One in four public sector clients are likely to cancel construction projects over the next six months and a further quarter will ask their suppliers to slash prices due to budget cuts, a new survey has revealed.

Local authorities admit they are more likely to cancel projects over the next six months (35 per cent) in a hope to save money. Housing associations said they will ask suppliers to cut their prices (50 per cent) and health authorities predict they will retender projects (33 per cent).

The survey, carried out by Constructionline highlights the stark continuation of public sector spending cuts, with two thirds (68 per cent) of public sector clients saying they will have less construction budget available over the next six months.

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In the face of cutbacks, however, public sector organisations including local authorities, housing associations and health authorities, are working with Constructionline to deliver effective cost savings to their construction budgets. In the next six months, nearly 90 per cent of those surveyed said they will employ new methods to deliver savings to their budgets, in the hope that projects won’t have to be cancelled or prices slashed.

Adding new contractors to supply chains (25 per cent), retendering for frameworks (21 per cent), price benchmarking futures tenders (32 per cent) and retendering for projects (34 per cent) will be popular methods applied by public sector clients over the next six months.

Philip Prince, sales and marketing director at Constructionline, said: "Despite the financial pressures public sector organisations are under, our survey has highlighted the positive steps many organisations are already taking to deliver effective savings. We are helping many of our own clients look at ways to save on procurement costs and therefore reduce their overall construction costs. In the last six months, nearly a third (32 per cent) of public sector clients joined framework agreements and a further quarter (27 per cent) started trialling new forms of framework working. Frameworks can guarantee certainty on time, cost and quality, which means greater predictability and a more timely and efficient programme of delivery."

(CD)