MORE THAN half of the tenders submitted for construction projects are priced at below cost, according to a survey by the Society of Chartered Surveyors Ireland.
The society estimates on average tenders are being priced 17 per cent below what it describes as “realistic” construction cost levels. Some 52 per cent of all tenders are now below cost, the survey found, up from 37 per cent two years ago.
Some 97 per cent of quantity surveyors polled have noticed an increase in below-cost tendering over the last three years.
The downward pressure on price is having a detrimental effect on the completion rate of construction projects, the society claims.
Below-cost tendering has already led to the collapse of a number of State construction projects, including the construction of schools, according to John Curtin, president of the society,
“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,” he said.
Some 55 per cent of quantity surveyors have had experience of projects which were not completed because of below-cost practices, according to the survey.
Responding to the data the Construction Industry Federation called on the Government to accelerate the passage of the Construction Contracts Bill. “The new data highlights the link between accepting tenders that are too low and the non-payment of contractors, sub-contractors and suppliers,” said Don O’Sullivan, its director of contracting.
