Czech Construction Industry Thrives on Large Public Contracts, Surpassing 23% Annual Growth

The Czech construction industry is experiencing robust growth, primarily fueled by a surge in large public contracts, with their number escalating annually by over 23 percent. A recent analysis by CEEC Research reveals that in the first three quarters of this year alone, a total of 5,844 contracts were awarded, amounting to a substantial value of 167.9 billion koruna. This signifies a notable 19.2 percent increase, underlining the pivotal role public contracts play in sustaining the Czech construction sector, constituting a third of the market volume.

Michal Vacek, Executive Director of CEEC Research, emphasizes the readiness of public procurers with projects in hand and significant financial resources, stating, “Public procurers have projects ready and up to 400 billion koruna lying in municipal accounts.” This financial backing contributes significantly to the industry’s stability and growth.

Kamil Jeřábek, Managing Director of Wienerberger, a company specializing in bricks and roof tiles, echoes the sentiment, acknowledging the crucial impact of public contracts on the industry’s vitality.

Among the notable contracts this year, the largest was announced by the Railway Administration in March, planning the construction of an ETCS traffic safety system on the line from the state border with Germany to Kralupy nad Vltavou, with a value of 12.8 billion koruna. Other prominent contracts include the Prague Water Company’s August announcement for the reconstruction and expansion of the Central Wastewater Treatment Plant in Prague (7.3 billion) and the Directorate of Roads and Highways’ contract for the construction of the D3 motorway from Prague to the border with Austria (6.2 billion).

Despite the industry’s overall success, September posed challenges for building construction. Martin Gürtler, an analyst at Komerční banka, attributes this to weak demand for construction work amid elevated construction costs. This emphasizes the balancing act the Czech construction industry must navigate between increasing demands and cost considerations as it continues to thrive on the back of substantial public contracts.

Article by Prague Forum

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