A new report by Constructionline has found that the industry's SMEs are facing tougher tender contests and longer payment times for completed work.

The service, which has over 21,000 contractors and consultants on its database of which 90 per cent are SMEs, found that a third of respondents say competition from larger companies was the biggest challenge they face during the tender process.

The same proportion said winning work and finding opportunities were the biggest obstacles to their success overall, painting a picture of a sector beset by increasingly tough competition.

Encouragingly, just under three quarters (74 per cent) had not seen any of their projects cancelled in the past three months while 60 per cent have secured most of their recent project wins from the private sector.

The report revealed that when acting as sub-contractors, over half (56 per cent) had seen payment times lengthen in the past 12 months, with more than a third (34 per cent) having been asked for rebates, and 41 per cent have seen increased retention periods.

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These statistics stood in stark contrast to the experiences of those acting as principal contractors of which only 40 per cent had seen payment times increase, 26 per cent asked for rebates and 27 per cent seeing longer retention periods.

The survey also revealed the barriers to success SMEs face from their clients.

Over two thirds (65 per cent) of the sample said that clients are not helpful enough during the tender process with over a half (52 per cent) saying more detailed project information would help improve their success rates in tender contests.

Commenting on the survey, Philip Prince, a director from Constructionline, said: "It's clear that both clients and the majors need to be offering more support to the sector’s smaller firms.

"SMEs are the backbone of UK construction so their survival is critical to the industry's long term health. Stricter rules on payment times, especially to protect sub-contractors, would give a huge helping hand to the thousands of firms for whom cash is king.

"The Government's work to promote BIM will go some way to helping firms overcome the lack of information they face in the tender contest, though SMEs will need support in adopting these techniques if they are not to be left behind.

"Though there are still many positives to take from our findings. The growth of the private sector as a major supplier of new work is a good sign that the sector is well balanced in the wake of the government’s austerity drive."

(CD/DW)