SMEs worst hit as survey reveals 60% of firms report lower prices for new work than a year ago

Tender prices continued to plummet sharply in the first quarter of 2009, according to the Civil Engineering Contractors Association.

New data released today shows 60% of firms surveyed for CECA's workload trends survey reported lower prices for new work than twelve months earlier.

For repair and maintenance work, the result was nearly as weak, with 42% reporting reduced tender prices.

Firms with 115 to 299 employees reported larger falls than other sized groups, while Scotland was the area worst hit.

Rosemary Beales, CECA director, said: “We are clearly seeing a reversal of the upward trend in tender prices with two successive quarters of downward pressure.

“This is bad news for the industry’s clients. They may enjoy a temporary benefit in terms of tender price competition but this will create a very unhealthy market situation. If this becomes common practice the situation will rapidly become unsustainable. The long-term result will be a contraction in the marketplace and sharp rise in tender prices when the economy emerges from recession and demand returns.

“Contractors and clients need to look to beyond the short-term situation and think of the overall health of the sector. It will serve nobody’s long term best interests if the decline in tender prices is exploited for a perceived short-term gain.”

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