Half of construction tenders 'below cost'

More than half of tenders submitted for construction projects are priced at below cost, according to a survey carried out by the Society of Chartered Surveyors Ireland.

The society estimates that below-cost tenders are being priced approximately 17 per cent below what it describes as "realistic" construction cost levels.

Some 52 per cent of all tenders are now below cost, the survey found, up from 37 per cent two years ago.

Some 97 per cent of quantity surveyors have noticed an increase in below-cost tendering over the last three years, while 87 per cent have seen an increase in the last twelve months.

The downward pressure on price is having a detrimental effect on the completion rate of construction projects, including public contracts, the society claims.

According to John Curtin, president of the society of Chartered Surveyors Ireland, below-cost tendering has already led to the collapse of a number of State construction projects, including school buildings the construction of schools.

"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," he said.

Some 55 per cent of quantity surveyors have had experience of projects which were not completed because of below-cost practices, according to the survey.

More than two-thirds of these were public projects, the survey found.

Some 40 per cent of quantity surveyors believe that instances of below-cost tendering will increase in the next 12 months, while 83 per cent say they or their clients have lost business to tenders which were submitted at below cost.