Supply chain feeling the squeeze as pressure mounts on firms to start discounting

Subcontractors and architects are feeling the pressure to slash their prices as the financial strain of the covid-19 lockdown mounts.

According to a covid-19 update from Barbour ABI, firms near the top of the supply chain have been putting pressure on those further down to cut their costs.

The update said: “We have identified a number of reports of either requested or voluntarily discounting across subcontractors and architects.”

David Frise, chief executive of the Building Engineering Services Association (BESA), said his members were being pressured to cut their numbers.

He said: “A recent audience poll of the BESA webinar, 38% said they had been asked to discount their rates or felt obliged to volunteer.

“This would indicate that there is a growing pressure for sub-contractors to lower prices, which could only encourage a race to the bottom and lead to issues around quality.”

This follows a report from architecture recruitment agency Frame Recruitment that desperate practices were offering 20% discounts to win work.

Managing director Martin Bennell warned there would be pressure on practices to be ultra-competitive as the sector began to recover – and that it would probably impact on salaries.

“We’ve heard of people offering 20% discounts to win work,” he added.