Survey shows suicide bidding sweeping industry

Grant Prior 13 years ago

Two-thirds of contractors cut tender prices during the first quarter of 2011 as suicide bidding continued to sweep the industry.

The latest trade survey from the Construction Products Association highlighted the cut-throat nature of tender races.

The survey said: “The weakness of demand ensured that the industry remained highly competitive in 2011 Q1, exerting further downward pressure on tender prices, according to 63%, on balance, of building contractors.

“Only 5% of building contractors were able to raise tender prices in 2011 Q1, compared with 2010 Q4, while a significant 68% shaved tender prices down further in an attempt to secure work.

“A combination of rising costs and falling tender prices put profit margins under further pressure.”

The survey showed that construction output grew during the first three months of the year casting further doubts on Government figures showing a 4% drop.

But firms are gloomy about future prospects as spending cuts bite and material price inflation hits home.

Noble Francis, Economics Director at the Construction Products Association said: “This survey highlights that construction improved during the first quarter of the year, contrasting sharply with the ONS’s construction output figures that indicated construction fell 4% over the same period.

“However, this improving situation is compared to the final quarter of last year, which was badly affected by poor weather in November and December.

“The industry’s near term future is likely to be extremely challenging with domestic demand remaining subdued, exacerbated by expectations of further rises in fuel, energy and materials costs.”

Stephen Ratcliffe, Director UKCG, said:  “The survey highlights that the situation for contractors improved in Q1 compared to the weather affected final quarter of 2010.

:However, there remains a great deal of concern regarding the year ahead given that we have not yet seen the full impact of the public sector cuts.

“The government has stated that construction is at the heart of its growth strategy for the UK economy and, as it accounts for around 10% of the UK’s economy, it is vital that investment in essential schools, hospitals and housing is maintained at levels that will provide the basis for economic recovery.”

Julia Evans, Chief Executive of the National Federation of Builders added:  “Once again, the industry is working through a difficult set of challenges with rising costs, falling margins and lower demand.

“However, an obsessive focus on quarterly figures risks losing sight of the bigger picture.

“The overall downward trend is not encouraging. As long as the fundamental issues of difficulty with access to finance and prioritising cost over value remain, the trend is unlikely to be reversed.”

Latest news

McAlpine signs £500m Broadgate dual towers deal

Work to start on iconic 36-storey and 21-storey towers
6 hours ago

Worker rescued from collapsed four metre deep trench

Fire crews take six hours to save trapped builder near Blackwall Tunnel
10 hours ago

Gove puts another major building scheme on hold

Secretary of State starts another planning fight after M&S defeat
1 day ago

Greenwich University tenders £300m framework

Up to five firms will carry out upgrade and newbuild work at three campuses
11 hours ago

Work starts on Manchester 26-storey Obsidian tower

Contractor Domis starts Salboy's 10th Manchester scheme in seven years
9 hours ago

Race for £1.3bn West Midlands social homes framework

The Community Housing Group reboots tender race for new build housing
9 hours ago

Delancey submits £400m King’s Cross lab plans

200,000 sq ft lab/office project will be built above railway and tube tunnels just 4.5m below
1 day ago

Winners revealed for £150m fire safety framework

New deal will help organisations comply with the Building Safety Act
10 hours ago

Sellar plans £500m City tower next to Walkie-Talkie

Consultation starts on London 60 Gracechurch Street tower
1 day ago

Severfield ends year on high with record order book

Orders top £500m with strong future pipeline of opportunities ahead
1 day ago

Second senior director exits National Highways

Commercial director Malcolm Dare set to move on to new role
1 day ago

New scheme fuels London lab building boom

Plans in for 160,000 sq ft Whitechapel scheme near Royal London hospital
1 day ago

Contract race starts for next £155m section of A9 dualling

Prior Information Notice published for Tay Crossing to Ballinluig stretch
2 days ago

£55m Sheffield build-to-rent scheme approved

Demolition to start later this year for 158-flat Sheffield Garden project
2 days ago

London back as most expensive place to build in world

Capital leapfrogs Geneva to top costliest construction rankings
2 days ago

Gas supplier Regent to buy TClarke for £90m

£491m turnover listed building services specialist to be sold
2 days ago

Steel contractor Billington launches into bridge market

Steelwork firm hires staff from failed architectural and bridge specialist SH Structures
2 days ago

McGee employees benefit from rise in profits

Pre-tax profit doubles boosting payouts for Employee Ownership Trust
2 days ago

Lendlease veteran is latest new McAlpine director

Paul Sims joins as Operations Director after 40 years at rival contractor
3 days ago

Costain signs site labour supply deal with four firms

Contractor to use only a quartet of providers for temporary labour supply
2 days ago

BAM go-ahead for Leeds 200,000 sq ft office

Latitude Yellow will complete final plot at Doncaster Monk Bridge site
3 days ago

VolkerFitzpatrick wins £30m logistics job

Latest deal to build five distribution units for Prologis UK
3 days ago

Trio win new Scape utilities consultancy framework

Perfect Circle, AtkinsRéalis and Arcadis win places on
2 days ago

Precast firm FP McCann cleared after immigration raid

Home Office takes no action after public raid on construction site
3 days ago

Wates-owned SES restructure delivers record profit and revenue

Building services contractor revenue soars to almost £300m
3 days ago

25 groundworks firms win £100m Places for People deal

M&J Evans, Carmac and Churngold Construction feature in housing association's line-up
3 days ago

Energy efficiency firms angry at lack of CITB support

SME contractors funding bid "does not meet the current criteria for supporting productivity or EDI"
3 days ago

£400m South Cambridge science park approved

Outline approval allows former sewage treatment works to be demolished
3 days ago

McLaren gets green light for 45-storey Leeds tower

Landmark Wellington Square scheme will see 464 flats built with 360,000 sq ft of offices
6 days ago

Heavy rain causes 1.9% construction output fall

Hopes remain undampened of a resi-led recovery this summer
6 days ago

Contractor services