Construction challenges in Central and Eastern Europe
Overheating in Central and Central Eastern Europe markets is putting pressure on the capacity of contractors and suppliers throughout the construction supply chain.
Tender price inflation is running at 5 percent in some markets and we’re seeing ever more contractors and suppliers with full order books. Also, in some countries, contractors are shying away from multi-national corporate clients, choosing to work for local clients with less onerous contract conditions and shorter payment terms.
When developing a contracting strategy, international clients need to be sensitive to local market conditions if they want the best outcome.
The effects of overheating are particularly acute in smaller countries such as Slovakia, where one or two major projects can absorb the entire domestic supply of certain key products.
In light of the above, it’s particularly important to have proactive general contractors aligned with their clients' objectives. A supportive contractor can help the project team to introduce innovation through the supply chain to overcome procurement problems.
Innovations we have seen recently include cross-border sourcing of materials and breaking down trade packages, both in terms of size, so that smaller contractors can deliver them with direct material procurement by general contractors, who then engage local labour-only contractors on site.
This content is part of the International construction market survey 2018