25% of public sector constructions likely to be cancelled

Published by Max Salsbury for 24dash.com in Housing and also in Development

A quarter of public sector clients are likely to cancel construction projects in the next six months due to budget cuts.

A further 25 percent will ask suppliers to slash prices, a survey has revealed.

Of those surveyed, 50 percent of housing associations said they will ask suppliers to cut prices; 35 percent of local authorities said they are likely to cancel projects; and 33 percent of health authorities will retender schemes.

Carried out by Constructionline, the survey exposes the effect that budget cuts are having on public sector construction, with 68 percent of clients saying they will have smaller budgets available over the next six months.

However, nearly 90 percent of those surveyed said they will try new methods so that projects won't have to be cancelled.

Adding new contractors to supply chains (25 percent), retendering for frameworks (21 percent), price benchmarking futures tenders (32 percent) and retendering for projects (34 percent) will be popular methods applied by public sector clients over the next six months.

Philip Prince, sales and marketing director at Constructionline, said: “Despite the financial pressures public sector organisations are under, our survey has highlighted the positive steps many organisations are already taking to deliver effective savings.

"We are helping many of our own clients look at ways to save on procurement costs and therefore reduce their overall construction costs.  In the last six months, nearly a third of public sector clients joined framework agreements and a further quarter started trialling new forms of framework working.

"Frameworks can guarantee certainty on time, cost and quality, which means greater predictability and a more timely and efficient programme of delivery.”