Quarter of public sector clients primed to cut projects

One in four public sector clients are likely to cancel construction projects over the next six months with a further quarter set to ask their supply chain to slash prices as public spending cuts bite, a government-backed survey has revealed.

The survey of public sector organisations by Constructionline, a pre-qualification certification scheme for contractors and consultants backed by the Department for Business, Innovation and Skills, found that 35% of local authorities are likely to cancel projects over the next six months in a bid to save money, while half of housing associations said they would ask suppliers to cut their prices.

The survey also found that a third of health authorities predict they will retender projects in the next six months.

The survey highlights the impact of continuing public sector spending cuts, with 68% of public sector clients saying they will have less construction budget available over the next six months.

The survey also found that over the next six months, nearly 90% of those surveyed said they would employ new methods to deliver savings to their budgets, in a bid to ensure that projects won’t have to be cancelled or prices slashed.

New methods included adding new contractors to supply chains (25%); retendering for frameworks (21%); price benchmarking futures tenders (32%); and retendering for projects (34%).

Philip Prince, sales and marketing director at Constructionline, said: “Our survey reflects the state of public spending cuts and the lack of building grants available from central government, which has been facing the industry for some time now. In these difficult economic times, it’s important to adapt and find ways to save time and money.”

The survey results come after Building’s Client Intelligence white paper found that public sector clients were failing to take up some of the key recommendations of the government’s Construction Strategy one year after its launch.