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REAL ESTATE: BUILDING SOLUTIONS

Local contractors hold a few trump cards in fight for contracts

The political and economic uncertainty in the Slovak Republic since its division from the Czech Republic at the beginning of 1993 has been a deciding factor in keeping investors out of the Slovak market. It is not surprising that foreign investors new to the Slovak market will seek to limit their risk by choosing an international /western contractor with whom they are familiar and who can demonstrate a track record in the type of construction being considered. There are alternatives, however.
Western contractors are perceived (especially by western clients) as being able to provide a level of quality and professionalism that is a cut above the local alternatives. Western contractors may be financially more stable and are able to provide a western level of guarantees and insurance as well as a higher degree of management expertise and quality control.


photo: David Arneil

The political and economic uncertainty in the Slovak Republic since its division from the Czech Republic at the beginning of 1993 has been a deciding factor in keeping investors out of the Slovak market. It is not surprising that foreign investors new to the Slovak market will seek to limit their risk by choosing an international /western contractor with whom they are familiar and who can demonstrate a track record in the type of construction being considered. There are alternatives, however.

Western contractors are perceived (especially by western clients) as being able to provide a level of quality and professionalism that is a cut above the local alternatives. Western contractors may be financially more stable and are able to provide a western level of guarantees and insurance as well as a higher degree of management expertise and quality control. They may also have experience of a wider variety of construction projects than their Slovak counterparts and, depending on the nature of the project, the western contractor may have some technical knowledge and ability that is not available locally.

Local contractors, however, have some trump cards to play in the competition for new work. They are generally able to offer a lower price than their foreign competitors, for the local market is fiercely competitive due to low volume of work, and local knowledge enables the procurement of labour and materials at rates which foreign contractors find difficult to match.

Local knowledge brings another important advantage. The construction process can be complicated in any country, and in this respect the Slovak Republic is no exception. Local contractors have the advantage of knowing which hoops to jump through, when to jump and who to jump for.

Other factors which have an important influence on the choice of contractor (whether local or not) include the size of the particular project, the client's priorities in terms of time cost and quality, the contractor's workload (existing and future) and the composition of the contractor's organisation (i.e. what proportion of work will be done in house and how much will be subcontracted).

In the available space it is difficult to do more than make general statements. The local construction industry is very experienced and there are some very strong local companies that can provide good quality construction. Western contractors (principally Austrian) are active in Slovakia, and while they tend to be more expensive, their expertise may be worth paying for on some projects.

Whichever route is chosen, a careful pre-qualification and selection of contractors is recommended. The chosen contractor should be secured on a good contract and carefully managed to avoid delay and cost overruns. These principles, whether applied to local or international contractors, will greatly increase the likelihood of a project's being successful.

David Arneil is Associate Director of Cost Management at Capita Beard Dove. His column appears monthly. Send comments or questions to d.arneil@capita.cz.

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