Public works and private construction firms face a challenging period as price updates lag and awards sit idle across the sector. Many companies feel the economics of their projects do not reflect real costs, a situation worsened by the post-2008 market shift toward operators backed by global funds. The result is a tougher contracting environment where cost escalations cannot be easily passed on, threatening the ongoing viability of numerous firms in the region.
The board of Alicante’s employers’ association has urged administrations to draft a Private Construction Contracts Law. The goal is to rebalance the system, curb abuses, and create clearer rules for everyone involved in private construction projects.
Fopa recalls the housing market crash of 2008, which led to the disappearance of many local companies and the rise of new operators, largely influenced by large international funds. This transformation professionalized the industry and brought much-needed stability, but it also introduced rigid contracts with limited flexibility and reduced empathy for construction companies. In these conditions, builders are often the ones bearing the worst consequences of unemployment and project risk.
In Guardamar del Segura, a study highlighted the pressures on operators and the risk borne by builders who face prices that do not reflect inflation. The issue centers on project timing and the responsibility for meeting current and future regulations. Support funds have not accepted price revision in inflationary periods, creating losses when key building materials rise in price. In short, many contracts for turnkey projects place most risks on contractors.
A study by the association notes a need for better management of after-sales service. The current framework requires a guarantee fund equal to 5% of the project value to be returned 12 months after delivery, but complaints from end customers to promoters’ after-sales departments have increased. The industry calls for specific rules to define when and how returns should occur and how builders should respond to after-sales inquiries.
Inflation and licensing delays slow the growth of residential construction in Alicante
Further concerns involve delays in licensing and rising inflation, which hinder the expansion of residential building. The association has identified issues with the guarantee fund process and believes clearer guidance is needed to ensure prompt handling of after-sales claims and to prevent lingering disputes that press on project timelines.
Law changes
The board of directors supports a Private Construction Contracts Act that would arrange these situations with greater legal certainty and straightforward rules for both construction companies and subcontractors. The aim is to balance responsibilities and risks and to unify industry standards so as to reduce abuse and misalignment between parties.
Alicante province needs 15,000 workers to keep construction
Fopa advocates for a standard-setting guide created by professional organizations. This guide would outline how to raise concerns with project owners or builders and establish clear terms for the return period and maximum duration of the guarantee fund. It would also specify what counts as an after-sales claim and the conditions that govern it, guiding industry practice toward fairness and predictability.
In summary, the region seeks a balanced framework that supports ongoing construction while protecting the interests of contractors and owners alike, with rules that prevent the all-too-common reliance on price erosion and aggressive risk shifting.
Overall, the discussion centers on stabilizing the private construction market through clear contracts, sensible risk allocation, and reliable after-sales processes, so that housing and infrastructure projects can move forward without triggering mass closures or destabilizing local firms. See the ongoing dialogue for context and future updates in this sector. (Citation: Fopa, 2024).