Almost half of construction companies have low or no involvement in public infrastructure projects
48% of construction companies have no or low involvement in public infrastructure projects according to a survey carried out by the Construction Industry Federation. The survey also showed that for 69% of contractors, public works contracts make up less than 50% of annual turnover.
Too much bureaucracy, administrative burden, low margins and lowest price awarded over quality were the top concerns discouraging construction firms from taking up public works contracts.
85% of companies believe that public infrastructure projects are awarded to the lowest price bid, with just 12% believing that quality of work is a primary factor.
Paul Sheridan, Director of Main Contracting in the Construction Industry Federation said: “The results of this survey are alarming, especially at a time when we need to accelerate infrastructure delivery. The Government relies on construction contractors to build vital infrastructure such as water, wastewater, energy, transport and education to support public wellbeing and investment. Yet, half of construction companies are not opting to work on public infrastructure, with more attractive commercial opportunities available with private clients both domestically and internationally.
“We know that improving Ireland’s infrastructure will support investment, housing and jobs, so it is more crucial than ever that water, energy, transport, hospitals, schools and roads are built. Construction companies are eager to scale up their efforts, but they must have certainty of a pipeline of new work and that tendering for major infrastructure projects prioritizes quality and efficiency over lowest cost and lengthy bureaucracy.”
The survey of 221 companies also found that 58% of contractors have been expected to take on the financial risk for a project when inaccurate, incomplete background information has been provided by the contracting authority. Paul Sheridan said: “Some 75% of construction companies stated that the contracting body benefits from this because the contractor is being forced to fund the rectification of design errors made by others. This is patently unfair and undermines the contractor’s business and its employees.”
Ahead of Budget 2025, the Construction Industry Federation is urging the Government to guarantee multi-annual funding for Uisce Eireann and similar public bodies, increase quality in the award of contracts with a move away from lowest price tenders, instill better risk management and collaboration on construction projects and contracts, along with reducing the administrative burden and costs of tendering for public works.
Paul Sheridan said: “The research highlights the urgent need for further reform of public procurement and contracts in several critical areas to make public infrastructure projects more commercially viable options for construction firms. These views are shared by the EU, which has also recommended the reform of public procurement and contracts.”
Source: CIF News
