The state has announced the most construction contracts this year in three years

Prague - This year, the government has announced the highest number of construction contracts in three years, allowing builders to get work worth up to 115.2 billion crowns. This is evident from data in the Public Procurement Bulletin. However, the tendering process is sluggish, with every tenth contract announced this year being canceled. The data was analyzed by CEEC Research, NESS, and the Chamber of Public Procurement Administrators (KAVZ), and ČTK has access to the analysis.
    Government institutions announced a total of 3036 tendering procedures for construction works from January to the end of October, which is an increase of 32.1 percent year-on-year. The expected value of the contracts rose by 27 percent to 115.2 billion crowns.
    "The state accounts for approximately one-third of the total performance of Czech construction, so this increase is already noticeable in the overall performance of the sector, which grew by 3.9 percent in the first nine months. Public investments in civil engineering are particularly evident, having increased by up to 9.4 percent. In some segments, such as railway construction, there is even a surplus of demand over the capacity of construction companies, which are struggling to keep up," said Jiří Vacek, director of the analytical company CEEC Research.
    In ten months of the year, the public administration awarded 4539 contracts. This was an increase of 35.8 percent year-on-year. The value of contracts awarded in January to October this year amounted to 93.4 billion crowns, representing a year-on-year increase of up to one-fifth (20.5 percent).
    "Contracts are indeed increasing, but prices are not rising yet. Due to the unfavorable exchange rate of the euro, profitability is very low," warned Vladimir Steiner, operating director of Schindler CZ for the Czech Republic.
    However, builders must reckon with the fact that not all the money will actually be received. Already, 11 percent of the competitions announced in the first ten months of this year, worth 12.6 billion crowns, have been canceled. This percentage may still increase. Authorities have so far selected a specific contractor in only a third of the public tendering processes (36 percent).
    The difference between the announced price and the price achieved in the tender was, on average, nearly twenty percent. The price at which companies ultimately secured the contract was, on average, 18 percent lower than what the public contracting authority had budgeted. If this trend continues, construction companies would miss out on another 11.1 billion crowns. According to estimates, more than a quarter of the money could remain in state, city, or municipal treasuries.
   "Another negative factor is the length of the selection processes. Billion-crown contracts can be halted for several months due to investigations by the Office for Protection of Competition (ÚOHS)," pointed out further difficulties by Branislav Bačo, sales manager of the company Ruukki CZ and SR.
    Construction is one of the sectors most affected by the recent crisis. Since 2008, builders have lost 443 billion crowns, which is the turnover of the sector in a year. According to statistical data, 41 larger companies collapsed during this time, and up to 50,000 people lost their jobs in the sector. Builders primarily criticize the lack of a coherent policy from state investors and the radical decline in public investments.