CRESME-H2O SURVEY CALLS FOR TENDERS AND CONTRACTS FOR PUBLIC SECTOR WATERWORKS
22 May 2020
1
AWARDS IN THE FIRST FOUR MONTHS OF 2020, PUBLIC TENDERS AWARDED INVOLVING WATER GREW BY 40% IN TERMS OF THE TOTAL EURO AMOUNT AND BY 20% IN NUMBER In the first four months of 2020, the number of tendered contracts of a significant amount (over €1 million) grew by 20.7% (from 87 in the first four months of 2019 to 105 in the first four months of 2020) and the overall euro amount grew by 40.1% (from €362 million in the first four months of 2019 to €507 million in the first four months of 2020). This growth is the natural outcome of the boom in calls for tenders in 2019, while the effects of the dramatic drop in the first four months of 2020 will be seen in the months to come. Water market tenders worth over €1 million from 2002 to 2019 and in the first four months of 2019 and 2020 491
3,500
3,000
293
2,000
210
238
270
1,500
87
200
105
159
219
201
300
266
250
350
361
367
352
375
2,500
235
Number of calls
400
361
500
100
Amount (million euros)
491
600
1,000
507 0 1Q 2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
0
1Q 2019 362
1,163
997
648
1,532
1,859
1,457
871
999
1,147
882
956
1,326
3,129
2,330
2,590
1,505
1,181
1,078
500
Source: Cresme Europa Servizi
The tenders awarded were mainly execution-only contracts. Specifically, in the first four months of 2020 95 execution-only contracts were awarded (90% of the tenders awarded) for an overall amount of €441 million (87% of the amount awarded). In the first four months of 2020, contracts for waterworks were among the few to increase compared to the first four months of 2019 (+20.7% in terms of number of contracts awarded, +40.1% in terms of amount), compared to total public works, where awarded contracts fell by 16.7% in terms of number of contracts and 45.1% in terms of amount. That growth is to be attributed to the boom in 2019 that mainly involved the euro amount of public tenders for waterworks (+214.2% compared to 2018) and, to a lesser extent, all other public works (+45.2% compared to 2018).
2
The water market - Contracts worth over €1 million from 2018 to 2019 and in the first four months of 2019 and 2020 per market type - Number Jan April 2019
Jan April 2020
% var. 2019/2018
% var. 1st 4 mos. 2020/2019
3
3
2
50.0
-33.3
23
10
3
5
-56.5
66.7
25
13
6
7
-48.0
16.7
172
261
75
95
51.7
26.7
Integrated contracts
13
19
6
3
46.2
-50.0
General contractor
0
0
0
0
0.0
0.0
Tradition market total
185
280
81
98
51.4
21.0
WATER TOTAL
210
293
87
105
39.5
20.7
2,150
2,836
995
829
31.9
-16.7
9.8
10.3
8.7
12.7
5.1
46.0
2018
2019
2
Construction, maintenance and management Overall market total
PPP
Execution-only contracts
PUBLIC WORKS TOTAL Water as a % of total pub. works Source: Cresme Europa Servizi
The water market - Contracts worth over €1 million from 2018 to 2019 and in the first four months of 2019 and 2020 per market type - Amount in millions of euros % var. 2019/2018
% var. 1st 4 mo. 2020/2019
Jan April 2019
Jan April 2020
40
40
11
29.0
-72.5
153
48
16
15
-68.6
-6.3
Overall market total
184
88
56
26
-52.2
-53.6
Execution-only contracts
718
834
261
441
16.2
69.0
Integrated contracts
95
241
45
40
153.7
-11.1
General contractor
0
0
0
0
0.0
0.0
Tradition market total
813
1,074
306
481
32.1
57.2
WATER TOTAL
997
1,163
362
507
16.6
40.1
20,423
20,905
8,270
4,539
2.4
-45.1
4.9
5.6
4.4
11.2
14.3
154.5
2018
2019
31
Construction, maintenance and management
PPP
PUBLIC WORKS TOTAL Water as a % of total pub. works Source: Cresme Europa Servizi
3
20.0
26.7
25.4
28.9
29.8
27.3
27.1
25.6
23.2
21.5
21.9
21.9
22.0
20.8
18.9
25.0
20.7
30.0
31.7
28.9
35.0
29.4
Water market tenders worth over €1 million from 2002 to 2019 Average downturns
15.0 10.0 5.0 0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Cresme Europa Servizi
4
CALLS FOR TENDERS IN THE FIRST FOUR MONTHS OF 2020, THE NUMBER OF CALLS FOR TENDERS DROPPED 30%, WHILE THE AMOUNTS HAVE BEEN INFLUENCED BY A FEW ROBUST CALLS THAT WERE AWARDED IN 2019: AS SUCH, THE AMOUNTS PUT UP FOR BID COMPARED TO 2019 ARE EITHER -70% OR +28%. The Survey examines the following types of works and services: 1) Integrated water services; 2) Construction, maintenance/renovation and operation of plants and networks necessary to implement ‘integrated water services’: water collection works, drinking water plants, water mains, water towers, pumping stations, underground or elevated reservoirs, end-user water distribution networks, equipped tunnels, sewerage networks and waste water treatment plants, etc. 3) Construction, maintenance/renovation and management of dams; 4) Construction, maintenance/renovation and management of networks and plants for irrigation systems. In the first four months of 2020, the amounts put up for tender for waterworks in the public sector dropped 70.1% waterworks, while the number of calls dropped 29.8%. Contracts dropped from 568 in 2019 to 399 in 2020, and the bid amounts went from €2,809 million to €841. However, this figure is compared to the very strong growth recorded in 2019, when 1,554 tenders were published and the total amount for the whole year was over €6.2 billion, the highest in the period considered (17 years), exceeding the maximum levels recorded in 2005 (€4.4 billion).
5,000
Number of calls
4,000
2,000 3,000
1,000 500
5
2,000
841 399
2,809 568
1,500
1,000
Amount (million euros)
2,385
3,236
6,000 2,184
2,500
2,767
3,000
7,000 2,782
3,500
3,301
4,000
3,512
The water market - Calls for tenders and requests published from 2002 to 2019 and in the first four months of 2019 and 2020
1,554 6,230
1,504 1,983
1,359
1,143
Q1 2020
Q1 2019
2019
2018
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
0 2017
955 753
1,280
1,178 1,755
2,722
866
1,194
1,420
958
1,682
1,409 1,731
1,040
1,400 1,474
1,905
2,226
3,968
4,373
3,052
2,553
1,979 2002
0
Source: Cresme Europa Servizi
The in-depth analysis of the waterworks market shown above demonstrates that the drastic drop in the amount put up for tender in the first four months of 2020 can be attributed mainly to tenders with high euro amounts (-88.5% for tenders worth more than €50 million), which had stimulated the 2019 market, when almost 60% of the overall amount recorded (€3.7 billion) derived from only 2 calls for tender regarding Emilia Romagna.
The water market - Calls for tenders and requests published from 2018 to 2019 and in the first four months of 2019 and 2020 by euro amount bracket - Number % var. 1st 4 mos. 2020/2019
2019
1st 4 mos2019.
72
89
27
35
23.6
29.6
Up to €150,000
447
363
187
98
-18.8
-47.6
From €150,000 to €500,000
414
384
136
88
-7.2
-35.3
From €500,001 to €1,000,000
240
262
85
65
9.2
-23.5
From €1,000,001 to €5,000,000
274
360
103
83
31.4
-19.4
From €5,000,001 to €15,000,000
36
76
27
22
111.1
-18.5
From €15,000,001 to €50,000,000 Over €50,000,000
18
14
1
5
-22.2
400.0
3
6
2
3
100.0
50.0
1,504
1,554
568
399
3.3
-29.8
Amount not indicated
TOTAL
1st 4 mos 2020
% var. 2019/2018
2018
Source: Cresme Europa Servizi
The water market - Calls for tenders and requests published from 2018 to 2019 and in the first four months of 2019 and 2020 by euro amount bracket - Amounts in millions of Euros. % var. 2019/2018
% var. 1st 4 mos. 2020/2019
2019
33
27
13
7
-18.2
-46.2
From €150,000 to €500,000
126
111
39
25
-11.9
-35.9
From €500,001 to €1,000,000
184
200
63
47
8.7
-25.4
From €1,000,001 to €5,000,000
630
825
232
187
31.0
-19.4
From €5,000,001 to €15,000,000
294
654
234
183
122.4
-21.8
From €15,000,001 to €50,000,000 Over €50,000,000
416
359
15
139
-13.7
826.7
301
4,055
2,214 * 61
253
1247.2
-88.6/+314.7*
1,983
6,230
2,809 * 656
841
214.2
-70.1/+28.1
Up to €150,000
TOTAL
Jan - April 2019
Jan April 2020
2018
Source: Cresme Europa Servizi * The euro amount of the contract to manage the integrated water services in the Rimini catchment area (excluding the municipality of Maiolo), including the execution of instrumental works for €2.152 billion, has been subtracted from the total of the first four months of 2019.
6
It involved the contracting out of integrated water services in the Rimini catchment area, with the exclusion of the municipality of Maiolo, including the execution of instrumental works for €2.152 billion, and the dual-purpose tender to find a managing private partner - Selection of the operating private partner of the company to be set up, to be entrusted with integrated water services for the Province of Reggio Emilia, excluding the municipality of Toano, for €1.56 billion. The first of these two contracts was put up for bid by ATERSIR (the Emilia-Romagna Agency for Water and Waste Services) on 18 March 2019. Without this call for tenders, the tender notices for waterworks in the first four months of 2020 would have grown 28.2% compared to the same period in 2019. There was a drastic drop in the Public and Private Partnerships (PPP) market, from the over €2 billion up for tender in the first four months of 2019, to the barely €24 million in the first four months of 2020 (-98.9%), after the impressive growth of 2019 (+13,246% over 2018) when just 11 calls for tenders had reached an overall value exceeding €3.7 billion, 60% of the total amount of contracts in the water market. In the first four months of 2020, compared to the first four months of 2019, the public works market dropped 16.8% in terms of the number of calls for tenders (compared to the 29.8% drop in waterworks alone) and fell 37.6% in terms of the euro amount (compared to a 70.1% drop in waterworks). The water market - Calls for tenders and requests published from 2018 to 2019 and in the first four months of 2019 and 2020 by market type - Number 2018
2019
PPP
13
11
Construction, maintenance and management Overall market total
88
89
Jan April 2020
% var. 2019/2018
% var. 1st 4 mos. 2020/2019
4
4
-15.4
0.0
38
41
1.1
7.9
Jan April 2019
101
100
42
45
-1.0
7.1
1,378
1,396
508
340
1.3
-33.1
Integrated contracts
25
58
18
14
132.0
-22.2
General contractor
0
0
0
0
0.0
0.0
1,403
1,454
526
354
3.6
-32.7
Execution-only contracts
Tradition market total WATER TOTAL PUBLIC WORKS TOTAL Water as a % of total pub. works Source: Cresme Europa Servizi
1,504
1,554
568
399
3.3
-29.8
23,332
23,511
7,616
6,333
0.8
-16.8
6.4
6.6
7.5
6.3
3.1
-16.0
The water market - Calls for tenders and requests published from 2018 to 2019 and the first four months of 2019 and 2020 by market type - Amounts in millions of euros. 2018
PPP Construction, maintenance and management Overall market total Execution-only contracts Integrated contracts General contractor Tradition market total WATER TOTAL PUBLIC WORKS TOTAL
2019
Jan April 2019
Jan April 2020
% var. 2019/2018
% var. 1st 4 mos. 2020/2019
28
3,737
2,169
24
13,246.4
-98.9
196
110
74
320
-43.9
332.4 -84.7
224
3,847
2,243
344
1,617.4
1,514
1,980
389
434
30.8
11.6
245
404
177
63
64.9
-64.4
0
0
0
0
0.0
0.0
1,759
2,383
566
497
35.5
-12.2
1,983
6,230
2,809
841
214.2
-70.1
31,638
45,950
13,022
8,124
45.2
-37.6
7
Water as a % of total pub. works Source: Cresme Europa Servizi
6.3
13.6
21.6
10.4
115.9
-51.9
In the first four months of 2020, the amount put up for tender for maintenance and management contracts diminished drastically, from €2.2 billion in the first four months of 2019 to €341 million (84.8%), pumping the brakes on the growth seen in 2019, when tenders had reached the overall amount of over €3.8 billion, compared to just under €190 million in 2018 (+1,934%).
8
The water market - Calls for tenders and requests published from 2018 to 2019 and in the first four months of 2019 and 2020 by type of intervention - Number Jan April 2020
% var. 2019/2018
% var. 1st 4 mos. 2020/2019
76
59
-5.9
-22.4
72
53
-4.1
-26.4
4
6
-40.0
50.0
340
4.8
-30.9
128
-17.3
-32.6
173
26.6
-34.5
Jan April 2019
2018
2019
NEW
203
191
New construction
193
185
New construction and management RENEWAL
10
6
1,301
1,363
492
Ordinary maintenance
602
498
190
Extraordinary maintenance and repairs Maintenance and management
609
771
264
TOTAL Source: Cresme Europa Servizi
90
94
38
39
4.4
2.6
1,504
1,554
568
399
3.3
-29.8
The water market - Calls for tenders and requests published from 2018 to 2019 and in the first four months of 2019 and 2020 by investment type - Amounts in millions of euros. % var. 1st 4 mos. 2020/2019
11.0
-44.0
Jan April 2020
544
225
126
541
224
122
18.9
-45.5
34
2
1
3
-94.1
200.0
1,494
5,687
2,584
715
280.7
-72.3
716
835
97
59
16.6
-39.2
588
1,007
245
316
71.3
29.0
189
3,845
2,242
341
1,934.4
-84.8
1,983
6,230
2,809
841
214.2
-70.1
2019
NEW
490
New construction
455
New construction and management RENEWAL Ordinary maintenance Extraordinary maintenance and repairs Maintenance and management TOTAL Source: Cresme Europa Servizi
% var. 2019/2018
Jan April 2019
2018
The calls for tenders published by the managers of local public services, the main clients in the water market, fell both in terms of number of tenders (-21.3%), from 315 in the first four months of 2019 to 248 in the first four months of 2020, and in terms of the overall euro amount (-73.7%), from nearly €2.7 billion in the first four months of 2019 to €700 million in the first four months of 2020. Here again, this halted the growth seen in 2019, when the contracts commissioned by managing entities had increased in both number (+32.5% over 2018) and amount (+296.9 over 2018). The water market - Calls for tenders and requests published from 2018 to 2019 and in the first four months of 2019 and 2020 by type of commissioning entity - Number 2018
2019
Jan April 2019
Jan April 2020
% var. 2019/2018
% var. 1st 4 mos. 2020/2019
Local public service providers
767
1,016
315
248
32.5
-21.3
Municipalities and municipality clusters Other local entities
489
339
161
101
-30.7
-37.3
227
178
88
49
-21.6
-44.3
16
7
3
1
-56.3
-66.7
180.0
-100.0
3.3
-29.8
Central bodies Others, public and private TOTAL
5
14
1
0
1,504
1,554
568
399
Source: Cresme Europa Servizi
9
The water market - Calls for tenders and requests published from 2018 to 2019 and in the first four months of 2019 and 2020 by client type - Amounts in millions of euros. 2018
Local public service providers
Jan April 2019
2019
% var. 2019/2018
Jan April 2020
% var. 1st 4 mos. 2020/2019
1,443
5,727
2,661
700
296.9
-73.7
200
147
72
40
-26.5
-44.4
267
281
71
96
5.2
35.2
Central bodies
62
37
5
5
-40.3
0.0
Others, public and private
12
37
0
0
208.3
0.0
1,983
6,230
2,809
841
214.2
-70.1
Municipalities and municipality clusters Other local entities
TOTAL Source: Cresme Europa Servizi
In terms of geographical distribution, the strong contraction in the first four months of 2020 occurred mainly in northeast Italy, which returned to 2018 levels with a drop of 94.2% in terms of overall euro value and of 40.7% in terms of the number of contracts tendered. Northeast Italy was the epicentre in 2019, when almost €4.3 billion was up for tender (about 69% of the overall value of calls for tender), with growth of 1,320% over 2018. The overall euro value of calls for tenders published in 2020 in northwest Italy also fell (-29.4% compared to the first four months of 2019), as they did in southern Italy (-28.9%) and in central Italy (-3.1%), while they grew on the islands (+1,236%), where calls for tender worth €334 million were published, compared to €25 million in the first four months of 2019. The water market - Calls for tenders and requests published from 2018 to 2019 and the first four months of 2019 and 2020 by geographic area - Number Jan April 2019
Jan April 2020
% var. 2019/2018
468
168
95
-0.8
-43.5
246
242
91
54
-1.6
-40.7
CENTRAL
184
209
71
71
13.6
0.0
SOUTH
434
485
185
119
11.8
-35.7
ISLANDS
165
131
51
57
-20.6
11.8
3
19
2
3
533.3
50.0
1,504
1,554
568
399
3.3
-29.8
2018
2019
NORTH-WEST
472
NORTH-EAST
Not regionally divisible TOTAL
% var. 1st 4 mos. 2020/2019
Source: Cresme Europa Servizi
The water market - Calls for tenders and requests published from 2018 to 2019 and the first four months of 2019 and 2020 by geographic area - Amounts in millions of euros. % var. 2019/2018
% var. 1st 4 mos. 2020/2019
113
37.3
-29.4
2,280
132
1,319.9
-94.2
200
64
62
-58.1
-3.1
414
683
280
199
65.0
-28.9
156
156
25
334
0.0
1236.0
9
45
1
1
400.0
0.0
1,983
6,230
2,809
841
214.2
-70.1
Jan April 2019
2018
2019
NORTHWEST
625
858
160
NORTHEAST
302
4,288
CENTRAL
477
SOUTH ISLANDS* Not regionally divisible TOTAL Source: Cresme Europa Servizi
10
Jan April 2020