Winning public sector work is a huge opportunity for small and medium construction businesses in the UK—but it comes with rules. Get the contract basics right and you protect cash flow, avoid disputes, and score well on legal compliance tenders. Get them wrong and you risk blown margins and poor performance scores that follow you to the next bid.
This guide strips out the jargon and explains UK construction law essentials you’ll meet in real tenders, from which contract you’re signing to payment rules, safety duties, and the new procurement regime.
1) Know the contract you’re signing (and why it matters)
Most public bodies buy works using recognised standard forms. The big two are JCT (widely used for building works) and NEC (common for infrastructure and collaborative delivery).
- JCT: traditional, clearly allocates design/risk, familiar to building clients. Evidence shows it’s the most widely used standard form in UK construction.
- NEC4: focuses on proactive project management (early warnings, programmes) and defines change as compensation events. It’s widely used across UK public sector projects.
What to do before you bid:
- Pin down scope and drawings/spec: your price lives or dies here. Check for provisional sums and exclusions.
- Check time obligations: JCT uses extensions of time; NEC uses programmes and time risk allowances.
- Understand change: JCT calls them variations; NEC calls them compensation events with agreed time/cost effects.
- Review insurances, bonds, warranties: know what you must provide and when.
- Read the Contract Particulars/Contract Data: this is where options, damages, and key dates are set.
Example (typical UK tenders):
- School refurbishment under JCT Minor Works—clear employer-led design, variations priced as they arise.
- Footpath and kerb replacement under NEC4 ECC Option A—fixed price with proactive programme updates and compensation events.
2) Payment, notices and cash flow: the rules you cannot ignore
The Housing Grants, Construction and Regeneration Act 1996 (the Construction Act) sets mandatory payment processes in construction contracts. Key ideas:
- Applications & “notified sums”: you apply for payment; if the payer doesn’t issue a payment notice or a valid pay less notice on time, the notified sum becomes due. Recent case commentary confirms a pay less notice can mirror a payment notice in content if it clearly states what is due and why. Timings and clarity are everything.
- Practical tip: build a payment calendar for every project: application date, payment notice deadline, pay less notice deadline, due and final dates for payment.
- If cash stalls: statutory adjudication lets either party get a quick, binding (interim) decision—normally in around 28 days—to keep money moving. Think of it as “pay now, argue later.”
Example (real-world situation):
You instal M&E in a community centre. Your application is £120k. The council’s agent misses the pay less notice deadline. Even if they dispute some items, the notified sum stands—short-pay without a valid notice and you can adjudicate for prompt payment.
3) Safety and building control: your legal duties on every job
Two regimes matter on public projects, large and small:
- CDM 2015 (Construction (Design and Management) Regulations): sets roles (client, principal designer, principal contractor) and duties to plan, manage and monitor work safely. Even on small jobs, you must cooperate, provide information, and manage risks.
- Building Safety reforms: since 1 Oct 2023, England has a new dutyholder and competence regime under Building Regulations (applies to all building work), plus a separate building control route for higher-risk buildings overseen by the Building Safety Regulator. Expect clearer responsibility, stronger oversight, and more documentation.
What this means for bids:
- Show competence (training, experience, supervision) for your trade.
- Name your PD/PC clearly and explain how you’ll manage risks (RAMS, inductions, welfare).
- For higher-risk buildings, allow time for approvals and evidence trails (design control, change control).
4) Procurement rules: what changed—and how to stay compliant
The Procurement Act 2023 is now live (from 24 February 2025) and replaces the old Public Contracts Regulations for new procurements. If a competition started before that date, the old rules largely still govern it—so always check the tender pack for the regime in scope.
What’s new and relevant for SMEs:
- More transparency throughout the contract lifecycle via published notices (e.g., pipeline, tender, contract award, termination). Expect more information in the open and a clearer audit trail.
- Contract award notices and standstill: authorities must publish a contract award notice before entering the contract (subject to exemptions) and observe standstill, which affects when you can mobilise.
- SME-friendly intent: the government’s reform programme aims to open up opportunities for smaller suppliers—good news if you can meet compliance and show value. (Check each authority’s guidance and SQ for specific measures.)
Tendering tip: build a compliance matrix that tracks the legal and policy asks (procurement notices, standstill, prompt-payment statements, conflicts, modern slavery, etc.) so nothing is missed in final submission—strong signals for legal compliance tenders.
5) Managing change and disputes the smart way
Public contracts expect you to spot issues early and deal with them in-contract, not at the end.
- Early warnings & records: NEC mandates early warnings; JCT rewards clear communication. Keep dated site records, photos, marked-up drawings, and correspondence.
- Agree scope changes before doing the work: seek written instruction (JCT) or raise a compensation event (NEC) so time and money are captured.
- Adjudication as a pressure valve: if agreement stalls, use adjudication to maintain cash flow without derailing the job. It’s quick and enforceable.
Example (use case):
During a leisure centre refurb, asbestos is discovered. Under JCT, you seek an instruction and price the variation; under NEC, you notify a compensation event, agree the impact on time/cost, and update the programme—keeping the project compliant and auditable.
Summary
If you’re new(ish) to public sector tenders, focus on four anchors:
- Know your form (JCT vs NEC) and what it means for time, cost and change.
- Master payment notices to protect cash flow and avoid “notified sum” traps.
- Stay lawful on safety (CDM) and under new building control rules.
- Align to the Procurement Act 2023 transparency and process steps.
Nail these, and you’ll improve delivery confidence—and your bid scores.
Ready to win more, with fewer legal headaches?
Sign up for free to access templates, checklists and short explainers designed for SME contractors.
FAQs
1) What’s the quickest way to resolve a payment dispute?
Use adjudication—it usually produces a binding decision in about 28 days.
2) Do CDM duties apply on small jobs?
Yes. The duties scale with project size, but roles and cooperation duties still apply.
3) My tender mentions NEC—what’s different for me?
Expect proactive programme management and to manage change through compensation events agreed during the job, not argued at the end.
4) We started a framework mini-competition in Jan 2025—what rules apply?
Check the tender: if the procurement started before 24 Feb 2025, older PCR rules may still apply under transition provisions.
5) If I miss a pay less notice, can I still short-pay?
Risky. Without a valid, timely pay less notice, you may have to pay the notified sum and argue value later.
