Subcontracting firms are feeling the squeeze. Many are carrying on works or partially mobilised on contracts that have yet to be fully activated, leaving them stuck with costs before revenue.
Rising materials and labour costs, coupled with delays from regulators or clients, are increasing the risk for the firms that took on fixed-price contracts. Some smaller subcontractors may run into cash flow or solvency issues in the coming months.
Analysts warn that this is a recipe for defaults or work stoppages unless clients and main contractors act more flexibly, for example by sharing cost escalation risk more fairly.