By Ramesh Mathew/Staff Reporter

While there is no dearth of projects in the country’s construction sector, not many of these sub-contractors and small firms are keen to undertake new work, it is learnt.

“Enquiries for undertaking new work come from contractors every other day, but most of us are unable to give any assurance on our participation,” said a senior official of a company that has been involved in several projects as a sub-contractor.

The official claimed that arrears from some of the large contractors “are so voluminous” that it has become difficult for firms like his to function. A number of local, regional and even international companies apparently owe large sums to their sub-contractors for close to two years, say industry insiders.

“Though there is a marginal improvement in the payment scenario now, money is still hard to come by,” said the financial controller of a contracting house whose workers are deployed at a number of ongoing projects.

He recalled that as far as payments to sub-contractors are concerned, the period between 2004 and 2009 was the best. European, American and Japanese companies that executed major projects never left any amount unpaid to their sub-contractors and payments were settled on schedule, he said.

“However, the payment scenario these days is far from rosy despite enormous competition between the parties to secure contracts,” the official stressed, adding that repeated under-quoting by “amateurish” contracting companies had “severely affected” the firms as well as the industry.

Meanwhile, at least two managers alleged that some of the international firms that landed major infrastructure contracts in recent weeks had a poor track record in terms of settling the outstanding bills of sub-contractors.

“Despite numerous appeals made to their offices over the past several months, some of them have large sums as arrears to be paid to most of their sub-contractors,” said a senior official of a contracting firm, accusing a major company of repeatedly failing to settle bills for over two years.

While some industry professionals attributed the “payment crisis” to receivables-related delays from the departments awarding works, others blamed the managers of major companies that executed projects.

“Poor financial management, especially diversion of funds, is paralysing the operations of many small-time firms,” said an engineer, citing examples of some construction companies that “collapsed” in recent years because of “financial
indiscipline”.