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Riga City Council: there are many construction companies, but no builders

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There has been an increased volume of interest coming from construction companies for Riga City Council’s Properties Department’s announced procurement projects this year. This trend has been present since autumn last year. It shows a serious problem with Latvia’s construction sector – there are many construction companies, but no actual builders to do the required jobs, notes the head of RCC’s Properties Department Oleg Burov.

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUAccording to him, there has been a rolling trend in Latvia – state and municipal procurement projects are usually won by companies offering the lowest prices. Such companies usually have low wages, and those are not always paid officially. Such wages usually force people to stay home or leave the country. Construction companies no longer participate in procurement projects because they are unable to provide workers.

‘We have been surprised by the low interest of construction companies for Properties Department’s announced procurement projects this year. We first noticed this trend in autumn of 2013,’ – says Burov.

‘The lack of interest does not seem to depend on the procurement project’s volume of actual construction work. For example, we had announced two projects last December. Both required a little bit of internal work. Each project’s estimated amount of work was equal to EUR 40,000 – small-scale repairs in two objects owned by the municipality. These projects were announced six time. All of them either gained no potential participants or had offers that exceeded the estimated rates.’

There has not been much interest for financially large procurement projects as well. ‘We recently announced a project for heating systems for school and kindergarten façades. Expenses were estimated at EUR 4 million. It was decided to divide this amount into four lots. One lot, which included historical buildings, had no contestants whatsoever. Another lot had only one contestant. The remaining two also had only two contestants,’ – as explained by Burov. He believes there is a new problem in Latvia’s construction sector: ‘There are owners of construction companies, names and such, but no actual workers to perform work.’

Burov believes this problem has surfaced because any procurement project – state or municipal – gives preference to offers with the lowest prices. ‘If projects are won only by companies with the lowest prices in their offers, this means they pay their employees low wages, and not always officially. Low salaries often force people to stay home or leave the country. People get the general impression that it is no longer worth working. Why are there no participants with large and medium-sized expenses? There aren’t any because companies are not able to supply workers. Only large companies remain at the moment. These are stable companies that pay taxes and wages officially and have respectable relations with subsidiaries,’ – says Burov.

‘It is possible to save money on materials because we cannot strictly state in our project which materials we want to be used,’ – explains Burov.

Ref: 103.109.109.2622


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