February 26, 2021

Tenders for civil works plummeted 26% in 2020 and fell to the levels of six years ago



The measures to suspend public procurement and restrictions on mobility to face the health crisis had a negative impact on the activity of the construction sector during 2020. The construction sector also registered a stoppage of activity during the months of confinement more strict with millionaire cuts if compared to the year of 2019. Consequently, the public tender for civil works plummeted 26% -to 8,364 million euros- in which it was the third largest drop since 1996 and public procurement plunged 39%, up to 6.348 million, according to data from the «Analysis of the Infrastructure Sector; Balance for 2020 and Forecasts for 2021 »presented by the Association of Construction Companies and Infrastructure Concessionaires (Seopan). The situation in both cases resulted in a return to 2014 levels. The information provided by Seopan also reveals that ehe traffic on state and regional highways and highways fell by 37% and 35%, respectively from the first state of alarm in March to December.

In terms of employment, the restrictions and the stoppage decreed by the Government caused the destruction of 80,200 jobs on average per month during March, April and May within the construction sector. However, with the de-escalation, economic activity began to recover with a rebound in the construction labor market that has meant that by the end of last year all the jobs lost in this sector had already been recovered.

In addition to the damage caused by the coronavirus, from Seopan they add that the sector has continued to drag two important inefficiencies this year. The president of Seopan, Julián Núñez, criticized during the press conference that the budget execution of the two major investment ministries (the Ministry of Transport and the Ministry for the Ecological Transition) did not remain at 68.7% in 2020. Núñez denounced that In the last 14 years, the State has stopped executing 41,100 million euros, a scenario that has prevented the creation of 48,000 annual jobs and 20,145 million euros for the public coffers of fiscal return for taxes and social contributions.

This situation of non-execution is due to “unjustified delays” in the bidding procedures and the award of contracts, but also to the suspension and termination of contracts due to the awarding of offers “with abnormally low prices and the high judicialization of the problems »that arise from the interpretation and fulfillment of contracts, as explained by the president of Seopan, Julián Núñez.

The second ineffectiveness, according to Seopan, is related to political indecision to solve Regulatory obstacles that prevent capital raising in financial markets to finance the infrastructures that the country needs to solve its deficit in priority infrastructures and comply with the sustainable development goals set by the United Nations. In fact, the value of the infrastructure concessions barely reached 50 million euros, according to data provided by Seopan.

With regard to the sector’s prospects for 2021, Seopan points out that they are “uncertain” with an expected growth ranging from 1% to 2.7%. However, the construction employers’ association warns that these projections will be conditioned by the aforementioned budget execution, mainly ADIF, which represents 24.4% of the national civil works. Likewise, the employer is committed to proposing to the competent European authorities a possible extension of the deadlines for the execution of these aid, which for 2021 are calculated at 34,490 million.

According to Seopanl, the plans approved by the Government project an investment from European construction funds that will amount this year to 10,286 million euros, of which 5,300 will go to the ecological transition.

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