The price of project work in tenders has dropped on average by a quarter

Prague - The state has saved up to a quarter of the planned costs on project works this year, as the average price of project works in tenders has dropped compared to original expectations. Public procurers will save an average of 19 percent on construction contracts, according to an analysis by CEEC Research, Ness, and the Chamber of Public Procurement Administrators (KAVZ), which is available to ČTK.
    Managers of state, city, and municipal budgets have already saved a total of 100 million crowns on project contracts this year. "Some project companies in segments such as road construction are willing to offer dramatic discounts to ensure work for their employees and avoid laying off their specialists. On the other hand, in some cases, public investors also change the original order and 'streamline' the initial intention, thereby securing savings on their planned budget," explained Jiří Vacek, director of CEEC Research.
    However, KAVZ chairman Martin Janoušek warns that the current low prices for designers may cause problems in the future. "I am convinced that the so-called savings on project works actually mean an increase in costs in the future. Procurers should strive to evaluate these contracts using criteria other than just the lowest price. Let’s hope that the possibility to evaluate experiences included in the so-called technical amendment to the public procurement law will contribute to this," noted Janoušek.
    Vladimír Steiner, the operational director of Schindler CZ, also warns against excessive savings in projects. "Savings on a project are savings in the wrong place. The project price usually hovers around three percent of the total realization value. Saving 15 percent on design work will not even yield a half-percent saving on the entire project. The impact on quality can be enormous and usually backfires," warns Steiner. According to him, it is not uncommon for builders to have to address floor height adjustments, modify the number of floors, and in extreme cases, the elevator shaft is completely omitted from the project due to inaccurate design during the actual execution of the contract. "Additional costs then significantly exceed the original 'savings,'" added Steiner.