Fatih Şahin Фатіх Шахін Ukraine, business and international experience — since 2004
Energy & Infrastructure

The road building programme, from a supplier chair

A very large road programme ran for several years. Seen from the supply side, what mattered was contracting practice, payment terms and whether the tender was real.

Novoazovs'kyi district, Donetsk Oblast, Ukraine   panoramio (1)
Photo: Владимир Рязанцев · CC BY 3.0

A national road programme looks, from outside, like a budget line and a ribbon. From inside the supply chain it looks like a set of commercial questions, and those questions determine whether the money buys road or buys margin.

What a supplier watches

Whether the tender is genuinely open. A specification written around one manufacturer's product is a decision disguised as a competition, and experienced suppliers recognise it and do not bid.

Payment terms and payment discipline. A contractor paid ninety days late finances the state at their own cost, prices that into the next bid, and the state pays for it twice.

Volume predictability. A programme with a stable multi-year pipeline lets suppliers invest in plant. A stop-start programme is served by whoever has idle equipment, which is not the same population.

What the programme did well

Scale and continuity for several seasons, which allowed asphalt plants, quarries and equipment fleets to be financed against expected work rather than hoped-for work.

Electronic tendering, which made who won and at what price a matter of public record.

What the criticism was

Concentration among a small number of large contractors, and questions about whether the works selected were the ones with the highest transport value. Both are legitimate and both are answerable with published data.

The general observation

A construction market is built by the way it is contracted. Consistent tenders, honest specifications and payment on time produce a competitive supply base within a few years; the opposite produces a small number of firms that know how to work the system.

The chair in this title is genuinely my chair. I learn whether a programme is real not from the tender document but from the payment date: an authority that pays on time gets cheaper bids next time, and one that pays late buys back the interest on its delay in the price. That is the most durable lesson I take from Ukraine's road programme — contracting practice is what builds a market.

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