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A NEW SURVEY has found that over half of all tenders for construction projects in Ireland are now submitted carrying prices below their actual cost, as construction firms fight to win new projects.
The Society of Chartered Surveyors in Ireland says that the percentage of tenders being submitted ‘below cost’ has increased to 52 per cent – up from 37 per cent around two years ago.
Its survey added that below-cost tenders were, on average, valued 17 per cent lower than their true cost – and warned that below-cost tendering was “unsustainable” and “will result in longer-term problems for industry clients”.
It also added that the practice would ultimately cost jobs and expertise.
The survey found that 97 per cent of quantity surveyors had experienced an increased in below-cost tendering over the last three years, while six out of seven surveyors said clients had accepted the cheapest tender available even when it was below-cost.
Over half of quantity surveyors responding to the survey said they had seen projects collapse because they were below cost. Over two-thirds of projects which failed to be completed were public projects.
SCSI president John Curtin said that below-cost tenders being accepted had already led to the collapse of a number of State construction projects, including contracts to build new schools.
“Below-cost tendering by contractors is likely to continue over the next twelve months,” Curtin said.
“This race to the bottom poses a real threat that tenders will not provide the required standard of construction quality and professional expertise needed for the long-term viability, and return on investment, of any project over its life cycle.”
Curtin added that it was in the public interest to ensure that the highest possible quality of construction standards were provided for at the outset of any new construction project.
“Ensuring that the tender takes these factors into account, and is not just based on the lowest price, is crucial,” he said.
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Below cost work = below cost quality.
Sadly higher cost work doesn’t equal higher quality.
It’s not about ‘below cost quality’, it’s about contractors being unable to pay their sub-contactors or staff, or even stay in business until the work is finished. It’s about constantly looking for loopholes and variations and scheduling conflicts in the contract so that they can extract enough extra cash to break even, and refusing to solve the simple predictable problems of every job without additional money being agreed in advance, all of which means that the commissioning authority spends a fortune in micro-managing the job, and completely diverts everyone from actually doing the damn work.
Or ‘add ons’ later to cover costs
Below cost = overcharging when times were good!!
The way the ordinary construction worker has been treated in this country is a disgrace..just ordinary men trying to better themselves only to be kicked right down the ladder again. Our government banged on and on about shopping locally but at the same time in my local area they preferred hiring northern contractors to do local jobs. These contractors can source their materials for cheaper in the north so they were ale to undercut the smaller Irish builders who ‘shopped locally’! Also the government introduced this ‘lovely’ new building procurement act that meant that builders who were once able to tender for smaller council contracts such as school extensions ect where no longer able to do so unless they had a turnover over millions hence it pushes out the smaller contractors making the way for bigger contractors to dictate higher prices!
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