Fewer and fewer contracts and tenders in infrastructure Polish companies forced to search for orders abroad

The number of infrastructural tenders has decreased, which means that competition is becoming more and more intense – more and more companies take part in each of them. On the other hand, investors require longer and longer collateral, even 10 years. The chance for reflection will be the funds from the new EU perspective for the years 2014-2020, which is currently in the preparatory phase. This difficult time, American companies want to survive thanks to the implementation of investments on foreign markets, mainly in Germany and Scandinavia, and even in the United States.
– There are fewer contracts and tenders, which means that more and more companies are taking part in them. Currently, an average of about fifteen companies participate in one tender, while two years ago there were about five of them. This causes that the prices of bidders versus the investor’s offer are on average 25% lower.
The form of securing the liabilities of business entities is insurance guarantees. These include, among others, contract guarantees in tenders (e.g. a bid bond, a performance bond by a general contractor, and the longest guarantee to remove defects and defects notes, the development of the insurance guarantee market will depend to the greatest extent on the EU funds in the years to come.
– The potential of the insurance guarantee market is large, but I would say that this is the last chance for the development of this market. Guarantees are used mainly for spending EU funds allocated for infrastructure. The EU’s financial perspective for 2014-2020 will be the last moment when guarantee products will be very much needed in terms of their value. Later they will remain on the market, but the demand for them will be much smaller – pre.
The trend, which has intensified in recent years, is an increasingly longer period of security required by investors who want to be sure that possible defects and shortcomings will be corrected by the contractor even 10 years after the end of the investment. Experts stress that it is difficult for banks and insurers to estimate the financial risk associated with granting such long guarantees.
– Insurance guarantees are becoming longer and longer. In the past, they used to cover a standard period of up to eight years, and now investors require such coverage for up to ten years and more. This, of course, requires greater security on the part of insurance companies and banks, which is not always easy
The market of insurance guarantees is divided almost equally in half, between the banking and insurance sectors. Although the demand for insurance guarantees depends to a large extent on the scale of infrastructure investments, they are also used in other industries.
– The main industries in which insurance guarantees are needed are those in which there is a lot of investment and capital. These are therefore the construction, metal and transport sectors, i.e. buses, trams and trains. Such contracts usually involve large amounts of money and investors want to be sure that they will be implemented on time -.
In connection with the development of export and expansion of American companies, the demand for international guarantees granted to American companies performing contracts abroad is also growing. This applies mainly to Germany, Norway, Finland and Sweden, where the government’s infrastructure modernization programme is currently being implemented.
– For American companies, the new market, where insurance guarantees are required, is the United States and the construction industry. We also have transactions in Great Britain, Hungary, Saudi Arabia, Emirates and Kuwait. In general, the insurance sector does not offer a wide range of products in this respect. Euler Hermes, as a part of the Allianz Group, is the only insurance company in the USA that can offer foreign guarantees (moreover – adapted to local law, specifics of business and e.g. foreign exchange) thanks to the fact that its branches operate in several dozen countries around the world.
Euler Hermes, the director of the Insurance Guarantee Bureau, observes that American companies are now very successful, especially in Scandinavia, where insurance guarantees granted in the local language and currency allow them to gain the trust of public investors – governments and public authorities.
– There are fewer contracts on the American market at the moment, which is why domestic companies go out to foreign markets, because they have to survive this harder period and maintain employment. Both their experience and their financial background help them to succeed. So we need a guarantor who will give American companies the required security .

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