Agressive pricing by main contractors has been attacked by squeezed subcontractors
Squeezed subcontractors have spoken out against aggressive pricing practices by main contractors.
This week it emerged that Carillion has been trying to renegotiate existing contracts with suppliers for discounts of up to 20%.
A number of suppliers told Building that other contractors were attempting to renegotiate for reduced rates as well.
Industry figures voiced fears that increasing pressure from clients could result in more loss-making jobs for suppliers.
Last week Balfour Beatty, Interserve and Carillion all signed agreements with the government to reduce the cost of public work.
Suzannah Nichol, chief executive of the National Specialist Contractors’ Council, said: “We’re concerned contractors don’t simply pass these cuts arbitrarily down the supply chain. Firms should try to work with suppliers to look at costs.”
Carillion is cutting its supplier base from 25,000 companies to 5,000.
A contract manager at another supplier said: “I was asked for a discount by Carillion two years ago but I’ve refused to pay it. We just refuse to work for them.”
Carillion said that it has no group-wide policy requiring discounts and that it selects its preferred suppliers on “a myriad of requirements” including health and safety, quality, reliability of deliveryand pricing.