Construction procurement

Construction sector overview

Employment in the construction industry in Scotland stood at 157,000 in 2024, accounting for 5.9% of employment in Scotland and an increase of 15.4% over the latest year.

In March 2025, there were 22,930 registered enterprises operating in the sector, representing 13.1% of all registered business in Scotland. In 2025, 98.1% of those were small (0 - 49 employees); 1.4% were medium (50 - 249); and 0.5% were large (250+).

In 2023, turnover for the sector was £25.1 billion and approximate Gross Value Added (aGVA) was £9,7 billion. Between 2022 and 2023, turnover in this sector increased by 2.7% and aGVA increased by 3.0% in nominal terms.

Construction procurement

The annual report on procurement activity in Scotland for 2023 to 2024 stated that the public sector spent £3.3 billion in 2022/23 with construction sector contractors, consultants and suppliers on building and civil engineering works. £2.4 billion of that spend was with suppliers in Scotland alone, of which:

62.5% was with small and medium-sized enterprises, where location and size were known, accounting for £1.6 billion of total procurement spend
£7.5 million went to third sector organisations, where location was known
57% went to suppliers based in the 60% most deprived areas, where location was known, accounting for £1.5 billion of total procurement spend
£738 million went to suppliers in the same local area as the purchasing body, accounting for 26.7% of all procurement spend in Scotland with the construction sector

Best practice and improvement programme

A number of workstreams and initiatives are being undertaken to improve the procurement of public sector construction projects.

The Client Guide to Construction Projects is guidance to assist public sector clients to procure and manage construction projects. It consists of three handbooks and is available online through the links below:

Handbook 1: project initiation and business case handbook
Handbook 2: construction procurement handbook
Handbook 3: construction phase handbook

Whilst the guidance is aimed primarily at public sector clients, it should also be of assistance to contractors and consultants alike in developing their understanding of how the public sector delivers construction projects.

The comparison of HMG Construction Playbook and SG client guide to construction projects recognises areas of good practise and identifies further opportunities for improvement that may be adopted within construction procurement through the Client Guide to Construction Projects in Scotland.

Construction policy notes (CPNs) have two purposes:

to notify the public sector and their stakeholders of changes to our construction procurement policy
to provide additional guidance to contracting authorities on various aspects of construction procurement

Note that the Client Guide to Construction Projects and CPNs are both mandated for use by all organisations in-scope of the Scottish Public Finance Manual. Other organisations are welcome to adopt them into their construction procurement procedures and use as good practice.

The Construction Capability Assessment Tool (CCAT) seeks to assist contracting authorities in understanding their organisation’s capability and capacity to deliver construction projects. Read more about the CCAT in the construction policy note (CPN1/2022). Please email the address at the foot of the page if you would like a copy of the CCAT.

The Construction Procurement Sessions are a series of webinars hosted by the Construction Procurement Policy Unit for all those with an interest in public sector construction procurement in Scotland. 2025 saw events covering sustainable pricing; changes to construction contract retention; procurement threshold changes; and conflict avoidance. More will follow in 2026.

The Construction Clients Knowledge Hub is a virtual resource primarily for public sector clients in-scope of the Scottish Public Finance Manual. It will also be of interest to other contracting authorities, contractors and consultants who wish to learn more about the delivery of public sector construction projects. It aims to help:

clients to procure and manage their construction projects
raise awareness of Scottish Government’s Construction Procurement Policy as set out in the resources noted above and also in Scottish Procurement Policy Notes (SPPNs)
highlight emerging hot topics
share experience and promote learning

If you are interested in joining our Knowledge Hub, please email the address at the foot of the page.

Delivering quality in construction projects means creating a physical asset which meets the requirements of the client as specified in the contract documents. The client’s role and their capability to successfully deliver quality outputs and outcomes from their projects is crucial to the success of the project. The Client Guide to Construction Projects includes advice throughout its three handbooks to assist public sector bodies in this regard.

Project Bank Accounts (PBAs) help to ensure that contractors and sub-contractors working on construction projects for Scottish Government bodies are paid promptly. They are a ring-fenced account which see that members of the construction supply chain (many of which are SMEs) working on government projects get paid directly within contractually agreed dates and in most cases in a day or two.

The Public Procurement Strategy for Scotland helps support the development of a sustainable built environment. This includes the creation of a portfolio of frameworks to deliver public works which consider the economic impact and sustainability of the construction industry, and how this relates to inclusive growth and climate change targets. The strategy sets out a cross-public sector ambition to ensure public works projects reflect and help deliver on relevant Scottish Government obligations on topics such as Fair Work First and Net Zero.

This 2013 review looked into the procurement of public sector construction projects in Scotland. It made a series of recommendations designed to improve and strengthen client and supplier capability through a more efficient and effective procurement process. Read more about the implementation of these recommendations.

Contact

If you have any questions about the above please contact the Construction Procurement Policy Unit:

Email: PropertyandConstruction@gov.scot
Tel: 0131 244 8492

Public sector procurement