More than 4 thousand tenders in the country were declared void in the construction sector during 2022, which meant that the State stopped investing more than 800 billion pesos in public projects that year. This, according to research from the University of Talca, represents a 100% increase compared to 2021.
This was established by the “Study of deserted tenders and without offers. Construction Sector”, carried out by the academic of the Faculty of Engineering of said university, Armando Durán Bustamante, who analyzed all the non-awarded projects from the period between 2019 and the first semester of 2023.
As a result of the investigation, it was established that, during last year, 4,023 projects were not awarded, representing 28.6% of the 14,064 tenders corresponding to that period.
“There has been a constant increase in tenders declared void from 2019 to the first half of 2023, and the amounts not awarded in those years went from $224,031 million to $802,683 million,” said the academic from the School of Civil Engineering in Works. Civilians of UTalca.
When analyzing the situation region by region, the academic’s research determined that Atacama (43%), O’Higgins (40%), Antofagasta (39%) and Ñuble (38%) exhibit the largest budgets for unannounced tenders during 2022.
Regarding the first seven months of 2023, the data are not encouraging either, since the number of awarded projects, according to the study, decreased by 150% compared to the same period last year. Between January and July of this year, the study revealed that Ñuble (44%), O’Higgins (40%) and Antofagasta (38%) have the highest rates of deserted tenders.
The UTalca professor explained that this drop in project awards is occurring in a segment that directly affects the most vulnerable sectors, since they are small and medium-sized tenders, in a section that ranges between 50 and 300 millions of pesos.
“It is the large projects that are being awarded, but the small ones such as participatory paving, construction of kindergartens, expansion of schools, multi-fields, social headquarters, are not being awarded,” he warned.
Ñuble Region
In the Ñuble region, the data is alarming, because, while in 2021 projects for a total value of $5,134 million were not awarded, in 2022 that figure rose to $21,578 million (38% of the budget), Professor Durán explained, which which represents an increase of 320%, three times the average increase at the national level.
“Of a total of 644 projects tendered last year in the region, 196 were declared void (30.4%) due to lack of budget. Projects that have been long awaited by citizens,” he commented.
“For a new region, public works is left without companies participating in more than 30% of the contracts, they are not built, which means in economic terms, if compared in terms of social housing, that 1,500 homes were stopped being built. in the region, which affects competitiveness and employability, with Ñuble being one of the regions with the highest unemployment rates,” said the academic.
Regarding the period January-July 2023, of the 374 tenders in Ñuble, a total of 164 (44%) were declared void, well above the 30.4% average at the national level.
“The slowdown that the Ñuble region has suffered in private and public investment will negatively affect growth. This region has shortcomings, among which are poor infrastructure, little investment, extra costs in construction projects, and lack of availability of resources. The cities of the Ñuble region have grown, adding that some present high levels of exposure and vulnerability to natural threats and extreme climate events and that require new infrastructure solutions in the short term,” Durán analyzed.
According to the UTalca professor, “investments in road works infrastructure in the region, for example, affect transportation and are essential, since they increase capacity and improve the efficiency of travel times; “This region exports its agricultural products and requires efficient logistics chains in which transportation is essential.”
Factors
Along with the analysis of the collected data, the study included 112 interviews with companies in the construction industry, which made it possible to establish which factors are generating the low interest in participating and winning public tenders.
The main problems mentioned by the companies and that impact when bidding in a public tender are the increase in materials, with 61%, along with project financing, with 24%.
“The third factor would be all these security variables, which were not considered in the logistics of the project and which today are associated with the increase in crime in Chile,” the academic pointed out.
For his part, the president of the Chilean Chamber of Construction (CChC) Chillán, Ricardo Salman Aburdene, “the high rate of deserted tenders in Ñuble is mainly due to two factors. Firstly, there is the weakening of companies as a consequence of the economic crisis that affects the country, especially the construction sector. During the pandemic, construction material costs saw a significant increase, weakening businesses’ working capital for nearly three years. Although the pressure on costs has decreased, a notable slowness and bureaucracy persists in the project approval process, which slows down activity and makes it more expensive, making it difficult for companies to recover.
Secondly, the union leader continued, “the strict financial restrictions imposed by private banks and BancoEstado have limited the financing of new projects, lines of credit, working capital and guarantee notes. This has led companies to rely heavily on their own resources, reducing their ability to take on new works and participate in tenders. These two factors combined explain why companies cannot participate in all tenders due to financial constraints.”
Salman added that, “in addition, other factors have impacted companies, such as delays in bidding for works due to reviews in the Ministry of Social Development, a procedure that was not previously necessary for conservation projects. Also added are the challenges caused by fires in summer and floods during winter, which have distracted authorities from managing, approving and bidding for projects, forcing them to focus on emergency works. In summary, this year is characterized by a high rate of deserted tenders, delays in projects and a concentration of these tenders towards the last quarter, with the hope of a recovery in activity.
In that sense, the helmsman of the CChC Chillán stated that, “we hope that inflation control advances and is concluded promptly, although doubts persist due to the growth of public spending in next year’s budget, which could put pressure on the demand and inflation to a certain extent.”
“Once inflation is controlled, it would be essential to reduce the interest rate and eliminate restrictions on the financing of investment projects. Likewise, it is necessary to streamline permitting processes and reduce the deadlines for approving projects and bidding for works, which, together with the current high interest rates, increase costs. These measures are essential to reactivate economic activity and stimulate growth,” concluded Salman.
Bill
In that sense, the Seremi of Economy of Ñuble, Erick Solo de Zaldívar Garay, recognized that “the increase in deserted tenders is a situation that worries us. These indicators have precisely led us as the Government and Ministry of Economy to present to the National Congress the project that modernizes the public procurement system, which seeks to increase the number of institutions regulated by law and extend the coverage of the Public Market platform, promoting the participation of smaller companies and cooperatives. The project was approved by Congress and is currently in the Constitutional Court reviewing some regulations.”
“It is important to highlight that – the seremi emphasized -, according to Chile Compra estimates, the approved measures will imply an approximate increase in the sales of MSMEs and Cooperatives of US$ 300 million, which is undoubtedly a benefit for this sector. . In addition, exclusivity of agile purchasing procedures will be established for them, which will allow for a fairer system and equal conditions and attractiveness compared to large companies. Let us remember that currently the limit for this sector is 30 UTM, and with the enactment of this reform, its limit increases to 100 UTM. In this way, any acquisition of goods or services that has a value equal to or less than 100 UTM must be seen through agile purchasing and provided by a MSME or cooperative, and only in the event that no MSME or cooperative has submitted an offer, the “supplier may acquire the good or service from companies that are not smaller in size.”
Solo de Zaldívar added that “local suppliers are also promoted and strengthened, so when there is a need for a good or service, for example, in Chillán, local suppliers will be prioritized.”
On the other hand, he indicated that “the project incorporates standards and criteria of sustainability, probity, transparency, competition and innovation. This last point takes on special relevance, because special procedures will be created with a focus on innovation, where their existence will allow State agencies to seek innovative solutions (R&D) to complex problems that the administration faces today. and that the products or services currently available on the market cannot solve or that require adaptations to do so.”
