SMEs squeezed out by main contractors

Smaller construction firms are being squeezed out of the industry by major contractors, a survey has found.

The survey by contractor prequalification body Constructionline, found a third of over 1,300 firms surveyed said that competition from big contractors was the biggest barrier they had to winning work.

Nearly two thirds of firms said that clients should be more helpful during the tender process and over half said that more information would make it easier to win work.

Philip Prince, director at Constructionline, said: “It’s clear that both clients and the majors need to be offering more support to the sector’s smaller firms.”

“SMEs are the backbone of UK construction so their survival is critical to the industry’s long term health,” he added.

The survey also found that smaller firms suffered onerous financial conditions when working as sub-contractors, with 56% seeing payment times lengthen in the last year compared with 40% of main contractors.

Plus, 41% said they were seeing longer retentions periods, while only 27% of main contractors reporting the same trend.

Prince said: “Stricter rules on payment times, especially to protect sub-contractors, would give a huge helping hand to the thousands of firms for whom cash is king.”