Three major construction firms secured 40.8% of Cyprus’s public works contracts worth €2.5 billion between 2015 and 2024, raising concerns about market concentration, according to an Audit Office report examining the allocation of public construction projects.
Cyfield took on 157 projects worth €563.96 million during the period, whilst Iacovou Brothers secured 84 projects valued at €321.98 million and Cybarco Ltd won 40 projects worth €140.98 million. The three contractors obtained just 13% of the total number of contracts awarded but secured 40.8% of the total market value from the 2,164 contracts allocated.
Auditor General Andreas Papaconstantinou said a significant percentage of the total contract value concentrated in a limited number of contractors. “The aforementioned statistic indicates increasing market concentration for large projects in specific contractors,” he stated.
Cyfield held dominant position for four years
The report notes that Cyfield ranked first in market share distribution for four consecutive years from 2019 to 2023, which “may constitute another element indicating the creation of a dominant position”.
The company’s market share grew dramatically during the period. In 2015, Cyfield won approximately 3% of total projects, rising to 13% in 2017 before falling to 9% in 2018. The firm secured €51.39 million in contracts representing 20% of total projects in 2019, jumping to €106.79 million and 40% of the total in 2020. In 2022, Cyfield won €77.39 million worth of projects representing 22% of the total, climbing to €175.82 million and 30% in 2023 before dropping to €28.19 million and 8% in 2024.
Any lack of sufficient options limits the state’s negotiating capacity and may “force” repeat collaborations with contractors who potentially do not respond adequately, the Auditor General stated.
The concentration of large projects in specific contractors raises questions about whether these entities possess the operational capacity to implement multiple projects simultaneously with success, Papaconstantinou said.
“The above cause particular concern, especially from the fact that several large projects of the Republic of Cyprus are either subject to major delays or are not completed at all,” he added.
Average delays reach 461 days across projects
The report found that average delays in project implementation reach 461 days, translating to delays of 76.7% relative to contracted execution time. The average contract duration for each project stands at 601 days.
The audit covered contracting authorities in the public and broader public sector as well as local government authorities. The highest number of projects (612) with the greatest value (€596.04 million) were awarded in 2023.
Single-bid tenders raise red flags
In a notable finding, 14.2% of tenders received only one bid, which was ultimately awarded to that sole bidder. Papaconstantinou said this fact should concern contracting authorities, particularly where there are indications that a specific economic operator repeatedly constitutes the only bidder.
The report states that contractor participation in tenders ranges from satisfactory to limited. Some 60.3% of tenders from 2021-2024 attracted at least three participants, whilst 14.2% of cases saw no competition at all.
Despite the concentration of a large portion of contract value in few contractors, 80% of the total number of contracts were distributed among a large number of smaller contractors. Of the 2,164 contracts, 1,734 were undertaken by small or individual contractors, indicating market fragmentation in smaller-scale projects.
2015 dominated by single contractor
In 2015, Lois Builders Ltd showed the highest total contract value awarded at €13.5 million, representing 72% of total projects. The Auditor General noted that the other three major contractors secured significantly smaller total contract values, ranging from €596,999 to €2.9 million.
The report states that preventing phenomena of excessive concentration or fragmentation constitutes a basic prerequisite for shaping a healthy and competitive public works market.
Papaconstantinou said that “the report does not aim to target any economic operator but hopes to highlight the big picture in the construction sector within the framework of information and transparency”. For this reason, he said, the summary avoids any commentary to exclude the possibility of misinterpretations.
