A survey by the Civil Engineering Contractors Association (CECA) of around 300 companies based in the UK found greater competition and poor client practice were the two growing problems facing contractors during the past six months, with 17.1 per cent reporting them as a concern.
Some contractors are submitting bids so low they are unaffordable. “Unfortunately suicide bidding is symptomatic of the problems facing the industry at the moment,” said CECA director of external affairs, Alasdair Reisner. “The lowest price never delivers the best value but sadly even the more scrupulous companies who refuse to go down to the lowest bid are in financial difficulty.”
He added some tender processes are exacerbating the issue. “Some models of procurement make suicide bidding much more likely. [Procurement] tends to be the first point at which engagement between the contractor and client breaks down. We would like to see more enlightened models of procurement and a leaner approach without putting too much burden on the supply chain.”
The primary issue facing contractors is falling workloads, affecting 32.9 per cent of companies. The CECA says this is particularly the case for companies working in the public sector, where projects are drying up. The association fears there is no short-term relief and the government should boost output through maintenance and minor works to help sustain the industry.
Written by Anna Reynolds on Supplymanagement.com