CIVIL ENGINEERING
    MARKET STUDY
          Final Report


             21 May 2026




     1
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The Competition and Markets Authority has excluded from this published version
of the final report information which it considers should be excluded having regard
    to the three considerations set out in section 244 of the Enterprise Act 2002
 (specified information: considerations relevant to disclosure). The omissions are
   indicated by []. Some numbers have been replaced by a range. These are
    shown in square brackets. Non-sensitive wording is also indicated in square
                                       brackets.




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Contents
Executive Summary ........................................................................................................... 7
Introduction .......................................................................................................................... 7
Our assessment ................................................................................................................... 8
     Why have we examined this market? .......................................................................... 8
     What evidence have we looked at? ............................................................................. 8
     What did the evidence tell us… ................................................................................... 9
       … about market dynamics and outcomes? ............................................................. 9
       … about how public procurement is shaping the market? ....................................... 9
       … about how regulation affects incentives to enter, grow and invest in this market?
                ................................................................................................................. 12
Our Recommendations ...................................................................................................... 14
     Overarching market shaping ..................................................................................... 15
     Addressing pipeline uncertainty................................................................................. 16
     Alleviating public authority capacity constraints......................................................... 17
     Procurement policy and approaches ......................................................................... 18
     Reducing regulatory barriers ..................................................................................... 20
     Impact………………………………………………………………………………………..22
Main Report ...................................................................................................................... 24
1.      Our Market Study ...................................................................................................... 24
        Background ............................................................................................................... 24
        Aim and scope of the Market Study........................................................................... 25
        Overview of process .................................................................................................. 26
        Market Investigation Reference decision ................................................................... 28
        Structure of remainder of report ................................................................................ 28
        Next steps ................................................................................................................. 29
2.      Market Overview ....................................................................................................... 30
        Market Outcomes ...................................................................................................... 30
          Cost………………………………………………………………………………………..31
          Delivery timescales ............................................................................................... 33
          Quality…………………………………………………………………………………….33
          Innovation ............................................................................................................. 34
        Supply side ................................................................................................................ 35
          Market concentration............................................................................................. 36
          Business dynamism .............................................................................................. 37
          Barriers to entry and expansion ............................................................................ 41
          Subcontracting ...................................................................................................... 43
        Demand side ............................................................................................................. 46
3.      Procurement .............................................................................................................. 48
        Introduction – how public procurement shapes this market ....................................... 48
        Pipeline uncertainty ................................................................................................... 49


                                                                   4
          Pipeline strategy, funding and visibility.................................................................. 49
          Public Authorities’ pipelines .................................................................................. 53
          Pipeline impact on supply side .............................................................................. 55
          Conclusions on pipeline uncertainty ...................................................................... 57
        Procurement Policy and Approaches ........................................................................ 58
          Scoping ................................................................................................................. 59
          Procurement methods and use of frameworks ...................................................... 67
          Procurement processes and barriers to entry ....................................................... 73
          Bid evaluation........................................................................................................ 75
          Allocation of risk and incentives for efficiency ....................................................... 78
        Public authority capacity constraints ......................................................................... 85
          Skills shortages ..................................................................................................... 86
          Coordination .......................................................................................................... 88
          Risk Appetite ......................................................................................................... 91
        Conclusion on procurement....................................................................................... 94
4.      Regulation ................................................................................................................. 96
        Background and context ............................................................................................ 96
          Market dynamics impacted by regulation .............................................................. 97
        Impact of regulation on firms’ incentives.................................................................... 99
          Streamlining regulatory compliance .................................................................... 101
          Consolidated accreditations and qualifications.................................................... 104
          Fast-tracked regulatory approvals ....................................................................... 105
5.      Recommendations .................................................................................................. 107
        Introduction.............................................................................................................. 107
        Our package of measures ....................................................................................... 108
           Overarching market shaping ............................................................................... 111
           Pipeline uncertainty ............................................................................................. 113
           Procurement authority capacity constraints ........................................................ 114
           Procurement policy and approaches ................................................................... 117
           Regulatory barriers.............................................................................................. 121
        Interdependencies ................................................................................................... 123
        Next steps ............................................................................................................... 125


Figures
Figure 1.1 : Overview of market study recommendations .................................................. 23
Figure 2.1 : Civil engineering and UK whole economy entry and exit rates, 2005 to
2021 ....................................................................................................................................38
Figure 2.2 : Civil engineering new entrant turnover evolution, 2018 to 2025 ..................... 39
Figure 2.3 : Civil engineering and UK whole economy average rank persistence, 1997 to
2022...................................................................................................................................40
Figure 2.4 : Civil engineering top 20 suppliers share of supply, 2018 to 2025 ................... 40
Figure 5.1 : Summary of impact of recommendations...................................................... 110



                                                                    5
Appendices
A.   Further Evidence
B.   Detail of Recommendations




                                 6
Executive Summary

Introduction
1.        Reliable, high-quality road and railway infrastructure is critical to driving economic
          growth and improving the connectivity of people throughout the UK. The public
          sector spent around £19 billion in 2023/24 on public roads and rail infrastructure
          (excluding High Speed 2). By adopting a strategic approach, governments can
          harness the purchasing power of the state and their control over regulation to
          foster a market that is more dynamic, driving improved outcomes for consumers
          and greater investment by firms.

2.        In the context of the UK government’s Industrial Strategy and 10-Year
          Infrastructure Strategy, the CMA has conducted a market study into the civil
          engineering market for public road and railway infrastructure. We have carried out
          this study – in line with the UK government’s strategic steer to the CMA and the
          CMA’s 2026-2029 strategy – to identify practical opportunities to strengthen
          competition and improve outcomes in this market; and to support growth and
          investment in UK infrastructure. The final report marks the conclusion of 11
          months of in-depth analysis and deep engagement across governments, procuring
          authorities and industry.

3.        We have found that there are significant opportunities to improve outcomes in this
          market. Costs are high; project overruns are common; quality is variable; and
          innovation is limited.

4.        Our recommendations set out specific actions for the UK, Scottish and Welsh
          governments and the Northern Ireland Executive to drive better market outcomes:
          setting strategic direction in a fragmented landscape, providing clearer and longer-
          term pipelines, improving procurement practice, and streamlining regulatory
          compliance. Taken together, this package will improve delivery, support innovation
          and business dynamism, and secure better value for money from public
          investment.

5.        The size of the opportunity is considerable, with possible efficiency savings of up
          to £5 billion per year 1 and a potential multiplier effect on growth – not only boosting
          the civil engineering sector but also increasing productivity through improving the
          connectivity of business activities and people throughout the UK. Although our
          study has focused on road and rail, we expect the lessons to have broader



1 The National Infrastructure Commission (2024), Cost drivers of major infrastructure projects in the UK – Methodology

and technical annex (p18), indicates a range of possible efficiency savings of 10-25%. When applied to the annual
expenditure noted in Appendix A (paragraph A.1), which the CMA estimated to be approximately £19 billion in 2023/24,
this amounts to approximately £2-5 billion of potential savings.


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          application across other civil engineering markets as well as informing the CMA’s
          broader programme on public procurement.

6.        The CMA stands ready to work with the UK and devolved governments on the
          implementation of our market study recommendations to achieve these benefits
          for the UK.


Our assessment

Why have we examined this market?

7.        The CMA has powers under the Enterprise Act 2002 for ensuring that markets
          work well for consumers. In the case of a market study, the CMA examines
          whether a particular market may not be working as well as it can be, the causes of
          that and what actions should be taken to deliver improvements.

8.        We have focused on this market due to the importance of infrastructure for the
          UK’s economic growth and concerns that the market was not operating as
          effectively as it could be. Public road and rail spend accounts for a high proportion
          of total public spending on economic infrastructure: around 70-75% in 2022. 2 At
          launch, we noted that our findings may identify lessons that are also informative
          for civil engineering in other areas of infrastructure.


What evidence have we looked at?

9.        We have assessed a wide range of evidence to determine how this market is
          operating and to develop our recommendations. This has included engagement
          with suppliers, procuring authorities, and the UK and devolved governments,
          qualitative research to understand the experience of smaller firms in the supply
          chain, desk research and international comparisons.

10.       Following our initial evidence gathering and analysis, we published an interim
          report on 17 December 2025 to consult on our provisional findings and potential
          options for recommendations. We then undertook further analysis, including
          consideration of consultation responses, and developed and tested our
          recommendations.




2 National Infrastructure Commission, Second National Infrastructure Assessment - NIC.




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What did the evidence tell us…

… about market dynamics and outcomes?

11.   The public sector is the key source of demand for road and rail civil engineering
      and sets the operating conditions through procurement policy and regulation. It
      plays a fundamental role in shaping market dynamics and behaviour by suppliers,
      both at the market- and project-level.

12.   Procurement is dispersed across UK and devolved governments, public authorities
      and local authorities. Six different bodies procure rail and road infrastructure at a
      national level, while responsibility for local roads is split between hundreds of local
      authorities and some combined authorities. This means procurement decisions are
      typically taken at a project level, but have an aggregate impact on supply-side
      behaviour and incentives. There is currently a lack of central strategic direction,
      insufficient pipeline certainty, inconsistent procurement practices and burdensome
      regulation.

13.   On the supply-side, while current levels of concentration are not inherently
      concerning, business dynamism has weakened over the past 20 years, with
      smaller and newer firms struggling to scale. These dynamics reduce challenges to
      incumbents and weaken incentives to invest in productivity and innovation.

14.   Suppliers rely heavily on subcontracting. When used appropriately, this can
      provide flexibility and specialist capability. However, it can also create
      inefficiencies by adding cost and complexity. Extensive subcontracting is partly a
      response to uncertainty over funding and pipeline commitments, which weakens
      incentives to invest in capacity in-house and self-delivery.

15.   These demand- and supply-side dynamics have resulted in poor market outcomes
      over a sustained period of time:

      (a)   costs are high and have been increasing in real terms;

      (b)   cost and time overruns on projects are common;

      (c)   quality is variable; and

      (d)   innovation is constrained, including investment in new technologies and
            processes.

… about how public procurement is shaping the market?

16.   Public procurement is a critical lever for government to shape markets and
      promote growth. By adopting a strategic approach, the state can use its
      purchasing power to achieve better value and to foster dynamic and competitive


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          markets. However, we have found the public sector is not currently wielding this
          power effectively.

          Strategy and funding pipelines

17.       The public sector landscape for road and rail infrastructure is fragmented
          and lacks clear strategic direction. While the UK Government has a 10 Year
          Infrastructure Strategy 3 and is legislating to introduce a Long-Term Rail Strategy 4,
          decisions about road and rail infrastructure are still typically made at a project level
          across a range of bodies – including UK and devolved governments, Network Rail,
          National Highways and local authorities. Opportunities are being missed to actively
          and strategically shape the market.

18.       Short-term funding and changing government priorities undermine long-
          term planning by both procurers and suppliers. As a result, public authorities
          often default to lower-risk, short-term projects rather than more long-term
          transformative programmes, and suppliers have weaker incentives to invest in
          skills, capacity and innovation.

          (a)    National Highways and Network Rail operate within five-year settlement
                 periods. However, both have experienced changes to funding and priorities
                 within those periods, including cancellation or rephasing of work, and
                 enhancements funded on a project-by-project basis. Elsewhere, shorter
                 funding cycles are common: Transport Scotland operates within a four-year
                 pipeline with multiple annual settlements, and the Welsh Government and
                 Northern Ireland’s Department for Infrastructure largely operate with annual
                 budgets. For local roads, English local authorities have recently been given a
                 four-year capital settlement, but local authorities in Scotland and Wales
                 continue to rely on annual settlements.

          (b)    These features weaken confidence that projects will proceed as planned,
                 impede the effective scoping of projects and limit the time for engagement
                 between procuring authorities and suppliers. Multiple stakeholders
                 emphasised that a clear, credible and funded multi-year pipeline would
                 enable firms to plan resources, invest in skills and innovation, and reduce
                 inefficient peaks and troughs.

          Procurement practices

19.       Procurement and contracting do not consistently drive long-term value.
          Weaknesses in scoping, engagement, project design and evaluation raise bid
          costs, reduce competition, and underweight quality, deliverability, innovation and


3 UK Infrastructure: A 10 Year Strategy - GOV.UK.
4 Railways Bill factsheet: the Long-Term Rail Strategy - GOV.UK.




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          whole-life value. These project-level decisions not only impact individual project
          outcomes but have an aggregate impact on incentives within the market, including
          incentives to expand, invest, and innovate.

20.       Public authorities face limitations in their ability to scope projects effectively
          and evaluate different options with insufficient focus on parameters that are
          harder to assess, such as quality, innovation and long-term value. Stakeholders
          reported that requirements and business cases are sometimes insufficiently
          developed, leading to changes later in delivery; scopes can also become overly
          prescriptive or ‘gold-plated’, as additional requirements accumulate. Deficiencies
          in scope and design can result in unrealistic budgets and programmes, deter
          bidders, and increase the likelihood of cost and time overruns when there are
          changes in scope during delivery. We also found that early market engagement –
          when carried out with appropriate safeguards – can improve design, risk
          assessment and deliverability, but some procurers are discouraged from engaging
          early due to concerns about legal challenge and reputational risk.

21.       Public authorities are not sufficiently incentivised to select and design a
          procurement method that induces stronger competition and reduces the
          cost and complexity for suppliers in bidding. Public authorities use open
          competition, frameworks and direct awards to procure services. Frameworks may
          save time and reduce uncertainty, but their effectiveness varies, and suppliers
          reported that poorly designed ones can create overlapping, excessive bidding
          requirements and extra costs, especially where the volume of work anticipated
          does not materialise. While reforms following the Mosey ‘Gold Standard’ review5
          and Procurement Act 2023 aim to improve framework access, adoption remains
          inconsistent. Open competition increases access but demands more resources.

22.       The design of procurement processes can raise barriers to entry and
          expansion. Lengthy and complex procurements are costly for bidders, particularly
          smaller firms. Preparing submissions can require significant inputs from a range of
          specialists. Requirements for specific prior experience or a proven track record
          can favour incumbents even where firms have relevant capability from adjacent
          markets. Limited, non-actionable feedback after failed bids can further weaken
          incentives to compete in future.

23.       Finally, misallocation of delivery risks between public authorities and
          contracting firms reduces incentives to deliver to time and budget after
          contracts are awarded. Although we have not found that risk is systematically
          misallocated, we have heard concerns about risks being transferred to suppliers
          even when they are not best placed to manage these. We also found that
          extensive use of contract amendments can add complexity and, in some cases,
          reallocate risk in ways that run counter to standard contract guidance. Issues

5 Gold Standard Report.




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          around the allocation of risk also apply to how risk is cascaded down the supply
          chain, sometimes inappropriately, with limited visibility for public authorities –
          raising issues for SMEs’ ability to manage downside risk and invest in innovation.
          More consistent, collaborative approaches to risk management, allocating risk to
          the party best able to manage it, would support better outcomes.

          Public authority capacity

24.       Public authorities struggle to build, recruit and retain the procurement and
          engineering capabilities needed to drive better outcomes.

          (a)    Skills shortages across the wider civil engineering sector are acute. There
                 were 5,900 civil engineering skills shortage vacancies in 2024. 6 Skills
                 shortages in public authorities negatively affect their ability – particularly
                 smaller ones – to effectively scope projects, evaluate non-price criteria and
                 manage risk. This can also lead to entrenched reliance on external
                 consultants without building the necessary experience to challenge
                 information provided by suppliers effectively.

          (b)    There is also currently limited coordination between similar authorities to pool
                 expertise, share lessons learned and pursue joint procurement where
                 appropriate. Opportunities are therefore being missed to make better use of
                 the limited civil engineering capacity.

… about how regulation affects incentives to enter, grow and invest in this market?

25.       Regulation is a powerful lever for governments to shape markets. Well-designed
          regulation can help achieve a range of societal goals, such as environmental
          protection and health and safety, while giving firms the clarity and confidence they
          need to invest, innovate and compete.

26.       However, some aspects of the regulatory compliance landscape in this market are
          creating unnecessary burdens on existing and prospective market participants. We
          have found that some regulatory processes are complex, overlapping and slow,
          which adds compliance costs and raises barriers to entry and expansion. This is
          particularly acute for smaller firms and those seeking to innovate.




6 Department for Education employer skills survey, Step 6: Explore data - Create your own tables on employer skills

survey, accessed 11/05/26.


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          Regulatory compliance

27.       The main concerns we have identified arise from a complex regulatory compliance
          landscape which is limiting effective and efficient delivery of civil engineering
          projects, rather than the substance of regulations themselves.

28.       We found that onerous and prescriptive technical standards add to the compliance
          burdens on firms. Previous research into overlapping technical standards has
          found that this is a longstanding problem. In some cases, there are limited
          opportunities for businesses and market participants to provide feedback on areas
          in which burdens are greatest, reducing incentives for standards setters to tackle
          high-impact areas as a priority.

29.       The planning and permitting process was consistently highlighted as one of the
          key areas of regulation contributing to delays in infrastructure delivery, particularly
          the role of statutory consultees. Ongoing reforms by the UK and devolved
          governments to streamline the planning system 7 should address many of the
          concerns we have identified in this area.

          Accreditations

30.       Overlapping accreditation and pre-qualification requirements imposed by both the
          public sector and industry create barriers to entry and to scaling. While
          accreditations play an important role in demonstrating a firm’s ability to carry out
          specified work, they can be costly to attain and hold. Limited mutual recognition of
          accreditations across road and rail means that suppliers often need multiple
          different accreditations for similar work. This disproportionately affects SMEs, as
          strict requirements are passed down supply chains, and smaller firms are likely to
          be less able to absorb additional costs.

          Regulatory approvals

31.       Slow approvals processes for innovations limit the incentives for firms to invest in
          new products and methods and scale these activities across the industry. We have
          found that this burden is most significant for innovations in rail.

32.       There is a clear need for a safety-critical culture, but our evidence suggests a
          broader risk-averse culture is hindering innovation. We found there is scope to
          improve the process of adopting new innovations without risking safety. Pilots,



7 MHCLG (2026), National Planning Policy Framework: proposed reforms and other changes to the planning system;

MHCLG (2025), Reforms to the statutory consultee system; DEFRA, The Rt Hon Steve Reed OBE MP and The Rt Hon
Angela Rayner MP (2025), Environmental reforms to break planning system gridlock; DfI (2025), Kimmins announces
further improvements to the planning system; Planning and Environment Decisions Wales (2025), New process to speed
up planning for infrastructure projects and make Wales a better place to invest; and the Scottish Government, Planning
and architecture: Reforming the planning system, accessed on 11/05/26.


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      fast-track approval routes, as well as more established routes to rollout would also
      help scale innovations.


Our Recommendations
33.   We are proposing a package of mutually reinforcing actions for the UK, Scottish
      and Welsh governments and the Northern Ireland Executive to drive better market
      outcomes. Taken together, this package is designed to reshape incentives across
      the market, improve delivery, support innovation and business dynamism, and
      secure better value for money from public investment. Implementation of the
      package as a whole is necessary to achieve their full potential, although we have
      highlighted seven recommendations that are particularly critical.

34.   In formulating our package of recommendations, we have considered their
      effectiveness in delivering better outcomes, and their cost and burden on
      stakeholders. We have also noted the interdependencies between the different
      elements of the package and, where relevant, have noted the potential trade-offs.
      Achieving the full potential impact of our recommendations requires central,
      proactive direction from government to coordinate the measures and balance the
      trade-offs.

35.   We consider that HM Treasury – as the department responsible for infrastructure
      strategy across the public sector, and with the central position and power within
      government to drive the necessary system-wide change – should oversee the
      implementation of our recommendations for UK government. HM Treasury is well-
      positioned to provide the necessary strategic approach to the recommendations as
      a package, and to draw lessons from this work to drive broader changes across
      other infrastructure sectors where appropriate. There is also a clear role for other
      departments and public authorities in implementing our recommendations, and the
      precise allocation of responsibilities would be a matter for government to consider
      as part of its response to the market study.

36.   Devolved governments will be accountable and responsible for implementing
      recommendations that fall within the scope of their devolved powers, and we
      recognise that HM Treasury will need to work closely with devolved governments
      in areas that are within devolved competence.

37.   Given the scope of our study, our recommendations apply to road and rail
      specifically, but we recognise that there may be strong parallels with other civil
      engineering sectors. We think the UK government should therefore give careful
      consideration as to whether the recommendations we set out below should also be
      applied to other types of infrastructure.




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Overarching market shaping

38.       The UK government has powerful tools at its disposal to shape the market by
          adopting a strategic approach to procurement policy, practices and regulation.

39.       Recommendation 1 (critical): Strategic ownership for driving change.
          Recognising its overarching responsibility for infrastructure strategy across the
          public sector, and its ability to deploy the necessary convening powers and levers
          within the UK government, we recommend that HM Treasury takes strategic
          ownership for driving and overseeing the necessary system-wide changes to
          actively shape the market.

40.       This is a critical recommendation and is necessary to overcome the fragmentation
          of accountability for civil engineering across a range of departments and bodies;
          address the persistent failure to track and drive forward the implementation of
          previous recommendations and reform initiatives; and tackle the range of
          interlinked and deeply-rooted issues in the sector. Strategic ownership by HM
          Treasury would also enable a cross-sectoral approach if the UK government
          decides to extend the scope of our recommendations to other areas of civil
          engineering.

41.       In practice, we would envisage the National Infrastructure and Service
          Transformation Authority (NISTA) playing a central role in providing the necessary
          strategic coordination, advice and oversight to deliver the system-wide change that
          is required. This aligns with NISTA’s mandate – under its foundational
          Memorandum of Understanding between HM Treasury and Cabinet Office – to
          drive improvements at the policy, project, programme, portfolio and system level. 8

42.       Recommendation 2 (critical): Sector plan. We recommend that the UK
          government, in consultation with the Scottish and Welsh governments and the
          Northern Ireland Executive: (i) publish a strategic sector plan for civil engineering
          in the road and rail sector; and (ii) report annually on progress against that sector
          plan.

43.       The sector plan should set out a coherent, system-wide set of objectives and
          actions for civil engineering in the road and rail sector. This would include a
          framework for proactively shaping the market through public procurement and
          regulation, altering incentives for public authorities and breaking down barriers to
          investment and innovation. It should clearly set the desired priority outcomes for
          the market to deliver, including any necessary trade-offs, alongside concrete
          actions to implement changes and monitor outcomes. The UK government should
          give careful consideration as to the appropriate scope of the sector plan, including



8 National Infrastructure and Service Transformation Authority (2025) NISTA Memorandum of Understanding.




                                                        15
      whether it should extend beyond road and rail, in line with the approach taken to
      Recommendation 1.

44.   Overall responsibility for the development and implementation of the sector plan
      should be assigned to a single department within UK government. If the scope of
      the sector plan is limited to road and rail, we consider that the Department for
      Transport would be well-placed to take on this responsibility. However, in these
      circumstances, it will be important for the Department for Transport to ensure that
      the sector plan is developed in line with the strategic approach set by HM Treasury
      under recommendation 1. Input from other relevant departments and bodies, along
      with the Scottish and Welsh governments and the Northern Ireland Executive,
      would also be required in line with their respective responsibilities.


Addressing pipeline uncertainty

45.   Stable, long-term funding and transparency over future project pipelines will
      support planning, investment and innovation for both procurers and suppliers.

46.   Recommendation 3 (critical): Multi-year capital funding. We recommend that
      the UK, Scottish and Welsh governments and the Northern Ireland Executive each
      implement multi-year capital budgets (of at least three years) for all procuring
      authorities.

47.   This will enable procurers to have more stable funding and procurement plans,
      facilitating investment decisions and creating the conditions for increased
      innovation. Crucially, it should unlock more strategic procurement approaches
      across all procurement activity. We recognise that this recommendation comes
      with the trade-off of reduced flexibility for government to adjust budgetary
      allocations year-on-year. We consider that key benefits for the sector would be
      unlocked with a multi-year budget period of a minimum of three years. We
      consider HM Treasury, with support from the Department for Transport (DfT),
      would be best placed to deliver this recommendation for UK government.

48.   Recommendation 4: Longer-term contracts. We recommend that the UK,
      Scottish and Welsh governments and the Northern Ireland Executive each give all
      procuring authorities greater flexibility to commit to contracts that extend beyond
      budget settlement periods. This would include the setting of budget and timeline
      thresholds within which procurers can make commitments without requiring case
      by case central approvals.

49.   This will provide suppliers with increased certainty over a programme of work,
      reduce bid costs for all parties, and support collaborative and innovative
      contracting arrangements. This should come alongside the greater use of longer-
      term contracting in general, including greater contracting for programmes of



                                          16
      projects rather than project-by-project. We consider HM Treasury would be best
      placed to deliver this recommendation for UK government.

50.   Recommendation 5: UK-wide infrastructure pipeline. (i) We recommend that
      NISTA, in collaboration with the Scottish and Welsh governments and the
      Northern Ireland Executive, expands its infrastructure pipeline to include road and
      rail projects planned by the devolved governments and their arms-length bodies.
      (ii) We recommend that NISTA’s pipeline should be expanded to include
      information for each project on: funding confirmation status; planning approvals
      status; intended timelines for procurement; and intended procurement method.

51.   This will provide greater visibility for suppliers on upcoming opportunities, with the
      improved transparency enabling more efficient and effective planning by firms in
      the supply chain, and facilitating an increase in targeted capacity-building and
      investment.


Alleviating public authority capacity constraints

52.   Addressing capacity and skills shortages is fundamental to enabling public
      authorities to make effective procurement decisions, and to improving market
      outcomes. Stronger capability and pooling of capacity can improve scoping,
      evaluation and risk management, reducing reliance on expensive workarounds
      and improving consistency of practice.

53.   Recommendation 6 (critical): Sustained capability building. We recommend
      that the UK, Scottish and Welsh governments and the Northern Ireland Executive
      each publish a civil engineering strategic workforce plan that sets out how they will
      strengthen the commercial and technical capability of all public procuring
      authorities, and report regularly on progress against this.

54.   Strengthening procurers’ commercial and technical capacity and capability is
      fundamental to ensuring public procurement can take full benefit of market-
      shaping opportunities, reduce costs, and deliver the strongest outcomes. This
      should include targeted actions to address persistent challenges in recruitment,
      retention and skills. We consider this should form part of the sector-wide plan with
      delivery supported by the Ministry of Communities, Housing and Local
      Government (MHCLG), Government Commercial Agency (GCA) and DfT.

55.   Recommendation 7: Cross-authority pooling of capacity. We recommend that
      the UK, Scottish and Welsh governments ensure that all local authorities have
      sufficient access to sources of pooled capacity to support their road procurement
      and contracting activities. Governments should evaluate, and report on, demand
      for and use of pooled capacity on an annual basis, and address gaps identified.




                                            17
56.   This will help ensure authorities can access the specialist advice and support they
      need – reducing reliance on external consultancy, and making more effective use
      of commercial and technical skills in the public sector, without requiring each
      authority to develop and maintain the full range of skills in-house. We consider that
      MHCLG or DfT would be best placed to lead delivery of this recommendation for
      UK government, with support from HM Treasury and GCA.

57.   Recommendation 8: Cross-authority joint procurement. (i) We recommend
      that the UK, Scottish and Welsh governments work with local authorities in their
      respective nations to identify and pursue further opportunities for joint procurement
      of road infrastructure. Governments should publish on an annual basis where they
      have facilitated joint procurement amongst local authorities and disseminate key
      learnings with local authorities. (ii) We recommend that Network Rail identify and
      pursue opportunities for more centralised procurement across the five Network
      Rail regions. The UK government should ensure, where appropriate, effective joint
      procurement is utilised between regions, and in collaboration with the Scottish
      Government and the Welsh Government.

58.   This will provide procuring authorities with more buyer power, drive greater value
      for money, and combat duplication and/or conflict in authorities’ work. Annual
      reporting on this measure could form part of sector plan reporting, and we
      consider that DfT would be best placed within UK government to ensure effective
      joint procurement is utilised.


Procurement policy and approaches

59.   We have formed a number of recommendations to ensure consistent adoption of
      best practice, support innovation, and drive value for money over the long term.
      These measures reduce bid costs, strengthen competitive tension, and shift
      incentives towards focusing on whole-life value rather than lowest upfront price.

60.   Recommendation 9 (critical): Adoption of best practice. We recommend that
      the UK government should mandate compliance with the Construction Playbook
      and its accompanying Guidance Notes – ending the current ‘comply or explain’
      approach – for national procuring authorities. Similarly, the Scottish and Welsh
      governments and the Northern Ireland Executive should mandate compliance with
      the Client Guide, Transport Appraisal Guidance, and Construction Toolkit for
      national procuring authorities. As part of this, governments should publish a
      comprehensive implementation plan for how they will support and ensure
      compliance, and monitor and report on compliance on an ongoing basis.

61.   Widespread adoption of best practice will ensure the public sector takes
      advantage of the opportunities to increase competitive tension in procurement,
      drive long-term value, and shape the market in line with its objectives. For the UK
      government, the GCA review of the Construction Playbook due this year can be

                                           18
      used to make any changes that would be required to support mandation; and HM
      Treasury can require compliance as part of the public spending framework.

62.   Recommendation 10: Supporting innovation. We recommend that the UK,
      Scottish, and Welsh governments and the Northern Ireland Executive require all
      national public authorities to publish, at least every three to five years, target areas
      for innovation in their supply chains. This should be supported by funding and
      regular reporting as appropriate.

63.   This will provide greater confidence for suppliers in where innovations would be
      likely to be welcomed by public procurers, which would encourage investment and
      inclusion in bids. This should also support and underpin the approach taken by
      procuring authorities in their project, programme, and portfolio procurement
      strategies to proactively considering and encouraging innovation, investment, and
      opportunities for long-term cost reduction. We consider that DfT would be best
      placed to deliver this recommendation for UK government.

64.   Recommendation 11: Use of frameworks. We recommend that the UK, Scottish
      and Welsh governments and the Northern Ireland Executive ensure that all future
      national road and rail public procurement frameworks adhere to the Gold
      Standards set out in the 2021 Mosey review.

65.   Ensuring all future frameworks adhere to the Gold Standards will drive and support
      adherence to best practice, and improve outcomes – including lower procurement
      costs, greater value for money, and reduced risk. We consider that GCA would be
      best placed to deliver this recommendation for UK government.

66.   Recommendation 12: Standardising procurement processes. We recommend
      that the UK, Scottish and Welsh governments and the Northern Ireland Executive
      each conduct a review to identify opportunities for, and deliver, greater
      standardisation of procurement processes across procuring authorities.

67.   Delivering greater standardisation will reduce administrative burdens on suppliers,
      support increased competition in public tenders, and lower barriers to entry and
      growth opportunities for SMEs. We consider that GCA, with support from DfT,
      would be best placed to deliver this recommendation for UK government.

68.   Recommendation 13: Improved approach to risk allocation. We recommend
      that procuring authorities should conduct a zero-based review of Z clauses in
      model contracts, to remove historical clauses altering how risk is allocated that are
      no longer required.

69.   While Z clauses – which allow procuring authorities to include additional, bespoke
      conditions of contract – may be used for valid reasons, we have consistently heard
      that they are overused, resulting in the inappropriate allocation of risk throughout
      the supply chain. Reducing their use will improve and standardise the approach

                                            19
          taken to the allocation of risk to suppliers by public authorities. We consider that
          GCA would be best placed to deliver this recommendation for UK government.

70.       Recommendation 14 (critical): Standardisation of designs. We recommend
          that the UK, Scottish and Welsh governments and the Northern Ireland Executive
          should determine and mandate for national procuring authorities the use of a
          limited set of standard designs for certain road and rail infrastructure outputs (such
          as bridges, gantries, and other common structures that are repeated across
          projects).

71.       This will create a virtuous cycle of a more predictable and efficient environment for
          infrastructure development – reducing system costs, delivery risk, and burdens on
          procurers, and driving opportunities and incentives to take advantage of
          economies of scale, including investment in practices such as industrialised
          construction methods. We consider that DfT would be best placed to deliver this
          recommendation for UK government.

72.       Recommendation 15: Alignment of designers’ and procurers’ incentives. We
          recommend that the UK, Scottish, and Welsh governments and the Northern
          Ireland Executive review and strengthen their best practice guidance on aligning
          external designers’ incentives with those of public procurers.

73.       This will drive more efficient outcomes – with well-aligned incentives between
          designers and procurers fundamental to ensuring that designs deliver long-term
          value for money, in construction and across the lifetime of the infrastructure asset.
          It should also reduce demands on procuring authorities’ resources and expertise.
          We consider that GCA, with support from DfT, would be best placed to deliver this
          recommendation for UK government.


Reducing regulatory barriers

74.       Simplifying and streamlining regulatory processes will support project delivery,
          lower barriers to entry and expansion, particularly for smaller firms, and accelerate
          innovation while protecting essential safety outcomes.

75.       Recommendation 16 (critical): Reduce over-compliance. (i) We recommend
          that the UK, Scottish and Welsh governments and the Northern Ireland Executive
          direct regulators and public bodies9 with standards-setting responsibilities to
          establish and run an open-ended challenge function for industry to challenge any
          standards, for both designs and products, on the grounds that they are out of date,
          duplicative or redundant. (ii) In addition, the UK, Scottish and Welsh governments
          and the Northern Ireland Executive should agree and enforce sets of consistent
          regional standards for ‘preferential requirements’ by local authorities for civil


9 Such as the Office of Rail and Road, National Highways, Network Rail and the Rail Safety and Standards Board.




                                                         20
          engineering projects. (iii) The UK government should also consider updating the
          Railway Regulation Act so that Network Rail 10 has equivalent legal powers as
          National Highways to access adjacent land to conduct civil engineering works for
          enhancement and renewals.

76.       Ensuring more agility and responsiveness by standards setters and managers will
          facilitate lower costs for firms, greater innovation, and increased competition.
          Consistent standards for preferential design and engineering requirements will
          reduce barriers to entry for firms and increase efficiency in cross-regional
          operations, as well as supporting greater joint procurement. We consider that DfT,
          with support from the Office of Rail and Road (ORR), would be best placed to
          deliver this recommendation for UK government.

77.       Recommendation 17: Streamline accreditations. We recommend that the UK,
          Scottish and Welsh governments and the Northern Ireland Executive should
          review the existing range of supplier accreditations for duplication and set a single
          approved list of accreditations that are acceptable for firms working on public road
          and rail infrastructure projects.

78.       This streamlining will reduce administrative burden on suppliers, with particular
          benefit for SMEs, and facilitate greater market access and competition. We
          consider that Cabinet Office, with support from DfT, would be best placed to
          deliver this recommendation for UK government.

79.       Recommendation 18: Streamline regulatory approvals. The UK government
          should direct regulators and public bodies11 to streamline approvals processes for
          new technologies in road and rail infrastructure and establish fast-track approval
          processes, which should include the recognition of reference-class data.

80.       This streamlining of approvals should encourage the development and rollout of
          new innovations across the supply chain. We consider that DfT, with support from
          the Office of Rail and Road (ORR), would be best placed to deliver this
          recommendation for UK government.

81.       Recommendation 19: Utility diversions response times. We recommend that
          the UK, Scottish and Welsh governments and the Northern Ireland Executive
          direct sector regulators12 to agree and monitor standardised response times for
          utility diversions.

82.       The need for utility diversion arises when utility networks (such as cables or pipes)
          need to be relocated or altered in some way to enable engineering works.
          Introducing more consistent response times would help to address delays, which


10 And Great British Railways once operationalised.
11 Such as National Highways, Network Rail and the British Board of Agrément.
12 These include Ofcom, Ofgem, Ofwat, the Utility Regulator and the Water Industry Commission for Scotland.




                                                         21
      can contribute to significant cost and time overruns. We consider that DfT would
      be best placed to deliver this recommendation for UK government.


Impact

83.   Figure 1.1 summarises how our package of measures would deliver better
      outcomes. Critical recommendations are highlighted in light blue. However, the
      overall impact of our recommendations would be maximised through
      implementation of the package in full, due to mutually reinforcing improvements
      and positive feedback loops.

84.   We advise that our recommendations should be delivered as soon as possible to
      deliver key benefits for the civil engineering market for public road and railway
      infrastructure – and the wider UK economy. These include: reducing costs,
      reducing delivery timelines and overruns, increasing innovation, and encouraging
      scale-up and business dynamism.

85.   We encourage the UK government, in its response to this report, to set out the
      specific intended timeline for delivery against each recommendation.




                                          22
Figure 1.1: Overview of market study recommendations




                                              23
                                                 Main Report

1.         Our Market Study

Background

1.1        Civil engineering encompasses the design, construction and maintenance of
           infrastructure ranging from transport links to access to clean water and sanitation,
           from telecommunications networks to energy generation.

1.2        The economic infrastructure delivered by civil engineering is fundamental to
           economic growth. Construction is the 7th largest sector in the UK economy, within
           which civil engineering contributes around £23 billion to the UK’s Gross Value
           Added. When functioning well, the civil engineering market has the potential to
           create a multiplier effect on growth – boosting the civil engineering sector itself and
           increasing productivity by improving connectivity of business activities and people
           throughout the UK.

1.3        The UK government’s 10-Year Infrastructure Strategy 13 recognises the key role of
           infrastructure – including economic infrastructure – in delivering economic growth
           across the country. However, the Strategy recognises that over many years the
           sector has underperformed, with low and erratic public investment levels, and
           insufficient coordination in policy and delivery across sectors and between
           government and delivery partners. It sets out an approach to improving UK
           infrastructure performance, based on reforming institutions, providing certainty and
           removing barriers.

1.4        A central plank of the Strategy has been the creation of the National Infrastructure
           and Service Transformation Authority (NISTA) to integrate infrastructure policy,
           strategy and delivery in the centre of government, building on the work of its
           predecessor bodies including the National Infrastructure Commission (NIC).

1.5        In 2024, the NIC published a report on the Cost Drivers of Major Infrastructure
           Projects in the UK. 14 The report identified poor outcomes such as high costs,
           including in some cases compared to international peers. The NIC identified four
           main drivers for this:

           (a)    lack of strategic direction;

           (b)    sponsor and client capability challenges;




13 HM Treasury and NISTA (2025), UK Infrastructure: A 10 Year Strategy.
14 NIC (2024), Cost drivers of major infrastructure projects in the UK.




                                                             24
          (c)     inefficient consenting and compliance processes; and

          (d)     supply chain constraints.


Aim and scope of the Market Study

1.6       Against this backdrop, the CMA launched this market study, focusing on the civil
          engineering market 15 for public road and railway infrastructure. 16 Our aim was to
          complement government reforms by identifying opportunities to improve the
          performance of the market.

1.7       At the start of the market study, we set out the following questions to address:

          (a)     how public authorities can access and assess the right information to make
                  well-reasoned decisions when procuring roads and railways;

          (b)     how public authorities can work effectively with civil engineering firms to
                  deliver road and railway projects on time, to a high quality and within
                  anticipated budgets;

          (c)     whether any procurement, planning or other regulatory processes create
                  significant barriers which limit companies’ ability and incentive to enter,
                  expand, invest and innovate; and

          (d)     in light of (a), (b) and (c), what market structures and features will most
                  effectively enable the delivery of roads and railways that support UK
                  productivity and growth.

1.8       Building on the government’s strategic steer to the CMA, and as reflected in our
          strategy for 2026-29, 17 the CMA is committed to delivering on our mandate to
          promote competition and protect consumers in a way which helps drive economic
          growth and improve household prosperity. This includes providing expert advice
          and recommendations to government, with a particular focus on public
          procurement and regulatory barriers. 18




15 Throughout the report, we use the term ‘civil engineering market’ for ease of exposition, however we note that true

economic markets for civil engineering may well be local or regional and differ between different types of project. For the
avoidance of doubt, we have not attempted a comprehensive analysis of such markets, and instead focus on assessing
broader trends, data, and behaviour relating to the process of undertaking civil engineering projects for road and railway
infrastructure.
16 The scope of the market study is set out in our Market Study Notice. As further explained in our Statement of Scope, in

order to keep the project manageable, we excluded from the focus of our market study tram networks, all light rail,
including underground rail networks; and upstream raw materials that input to the construction of roads and railways.
Additionally, our market study does not directly consider HS2 as it has been subject to multiple reviews already, and the
unique scale of the project limits the applicability of any lessons more broadly.
17 CMA (2025), CMA Strategy 2026 to 2029.
18 In support of the CMA’s third strategic objective of: Helping government deploy tailored pro-competitive interventions to

support growth, innovation and investment-related policies.


                                                            25
1.9        We have extensive experience in assessing how suppliers and purchasers interact
           in markets, how this behaviour can drive more or less desirable outcomes, and
           what types of intervention may help or hinder. We have brought this to bear in the
           civil engineering market, in particular by applying a competition lens to how
           approaches to procurement and regulation may be incentivising procurers and
           firms to behave in ways that drive poor outcomes.

1.10       The scope of the market study (as set out in the market study notice 19) is the full
           project life cycle of railway and public road infrastructure. We considered that
           these were the economic infrastructure subsectors where the CMA could provide
           the most insight and greatest impact. Together, rail and road, excluding HS2, 20
           accounted for 70-75% of government expenditure on economic infrastructure in
           2022. 21 This scope was designed to allow us to explore issues in depth and at
           pace, drawing comparisons across a range of practices. It enabled us to consider
           areas representing a high proportion of public sector investment in economic
           infrastructure and civil engineering activity.


Overview of process

1.11       We launched this market study on 19 June 2025. Following an evidence-gathering
           and analysis phase, we published our interim report on 17 December 2025. The
           interim report set out our provisional views on the issues we had identified, along
           with potential options for recommendations to governments to address these. 22
           Interested stakeholders were invited to submit written responses to the interim
           report by 28 January 2026. We then undertook further evidence-gathering and
           analysis, including consideration of the consultation responses, and further
           development and testing of potential recommendations. This final report sets out
           the CMA’s findings and final package of recommendations based on the totality of
           the evidence gathered throughout the study.

1.12       Our work has been informed by a variety of perspectives. Our information-
           gathering activities included the following:

           (a)    We issued an invitation to comment when we launched the market study and
                  received 18 responses, which are published on our website. 23

           (b)    We have met with a wide range of stakeholders, including contractors, public
                  authorities, trade associations, local government associations, as well as the
                  UK and devolved governments.



19 CMA (2025), Market Study Notice - Civil engineering in rail and road.
20 Our market study does not directly consider HS2 as it has been subject to multiple reviews already, and the unique

scale of the project limits the applicability of lessons more broadly.
21 NIC (archived content), Second National Infrastructure Assessment.
22 CMA (2025), Civil engineering: CMA sets out concerns and options for better outcomes.
23 Non-confidential versions of these responses are available on our case page.




                                                              26
          (c)    We convened a civil engineering sector panel, bringing together both
                 suppliers and procurers to participate in debate and gather views. 24

          (d)    We received written responses to requests for information from a variety of
                 procurers and suppliers.

          (e)    We reviewed literature on international comparators and met with officials
                 working in other jurisdictions.

          (f)    We procured an independent research agency to carry out qualitative
                 research with a sample of contractors operating lower down the supply
                 chain. 25

          (g)    We received and analysed 25 responses to our interim report 26 and have
                 considered these carefully to inform our findings and recommendations.

          (h)    We held meetings with a wide range of stakeholders, including the UK and
                 devolved governments and public bodies, to consider the possible
                 recommendations set out in the interim report.

1.13      This is the first market study to apply the CMA’s ‘4Ps’ commitment to pace,
          predictability, proportionality and enhanced process to deliver more effective
          engagement with key stakeholders.

          (a)    On pace, the choice of the market study tool at the outset allowed us to
                 complete the project in less than 12 months end-to-end. We benefited from
                 sector expertise through our sector panel from an early stage to help identify
                 and assess concerns more efficiently and effectively.

          (b)    On predictability, we published a roadmap to give businesses clarity about
                 the key stages of the market study and channels for engagement with the
                 CMA. We used webinars at launch and at the interim report stage to explain
                 directly to market participants the issues we intended to focus on and our
                 expectation for the outcomes of our work.

          (c)    On proportionality, we focused the scope and themes of the market study on
                 areas that built on previous studies. We sought to avoid duplication with
                 ongoing reforms, focusing on areas where there was potential to take
                 tangible action.

          (d)    On process, we have used a range of engagement channels to hear from a
                 full range of businesses in the civil engineering supply chain, as well as
                 public sector bodies. Given the importance of government policy and the


24 For more information on the make-up of the panel, see How to engage with the CMA's civil engineering market study.
25 Jigsaw Research (2026), Qualitative Research with Civil Engineers.
26 Non-confidential versions of these responses are available on our case page.




                                                          27
            regulatory framework in the civil engineering market for public road and rail
            infrastructure, we engaged extensively with the UK, Scottish, and Welsh
            governments and the Northern Ireland Executive to test the possible options
            we identified to address our concerns.


Market Investigation Reference decision

1.14   When the findings of a market study give rise to reasonable grounds to suspect
       that a feature or combination of features of a market in the UK prevents, restricts
       or distorts competition, the CMA may decide to make a market investigation
       reference (MIR) where it would be appropriate and proportionate to do so.

1.15   As set out in chapters 3 and 4 below, the CMA has identified wide-ranging and
       often deep-rooted issues that are resulting in poor market outcomes. The core
       concerns arise from public policy‑determined features, such as short‑term funding
       settlements and uncertain project pipelines. As such, the main levers for
       addressing the identified concerns sit with governments and public bodies.

1.16   The issues we have identified are therefore more appropriately and proportionately
       addressed through formal recommendations, rather than using the specific order-
       making powers available to the CMA following an MIR. We have also not received
       any representations to the effect that an MIR should be made.

1.17   The CMA has therefore decided not to make a reference under section 131 of the
       Act in relation to the supply of public road and railway infrastructure in the UK.


Structure of remainder of report

1.18   The remainder of this report is structured as follows:

       ●    Market Overview: This chapter sets out the CMA’s observations on the size
            and shape of the market, market outcomes, and supply- and demand-side
            behaviours.

       ●    Procurement: This chapter sets out how the public sector is shaping the
            market through its procurement activities. It considers the impact of pipeline
            uncertainty, procurement policy and approaches, and public authority
            capacity constraints on road and rail engineering firms and how these firms
            respond.

       ●    Regulation: This chapter considers the impact of regulation – in particular,
            the role of technical standards, accreditations, and regulatory approvals for
            innovations, on the ability for firms to enter the market, scale up and
            innovate.



                                            28
          ●      Recommendations: This chapter sets out the CMA’s recommendations to
                 the UK, Scottish and Welsh governments and the Northern Ireland Executive
                 designed to improve outcomes in the market.


Next steps

1.19      In its strategic steer to the CMA, the UK government commits to issuing an official
          response to the CMA’s recommendations within 90 days of publication of this final
          report, with a presumption that the government will accept the recommendations
          unless there are compelling reasons not to do so. 27 The CMA stands ready to
          work with the UK, Scottish, and Welsh governments and the Northern Ireland
          Executive on the recommendations and their implementation.




27 CMA (2025), Strategic steer to the Competition and Markets Authority.




                                                          29
2.        Market Overview
2.1       As noted above, the focus of this study is the civil engineering market for public
          road and railway infrastructure. 28 In this section, we set out the relevant market
          characteristics we have observed which inform our analysis, including:

          (a)    outcomes we have observed, which inform the assessment of whether the
                 market is working well;

          (b)    how firms on the supply side of the market are operating, including examining
                 some indicators of the strength of competition; and

          (c)    how the public sector is operating on the demand side of the market,
                 particularly in their role procuring public road and railway infrastructure.


Market Outcomes

2.2       In determining whether a market is working well for customers, business, and the
          wider UK economy, the CMA evaluates the outcomes of the competitive process,
          which include price, profitability, quality and levels of innovation. If the market were
          working well, we would expect to see (among other things) the following market
          outcomes:

          (a)    Competition between suppliers and procurement and contracting methods
                 working to keep whole life costs (prices) for public road and rail infrastructure
                 as low as possible.

          (b)    Delivery timelines being as fast and predictable as possible given the
                 capacity and capability in the supply chain, which may be expected to adapt
                 over time to the demands being placed on it.

          (c)    Quality standards meeting the expectations of customers.

          (d)    Innovation driving the adoption of new technology and ways of working that
                 underpin productivity and/or quality improvements.

2.3       Prices tend to be more observable and measurable than some other outcomes,
          and an analysis of these can provide insight into the extent to which the market is
          working well. Other indicators, such as quality and innovation, although harder to
          quantify, may be no less important to buyers in the market.

2.4       We have sought to be targeted in gathering our own evidence in this area, as we
          are mindful that there is a wide body of existing research on infrastructure project

28 As noted above, true economic markets for civil engineering may be local or regional and may differ between different

types of project. We have focused on broader trends, data and behaviour relating to the process of undertaking civil
engineering projects for road and railway infrastructure.


                                                           30
          outcomes. In the following sub-sections, we set out the key findings from both
          these previous studies and data we have gathered, and our conclusions on the
          extent to which the market is falling short of the desired outcomes.

2.5       As explained below, we have found that the civil engineering market for road and
          rail has, over a sustained period, produced outcomes that are worse than they
          could be across a number of dimensions. This includes cost, delivery timescales,
          quality and innovation. Further detail on the evidence we have examined and our
          findings is set out in Appendix A.

Cost

2.6       In order to examine costs, we have considered evidence on cost levels and trends,
          productivity levels (as a potential driver for cost levels) and cost overruns.

2.7       In terms of cost levels and trends, in its 2024 ‘Cost Drivers Report’, 29 the NIC
          identified persistent issues around the high cost and slow delivery of infrastructure
          projects, with construction costs having risen by around 30% more than GDP per
          capita since 2007. There was also evidence of higher costs of big infrastructure
          projects in the UK compared with other countries, specifically in nuclear power and
          rail, along with broadly flat labour productivity in the sector since 2008. 30

2.8       There are indications that costs have been increasing in real terms (ie faster than
          inflation), for example:

          (a)     For road, the total forecast cost of National Highways’ strategic road
                  enhancement schemes increased by 43% (in nominal terms, or c.14% in real
                  terms), on a like-for-like basis, from 2020-21 to 2024-25. 31 This is equivalent
                  to a c.3.5% average annual real-terms increase.

          (b)     For rail, Office of Road and Rail (ORR) analysis identified a 7% average
                  annual increase in the unit cost (in real terms) of conventional track renewals
                  since 2014-15. 32

2.9       We have also considered productivity data as a potential driver of cost levels, and
          therefore an indicator of whether costs could be reduced. Office for National
          Statistics (ONS) analysis highlights that, while the level of civil engineering
          productivity is above that of the whole economy, the sector’s productivity growth




29 NIC (2024), Cost Drivers of Major Infrastructure Projects in the UK.
30 NIC (2024), Cost Drivers of Major Infrastructure Projects in the UK, p4 and 8.
31 ORR (2025), Annual Assessment of National Highways' performance: End of the second road period April 2020 to

March 2025, pp36-38.
32 ORR (2024), Cost benchmarking of Network Rail's maintenance and renewals expenditure: annual report 2023 to

2024, p6.


                                                            31
          has been broadly flat over the last 15 years. 33 We judge that this weak productivity
          growth has contributed to infrastructure becoming relatively more expensive. 34

2.10      There is also consistent evidence that costs regularly exceed initial expectations
          on many road and rail infrastructure projects. Specifically:

          (a)     CMA analysis of information from national procurement authorities for public
                  roads projects undertaken between 2015 and August 2025 shows that, for
                  the projects for which sufficient financial information was provided, each
                  authority had between 29% and 79% of those projects exceed their contract
                  budgets. 35 The average overruns on these projects varied between 12.2 –
                  19.0%, depending on the authority. 36

          (b)     Analysis by Boston Consulting Group (BCG) indicates cost overruns for rail
                  may be common as well. 37 Analysis of 25 UK rail projects by BCG indicated
                  that 76% of those projects exceeded their budget, by an average of 41%.
                  Similar analysis by BCG of 51 road projects indicated that 69% of those
                  projects exceeded their budget, by an average of 66%. It notes that large-
                  scale infrastructure projects will typically use a ‘P50 schedule’ when it comes
                  to cost estimates: this means it has a 50% probability of being exceeded. As
                  such, around 50% of projects would be expected to run over budget. It also
                  found that the UK is not an outlier in having frequent and large overruns. 38

2.11      While we place more weight on our own analysis of data gathered from public
          authorities on cost overruns, as this reflects a broader range of projects, both the
          CMA and BCG analyses indicate that cost overruns are a common occurrence,
          and the level of such overruns is often significant.

2.12      Based on the evidence we have examined, our assessment is that the market is
          not currently delivering optimal outcomes in terms of public road and rail
          infrastructure costs, in terms of both overall level of costs and predictability of
          costs.




33 ONS (2021), Productivity in the construction industry, UK: 2021.
34 We note rising input costs have also contributed to these observed trends. For example, UK construction material price

indices rose sharply from 2020 to 2022, in part due to the impact of Coronavirus (COVID-19) and the rise in gas prices
which was then exacerbated by Russia’s invasion of Ukraine. While the rate of increase has slowed since 2022,
construction material prices remain significantly above both their historical level and consumer price inflation indices.
Department for Business and Trade (2025), Construction building materials: commentary February 2025.
35 We note that the data we received covered different proportions of the contracts they had awarded and so the precise

percentages should be treated with caution. For example, for National Highways we received both budget and outturn
data for 29/68 enhancement contracts; of these 29 contracts, 23/29 (79%) had an overrun. For Transport Scotland, 14/20
contracts had sufficient data to analyse overruns; of these 4/14 (29%) had an overrun. Further details of the data and
results are set out in Appendix A. We have not provided an overall average to avoid amalgamating data of different
levels of completeness, which would also disproportionately reflect results from larger authorities.
36 CMA analysis of National Highways, Transport Scotland, the Welsh Government and Northern Ireland’s Department

for Infrastructure’s (DfI) response to the CMA’s information request [].
37 BCG (2024), Improving Infrastructure Delivery in the UK.
38 BCG (2024), Improving Infrastructure Delivery in the UK.




                                                           32
Delivery timescales

2.13      Project delivery overruns are also a common issue for road and railway projects,
          and these delays can increase project costs. Overruns also delay the benefits
          arising from the improved transport infrastructure. Analysis by BCG shows that:

          (a)    For road, based on a sample of 48 UK projects, 58% finished late and, when
                 they finished late, they overran their estimated duration by 29% on
                 average. 39

          (b)    For rail, based on a sample of 27 UK projects, 56% finished late and, when
                 they finished late, they overran their estimated duration by 27% on
                 average. 40

Quality

2.14      Quality of UK public road and rail infrastructure is not easily measured
          quantitatively given the number of relevant factors. We summarise below and in
          Appendix A the evidence we have considered from Department for Transport (DfT)
          and devolved nations’ statistics, ORR analysis and international benchmarking.

          (a)    Data from DfT on the proportion of different roads classified as red 41 shows
                 that for local roads, 5% of ‘A’ roads and 7% of ‘B’ and ‘C’ roads were
                 classified as red in 2025. However, as set out further in Appendix A, there is
                 considerable variation in the proportions classified as red for different local
                 authorities, as well as variation as to whether road conditions have been
                 reported as improving or worsening over time. 42

          (b)    The same source indicated that 4% of motorway and 6% of ‘A’ road in the
                 strategic road network were classified as red in 2025, levels which have been
                 broadly consistent since 2019. 43 However, the number of pavement (ie road
                 surface) defects that National Highways reported in the final year of the
                 second road period (April 2020 to March 2025) was 40% higher than in the
                 first year. 44

          (c)    For the devolved nations, in Northern Ireland, 2.4% of A class roads were
                 categorised as being in poor condition requiring further investigation in 2024-




39 BCG (2024), Improving Infrastructure Delivery in the UK.
40 BCG (2024), Improving Infrastructure Delivery in the UK.
41 A red classification means it should have been considered for maintenance. Treatment may or may not be required,

but the road should be investigated fully. The other classifications are amber (maintenance may be required soon) and
green (no further investigation or work is needed). DfT (2026), Road conditions in England to March 2025.
42 DfT (2026), Road conditions in England to March 2025.
43 DfT (2026), Road conditions in England to March 2025.
44 ORR (2025), Annual Assessment of National Highways' performance: End of the second road period April 2020 to

March 2025, pp46-47.


                                                              33
                 25. 45 Transport Scotland reported that in 2024-2025, 31% of the local
                 authority A road network may require some kind of maintenance, following
                 more detailed examination. 46 The Welsh Government reported that 7.4% of
                 the motorway and 2.6% of the trunk road network is currently in need of close
                 monitoring, as of the end of March 2025. 47

          (d)    For Network Rail, key measures of asset reliability have been broadly steady
                 at the start of its current control period, but ORR has highlighted some
                 variability in this across regions and that this may not be sustained if renewal
                 works are not maintained. It also highlighted concerns over Network Rail’s
                 management of its structures examinations and assessments as these are
                 not being delivered in line with its standards. 48

          (e)    International benchmarking by the Global Infrastructure Investor Association
                 in 2024 shows the proportion of respondents rating infrastructure in Great
                 Britain as very or fairly good was 62% for the major road network, 44% for
                 the local road network, and 51% for rail infrastructure. In each case, these
                 ratings are broadly in line with the reported average for G7 countries. 49

2.15      Overall, whilst there does not appear to be significant public authority concern
          about the quality of road and rail infrastructure, quality indicators used by those
          authorities suggest there is variability in quality and therefore scope for
          improvement. However, it is unclear whether this reflects issues with the initial
          quality of the infrastructure or failures to maintain the infrastructure in a timely
          manner.

Innovation

2.16      Innovation is a broad concept about creating and implementing many new
          products or processes. 50 Promoting innovation is a key driver of productivity and
          economic growth, 51 and the UK government has identified promoting innovation,
          along with investment and the adoption of technology, as key steps to kickstarting
          economic growth. 52

2.17      We have gathered evidence from suppliers’ views and internal documents on their
          current focuses for innovation, public authority initiatives to support innovation, and


45 DfI, The Northern Ireland Road Network and Condition Statistics 2024-25 report has been published today, accessed

on 22/04/26.
46 Transport Scotland (2025), Scottish Transport Statistics 2025, p125.
47 The Welsh Government, Road lengths and conditions: April 2024 to March 2025, accessed on 22/04/26.
48 ORR (2025), Annual assessment of Network Rail 2024 to 2025.
49 Ipsos (2024), Global infrastructure Index 2024, pp11-13.

50 Innovation is defined by the OECD as ‘a new or improved product or process (or combination thereof) that differs

significantly from the unit’s previous products or processes’. OECD (2018), Oslo Manual 2018, Guidelines for Collecting,
Reporting and Using Data on Innovation, 4th Edition, p20.
51 OECD (2018), Oslo Manual 2018, Guidelines for Collecting, Reporting and Using Data on Innovation, 4th Edition,

section 2.4; and G20 (2016), G20 Blueprint on Innovative Growth, p2.
52 Prime Minister's Office, Kickstarting Economic Growth, accessed on 26/02/26.




                                                          34
           publicly available information. Our analysis of this evidence indicates that suppliers
           do compete on innovation, although it may be considered less important than
           other parameters of competition.

2.18       Innovation takes many different forms in these markets, including investment in
           new technologies and processes, and those that reduce the carbon footprint of
           projects. Innovation appears to be more prevalent in road than in rail, at least
           partially due to the regulatory environment and culture in rail.

2.19       Overall, based on the evidence set out in Appendix A, our view is that there is
           scope for the market to deliver higher levels of innovation, for example by ensuring
           innovative ideas are dispersed and taken up in practice, and addressing regulatory
           and cultural barriers to innovation, particularly in rail.


Supply side

2.20       In this sub-section, we consider the supply side of the market, focusing on certain
           indicators of the strength of competition.

2.21       According to ONS and Inter-Departmental Business Registration data, as at Q3
           2024 (the most recent data available), there were 21,680 firms classified as
           working in civil engineering in Great Britain, 6,216 of which were active in
           highways, railways, or bridges and tunnels. 53

2.22       The market is characterised by a tiered arrangement of contractors in the supply
           chain, typically broken down into Tier 1, Tier 2 and Tier 3.

           (a)    Tier 1 contractors tend to be large national businesses which provide
                  services in design and project management alongside some degree of
                  infrastructure project delivery.

           (b)    Tier 2 firms generally subcontract the work from Tier 1 and tend to deliver
                  key work packages relating to their specialism, such as earthworks and
                  surfacing, and often provide the labour to deliver projects.

           (c)    Tier 3 firms tend to be subcontractors for Tier 2 (and sometimes Tier 1), and
                  can vary from smaller local firms that handle specific elements of the work, to
                  larger firms providing raw materials and finished products.

           The tiers are not strictly delineated: some companies may operate across the
           different tiers, depending on the scale and nature of the project, and it is possible
           to have a fourth Tier (or more) on larger projects.




53 Construction statistics annual tables 2024, table 3.7.




                                                            35
2.23       To build an understanding of the way the supply side of the civil engineering
           market functions, we have examined: indicators of concentration and market
           dynamism; the extent to which there are barriers to firms entering the market and
           expanding, which could dampen competition; and the implications of the current
           tiered market structure for effective delivery. Although some aspects of
           competition are not themselves directly observable from the evidence we have (for
           example, we cannot observe the interactions between suppliers and procurers or
           the strength of bids put forward), by looking at a range of indicators in this way, we
           can gauge whether a lack of effective competition may be driving the poor
           outcomes described above.

Market concentration

2.24       As discussed further in Appendix A, to analyse concentration, we have estimated
           the shares of supply for Tier 1 civil engineering firms using a dataset of road and
           rail infrastructure contracts sourced from Barbour ABI. 54 For Northern Ireland, we
           relied on data provided by Northern Ireland’s Department for Infrastructure in
           response to our RFI, as the Barbour ABI coverage was more limited for this nation.
           We have also analysed contract information over the last 10 financial years from
           2015/16 through to 2024/25 inclusive, which we received from public authorities, to
           analyse supplier bidding activity for the UK public road and rail contracts procured
           by them.

2.25       Our analysis of the Barbour ABI data and data from public authorities shows that
           around 15-20 civil engineering firms are active in regularly bidding for public
           authority contracts (although they do not all bid for every contract). As set out in
           more detail in Appendix A:

           (a)    For rail in Great Britain, several players have supplied Network Rail over the
                  last 10 years, none of which have consistently held a greater than 10% share
                  of supply throughout the 10-year period and no one supplier stands out as
                  having consistently the highest share. 55

           (b)    For National Highways contracts (which cover strategic roads in England),
                  four large suppliers accounted for [50-60]% of the total contract value for the
                  10 years we examined. National Highways stated that contract value may
                  overstate shares of supply as it does not represent actual incremental spend



54 The Barbour ABI data set includes contract values at the point of award for civil engineering projects in road and rail in

the UK in the last ten years. It is an aggregation of data that is available in the public domain and, as such, it may not
include all expenditure in the market. For example, some work that is allocated to a supplier under a framework
agreement may not be captured by our analysis, and any cost overruns that exceed the initial contract value are not
captured.
55 The analysis described above is focused on shares of supply. With regard to bidding analysis for Network Rail, we only

received information on a subset of contracts from Network Rail which generally had smaller value contracts. We
therefore do not put weight on the results of the bidding analysis, and instead focus on shares information.


                                                             36
                 with the supplier. 56 We accept that concentration may be lower than indicated
                 by our dataset, but in any event do not consider this analysis to indicate
                 problematic levels of concentration. Bidding analysis for National Highways
                 enhancement contracts 57 shows that, where work was allocated through
                 competition (rather than directly awarded to suppliers already on a
                 framework), there were on average six bidders competing for each contract,
                 although this number varies depending on the type of contract or framework.

          (c)    Concentration in the nations is more difficult to assess given there are fewer
                 contracts year to year. However, overall, there appears to be a number of
                 large Tier 1 firms competing for contracts in Scotland, Wales, and Northern
                 Ireland. Bidding analysis for public road contracts offered by Transport
                 Scotland, Northern Ireland’s Department for Infrastructure, and the Welsh
                 Government indicates that the average number of bidders these contracts
                 attracted is generally between three and five, although this was not the case
                 for all types of contracts.

2.26      Taken together, the evidence above does not point to concerning levels of
          concentration. However, this is not sufficient for us to conclude that competition is
          strong in this market. As we explain in Appendix A, there are a number of
          limitations to the shares and bidding data and the analysis it allows us to
          undertake – for example, in not allowing us to consider competition in more
          specific geographies or below Tier 1. Moreover, the existence of multiple bidders
          for contracts does not rule out the possibility of weak competition: having several
          bidders is a necessary but not sufficient condition for a competitive tender process.

Business dynamism

2.27      In order to examine business dynamism, 58 we have considered rates of entry and
          exit, data on the evolution of entrant turnover, findings from our market research
          and rank persistence of large firms over time.

2.28      As set out in Figure 3.1, rates of firms entering and exiting civil engineering 59 – a
          common indicator of market dynamism – have fallen over the last 20 years. Civil
          engineering now appears to be more closely aligned with the wider economy,
          having previously outperformed the wider economy on this measure of dynamism.


56 National Highways indicated its data on actual supplier spend shows lower concentration. We have not relied on

National Highways’ data as it appears to include spend with non-civil engineering firms, but we accept that concentration
on this metric may be lower than indicated by our dataset.
57 National Highways did not provide data on renewals or maintenance contracts. This data therefore represents a

narrower set of projects than contained in the Barbour ABI dataset.
58 When a market is working well, more productive firms are able to displace less productive ones and there is a

continuous process of resources being reallocated in line with competitive forces. This is often referred to as ‘business
dynamism’.
59 We note that civil engineering includes activities relevant to our market study – construction of roads and motorways,

construction of railways and underground railways, construction of bridges and tunnels – but also activities relating to
other infrastructure like energy and water.


                                                           37
           This indicates that, as fewer firms enter and exit the market, competitive pressure
           on incumbent firms may be lessening. We also note that the entry rate is typically
           higher than the exit rate, which means that the active business population is
           expanding. This could be a reflection of a growing market, but it may also suggest
           less economically viable firms do not exit the market (acting as a drag on
           productivity).

Figure 2.1: Civil engineering and UK whole economy entry and exit rates, 2005 to 2021




Source: CMA analysis of data from Longitudinal Business Databases (2004-2021)


2.29       As an alternative approach to assessing business dynamism, we have also
           considered whether new entrants – defined as firms with no revenue recorded in
           the Barbour ABI dataset 60 in any of the preceding years – are able to expand their
           activities in future years and displace incumbent civil engineering firms (see Figure
           3.2).

2.30       The charts show that entrants win a reasonable amount of business in the year
           they enter, but this often falls off in subsequent years. This indicates that, in both
           road and rail, new entrants are able to break into the market, but there appears to
           be a pattern of firms winning minimal further work subsequent to their initial entry.
           Although this may be due to limitations with our dataset, and the annual volatility
           will in part reflect the multi-year nature of many contracts, this analysis could also
           indicate that firms struggle to maintain or grow their presence in this sector. We
           consider in the next section the barriers firms may face in expanding, which also
           supports that firms face barriers to growing.

2.31       The difficulties faced by entrants and smaller firms in growing, particularly more
           recently, were also highlighted in our market research. In our qualitative research,
           participants from Tier 2 and 3 firms reported changes in public road and rail
           markets over the last five years, many of which seemed to be having an adverse


60 As previously noted, the Barbour ABI data set includes contract values at the point of award for civil engineering

projects in road and rail in the UK in the last ten years. It is an aggregation of data that is available in the public domain
and, as such, it may not include all expenditure in the market. Further, our analysis is based on the total contract value at
the point of tender being awarded, excluding contracts relating to HS2 (as well as private sector clients). It therefore does
not reflect the extent to which new entrants are able to win subcontracts in the wider supply chain.


                                                              38
           effect, including an increasing sense of unpredictability, a reduction in the amount
           of enhancement work compared with renewals and maintenance, and processes
           around commissioning becoming more bureaucratic and time-consuming. These
           trends were leading to financial uncertainty in some firms and making it more
           difficult for some smaller firms to compete, putting pressure on pricing, the ability
           to attract and retain talent, and making it harder to enter new markets. They
           reported that these developments also drove consolidation, with large civil
           engineering firms acquiring smaller firms to build their capacity, skill base and
           resilience. 61

Figure 2.2: Civil engineering new entrant turnover evolution, 2018 to 2025




Source: CMA analysis of Barbour ABI data


2.32       We have also calculated rank persistence, which measures the fraction of the
           largest firms in the market that can maintain their position over an extended
           period. Higher rank persistence tends to point to lower dynamism and weaker
           competition.

2.33       In Figure 3.3 below, we present average rank persistence in civil engineering of
           the top 10 firms, in terms of turnover, in civil engineering and the whole UK
           economy.




61 Jigsaw Research (2026), Qualitative Research with Civil Engineers, p7.




                                                          39
Figure 2.3: Civil engineering and UK whole economy average rank persistence, 1997 to 2022




Source: CMA analysis of data from Business Structure Database (1997-2022)
Note: Rank persistence is calculated based on the top 10 firms in terms of turnover and considers a three-year window. For example, a
rank persistence of 0.25 means that a quarter of the firms in the top 10 today were also in the top 10 in each of the three previous years.


2.34        Average rank persistence in civil engineering has typically been below the UK
            economy-wide level over the period. Although it is now higher than it was at the
            start of this period, potentially indicating that there is less replacement of civil
            engineering firms at the very top, it may be that the earlier data points in the
            series, in 2011 and 2012, are influenced by post-financial crisis volatility.

2.35        To further explore persistence at the top, we have examined the shares of supply
            of the top suppliers based on the total contract value at the point of tender being
            awarded, excluding contracts relating to HS2 (as well as private sector clients).
            We defined the largest 20 firms as those with the greatest total revenue over the
            period 2016 to 2025, across both road and rail. To account for the infrequent
            nature of procurement activity, we considered a three-year rolling average.

Figure 2.4: Civil engineering top 20 suppliers share of supply, 2018 to 2025




                                                                   40
Source: CMA analysis of Barbour ABI data.


2.36       Our analysis suggests that established firms tend to win a large fraction (often the
           majority) of the contracts awarded each year (particularly in rail), but this is spread
           among a relatively large group of suppliers.

2.37       Overall, our evidence indicates that there are many competitors active in the
           sector, some of which are large, although it may be difficult for new or smaller
           firms to scale sufficiently so they can break into this group. Civil engineering is not
           out of line with the wider economy on these metrics, but had previously shown
           higher levels of dynamism, particularly as measured by entry and exit. There
           therefore appears to be some potential for market dynamism to increase, which
           would strengthen competition between firms. Greater levels of competitive
           pressure would incentivise firms to bring down costs and/or increase quality in
           order to win contracts. Compounding over time, improving these incentives would
           be expected to boost the productive capacity of the sector.

Barriers to entry and expansion

2.38       Our findings on business dynamism, particularly declining entry rates and the
           indication that firms may face difficulty scaling up, could indicate that there are
           barriers to firms entering and expanding in this sector. In order to examine such
           barriers, we have gathered information from market participants to understand the
           types of barriers encountered by firms and the extent to which they may be
           inherent or influenced by the behaviours of market participants.

2.39       In the civil engineering market, some barriers are to be expected as a natural
           consequence of the nature of the activity, such as the availability and costs of
           employing staff with the necessary skills, or the upfront costs of equipment and
           materials. Given the upfront investment required, the market is also likely to exhibit
           economies of scale. As set out in more detail in Appendix A, many of the Tier 1
           and Tier 2 firms we engaged with considered costs to enter and expand 62 and
           economies of scale to be barriers to entry and expansion, and some also
           highlighted access to inputs (such as specialist labour and raw materials). 63 Many
           respondents to the question on barriers in the interim report commented that
           barriers to expansion were more significant for suppliers than barriers to entry
           (although we note that several of these responses came from incumbent




62 These costs included both investments in capital and procurement and regulation-related costs, such as resources to

plan bids and accreditation costs.
63 Responses to the CMA’s information requests [].




                                                          41
          suppliers). 64 However, other respondents disagreed, indicating that both entry and
          expansion barriers are important. 65

2.40      Barriers to expansion commonly identified by industry stakeholders include:

          (a)    a lack of incentive to invest due to pipeline uncertainty66

          (b)    onerous requirements for tenders, including disproportionate administrative
                 and insurance burdens; 67

          (c)    procurement strategies prioritising cost and risk minimisation over quality and
                 thus discouraging long-term capability building and investments; 68

          (d)    low margins experienced by small suppliers and Tier 1 firms, which restrict a
                 firm’s ability to invest and scale; 69 and

          (e)    firms that secure a place on frameworks receiving less work than anticipated,
                 which undermines the economic rationale for expansion. 70

2.41      Some practices in the market may also disproportionately affect small or entrant
          firms more than others, acting as barriers to growth and scaling up as well as
          making entry more difficult. We discuss these elsewhere in the report but for
          example:

          (a)    How public authorities undertake procurement could either directly or
                 indirectly favour large firms or those with whom they have existing
                 relationships. We consider this in the procurement section below.




64 Balfour Beatty, BAM Nuttall, CECA, Laing O'Rourke, TICS, and Rail Forum’s responses to the CMA’s interim report,

question 1; RIA's response to the CMA’s interim report, p3.
65 NEPO noted not all SMEs want to expand, but there are barriers to small firms maintaining a sustainable level of

success. NEPO's response to the CMA’s interim report, question 1. Amey recognised there are barriers to expansion,
but considered these are inherent to the market such as the fact that there are minimum levels of capital and technical
resource required not just to demonstrate credibility, but to be able to quickly mobilise on projects as well. Amey's
response to the CMA’s interim report, question 1. SCAPE considered barriers to entry and expansion are closely linked
and should be considered with equal importance. SCAPE's response to the CMA’s interim report, question 1. Mott
MacDonald also considered both entry and expansion are equally important to the health of the market. Mott
MacDonald's response to the CMA’s interim report, question 1. ACE reported split views among its members, with some
seeing entry and expansion barriers as equally important and others seeing expansion barriers as more critical. ACE's
response to the CMA’s interim report, question 1.
66 Balfour Beatty, BAM Nuttall, CECA, Laing O'Rourke, SCAPE, and Skanska’s responses to the CMA’s interim report,

question 1. Sector panel members agreed that lack of pipeline certainty has an impact on the willingness of firms to
invest in graduate and apprentice schemes. Note of meeting with the sector panel [].
67 FSB, ACE, and Balfour Beatty’s responses to the CMA’s interim report, question 1.
68 CECA, Balfour Beatty, RIA, and BAM Nuttall’s responses to the CMA’s interim report, question 1. Sector panel

members observed that EU contractors have stronger vertical integration, higher margins, and self-delivery capacity,
while the UK employs a lowest-cost model with UK firms relying heavily on supply chains. Note of meeting with the
sector panel [].
69 CECA, Laing O’Rourke, and Costain’s responses to the CMA’s interim report, question 1; Note of meeting with ICE

[].
70 CECA; Laing O’Rourke; Balfour Beatty; and RIA’s responses to the CMA’s interim report, question 1. Some sector

panel members echoed that centralised frameworks act as pooling tools, though work does not always consistently
materialise. Note of meeting with the sector panel [].


                                                          42
           (b)    Regulatory requirements may be more difficult to navigate for smaller
                  businesses or those less familiar with how the requirements work. We
                  consider this in the regulation section below.

2.42       There does not appear to be a clear distinction between inherent barriers in the
           market and those which are influenced by market participants. Instead, we found
           that barriers which are inherent to the proper working of the market may be
           exacerbated by the behaviours of market participants. For example:

           (a)    There will usually need to be some form of bidding process to choose
                  suppliers, which will require firms to have the technical and commercial
                  expertise to put together a credible bid.

           (b)    Getting access to such expertise can present a barrier for new firms, but one
                  which is necessary to ensure they are capable of undertaking the work.

           (c)    Where bidding processes are unnecessarily or disproportionately onerous,
                  this would increase the expert resources firms need to be able to compete,
                  which is likely to disproportionately affect new or smaller firms.

           (d)    Even where smaller firms have access to expertise, being seen as credible
                  by public authorities to expand beyond a certain size or specialism, given the
                  level of resources needed, may also act as a barrier to expansion. 71

2.43       Overall, firms appear to face barriers to entering and expanding in the market.
           Some of these barriers are inherent to the market – for example, the need for a
           certain level of capital and expertise to be credible. However, the extent of these
           and other barriers are influenced by actions on the demand side. Our analysis set
           out in the rest of the report has largely focused on those which we consider could
           reasonably be reduced through different behaviours which still meet the underlying
           need of the procurer or regulation. Different approaches on the demand side may
           therefore be able to reduce these barriers and support greater competition.

Subcontracting

2.44       Subcontracting is a ubiquitous feature of the delivery of civil engineering projects 72
           for road and railway infrastructure in the UK, leading to multi-tiered supply chains




71 There is not a clear delineation between the different tiers in the supply chain. However, Tier 1 seems to be regarded

as somewhat distinct: in our market research, participants sometimes described their firm as operating at Tier 2 even
where it is directly commissioned by the public authority – for example, due to the size or specialism of the work it can
undertake in that role. Some participants in our market research whose generalist Tier 2 firms were looking to expand
and pick up more of the larger, principal contractor roles currently going to Tier 1s, felt their size either explicitly or
implicitly prevented them from pursuing those large contracts. These participants felt the only thing distinguishing their
firms from the Tier 1s was size, rather than skillset. Jigsaw Research (2026), Qualitative Research with Civil Engineers,
p26.
72 As set out in Appendix A, even small projects can have multiple subcontractors involved.




                                                            43
          for most major projects. In this section we consider whether the prevalence of
          subcontracting may be contributing to poor outcomes.

2.45      As set out further in Appendix A, those seeking to procure subcontractors’ services
          will generally use competitive selection practices and target receiving multiple
          bids. However, choice can sometimes be limited, for example when specialist
          skills and equipment are required.

2.46      CMA analysis of data from Barbour ABI on subcontracting activity by the top 9 Tier
          1 firms73 between 2016 and 2025 indicates that the firms have preferred
          subcontractors, which may increase efficiency but may also inhibit other
          subcontractors from gaining access to Tier 1s they have not worked with
          previously. 74 This also aligns with evidence received from stakeholders, as set out
          in Appendix A, that relationships are important in this market, both between
          contractors at different levels of the supply chain, and between subcontractors and
          the public authority, which can lead to softer competition in some cases.

2.47      As set out in Appendix A, we recognise that there are many benefits to firms and
          public authorities of subcontracting, including allowing flexible access to skills and
          resources and increasing competition among subcontractors (including by
          providing an entry point for new firms). Multiple Tier 1 firms told us that they have
          measures in place to mitigate subcontracting inefficiencies, as also discussed
          further in Appendix A. 75

2.48      However, drawing on the relevant literature and our stakeholder engagement, we
          have identified several ways that the structure of the supply chain for civil
          engineering of road and railway infrastructure could contribute to worse market
          outcomes. As set out in more detail in Appendix A, these include:

          (a)     Challenges in coordinating inputs across multiple tiers/ subcontractors, and in
                  assuring the work, leading to longer delivery timelines, higher risk, and higher
                  costs/ prices. 76

          (b)     The application of margins and overheads by each individual firm at different
                  tiers of the supply chain contributing to higher costs/ prices. 77




73 The analysis is based on nine of the ten top Tier 1 players because one did not have any qualifying projects for the

analysis.
74 All of the top 9 Tier 1 firms undertook some degree of subcontracting to their own subsidiaries, and at least 75% of

each Tier 1’s subcontractors only worked with one of the top 9 firms over the period. See appendix A for further
information.
75 Responses to the CMA’s information requests [].
76 Responses to the CMA’s information requests []; Balfour Beatty’s response to the CMA’s invitation to comment,

question 6.
77 Responses to the CMA’s information requests [].




                                                            44
          (c)     Difficulties in implementing consistent quality standards across multiple
                  subcontractors. 78

          (d)     Difficulties in aligning incentives throughout the supply chain where there are
                  more levels and different business models involved. 79

          (e)     The comparatively small size of firms may mean they are more restricted in
                  their available capital, restricting their ability to take on risk and invest. 80

2.49      We do not have evidence as to how often the downsides of subcontracting
          outweigh its benefits, and so whether the net impact of subcontracting on market
          outcomes is negative. However, we consider it likely subcontracting contributes to
          poor outcomes on at least some occasions.

2.50      Multiple firms stated a preference to self-deliver where possible, although only two
          Tier 1 firms, Laing O’Rourke and Murphy, said they self-deliver the majority of their
          work. 81 This implies there may be factors inhibiting firms from using self-delivery
          as much as they would prefer.

2.51      As discussed further below in the procurement section, this fragmentation in the
          supply chain is to some extent a reaction to the circumstances firms face,
          particularly the uncertainty over future resourcing needs given the lack of clarity
          over long-term pipelines of work. 82 Firms may therefore not have sufficient
          confidence that projects will actually proceed, with sufficient funding attached, to
          make investments in their own assets and resources in anticipation of delivering
          those projects.

2.52      Overall, firms often choose to subcontract, forming tiered supply chains. While this
          has some advantages, for example where it gives more flexible access to
          specialist resources, it also brings disadvantages where the costs of coordinating
          different suppliers and aligning standards and incentives outweigh these gains.
          There is also a balance in how firms choose to subcontract: relying on
          subcontractors with which a Tier 1 or public authority has a long-standing
          relationship can ease some of the inefficiencies in having separate suppliers at


78 Responses to the CMA’s information requests []; Murphy’s response to the CMA’s invitation to comment, question 6.
79 NIC highlighted that the incentives of Tier 1 firms – which tend to own little capital and instead charge for staff time,

and so potentially incentivised to prolong projects – are different to those of lower tiers in the supply chain which own
capital and face incentives to deploy this continuously, delivering on time and minimising downtime between projects.
Designing a commercial strategy which works for all tiers throughout a project’s life requires clients with high levels of
expertise. NIC, (2024), Cost Drivers of Major Infrastructure Contracts in the UK, p37.
80 BCG stated “The fragmented nature of the UK construction sector often means multiple small construction firms are

required. This not only increases costs and complexity on individual projects, but also means none of the firms have the
incentive or even ability to invest in capital/technology improvements that would benefit the industry at large.” BCG
(2024), Improving Infrastructure Delivery in the UK.
81 Laing O’Rourke’s response to the CMA’s information request []; Note of meeting with Murphy []; Responses to the

CMA’s information requests []; Note of meeting with [].
82 See for example M Group, Laing O’Rourke, Balfour Beatty, Amey, Kier, RIA, Costain, ACE, and Mott MacDonald’s

responses to the CMA’s interim report, question 2; NIC, (2024), Cost Drivers of Major Infrastructure Contracts in the UK,
p36.


                                                            45
           different tiers in the supply chain, but may also reduce the degree of competition
           between subcontractors.

2.53       The widespread use of subcontracting appears to be at least partially driven by
           behaviour on the demand side (specifically a lack of certainty over future demand),
           which reduces the incentive for firms to invest in holding their own capital and
           labour even where it would otherwise be beneficial for them to do so. To the extent
           that subcontracting is carried out to a greater degree than would be optimal, this
           will contribute to negative outcomes.


Demand side

2.54       In this sub-section, we provide an overview of the demand side of the market. This
           comprises the public sector, disaggregated into local and national procuring
           authorities.

2.55       Across the UK, the public sector spends approximately £19 billion a year on
           maintaining and enhancing public roads and railways (excluding HS2). 83 We
           estimate that in 2023-24 total annual expenditure on public roads was about £10.3
           billion, with about £8.7 billion spent on railways. It is more difficult to gauge the
           respective share of project types (enhancement, renewals, and maintenance), as
           definitions can vary, but in the case of National Highways and Network Rail,
           enhancements accounted for around 55% and 27% of annual spend respectively.

2.56       The UK government and devolved governments act as project sponsors for public
           road and railway infrastructure projects, setting the policy agenda and funding
           settlement. Major cross-Great Britain rail projects are procured by the UK
           government, while development of strategic roads and local rail infrastructure is
           devolved to the Scottish Government, the Welsh Government, and the Northern
           Ireland Executive. The UK government and devolved governments are also
           responsible for setting the regulatory frameworks and planning systems for
           infrastructure projects and, in the case of some large infrastructure projects,
           considering planning applications.

2.57       Road and railway infrastructure is procured by a range of public authorities across
           the UK. For public road:

           (a)    In England, National Highways is responsible for operating, maintaining and
                  improving the strategic road network (ie motorways and major A roads).
                  Local authorities tend to be responsible for the enhancement and
                  maintenance of local roads.




83 Our market study does not directly consider HS2 as it has been subject to multiple reviews already, and the unique

scale of the project limits the applicability of any lessons more broadly.


                                                              46
          (b)    In Scotland, Transport Scotland is responsible for managing, maintaining,
                 and improving the strategic road network. Local authorities tend to be
                 responsible for the enhancement and maintenance of local roads.

          (c)    In Wales, the North and Mid Wales Trunk Road Agent and South Wales
                 Trunk Road Agent are responsible for managing, maintaining, and improving
                 the strategic road network. Local authorities tend to be responsible for the
                 enhancement and maintenance of local roads.

          (d)    In Northern Ireland, the Department for Infrastructure is responsible for the
                 enhancement and maintenance of road infrastructure.

2.58      For railways:

          (a)    In Great Britain, Network Rail owns, repairs, and develops most railway
                 infrastructure. Local authorities also have responsibility for light rail
                 infrastructure (eg trams).

          (b)    The Welsh Government and Transport for Wales also manage some railway
                 infrastructure.

          (c)    In Northern Ireland, Translink is responsible for managing the rail network.

          (d)    The UK government has announced its intention to legislate to establish
                 Great British Railways, which would be responsible for rail services and
                 infrastructure. 84

2.59      Local authorities account for over half (£5.6 billion in 2023-24) of the spending on
          roads, with the remainder being procured by national public authorities.
          Procurement of railway infrastructure, on the other hand, is mostly undertaken by
          national public authorities. A breakdown of expenditure is included in Appendix A.

2.60      Civil engineering projects are generally procured through bidding processes, either
          for one-off requirements or as part of broader programmes or portfolios of work.
          Public road and rail civil engineering contracts tend to be of relatively high value
          and long duration compared to those in other types of market.

2.61      We explore the impact of the procurement approaches and processes further in
          chapter 3.




84 DfT (2025), Great British Railways and the public ownership programme.




                                                         47
3.    Procurement

Introduction – how public procurement shapes this market

3.1   Public procurement plays a fundamental role in shaping market dynamics and
      behaviour by suppliers, both at the market- and project-level:

      (a)   Governments set the overall strategy for road and rail infrastructure. They
            also make decisions on public authority funding (for both capital and
            procuring authorities’ current resources), and public procurement policy and
            regulations. Taken together, this sets the environment and constraints in
            which procuring authorities work.

      (b)   Governments – and procuring authorities within their areas of authority –
            shape expectations of future demand by setting out their strategic aims and a
            pipeline of projects, which the market then responds to in making its own
            plans, including for investment.

      (c)   For individual projects, procuring authorities set the project requirements, the
            procurement method and the award criteria, which set the parameters of
            competition for suppliers. Procuring authorities may then seek to maintain
            competitive pressure during the delivery phase. These project-level decisions
            not only impact individual project outcomes but have an aggregate impact on
            incentives within the market, including incentives to expand, invest, and
            innovate.

3.2   In the following sections, we examine:

      (a)   how pipeline uncertainty may be undermining long-term planning which
            would drive efficiency and investment, and leading to poor outcomes on
            individual projects. We find that there are a range of missed opportunities
            and incentives for the public sector to more actively and collectively set
            incentives that shape the market. Further, a combination of short-term
            funding pressures, uncertainty over longer-term budgets, and changing
            government priorities undermines long-term planning by both public
            authorities and the supply chain.

      (b)   how procurement policy and approaches may be raising barriers to
            expansion, impacting investment and delivering poor outcomes. We find that
            procurement approaches do not consistently drive long-term value, actively
            shape the incentives for firms nor harness effective competition, with a
            recurring challenge around inconsistent adoption of best practice.

      (c)   how public authority capacity constraints may be impeding their ability to
            make choices which drive the best long-term value from projects. We find


                                            48
                  that public authorities can struggle to build, recruit, and retain sufficient
                  procurement and engineering capabilities to drive better outcomes, and miss
                  opportunities to coordinate in ways which could help to alleviate these
                  constraints.


Pipeline uncertainty

3.3       The forward pipeline of work will determine what public authorities will be trying to
          procure, and what firms will therefore be competing to provide. When working well
          it is a clear signal to the market about future opportunities, which we would expect
          to incentivise firms to invest in their capability and capacity in order to compete for
          future opportunities rather than seeking to subcontract this in. We have therefore
          examined the nature of pipeline visibility in this market, in particular in this section:

          (a)     we describe the way national and local public authorities’ strategy, funding
                  and pipelines are set and review recent developments to improve pipeline
                  visibility;

          (b)     we look at the impact of this approach for public authorities, particularly local
                  authorities; and

          (c)     finally, we consider the impact that the present situation has on firms’ ability
                  to plan and invest.

Pipeline strategy, funding and visibility

3.4       A range of strategies guide the overarching approach to public road and rail
          infrastructure:

          (a)     NISTA was established in 2025 to address systemic challenges in the UK
                  Government’s infrastructure system, in part through combining expertise in
                  strategy and delivery under one organisation. 85 In June 2025, NISTA
                  published its 10-year Infrastructure Strategy, which represents a significant
                  commitment to long-term planning across all areas of infrastructure.

          (b)     For rail, the UK Government is legislating to introduce a Long-Term Rail
                  Strategy 86. If this becomes law, it would set out strategic objectives for the
                  railway over a 30-year period.




85 HM Treasury and NISTA, Government ushers in new era for UK infrastructure delivery, accessed on 28/04/26.
86 DfT (2025), Railways Bill factsheet: the Long-Term Rail Strategy.




                                                           49
           (c)    The Scottish Government has been consulting on a 10-year Infrastructure
                  Strategy, which proposes a framework to guide investment across economic,
                  social and natural infrastructure. 87

           (d)    The Welsh Government published a 10-year Infrastructure Strategy in 2021,
                  with a rolling programme of Infrastructure Finance Plans to set out the focus
                  of infrastructure investment across 16 strategic outcomes. 88

3.5        Evidence we have gathered points consistently to the need for improved sector
           planning and more proactive market-shaping. While some of the older evidence
           may have influenced the strategies above, the totality of evidence indicates more
           is needed:

           (a)    In responses to our interim report, several stakeholders emphasised that a
                  clear, credible and funded multi-year pipeline would enable firms to plan
                  resources, invest in skills and innovation, and reduce inefficient peaks and
                  troughs. 89

           (b)    The NIC identified a lack of strategic direction as a root cause for systemic
                  failures in its cost drivers of major infrastructure projects report. 90

           (c)    In its annual report, NISTA noted that the delivery of infrastructure in the UK
                  has long been challenged by complexity and fragmentation. 91

           (d)    ICE recently called for a more joined-up approach to infrastructure-related
                  policy making across government, with clear roles and responsibilities for
                  delivery, and also highlighted that growth sectors identified in the industrial
                  strategy will need the right infrastructure in place to flourish. 92

3.6        We have also identified international examples where other countries have put in
           place greater public sector coordination and longer-term planning in road and rail
           infrastructure to drive better outcomes. For example, the Republic of Ireland has
           the National Roads 2040 Strategy to set long-term investment priorities 93 and the
           Australian infrastructure plan commits to a planning horizon of at least 40 years for
           very large transport investments. 94 More detail of international examples are set
           out in Appendix B.

3.7        The strategies set out by the UK, Scottish and Welsh Governments and NISTA are
           complemented by funding cycles that enable government procuring authorities to


87 The Scottish Government, Infrastructure Strategy 2027-2037: consultation, accessed on 28/04/26.
88 The Welsh Government (2025), The Wales Infrastructure Investment Strategy.
89 Balfour Beatty p1, Skanska pp1-2 and Transport Scotland’s p2 responses to the CMA’s interim report.
90 NIC (2024), Cost drivers of major infrastructure projects in the UK, p17.
91 NISTA (2025), NISTA Annual Report 2024-25.
92 ICE’s response to the CMA’s interim report, question 3, p3.
93 Transport Infrastructure Ireland, National Roads 2040 Final Report, accessed on 11/05/26.
94 Infrastructure Australia, 2021 Australian Infrastructure Plan, accessed on 10/04/26.




                                                             50
          set out their strategic aims and a pipeline of projects. Overall, the funding
          landscape is fragmented and complex. Funding cycles vary across the road and
          rail sectors, across the devolved nations, and across national and local projects.

3.8       For major road projects:

          (a)    National Highways has a 5-year funding pipeline, which in principle should
                 allow for longer term planning and visibility of future projects. However,
                 National Highways noted that, at spending reviews, government sometimes
                 changes its level of funding and priorities for road infrastructure for the next
                 or current 5-year spending period term (known as the Road Investment
                 Strategy (RIS) period), including cancelling projects. 95 This can significantly
                 impact National Highways’ ability to plan and continue with the preparatory
                 work on projects that are part of a visible pipeline during the current RIS
                 period. 96 For example, early engagement before funding is confirmed may
                 raise expectations which cannot be met, which can undermine trust. National
                 Highways stated that giving as much certainty as possible over 5-year
                 periods will deliver the best benefits long term to road users.

          (b)    Transport Scotland has a 4-year funding pipeline, although there are multiple
                 annual budget settlements within Transport Scotland’s pipeline period. The
                 constraints placed by annual budget dependencies makes it difficult to plan a
                 pipeline of projects.

          (c)    The Welsh Government and Northern Ireland’s Department for Infrastructure
                 primarily have annual pipeline and budget lengths. 97 This makes it difficult for
                 them to undertake long-term planning, and to structure and group future
                 projects effectively.

3.9       For local road projects:

          (a)    Local authorities are responsible for procuring local road projects in England,
                 Scotland and Wales. In England, in December 2025, the Government
                 announced £7.3 billion of capital funding for local highways maintenance in
                 England over the four-year period from 2026-27 to 2029-30. 98 Although
                 previous spending reviews set indicative multi-year totals, DfT had historically




95 ORR (2025), Annual Assessment of National Highways' performance: End of the second road period April 2020 to

March 2025, p34.
96 National Highways’ response to the CMA’s information request [].

RIS3 was due to start on 1 April 2025 but has been delayed starting until 1 April 2026. This delay allowed the
government to assess and set priorities for the road network as part of the 2025 Spending Review. An interim settlement
was put in place for 2025-26 to fund National Highways. DfT (2025), Interim Settlement: Investment and management of
the strategic road network from April 2025 to March 2026.
97 The Northern Ireland Department of Finance has indicated plans for a multi-year funding model in its draft Budget for

2026-29/30. Minister of Finance (2026), Public Expenditure: Proposed Draft Budget 2026-29/30, p3.
98 DfT, Highways maintenance block: formula allocations 2026 to 2030, accessed on 27/04/26.




                                                          51
                 confirmed individual authority allocations only annually. 99 The new settlement
                 provides confirmed allocations across the full four-year period, and extends
                 the highways maintenance block to London boroughs and the City of London
                 for the first time, giving all local highway authorities in England multi-year
                 capital funding certainty. Further, we understand that previously local
                 authorities must assemble funding from different sources 100 often with
                 different requirements on how the funding can be used, which further
                 complicates their ability to develop an overall plan for the best use of their
                 available funds. 101 We understand that the change to funding approach
                 described above should also alleviate this concern. We note that as this is a
                 recent change, it is too soon to tell whether it will be implemented in a way
                 which has the desired effect of ‘enabling [local authorities] to better plan
                 ahead and move away from expensive, short-term repairs and to invest in
                 proactive and preventative maintenance’. 102

          (b)    By contrast, road maintenance is a devolved responsibility in Scotland and
                 Wales, where local authorities continue to receive funding through annual
                 settlement circulars – the Welsh Government's Revenue Support Grant and
                 the Scottish Government's General Revenue Grant – with no multi-year
                 equivalent in place in either nation. 103, 104 As for major roads, this limits the
                 ability for local authorities to plan ahead and commit to future projects.

3.10      For rail projects:

          (a)    Network Rail is responsible for the rail infrastructure in Great Britain and has
                 a 5-year funding and pipeline period, known as a Control Period (CP), set by
                 the UK government. Similar to National Highways, this should allow for better
                 forward planning. However, Network Rail told us that enhancement projects
                 are generally funded on a project-by-project basis outside the CP due to
                 uncertainty and work bank variability. 105 Network Rail stated that



99 NAO, The condition and maintenance of local roads in England, accessed on 27/04/26. The 2024 NAO report – the

condition and maintenance of local roads in England – found that DfT’s funding for local roads has generally been short
term and provided through multiple funds. Although spending review settlements include multi-year annual totals for local
road maintenance, DfT only provided certainty over total funding to the majority of local authorities on an annual basis.
The exception is DfT’s City Region Sustainable Transport Settlement (CRSTS), which provided transport funding,
including for local road maintenance, to eight combined authorities in five-year periods.
100 NAO found DfT had provided funding to local authorities through multiple funds over the preceding decade, including

six block funds and two top-up funds distributed based on road network length; three competitive funds which local
authorities bid for; and one incentive fund. It also noted funding had become more fragmented over time: in 2015-16,
73% of funding was through the Highways Maintenance Block, but this fund accounted for only 32% in 2024-25. NAO,
The condition and maintenance of local roads in England, p24, accessed on 30/04/26.
101 Note of meeting with the sector panel [].
102 DfT, Highways maintenance block: formula allocations 2026 to 2030, accessed on 27/04/26.
103 The Welsh government, Written Statement: Final Local Government Settlement 2026-27, accessed on 27/04/26.
104 The Scottish Government, Local government finance circulars, accessed on 27/04/26.
105 Network Rail’s response to the CMA’s information request [].

Enhancements are funded through the Rail Network Enhancement Pipeline in England and Wales, and in Scotland
through the Scottish Government appraisal process outlined in the Rail Enhancements and Capital Investment Strategy.
(Network Rail, Our Control Period 7 (CP7) delivery plans, accessed on 11/05/26).


                                                           52
                  enhancements are often drip-fed funding which can lead to non-optimal
                  solutions and a stop/start nature to the work. 106

           (b)    For Northern Ireland, Translink 107 is responsible for holding and managing
                  property assets of Northern Ireland Railways, 108 and has an annual pipeline
                  based on the annual budget cycles of the Northern Ireland Executive. As for
                  roads projects, this period is too short to allow for long-term planning.

3.11       In July 2025, NISTA introduced a new platform – called the Infrastructure Pipeline
           – that provides industry with some details of planned major capital projects,
           including major road and rail projects. In March 2026 it published an updated
           version with additional information included – information it plans to expand on
           further. 109 However, NISTA makes clear that it does not reflect a fully
           comprehensive view of the pipeline of UK road and rail projects, and does not
           imply certainty of funding. 110 The Infrastructure Pipeline contains fewer projects in
           Scotland, Wales and Northern Ireland, although NISTA intends to improve links
           between each nation’s lists of infrastructure plans 111 and the UK government's
           Infrastructure Pipeline.

3.12       As we set out in Appendix A, the information available on different pipelines across
           the nations varies. For example, across all the nations, published pipelines include
           information on budget and process timings, but only some break down the pipeline
           by sector or region. Consultation responses to our interim report proposed a range
           of additional information which would help potential suppliers make informed
           investment and broader business planning decisions; this is discussed further
           below and in Appendix B.

3.13       Overall, the combination of short-term funding pressures, uncertainty over longer-
           term budgets, and fragmented and changing government priorities is acting as a
           barrier to strategic planning and engagement with suppliers.

Public Authorities’ pipelines

3.14       The issues with funding certainty described above have a number of impacts on
           public authority decision making. It is driving decision-makers in public authorities

106 Network Rail’s response to the CMA’s information request [].

Network Rail Scotland told us for their enhancements projects they are constrained by the annual funding allocation
which can mean they need to take a phased approach to how they deliver projects that span multiple years. Note of
meeting with Network Rail [].
107 Translink is the trading name of the Northern Ireland Transport Holding Company.
108 Translink is the brand name of the integrated public transport operation of Metro, Ulsterbus and NI Railways.
109 NISTA, Infrastructure Pipeline: Introduction, accessed on 11/05/26.
110 NISTA, Infrastructure Pipeline: Methodology, accessed on 11/05/26.
111 In Scotland, the Scottish Futures Trust has a Construction Pipeline Forecast Tool that provides a forward look for

anticipated public sector spend within construction. The forecast tool is updated every 6 months. In Northern Ireland, the
Northern Ireland Executive has the Investment Strategy for Northern Ireland which sets out key objectives for
infrastructure investment for the next thirty years. As part of this strategy, it has an Infrastructure Investment Pipeline that
is updated frequently. In Wales, the Welsh Government published the Project pipeline providing visibility for planned
public and private investment in Wales’s infrastructure.


                                                              53
           to default to lower risk, short-term projects, rather than focusing on more complex
           and potentially transformative schemes. 112 For local authorities, limited levels of
           funding, uncertainty over funding from central government, and time pressures
           within which central government funds must be deployed 113 can act as a barrier to
           strategic approaches to procurement. 114,115 Short-termism is particularly acute in
           local authorities that typically have been operating with one-year funding
           settlements, 116 and only a short period of time to spend a budget allocation.

3.15       As well as setting out expected forward plans of infrastructure work, certain
           procurement approaches can provide greater certainty of future funding for
           projects:

           (a)    Programmatic procurement 117 and portfolio contracting 118 can shift away
                  from ‘transactional’ project-by-project procurement to ‘strategic’ procurement
                  that uses purchasing power and longer-term certainty to de-risk innovation
                  and to create markets. 119 120As well as providing certainty and commitment,
                  these approaches can also provide other benefits such as space for learning,
                  collaboration, and standardisation. 121

           (b)    Long term contracts can also be used to provide stronger forward
                  commitments and inherently provide certainty of funding further into the
                  future.

3.16       However, while there are examples of public authorities using these contracting
           approaches, their use is inhibited (particularly in the devolved nations) by annual
           funding settlements, alongside other factors such as not wanting to disadvantage
           SMEs (for example, if it reduced the number of smaller opportunities, or if SMEs




112 Responses to the CMA’s information requests []; Note of meeting with the sector panel [].
113 Responses to the CMA’s information requests [].
114 Responses to the CMA’s information requests []; Note of meeting with [].
115 For example, Transport for West Midlands told us that funding envelops of government programmes does not align

with the natural project delivery timelines. Note of meeting with [].
116 For example, NAO (2024) noted in relation to the maintenance of local roads that ‘Annual [budget] provision reduces

the certainty of funding for local authorities, which is needed to allow them to develop longer-term, more
cost-effective maintenance regimes. Stability of funding over the longer term enables local authorities to invest in building
skills and capabilities, and procure contracts for maintenance at better prices over a longer period.’ NAO (2024), The
condition and maintenance of local roads in England, paragraph 2.5.
117 Programmatic procurement is an approach which involves managing a suite of works that are coordinated at the

programme level rather than treating projects as standalone schemes.
118 Portfolio contracting refers to bringing multiple related projects together under a common commercial and

management approach rather than as individual contracts that are let project by project.
119 See for example Project 13 and Institute of Civil Engineers (2017), From Transactions to Enterprises: A new approach

to delivering high performing infrastructure, pp2-3, pp11-13 and p16. The role of public procurement in influencing and
creating markets is also noted in the literature, such as Edler, J. (2026), Demand, Public Procurement and
Transformation, The New Role of the State for Transformative Innovation pp322-323 and 325; Selviaridis, K. (2016),
Public procurement and innovation: A review of evidence on the alignment between policy and practice, p1.
120 We understand that in Germany many road infrastructure projects are part of ongoing incremental programmes (such

as road widenings, renewals and junction upgrades) rather than one-off projects to encourage learning and stable supply
chains.
121 NIC (2024), Cost drivers of major infrastructure projects in the UK, p22.




                                                            54
          were less able to commit to long-term or larger scale projects). 122 Network Rail
          also makes limited use of long-term contracting, with the main barriers including
          funding certainty alongside in-period funding volatility, exposure to macroeconomic
          shocks, annual delegated budget limits, value-for-money risks which can
          incentivise cautious work release rather than full portfolio commitments, 123,124
          regulation and governance. 125

3.17      Programmatic procurement is used overseas. For example, the Victorian
          Government in Australia has used a programmatic approach in its Level Crossing
          Removal Project, which is removing 110 level crossings in Melbourne between
          2016 and 2030. 126 An intention of the programmatic approach has been to
          strengthen opportunities for innovation and continuous improvement. 127

3.18      We have also heard from one stakeholder that, where there are short-term funding
          settlements, local authorities feel inhibited from engaging early with suppliers
          about the pipeline of work or make best use of longer-term contracts. This in turn
          prevents suppliers from being able to plan to enable effective resourcing
          decisions. This means projects might not obtain the right resources, they often
          cost more, and they take longer to deliver. 128

3.19      The Chartered Institute of Highways and Transportation (2025) white paper noted
          if England’s funding for maintenance and management of local roads were more
          long-term and strategic, in a way that is comparable to the five-year settlements in
          place for the Strategic Road Network and the rail sector, efficiency savings in the
          range of £1 billion to £2.1 billion could reasonably be achieved over a five year
          period. 129 In general, short-term thinking can reduce the value for money that the
          public sector as a whole is able to derive from markets. 130

Pipeline impact on supply side

3.20      We have gathered evidence from stakeholders to understand how uncertain
          pipelines impact suppliers’ ability to plan and invest. The evidence we have
          considered includes the following:




122 DfI TRAM told us with Northern Ireland’s supplier base being predominately made up of SMEs, the use of long-term

aggregated multi-function contracts risks disadvantaging smaller firms as the longer-term contracting approaches may
restrict SME access to public contracts. DfI’s response to the CMA’s information request [].
123 Network Rail said if funding must be diverted from committed work banks under long-term contracts, there can be

penalties or sunk costs. Network Rail’s response to CMA information request [].
124 Network Rail said it does not include break clauses in contracts as these seen as potentially costly and therefore

riskier. Note of meeting with Network Rail [].
125 Note of meeting with Network Rail [].
126 Victoria’s Big Build, Level Crossing Removal Project: Project overview, accessed on 11/05/26.
127 Victoria’s Big Build, Level Crossing Removal Project: Innovation, accessed on 11/05/26.
128 Note of meeting with [].
129 Chartered Institute of Highways and Transportation (2025), Unlocking the Benefits of Long-Term Funding for Local

Roads: Key message for policy makers, p1.
130 The Construction Playbook, p55.




                                                           55
          (a)    In response to the interim report, stakeholders consistently ranked increasing
                 funding certainty and improving pipeline visibility as the most important
                 measures that governments could take to improve outcomes.

          (b)    Sector panellists noted that uncertain funding restricts effective planning by
                 suppliers seeking to bid. 131 One sector panellist highlighted that lack of
                 certainty harms the ability of suppliers to plan where resources and the
                 existing skilled workforce are to be deployed in the future, not just for Tier 1
                 firms but down through the rest of the supply chain. 132

          (c)    The Civil Engineering Contractors Association and Skanska highlighted that
                 lack of certainty over future work can lead to a loss of skills to other sectors,
                 reducing the available skilled labour in the future. 133 A lack of available skilled
                 labour and sector specific knowledge can lead to project delays and higher
                 project delivery costs. Similarly, for the rail sector, RSS Infrastructure
                 highlighted funding uncertainty on the type of future work has led to lapsed
                 frameworks, rising costs and redundancies. 134

          (d)    Balfour Beatty said that enabling sufficient certainty on the opportunity
                 pipeline (including for smaller suppliers) is key, in order to encourage the
                 necessary investment in the sources of supply and maximise competition. 135

          (e)    A sector panel member highlighted that even if contracts for early stages of a
                 project are awarded, this does not guarantee that the project will proceed.
                 The panellist also noted that it is difficult to make a business case for
                 investment (relying on forward workload) in an environment where projects
                 are being cancelled. 136 In a similar vein, Murphy submitted that there is a
                 culture of doing the bare minimum during the early phases so as not to incur
                 significant cost in case the scheme does not go ahead. 137

          (f)    National Highways highlighted that uncertainty on confirmed funding can
                 cause a lack of confidence that projects will actually proceed and affects
                 decisions by firms over whether to enter in the future. 138

          (g)    Many stakeholders have highlighted that pipeline certainty is important as a
                 platform to support investment in innovation. 139




131 Note of meeting with the sector panel [].
132 Note of meeting with the sector panel [].
133 Note of meeting with CECA []; Note of meeting with Skanska [].
134 Note of meeting with RSS Infrastructure [].
135 Balfour Beatty’s response to the CMA’s information request [].
136 Note of meeting with the sector panel [].
137 Murphy’s response to the CMA’s information request [].
138 Note of meeting with National Highways [].
139 Responses to the CMA’s information requests []; Notes of meetings with []; Jigsaw Research (2026), Qualitative

Research with Civil Engineers, paragraph 3.5.5.


                                                          56
          (h)     Previous reports have also found that pipeline uncertainty reduces the
                  willingness of firms to invest in building their own capacity. 140

3.21      Further, multiple stakeholders reported that a lack of pipeline visibility, alongside
          its certainty, acts as a barrier in this market, particularly in relation to innovation
          and investment. 141 For example RIA told us that a visible pipeline was vital to
          enabling investment in training and innovation. 142 Suppliers need to be able to see
          what is in the pipeline for it to assist in planning.

3.22      The evidence we have gathered, consistent with previous reports, clearly shows
          that lack of funding certainty and pipeline visibility undermines suppliers’ ability to
          plan ahead effectively, which inhibits investment in innovation, skills and capacity.
          This also impacts on their decisions whether to build in-house capacity or sub-
          contract, as discussed in the subcontracting section.

Conclusions on pipeline uncertainty

3.23      The evidence we have gathered shows that a combination of short-term funding
          pressures, uncertainty over longer-term budgets, and changing government
          priorities is leading to short-termism by public authorities. It compromises public
          authorities’ ability to plan and undertake procurement as effectively as possible to
          secure value for money. On the supply-side, it results in market participants having
          limited visibility of and confidence in the pipeline of future projects. This reduces
          the incentives for firms to make future plans and invest effectively, as they are
          uncertain about future expected demand. It is also contributing to a high degree of
          subcontracting in the market, which can be inefficient, as discussed in the
          subcontracting section and Appendix A.

3.24      We recognise that governments have sought to lengthen funding settlements and
          improve pipeline visibility, and that there is a trade-off between providing long-term
          funding certainty and ensuring the use of public funds remains appropriate over
          time, and that the electoral cycle creates inherent uncertainty. Nevertheless,
          increasing pipeline visibility and confidence further and as far as possible appear
          key to improving the efficiency of the sector and driving investment and innovation.




140 NIC, (2024), Cost Drivers of Major Infrastructure Projects in the UK, pp18-22 and 36. BCG also included securing

certainty in the supply chain as one of its recommendations, noting ‘A steady flow of projects in the pipeline will ensure
predictability, increasing willingness to invest and drive cost and time savings. The value chain must be confident that
priorities will survive beyond parliamentary cycles to ensure a return on investment.’ BCG (2024), Improving
Infrastructure Delivery in the UK.
141 Responses to the CMA’s information requests []; Responses to the CMA’s invitation to comment, question 7 and 8.
142 Note of meeting with RIA [].




                                                           57
Procurement Policy and Approaches

3.25      Procurers also shape market conduct and outcomes in the way that they scope,
          award and manage projects. In this section we consider:

          (a)     The role of scoping in ensuring good project outcomes.

          (b)     The impact of different procurement methods, including the use of
                  frameworks.

          (c)     Procurement processes and how they impact barriers to entry.

          (d)     The role of bid evaluation.

          (e)     Allocation of risk and incentives for efficiency in project delivery.

3.26      Across all these areas, we have observed that there is already a considerable
          amount of guidance as to what good practice looks like in the procurement of civil
          engineering projects for roads and railways – for example, in relation to how to
          carry out effective scoping and early contractor involvement (ECI), 143 how to
          structure frameworks, 144 and how risk should be allocated in different types of
          projects. 145 In particular, the Construction Playbook and Sourcing Playbook, and
          Client Guide in Scotland aim to guide public authorities on best procurement
          practice. 146 However, various factors appear to limiting the practical impact of this
          guidance:

          (a)     The Construction Playbook is primarily aimed at UK government and arm’s
                  length bodies, rather than local authorities or devolved governments, 147
                  which have separate guidance as set out above.

          (b)     We have also heard that best practice is not always followed, 148 potentially
                  leading to an inconsistent approach between different authorities. We do not
                  have a complete picture as to how far national procuring authorities are
                  following best practice. However, the evidence suggests most such bodies
                  do try to apply the principles set out in best practice, although are not always
                  able to do so completely. 149


143 The Construction Playbook, section 3.
144 Gold Standard Report.
145 The Construction Playbook, pp54-56. Different NEC contract options align with different approaches to allocating risk:

NEC4 ECC pricing provisions – an introduction for new NEC users, accessed on 11/05/26.
146 In addition to The Construction Playbook and The Sourcing Playbook, public authorities also utilise The Green Book,

and regional guidance (such as the Welsh Transport Appraisal Guidance, the Construction Toolkit in Northern Ireland or
Local transport guidance notes).
147 CCS (2021), The Construction Playbook – what is it and what does it mean for you?.
148 Amey's response to the CMA’s invitation to comment, p4; ACE's response to the CMA’s invitation to comment, p6;

AtkinsRéalis’ response to the CMA’s invitation to comment, p3; Note of meeting with []; BAM Nuttall's response to the
CMA’s invitation to comment, p11; Response to the CMA’s information request [].
149 For example, Transport Scotland indicated their procedures align with the Scottish Government’s Construction

Procurement Handbook guidance, although their procedures may be applied slightly differently as individual projects


                                                           58
          (c)     We have also received feedback that while the Construction Playbook and
                  the Client Handbook in Scotland are well-intended, it is not always practical
                  to action all the recommendations in the guidance. 150

3.27      We appreciate that no guidance or best practice will be able to account for all
          eventualities, and so there will always need to be a degree of flexibility and
          judgement in how it is applied in practice. We have therefore sought to understand
          whether there are areas where there appears to be scope to apply best practice
          more consistently even taking this into account. We highlight in the sections below,
          and corresponding detail in Appendix A, how far public authorities appear to be
          adhering to some of the key elements of best practice, including on scoping,
          procurement methods and risk allocation.

Scoping

3.28      There is broad agreement by stakeholders on both the demand and supply side
          that getting scoping right is critical to being able to deliver effectively in later stages
          of the project. 151 In this section, we set out current issues with how scoping is
          done, and the impacts this has on projects. We then examine the factors which
          contribute to deficiencies in scoping.

          Current issues with scoping

3.29      Many of the Tier 1 and 2 firms we have engaged with have identified issues with
          scope and design as a driver for project overruns, 152,153 as have some public
          authorities. 154 For instance, Balfour Beatty and Skanska told us that business


never offer the ‘perfect scenario’. Note of meeting with Transport Scotland []. Network Rail estimated that they have hit
75-80% compliance of the Construction Playbook, but don’t monitor compliance as well as they could. Note of a meeting
with Network Rail []. However, National Highways stated that it is guided by the principles set out in the Construction
Playbook and Gold Standard Report, and considers itself to be complying with them. Note of meeting with National
Highways [].
150 Note of meeting with the sector panel []. As noted above, Transport Scotland procedures may be applied slightly

differently to the ‘perfect scenario’ set out in the Client Handbook. Note of meeting with Transport Scotland []. A sector
panel member observed that where there is greater political involvement in, and oversight of, the operations of a local
authority that can result in the local authority not using the Construction Playbook.
151 For example, the NIC noted that the most cost-effective way to identify potential delivery problems is to consider risks

at an early stage, rather than trying to fix issues once construction has started, and emphasised that late-stage changes
in scope and design are more expensive and can lead to cost overruns. NIC (2024), Cost Drivers of Major Infrastructure
Projects in the UK, p27. The Construction Playbook also states ‘Clear outcome-based specifications will help to innovate,
to provide cost effective solutions that deliver social value, net zero and improved
sustainability and enable effective contract management through the life-cycle.’ The Construction Playbook, p26.
152 While we discuss factors affecting cost and time in terms of overruns, we note that these factors are also likely to be

closely related to cost inflation in general ie even if costs are accurately predicted, they may still be higher than
necessary.
153 When asked about the drivers for the largest financial overruns on enhancement projects over the last 10 years, the

most mentioned driver by far was scope changes, with other design and planning related factors such as unexpected
ground conditions and incomplete/inaccurate design also mentioned multiple (although fewer) times. Further, multiple
Tier 1 firms told us that one of the main causes of cost or time overruns was an underdeveloped project scope.
Responses to CMA’s information requests []. The CMA market research with Tier 2 and Tier 3 suppliers also identified
poor project design as a key source of delay. Jigsaw Research (2026), Qualitative Research with Civil Engineers,
paragraph 3.4.2.
154 Network Rail identified multiple different drivers including incomplete or outdated ground and asset information and

early scope definition based on incomplete information among others as drivers of cost overruns. Network Rail’s


                                                            59
          cases and requirements are often insufficiently developed, which can lead to
          subsequent changes as the requirements have not been properly tested. 155

3.30      We have also seen evidence that scopes are often overly prescriptive or gold-
          plated. Previous work has highlighted that “[a] common theme across UK
          infrastructure is that specifications and standards go beyond what is necessary”. 156
          For example, Murphy highlighted that project requirements often expand as
          multiple stakeholders add their individual ‘wants’, resulting in an unmanageable list
          of deliverables that go beyond the core scope and include numerous ‘nice to
          haves’. 157

3.31      As explained below, deficiencies in scoping often impact budget setting and
          subsequent project delivery.

          Budget setting

3.32      Deficiencies in project scoping, or in reflecting the reality of the project scope in
          budget needs, mean budgets may not be realistic. Balfour Beatty said that setting
          budgets based on incomplete or underdeveloped project scopes may mean the
          budgets and programmes are unrealistic. Morgan Sindall highlighted that budgets
          which are prepared years in advance of project delivery are often out of date by
          the time the project starts, 158 and Laing O’Rourke said that Strategic Outline Case
          cost estimates are not always reflective of a project’s complexity. 159 Mott
          MacDonald highlighted that schemes are given approval before they have reached
          an adequate level of design maturity, and so budgets are frequently set
          prematurely, before cost, risk, and delivery implications can be assessed with
          confidence. 160

3.33      Budgets often appear to be set too optimistically in any event. Although existing
          guidance in approaches to setting cost and timeline estimates recommends
          adjusting for optimism bias, 161 multiple suppliers told us that cost estimates can be
          optimistic, over and above the optimism bias adjustment routinely added to
          budgets. 162 This optimism is likely partially driven by limited information and




response to the CMA’s information request []. One local authority mentioned forced scope changes or forced
redesigns after contract award as a result of unforeseen site conditions, other external factors impacting the work and
changing strategic demands. Note of meeting with []. Another local authority said design failures, particularly external
designs that do not reflect local conditions, were also a cause of overruns. Note of meeting with [].
155 Balfour Beatty’s response to the CMA’s information request []; Skanska’s response to the CMA’s information

request [].
156 BCG (2024), Improving Infrastructure Delivery in the UK.
157 Murphy's response to the CMA's information request [].
158 Balfour Beatty’s response to the CMA’s information request []; Morgan Sindall’s response to the CMA’s information

request [].
159 Laing O’Rourke’s response to the CMA’s information request [].
160 Mott MacDonald’s response to the interim report question 4, p4.
161 HM Treasury and Government Finance Function, The Green Book, accessed on 11/05/26.
162 Responses to the CMA’s information requests [].




                                                           60
           inappropriate integration of past data. 163 Taking into account past data is important
           because public authorities and contractors may lack timely feedback as issues
           rooted in the scope may only surface later, limiting the ability to recalibrate
           expectations quickly based on present circumstances. Political considerations are
           also likely to incentivise optimistic planning in some cases. 164

3.34       Unrealistic budgets deter firms from bidding, 165 limiting competitive pressure on
           those who do bid and so limiting the choice of supplier for the public authority. In
           principle, trying to select a supplier to meet an unrealistic budget may also put a
           public authority more at risk of selecting a supplier which has under-priced the
           work, although we have not heard or observed this directly. Selecting under-priced
           bidders can lead to added cost in the long-run 166 and so deliver less value for
           money than where a more realistic budget had been determined upfront.

           Impact on project delivery

3.35       Where changes are needed to project scopes once the project is underway, this
           often leads to additional costs and delays.

           (a)    National Highways submitted that funding agreements are subject to
                  Treasury approvals and required to follow strict public procurement laws set
                  by the Procurement Act 2023 and public contract regulations. As such, any
                  significant change in scope, design, or delivery method typically demands
                  formal approval to comply with the conditions of their licence, which can
                  delay decisions and reduce the ability to adapt. 167

           (b)    Costain submitted that when contracting authorities are budget-constrained
                  (eg by annualised budgets) during early project phases, opportunities to de-
                  risk and optimise the design are often not pursued and risks can then
                  manifest later, during construction. 168,169 Such unplanned changes in


163 We understand that public authorities at national levels use cost databases and benchmarking tools to set budgets at

the scoping phase – see for example ORR (2019), Assessment of Highways England’s cost estimation approach for
RIS2, p26 and ORR (2022), Preparing for RIS3 enhancements: Cost and efficiency review, pp11-12. We understand that
these are most useful for simple, repeatable work rather than more complex bespoke projects.
164 For instance, the Institution of Civil Engineers reports that ‘forecasting time, cost and benefit outturns is technically

difficult and is often made more so by political incentives which encourage underestimation […]’ Institution of Civil
Engineers (2025), Why do major projects cost so much and take so long? And what can be done about it?, p4.
Behavioural Insights Team (2025), Stay calibrated – A practical guide to debiasing decision-making, pp1-31.
165 For example, Tier 2 and 3 participants in the CMA’s market research reported that public road and rail contracts with

too much uncertainty, too much risk, and insufficient budget commonly deterred firms from competing. Jigsaw Research
(2026), Qualitative Research with Civil Engineers, p41 and 43.
166 Tier 2 and 3 participants in the CMA’s market research alleged that some competitors may under-price to win work,

and highlighted a number of ways this can add cost in the long run. Jigsaw Research (2026), Qualitative Research with
Civil Engineers, p58.
167 National Highways noted that this procurement legislation creates a structured and legally robust framework that

governs how civil engineering projects are sourced and contracted, applying reasonable controls and ensuring
accountability and fairness. National Highways’ response to the CMA’s information request [].
168 Costain’s response to the CMA’s information request [].
169 Similarly, in our market research poor designs were also commonly linked to issues being uncovered on the

ground, stoppages, late changes, or multiple contract variations during delivery, all of which can add cost and delays.
Jigsaw Research (2026), Qualitative Research with Civil Engineers, p49.


                                                             61
                  procurement timelines ‘can incur great costs for suppliers and damage the
                  credibility and reputation of the buyer…[and] raises prices unnecessarily
                  across the board.’170

3.36       Some stakeholders highlighted that there are instances where incentives are
           misaligned between different parties in how far they are exposed to the costs of
           changes, which mean they are not addressed expeditiously. 171 However, there are
           examples of how the costs of amendments to scoping during projects can be
           mitigated. For instance, Network Rail submitted that the Project Acceleration in a
           Controlled Environment (PACE) framework allows it to manage projects to
           minimise and mitigate the risks associated with project development and
           delivery. 172

           Factors contributing to issues with scoping

3.37       We have identified a number of factors that are contributing to deficiencies in
           scoping: constraints on resources, inconsistent use of early engagement with
           suppliers and risk aversion in scoping. We consider each of these in turn.

           Constraints on resources

3.38       First, some public authorities lack sufficient capability to undertake effective
           scoping, either using in-house resource or procuring it from consultants. As
           discussed in the capacity constraints section, public authorities can struggle in
           attracting and retaining sufficient expertise. There can also be issues arising from
           the use of external consultants, for example where their incentives are not
           sufficiently aligned with those of the public authority as noted above.

3.39       Second, even where authorities may wish to engage in detailed early scoping,
           they may not have sufficient time available to do so, particularly for those
           authorities with limited budget and pipeline certainty. Specifically, the Association
           of Directors of Environment, Economy, Planning & Transport (ADEPT) noted that
           local authority annual capital budgets are sometimes only confirmed shortly before
           the funding is available for use, and must then be used within a very short window,
           making it difficult to plan and procure effectively. 173 In addition, one sector panel



170 HM Government (2022), The Sourcing Playbook: Government guidance on service delivery, including outsourcing,

insourcing, mixed economy sourcing and contracting, p50.
171 Some participants in the CMA’s market research described a lack of imperative to improve designs, as there seemed

to be fewer negative consequences for consultants or Tier 1 firms if they ‘designed in’ issues at the start of projects than
for the Tier 2 and Tier 3 firms who have to implement them. Some alleged this could be done intentionally in that later
design revisions were additional, billable work for the consultants concerned. Jigsaw Research (2026), Qualitative
Research with Civil Engineers, pp49-50. BAM Nuttall highlighted that over-reliance on consultants, advisors and cost
consultants within client strategy and procurement teams can lead to mis-aligned objectives where the consultant is not
incentivised to deliver the ‘best value and outcomes’. BAM Nuttall’s response to the CMA’s invitation to comment,
question 7.
172 Network Rail’s response to the CMA’s information request [].
173 Note of meeting with ADEPT [].




                                                            62
          member noted that providing funding for ‘shovel ready’ schemes incentivises
          authorities to claim that plans are more developed than they actually are, resulting
          in the early stages of the project being condensed. 174

          Not consistently making best use of early involvement of suppliers

3.40      Best practice set out in the Construction Playbook recommends early involvement
          of suppliers to help improve design delivery and operational outcomes. 175 There
          are some examples of positive practice in this regard. Multiple national public
          authorities involved in road procurement told us that they engage with suppliers
          during the scoping phase of projects176 and that they run market engagement
          events once the project scope has been defined to seek views on the approach. 177
          For Network Rail, several regions use some form of early contractor involvement
          to help develop the project scope and design for enhancements, although the
          approach is more mixed for renewals work. 178

3.41      However, as set out further in Appendix A, some public authorities tend not to use
          early engagement, or have raised concerns about doing so. We have identified
          several concerns that appear to be discouraging authorities from doing this,
          though in many cases there are countervailing considerations that authorities do
          not appear to be taking fully into account.

3.42      Multiple national public authorities have highlighted the desire to avoid legal and
          reputational challenges arising during procurement awards. 179 Early contractor
          involvement can be seen as a risk in this regard if not undertaken carefully.
          However, the NIC (2024) noted ‘Systemic risk aversion exacerbates this problem
          [of public sector clients believing they cannot use early market engagement on the
          basis it may prejudice the process], by prioritising avoiding challenge from
          unsuccessful suppliers during the procurement process – and the associated
          delay – ahead of steps that are proven to reduce the risk of cost overruns.’ 180

3.43      Related to legal and reputational challenges, engaging with a given supplier at
          pre-tender stage could weaken, or be perceived to weaken, the competitive


174 Note of meeting with the sector panel [].
175 The Construction Playbook, pp26-28.
176 Response to CMA’s information requests [].
177 Response to CMA’s information requests [].
178 Southern Region told us they rarely engage with suppliers early for their renewals work-bank due to the repetitive

nature and the need for like-for-like replacements for most works. Network Rail Southern’s submission to the CMA [].
But Network Rail Scotland told us that for their renewals work they aim to work in partnership with key framework
suppliers to deliver early contractor engagement and to consider value engineering opportunities, and take a ‘delivery to
cost’ approach where appropriate. Network Rail Scotland submission to the CMA [].
179 National Highways and Transport Scotland described wanting to avoid disadvantaging certain suppliers, and ensure

that the procurement process is run correctly. Failure to follow correct procedures can lead to legal challenges and
subsequent reputational risk. Responses to the CMA’s information requests []; Note of meeting with National Highway
[]. Northern Ireland’s Department for Infrastructure submitted that legal challenges are the biggest concern when
awarding contracts, and the key to successful procurement is getting legal advice at an early stage, and throughout the
process. DfI’s response to the CMA’s information request [].
180 NIC (2024), Cost drivers of major infrastructure projects in the UK, p29.




                                                           63
          process as it potentially advantages those engaged suppliers over other bidders,
          although we note that a scope with insufficient input from the sector risks being
          unrealistic or unattractive to potential bidders, which could also reduce
          competition. We also note that the Construction Playbook and its Guidance Note
          ‘Market, Supplier & Supply Chain Engagement in Construction’ 181 provides
          guidance on how early supplier involvement can be pursued whilst maintaining
          competitive tension.

3.44      In principle, it is also possible that early supplier engagement risks embedding
          terms that are favourable to the supplier at the expense of the procurer, due to
          differences in incentives and asymmetry of information with suppliers.

3.45      Most Tier 1 firms that we have engaged with said that supplier engagement as it is
          currently done is inadequate to appropriately inform the project approach on
          design specifications, risk assessments and costs. 182 Respondents to the interim
          report highlighted a number of ways early engagement could be used more
          effectively, including following Construction Playbook Guidance more closely, 183
          having more involvement of suppliers who are further down the supply chain, 184
          early inclusion of experienced engineers, 185 and having an output-focused
          approach, 186 such as aligning with Project 13 principles which take a holistic
          collaborative approach. 187 Involving the whole supply chain in project scoping and
          design could also encourage innovation by helping surface ideas from the ground
          up more effectively, particularly as innovation is often implemented by Tier 2 and 3
          firms delivering the works. 188 Better support for the application of scoping
          principles within the Construction Playbook would help to support adoption of best
          practice regarding scoping and early engagement.

3.46      Overall, we consider that early supplier engagement, when pursued with
          reasonable safeguards, is a valuable tool for procuring authorities to use in
          preparing for road and rail infrastructure projects.

          Risk aversion in scoping and design

3.47      Public authorities are often risk averse in their approach to scoping and design, for
          example, either by being conservative in their approach, avoiding scopes and
          designs that involve innovative approaches or by overspecifying bespoke designs

181 GCF (2022), Market, Supplier & Supply Chain Engagement in Construction: Guidance Note.
182 Response to CMA’s information requests [].
183 BAM Nuttall, Balfour Beatty, ICE, Combined Response and M Group’s responses to the CMA’s interim report,

question 5.
184 Combined Response, ACE, Balfour Beatty, Kier and ICE’s responses to the CMA’s interim report, question 5.
185 ACE, BAM Nuttall and Kier’s responses to the CMA’s interim report, question 5.
186 Rail Forum, Balfour Beatty and Mott MacDonald’s responses to the CMA’s interim report, question 5.
187 Balfour Beatty and Mott MacDonald’s responses to the CMA’s interim report, question 5. Project 13 is an initiative that

was launched by ICG in 2018 to improve infrastructure delivery and management. It follows a set of core principles
designed to improve infrastructure delivery through collaborative processes. Under it, project owners, partners, advisers,
and suppliers all work together more closely and develop long-term relationships.
188 Multiple stakeholders have said that innovation opportunities come from the lower tiers of the supply chain.




                                                            64
          in order to mitigate the risk of challenge. A number of stakeholders have
          highlighted that project briefs can be overly prescriptive, restricting the ability for
          contractors to innovate. 189

          (a)     BAM Nuttall told us road and rail clients are often cautious about owning the
                  risk of new products, processes and techniques and it is not viable for
                  suppliers to own the whole risk given the low profits in the sector. 190 This
                  suggests that where appropriate risk is not scoped in by the authority, firms
                  may default to over-cautious or more established approaches, missing the
                  potential to deliver longer-term value.

          (b)     Costain noted that there is an understandable risk aversion from public
                  authorities, Tier 1 firms and designers when it comes to innovative, untested
                  designs and that any change is often subject to significant challenge and so
                  requires a lot of energy and cost to get the change implemented. 191

3.48      We have heard a range of reasons for risk aversion in scoping. For example,
          Amey submitted that maintenance contracts often suffer from a ‘do just enough’
          mindset, due to budget constraints of contracting authorities, the lack of long-term
          asset management thinking, and other factors, including the contracting models
          used and the extent to which they encourage innovation. 192 Some participants in
          our market research indicated that innovation is hindered by procurers favouring
          tried-and-tested approaches and having slow approval methods for new
          approaches, as they may not have the expertise, resource, or appetite for trying
          newer products or methods (especially in the rail sector). 193

3.49      Previous reports have also highlighted that over-engineered designs can be the
          result of taking a cautious approach in order to mitigate the risk of challenge in
          planning processes. 194 With regard to gold-plated designs, the risk of over-
          specification is exacerbated by lack of standardisation in design. Bespoke designs
          are currently the norm in the UK, 195 which leaves greater scope for procurers to
          introduce different design elements which go beyond what is necessary.




189 Morgan Sindall’s response to CMA’s information request []; Amey’s response to the CMA’s information request

[]; CECA, SCAPE, RIA and ACE’s responses to the CMA’s interim report, question 3.
190 BAM Nuttall’s response to the CMA’s information request [].
191 Costain’s response to the CMA’s information request [].
192 Amey’s response to the CMA’s information request [].
193 Jigsaw Research (2026), Qualitative Research with Civil Engineers, p72.
194 BCG highlighted that a common theme across UK infrastructure is that specifications and standards go beyond what

is necessary as “it is usually easier to design assets to go ‘above and beyond’ to pre-empt or respond to planning
concerns than to set out a more economical design and defend it”. BCG (2024), Improving Infrastructure Delivery in the
UK. NIC also stated that amongst designers, risk aversion to mitigate the risk of challenge in the planning system can
lead to over-engineered design which costs more than is strictly necessary. NIC (2024), Cost drivers of major
infrastructure projects in the UK, p32.
195 ICE highlight that traditionally bridges, retaining walls and other transport infrastructure assets are designed on a

bespoke, site-specific basis. ICE (2018), Standard design key to offsite manufacture.


                                                           65
3.50      Multiple stakeholders were supportive of greater standardisation of designs in civil
          engineering projects in response to our interim report. 196 We note there can be a
          trade-off between standardisation and innovation, as innovation can introduce
          variability, although this depends on the type of innovation involved. 197 However, it
          does not appear that allowing significant levels of bespoke design is being used to
          drive innovation, given the concerns set out above. There are a number of ways
          trade-offs between standardisation and innovation can be managed, including
          through having transparent, structured processes for approving exceptions to
          standards and ensuring standards are kept updated, and greater focus on
          outcome-based scoping, where procurers specify the outcome they want to
          achieve and allow suppliers to come up with the specifics for how to deliver this. A
          number of stakeholders have expressed support for greater use of outcome-based
          approaches to encourage innovation and investment. 198

          Conclusions on scoping

3.51      As set out above, we have heard from stakeholders that, across projects, the
          current standard of scoping is less than could reasonably be achieved, with knock-
          on impacts on budgets and project delivery. This is driven by several factors:
          public authorities sometimes have insufficient expertise or time to effectively scope
          projects or to challenge the scopes prepared for them by consultants, and we see
          that procurement authorities often do not use early engagement with suppliers as
          effectively as they could. Public authorities are often also conservative in their
          approach to scoping, leading them to avoid scopes and designs that would involve
          innovative approaches. This is exacerbated by the limited use of standardised
          designs, which can allow designs to become gold plated to avoid challenge.

3.52      We note that guidance on scoping, particularly regarding the use of early
          engagement with the supply chain, is set out in the Construction Playbook, which
          assists with managing some of the risks we discuss above. However, use of this
          guidance is currently inconsistent, which mutes its impact. We also note that the
          OECD has been developing tools to support public authorities’ procurement
          strategy, which involves using economic principles to break down projects into
          work packages and determine, based on the features of the packages and supply
          chain capabilities, whether to build in-house or procure externally – and for the
          latter, how to bundle packages and how to choose between contractual
          arrangements. 199 Pilots utilising this approach have been undertaken in Norway 200



196 Balfour Beatty and Kier’s responses to the CMA’s interim report, question 7; M Group and BAM Nuttall’s responses to

the CMA’s interim report, question 20.
197 ICE highlighted that standardisation is needed to benefit from off-site manufacture, but that “a compromise is needed

from what might traditionally have been considered an ‘optimised design’.” ICE (2018), Standard design key to offsite
manufacture.
198 CECA, BAM Nuttall and Rail Forum’s responses to the CMA’s interim report, question 3.
199 OECD, Support Tool for Effective Procurement Strategies (STEPS), accessed on 11/05/26.
200 OECD (2021), Procurement strategy in major infrastructure projects: Piloting a new approach in Norway.




                                                           66
          and Germany201 (in the latter case not in a road and rail context), although it is too
          early to evaluate whether these have resulted in better outcomes. We consider
          this approach is likely to be particularly valuable for larger scale or more complex
          projects, given the best approach may be less clear cut in such cases.

Procurement methods and use of frameworks

3.53      Public authorities tend to choose between one of three procurement methods:

          (a)     Open competition (sometimes also referred to as competitive tendering) – a
                  tendering procedure without a restriction on who can submit tenders. 202 Open
                  competition allows for the widest possible set of suppliers to compete, but as
                  a result tends to be slower and more costly as procurers must have
                  procedures to consistently evaluate a potentially wide range of bids.

          (b)     Use of a framework – a contract between a contracting authority and one or
                  more suppliers that provides for the future award of contracts by a
                  contracting authority to the supplier or suppliers. 203 Suppliers compete
                  upfront to be allowed onto the framework, which narrows the field of suppliers
                  who may then be selected for work assigned to that framework. There may
                  be some subsequent competition for work allocated via the framework, but
                  this will be restricted to those who were successful in the initial competition.
                  This more limited competitive stage allows for the work to be allocated more
                  quickly.

          (c)     Direct award – where a public contract is awarded without a competitive
                  tendering procedure and the public contract is placed directly with the
                  supplier of the contracting authority’s choosing. 204 Direct awards allow work
                  to be allocated quickly, but involve no competition, and so are only possible
                  in certain circumstances.

3.54      The procurement method can influence who wins the contract, presenting an
          opportunity to encourage the right level of competition in the market and ultimately
          shape outcomes. 205 As noted above, each method involves trade-offs between
          level of competition and speed and resource needed to award work, and so will be
          appropriate in different circumstances. However, if the appropriate method is not
          chosen, this may lead to unnecessarily limited competition which may lead to
          worse outcomes. In addition, while all procurement methods involve some costs


201 OECD (2025), The Procurement Strategy for the German Federal Criminal Police Campus: Applying the STEPS

Methodology to Infrastructure, accessed on 11/05/26.
202 Cabinet Office, Guidance: Frameworks, accessed on 11/05/26.
203 Procurement Act 2023, section 20.
204 Cabinet Office, Guidance: Direct Award, accessed on 11/05/26.
205 The Construction Playbook (2022) highlights this, stating that procurement processes should be of proportionate

duration and effort to the size and complexity of the contract opportunity. An unnecessarily complicated or protracted
process can risk minimising the pool of bidders and stifle competition, The Construction Playbook, p48.


                                                           67
          for suppliers and procurers, if these costs are unnecessarily high, this may limit the
          number of firms which choose to compete as well as using up scarce procurement
          resources.

3.55      In this section we set out how frameworks are used by public authorities and their
          advantages and disadvantages. We also examine the extent to which other
          reviews and recent policy developments are starting to improve the use of
          frameworks. We then consider how open competition is used, and how it could be
          made less costly for market participants.

          Frameworks

3.56      In 2021, there were over 2,000 active public sector construction frameworks. 206
          The NAO has also noted there has been a growing trend in the use of frameworks
          in public procurement. 207 We have heard evidence to suggest that there is
          considerable variance between frameworks, for example, in the extent to which
          they are underpinned by committed schemes208 and the number of suppliers within
          them. 209

3.57      Market participants value the use of frameworks for several reasons. For example,
          stakeholders have highlighted that:

          (a)    Procuring through frameworks can reduce time, cost 210 and uncertainty by
                 facilitating working relationships with suppliers. 211

          (b)    Longer-term frameworks build relationships and trust. 212

          (c)    Further, multiple Tier 1 firms submitted that frameworks allow for certainty of
                 repeat work, compared with open competitions that require a higher upfront
                 investment of time, resource and risk. 213

3.58      However, there are also drawbacks to using frameworks where they are not well-
          designed, which raises barriers to entry for some firms and adds to system costs
          of procurement. Examples of these drawbacks include:




206 Cabinet Office (2021), An Independent Review of Public Sector Construction Frameworks, p2.
207 Specifically, NAO found government procured 72% of its large contracts through frameworks in 2021-2022, compared

to 43% in 2018-2019. NAO (2023) Lessons learned: competition in public procurement, p10.
208 For example, there are frameworks with a known, quantifiable, predetermined committed number of or projects. There

are also frameworks where the idea of what is needed is known but the specific schemes are not, eg a number of local
authorities knowing they've got a capital programme of works for their highways, but not the specific projects. Note of
meeting with [].
209 Note of meeting with the sector panel [].
210 NAO (2023) Lessons learned: competition in public procurement, p10; Submissions to the CMA [].
211 Response to the CMA’s information request []. A sector panel member also noted that in Scotland, some public

sector bodies favoured using frameworks as they are under time pressure and can get a contractor on-board quicker at
times, without having to conduct a mini-competition. Note of meeting with sector panel [].
212 Note of meeting with the sector panel [].
213 Responses to the CMA’s information requests [].




                                                          68
          (a)     Awarding contracts to the pre-selected group of suppliers on long-standing
                  frameworks may exclude new entrants. 214

          (b)     Some frameworks provide participating suppliers with little or no guaranteed
                  work, despite the costs they incurred to join the framework. For example,
                  multiple Tier 1 and 2 firms reported experiencing abortive procurement costs,
                  where they successfully entered frameworks which were later cancelled, or
                  where the advertised volumes of work did not fully materialise. 215

          (c)     Once on a framework, there can be further costs to gain work as a result of
                  mini-competitions, which can be inefficient. 216 The degree to which this is
                  inefficient in practice depends on the level of additional cost placed on
                  suppliers (and procurers) from running the mini-competition compared with
                  the benefit from ensuring the particular piece of work is undertaken by the
                  most suitable supplier on the framework.

          (d)     There are issues with complexity and design of frameworks, including many
                  overlapping frameworks 217 (which can lead to duplication of costs) and a
                  sometimes disproportionate bidding process relative to the framework’s
                  purpose. 218

          Developments in best practice use of frameworks

3.59      There have been two relatively recent developments that have the potential to
          address some of the limitations of frameworks identified above: the 2021 Gold
          Standard Report and the Procurement Act 2023.

          (a)     In 2021, an independent review of public sector construction frameworks was
                  commissioned by Cabinet Office. 219 The report from this review (the Gold
                  Standard Report) sets out 24 recommendations that establish a ‘gold
                  standard’ for the assessment of new frameworks. These recommendations
                  covered points such as: ensuring that frameworks offer sustainable pipelines
                  of work; harmonising, digitising and rationalising framework demand;
                  reducing procurement costs by consistent and proportionate assessment of
                  economic and financial standing of firms; and considering the optimum
                  duration, scope and continuity of framework call-offs as part of the framework
                  strategy to respond to industry concerns regarding inefficient and costly mini-
                  competitions. This report was endorsed in the 2022 update of the


214 Responses to the CMA’s information requests [].
215 Responses to the CMA’s information requests []; Balfour Beatty’s response to the CMA’s invitation to comment, p8.
216 Responses to the CMA’s information requests [].
217 Note of meeting with the sector panel [].
218 FM Conway's response to the CMA's invitation to comment, pp4-5.
219 The review examined framework procurement documents, contracts, guidance and case studies shared by 20 clients

and framework providers, with additional contributions from clients, framework providers, industry membership
organisations, consultants, contractors, specialists and advisers. Questionnaires were designed for participants to share
views and experiences as to how current frameworks operate. Gold Standard Report, p94.


                                                           69
                  Construction Playbook, 220 and a ‘Constructing the Gold Standard’ verification
                  scheme was launched in November 2023. 221

          (b)     In England, Northern Ireland and Wales, the Procurement Act 2023
                  introduced a new concept of an ‘open framework’, 222 which provides
                  contracting authorities with the flexibility to appoint new suppliers during the
                  life of a procurement framework. 223 The Procurement Act 2023 also
                  introduced a new purchasing tool, ‘dynamic markets’. Broadly speaking,
                  dynamic markets are lists of pre-approved qualified suppliers (those who
                  have met the ‘conditions for membership’) that remain open to new members
                  throughout their lifespan who are eligible to participate in future
                  procurements. 224 These also reflect the recommendations of best practice
                  outlined by the Gold Standard Report by allowing for ongoing supplier
                  engagement and ensuring a diverse range of suppliers (including SMEs) can
                  contribute to public contracts. 225 The introduction of open frameworks and
                  dynamic markets could help overcome some of the limitations of frameworks
                  in terms of excluding new suppliers.

3.60      As set out in Appendix A, our evidence-gathering indicates that while a number of
          public authorities are adhering to the recommendations, 226 they are not yet being
          consistently adopted or fully effective in driving best practice.

          (a)     In particular, there is scope for wider implementation of the Gold Standard
                  Report across the devolved nations, as some national guidance documents
                  have not explicitly endorsed the Gold Standard Report. 227 The Welsh
                  Government also noted that several Construction Playbook principles align
                  with existing the Welsh Government practice, and wider adoption of the Gold
                  Standard framework would be beneficial. 228



220 Constructing Excellence, Constructing the Gold Standard Verification Scheme, accessed on 19/03/26.
221 Constructing Excellence, Constructing the Gold Standard Verification Scheme, accessed on 19/03/26.
222 Open framework is a scheme of frameworks that provides for the award of successive frameworks on substantially

the same terms. A reference to an award on ‘substantially the same terms’ is a reference to an award that could be made
by reference to the same tender or transparency notice without substantial modification (section 49(9) Procurement Act
2023). Section 49 of the Procurement Act 2023. As the Procurement Act 2023 does not apply to a devolved Scottish
authority in most circumstances (except where a devolved Scottish authority carries out procurement falling within
section 115A of the Procurement Act 2023), the provisions on frameworks at section 45-49 of the Procurement Act 2023
will not generally be applied to devolved authorities in Scotland.
223 Section 49(2) Procurement Act 2023. Open frameworks must be reopened at least once during (i) the period of three

years beginning with the day of the award of the first framework in the scheme, and (ii) each period of five years
beginning with the day of the award of the second framework in the scheme.
224 A dynamic market is not a public contract, it is more akin to a pool of suppliers (s35(5) PA23). The ‘dynamic’ part

refers to the fact that they must remain open to new suppliers to join at any time. Contracts are awarded under dynamic
markets using the competitive flexible procedure.
225 Trowers & Hamlins, Procurement Act 2023 – Frameworks and Gold Standard, accessed on 12/02/26.
226 The Gold Standard verification scheme has certified a few contracting authorities that procure civil engineering works,

including the Crown Commercial Service and SCAPE. National Highways told us that they are compliant with all aspects
of the Gold Standard Report, where it is used as a checklist when procuring to ensure they are guided by principles
outlined in the report.
227 The Scottish Government (2019), Construction Procurement Handbook; the Northern Ireland Executive (2025), Public

Procurement Policy Statement.
228 Note of meeting with the Welsh Government [].




                                                           70
          (b)    The CMA’s evidence gathering has also identified several of the same
                 concerns the recommendations were designed to address, such as lack of
                 clarity as to the pipelines of work that are planned or committed to be
                 procured under specific frameworks, and onerous and inconsistent
                 processes.

3.61      In addition, as further set out in Appendix A, there is also some further scope to
          improve the design of frameworks in various ways which would align with the
          recommendations, such as authorities sharing frameworks (which would assist in
          ensuring sufficient pipelines of work) and standardising some elements of their
          design to a greater extent – although we note there may be limitations to the
          extent to which this is feasible given differences between procuring authorities and
          their requirements.

3.62      There are a number of reasons that could explain why the recommendations in the
          Gold Standard Report and tools in the Procurement Act are not being as widely
          adopted as intended:

          (a)    There may be existing frameworks that do not align with best practice as they
                 were procured before the Gold Standard Report was published in 2021, or
                 endorsed in the 2022 Construction Playbook update.

          (b)    Other aspects of how the market is working may impede how far the
                 recommendations can be implemented. For example, limitations in pipeline
                 certainty and ability to set out portfolios or long-term contracts, are likely to
                 inhibit the effective design of projects procured through frameworks.

          (c)    Until there are more examples of these new approaches being used, some
                 framework owners may be risk averse in how they use them. One sector
                 panellist noted that Crown Commercial Service (CCS) is launching new
                 commercial framework agreements under the new Procurement Act powers,
                 which offers new flexibility under frameworks and under the competitive
                 flexible procedure. However, there is a lack of case law on the Procurement
                 Act 2023 and a lack of practical experience with frameworks under this new
                 legislation, leading to some risk-aversion as regards the opportunities under
                 this new legislation. 229

          (d)    Some elements may be being implemented, but not as far as industry would
                 like. For example, some suppliers may view any form of mini-competition
                 once they are on a framework as unnecessary, and so continue to argue this
                 should be removed from framework design even where the cost of it has




229 Note of meeting with the sector panel [].




                                                  71
                  been reduced as far as possible. However, such further competition may be
                  warranted to ensure the best placed contractor takes on that work.

3.63       Some of these reasons are less problematic than others, but in the round, we
           consider more should be done to embed the recommendations.

           Open competition

3.64       As set out in Appendix A, open competition is generally used where a framework
           would not be suitable, for example due to the high value of the work or the pipeline
           of work being insufficient to justify a framework. However, open competition is
           generally more costly for both suppliers and public authorities compared to
           procuring via a framework (once it has been set up). For example, there is a time
           cost associated with open procurement methods versus procuring through
           frameworks, particularly with larger projects. 230 Network Rail submitted that open,
           competitive procurement is more resource-intensive and slower. 231

3.65       Stakeholders have highlighted scope to reduce some of these costs, and so make
           competitive processes less resource-intensive for both procurers and suppliers.
           Responses to the interim report highlighted scope for:

           (a)    greater standardisation of procurement across public authorities (for example
                  through standardised pre-qualification questionnaires and accreditations, 232
                  and use of standard templates, 233 among other suggestions); and

           (b)    greater digitalisation, as intended by the launch of the new Central Digital
                  Platform in connection with the Procurement Act. 234 Balfour Beatty stated this
                  platform has not seen the expected simplification or standardisation of pre-
                  qualification submissions expected and suggested it could be developed
                  further. 235 Some respondents also suggested ensuring that the information
                  requested is proportionate to the project, 236 although we note this should not
                  be at the expense of public authorities having the information they need to
                  make the best choice between bidders.

3.66       We consider it is likely there is scope to reduce some of the costs of open
           competition as suggested above, although note there are likely to be limits to how
           far some of these suggestions can be adopted. For example, some aspects of
           procurement are likely to differ across public authorities for good reason, and as



230 Response to the CMA’s information request [].
231 Network Rail’s response to the CMA’s information request [].
232 Combined Response to the CMA's interim report, question 7.
233 Balfour Beatty and ACE’s responses to the CMA’s interim report, question 7.
234 The Procurement Act 2023 legislated for provision of a central digital platform, where all suppliers can input their

commonly used information. GCF, Central Digital Platform - factsheet, accessed on 12/03/26.
235 Balfour Beatty’s response to the CMA’s interim report, question 7.
236 Balfour Beatty and CECA’s responses to the CMA’s interim report, question 7.




                                                             72
          noted there is a minimum level of information authorities will need to be able to
          properly assess bidders.

3.67      There are a number of reasons why making open competition as efficient as
          possible is important, beyond ensuring best use of the scarce resources of both
          suppliers and procurers. Given that open competition can be used for the most
          high value projects, it is important that the competition to deliver these is as
          effective as possible to ensure value for money is achieved. Reducing the cost of
          open competition may also make it a more viable option in a wider range of
          circumstances, resulting in more competitive outcomes.

          Conclusions on procurement methods

3.68      The evidence set out above and in Appendix A indicates there is scope to reduce
          the cost and complexity for suppliers in bidding for both frameworks and open
          competition, which should induce stronger competition. With regard to frameworks,
          a previous independent review identified a number of recommendations to
          improve the use of frameworks. 237 These have since been adopted in the
          Construction Playbook, and some of these are reflected in developments under
          the Procurement Act 2023. However, the extent to which these recommendations
          are being followed appears to be inconsistent. While open competitions are always
          likely to be more costly than using a framework, there may be scope to reduce the
          costs of these processes through greater standardisation and digitalisation, and
          ensuring the process is proportionate.

Procurement processes and barriers to entry

3.69      Beyond the procurement method, other aspects of the design of the procurement
          process can impact competitive dynamics.

3.70      The evidence shows there are a number of ways procurement processes can
          raise barriers to entry or expansion, negatively affecting the market structure as
          well as project outcomes, as set out below:

          (a)     The overall design of the process may deter potential bidders, particularly
                  smaller firms, if it requires high commitments of time and resource to
                  participate. Multiple firms have told us that lengthy and/or complex
                  procurement processes 238 are costly, with a number of Tier 1 firms reporting



237 Gold Standard Report.
238 A Tier 1 firm, Amey, and Tier 2 firm, D Morgan, specified this in relation to competitive tenders, though Amey

caveated that this is not necessarily a bad thing as it allows solutions to be developed and refined in close consultation.
Two other Tier 1 firms, Morgan Sindall, Laing O'Rourke submitted this in relation to frameworks, where mini competitions
can be costly to bid and lead to barriers. Amey's response to the CMA's information request []; D Morgan's response
to the CMA's information request []; Morgan Sindall's response to the CMA's information request []; Laing
O'Rourke's response to the CMA's information request [].


                                                            73
                 that this acts as a barrier to entry and expansion in the market. 239
                 Participants in the CMA’s market research reported significant time and
                 burden involved in assessing whether to bid and then, if there is a decision to
                 do so, in preparing proposals, with days spent by legal experts, quality
                 experts, and others alongside those who are core to determining project
                 approach such as surveyors, estimators, and engineers. 240 Similarly,
                 National Highways and Network Rail said that costly, resource-intensive
                 procurement processes can deter smaller companies. 241 National Highways
                 noted smaller or entrant companies may be particularly deterred given the
                 significant volatility experienced across their sector. We discussed in the
                 previous section, and in Appendix A, that there may be ways to reduce the
                 resource burdens of both framework and open competition procurement.

          (b)    Tender evaluation criteria and contracts may disadvantage those seeking to
                 enter new markets where they implicitly or explicitly require specific
                 experience. Three Tier 1 firms and a Tier 2 firm told us that requiring prior
                 experience and/or proven track records in the evaluation model can act as a
                 barrier to entry for firms in this market. 242 Similarly, participants in the CMA’s
                 market research indicated the requirement or perceived preference for
                 evidence of previous work on public infrastructure (rather than similar private
                 infrastructure experience) was seen to favour incumbents and reduce interest
                 in bidding for smaller or new entrants to the market. 243

          (c)    A lack of, or limited, actionable feedback following unsuccessful bids may
                 also demotivate suppliers and miss opportunities to support stronger bids
                 and competition in future. 244 Two Tier 1 firms reported receiving feedback
                 against criteria that they perceived to be subjective. One Tier 1 firm received
                 this feedback specifically in relation to a collaboration workshop assessment,
                 when being evaluated against incumbent firms. 245 Some participants in the
                 CMA’s market research mentioned that they received feedback on failed
                 bids, but information can feel limited and come via procurement teams or
                 non-specialists. 246 Without clear, constructive feedback, firms might struggle
                 to improve future bids or feel discouraged from participating.

3.71      Relatedly, existing Tier 1 suppliers are more likely to understand a given public
          authority’s procurement process and evaluation approach, giving them a
          competitive advantage compared with non-incumbents with limited past


239 Responses to the CMA’s information requests [].
240 Jigsaw Research (2026), Qualitative Research with Civil Engineers, p61.
241 National Highways' response to the CMA's information request []; Network Rail's response to the CMA's information

request [].
242 Responses to the CMA’s information requests [].
243 Jigsaw Research (2026), Qualitative Research with Civil Engineers, p61.
244 Note of a meeting with [].
245 Responses to the CMA’s information requests [].
246 Jigsaw Research (2026), Qualitative Research with Civil Engineers, p52.




                                                          74
           experience. Multiple Tier 1 suppliers cited reasons why long-standing relationships
           with public authorities could be beneficial to incumbent firms. 247 Public authorities
           also recognise repeat interactions with suppliers can shape competitive dynamics.
           For example, National Highways notes that a familiarity with its ways of working
           can strengthen collaboration with a supplier and support increased efficiency, but
           that this can also pose a challenge to other potential suppliers who need to build
           their alignment with them. 248 Network Rail told us it focuses on infrastructure
           experience instead of rail-specific experience to incorporate suppliers from the
           wider market. However, suppliers who have frequent interactions with Network
           Rail are more likely to get onto frameworks as they are familiar with Network Rail’s
           tender process. 249

3.72       There may also be less resource required by public authorities in working with
           familiar suppliers. As noted above, familiarity with a public authority’s ways of
           working can increase efficiency. Contracting with larger firms also saves from the
           cost of managing multiple points of contact along the supply chain. 250

3.73       While there are some efficiencies in working with familiar suppliers, there also
           appear to be some unnecessary frictions in processes which may disadvantage
           new or smaller suppliers, such as unnecessarily complex processes or lack of
           feedback. Our view is that there are therefore opportunities to reduce the barriers
           faced by new or smaller firms in how the procurement process works and how
           they are evaluated, so that they are not unduly disadvantaged compared with
           other bidders.

Bid evaluation

3.74       Procurers also shape the market through the way they evaluate bids. Bid
           evaluation criteria set the parameters on which firms will compete and so can
           encourage firms to focus to a greater or lesser degree on price, quality, innovation
           and other non-price criteria. We consider in this section concerns that procurers
           are disproportionately focused on (upfront) price, potentially at the expense of
           other important considerations, such as value for money, deliverability and quality.

3.75       Across Tier 1 and Tier 2, some suppliers told us that price is usually the main
           deciding factor in contract award decisions, 251 which some suppliers indicated was
           due to budgetary and funding constraints. 252,253 A weighting that overly favours



247 Responses to the CMA’s information requests [].
248 National Highways’ response to the CMA’s information request [].
249 Note of meeting with Network Rail [].
250 Transport Scotland told us it can be efficient for the client to have a single Tier 1 point of contact. Transport Scotland’s

response to the CMA’s information request [].
251 Responses to the CMA’s information requests [].
252 Responses to the CMA’s information requests [].
253 Some participants in the CMA market research mentioned that it was common for procurers to focus on finding the

cheapest bidder, but many public authority procurers now put more value on quality. They noted budgets for some


                                                              75
           price in evaluation criteria can incentivise firms to under-price risk or strip out
           innovation. 254,255 For example, a panel member noted evaluation models can be
           output-focused rather than outcomes-focused and this may not achieve best value
           for public money. In particular, an evaluation which focuses on lowest price may
           not sufficiently weight the benefits of keeping established teams together, meaning
           learning is lost between projects. 256 An over-focus on price can deter some firms
           from competing for the contract. 257 It can also make a strategy of under-pricing
           bids more likely to be successful. A few participants in the CMA’s market research
           alleged that some competitors may under-price to win work, which made
           competing hard and added cost in the long run. Such under-pricing may be
           intentional (to win work at a loss or no profit to generate experience in a new
           sector or to keep staff working, sometimes with the aim of renegotiating variations
           at a later stage), unintentional (as a result of error or inexperience and failure to
           understand risks, which can lead to variations, renegotiations, or disputes or
           failure to deliver) or the result of delivering lower quality work that requires more
           maintenance or has shorter lifespan. 258

3.76       However, we have seen evidence from some public authorities that they are
           mindful of the impact of the weighting of the various evaluation criteria. 259 There
           are also many non-price attributes which may be evaluated in different ways,
           including quality, 260 innovation, 261 and social value. 262 National Highways and


projects can be tight, especially in rail, and focus on minimum upkeep instead of fixing issues for the long-term. Jigsaw
Research (2026), Qualitative Research with Civil Engineers, p52.
254 For example, Balfour Beatty submitted that tender valuations with a narrow focus on cost can discourage the adoption

of new technologies and Modern Methods of Construction, which may require higher upfront investment but deliver long-
term savings, productivity gains, and sustainability benefits. Balfour Beatty’s response to the CMA’s invitation to
comment, p8. Kier told us that certain public sector clients have prioritised cost certainty over innovation and that the
procurement process can therefore present significant barriers to implementing innovations. Kier’s response to the
CMA’s information request [].
255 Responses to the CMA’s information requests []; Amey's response to the CMA's invitation to comment, question 2.
256 Note of meeting with the sector panel [].
257 Some participants in the CMA’s market research reported that their firm would decide not to bid on price-driven

contracts if they felt they could not deliver a high-quality service for the price. This was also to avoid a ‘race to the
bottom’ on price (and avoid existential risk). Jigsaw Research (2026), Qualitative Research with Civil Engineers, p58.
258 Jigsaw Research (2026), Qualitative Research with Civil Engineers, p58.
259 For example, Transport Scotland told us they are moving away from focusing more on price towards a more balanced

approach where quality and price are more equally weighted, in line with wider industry and market trends. Transport
Scotland’s response to the CMA’s information []. National Highways’ procurement principles are intended to avoid
defaulting to lowest-cost tendering. National Highways response to the CMA’s information request []. For competitive
tenders, Network Rail evaluates bids using a price/technical weighting when awarding contracts. It also noted that it may
use target cost or cost emerging pricing strategies instead of asking a supplier for a lump sum fixed price when the scope
of a project is uncertain. Network Rail’s response to the CMA’s information request [].
260 For example, some suppliers told us that a proven track record of delivering similar contracts to high standards

assures clients that a supplier will be able to achieve similar results on the project being procured for. Responses to the
CMA’s information requests []. Costain told us that some recent procurement processes have required a qualitative
response from tenderers about the client’s budget for the project, and this has added an increased quality dimension to
the commercial elements of the bid, although Costain added that this did not drive the tender outcome. Costain’s
response to the CMA’s information request [].
261 For example, Balfour Beatty told us that public authorities increasingly value digital technology to improve

constructability and investment in leading-edge manufacturing facilities, especially for rail. Balfour Beatty’ response to the
CMA’s information request [].
262 For example, multiple suppliers have commented that sustainability is a priority due to clients’ increased focus on net-

zero ambitions or carbon targets. Responses to the CMA’s information requests []. Kier told us that a local authority
procuring a road maintenance contract might place a higher weighting on social value due to the longer length of the
contract, and have expectations on the contractor’s ability to help deliver the local authority’s strategic outcomes eg


                                                             76
           Transport Scotland told us that non-price criteria are important considerations. 263
           For example, National Highways told us quality is prioritised in certain
           circumstances, and it has been exploring ‘absolute’ assessment methodologies,
           such as price per quality point or weighted value for money index quality
           assessment. 264

3.77       Effective evaluation of non-price criteria requires time and expertise. 265,266 For
           example, we have heard from National Highways that effectively evaluating the
           social value generated by a bid is a constraint when contracting projects 267 as it
           requires time and resource to plan and implement. Where it is difficult to assess
           non-price criteria, putting more significant weight on those criteria is unlikely to
           assist in rebalancing evaluations alone, as public authorities are not able to
           properly differentiate between offers, and so it is likely to be difficult for firms to
           differentiate themselves effectively. Public authorities need to have the expertise
           to properly evaluate more difficult to assess criteria for such rebalancing to be
           effective.

3.78       There is some variation in whether public authorities have access to this expertise
           in-house or via external consultants. For example, in terms of current capabilities,
           National Highways told us that it has tools to support tender processes and
           commitment to monitor delivery, to ensure compliance to legislation and maximise
           public benefit. 268 Several Network Rail regions also reported using internal
           expertise in evaluating quality. 269 For Northern Ireland, DfI highlighted difficulties in
           recruiting specialist engineering/procurement staff continues to be prevalent. 270
           However, the Welsh Government and Transport Scotland have reported the use of
           external agents when evaluating criteria that require specialist technical
           knowledge. 271 Local authorities vary in their level of in-house expertise, although
           we set out later in the public authority capacity constraints section in general they
           may struggle more with attracting and retaining technical expertise.

3.79       Further, in principle some benefits may not be properly weighted in evaluation
           criteria as they have wider impacts than on the specific project, known as spillover



reducing unemployment for young people in the local area by providing opportunities. Kier’s response to the CMA’s
information request [].
263 Transport Scotland’s response to the CMA’s information request [].
264 National Highways response to the CMA’s information request [].
265 Cabinet Office (2021), Bid Evaluation guidance note, p16.
266 Mott MacDonald submitted that public sector organisations no longer have the depth of technical engineering

capability to fully understand the technical challenges and therefore are not able to differentiate supply chain solutions
effectively. This leads to the over reliance of price criteria to the detriment of quality in evaluations. Mott MacDonald’s
response to the CMA’s invitation to comment, p5.
267 In its Bid Evaluation guidance, the Cabinet Office state that social value should be explicitly evaluated, and when

properly accounted for it can help to level the playing field for all types of businesses. Cabinet Office (2021), Bid
evaluation guidance note, p11.
268 National Highways' response to the CMA's information request [].
269 Network Rail’s submissions to the CMA [].
270 DfI’s response to CMA’s information request [].
271 Note of meeting with the Welsh Government []; Transport Scotland's response to the CMA's information request

[].


                                                             77
          effects. Spillover effects are impacts of economic activity that affect economic
          actors (society, businesses, and government) that are not directly undertaking the
          activity. 272 These can comprise rent (or market) spillovers, knowledge spillovers,
          and product/network spillovers. 273 A previous report estimates that the social
          returns from spillovers across R&D investments accounts for a rate of return in the
          region of 20-100%. 274

3.80      We consider that public authorities are generally unlikely to consider the positive
          spillover effects into the wider economy of encouraging innovative approaches or
          investment into new technologies or processes. This is understandable, given that
          individual public authorities will generally be most concerned with providing the
          best outcomes for their individual area of focus, rather than considering benefits
          for the broader economy. In general, we would not expect individual public
          authorities to promote industry-transforming innovations without coordination or
          encouragement by central government.

3.81      We note that procuring authorities such as National Highways and Network Rail,
          as well as the UK government, have some initiatives designed to provide areas of
          focus for innovation, in some cases backed by funding. 275 However, there appear
          to still be challenges in getting successful innovations adopted into business-as-
          usual projects, as set out further in Appendix A and the regulation section.

3.82      In general, we have found that public authorities are conscious of considering non-
          price criteria such as quality and innovation in their assessment and there are
          some examples of good practice. However, robust assessment and reward of
          innovative approaches can be challenging, particularly due to the safety-critical
          nature of projects and challenges in evaluating novel propositions. We have heard
          that weighting or assessment by public authorities means that price, rather than
          harder to assess criteria such as quality and whole life cost, will often determine
          the outcome, despite guidance in the Construction Playbook. 276 Revisiting how
          tenders are evaluated may improve the incentives on firms to offer new ways of
          working which offer long-term savings and productivity improvements.

Allocation of risk and incentives for efficiency

3.83      Once a supplier is appointed, the nature of incentives and competitive pressures
          change significantly. Incentives to deliver to time and budget and to do so
          efficiently are determined primarily through the allocation of delivery risk (ie the
          risk that costs are higher than anticipated, either due to unforeseen events or


272 ICF GHK, An economic analysis of spillovers from programmes of technological innovation support, p21.
273 ICF GHK, An economic analysis of spillovers from programmes of technological innovation support, p21.
274 ICF GHK, An economic analysis of spillovers from programmes of technological innovation support, pp14-15.
275 For example, National Highways has Designated Funds it allocates focused on themes and activities that can

enhance road users and communities’ experiences on or near the SRN. National Highways, Designated Funds,
accessed on 27/02/26. Details of further initiatives are set out in Appendix A.
276 The Construction Playbook, p62.




                                                         78
           inefficiency) in contracts between the public authority and contracting firm, and
           broader contractual control mechanisms.

3.84       Pricing mechanisms allocate the burden of delivery risk between the public
           authority and contracting firm. Different contract options allow for different
           allocations of risk and reward suitable for different types of projects:

           (a)    Lump sum contracts (most suitable for small or ‘straightforward’ projects)
                  provide the procuring body with cost certainty and the contracting firm with a
                  strong incentive to deliver below the expected cost as the firm receives any
                  cost savings below the lump sum price, 277 but conversely the firm bears the
                  risk of overrun.

           (b)    Cost reimbursable contracts (often used for high-risk or emergency works)
                  place the risk of cost overruns onto the procuring authority, 278 as well as
                  reducing the firm’s incentive to operate efficiently and minimise costs.

           (c)    Target cost contracts share cost underspend or overspend between the
                  procuring body and firm based on a pre-agreed allocation, otherwise known
                  as the ‘pain/ gain’ mechanism. Target cost contracts can encourage
                  collaboration across delivery as both parties have a stake in the delivery cost,
                  and facilitate more appropriate allocation of risk between the public authority
                  and contracting firm compared with lump sum or cost reimbursable contracts,
                  meaning risks are more likely to be borne by the party most able to manage
                  and mitigate the risk. 279

3.85       In addition, risk is allocated between the contracting firm and its subcontractors
           down the supply chain using similar contract mechanisms. In this section, we first
           consider how risk is allocated between public authorities and Tier 1 firms, including
           the impact of how risk is allocated on performance, and what factors affect risk
           allocation. We then consider how risk is allocated further down the supply chain.

           How risk is allocated between public authorities and Tier 1 firms

3.86       We have received mixed evidence on whether public authorities try to shift risk
           inappropriately onto contractors: many of the Tier 1 and Tier 2 firms we have
           engaged with considered that risk is generally allocated appropriately, 280 but


277 Note meeting with [].
278 Responses to the CMA’s information requests [],
279 Responses to the CMA’s information requests []. Target cost contracts may also incentivise firms to work efficiently

to keep the delivery cost below or as close to the target cost as possible to maximise their share of the gain/minimise
their share of the pain, although how efficient this is in absolute terms depends on how accurately the target cost
specified reflects efficient costs. To the extent there remains an asymmetry of information between procurers and
contractors as to realistic efficient costs, the target cost may be set too high.
280 Amey p3, BAM Nuttall p11 and Ringway Infrastructure’s p4 responses to the CMA’s invitation to comment;

Responses to the CMA’s information requests []. For example, BAM Nuttall stated that the ‘road and rail market is in
many ways ahead of other sectors in terms of fair risk allocation across different parties’ although it also stated ‘there are
still improvements that can be made’: BAM Nuttall’s response to the CMA’s invitation to comment, question 5d, p11.


                                                             79
           several expressed concerns that too much risk is often placed on contractors. 281
           For example, Balfour Beatty told us that ‘contractors are frequently asked to
           accept risks – such as unforeseen ground conditions, delays in planning
           approvals, utility diversions, or third-party consents – that are outside their
           control’. 282

3.87       The collapse of Carillion has been cited to us by a contractor as an example of the
           negative consequences of placing too much risk on contractors. 283 This is
           supported by findings from the Institute for Government and other public inquiries
           into Carillion. 284 There appears to have been some rebalancing of the allocation of
           risk since the collapse of Carillion, with some national public authorities shifting
           towards taking on more client risk in contract strategies, 285 in part due to firms
           becoming more selective in the contracts they bid on given past experience and
           increased demand for civil engineering capacity. 286 The Welsh Government
           referred to a ‘danger [that the contracting community] don’t feel that they should
           take any risk anymore. They won’t take ground risk. They don't want to take
           weather risk. They don't take design risk’. 287

3.88       Particular concerns around the use of ‘Z clauses’ in risk allocation have been
           raised by a range of market participants. 288 Some Tier 1 and Tier 2 firms have told
           us that Z clauses (essentially amendments to standard form industry contracts)
           are used to allocate risk, including to allocate risks to the contractor that are
           outside its control, such as altering the party liable for costs related to inflation,

281 AtkinsRéalis p3, Balfour Beatty p9, BAM Nuttall p12 and Murphy’s p2 response to the CMA’s invitation to comment;

Responses to the CMA’s information requests [].
282 Balfour Beatty’s response to the CMA’s invitation to comment, question 4d.
283 A Tier 1 supplier described that the risk appetite of contracting firms changed following the collapse of Carillion. Note

of meeting with [].
284 The IfG report into the collapse of Carillion stated ‘Private companies can price and manage some risks well, but

government has often attempted to transfer all risks, including high-cost, low-probability risks, that are beyond the control
of suppliers. These cannot be competitively priced by the private sector, which means transferring them reduces
competition and raises costs for government’. Institute for Government (2020), Carillion: Two years on, p21. UK
governments transferring risk to contractors which they cannot manage was also highlighted by Public Administration
and Constitutional Affairs Committee (2018), After Carillion: Public sector outsourcing and contracting, paragraph 63.
285 For example, prior to the Coronavirus (COVID-19) pandemic, the Welsh Government would pass the risk of inflation

and statutory undertaker diversions programmes onto the contracting firm, but now gives due consideration to handling
those risks itself. Note of meeting with the Welsh Government []. Transport Scotland historically used bespoke
construction contracts which placed much of the risk onto the contracting firm, but now adopts a more collaborative
approach. Note of meeting with Transport Scotland []. Network Rail Eastern region stated that ‘generally over time,
Network Rail originally did mostly lump sum, then we moved to target cost and now we're in the space of the teams
decide which is most appropriate for the work they're trying to deliver. Note of meeting with Network Rail Eastern [].
286 Some national public authorities have expressed that contracting firms are either reluctant or will not bid on contracts

with too much risk, meaning public authorities have to consider contract strategies involving increased risk sharing.
Notes of meetings with []. One sector panel member described that the allocation of risk can be cyclical and
associated with the amount of choice for suppliers, they indicated the market is currently ‘buoyant’ and firms are able to
push back against what is seen as unfair allocation of risk and be more selective in their choice of project. Note of
meeting with the sector panel [].
287 Note of meeting with the Welsh Government [].
288 Z clauses allow users to include additional, bespoke conditions of contract. Z clauses may be used for several

reasons, for example where there has been experience of a standard clause being interpreted in an unintended way, or
to reference to other agreements or external processes that need to be complied with, particularly on larger projects.
NEC (2025), NEC4 option Z for additional contract conditions: clarity or curse?. This webpage also notes NEC has
published public-sector Z clauses addressing the Official Secrets Act, confidentiality obligations and site security, and
that the Crown Commercial Service (CCS) also has ‘boilerplate’ Z clauses covering admittance to site, anti-bribery and
corruption, freedom of information, building information modelling, data protection and cyber risk.


                                                             80
          weather or changes in law. Amendments can also add complexity to the contract
          which can act as a barrier to participation. 289 We note that public authority
          contracts with Tier 1s can contain dozens, and sometimes hundreds, of Z clauses,
          although we note not all of these will be for the purpose of reallocating risk. 290 We
          understand that there are appropriate uses for Z clauses, with National Highways
          and the Welsh Government telling us that Z clauses are necessary to address the
          bespoke requirements of each project. 291 However, using Z clauses to reallocate
          risk runs counter to New Engineering Contract (NEC) 292 guidance as they can
          fundamentally alter the intended risk allocation and make the contract one-
          sided. 293

          Impact of risk allocation and incentives for performance

3.89      The Construction Playbooks states that ‘[t]he approach to risk management and
          proposals for risk allocation should be subject to extensive scrutiny before formally
          going to market.’ 294 This is because it is important to strike the balance in how risk
          is allocated to drive the right incentives for different parties.

3.90      On the one hand, placing too much risk on suppliers can lead to a range of
          negative outcomes. Examples of these outcomes include receiving fewer bids, 295
          raising barriers to participation for smaller and mid-size contractors, 296 higher bid
          prices, 297 and firms under-pricing risk, 298 which can lead to disputes. 299

3.91      On the other hand, suppliers need to be sufficiently motivated to deliver effectively,
          and public authorities need sufficient mechanisms to ensure this. As set out in

289 Responses to the CMA’s information requests []; Bam Nuttall's response to the CMA’s invitation to comment,

question 7, p15.
290 We received information from six Tier 1 suppliers on the average number of Z clauses contained in public authority

contracts broken down by NEC contract type. As set out in Appendix A, for roads contracts the average number of Z
clauses ranged from 22 for Option C contracts to 101 for Option B contracts and for rail ranged from 31 for Option B
contracts to 210 for Option E contracts, although we note contract types classified as ‘Other’ had fewer Z clauses on
average.
291 National Highways stated that ‘There is no such thing as an unamended NEC contract’, stating that NEC contracts

are ‘written in such a way as that they're universally applicable…but in their universality then they are not applicable
because […] each individual project or contract has its own peculiarities or bespoke requirements’. Note meeting with
National Highways []; and the Welsh Government indicated that it includes Z clauses around inflation, statutory
undertakers, design ownership and ground conditions. Note of meeting with the Welsh Government [].
292 The New Engineering Contract (NEC) is a suite of collaborative contracts used in the construction and engineering

industries for procurement of works, services, and supplies, currently on its fourth edition (NEC4). Different contract
options allow for different allocations of risk and reward suitable for different types of project.
293 NEC (2025), NEC4 option Z for additional contract conditions: clarity or curse?.
294 The Construction Playbook, p54.
295 Contracts seen as placing disproportionate risk on contracting firms can be unattractive, making firms more reluctant

to bid. FM Conway p5, Mott MacDonald p5, Taylor Woodrow pp5-6, Transport Scotland’s p9 responses to the CMA’s
invitation to comment.
296 For example, the CMA heard that inappropriate allocation of risk can push the market to those with the scale to afford

the limits of liability which have been incorrectly assigned. HIVE Collaboration’s response to the CMA’s invitation to
comment, question 5.
297 Taylor Woodrow’s response to the CMA’s invitation to comment, p8; Transport Scotland’s response to the CMA’s

invitation to comment, p9. For example, use of lump sum contracts places most of the risk on the contracting firm. These
firms then price this risk into their bid resulting in a higher price.
298 Response to the CMA’s information request [].
299 Taylor Woodrow’s response to the CMA’s invitation to comment, p6; Welsh Audit Office (2020), A465 Section 2 –

interim findings, pp15-22.


                                                           81
          Appendix A, some stakeholders have indicated that poor contractor performance
          or approach 300 and poor contract management 301 can be drivers of cost and time
          overruns, and so it is important for public authorities to have sufficient controls in
          place to minimise or mitigate these risks. Risk-sharing mechanisms also dull the
          incentive on firms to be as efficient as possible where they bear only part of the
          cost of inefficiency and so place more onus on public authorities to monitor
          performance on an ongoing basis.

3.92      To drive better market outcomes, it is important that all parties are incentivised to
          address issues and challenges effectively, requiring coordination and cooperation
          between public authorities, Tier 1 firms and the wider supply chain. Collaborative
          approaches to risk management can be a way to achieve this. A number of
          stakeholders have highlighted the importance of collaborative approaches to risk
          management. 302 This often goes hand in hand with appropriate allocation of risk,
          ensuring risk is shared between parties according to who is best placed to manage
          it. Several stakeholders also indicated that more appropriate risk sharing could
          lead to better outcomes specifically regarding innovation. 303

          Factors affecting risk allocation and management between public authorities
          and Tier 1 firms

3.93      Various factors impact how risk is allocated between public authorities and Tier 1s:

          (a)    Tier 1 capacity and willingness to accept risk: As noted above, one factor
                 influencing risk allocation being shifted more towards public authorities is
                 suppliers having greater choice as to which projects they take on, given
                 higher demand for civil engineering capacity.

          (b)    Maturity and certainty of scope: There is a link between the certainty of the
                 project scope and the ability to specify details in contracts: where the scope
                 is clear and well-developed, the contractor is less exposed to the risk of
                 subsequent changes and so mechanisms which share such risks are needed
                 less. National Highways and Network Rail submitted that the pricing
                 mechanism is in large part determined by the maturity of the scope. 304
                 Several suppliers also highlighted underdeveloped design and scope as one
                 of the key risk factors in delivering road and rail projects. 305 We have already
                 set out above our concern that public authorities are often not ensuring
                 scopes are appropriately specified.



300 Responses to the CMA’s information requests []; Note of meeting with [].
301 Responses to the CMA’s information requests [].
302 Responses to the CMA’s information requests []; Note of meeting with [].
303 BAM Nuttall, Kier and ACE’s responses to the CMA’s interim report, question 3.
304 National Highways’ response to the CMA’s information request []; Network Rail’s response to the CMA’s

information request [].
305 Responses to the CMA’s information requests [].




                                                          82
          (c)    Public authority capacity for risk management: Capacity constraints could
                 in principle also affect risk management, including the time allocated to risk
                 management activities. Network Rail submitted that although de-risking
                 future procurement stages is beneficial, it is also time-consuming. 306 We
                 have also identified concerns over whether public authorities have the
                 necessary commercial expertise to determine the appropriate allocation of
                 risk. 307 We consider capacity constraints on public authorities in more detail
                 in the capacity constraints section.

          (d)    Public authority need for budget certainty: Public authorities may also
                 prefer risk allocations which give them greater certainty as to outturn costs.
                 Some local authorities we have engaged with generally use lump sum
                 contracts that put most of the risk on the contractor, 308 with two local
                 authorities indicating that this is because they need cost certainty due to their
                 funding constraints. 309 However, we note that such an approach can lead to
                 higher overall costs, as firms may be incentivised to be more conservative in
                 their cost estimates in case potential downside risks to which they are
                 exposed come to pass.

          How risk is allocated between Tier 1 firms and subcontractors

3.94      Risk allocation down supply chains is also important for effective delivery of civil
          engineering projects. Poor contract management by Tier 1s can contribute to
          project delays, 310 while proactive engagement with the supply chain helps mitigate
          issues which may otherwise arise. 311

3.95      Similar to concerns around the allocation of risk between public authorities and
          Tier 1 firms, some parties have described Tier 1 firms passing down
          disproportionate or inappropriate levels of risk. 312 For example, participants in the
          CMA’s market research noted that risks such as ground risks or consequential

306 Network Rail’s response to the CMA’s information request [].
307 Note of meeting with the sector panel []. For example, one organisation stated; ‘Sometimes, those procuring at the

highest level (especially in the local government space) have limited expertise and / or resource and we feel that many
can struggle to balance risk fairly between supply chain and client.’ ACE’s response to the CMA’s invitation to comment,
page 6,
308 Notes of meetings with [].
309 Notes of meetings with [].
310 For example, the CMA’s market research found some reports of multiple consultants and Tier 1 managers on site who

are not involved in delivery, making liaison inefficient for Tier 2s. Tier 2 and Tier 3 firms also reported that some
managers and consultants seemed less incentivised to stick to timetable and avoid delays as they could get ongoing
management fees. However, we note there were fewer mentions of issues in general of contract management day-to-
day by public authorities or contractors higher up the supply chain, with more frustration with the original policymaking,
contracting and terms. Jigsaw Research (2026), Qualitative Research with Civil Engineers, pp66-67.
311 Several Tier 1 firms described taking active steps with their supply chain to minimise or avoid disruption when issues

arise. Responses to the CMA’s information requests [].
312 A E Yates, which acts as both Tier 1 and Tier 2, stated that the public sector has moved to a position where

commercial assessments and payment terms are fair and reasonable, but it does not see the same when working with
Tier 1 firms on publicly funded contracts, and instead sees Tier 1 firms seeking to pass down disproportionate levels of
risk. A E Yates’ response to the CMA’s information request []. One of the sector panel indicated that it sees risks being
passed down to their firm by Tier 1 firms which it is not well placed to manage, such as planning risks. Note of meeting
with the sector panel [].


                                                           83
           loss were often out of subcontractor’s control but allocated to them by Tier 1
           firms. 313 While others indicated Tier 1 firms pass on or retain risk according to who
           can manage them, 314 based on the evidence we have seen in the round we
           consider it is likely there are at least some instances where risk is passed on
           inappropriately.

3.96       The evidence we have gathered provides some indication that how risk is
           allocated down supply chains impacts how projects are being delivered. More
           specifically:

           (a)    Disproportionate risk being held by smaller Tier 2 and Tier 3 firms may
                  restrict innovation by these firms. Our market research indicates that SMEs,
                  including specialist contractors, are often well-placed to innovate and deploy
                  new technologies, but can be more vulnerable to cash flow issues and are
                  less equipped to handle downside risk. 315

           (b)    Information we have gathered on Tier 1 subcontracts shows that these can
                  also have a significant number of Z clauses (although as for public authority
                  contracts, not all will be designed to reallocate risk), particularly for road
                  contracts, which as noted above adds to the complexity of contracts. 316

           (c)    Public authorities may have limited visibility of the extent to which risk is
                  passed on, 317 and so may not be aware that risk is not being appropriately
                  managed.

3.97       There is some indication that there is a relationship between the approach taken
           by the public authority, and the approach which replicates through the rest of the
           supply chain. D Morgan stated that their approach to passing on risk to
           subcontractors is influenced by the strategy of the Tier 1 or public authority. 318
           Similarly, one of the sector panel indicated that the approach to cascading risk

313 Jigsaw Research (2026), Qualitative Research with Civil Engineers, p8.
314 Breedon indicated that the risks which tend to be passed down are those it can mitigate or sensibly price. Breedon’s

response to the CMA’s information request []. A sector panel member also said their firm retains or passes down risks
depending on who can manage them. Note of meeting with the sector panel []. Multiple Tier 1 firms submitted that they
allocate risk appropriately to subcontractors. Responses to the CMA’s information requests [].
315 Some participants in our market research noted smaller, specialist firms are well-placed to develop new products or

ways of working due to their specialist expertise. However, it was these same firms that were most vulnerable to cash
flow issues, late payments, and risk being pushed down the chain, meaning innovation was deprioritised in favour of
more existential factors. Jigsaw Research (2026), Qualitative Research with Civil Engineers, p72. We have noted
previously that multiple other stakeholders have said that innovation opportunities come from the lower tiers of the supply
chain. Responses to the CMA’s information requests [].
316 We received information from six Tier 1 suppliers on the average number of Z clauses contained in Tier 1

subcontracts broken down by NEC contract type. As set out in Appendix A, for roads contracts the average number of Z
clauses ranged from 42 for Option C contracts to 80 for Option A contracts and for rail ranged from 15 for Option A
contracts to 47 for Option E contracts, although we note contract types classified as ‘Other’ had fewer Z clauses on
average (there was also one Option C contract, which had 0 Z clauses).
317 We have heard from a local authority that it has no oversight of onward risk allocation, whilst noting that it is of interest

to them to maintain some level of oversight over this. Note of meeting with []. National Highways noted that it
outsources risk allocation as part of project management to the primary contractor, but continually monitors supply chain
risk through a dedicated team to inform preventative measures or appropriate resilience actions. Note of meeting with
National Highways [].
318 D Morgan’s response to the CMA’s information request [].




                                                              84
          down the supply chain is influenced by the contractual relationship with the public
          authority. 319 Therefore, public authorities may be able to indirectly drive a
          collaborative approach to risk and contract management throughout the supply
          chain.

          Conclusion on allocation of risk

3.98      Overall, the evidence we have considered does not point to a systematic
          misallocation of risk, either between procurers and contracting firms, or between
          the tiers of the supply chain, although there are likely to be instances where this
          does occur. Our view is that it is important that all parties are incentivised to
          address issues and challenges effectively, requiring coordination and cooperation
          between different contracting parties: public authorities, Tier 1 firms and the wider
          supply chain. As a result, we judge that allocation of risk should be better aligned
          with the ability to control these risks and create appropriate incentives for all
          parties in mitigating such risks. One way to achieve this would be through more
          consistent, collaborative approaches between parties to a contract or set of
          contracts to determine which risks are allocated to different parties, which would
          allow for more accurate assessments of risks and for parties to be more willing to
          accept risks they are best placed to manage. Much has already been done to set
          out best practice, so the key opportunity is ensuring best practice is adopted.

3.99      We note that the approach to risk allocation by public authorities may also be
          impacted by other factors we have considered, such as approach to scoping and
          capacity. We discuss the specific issue of risk aversion on the part of public
          authorities in more depth below.


Public authority capacity constraints

3.100     Public authority capacity determines the resource and expertise they have
          available to determine what projects to take forward, how best to procure them
          and how they oversee and manage their delivery. It may also influence the degree
          to which authorities are comfortable with different types of risk. To understand the
          significance of capacity constraints in this market, we have considered:

          (a)    evidence on skills shortages, and their impact;

          (b)    the degree to which public authorities collaborate and coordinate their
                 activities and share best practice as a way of boosting their capacity; and

          (c)    the role of risk appetite on the part of public authorities in driving outcomes,
                 and how capacity constraints may play a role in this.



319 Note of meeting with the sector panel [].




                                                 85
Skills shortages

3.101      Skills shortages in relation to civil engineering in general are well-documented.
           According to Department of Education research, there were 5,900 skills shortage
           vacancies in civil engineering registered in 2024, an 84 per cent rise from 2022. 320
           Further, modelling by Construction Industry Training Board (CITB) indicates the
           UK would need 1,470 additional civil engineers per year between 2024 and 2029
           to meet the increase in work it had identified (a 2.7% increase on the 2024
           workforce). 321 Multiple public authorities and suppliers raised concerns about the
           shortage of skills across the civil engineering sector, affecting multiple stages of
           project development – from planning and procurement, to delivery. 322 This
           industry-wide gap in expertise can contribute to extended procurement timelines
           and project delays.

3.102      While skills shortages affect both the demand and supply side, we consider gaps
           in capacity and skills on the demand side can have a significant effect on public
           authorities’ ability to procure effectively. We have heard particular concerns over
           the ability of public authorities to resource for, attract and retain sufficient staff with
           the necessary technical skills to manage different aspects of the procurement
           process effectively, such as:

           (a)     having the relevant knowledge and technical skills to set out project
                   requirements. 323 Particularly where public authorities are not using an
                   outcome-based approach, they will need to have sufficient expertise to
                   specify what they want, or at least to be able to vet what external designers
                   propose to ensure that it is fit for purpose and deliverable. 324

           (b)     having sufficient technical resource and time to effectively assess non-price
                   criteria, 325 given the need for such staff to deliver on day-to-day roles. 326
                   Evaluation teams need sufficient technical and commercial expertise,
                   supported by effective training, to be able to assess non-price criteria in
                   bids. 327



320 Department for Education, Step 6: Explore data - Create your own tables on employer skills survey, accessed on

11/05/26.
321 CITB and Oxford Economics (2025), Construction Workforce Outlook: Labour Market Intelligence Report 2025-29,

p11.
322 Responses to the CMA’s information requests []; Note of a meeting with []; ICE, Next Steps Panel Debate: What

are the pinch points that could derail the UK’s infrastructure ambitions?, accessed on 11/05/26.
323 Notes of meetings [].
324 Tier 2 and 3 participants in the CMA market research identified that early project designs are commonly unclear or not

prepared to a sufficient level of detail due to a combination of insufficient in-house skills in public authorities to scrutinise
and challenge the designs prepared by consultants or Tier 1 firms, insufficient knowledge and understanding of delivery
among consultants and Tier 1 firms, insufficient input from specialists, and insufficient site surveying or understanding.
Jigsaw Research (2026), Qualitative Research with Civil Engineers, paragraph 3.4.2.
325 Cabinet Office (2021), Bid Evaluation guidance note.
326 National Highways submitted that the key challenge lies in accessing the right technical staff, as it has technical

expertise in abundance. Resource constraints mean that its specialists are fully committed to their daily roles, making it
difficult to allocate them to short-term assessments. National Highways response to the CMA’s information request [].
327 RIA, Balfour Beatty and M Group’s responses to the CMA’s interim report, question 8.




                                                              86
          (c)     having the necessary procurement expertise to determine the appropriate
                  allocation of risk. We note on this last point that some stakeholders have
                  informed us that this can be a challenge (in particular for smaller local
                  authorities, or smaller authorities more generally), 328 although some public
                  authorities told us they have the relevant procurement expertise. 329

3.103     More broadly, capacity constraints affect different authorities to different extents.
          Capability reviews undertaken by ORR in preparation for the third road period
          indicate that National Highways has sufficient commercial capability and capacity
          but may need to build further civil engineering capability and capacity, due to a
          shortage of skilled engineers and competition from other sectors for them, as well
          as initiatives by National Highways to bring more functions in-house and increase
          forecast delivery volumes. 330 It also highlighted that Independent Reporter
          assessments had found Network Rail’s capability had improved over CP6 (April
          2019 to March 2024), although it acknowledged Network Rail’s capability varies
          across the country. 331 In general, local authorities may struggle more with
          attracting and retaining technical expertise. 332 However, we have also heard that
          even where local authorities do have the necessary expertise, there can be a view
          that external expertise is more credible even where it does not add material
          value. 333 This can lead to a waste of resources in getting external validation
          unnecessarily, and over time may disincentivise authorities from investing in their
          own expertise.

3.104     In addition, even larger national authorities face some constraints in their ability to
          attract and retain specialist skillsets. As in other professions requiring specialist
          expertise, restrictions on public sector pay rates can make it difficult to recruit and


328 Note or meeting with the sector panel []; Note of meeting with [].

For example, one organisation stated; ‘Sometimes, those procuring at the highest level (especially in the local
government space) have limited expertise and / or resource and we feel that many can struggle to balance risk fairly
between supply chain and client’ ACE’s response to the CMA’s invitation to comment, p6.
329 A panel member gave an example of a large local authority that does have technical expertise in-house already,

through its own direct employees or long-term service contracts or access to professional frameworks. The Welsh
Government noted that it achieves its expertise through a mixed economy approach of using internal and external
support. Note of meeting with the sector panel []; Notes of meetings with [].
330 ORR’s submission to the CMA []. A capability review of National Highways in 2023 found it had improved its

commercial and procurement management, but that there was room to improve its programme management capability
and initiatives to deploy digital capabilities and repeatable production approaches. Nichols (2023), Road Investment
Strategy 3: Procurement & Project Management Capability Review, pp27-28. A separate capability review also found
that National Highways had improved its asset management capabilities. AMCL (2023), National Highways & Office of
Rail and Road: Asset Management Capability & Efficiency Review - Final Report.
331 ORR’s submission to the CMA []. ORR highlighted the ARUP(2024), Independent Reporter - Capital Investment

Capability Framework Assessment. This found improved levels of maturity across the major enhancement programme
and the Regions since 2020, although improvements were more significant in enhancements than renewals.
332 Tier 2 and Tier 3 participants in the CMA market research felt the absolute competency levels across local authorities

was both variable and, on average, lower than they found at national bodies. This lack of in-house technical expertise
meant that local authorities were more prone to hiring external consultants or relying on less-experienced staff to procure
work. Jigsaw Research (2026), Qualitative Research with Civil Engineers, p36. Work by the Local Government
Association highlighted that the Civil Engineering Skills Partnership Hub identified recruitment and retention challenges
across all roles, grades and regions. These issues are particularly evident in key technical and specialist areas including
highways, traffic and traffic signals, and also extended into managerial positions. LGA, Local Government Civil
Engineering Workforce Strategy and Action Plan, accessed on 11/05/26.
333 Note of meeting with [].




                                                            87
           retain such specialists. 334 Public authorities may also not be able to justify
           retaining significant numbers of skilled staff where there are long periods during
           which that expertise is not being used, and so contribute to resource constraints
           when such expertise is needed. 335 Relying on the contracting-in of expertise can
           be efficient in some circumstances. However, there can be a risk that public
           authorities do not retain enough continuity of expertise to critically assess and,
           where necessary, challenge information being provided by suppliers. 336

3.105      As noted above, skills shortages also affect the supply side. We noted in the
           pipeline section that pipeline uncertainty can contribute to the loss of skills from
           the private sector as well.

3.106      Overall, funding constraints and skills shortages in civil engineering more broadly
           contribute to challenges faced by public authorities to build, recruit, and retain
           sufficient procurement and engineering capabilities, which are necessary to drive
           better practice. These constraints appear to affect smaller authorities to a greater
           extent, although even larger authorities face some such constraints.

Coordination

3.107      Coordination between public authorities could alleviate some of the constraints
           they face by providing them better access to information (such as cost
           benchmarking or best practice) or allowing them to pool resources, including to
           jointly procure common or overlapping projects. It could also allow better utilisation
           of scarce civil engineering capacity on the contractor side, for example, by
           smoothing demand from local authorities (particularly those in close proximity), to
           avoid creating unnecessary peaks and troughs in demand. We set out below and
           in Appendix A the evidence we have gathered as to the scope for public
           authorities to coordinate more effectively.

3.108      We appreciate there may be good reasons why coordination is not always
           possible or appropriate. For example, we understand the limitations in how far
           national and local authorities can or should coordinate their procurement, given
           the differences in scale and scope of projects they may deliver. For example, we
           have heard from National Highways and the Welsh Government that they
           communicate with local authorities, either for benchmarking costs with them or by


334 NIC (2024), Cost drivers of major infrastructure projects in the UK, p26. [].
335 For example, while NIC noted public sector pay rates as a challenge for retaining skilled staff, it also noted ‘Even

where pay flexibility exists, the start stop nature of projects can mean that client expertise is lost in the hiatus between
projects.’ NIC (2024), Cost drivers of major infrastructure projects in the UK, p26. [].
336 For example, NIC (2024) highlights the example of the Elizabeth Line, where the client, Crossrail Ltd, did not

sufficiently interrogate the information received from contractors on a complex scheme. As a result, it was unaware of
problems with both construction and the integration of the project with existing railway signalling systems until very late in
the project, leading to significant delays in completion. NIC (2024), Cost drivers of major infrastructure projects in the UK,
p26. Kier also highlighted that where clients rely on third party consultants, this can cause issues with project
administration, including because consultants may have differing incentives based on their pay structure. Kier’s response
to CMA’s information request [].


                                                             88
           consulting them as a key stakeholder when schemes are developed. However, the
           same public authorities told us that they do not coordinate with smaller local
           authorities regarding procurement, as the scale and types of projects differ. The
           Welsh Government specified this regarding the procurement and delivery of major
           road schemes. 337 We also recognise that parcelling small projects together may
           have implications for the amount and type of work which is suitable for smaller or
           entrant firms to compete for. 338

3.109      However, there appears to be room for greater coordination between more similar
           types of public authority. There was some support for greater capacity pooling 339
           and joint procurement 340 from respondents to the interim report, although some
           also noted challenges. 341 There are some examples of coordination occurring, but
           not necessarily widespread:

           (a)    We received mixed evidence from two national public authorities on the
                  extent to which they coordinate with other authorities. The Welsh
                  Government stated that it has not typically coordinated with others in the
                  past, 342 whereas National Highways mentioned that they do communicate
                  with other arm’s length bodies, through a forum facilitated by DfT for specific
                  purposes. 343

           (b)    At local authority level, we have heard examples of local authorities sharing
                  learning and information. For example, one local authority told us it works
                  closely with neighbouring authorities, and that as a member of ADEPT, it has
                  insight into how other authorities get the best value from their funding. 344 A
                  Welsh local authority told us that it benchmarks costs against other local
                  authorities in Wales and other highway authorities across the UK. 345 A third
                  local authority mentioned that there is an opportunity for cross learning
                  between councils, and that this could be improved. 346




337 For example, a sector panel member told us that there are two different systems going on in roads, there is the

central government system in National Highways, and the local authority system. They are two very different ways of
delivering, two different ways of procuring, and that local authorities are not able to tap into National Highways’
frameworks to be able to deliver their work. The Welsh Government said that their local authorities do not have many
large-scale projects in their pipelines, not to the value of what the national authority deals with on trunk roads. They
reported that local authorities would be looking typically at Tier 2, Tier 3 firms for pavement works, etc. Note of meeting
with the Welsh Government []; Note of meeting with National Highways []; Note of meeting with the sector panel
[].
338 In response to the interim report, SCAPE raised concerns that joint procurement could deter SME participation.

SCAPE’s response to the CMA’s interim report, question 18, p6.
339 Mott MacDonald p9, CECA p6 and ACE’s p10 responses to the CMA’s interim report, question 18.
340 Amey p5, Costain p5, Rail Forum p6 and RIA’s p9 responses to the CMA’s interim report, question 18.
341 For example, Transport Scotland welcomed the concept of pooled capacity to creates centres of excellence, but did

raise concerns around resource challenges, conflicts of interest, funding mechanisms, variable role requirements and
differing processes. Transport Scotland’s response to the CMA’s interim report, p3.
342 Note of meeting with the Welsh Government [].
343 Note of meeting with National Highways [].
344 Note of meeting with [].
345 Note of meeting with [].
346 Note of meeting with [].




                                                             89
          (c)    Regarding joining up procurement, one local authority mentioned that it does
                 not do this because as it is a large authority, what it puts out to market is
                 relatively large and so already benefits from economies of scale in
                 procurement. 347 We are aware of some initiatives by local authorities to
                 coordinate their procurement activity, 348 and several instances of shared
                 frameworks between local authorities. 349 There are also instances of
                 collaborative procurement in Wales 350 and Scotland. 351352

          (d)    Within rail, Network Rail operates a regional delivery model, and most of its
                 procurement activity is undertaken individually by each of the five regions.
                 Network Rail told the CMA it shares information across the different Network
                 Rail regional heads of cost estimation. 353 Throughout our market study,
                 suppliers have told us that this can lead to a lack of coordination which
                 creates added complexity and cost in the bidding process. For example, in
                 response to our interim report, the Rail Forum and Railway Industry
                 Association highlighted that there is scope for more co-ordinated
                 procurement, standardised approaches, and better information sharing
                 across the Network Rail regions. 354

3.110     Differences in funding cycles and the disaggregation of funding into different pots
          also contribute to a lack of coordination between public authorities over their
          procurement. The Association for Consultancy and Engineering (ACE) told us that
          some public authorities can take siloed approaches to publishing their pipelines
          based on their funding cycles. Although local and national authority projects are
          different and they operate at different scales, the separate pipelines can create a
          disjointed system rather than one that can help to identify overlaps to the supply
          chain. 355 Multiple Tier 1 firms highlighted suppliers must monitor multiple sites to
          obtain project leads for the same sector, 356 which can lead to inefficiencies.




347 Note of meeting with [].
348 For example, STAR Procurement supports Knowsley, Rochdale, St Helens, Stockport, Tameside, and Trafford

Councils in providing procurement and consultancy services. STAR Procurement, accessed on 11/05/26.
349 Frameworks have been developed by organisations like the North Eastern Procurement Organisation (NEPO), the

Midlands Highways Alliance (MHA) and SCAPE. NEPO is governed by 12 local authorities in the North East, and the
MHA similarly has a membership of 35 highway authorities, local to the Midlands region. SCAPE is governed by six local
authority shareholders. NEPO, About NEPO; Midlands Highway Alliance Plus, About Us; SCAPE, Civil Engineering
framework; Sell2Wales, SWWRCF - South West Wales Regional Contractors Framework, accessed on 08/04/26.
350 The Wales collaborative procurement hub is an approach to central procurement in Wales, providing access to

frameworks. Sell2Wales, Wales Collaborative Procurement Hub, accessed 09/04/26.
351 For example, the Scottish Government recently procured a new construction framework with support from Transport

Scotland. Note of meeting with Transport Scotland [].
352 Scotland Excel offers framework contracts for professional services including the design of capital infrastructure,

serving Scotland’s 32 local authorities. Scotland Excel, About Us | Scotland Excel, accessed on 21/04/26; Note of
meeting with [].
353 Note of meeting with Network Rail [].
354 Rail Forum’s response to the CMA’s interim report, question 4, p3; RIA’s response to the CMA’s interim report,

questions 17-18, p9.
355 Note of meeting with ACE [].
356 Responses to the CMA’s information requests [].




                                                          90
3.111     Learning lessons from past projects – either its own or from those undertaken by
          other authorities – also helps to enhance procurers’ capability in future. As set out
          further in Appendix A, many of the national public authorities have some form of
          lessons learned process in place, 357 although there are some cases where they
          could be more effective. 358 We have also heard some examples of lessons learned
          processes used by local authorities, 359 although we cannot tell from the
          information available how widespread these are. However, as noted above
          different authorities take different approaches to sharing information, and so such
          lessons learned may not always be disseminated effectively across procurers.
          There may also be scope for better dissemination of lessons learnt information to
          help spread the use of new effective technologies and processes, for example to
          more easily allow a technology or material which has been well-established in one
          sector to be adopted in another. 360

3.112     Overall, the evidence we have gathered indicates there is greater scope for
          coordination between public authorities, at least to the extent they are undertaking
          similar types of procurement activities.

Risk Appetite

3.113     We have discussed previously how risk is allocated between public authorities and
          suppliers. We now consider what influences the overall level of risk public
          authorities are willing to accept.

3.114     Public authorities need to carefully consider the level of risk they are willing to
          accept in different aspects of the civil engineering projects they procure. For
          example, aiming for too low risk in the design and scope of a new piece of
          infrastructure can stifle new ideas and approaches from being tested and
          implemented. Nevertheless, we acknowledge the vital role that low risk levels play
          in safeguarding health and safety in civil engineering projects and that the risk
          standards in this area must not be compromised. In this section, we first set out
          what our evidence shows on the general level of risk appetite in public road and
          rail, in the non-safety-critical aspects of procurement, and the impact this can
          have. We then set out factors which influence this risk appetite.




357 Responses to the CMA’s information requests [].
358 An ORR report from 2022 on technology adoption at Network Rail reported on repeated examples of failure to learn

from past experiences. ORR (2022), Technology Adoption Case Studies, Targeted Assurance Review.
359 Notes of meetings with [].
360 For example, on A585 Windy Harbour to Skippool improvements, Kier adopted a spray applied concrete to coat the

surface of a secant piled wall – a technology common in the rail industry but that was not in the design manual for roads
and bridges. As a result, Kier needed to secure a departure from standard solutions which was described as being a
difficult process requiring additional requirements. Kier's response to the CMA's information request [].


                                                           91
3.115     Several suppliers and industry organisations submitted that risk aversion is
          ubiquitous in the public road and rail sector. 361 A community interest company said
          that the civil engineering sector is inherently risk averse. 362

3.116     However, not all public authorities would accept that they are driven towards
          excessive risk aversion, and some other stakeholders agree that it is not
          universal. 363 For example, local authorities we have engaged with have expressed
          mixed attitudes towards risk:

          (a)    One local authority said that it is risk-averse by nature, operates within a risk-
                 averse environment and suggested that the external factors are likely to be
                 the drivers of this behaviour, such as scrutiny and governance checks. 364

          (b)    Another local authority said that the risk appetite is reasonable and
                 dependent on the project complexity. 365

          (c)    A local authority said that it seeks innovation to enhance work effectiveness,
                 rather than allow time and budget constraints to lead to risk aversion and
                 preference for traditional, familiar processes. 366

          (d)    One local authority said that risk attitudes and decision-making are shaped
                 by the need to justify both action and inaction, ensuring that resources are
                 allocated only where there is evidence of need. 367 Similarly, another local
                 authority said that it looks at projects individually and assesses the extent of
                 risk and value to the authority. 368

          (e)    One local authority said it does not perceive itself as a risk averse client and
                 takes the responsibility for appropriate risk management. 369

3.117     Where risk aversion is too high, it can have a number of impacts. For example,
          BAM Nuttall submitted that risk aversion in designers appointed by the employers
          (ie public authorities) and the contractors may result in rejecting innovation
          proposed within the contractor’s tender in favour of more traditional approaches
          that are considered safer – adding cost and time if the designs are delivered later
          than expected and require more expensive and time-consuming works. 370 A Tier 2
          firm submitted that risk aversion in the form of culture of predictability over


361 NEPO, Rail Forum, CECA, Laing O’Rourke, Amey, Balfour Beatty, SCAPE, Kier, ACE, BAM Nuttall, RIA, and Mott

MacDonald’s responses to the CMA’s interim report, question 12.
362 Note of a meeting with [].
363 For example, Mott MacDonald stated risk aversion is not universally excessive, but it can become problematic when

risk positions lack transparency or are not well understood. Mott MacDonald’s response to the CMA’s interim report,
question 12.
364 Note of meeting with [].
365 Note of meeting with [].
366 Note of meeting with [].
367 Note of meeting with [].
368 Note of meeting with [].
369 Note of meeting with [].
370 BAM Nuttall’s response to the CMA’s information request [].




                                                          92
          efficiency has led to longer delivery times and higher costs, through extra layers of
          approval, overplanning, and hampering innovation. 371

3.118     Our evidence suggests that a range of factors reduces the risk appetite of public
          authorities.

          (a)     A number of stakeholders have highlighted political and regulatory influences
                  on risk appetite. For example, factors that can reduce appetite for risk-taking
                  and act as barriers to innovation include risk aversion inherently embedded in
                  government policies, 372 safety and regulatory compliance requirements373
                  and political sensitivities. 374

          (b)     Previous research has highlighted that public authorities may also attract
                  media scrutiny, 375 face high expectations regarding transparency and
                  accountability 376 and be vulnerable to reputational risks 377 – all of which can
                  further reinforce low risk tolerance. Rail Forum noted ‘taking what some
                  might interpret as a riskier decision in certain scenarios could be interpreted
                  as recklessness if that decision causes unforeseen problems so there needs
                  to be support, not criticism for those concerned’. 378 NEPO submitted that it is
                  often difficult to take risks due to enhanced scrutiny and the pressure of
                  wasting taxpayers’ money if things go wrong. 379

          (c)     Some stakeholders have also highlighted that in recent years, inflation, skill
                  shortages, and shifting policy priorities have added market volatility,
                  increasing uncertainty which may further lower risk appetite. 380 Balfour Beatty
                  submitted that excessive risk aversion in public authority decision-making
                  can be driven, among others, by funding volatility and fear of litigation. 381
                  Bam Nutall suggested that this risk aversion is often structural rather than
                  behavioural, reflecting, inter alia, constrained and annualised budgets, and
                  the separation of capital and operational expenditure. 382




371 Response to the CMA’s information request [].
372 Response to the CMA’s information request [].
373 Responses to the CMA’s information requests [].
374 Responses to the CMA’s information requests []; Note of meeting with the sector panel []; Torugsa, N. and

Arundel, A. (2017), Rethinking the effect of risk aversion on the benefits of service innovations in public administration
agencies, Research Policy, 46(5), pp900-910. Institution of Civil Engineers (2025), Why do major projects cost so much
and take so long? And what can be done about it?, p4.
375 Torugsa, N. and Arundel, A. (2017), ‘Rethinking the effect of risk aversion on the benefits of service innovations in

public administration agencies’, Research Policy, 46(5), pp900-910.
376 Uyarra, E., Edler, J., Garcia-Estevez, J., Georghiou, L. and Yeow, J. (2014), ‘Barriers to innovation through public

procurement: A supplier perspective’, Technovation, 34(10), pp631-645. Pahlke, J., Strasser, S. and Vieider, FM. (2012),
‘Risk-taking for others under accountability’, Economics Letters, 114(1), pp102-105.
377 The Construction Playbook, p55.
378 Rail Forum’s response to the CMA’s interim report, question 12, p5.
379 NEPO’s response to the CMA’s interim report, question 12. See also ACE’s response to the CMA’s interim report,

question 12.
380 Responses to the CMA’s information requests [].
381 Balfour Beatty’s response to the CMA’s interim report, question 12.
382 BAM Nuttall’s response to the CMA’s interim report, question 12.




                                                           93
           (d)    Cultural and behavioural factors can also shape organisational decision-
                  making. 383 Public authorities may have preference for maintaining the status
                  quo – following the most familiar, and thus perceived as less risky, processes
                  and solutions. 384 For example, RSS Infrastructure submitted that the rail
                  sector primarily runs on a ‘we have always done it this way’ mindset. 385

3.119      Clearly, it is appropriate for public authorities to use public funds effectively – both
           in achieving value for money for taxpayers and ensuring the infrastructure they
           procure is safe and fit for purpose. However, on balance we consider the
           incentives currently faced by public authorities and firms are too often not
           sufficiently weighted towards accepting greater, but still well-considered, risk
           where this allows for new and innovative approaches to be tried which could drive
           future productivity improvements.

3.120      Changing the risk appetite of public authorities is likely to be necessary to drive
           change in their approach to procuring public road and rail civil engineering
           services. However, to the extent their risk appetite is itself partly driven by the
           constraints they face (such as over funding stability 386 and internal capabilities) 387
           as some stakeholders have suggested, changing these constraints may in itself
           help to shift attitudes to risk.


Conclusion on procurement

3.121      There are four main challenges relating to how public procurement levers shape
           incentives for procuring authorities and suppliers, market dynamics and outcomes.

3.122      First, the public sector procurement landscape is fragmented and lacks a clear
           strategic direction. Funding settlements and procurement policies set by different
           parts of the UK, Scottish and Welsh Governments and the Northern Ireland
           Executive, with a range of national and local authorities procuring public road and
           railway infrastructure. There are a range of missed opportunities for the public
           sector to more actively and strategically set incentives that shape the market.

3.123      Second, a combination of short-term funding pressures, uncertainty over longer-
           term budgets, and changing government priorities undermines long-term planning
           by both public authorities and the supply chain. We recognise that governments

383 These may include the influence of organisational and team structures, incentive systems, prevailing social and

cultural norms and cognitive biases, all of which can affect how risks are perceived and managed. Fasolo, B., Heard, C.
and Scopelliti, I. (2024), ‘Mitigating cognitive bias to improve organizational decisions: An integrative review, framework,
and research agenda’, Journal of Management, 51(6), pp2182-2211.
384 Status quo is a behavioural bias whereby people have a preference for maintaining the current status, even if it is

suboptimal. An early investigation by Samuelson and Zeckhauser (1988) found evidence of status quo bias in decision
making (Samuelson, W. and Zeckhauser, R. (1988), ‘Status quo bias in decision-making’, Journal of Risk and
Uncertainty, pp 7-59). See also Godefroid, ME, Plattfaut, R. and Niehaves, B. (2023), ‘How to measure the status quo
bias? A review of current literature’, Management Review Quarterly, 73, pp1667-1711.
385 RSS Infrastructure’s response to the CMA’s information request [].
386 ACE, BAM Nuttall and Balfour Beatty’s responses to the CMA’s interim report, question 12.
387 RIA, SCAPE and Kier’s responses to the CMA’s interim report, question 12.




                                                             94
        have sought to lengthen funding settlements and improve pipeline visibility, and
        that there are trade-offs with ensuring the use of public funds remains appropriate
        over time. Nevertheless, increasing pipeline visibility and confidence appear key to
        driving investment and innovation and improving efficiency in the sector.

3.124   Third, public procurement approaches are not consistently used effectively
        throughout the procurement and contracting lifecycle to shape incentives for firms,
        harness effective competition and focus on long-term value. Use of best practice
        guidance is often inconsistent, which mutes its impact.

3.125   Finally, funding constraints and skills shortages in civil engineering contribute to
        challenges faced by public authorities to build, recruit, and retain sufficient
        procurement and engineering capabilities, which are necessary to drive better
        practice. More coordination between procuring authorities, where they are
        undertaking similar types of procurement activities, would help alleviate these
        constraints.




                                              95
4.        Regulation

Background and context

4.1       As we highlight above, governments have several levers it can use to shape
          markets and achieve policy objectives. Alongside public procurement, the public
          sector has the opportunity to shape markets through regulation. A clear,
          predictable and proportionate regulatory and compliance landscape provides
          market participants with the clarity and certainty they need to invest, innovate and
          compete.

4.2       High regulatory standards can preserve and promote a range of societal goals,
          such as environmental protection and health and safety. Proportionate and
          well-targeted regulation that upholds high safety standards helps create a
          predictable and efficient environment for infrastructure development, supporting
          higher quality outcomes (infrastructure lifespan and safety) and more reliable
          project delivery. By clearly signalling the parameters within which firms can invest
          and innovate, well-designed regulation increases certainty, minimises barriers to
          entry, and helps create the conditions for businesses to scale and grow. However,
          unduly onerous regulatory requirements can increase costs and constrain
          investment and innovation.

4.3       Over time, it is a common feature of regulatory landscapes that rules and
          compliance processes can accumulate, as new requirements are added to the
          existing stock of regulation. 388 This can increase complexity and raise barriers to
          entry and operation for smaller challenger firms unable to take on or afford this
          compliance burden, undermine the positive effects of certainty and clarity, and
          deter innovation and investment.

4.4       In the following sections we examine:

          (a)    The market dynamics which may be impacted by regulation. These dynamics
                 are key drivers of business dynamism and growth. We set out this analytical
                 framework below to describe the potential impacts on the market.

          (b)    specific areas of regulation which, based on our evidence, create
                 unnecessary burdens on existing and prospective market participants, and
                 there are opportunities for governments to improve market outcomes,
                 encourage firms to enter, innovate and grow without undermining the benefits
                 of high regulatory standards.




388 HM Treasury, New approach to ensure regulators and regulation support growth, accessed on 22/04/26.




                                                        96
4.5       Based on the evidence discussed below, we consider that complex and slow
          regulatory processes are unnecessarily adding to the burden on public authorities
          and firms in the road and railway infrastructure sectors.

Market dynamics impacted by regulation

4.6       We have considered the potential impact of regulation on the key drivers of
          business dynamism and growth: new entry, growth and scaling, new business
          models and the adoption of new technology.

          New Entry

4.7       As discussed in chapter 2, there are barriers to firms expanding in this sector. We
          noted that the decline in entry rates could also indicate that barriers to entry have
          increased over time. If these barriers are reduced as far as possible, we would
          expect this to alter the incentives and behaviour of firms, leading to greater
          business dynamism and therefore more intense competition in the market.

4.8       It is crucial to ensure that regulation (including its application) does not unduly
          inhibit or hinder companies (particularly newer start-ups that favour innovative
          approaches) from entering and viably competing in the market. For example, the
          evidence set out in chapter 2 and Appendix A highlights that overly onerous
          requirements – including technical standards, preferential engineering, 389 and
          duplication of accreditation systems and pre-qualification questionnaires, which
          are required for both public and private contracts, make it harder for smaller firms
          to enter the market, scale and compete, particularly in the rail sector. 390 Data we
          have collected also indicates a material and sustained increase in the cost of
          regulatory compliance for larger firms over time.

          Growth and Scaling

4.9       The CMA’s discussion paper on scale-ups and competition policy identifies the
          significant impact of regulation on potential scale-up firms, noting that smart
          regulation can signal to investors a predictable environment where potential
          market opportunities exist. 391 By contrast, regulatory burden or bias within the
          supply chain (which unequally favours incumbents, for example) can also unduly
          limit and prevent the ability and incentives of smaller and medium-sized firms to
          grow and scale to be able to compete effectively.




389 Preferential engineering refers to design or engineering changes requested by a client or owner that go beyond the

original project scope, which reflect personal or strategic preferences rather than technical necessity.
390 Jigsaw Research (2026), Qualitative Research with Civil Engineers, p63; Response to the CMA’s information request

[]; Jigsaw Research (2026), Qualitative Research with Civil Engineers, p59 and 65; Laing O’Rourke p5, BAM Nuttall
p21, Rail Forum p4 and Balfour Beatty’s pp22-23 responses to the CMA’s interim report, question 22.
391 CMA (2025), Scale-ups and competition policy discussion paper.




                                                           97
4.10        Where this occurs, incumbents face weaker competitive pressure to deliver high-
            quality products and services at fair prices for the public sector. This can also limit
            firms’ ability to be in a position to introduce innovation, reduce firm diversity and
            inhibit broader growth in the market. For example, the CMA’s market research
            highlights instances where smaller firms have chosen not to bid for contracts (a
            direct reduction in competition for tenders) in some cases when they deem that the
            complexity, risk, or cost of compliance is too high to outweigh the benefits. 392 As
            we discuss later, we have found overlapping accreditations and pre-qualification
            questionnaires are also acting as barrier to firm’s ability to grow and scale.

            New Business Models

4.11        Badly designed, prescriptive or burdensome regulation may also hinder novel
            business approaches to delivery or solving problems that could improve delivery
            efficiency and quality, and align with strategic sector shifts and evolutions – for
            example, more agile firm structures that use non-traditional business models and
            technology to deliver infrastructure in ways fit for the future of civil engineering,
            such as the green transition.

4.12        New business approaches such as industrialised construction, which includes
            offsite building and modern methods of construction (MMC), are important
            developments in civil engineering that provide more efficient ways of building;
            however, the significantly different workflow to traditional building means that a
            recalibration of ways of working is required to be able to scale this method
            effectively. 393 As further discussed in Appendix A, stakeholders told us that a lack
            of standardisation of designs and slow approval processes or standard test
            methods are limiting the rollout of these new business models, which aligns with
            the surrounding literature.

4.13        Where the UK government is aiming to drive transformational change in other
            sectors, it has recognised the role of innovative approaches. For example, the
            UK’s housebuilding targets recognise that key reforms and strategic sector shifts
            are needed to be able to deliver the target of building 1.5 million new homes. 394

            Technologies and Approaches

4.14        The development, investment and deployment of novel technologies, particularly
            AI, can play a critical role in ensuring a modern and efficient civil engineering
            sector capable of delivering society’s continually evolving infrastructure needs.
            The UK government’s AI Opportunities Action Plan identifies AI adoption across



392 Jigsaw Research (2026), Qualitative Research with Civil Engineers, p55.
393 RICS (2018), Modern Methods of Construction; ICE (2018), Standard design key to offsite manufacture.
394 MHCLG and The Rt Hon Angela Rayner MP, Housing targets increased to get Britain building again, accessed on

27/04/26.


                                                          98
          the public and private sector as critical to fulfilling government objectives. 395
          Devolved Governments have also highlighted how AI can transform our public
          services and have taken steps to embed the skills needed to do this, through their
          respective action plans on AI. 396

4.15      However, the way the regulatory system is designed and operationalised can
          disincentivise and make it harder than necessary for suppliers to test and adopt
          innovative solutions, particularly where combined with a culture that is resistant to
          change and new untested ideas and methods. For example, as we discuss further
          in Appendix A, stakeholders across the supply chain noted slow approval
          processes hinder the introduction of new products and processes, particularly in
          rail. Respondents to the CMA’s market research also highlighted that procurers
          can favour tried-and-tested approaches and approval methods can be slow, as
          procurers may not have the expertise, resource, or appetite for trying newer
          products or methods. 397

4.16      This can deter and prevent firms from investing in developing and implementing
          new or even existing technologies and methods that could ultimately improve
          efficiency, lower costs and speed up delivery.


Impact of regulation on firms’ incentives

4.17      We have heard from industry in response to our interim report that Tier 1 firms
          generally considered regulatory barriers to be less of a problem than other areas
          of concern. 398 However, multiple stakeholders agreed that there is scope to
          improve how our regulatory regime works to improve the delivery of civil
          engineering projects. 399

4.18      Through responses to our interim report, desk research, requests for information
          and international comparisons, we have identified scope to improve certain
          aspects of the regulatory environment and processes to deliver more effective and
          efficient outcomes, incentivise innovation and support growth and scaling. We
          discuss this in more detail in Appendix A on the impact of regulation on
          effectiveness and efficiency in civil engineering for rail and public road.

4.19      We have heard consistent feedback across the supply chain, as well as from other
          industry stakeholders and public bodies, that rail is characterised by more complex
          regulatory processes and higher barriers to entry than the road sector, which

395 Department for Science, Innovation & Technology (2025), AI Opportunities Action Plan.
396 The Welsh Government (2025), AI Cymru: Shaping a Smarter, Fairer, More Prosperous Wales; the Scottish

Government (2026), Scotland's Artificial Intelligence strategy 2026-2031; The Executive Office (2025), New AI and Digital
office will drive innovation and transform services – O’Neill and Little-Pengelly.
397 Jigsaw Research (2026), Qualitative Research with Civil Engineers, pp72-73.
398 See Rail Forum, Amey, Balfour Beatty, BAM Nuttall, SCAPE, Rail Industry Association, ACE’s responses to the

CMA’s interim report, question 13.
399 Skanska, Rail Forum, CECA, Laing O’Rourke, ORR, Balfour Beatty, BAM Nuttall, Transport Scotland, SCAPE, Rail

Industry Association, ACE and TICS’ responses to the CMA’s interim report, question 10.


                                                          99
          reflects high standards and unique safety considerations. 400 However,
          stakeholders provided feedback on ways to improve and streamline processes
          across both the road and rail sectors.

4.20      We have found that duplicative compliance process and overly onerous technical
          standards, duplicative and overlapping accreditation and pre-qualification
          requirements, and slow regulatory processes for new technologies and
          approaches are limiting effective delivery of road and rail civil engineering projects.
          We set out these findings in more detail below.

4.21      Information provided by Tier 1 firms indicates that both the full time equivalent
          (FTE) number and cost of staff required to work on regulatory, legal or
          procurement functions has steadily increased for Tier 1 firms over the last 10
          years. 401 In the data we have received, growth in the cost of FTE for those
          functions has on average occurred at a higher rate than overall FTE growth, which
          suggests that in addition to requiring more staff, complying with regulation itself for
          these firms has become more costly. In addition, for firms that provided data on
          their spending on external resource or professional advisers (consultants) for their
          regulatory, legal and procurement obligations across road and rail, there were
          increases in spend over the last 10 years, particularly for rail. 402 While the sample
          size of this information is limited, it indicates that not only are costs of regulatory
          compliance increasing amongst Tier 1 firms that provided data, but these firms are
          also increasingly using external resource and consultants for compliance or
          regulatory functions. Within our evidence, multiple other stakeholders across
          levels of the supply chain and public authorities also noted a reliance on design
          consultants across both the road and rail sector. 403

4.22      While there may be specific reasons for using external consultants, these
          substantial increases could suggest that the complexity of regulation has grown
          over time such that firms feel the need to use professional advisors. This could act
          as a barrier to smaller challenger firms that are unable to afford such external
          advisors.




400 Responses to the CMA’s information requests []; Jigsaw Research (2026), Qualitative Research with Civil

Engineers, p25.
401 See evidence Appendix A section on barriers to entry, growth and scaling. For all 10 firms who provided data, the

average % increase in FTE working on regulation over the last 10 years compared to the base year of 2016 is around
12%. For all 10 firms who provided data, the FTE cost of regulation has increased since 2016, with an average increase
in cost across all 10 firms of 78.5% in 2025 vs 2016. The lowest increase in cost for those that provided data was 18%
over the ten years, and the highest increase was 169%.
402 See evidence Appendix A section on barriers to entry, growth and scaling. The average % change on external

resource spend since the base year of 2016 across 7 firms that provided data on rail was 272%, and the average %
change on external resource spend since the base year of 2016 across 6 firms that provided data on road was 103%.
403 Balfour Beatty’s response to the CMA’s interim report, question 14, p16; Notes of meetings with []; Jigsaw

Research (2026), Qualitative Research with Civil Engineers, p36.


                                                          100
Streamlining regulatory compliance

4.23      We have gathered evidence from stakeholders across the supply chain and from
          public authorities to assess where regulation could affect market dynamics. In
          Appendix A, we note how stakeholders highlighted aspects of the regulatory
          compliance landscape which are limiting effective delivery of civil engineering
          projects, rather than the substance of regulations themselves. 404 As such, our
          analysis has focussed on opportunities for streamlining of the regulatory
          compliance process rather than distinct regulations.

4.24      Although standardised benchmarking is not yet available to provide detailed
          comparisons, OECD indicators place the UK slightly above the OECD’s average
          on regulatory frameworks, permitting and licensing, and governance of economic
          regulators, factors which are all relevant to and impact general infrastructure
          investment and delivery. 405 As we highlight above, the UK typically also has higher
          unit costs for infrastructure and slower delivery times, which is attributed in part
          due to slow and overly risk averse planning processes, as well as other issues
          such as gold-plating and a lack of standardisation. 406 The UK government’s own
          figures show that Nationally Significant Infrastructure Project (NSIP) delivery time
          increased by 65% between 2012 and 2021, which is largely due to slow pre-
          application process, including planning. 407 This indicates that streamlining
          regulation would be expected to reduce costs and delivery timescales.

          Planning

4.25      The planning system, when functioning well, has the potential to drive forward a
          predictable system and framework for infrastructure development in the civil
          engineering market. By providing certainty around a balanced set of national
          planning policies covering the economic, social and environmental aspects of
          development, it has the opportunity to provide the predictable conditions for stable
          investment in civil engineering projects.

4.26      Consultation responses to our interim report, which consisted of industry
          organisations, Tier 1 firms and some public authorities, as well as relevant studies,
          consistently identify that the current system is delivering suboptimal outcomes and
          contributing to delays in the delivery of infrastructure.

          (a)    Existing literature cites infrastructure permitting as one of the most critical
                 bottlenecks to timely and cost-effective infrastructure delivery. 408 BCG note
                 how the infrastructure permitting process and project delivery is also held up

404 NEPO, Skanska, Rail Forum, CECA, ORR, Balfour Beatty, BAM Nuttall, SCAPE, RIA, TICS and ACE’s responses to

the CMA’s interim report, question 10.
405 OECD, Promote a coherent, predictable and efficient regulatory framework, accessed on 11/05/26.
406 BCG (2024), Improving Infrastructure Delivery in the UK.
407 Edie, New fast-track pathway in the works to tackle energy development bottlenecks, accessed on 28/04/26.
408 BCG, Infrastructure Investments in an uncertain world, accessed on 02/04/26.




                                                          101
                  when there are multiple opportunities for objection within the planning
                  process. 409

          (b)     The planning and permitting process was one of the key areas of regulation
                  that industry stakeholders identified as contributing to delays. The majority of
                  the Tier 1 firms we sought evidence from told us that statutory consultees
                  represent the greatest issue in the planning system. The process around
                  consultation of statutory consultees adds material complexity to, and often
                  leads to delays in, obtaining planning consents and it is often difficult to know
                  which statutory consultees must be consulted for a particular project. 410

4.27      Following the implementation of the Planning and Infrastructure Act 411, proposed
          updates to the National Policy Planning Framework 412, statutory consultee
          reform 413, as well as DEFRA’s lead environmental regulator model 414 are ongoing
          in England. The CMA supports these reforms, which are expected to address
          many of the concerns we have heard from stakeholders by significantly simplifying
          the planning and environmental approvals process across England and speeding
          up critical delivery of civil engineering projects.

4.28      Devolved governments are also undertaking a number of key reforms:

          (a)     In Northern Ireland, planning reform is also underway through the
                  Department of Infrastructure’s planning improvement agenda, which includes
                  support for local authorities as well as amendments to the Planning
                  Regulations which are designed to streamline decision making. 415

          (b)     The Welsh Government has also recently introduced The Infrastructure
                  (Wales) Act 2024. These reforms are designed to speed up the consenting
                  process for planning applications. 416 The UK Government’s new Planning
                  and Infrastructure Act 2025 will also apply to Wales. This is being supported
                  by a number of policy updates and technical advice notes designed to
                  complement these reforms and support a pro-growth planning policy 417

          (c)     The Scottish Government has recently produced the fourth National Policy
                  Planning Framework, as well as its delivery programme earlier this year. 418


409 BCG, Infrastructure Investments in an uncertain world, accessed on 02/04/26.
410 Multiple Tier 1 firms noted the difficulty in knowing which statutory consultees must be consulted. Responses to the

CMA’s information requests [].
411 MHCLG, The Rt Hon Steve Reed OBE MP, Emma Hardy MP and The Rt Hon Rachel Reeves MP (2025), Landmark

Planning and Infrastructure Bill becomes law.
412 MHCLG (2026), National Planning Policy Framework: proposed reforms and other changes to the planning system.
413 MHCLG (2025), Reforms to the statutory consultee system.
414 DEFRA, The Rt Hon Steve Reed OBE MP and The Rt Hon Angela Rayner MP (2025), Environmental reforms to

break planning system gridlock.
415 DfI (2025), Kimmins announces further improvements to the planning system.
416 Planning and Environment Decisions Wales (2025), New process to speed up planning for infrastructure projects and

make Wales a better place to invest.
417 CBI (2025), Planning for Growth in Wales: How to create jobs and meet net zero targets.
418 The Scottish Government, Planning and architecture: Reforming the planning system, accessed on 11/05/26.




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                 Their plans also include a map of national developments which document
                 progress updates within the planning process.

4.29      As such, we have not made any formal recommendations in this area but in
          Appendix B we have explored options the UK and devolved governments may
          wish to consider in future to achieve greater transparency throughout the planning
          process.

          Technical Standards

4.30      As set out in Appendix A, we have found evidence of overly prescriptive technical
          standards, including those mandated through contracts by procuring authorities,
          that are accumulating alongside other regulations and resulting in a complex and
          burdensome compliance landscape. 419 Stakeholders across Tier 1 firms, industry
          bodies and public authorities provided clear feedback that efforts to streamline
          technical standards are crucial to address this issue. 420 This fits with our chapter
          on risk aversion in scoping and design, in which we found that scopes are often
          overly prescriptive to minimise risk. One way to adopt a less prescriptive approach
          is to focus on outcomes, which may encourage the development of new
          innovations. 421

4.31      We consider that adopting a transparent and demand-side led approach to
          challenge existing standards, will enable regulators and public bodies responsible
          for standards such as ORR, National Highways, Network Rail and the Rail Industry
          Safety and Standards Board (RSSB) to focus on high-impact areas or particularly
          onerous or duplicative requirements industry are struggling with as a priority. We
          also heard that preferential requirements for standards and designs from procuring
          authorities can be mandated through contracts, and sometimes create onerous
          requirements, which accumulate on top of stringent technical standards to add to
          the burden on suppliers. 422

4.32      We have therefore also set out that, where possible, non-mandatory standards
          imposed by procuring authorities should be aligned across authorities to reduce
          the impact of overly prescriptive requirements on suppliers. Previous research into
          overlapping technical standards has found that this is a longstanding problem, 423
          and we consider this to be a key driver of inefficiencies in the current regulatory
          compliance system.



419 Industry Standards Group (2012), Specifying Successful Standards, p39; DfT (2017), Transport infrastructure

efficiency strategy, p57; TICS response to the CMA’s interim report, question 10, p1.
420 Notes of meetings with [].
421 TICS’ response to the CMA’s interim report, question 21, p5; Response to the CMA’s information request []; RIA’s

response to the CMA’s interim report, para 7.4, question 12.
422 TICS response to the CMA’s interim report, question 10, p1; Notes of meetings with [].
422 Notes of meetings with []; TICS response to the CMA’s interim report, question 10, p1.
423 Industry Standards Group (2012), Specifying Successful Standards, p39.




                                                         103
4.33      Through our stakeholder engagement, we also heard that for rail projects, delays
          and increases in costs occur due to a Transport and Works Act Order being
          required in England and Wales in order to access adjacent land for enhancement
          and renewals for civil engineering projects, which can take multiple months to
          years and requires Secretary of State approval. 424 For road projects, obtaining this
          access is already provided for within the highways and utilities legislation. 425

Consolidated accreditations and qualifications

4.34      We have heard from market participants across the supply chain that current
          accreditation requirements imposed by different procurers (both government and
          industry) are acting as a barrier to entry and growth in the civil engineering market
          by constraining smaller firms from being able to compete and grow. 426 Industry
          accreditations can be important in showing a firm’s ability to carry out specified
          work or approaches. However, our evidence shows that accreditations are costly
          to attain, and that there is an overlapping system of accreditations across road and
          rail, meaning suppliers often need multiple different accreditations for similar
          work. 427 Evidence also suggests that within each of the road and rail sectors there
          is minimal mutual recognition of accreditations so that businesses are forced to
          hold more than one accreditation that address many of the same or similar
          competencies. This system introduces unnecessary cost and adds barriers to
          entry and expansion.

4.35      We have found that this disproportionately affects SMEs, as strict requirements
          are often passed along and required down the full length of supply chains. 428 The
          CMA’s market research participants observed that their firms are being asked for
          multiple mutually recognisable certificates by accreditation providers, such as
          Safety Schemes in Procurement (SSIP) schemes and Common Assessment
          Standard (CAS) providers. 429 These participants also submitted that some Tier 1
          firms are ‘gold-plating’ certain accreditation requirements when sub-contracting
          along the supply chain, which is adding to unnecessary costs for smaller firms. 430
          Stakeholders noted overlapping prequalification questionnaires required from
          contracting authorities, which contributes to inefficiencies. 431 As one stakeholder


424 Submission to the CMA []; Network Rail (2019), Transport and Works Act Order Process; DfT, Transport and

Works Act orders: a brief guide, accessed on 28/04/26. Note that the Transport and Works Act Order only applies to
England and Wales. In Scotland, access to adjacent land can be granted by Ministers as set out in the Transport and
Works (Scotland) Act 2007.
425 Highways Act 1980, section 291, accessed on 11/05/26.
426 Jigsaw Research (2026), Qualitative Research with Civil Engineers, p59 and 65; Laing O’Rourke p5, BAM Nuttall p21,

Rail Forum p4, and Balfour Beatty’s pp22-23 responses to the CMA’s interim report, question 22; Response to the
CMA’s information request [].
427 Submission to the CMA []; Rail Forum p4, Laing O’Rourke p6, Balfour Beatty p13, BAM Nuttall p21, Mott

MacDonald p11 and ACE’s p11 responses to the CMA’s interim report, question 22.
428 Jigsaw Research (2026), Qualitative Research with Civil Engineers, p63.
429 Jigsaw Research (2026), Qualitative Research with Civil Engineers, p72.
430 Jigsaw Research (2026), Qualitative Research with Civil Engineers, p64.
431 Balfour Beatty, Costain, Rail Forum, CECA, Amey, RIA, BAM Nuttall and SCAPE’s responses to the CMA’s interim

report.


                                                        104
          noted, pre-qualification questionnaires are supplementary to accreditations, and
          measure many of the same competences that are assessed as part of the formal
          accreditation process. 432

4.36      We consider these strict contract requirements from procuring authorities as well
          as duplicative pre-qualification questionnaires are also adding to the compliance
          burden, and that these additional costs and compliance burdens are also less
          likely to be able to be absorbed by smaller firms.

Fast-tracked regulatory approvals

4.37      We have also found that slow approvals processes for innovations (which includes
          products and designs and new methods and techniques) are limiting the incentives
          to invest in and ability for these innovations to be deployed and scaled across the
          industry. Evidence gathered from a range of industry sources suggests that this
          burden is most significant in rail. 433 As we highlight in Appendix A in our section on
          regulatory barriers to new technologies, methods and models, we asked public
          authorities across England and the Devolved Nations responsible for product and
          design approvals for the numbers of applications, acceptances, and approvals
          over the last 10 years. Only Transport Scotland and Northern Ireland’s Department
          for Infrastructure were able to provide accurate data. 434 Therefore, we have relied
          more heavily on our evidence from industry bodies, and firms across the supply
          chain. Stakeholders were clear about the need for a safety-critical approach to
          road and rail regulations but noted a sometimes risk-averse culture that hinders
          innovations and had feedback on suggestions to improve the process of adopting
          new innovations that would improve delivery without necessarily risking safety. 435

4.38      Some industry stakeholders, including both Tier 1 firms and industry bodies,
          explicitly expressed support for more pilots for innovations, fast-track routes for
          low-risk innovations, reference-class data, and having more clear guidance on
          how to effectively and efficiently procure innovation. 436 Pilots can speed up the
          route to acceptance of new technologies and suggest ways for improvements in
          the way in which the regulatory approvals system works. For example, in Norway,
          Nye Veier, the authority responsible for the major road network, has run pilots with
          the supply chain to test new production methods on projects – such as road
          materials – with a view to identifying solutions that could be in scaled
          production. 437 Within the CMA’s market research, some Tier 2 firms also


432 Balfour Beatty’s submission to the CMA [].
433 Jigsaw Research (2026), Qualitative Research with Civil Engineers, p65; Rail Industry Association's response to the

CMA’s interim report, question 21, p5; Responses to the CMA’s information requests [].
434 DfI’s response to the CMA’s information request []; Transport Scotland’s response to the CMA’s information request

[].
435 Notes of meetings with []; RIA’s response to the CMA’s interim report, question 10, p5; TICS response to the

CMA’s interim report, question 10, p1; BAM Nuttall’s response to the CMA’s interim report, question 21, p21.
436 Balfour Beatty, RIA, Laing O’Rourke and GIRI’s responses to the CMA’s interim report, question 21,
437 BVM Vegbygging, Pilotering, accessed on 10/05/26.




                                                          105
          supported faster timescales for approving innovations. 438 However, implementing
          changes to product approvals systems will also need to be combined with better
          risk sharing through the supply chain, as well as increasing procurement authority
          capacity and support.




438 Jigsaw Research (2026), Qualitative Research with Civil Engineers, p53 and 72.




                                                         106
5.        Recommendations

Introduction

5.1       In this section, we set out the remedies that we have designed in response to our
          analytical findings. These findings concern five root causes that are holding back
          the market. Our remedies are therefore aimed at addressing:

          (a)    Fragmented public sector landscape: strengthening opportunities and
                 incentives for the public sector to actively and collectively shape the overall
                 market.

          (b)    Pipeline uncertainty: Providing stable, long-term funding and transparency
                 over future project pipelines, to support planning, investment and innovation
                 for both procurers and suppliers;

          (c)    Capacity constraints: Addressing capacity and skills shortages to ensure
                 public authorities are equipped to deliver value for money in effective
                 procurement and project delivery;

          (d)    Procurement policy and approaches: Ensuring consistent adoption of best
                 practice, and favouring long-term value over short-term cost; and

          (e)    Regulatory barriers: Simplifying and streamlining regulatory processes to
                 support project delivery, lower barriers to entry and expansion, and
                 accelerate innovation.

5.2       Our proposals include recommendations to the UK, Scottish and Welsh
          governments and the Northern Ireland Executive. 439 Governments have significant
          influence over the market structure and parameters of competition in civil
          engineering for road and rail infrastructure. This is due to government:

          (a)    Signalling strategic demand to the market;

          (b)    Being a strategically important customer for many suppliers; and

          (c)    Being responsible for the wider regulatory and planning framework.

5.3       We consider that HM Treasury – as the department responsible for infrastructure
          strategy across the public sector, and with the central position and power within
          government to drive the necessary system-wide change – should oversee the
          implementation of our recommendations for UK government. HM Treasury is well-
          positioned to provide the necessary strategic approach to the recommendations as

439 The UK government has committed to issuing an official response to the CMA’s recommendations within 90 days of

report publication, with a presumption that the government will accept the recommendations unless there are
compelling policy reasons not to do so.


                                                         107
          a package, and to draw lessons from this work to drive broader changes across
          other infrastructure sectors where appropriate. There is also a clear role for other
          departments and public authorities in implementing our recommendations, and the
          precise allocation of responsibilities would be a matter for government to consider
          as part of its response to the market study. We have set out below our indicative
          view of which departments would be involved in delivering each recommendation.

5.4       Devolved governments will be accountable and responsible for implementing
          recommendations that fall within the scope of their devolved powers, and we
          recognise that HM Treasury will need to work closely with devolved governments
          in areas that are within devolved competence.

5.5       Where our recommendations refer to ‘procuring authorities’, we mean public
          authorities that procure public road or rail infrastructure. We advise that these
          recommendations should be delivered as soon as possible. We encourage
          government in its response to this report to set out the specific intended timeline
          for delivery against each recommendation.

5.6       Our recommendations apply to road and rail specifically, but we recognise that
          there may be strong parallels with other civil engineering sectors. We think the UK,
          Scottish, and Welsh governments and the Northern Ireland Executive should
          therefore consider whether the recommendations we set out below should also be
          applied to other types of infrastructure.

5.7       We summarise our package of recommendations below. Further detail, including
          on how these recommendations could be applied, is set out in Appendix B.


Our package of measures

5.8       Taken as a whole, our package of mutually reinforcing measures aims to improve
          the market dynamics for civil engineering in road and rail infrastructure to bring
          about better outcomes, with the corollary of boosting UK productivity and growth.
          The size of the opportunity is considerable, with possible efficiency savings of up
          to £5 billion per year. 440

5.9       Key benefits for the road and rail infrastructure markets – and wider UK economy
          – would include:

          (a)    Reducing costs: through measures that incentivise standardisation of
                 designs to reduce costs and support innovation in production, reduce bid




440 The National Infrastructure Commission (2024), Cost drivers of major infrastructure projects in the UK – Methodology

and technical annex, p18 indicates a range of possible efficiency savings of 10-25%. When applied to the annual
expenditure noted in Appendix A (paragraph A.1), which the CMA estimated to be approximately £19 billion in 2023/24,
this amounts to approximately £2-5 billion of potential savings.


                                                          108
             costs for suppliers, and increase the capacity and effectiveness across public
             authorities in deploying their market shaping role;

       (b)   Reducing delivery timelines and overruns: through measures that
             improve scoping, early market engagement and the handling of risk to reduce
             the likelihood of overruns, and streamline regulatory processes;

       (c)   Increasing innovation: through measures that pursue longer-term
             procurement to drive economies of scale and returns to investment, provide
             transparent pipelines and desired innovations for future works, and give
             sufficient weight to quality and innovation in procurement exercises; and

       (d)   Encouraging scale-up and business dynamism: through measures that
             promote competition across the range of firm sizes with simplified
             procurement processes, streamlined regulation, and reduced uncertainty to
             enable the supply chain to invest in expanding operations.

5.10   Figure 6.1 below summarises how our measures would deliver better outcomes.
       The package is aimed at addressing the root causes we identified as holding back
       the market. Some of these recommendations are more fundamental to achieving
       the desired impact (highlighted light blue). However, our recommendations’ overall
       impact would be maximised with implementation of the package in full, reflecting
       mutually reinforcing improvements and positive feedback loops.




                                           109
Figure 5.1: Summary of impact of recommendations




                                             110
5.11    We set out the recommendations below, grouped under each of the root causes
        being targeted. We also note the interdependencies between the different
        elements of the package, which make some measures mutually reinforcing, and
        how we have weighed up relevant trade-offs. We recognise that some of our
        recommendations involve trade-offs with other policy aims, on which it will be for
        government to determine the appropriate balance – though we would note that the
        counterfactual, of taking no action in the direction we recommend, would involve
        the continuation of current sub-optimal outcomes. In order to help inform decision-
        makers, we also note possible key implications and impacts of adopting our
        recommendations below.

Overarching market shaping

5.12    The public sector, in its role as the primary source of demand and regulation in the
        road and rail civil engineering sector, shapes and influences industry structures
        and the parameters of competition. Government thus has powerful tools at its
        disposal to shape the market; but a fragmented or un-strategic approach across
        the public sector as a whole risks failing to capitalise on this potential impact, or to
        drive and embed necessary system-wide reforms. Furthermore, ongoing
        monitoring and transparent reporting can play a valuable role in supporting
        accountability and incentivising delivery against government initiatives and
        objectives.

Recommendation 1 – Strategic ownership for driving change

Recognising its overarching responsibility for infrastructure strategy across the
public sector, and its ability to deploy the necessary convening powers and levers
within the UK government, we recommend that HM Treasury takes strategic
ownership for driving and overseeing the necessary system-wide changes to
actively shape the market.

This is a critical recommendation and is necessary to overcome the fragmentation of
accountability for civil engineering across a range of departments and bodies; address the
persistent failure to track and drive forward the implementation of previous
recommendations and reform initiatives; and tackle the range of interlinked and deeply-
rooted issues in the sector. Strategic ownership by HM Treasury would also enable a
cross-sectoral approach if the UK government decides to extend the scope of our
recommendations to other areas of civil engineering.

In practice, we would envisage NISTA playing a central role in providing the necessary
strategic coordination, advice and oversight to deliver the system-wide change that is
required. This aligns with NISTA’s mandate – under its foundational Memorandum of




                                              111
Understanding between HM Treasury and Cabinet Office – to drive improvements at the
policy, project, programme, portfolio and system level. 441

Recommendation 2 – Sector plan

We recommend that the UK government, in consultation with the Scottish and
Welsh governments and the Northern Ireland Executive: (i) publish a strategic
sector plan for civil engineering in the road and rail sector; and (ii) report annually
on progress against that sector plan.

This is a critical recommendation. An overarching, integrated, strategic plan for the market
and supply chain will play a core role in tackling the range of interlinked and deeply-rooted
issues in the market, and in delivering the system-wide change needed.

This sector plan should set out a coherent, system-wide set of objectives and actions for
civil engineering in the road and rail sector. This would include a framework for proactively
shaping the market through public procurement and regulation, altering incentives for
public authorities and breaking down barriers to investment and innovation. It should
clearly set the desired priority outcomes for the market to deliver, including any necessary
trade-offs (such as the extent to which it wishes to leverage economies of scale versus
prioritising opportunities for SMEs, and the extent of standardisation of designs versus
flexibility), alongside concrete actions – with a clear set of timelines and owners – to
implement changes and monitor outcomes.

The UK government should also give careful consideration as to the appropriate scope of
the sector plan, including whether it should extend beyond road and rail, in line with the
approach taken to Recommendation 1.

Overall responsibility for the development and implementation of the sector plan should be
assigned to a single department within UK government. If the scope of the sector plan is
limited to road and rail, we consider that the Department for Transport would be well-
placed to take on this responsibility. However, in these circumstances, it will be important
for the Department for Transport to ensure that the sector plan is developed in line with the
strategic approach set by HM Treasury under Recommendation 1. Input from other
relevant departments and bodies would also be required in line with their respective
responsibilities. As this will interact with devolved matters, this should be done in
conjunction with the Scottish and Welsh governments and the Northern Ireland Executive
to work for the whole UK.

Both of these recommendations (1 and 2) would also facilitate the decision-making and
reporting set out in other recommendations in this package (such as Recommendations 6-
8 and 14).




441 National Infrastructure and Service Transformation Authority (2025) NISTA Memorandum of Understanding.




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Pipeline uncertainty

5.13    As noted earlier in this report, respondents to the interim report consultation
        identified pipeline uncertainty as one of the major factors contributing to short-term
        procurement approaches, lower supplier confidence to invest in staffing and
        equipment, and thereby lower levels of productivity and innovation across the
        sector. Increasing funding certainty and improving pipeline visibility were also
        consistently ranked by respondents as the most important measures that
        governments could take to improve outcomes.

5.14    Therefore, we consider that measures to provide stable, long-term funding for
        public procurers, and greater transparency and certainty for suppliers regarding
        future programmes of work, would address one of the key barriers to investment
        and innovation. We are recommending three measures to address these issues:

Recommendation 3 – Multi-year capital funding

We recommend that the UK, Scottish and Welsh governments and the Northern
Ireland Executive each implement multi-year capital budgets (of at least three years)
for all procuring authorities.

This is one of the recommendations we consider fundamental to achieving the desired
impact of our recommendations.

It will enable procurers to have more stable funding and procurement plans, facilitating
investment decisions and creating the conditions for increased innovation. Crucially, it
should unlock more strategic procurement approaches across all procurement activity and
provide greater certainty across the sector.

We recognise that this recommendation comes with the trade-off of reduced flexibility for
government; while public authorities would benefit from greater financial autonomy,
government would have less ability to adjust budgetary allocations year-on-year. We
consider that key benefits for the sector would be unlocked with a multi-year budget period
of a minimum of three years.

We consider HM Treasury, with support from DfT, would be best placed to deliver this
recommendation for UK government.

Recommendation 4 – Longer-term contracts

We recommend that the UK, Scottish and Welsh governments and the Northern
Ireland Executive each give all procuring authorities greater flexibility to commit to
contracts that extend beyond budget settlement periods. This would include the
setting of budget and timeline thresholds within which procurers can make
commitments without requiring case by case central approvals.



                                             113
This will provide suppliers with increased certainty over a programme of work, reduce bid
costs for all parties, and support collaborative and innovative contracting arrangements.
This should come alongside the greater use of longer-term contracting in general,
including greater contracting for programmes of projects rather than project-by-project,
which is part of Recommendation 9 below.

As with Recommendation 3, we recognise the trade-off of reduced flexibility for
government, and also recognise that increased use of long-term contracting could also
favour larger firms that can fund and commit to larger contracts – but this is balanced
against the clear benefits from appropriately greater use of longer-term commitments.

We consider HM Treasury would be best placed to deliver this recommendation for UK
government.

Recommendation 5 – UK-wide infrastructure pipeline

(i) We recommend that NISTA, in collaboration with the Scottish and Welsh
governments and the Northern Ireland Executive, expands its infrastructure pipeline
to include road and rail projects planned by the devolved governments and their
arms-length bodies.

(ii) We recommend that NISTA’s pipeline should be expanded to include information
for each project on: funding confirmation status; planning approvals status;
intended timelines for procurement; and intended procurement method.

This will provide greater visibility for suppliers on upcoming opportunities, with the
improved transparency enabling more efficient and effective planning by firms in the
supply chain, and facilitating an increase in targeted capacity-building and investment.

5.15    Within this area of recommendations, a particular interdependency to highlight is
        between Recommendation 3 and 5: the robustness and reliability of information
        within an expanded pipeline would be considerably supported by multi-year capital
        funding that enables procuring authorities to commit to plans in advance.

Procurement authority capacity constraints

5.16    In a well-functioning market, we would expect public authorities to be robustly
        equipped with the ability to make the range of complex and strategic decisions
        involved in road and rail procurement so as to maximise value for money. To do
        this requires them to possess the capacity and capability to effectively make a
        wide range of often difficult judgments across a complex set of considerations.
        However, we have found that public authorities can struggle to fund and source
        the specialist staff and invest sufficient time in procurement activities to fulfil these
        roles effectively. Given the importance and impact of this role, even small



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           improvements in capacity and capability could deliver a significantly positive
           impact on market outcomes.

5.17       We are therefore putting forward a series of recommendations to address public
           authority capacity constraints. These are centred on the following themes:

           (a)    Strengthening the core capabilities of public authorities in civil engineering,
                  procurement, commercial and project management disciplines;

           (b)    Encouraging greater collaboration between public authorities to pool
                  resources and expertise across organisations; and

           (c)    Encouraging more joint procurement to harness the benefits of the public
                  sector’s buyer power.

5.18       We have found that skills shortages and limited capacity in public authorities
           restrict effective procurement and project delivery. We are recommending three
           measures to address this:

Recommendation 6 – Sustained capability building

We recommend that the UK, Scottish and Welsh governments and the Northern
Ireland Executive each publish a civil engineering strategic workforce plan that sets
out how they will strengthen the commercial and technical capability of all public
procuring authorities, and report regularly on progress against this.

This is one of the recommendations we consider fundamental to achieving the desired
impact of our recommendations.

Strengthening procurers’ commercial and technical capacity and capability is fundamental
to ensuring public procurement can take full benefit of market-shaping opportunities,
reduce costs, and deliver the strongest outcomes. 442 A strategic plan to achieve this
should include targeted actions to address persistent challenges in recruitment, retention
and skills. This plan, and the annual reporting against it, could form part of the sector-wide
plan and reporting in Recommendation 2.

We consider this should form part of the sector-wide plan with delivery supported by
MHCLG, GCA and DfT.

Recommendation 7 – Cross-authority pooling of capacity 443

We recommend that the UK, Scottish and Welsh governments ensure that all local
authorities have sufficient access to sources of pooled capacity to support their

442 By commercial and technical we mean procurement, commercial (including (quantity surveyors), legal and civil

engineering professions.
443 Note that, in Northern Ireland, procurement of road and rail infrastructure is already centralised under Northern

Ireland’s Department for Infrastructure and Translink respectively.


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road procurement and contracting activities. Governments should evaluate, and
report on, demand for and use of pooled capacity on an annual basis, and address
gaps identified.

This will help ensure authorities can access the specialist advice and support they need –
reducing reliance on external consultancy, and making more effective use of commercial
and technical skills in the public sector, without requiring each authority to develop and
maintain the full range of skills in-house. Government could report on its annual evaluation
as part of the reporting in Recommendation 2.

Governments could draw from, for example, the New Zealand model of Crown
Infrastructure Delivery (CID), which helps government agencies by providing specialist
infrastructure delivery support. 444

We consider that MHCLG or DfT would be best placed to lead delivery of this
recommendation for UK government, with support from NISTA and GCA.

Recommendation 8 – Cross-authority joint procurement445

(i) We recommend that the UK, Scottish and Welsh governments work with local
authorities in their respective nations to identify and pursue further opportunities
for joint procurement of road infrastructure. Governments should publish on an
annual basis where they have facilitated joint procurement amongst local
authorities and disseminate key learnings with local authorities.

(ii) We recommend that Network Rail 446 identify and pursue opportunities for more
centralised procurement across the five Network Rail regions. The UK government
should ensure, where appropriate, effective joint procurement is utilised between
regions, and in collaboration with the Scottish Government and the Welsh
Government.

This will provide procuring authorities with more buyer power, drive greater value for
money, and combat duplication and/or conflict in authorities’ work. Annual reporting on this
measure could form part of the reporting under Recommendation 2.

We consider that DfT would be best placed within UK government to ensure effective joint
procurement is utilised.

5.19       These measures are mutually reinforcing, as pooling of capacity can support
           sustained capability building across public authorities, and greater collaboration is
           also likely to facilitate more opportunities for joint procurement.



444 CID, Delivering and supporting Crown infrastructure across New Zealand, accessed on 11/05/26.
445 Note that, in Northern Ireland, procurement of road and rail infrastructure is already centralised under Northern

Ireland’s Department for Infrastructure and Translink respectively.
446 And Great British Railways once operationalised.




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Procurement policy and approaches

5.20    Procurement policy, culture and practice play a fundamental role in shaping the
        incentives faced by public procurers and firms – and, as the primary buyer, how
        government conducts procurement will fundamentally influence the wider shape
        and dynamism of the market. Government’s approach to procurement can thus
        drive and harness competitive practices, support innovation and encourage firm
        scale-up and market dynamism. This needs to be driven through both the
        procurement policy environment and individual procurement decisions.

5.21    One particular area we have considered is how procuring authorities can be
        supported and incentivised to focus on maximising value over the longer term,
        including through incentivising innovation and investment, and bring down system
        costs. Another area is how best practice in procurement can be adopted more
        widely, as we have found that although best practice is generally widely known
        and understood it is not consistently adhered to.

5.22    There are also a range of related and further procurement policies and issues we
        have explored, with a particular focus on how competition could be made to
        operate more effectively. These include: the balance between competitive
        pressures and efficiency in the tendering process – including the balance between
        the use of open competition and the use of procurement frameworks; and where
        procurement frameworks are used, how competitive pressure could be more
        effectively utilised.

5.23    We are recommending the following measures to address these issues:

Recommendation 9 – Adoption of best practice

We recommend that the UK government should mandate compliance with the
Construction Playbook and its accompanying Guidance Notes – ending the current
‘comply or explain’ approach – for national procuring authorities.

Similarly, the Scottish and Welsh governments and the Northern Ireland Executive
should mandate compliance with the Client Guide, Transport Appraisal Guidance,
and Construction Toolkit for national procuring authorities.

As part of this, governments should publish a comprehensive implementation plan
for how they will support and ensure compliance, and monitor and report on
compliance on an ongoing basis.

This is one of the recommendations we consider fundamental to improving outcomes in
the market.

Widespread adoption of best practice will ensure the public sector takes advantage of the
opportunities to increase competitive tension in procurement, drive long-term value, and


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shape the market in line with its objectives. By providing for consistent adoption of a
number of actions and ways of working that overlap with our recommendations elsewhere
in the package (including Recommendations 4 and 11-13), this recommendation is a
fundamental component of the effectiveness of the package as a whole.

This recommendation includes the widespread adoption of best practice guidance on early
market engagement. We have heard from multiple stakeholders that procuring authorities
are sometimes dissuaded from pursuing early market engagement due to fears over
potential negative impacts on competition and compliance with competition law.
Recognising the important role that early contractor engagement can play in driving
improved market outcomes, we note that, provided conducted appropriately, we would not
ordinarily expect it to raise competition law concerns.

For the UK government, the GCA review of the Construction Playbook due this year can
be used to make any changes that would be required to support mandation; and HM
Treasury can require compliance as part of the public spending framework.

Recommendation 10 – Supporting innovation

We recommend that the UK, Scottish, and Welsh governments and the Northern
Ireland Executive require all national public authorities to publish, at least every
three to five years, target areas for innovation in their supply chains. This should be
supported by funding and regular reporting as appropriate.

This will provide greater confidence for suppliers in where innovations (such as
industrialised construction methods) would be likely to be welcomed by public procurers,
which would encourage investment and inclusion in bids. This should also support and
underpin the approach taken by procuring authorities in their project, programme, and
portfolio procurement strategies to proactively considering and encouraging innovation,
investment, and opportunities for long-term cost reduction.

As well as this recommendation, a number of other recommendations in our package
(such as Recommendations 1-5, 13-15 and 18) would support investment in, adoption and
dissemination of innovation in the sector.

We consider that DfT would be best placed to deliver this recommendation for UK
government.

Recommendation 11 – Use of frameworks

We recommend that the UK, Scottish and Welsh governments and the Northern
Ireland Executive ensure that all future national road and rail public procurement
frameworks adhere to the Gold Standards set out in the 2021 Mosey review. 447



447 Gold Standard Report.




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The 2021 Mosey review conducted an objective, independent review of public sector
construction frameworks, and set out recommendations for a ‘Gold Standard’ for
frameworks and framework contracts. Ensuring all future frameworks adhere to those Gold
Standards will drive and support adherence to best practice, and improve the outcomes
delivered by framework strategies, procurement, contracting and management – including
lower procurement costs, greater value for money, and reduced risk.

We consider that GCA would be best placed to deliver this recommendation for UK
government.

Recommendation 12 – Standardising procurement processes

We recommend that the UK, Scottish and Welsh governments and the Northern
Ireland Executive each conduct a review to identify opportunities for, and deliver,
greater standardisation of procurement processes across procuring authorities.

This should consider opportunities for greater standardisation across the procurement
lifecycle, including processes, compliance, data requirements, administrative requirements
(such as forms and documents used in supplier submissions), and approaches to bid
evaluation. It should incorporate best practice examples from organisations across the UK.

Delivering greater standardisation in procurement processes across public authorities will
reduce administrative burdens on suppliers, support increased competition in public
tenders, and lower barriers to entry and growth opportunities for SMEs.

We recognise that this recommendation comes with a trade-off between flexibility for
individual procurers to tailor processes to their own needs and wants, and the efficiency
gains and lowered barriers to entry that come through standardisation.

We consider that GCA, with support from DfT, would be best placed to deliver this
recommendation for UK government.

Recommendation 13 – Improved approach to risk allocation

We recommend that national procuring authorities should conduct a zero-based
review of Z clauses in model contracts, to remove historical clauses altering how
risk is allocated that are no longer required.

While Z clauses – which allow procuring authorities to include additional, bespoke
conditions of contract – may be used for valid reasons, we have consistently heard that
they are overused, resulting in the inappropriate allocation of risk throughout the supply
chain. Reducing their use will improve and standardise the approach taken to the
allocation of risk to suppliers by public authorities.

Other recommendations in our package, particularly Recommendation 9 on the mandating
and widespread adoption of best practice and Recommendation 12 on standardising


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procurement processes, will also play a key role in ensuring that risks are owned or jointly
owned by the party or parties best able to manage and bear them.

We consider that GCA would be best placed to deliver this recommendation for UK
government.

Recommendation 14 – Standardisation of designs

We recommend that the UK, Scottish and Welsh governments and the Northern
Ireland Executive should determine and mandate for national procuring authorities
the use of a limited set of standard designs for certain road and rail infrastructure
outputs (such as bridges, gantries, and other common structures that are repeated
across projects).

This is one of the recommendations we consider fundamental to achieving the desired
impact of our recommendations.

This will create a virtuous cycle of a more predictable and efficient environment for
infrastructure development – reducing system costs, delivery risk, and burdens on
procurers, and driving opportunities and incentives to take advantage of economies of
scale, including investment in practices such as industrialised construction methods.

There have been a range of successes in standardising designs internationally, including
in high speed rail in France, bridges in Germany, and metro stations in Canada (see
Appendix B). We also note parallels to Ireland, where there are mandatory national design
standards that apply to roads across all urban areas. 448

We recognise that this recommendation comes with the trade-off in some cases of
reduced flexibility for public authorities to tailor requirements for individual projects, such
as designing to local preferences or aims, and innovation in designs. However, our strong
view is that the widespread reliance on project-by-project bespoke design in the UK raises
long-term costs, increases the capacity required by procuring authorities, and lengthens
delivery timelines – and that reducing costs requires much greater standardisation than at
present.

We also recognise the potential trade-off of locking in advantages for firms that already
have experience in the specific standardised designs determined by government, and
thereby of creating advantages for a subset of suppliers. This may have a negative impact
on SME entry and growth in the market. However, this effect could be mitigated by
measures such as ensuring transparency in the designs to be used, while consistent
application of best practice and more standardised procurement approaches
(recommendations 9 and 12) should facilitate improved competition, entry and scale-ups in
the market. When determining standardised designs government should manage



448 Design Manual for Urban Roads and Streets, Government of Ireland, accessed 11/05/26.




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intellectual property (IP) appropriately, using existing IP guidance, so that they can be
open to use by the wider market.

We consider that DfT would be best placed to deliver this recommendation for UK
government.

Recommendation 15 – Alignment of designers’ and procurers’ incentives

We recommend that the UK, Scottish, and Welsh governments and the Northern
Ireland Executive review and strengthen their best practice guidance on aligning
external designers’ incentives with those of public procurers.

This will drive more efficient outcomes – with well-aligned incentives between designers
and procurers fundamental to ensuring that designs deliver long-term value for money, in
construction and across the lifetime of the infrastructure asset. It should also reduce
demands on procuring authorities’ resources and expertise.

This recommendation would be supported by Recommendation 9 on mandating
widespread adoption of best practice, and Recommendations 6 and 7 – which would
strengthen the ability of procuring authorities to engage with, challenge and shape design
proposals to ensure they maximise long-term value for money.

We consider that GCA, with support from DfT, would be best placed to deliver this
recommendation for UK government.


Regulatory barriers

5.24      We have found that complex and slow regulatory processes impede project
          delivery, raise barriers to entry and expansion, and limit efficiency-driving
          innovation. Proportionate, targeted regulation allows for a predictable and efficient
          landscape for infrastructure development, which can improve delivery of civil
          engineering projects in road and rail. This environment is also key for driving
          investment into the sector and supporting innovation, as well as facilitating entry
          into markets and cultivating the right environment for successful businesses to
          scale. As such, we are putting forward four recommendations to address these
          concerns.

Recommendation 16 – Reduce over-compliance

(i) We recommend that the UK, Scottish and Welsh governments and the Northern
Ireland Executive direct regulators and public bodies 449 with standards-setting
responsibilities to establish and run an open-ended challenge function for industry




449 Such as the Office of Rail and Road, National Highways, Network Rail and the Rail Safety and Standards Board.




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to challenge any standards, for both designs and products, on the grounds that they
are out of date, duplicative or redundant.

(ii) In addition, the UK, Scottish and Welsh governments and the Northern Ireland
Executive should agree and enforce sets of consistent regional standards for
‘preferential requirements’ by local authorities for civil engineering projects.

(iii) The UK government should also consider updating the Railway Regulation Act
so that Network Rail 450 has equivalent legal powers as National Highways to access
adjacent land to conduct civil engineering works for enhancement and renewals.

This is one of the recommendations we consider fundamental to achieving the desired
impact of our recommendations.

These measures will help reduce system costs, and lower barriers to entry. Ensuring more
agility and responsiveness by standards setters and managers will facilitate lower costs for
firms, greater innovation, and increased competition. Consistent standards for preferential
requirements (elements of design or engineering specifications which reflect preferences
rather than technical necessity) will reduce barriers to entry for firms and increase
efficiency in cross-regional operations, as well as supporting greater joint procurement
(Recommendation 8). Granting Network Rail access rights to adjacent land equivalent to
those of National Highways would significantly reduce the risk of delays involved in current
processes and increase the speed of delivery, though government is best placed to
consider if the trade-off between access and landowner rights should be similar in rail as in
road.

We consider that DfT, with support from the ORR, would be best placed to deliver this
recommendation for UK government.

Recommendation 17 – Streamline accreditations

We recommend that the UK, Scottish and Welsh governments and the Northern
Ireland Executive should review the existing range of supplier accreditations for
duplication and set a single approved list of accreditations that are acceptable for
firms working on public road and rail infrastructure projects.

In particular, governments should focus on reducing duplication amongst Safe Schemes in
Procurement (SSIP) providers and the use of multiple Pre-Qualification Questionnaires or
platforms, increasing mutual recognition between accreditations where possible, as well as
encouraging more consistent use of the Common Assessment Standard (CAS).

This streamlining will reduce administrative burden on suppliers, with particular benefit for
SMEs, and facilitate greater market access and competition.



450 And Great British Railways once operationalised.




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We consider that Cabinet Office, with support from DfT, would be best placed to deliver
this recommendation for UK government.

Recommendation 18 – Streamline regulatory approvals

The UK government should direct regulators and public bodies 451 to streamline
approvals processes for new technologies in road and rail infrastructure and
establish fast-track approval processes, which should include the recognition of
reference-class data.

As part of this, government should also promote dialogue between regulators and
international counterparts to consider successful approvals/deployment lessons.

This streamlining of approvals should encourage the development and rollout of new
innovations across the supply chain.

Similar initiatives to approve new products have been used in Norway to speed up the
route to market for alternative materials for road structures and tunnels, and the outputs of
such pilots will lead to relevant recommendations for new approval processes for product
regulations. 452

We consider that DfT, with support from the ORR, would be best placed to deliver this
recommendation for UK government.

Recommendation 19 – Utility diversions response times

We recommend that the UK, Scottish and Welsh governments and the Northern
Ireland Executive direct sector regulators 453 to agree and monitor standardised
response times for utility diversions.

The need for utility diversion arises when utility networks (such as cables or pipes) need to
be relocated or altered in some way to enable engineering works. Delays in addressing
such requests can contribute to significant cost and time overruns in project delivery, and
introducing more consistent response times that are subject to active monitoring would
help to address this.

We consider that DfT would be best placed to deliver this recommendation for UK
government.


Interdependencies

5.25      Throughout our package of recommendations, the measures proposed are
          interdependent and mutually reinforcing. To maximise impact, therefore, measures

451 Such as National Highways, Network Rail and the British Board of Agrément.
452 BVM Vegbygging, Pilotering, accessed on 05/05/26.
453 These include Ofcom, Ofgem, Ofwat, the Utility Regulator and the Water Industry Commission for Scotland.




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       should be implemented in tandem. This applies to recommendations across our
       package, as well as those within the groupings of overarching market shaping,
       pipeline certainty, procurement authority capacity constraints, procurement policy
       and approaches, and regulatory barriers. We have highlighted intra-section
       overlaps above, and highlight some additional key overarching interdependencies
       below.

5.26   Recommendation 1 on strategic ownership for driving change provides for
       deliberate, strategic decision-making on approaches to road and rail, and
       Recommendation 2 concerns regular reporting of progress against objectives to
       support progress and ownership. These would support the delivery of multiple
       recommendations, including:

       (a)   Publishing a civil engineering strategic workforce plan (Recommendation 6);

       (b)   Reporting on use of joint procurement (Recommendation 8);

       (c)   Highlighting target areas for innovation (Recommendation 10); and

       (d)   Setting out the degree of increased standardisation of designs
             (Recommendation 14).

5.27   Recommendation 10 on supporting innovation provides for direction from public
       procurers on where suppliers could aim to provide innovative solutions. Innovation
       also requires space for suppliers to analyse opportunities and make their own
       investment decisions with confidence, as well as flexibility for procurers to adopt
       new proposals. Achieving this requires multiple measures to be enacted, such as:

       (a)   Strategic ownership for driving change (Recommendation 1) that drives an
             agenda across public authorities of seeking, adopting and rolling out
             innovative practices;

       (b)   Longer-term funding (Recommendation 3), contracts (4) and transparent
             pipelines (5) to signal opportunities for investment and provide increased
             incentives for doing so;

       (c)   Alignment of designers’ and procurers’ incentives (Recommendation 15) that
             increases design focus on long-term value and greater use of standardised
             designs (Recommendation 14) that unlocks the opportunity for increased
             deployment of industrialised construction methods; and

       (d)   Streamlined regulatory approvals (Recommendation 18) that allow innovative
             practices to be adopted in a cost-effective manner, and disseminated across
             the industry.

5.28   Recommendation 9 on best practice provides for widespread adoption of a
       number of actions or ways of working that dovetail with our recommendations

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       elsewhere in the package. For example, the implementation of Recommendation 9
       would support the effectiveness of other recommendations by strengthening:

       (a)   Use of long-term contracts (Recommendation 4);

       (b)   Pipeline visibility (Recommendation 5);

       (c)   Standardisation of procurement processes (Recommendation 12);

       (d)   Appropriate allocation of risk in procurement contracts (Recommendation
             13); and

       (e)   Alignment of incentives between designers and procurers (Recommendation
             15).


Next steps

5.29   We consider that implementing this package of measures is essential to driving
       improved outcomes in the market, and a greater contribution to UK productivity
       and growth. We therefore strongly encourage governments to act on our
       recommendations, with speed and in full.

5.30   Following publication of our final report, we stand ready to engage further with
       governments, market participants and other interested parties on our
       recommendations and support their implementation.




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