Change to minimum permitted tendered percentage addition to costs of labour

The Office of Government Procurement (OGP) has announced a significant amendment to the Capital Works Management Framework, effective 9 January 2025, which will materially impact tender calculations within the construction sector. Specifically, Schedule Part 2 D of the Forms of Tender and Schedule, pertaining to adjustments to the Contract Sum for labour costs, has seen its minimum permitted tendered percentage addition dramatically increased from 0% to 35%. This substantial uplift directly addresses and formalises the statutory obligations faced by employers, a move designed to ensure comprehensive costing within public procurement. The revised 35% minimum is explicitly mandated to cover essential employer contributions including PRSI, holiday pay, pension contributions, sick pay, and death in service benefits, as dictated by applicable sectoral employment orders under the Industrial Relations Acts. For senior decision-makers, this change necessitates an immediate re-evaluation of tendering strategies and project financial modelling. The move from a zero-percentage baseline to a mandatory 35% floor will inherently drive up tendered labour costs, requiring contractors to integrate these statutory overheads more explicitly into their bids. Furthermore, the calculation is tied to current and projected sectoral employment order rates through to July 2026, demanding forward-looking financial planning to accurately price projects and maintain competitiveness in public works. Read More