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Quality and Safety are at risk as firms slash costs to win work

June 22nd, 2009
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Quality & Safety at Risk

A leading industry body has warned that Construction quality and safety standards are being put at risk as firms are being forced to cut costs to win competitive tenders.

The findings come from a new survey of the sector published by the Scottish Building Federation, the industry body and employers’ federation.

The SBF warns that the cost pressure could lead to the possibility of “shoddy work” and “unscrupulous” behaviour by firms desperate to win work.

Two thirds of firms responding to the latest Scottish Construction Monitor indicated that latest contracts were typically secured on the basis of a margin of under 3 per cent.

More than one in three is typically operating on a margin of under 2 per cent, while more than one in seven has seen its margins cut to under 1 per cent.

The survey also suggests that confidence within the industry remains weak with over 60 per cent responding either slightly less confident or much less confident about the prospects facing their business over the next 12 months compared to the previous 12 months.

SBF chief executive Michael Levack said: “The competitive pressure on many SMEs at the moment is immense.

“In the public sector, we’re seeing upwards of ten firms being invited to tender for each new contract. I’ve heard cases of recent local authority tender lists that have run to more than 20 companies, which is frankly ridiculous.

“In such a fiercely-competitive environment, one of my greatest fears is that responsible construction companies risk being undercut by less scrupulous firms, who can offer lower prices by cutting corners on quality and safety.”

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  1. Andrew
    June 22nd, 2009 at 18:01 | #1

    Those are very tight margins, hardly worth getting out of bed for, but when overheads are ticking over day in day out, even 2% is better than nothing.

    Andrew

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