Performance confidence in the year ahead amongst Scottish firms has declined during the third quarter of 2015, according to new research.

The latest Scottish Construction Monitor by the Scottish Building Federation (SBF) shows that industry confidence about their prospects has fallen to 51% from 64% last quarter.

Conversely, the percentage of respondents less confident about their firm's future prospects has risen from 4% in Q2 2015 to 16% this quarter.

The industry's overall confidence rating has dropped by 14 points this quarter to stand at plus 21 on the monitor index.

An overwhelming majority of respondents who had experienced use of bonds or guarantees when tendering for new work (96%) had been subject to a performance guarantee bond.


In addition, almost two thirds (64%) had experience of collateral warranties while only one in four (25%) had even been requested to provide a parent company guarantee.

The report revealed the largest proportion of bonds requested seem to have taken the form of a bank guarantee (50% of responses), with just over one third of respondents (36%) asked for an insurance backed guarantee.

A further 14% of respondents had experience of both.

The typical value of bond requested was 10% of the contract value, specified by 73% of respondents.

A total of 52% of businesses said the release date for the bond was linked to the practical completion of the project, while 44% said this was linked to making good on defacts.

The remaining 4% of respondents said the release date for the bond was linked to both.

Overall, 48% of respondents who were required to produce a bond had encountered difficulties in obtaining the bond from a guarantor.

SBF commercial director Ian Honeyman said: "The decline in industry confidence this quarter underlines employer concerns about the long-term sustainability of the growth in construction output we've witnessed over recent months - and the growing issue of skills and capacity shortages within the industry."

(LM/CD)