We are all feeling the widening impact of geopolitical instability, including the escalation of tensions in the Middle East, which is feeding into higher energy prices, renewed inflationary pressure and weaker investor confidence. Construction is particularly exposed, with energy and fuel costs affecting manufacturing, logistics and on‑site operations. These pressures are reinforcing cautious behaviour across the market.
Recent months and the current geo-political events have reinforced what many of you are experiencing daily: market volatility in construction is no longer a short‑term disruption but a structural challenge. Energy and gas prices, materials markets, logistics, labour pressures and investor confidence continue to affect costs, programme certainty and viability across Wales.
In response, Constructing Excellence Wales has provided advice to Welsh Government’s Procurement Policy Team on how public sector procurement can better respond to these conditions. This work builds on the principles that underpinned WPPN 09/21 (which is no longer in force), recognising that the issues it sought to address have persisted and evolved.
Our advice emphasises the need to look beyond single inflation indices and consider real, composite market signals; to use early market engagement and early contractor involvement more consistently; and to reinforce the case for value‑based procurement, rather than lowest price, particularly during periods of sustained volatility. Construction is uniquely exposed because energy is embedded at every stage of the lifecycle, from manufacture and transport through to site operations which creates systemic risk that cannot be managed through traditional risk transfer alone.
Welsh Government has confirmed that an information note is currently in development, informed by this work, and will be published when permissible, subject to pre‑election restrictions. CEW will continue to provide live market intelligence and represent members’ experiences as this guidance develops.
Thank you for continuing to share insight with us, it directly shapes our work on your behalf.