CECA warning over mounting suicide bidding

Civil engineering firms are being forced to bid below cost in order to survive, the Civil Engineering Contractors Association (CECA) has warned.

CECA's latest workload trends survey for July showed that all sizes of company in all regions of Great Britain are now reporting a steep drop in tender prices compared to July 2008.

Commenting, Rosemary Beales, CECA Director, said: “There is a definite trend of pricing below cost and it is affecting the whole market. For some organisations this is a matter of short term survival but it is now an issue of serious concern for everyone with an interest in the long term economic development of the UK.

“The relationship between contractors and clients, which has hugely improved over the past 10 years, will be stretched to breaking point if we see clients take advantage of the recession and of declining workloads to push for bargain basement prices.

“Some material and plant costs have fallen, but overall, the decline in costs is far less than the drop in tender prices.

“Cheaper and cheaper tenders must inevitably lead to lower quality work from those contractors who cut corners to win work. It will mean an increase in disputes and a decline in investment in training and technology. Persistently low tender prices increases the risk of insolvencies, firstly among those contractors who price responsibly and as a result fail to win work and then among those who win work with unsustainably low bids. Ultimately, this will reduce the overall capacity of the sector which benefits no one.

“We must not go back to the dispute culture that used to exist between client and contractors. If this situation is allowed to persist, we are storing up serious trouble for the future.”