The impact of the Global Financial Crisis (
GFC) is starting to have an impact on the Building and Construction Industry through a reduction of work available causing Contractors to tender for work "at" or "below" cost.
Back were the days when there were 4 or 5
competitors at a tender meeting. Now it has been reported that up to 30 competitors are attending tender meetings
competing for the same project.
The big picture here which is being overlooked is that by choosing the cheap options quality is being sacrificed for cost.
Principal previously awarded tenders on "best value" and "high quality". However, now we are seeing more and more tenders being awarded based on how cheap they are. This is causing a lot of reputable companies to either go bust or lower their standard, which in turn affects their reputation. This would be hard to heal in a recovering economy.
Cost cutting which compromises the quality of Construction is therefore a false economy.
Although the Government has not much helped in this area with their stimulus packages being handed out to blue chip companies, there are professionals out there and industry associations like the Civil Contractors Federation (CCF) that can help.
Those companies which pride themselves on quality must attempt to survive this current financial market without having to sustain heavy losses or damage to their reputation. Once the current economic climate starts to improve, those who have sustained without irrecoverable damage will benefit from the recovering market.