Monday, October 26, 2009

Polish A2 highway, Chinese Consortium

Two large sections of the A2 motorway project in Poland were recently awarded to COVEC Ltd.

Other European Contractors have raised concerns at the award of these projects as COVEC is essentially state owned and thus can rely on funds from their home state. European Contractors deem that this point leads to unfair competition. It is illegal for EU contractors to rely on state aid but the EU / EU commission cannot do anything about, and, appear powerless to do anything about companies outside the EU relying on state aid. Another gripe EU Contractors have is the issue of EU Contractors been unable to gain access to the Chinese Construction market.

COVEC is a wholly-owned subsidiary of China Railway Group Limited (CREC), a state-owned construction contractor.

Tuesday, October 20, 2009

The Sound of Tumbleweed..........

"October and the leaves are stripped bear of all they wear what do I care, October and Kingdoms rise and Kingdoms Fall but you go on" ........................U2 October.

By the way that's the whole song up there, probably Bono's shortest. This October for anyone involved in the Irish Civil Engineering Industry hasn't been a short one. In fact it's a month that combined with this coming November will be dragging and dragging. The reason for this apparent prolonged Autumn is due to the customary (or recent customary) slow down on release of tenders coming up to budget time. I say recent because now it is quiet the opposite to those boom years of the mid noughties. During those good ole days and at this time of year the civil construction industry via the public sector would have large enough capacity of tender releases. The reason for this was that during the month's coming up to budget time many Local Authorities would've actually had a surplus of cash and they would be getting rid of this annual surplus in order to get the same matching funding the following year. Oh how times have changed.

It is now completely the opposite and the figures speak from themselves; For the whole month of October 2009 in the Republic of Ireland so far only 5 fairly straightforward Civil Engineering Public sector projects were advertised for tender in the open market. Take this combined with the approximate total of 8 in the whole of September; then you know where this topic is heading.

Lets consider then for arguments sake and with a knowledgable quantity surveyors hat on, that the value of these projects was / will be approximately, on average, somewhere in the region of €1mil per project - that's €13m worth of supply coming into the civil engineering sector market for a capacity / demand that was of the order of €5 to €6 billion per-annum. Getting back to Bono, "Kingdoms rise and Kingdoms fall"; surely we mustn't let the Kingdom collapse and disappear altogether?

One also has to note the many 'dud' or 'shelved' projects advertised during the year via the 'two stage' tendering process. This two stage process (adopted from EU public procurement legislation) involves the first batch of tendering candidates to be whittled down to a select bunch of say 8 to 12 contractors (in this climate the first bunch has known to be up to and over 40 candidates). This 1st stage is "assessed" on a marking / technical capability system and a pass/fail system which is supposed to be objective but for anyone who has read one of these actual pre-qualification criteria documents and questionnaire documents then they will see how subjective they actually are.

On some of these pre-qualification type tender projects even when the stage reaches past the whittled down process to the actual pricing of the contracts one has noted that many of these projects have disappeared into oblivion and documents have never left the design offices for this 2nd stage, the actual pricing stage. One presumes these were shelved for reasons on unavailability of funding. Has anyone in the Government Departments considered the wasted funding and resources spent by each contractor in preparing these questionnaires and going through the first stage?

Back in July I noted that their wasn't a sod to be turned in the Country and that we need a stimulus package in the next budget to get some form of Industry and work in the Country. Since then my research has led me to the CIC (Construction Industry Council) who have already lobbied the Government last march on this subject in an excellent report ---

However, if the well is already dry and no funds are available then we need to look outside the Government for a boost. Maybe these guys will help?

More about Spirit of Ireland in a later blog; as a young Bono has said "kingdoms fall, but you go on" - hopefully the people in the Spirit of Ireland will go on and the 'no brainer' obvious potential projects they have their sights set upon will be up and running soon which will help to stimulate the civil infrastructure sector and in turn create thousands of badly needed jobs rather than waiting on Government and Government Departments to get off their holes and come up with a viable plan to do something about the state we are now in.