Many small Irish builders will be forced out of business and replaced with large international contractors if the Government goes ahead with plans to change the framework for construction industry contracts, an industry lobby group said.

Speaking yesterday at the Construction Industry Federation's (CIF) semi-annual briefing, Nobby O'Reilly, the group's president, said the proposals put forward by the Government for fixed-term contracts, whereby the full cost of a contract must be outlined in full prior to any agreement being reached, were an attempt to "buy cost certainty at any price".

Don O'Sullivan, director of contracting, criticised the proposed changes, saying they would shift a lot more of the risk, such as delays caused by archaeological finds or problems with utilities, onto the contractor, a burden many smaller companies are not in a position to shoulder.

He said that while CIF shared the Government's objective of achieving greater certainty on costs, it would prefer to see amendments made to the existing contractual framework to take account of the Government's targets. This would avoid forcing "untried and untested" contracts on the industry that would inevitably lead to lengthy legal disputes, he said.

"We can see the need for greater price certainty, but we believe that in putting forward entirely new contracts there are inherent risks," said Mr O'Sullivan. "We urge the Government to set aside the proposals to develop entirely new forms of contract and engage with the industry."

Fixed-term contracts have been used in some road projects since the end of 2002 and the Government is hoping to expand this to all areas of the construction sector in the near future. Some contractors have expressed concern that this will lead to contracts being overpriced as all possible risks, some of which undoubtedly will not materialise, are factored in to a contract.

Meanwhile, Mr O'Reilly said the value of Irish construction output this year would reach a record €28 billion and will account for about 24 per cent of GNP.

Employment in the sector increased by 34,600 in the 12 months to May, bringing the total employed to more than 300,000. CIF expects to see a similar increase in numbers employed in the next 12 months.

Despite a slowdown in the housing market in the UK, Hubert Fitzpatrick, CIF's director of housing, said he has no concerns it will spread into Ireland.

"Demand for residential property remains strong, and I don't envisage this changing in the short term," said Mr Fitzpatrick.