Delivering major construction projects in the UK public sector is often complex. From new housing developments to large-scale infrastructure improvements, these projects carry significant risks, which can be financial, operational, and reputational. Public sector buyers must not only ensure that projects are delivered on time and on budget, but also that they provide long-term value (including social value), comply with regulatory requirements, and meet the needs of communities.
Some risk is inherent in construction. But an effective procurement strategy is one of the most powerful tools available to manage it. By understanding the common risks, embedding robust procurement processes, and selecting the right delivery solution, public sector buyers can safeguard projects and achieve better outcomes.
This guide explores the key risks in construction projects, and how procurement can help to manage and mitigate them.
Jump to:
● Common risks in major construction projects
● Procurement as a risk management tool
● How procurement solutions help to manage construction risks
● Practical steps for public sector buyers
● How Procurement Hub can help
Common risks in major construction projects
Before starting the procurement process, it is important to recognise the most common risks often faced by public sector organisations commissioning large construction projects.
Cost overruns and budgetary pressures
Construction costs can escalate due to things such as design changes, inflation in material costs, labour shortages, supplier underperformance or unforeseen site conditions. Public bodies operate under tight fiscal scrutiny, so budget overruns can have significant political and reputational consequences, as well as often having a knock-on effect on other projects or activity.
Delays in project delivery
Schedules can sometimes slip due to contractor performance issues, supply chain disruptions, or unrealistic planning. Delays may cause additional costs, impact service delivery, and attract scrutiny from stakeholders. It can potentially have a somewhat negative effect on the community that the project is designed to support when it is delivered late.
Quality and compliance failures
Poor workmanship, non-compliance with building regulations, or inadequate oversight can lead to buildings that do not meet required standards. This can create safety risks and result in costly remedial works.
Supply chain fragility
In today’s volatile environment, insolvencies and financial fragility among contractors and subcontractors pose significant risks. Supply chain collapse mid-project can cause disruption and increase costs.
Health, safety, and environmental risks
Construction is inherently high-risk in terms of workforce safety. Increasingly, public sector projects also face scrutiny regarding environmental performance, sustainability, and achieving net-zero targets.
Stakeholder and reputational risks
Public sector projects attract a high degree of visibility. Failure to deliver value for money, or negative press around contractor performance, can damage the reputation of both the buyer and the wider public sector.
Procurement as a risk management tool
While all of these risks cannot be eliminated from every project, many of them can be managed and mitigated effectively. Procurement is central to this. A well-designed procurement strategy ensures that risks are considered up front, can be handled by the party best placed to manage them, and monitored throughout the project lifecycle.
The key ways that procurement supports risk management
Including a clear definition of requirements – Ensuring that specifications and outcomes are well-defined from the outset reduces the risk of scope creep and disputes further down the line.
Robust supplier evaluation – Assessing supplier capability, financial stability, and past performance helps reduce risks of underperformance and insolvency.
Appropriate contract structures – Standardised contracts embed risk-sharing mechanisms that promote collaboration and accountability, ensuring all parties are clear where they stand and what their responsibilities are.
Performance monitoring – Well-planned procurement processes establish governance structures and strategic KPIs for tracking delivery against milestones, quality, and cost.
Flexibility in supplier selection – Using frameworks or other established solutions allows buyers to adapt procurement to market conditions and project requirements, reducing exposure to single-supplier risk and boosting SME involvement.
How procurement solutions help to manage construction risks
Flexible frameworks, dynamic purchasing systems (which are changing to Dynamic Markets under the Procurement Act 2023), and specialist construction procurement routes provide structured ways to access pre-vetted suppliers and manage procurement efficiently. When used effectively, they can significantly reduce risk.
Mitigating cost risks
Frameworks often include pre-agreed commercial terms, providing buyers with greater cost certainty and consistency. Early contractor involvement through a framework can also support realistic budgeting, as suppliers contribute their expertise during design and planning stages.
Furthermore, frameworks allow access to competition at call-off stage, driving value for money while maintaining efficiency. This balances the need for cost control with flexibility to respond to market conditions.
Reducing delays
Framework suppliers are pre-qualified, reducing the time and risk involved in onboarding new contractors. Frameworks also often have established performance management processes, ensuring that underperforming suppliers are dealt with swiftly and cannot continue tendering for contracts if they fail to meet standards.
In addition, by procuring through established routes that are fit for purpose, buyers can avoid lengthy ‘from scratch’ procurement exercises that may themselves introduce delays to the project initiation.
Ensuring quality and compliance
Framework and procurement solution providers typically carry out rigorous checks on supplier competence, accreditations, and track record. This due diligence reduces the risk of appointing contractors who cannot deliver to required standards.
Many frameworks also build in quality assurance mechanisms, such as independent audits and reporting obligations, which help buyers monitor compliance throughout the project lifecycle.
Managing supply chain risks
Using frameworks and other procurement solutions gives access to a wider pool of suppliers, including SMEs and specialists, which helps diversify and minimise risks in the supply chain. In some cases, these solutions will also have built-in mechanisms for financial monitoring of suppliers, providing early warning signs before a problem escalates.
Incorporating supply chain resilience into procurement strategies, such as through requirements for sustainable sourcing or social value, further strengthens risk management.
Addressing health, safety and environmental concerns
Frameworks and other types of procurement solutions are increasingly embedding health, safety, and sustainability criteria into supplier selection and performance management. Buyers can use these tools to ensure that contractors align with net-zero goals, BNG, circular economy principles, and robust safety standards.
Protecting reputation
Transparent, compliant procurement processes protect buyers from legal and reputational risks. At Procurement Hub, our solutions are all designed to be procurement regulation compliant, providing assurance that processes are fair, open, and legally defensible.
It’s also important to note that for public bodies, selecting the right partners through a proven solution can enhance public trust by demonstrating that taxpayer money is being spent wisely and responsibly.
Practical steps for public sector buyers
For public sector buyers involved in major construction projects, the following steps can help embed effective risk management into procurement from the very start – minimising the risk of things going wrong:
- Map risks early – Identify key risks during project planning and link them directly to procurement decisions.
- Use pre-market engagement – Test your assumptions with suppliers and validate feasibility before finalising procurement documents.
- Select the right procurement solution – Not all ready-made solutions are the same. Choose one that aligns with your sector, values, and project scale.
- Focus on whole-life value – Move beyond lowest cost and consider quality, sustainability, and long-term operational costs.
- Monitor supplier health – Build in KPIs and other checks on financial resilience and capacity throughout the contract, not just leaving it until the end of the project.
- Invest in contract management – Procurement success depends on strong post-award management, so allocate resources accordingly to keep projects on track and spot any potential problems early.
An effective procurement strategy transforms risk from a threat into an opportunity for stronger collaboration, innovation, and resilience, delivering better outcomes for all.
How Procurement Hub can help
At Procurement Hub, our strong heritage in the construction sector as part of Places for People has helped us to develop and hone our procurement solutions to ensure that they are tried, tested and proven to be an effective way to manage successful projects.
Our Major Projects Framework has been designed for all kinds of construction projects for the UK public sector, with regional lots that cover England, Scotland, Wales and Northern Ireland. A major strength is in its flexibility, enabling buyers to shape the framework around specific project needs and giving access to top suppliers and consultants in one handy tool.
Get in touch to find out more.