Public institutions awarded construction contracts worth CZK 116.9 billion last year

Prague - The volume of orders placed by public institutions to construction companies for execution increased by 18.7 percent last year. Builders secured work worth 116.9 billion crowns. This follows from data in the Public Procurement Bulletin, which was analyzed by CEEC Research. ČTK has the analysis available.
There was also an increase in announced tenders, up 18.2 percent year-on-year. The bulletin recorded 3,433 tenders for construction work valued at a total of 133.8 billion crowns from January to the end of December.
Of these, the state has already completed the tender processes for 45 percent and awarded contracts to specific companies for execution. The winning bid was on average 15 percent lower than what public institutions had planned to invest in construction. Compared to previous years, this difference is decreasing. One-tenth of the contracts, with a total value of 14 billion crowns, were canceled by the clients.
Approximately two-thirds of the competitions (62 percent) were announced by regional authorities and associations, which include regions, cities, municipalities, and road administrations. More than one-fifth (23 percent) of the contracts are sought by "other entities", such as schools, hospitals, church institutions, or unions. The remainder of the contract announcements were placed by ministries and other national offices (12 percent) and state enterprises (three percent).
When evaluating the financial volume of announced contracts, the distribution of shares is somewhat different. The most money, 40 percent, is invested by regional authorities and associations, followed by ministries and national offices with 30 percent, "other" entities with 28 percent, and state enterprises at two percent.
"The growth of public investment was one of the key reasons for the recovery of Czech construction last year after the previous five-year crisis. For example, the volume of orders in railways increased significantly, where many companies are already reporting full capacity utilization, and the supply of certain materials for construction is completely sold out for several months. However, there is still a lack of contracts on roads and highways," said Jiří Vacek, director of CEEC Research.
However, Jiří Koliba, Deputy Minister of Industry and Trade, who is in charge of construction, dampens optimism. "Despite this positive result compared to previous periods, construction has not yet won," stated Koliba. He believes that legislative measures currently being prepared, particularly in the area of public procurement and construction law regulations, must contribute to smoother growth in investments.
Pavel Schlitter, sales director of Sitel, pointed out the low comparative base, thus last year's growth was expected according to him. "The base from which growth occurred has been lowered due to many previous years of decline. Moreover, growth in individual segments is very uneven. For example, investments in railway infrastructure are and will be record-breaking in the coming years, while in other areas of public investments there is no increase," said Schlitter.
Construction is one of the sectors most affected by the recent economic crisis. Builders have lost 443 billion crowns since 2008, which is the turnover for one year. The cumulative decline of the sector compared to 2008 reached 24 percent. According to an analysis of statistical data from last summer, 41 larger companies went bankrupt during that time, and up to 50,000 people lost their jobs in the sector.