The lowest common denominator

Time to start redundancies
Mostostal Warszawa has already reached an agreement with its trade unions - 410 to 439 people are to leave the company by the end of January 2013. Meanwhile, nearly 1,700 people are to be made redundant from Strabag in 2012. There will also be lay-offs at Budimex. Job cuts are also expected in the companies of the PBG group that have already filed for bankruptcy. At the beginning of June, Polimex-Mostostal terminated its corporate collective labour agreement. Even though the president of the company, Konrad Jaskóła, explained that this is aimed at avoiding mass redundancies, the workforce of the firm is increasingly apprehensive about the fact that there is no way of circumventing job cuts. In his statements to the media, Dariusz Blocher, the president of Budimex, admits that many thousands of people are to be laid off in the construction sector. "Nearly all the companies will be forced to restructure, more often in terms of a reduction in their workforce," says Dawid Piekarz.

How has it come to this?
The recent glut of infrastructure projects had all led us to look to the future with optimism. However, the speeding up of projects before Euro 2012 has actually had the opposite effect. "We had the opportunity to develop and strengthen the construction sector and unfortunately this has been missed. Instead, a lot of companies are now threatened with bankruptcy," declared Marek Michałowski, the president of the Polish Construction Employers Association, during the ?Construction Industry after the Euros. Bankruptcy Threat or Chance for Development?' conference in early July. Why has it come to this? Representatives of the sector are blaming the public tender system, which favours the cheapest offers. "A lot of companies that won tenders just by offering low prices had no experience in motorway or stadium construction. They offered lower rates and unfortunately miscalculated," says Dawid Piekarz. Marek Michałowski puts it bluntly: "What happened in Poland was a mad scramble to bid with the lowest offer. Tenders were being entered by 15-20 companies, of which many were rather eccentric and inexperienced, without the competence or financial resources to cope." Industry representatives point to the fact that Poland is the only country in the European Union which does not apply uniform general contracting conditions that, for example, satisfy FIDIC (International Federation of Consulting Engineers) standards. They also criticise tenders based on price only.

The price is right

Prof. Zofia Bolkowska of the Higher School of Management and Law in Warsaw points out that the expected contract costs often fell short of the actual costs, which was partly due to the high price of remunerations and materials, constituting app. 60 pct of the total. Contracts that were priced too low created a spiral of debt leading to payment gridlocks. The sector is hoping to change the government's approach to public tenders by 2014. But in mid-July ?Gazeta Wyborcza' published a statement by Sławomir Nowak, the minister of transport, building and maritime affairs: "There has been some talk for a while about the necessity of changing the public tender system with regard to construction work so that the price is not the only criterion of tender evaluation. We often hear so-called experts who, in order to ensure the ?quality of work', question the market rule that the price has to determine tender winners. By demanding extra payments for contracts, they in fact become lobbyists for construction companies. I would like to make this perfectly clear - there will not be any extra payments for contracts! I will defend the rule that the price, on top of the contract deadline, is the basic criterion of offer selection," he wrote. However, there is also some consolation for construction companies in the minister's declaration: "I hope that the ?Poland under Construction 2' programme will be launched as soon as in 2014 and it will be similar to the current one in its scope." Now all that construction companies can do is wait. But how many of them will survive until 2014?

Radosław Górecki