Reearch carried out by the Construction Industry Federation (CIF) points to a significant decline in construction output over the next 12-18 months as the Government's public capital investment programme is unwound.
The CIF's research, published in 'Public Construction Activity Report', which will be produced bi-monthly, finds that the aggregate value of projects for which shortlists of contractors are being created for Government projects is running substantially below Government commitments; that the conversion rate of these tenders – that is, the proportion of tendered projects actually commenced, may be as low as 60%; and that that the time lag between tender announcement and commencement is, in some instances, between two and three years.
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The research, which is based on an analysis of Government public procurement notices shows that less than €45m worth of new public construction projects were awarded over January and February and that just over €300m worth of pre-qualification (short-listing stage) notices were issued in January and February – whilst over €200m worth of pre-qualifications were announced in February, one major road project (M11 Gorey to Enniscorthy PPP) accounts for the bulk of this, suggesting that rather than representing a trend, February is more likely to be an outlier for the year as whole.
Based on these findings, the aggregate value of projects for which shortlists will be prepared in 2010 will be about €1-1.5bn.
With a conversion rate of 60%, this points to a pipeline of approximately €600-€900m worth of new public construction projects, albeit with substantial uncertainty as to when they will begin.
This bears no relationship to the Government's own commitment to invest €5.5bn in 2011, 2012 and 2013.
Investment by the Government this year relates, in the main, to projects that are underway, and, in most cases, close to completion, such as the inter-urban motorways. It will be impossible for the State to maintain infrastructure investment at even the very reduced levels set out in last December’s budget based on the identified pipeline of projects.
(BMcC/GK)
