Overview

When our client – a civil engineering subcontractor – was appointed to a framework more than a year after tendering, the risk of inflation eroding profit margins became a serious concern, particularly for critical subcontracted components such as precast bunds and liners. 

Thanks to GCM’s negotiation strategy during the tender and contract award process, our client was protected against cost escalation. This resulted in securing fixed subcontractor rates and over £440,000 in added value across the first two years of the framework. 

The client

Our client is a specialist civil engineering subcontractor delivering concrete, utility and energy-sector works across the UK. The company is known for its technical capability within high-specification frameworks. 

The challenge

In May 2022, our client submitted a tender for the Scottish Power Energy Networks (SPEN) framework covering Substation Bund Remedial and Replacement Works. GCM supported the initial submission, including engagement with our client’s key supply chain partners. 

However, the framework wasn’t awarded until September 2023, leaving our client exposed to over a year of inflationary pressure, particularly from the rising costs of precast components provided by our clients’ subcontractor. With fixed rates locked from the original submission, our client risked significant loss unless early commercial intervention could mitigate the cost creep. 

Our approach

GCM provided full commercial support through the tender, award and subcontracting process. Pre-award, we advised our client to include inflationary allowances in the base rates (15% for Year 1, 25% for Year 2). 

Prior to Best and Final Offer (BAFO) submission, GCM ensured price validity was reconfirmed with our client’s subcontractor, protecting their commercial position. Following our client’s appointment, GCM negotiated a fixed-cost subcontract with their subcontractor, aligned to the SPEN framework terms. 

We formalised a two-year fixed agreement enabling simple call-offs via contractor instruction, avoiding the need for repeated site-by-site negotiations. 

The result

GCM’s commercial planning and negotiation delivered major financial benefits and contractual clarity for our client. Results included: 

• £444,882.02 in projected gain over two years: 

• Year 1: £131,362.80 inflationary gain + £35,467.96 OH&P 

• Year 2: £218,938.00 inflationary gain + £59,113.26 OH&P 

In addition, there was no cost escalation from the subcontractor despite market inflation.