Fierce competition in construction tenders is pushing down bid levels. Final bid prices are on average 22 percent lower than the original cost estimates, writes CEEC Research in its recent analysis, published in Finanční noviny.
However, the volume of construction work being ordered has been on the rise. In the first half of the year, the public sector launched 1,877 construction tenders, up 38 percent y-o-y. The total value of projects also jumped 28.6 percent to CZK 63.8bn y-o-y. The National Railway Authority (SŽDC) launched CZK 6.2bn in construction orders in the first half of the year (up 41.2 percent y-o-y), followed by the Motorway and Road Directorate (ŘSD) with orders worth CZK 5bn (up 26.4 percent y-o-y).
CEEC Research, however, points out that the tender process is slow. Of all tenders launched in the first six months of 2014, only 28 percent were finalized while 9 percent were canceled. Dumping prices offered by bidders is another problem, leading to bankruptcies for both construction companies and their suppliers, warns Jiří Vacek, the director of CEEC Research. The deputy minister of industry and trade, Jiří Koliba, says that despite the improving economy, recovery in the construction sector has been slow.
