OHL ŽS has fallen into a loss of up to 200 million CZK due to tenders

Prague - The construction company OHL ŽS last year, according to preliminary estimates, increased its revenues to 10.5 billion crowns from the previous year's 8.28 billion crowns. However, it fell into a loss of 100 to 200 million crowns. This was due to contracts tendered at 50 to 60 percent of the projected price, said Michal Štefl, chairman of the company's board.
    According to him, the company was affected by the results of tenders from several previous years. "The winner laughed at the losers, and the losers mocked the winners for winning at such price levels," Štefl criticized the system of excessively low bids. Tenders at the level of 50 to 60 percent of the projected price were, according to him, suicidal.
    He admitted that even their construction company participated in such a system; otherwise, he claimed, they would have had to lay off all their staff. "We couldn't afford to win nothing, but on the other hand, we also couldn't afford to win much more. We could always win one construction project in the Czech Republic, and at the same time, we had to win two projects abroad to survive," Štefl added.
    The effort to retain employees, however, did not pan out well for the company, which laid off 800 people from the pre-crisis 2000, according to Štefl. Only recently, he said, the number of employees has slightly increased to 1400.
    The head of OHL ŽS claims that the suicidal competition still persists in the field of highway and road construction. Due to poor planning, builders have long warned of a lack of work. "In highway and road construction, there is basically no work," Štefl pointed out.
    The Brno-based company OHL ŽS is one of the largest construction companies in the Czech Republic. Before the onset of the crisis in 2008, the company's revenues exceeded 12 billion crowns, which fell to about eight billion in the following years. The company's profits also dropped significantly. This year, Štefl estimates that revenues will increase to at least 12.5 billion crowns, possibly up to 14 billion. The company is also active in foreign markets, for example, it will build a state prison in Bosnia and Herzegovina. The contract is for 26.5 million euros (approximately 729 million crowns). The company also has contracts in Slovenia and Moldova.
    Czech construction is among the sectors most affected by the recent crisis. Builders lost 443 billion crowns from 2008 to 2013, which is the turnover for one year. The cumulative decline in the sector compared to 2008 was 24 percent. The state significantly contributed to this by almost halting investments in infrastructure projects. The lack of contracts was one of the main reasons why construction companies continually lowered their offered prices to below-cost levels in public tenders.