Number of announced Czech public construction contracts fell by a tenth last year

Public contracts in the construction sector accounted for 30.3 percent of the CZK 566.4 billion of all public contracts announced by public contracting authorities last year. The number of announced public contracts in the construction sector fell by 10.3 percent year-on-year and the real value of their financial volume decreased by 4.6 percent. On average, construction firms won one in five public contracts awarded. This is according to an analysis of the construction sector prepared by CEEC Research.

According to the analysis, 1,410 proper construction procurement notices were issued in 2022, compared to 1,572 a year earlier. The total estimated value of the notices was CZK 171.7 billion, a year-on-year growth of 9.8 percent. The absolute value of construction procurement increased due to the increase in the price level in the construction sector, the authors of the analysis said.

"Major contracting authorities have proclaimed record investment budgets, but the average inflation rate for 2022 has reached 15.1 per cent. Although the nominal value of the volume of public tenders announced recorded a stated growth of 9.8 percent year-on-year, the real value, on the contrary, fell by 4.6 percent," calculated Michal Vacek, executive director of CEEC Research.

Among the largest public procurement notices issued last year was the CZK 24.6bn construction of the D line metro from Prague's Transport Company. The second giant contract was the construction of the D11 motorway in the section from Trutnov to the state border in the amount of CZK 13 billion announced by the Road and Motorway Directorate of the Czech Republic.

Of the announced contracts, CZK 53.9 billion, or 31 percent, was awarded. Of the total volume of announced contracts, five per cent were later cancelled, i.e. contracts worth CZK 9.4 billion. The largest cancelled contracts were the reconstruction of the line to Chomutov worth CZK 1.6 billion, announced by the Railway Administration, and the contract of the Road and Motorway Directorate of the Czech Republic for the construction of telematics systems on the D10 motorway worth CZK 956 million.

The analysis shows that contracting authorities are likely to cancel other contracts as well. "It is not that the public sector has stopped issuing construction contracts altogether. The situation is not that bad and hopefully it will not be. The development of towns and cities cannot be stopped completely. But it is possible that some projects will be postponed or phased out," says Markéta Vaňková, Mayor of Brno.

According to CEEC Research, 5,998 contracts were awarded in the construction sector in 2022, which was 15.2 percent less than in the previous year. The value of the contracts awarded was CZK 193.7 billion, down 13.7 percent year-on-year.

According to an analysis by IS, which processes data from the Public Procurement Bulletin using a different methodology than CEEC Research, the value of public construction contracts last year was CZK 235.3 billion, down 0.2 per cent year-on-year. The largest contracting authority was the Road and Motorway Directorate of the Czech Republic with contracts worth CZK 37.8 billion. The number of cancelled contracts was almost 30 percent higher year-on-year.

Source: CEEC Research and CTK