Low-priced deals fail

A NUMBER of state construction projects have collapsed because they were awarded to contractors who claimed they could do the job at an unrealistically low price, it has been claimed.

The Society of Chartered Surveyors Ireland found half of all tenders for construction projects are coming in below cost.

John Curtin, president of the Society of Chartered Surveyors, warned accepting below-cost tenders may not provide adequate quality and expertise.

“Below-cost tendering by contractors is likely to continue over the next 12 months,” Mr Curtin said. “This race-to-the-bottom poses a real threat that tenders will not provide the required standard of construction quality and professional expertise needed for the long-term viability and return on investment of any project over its life cycle.”

A survey, carried out by the surveyors organisation, found the percentage of below-cost tenders had risen from 37% to 52% in the last two years:

* Below-cost tenders are approximately 17% below realistic construction costs.

* 97% of quantity surveyors report an increase in below-cost tendering over the last three years.

* 83% of surveyors have experience of a client accepting the lowest bid even though it was considered below cost.

* 55% of surveyors have experience of projects failing to be completed because they were below-cost (68% public projects).