Public works contractors across the province have faced years of pressure as inflation and delayed price updates squeeze margins. Many firms that were once profitable are now barely breaking even, and a number of companies tied to private building have seen similar strains. After the 2008 crisis, new operators entered the market, many under the influence of international funds. They bring tighter project terms that make price revisions rare and, in some cases, unavoidable cost hikes linger unnoticed. The result is a looming question about the long-term viability of these businesses and how to ensure fair competition in a changing landscape.
Within Alicante, the board of the employers’ association has urged administrations to draft a Private Construction Contracts Law that would rebalance the field and curb practices some perceive as abusive. A clearer framework could help both builders and project owners navigate pricing, risks, and responsibilities more transparently.
Remembering the housing market collapse of 2008, which led to the disappearance of many local firms and the arrival of new players, mostly backed by large international funds, industry observers say the shift brought professionalization and stability but also spawned contracts with limited flexibility and little empathy for construction companies, often leaving the builder as the primary bear of risk.
A study conducted in Guardamar del Segura highlights situations where partners face pressured pricing and where the builder must shoulder project measures and regulatory compliance. At the same time, fund support mechanisms rarely allow price revisions in inflationary scenarios, resulting in losses when material costs rise. In practice, this has driven a preference for turnkey contracts with most risks borne by contractors.
Inflation and licensing delays continue to slow residential growth in Alicante. It has also been noted that a guarantee fund, held by the builder to cover after-sales service, can be reserved for extended periods. Current rules state that this fund, equal to 5% of the project value, should be released 12 months after delivery. However, industry stakeholders argue that any customer complaints to the promoter’s after-sales department warrant dedicated industry-specific regulations to determine when and how this fund is returned and what constitutes a valid claim.
Law changes
FOPA’s leadership agrees that updating the Private Construction Contracts framework would provide stronger legal certainty and straightforward rules for both construction companies and contracting entities, reducing abuse and promoting balance across the industry. The goal is to unify standards across the sector, balancing risks and responsibilities between the two parties while supporting a healthier market.
Guardamar del Segura and surrounding areas emphasize the need for a clear standard that guides what issues should be raised with the project owner or builder and clarifies the return periods for the guarantee fund and the maximum time allowed for refunds. This clarity would help define what qualifies as an after-sales claim and under what conditions claims are addressed.
Alicante province needs 15,000 workers to keep construction
FOPA advocates for a professional guide created by industry bodies outlining common complaints and the proper channels for addressing them with project owners or builders. The proposed standard would also specify timelines for guarantee fund returns and set explicit criteria for after-sales claims, ensuring a fair process for all parties involved.