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Sun May 26 2024

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Contractors pushed to drop prices to keep projects alive

13 Jul 12 Budget cuts mean that one in four public sector clients are likely to cancel construction projects over the next six months and a similar number will push suppliers and contractors to cut their prices, according to a new survey.

Cuts ahead
Cuts ahead

Some 50% of housing associations said they will ask suppliers to cut their prices; 35% of local authorities admit they are more likely to cancel projects over the next six months; and 33% of health authorities predict they will retender projects to get costs down.

The survey, carried out by the Constructionline prequalification certification scheme, found that 68% of public sector clients have reduced construction budgets for the next six months.

The survey also asked about how clients planned to achieve savings. Adding new contractors to supply chains (25%), retendering for frameworks (21%), price benchmarking future tenders (32%) and retendering for projects (34%) will be popular methods applied by public sector clients over the next six months.

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