FPSC warns: Lack of budget revision stalls EU-funded projects

The absence of a fully empowered government to adopt the budget revision needed to secure co-financing for projects funded by the Cohesion Fund-under the 2021-2027 EU multiannual financial framework-threatens to leave the construction sector with a lack of work, exacerbate corporate liquidity issues, and trigger a new exodus of skilled personnel. These concerns were voiced yesterday by representatives of the Federation of Construction Companies' Employers (FPSC) during a press conference held on National Construction Workers' Day.

The builders' warning comes at a time when companies have ramped up activity for 2025 and 2026 to complete projects under the National Recovery and Resilience Plan (NRRP)-with over euro3 billion in payments still outstanding for work already performed-and as energy costs weigh heavily on material producers while material and transport prices rise. Faced with declining corporate liquidity and even the risk of decapitalization for some firms, builders anticipate annual cost increases of at least 10% for construction projects.

"After the NRRP, attention is shifting to Cohesion Funds. However, there is a huge risk: many projects lack secured co-financing from the state budget," stated Constantin Erbaşu, President of the FPSC. He added: "Unlike the NRRP, future Cohesion Funds will require 40% national co-financing, compared to 5-10% in the past." For construction companies, the danger goes beyond the temporary loss of contracts. A disruption in the flow of investment could trigger the departure of the very workers these companies have struggled to train and retain over recent years. When asked if the sector might see a rise in unemployment after the PNRR (National Recovery and Resilience Plan) concludes, Mr. Erbaşu warned: "Skilled workers won't remain unemployed; instead, they will leave the country. Unskilled workers, however, could face unemployment if public investment drops and the private sector remains cautious." The risk is compounded by the fact that, according to the FPSC president, Germany has a program in place to recruit 200,000 construction specialists.

Compounding the prospect of an investment gap is an existing issue: construction companies are financing a significant portion of public works out of their own pockets. "Payments have been slow and delayed. There are completed projects that have only been 50% paid for. Settlement processes did speed up in July and August so the state could draw down EU funds," stated Constantin Erbaşu, who estimates that PNRR-related payments will likely continue until the end of the year.

And while a lack of projects and liquidity issues threaten company operations, the rising costs of energy, fuel, and materials threaten the cost of future projects. "Construction work cannot proceed without these resources. All these price hikes are directly reflected in the final cost of the projects," added the FPSC president, who also offered a stark forecast: "Prices will see double-digit growth-at least 10% annually-over the next two to six years, depending on the international landscape as well as the domestic political and economic climate."

• Minimal settlements for projects 60% complete

An overview of PNRR project execution and financing, presented by Daniel Piţurlea-FPSC vice-president and majority shareholder of Concelex-reveals the scale of financial pressure building up in the sector. According to him, PNRR cuts and recalibrations in recent years have significantly reduced the program's scope, while administrative delays have created major discrepancies between the actual stage of construction and the amounts reported and settled.

"Some projects that were 50-60% physically complete had only 5% of costs settled, due to a lack of supporting documentation from local authorities," stated Daniel Piţurlea. Data he presented indicates that approximately euro9.45 billion-equivalent to 44.8% of the PNRR-remained allocated for works managed directly by construction companies.

Even more telling regarding the companies' financial health is the gap between certified work and actual payments received. "On the ground, 64% of the contracted value has been certified, yet the amounts actually collected by contractors total only euro3.1 billion-just one-third," the FPSC vice-president noted. This discrepancy places immense pressure on company liquidity, as businesses must continue to pay wages, materials, suppliers, subcontractors, loans, and taxes even when the state delays settlements.

Under these circumstances, Daniel Piţurlea calls for the acceleration of acceptance procedures and the proper application of the partial acceptance mechanism. However, the issue is also one of administrative capacity: "It is imperative that public authorities should have professional teams of specialists to take charge of verifying and settling the work performed.”

However, the pressure does not stop with the construction companies. Their suppliers are entering a period where production is falling while costs are rising. "Currently, the industry as a whole is recording a 4.3% decline, while the manufacturing sector-which includes construction materials-is down by 4.4%. At the same time, prices have risen by 8.9% across the industry and by 9.7% in the manufacturing sector,” stated Valentin Petrescu, FPSC Vice President responsible for construction materials production. He also highlighted one of the industry's major vulnerabilities at this moment: "We are facing a drop in volumes combined with rising prices.”

• Unfair competition from non-EU countries in the joinery and window market

He added that, paradoxically, our country possesses industrial capacities that are competitive at a European level, yet it is simultaneously facing mounting pressure from imports. "In the window, joinery, and glass sector, Romania boasts modern production capacity on par with European standards, ranking second in exports within the European Union. Nevertheless, imports are substantial, totaling nearly 500 million euros,” said Valentin Petrescu, former FPSC President.

In the case of insulating glass, the situation has deteriorated rapidly. "Imports in the first five months of 2026 have already reached 60% of last year's total," noted Mr. Petrescu, specifying that the share of goods originating from outside the European Union rose from 44% in 2024 to 48% in 2026; the main sources were Turkey, Ukraine, and China, while Bulgaria and Poland were the leading sources within the EU.

However, Romanian producers complain that they do not compete on equal terms with suppliers from third countries. "These imports create unfair competition. Products from third countries often enter with zero customs duties or benefit from massive state subsidies on raw materials, whereas Romanian producers lack similar countermeasures," Valentin Petrescu added, pointing out that the CBAM mechanism applies to aluminum and metal but not to glass.

• Negative impact of rising energy prices

Energy remains one of the biggest challenges for the entire industry. "The construction materials sector is suffering due to a lack of fiscal predictability and huge energy costs. Electricity prices in Romania are 30-35% above the European Union average," warned Irinel Gheorghe, Vice President of FPSC and a representative for construction materials producers and distributors.

The representative for construction materials distributors does not view energy price capping as a solution to the problem. "I do not support price capping; instead, I advocate for stimulating the production of low-cost energy," said Irinel Gheorghe, adding: "An economy based exclusively on consumption must come to an end. We need to invest in domestic production capacities powered by low-cost energy." He also pointed out that rising energy costs are rapidly rippling through the entire construction supply chain. "Material prices directly impact contractors' cost estimates. The legislation on price adjustments has proven insufficient to offset the rising costs of labor and energy," stated Irinel Gheorghe. According to him, although material manufacturers have tried to shield ongoing projects, current stockpiles are running low. "Manufacturers have attempted to keep prices stable for projects already underway, but they can no longer sustain this effort. Significant price hikes for materials are expected in the near future," said Irinel Gheorghe, adding that transportation costs-now accounting for 10% of material prices, up from 3-4% prior to the Middle East conflict-are also driving up the total bill.

Problems also extend to steel, a fundamental raw material for construction. "The steel and iron product distribution sector is going through an extremely difficult phase at the European level, with steelworks and production facilities closing down," warned Marius Pintilie, Vice President of FPSC, President of the Romanian Association of Metal Distributors, and a member of Eurometal.

In Romania, distributors managed to maintain supplies even during the critical moments of recent years, but the situation has deteriorated sharply. "Starting in 2025 and continuing into 2026, the pressure has mounted enormously," said Pintilie. The steel distribution sector has a turnover of approximately euro1.5 billion, yet "in the first half of the year, volume declines of 20-25% were recorded for reinforcing steel and other products."

For the steel industry, investment predictability beyond the PNRR (National Recovery and Resilience Plan) is thus becoming just as important as it is for the construction sector. "We call for stability, predictability, and medium- to long-term planning for the post-PNRR period in order to protect the industry and prevent the deindustrialization of Romania," stated Marius Pintilie.

• The new European regulation on procurement - a massive boost for Romanian construction companies

The FPSC is also banking on the recent changes to the European regulation on public procurement. "The award criterion is shifting from price to quality. In other words, the lowest price will no longer be the deciding factor,” noted Constantin Erbaşu. According to him, the new approach will place greater emphasis on green procurement, the circular economy, the use of recycled materials, and energy efficiency, while also facilitating SME access to public contracts. Another change at the European level concerns limits on full subcontracting. Companies winning contracts will be required to demonstrate genuine execution capacity; Mr. Erbaşu highlighted the practice that construction firms aim to eliminate: foreign companies should no longer be able to enter Romania with nothing more than "a briefcase and a luxury car,” win a contract, and then effectively outsource the entire execution to other entities.

The new "Made in Europe” concept is expected to place greater importance on European operators and their certification. Equally important for Romanian companies is the financial discipline mandated by the upcoming European regulation, which stipulates a maximum 60-calendar-day deadline for public authorities to pay contractors and subcontractors.

Significant changes are also in the pipeline for the domestic market. According to the FPSC, the professional certification of construction companies-as stipulated in the Urban Planning Code-is set to become mandatory starting in July 2027. "An independent body named ARCOC (Romanian Association for the Certification of Construction Operators) will be established, comprising the FPSC, professional associations, academia, and government representatives," explained Valentin Petrescu. This certification will protect project owners and streamline the participation of firms in public tenders. The certification body will be a non-profit, self-funded, and fully digitized entity operating under the oversight of the relevant ministries.