Not so easy for general contractors

He also pointed out that the caution of general contractors is making life for developers more difficult. Having had their fingers burnt on previous contracts, general contractors will often refuse to enter into a new investment if they see even a shadow of a risk.

“We signed several contracts a year and a half ago, when material prices started rising sharply and also in the project estimates, discrepancies appeared between purchase prices and what was budgeted. However, we managed to sort out a few projects by signing a number of annexes. We did not earn as much as we intended but we came out unscathed,” said Łukasz Kozerski. Mateusz Witczyński, the communication manager at Astaldi, stated that sometimes it is not worthwhile for a company to remain in a toxic and unprofitable contract and then, despite the damage done to reputations and the financial losses, you have to take the difficult decision to leave a building site. Astaldi had already walked away from work for PKP [Polish State Railways] on two railway lines between Rawicz and Leszno and between Dęblin and Lublin. “The simplest economic law that prices rise when demand increases was ignored. It didn’t seem to matter to anyone whether the tenders were all announced together or one by one. Nobody thought it through, since the only thing that was important is that we build. It seems to me that this is the problem. We do not realise how much power the state really has and that even gigantic companies are really small on a market that is controlled by the state,” said Mateusz Witczyński. Paweł Sajewicz, an analyst from Euler Hermes, gave a presentation of the latest insolvency figures for construction companies. “In the first three months of this year we had 138 insolvency cases in the construction industry. Last year we had 132 cases over the same period. We are still operating in the problematic market,” he claimed.