A leading Midlands-based construction strategist and procurement adviser has warned that the long-term viability of many of the industry's small businesses is in jeopardy.

"They are being squeezed by increased competition for building projects from larger firms," said Neil Pountney, managing director of Solihull-based Emprima Ltd. "Clearly, some firms don't mind being the 'big fish' in a smaller pond, especially if it means picking up the morsels to guarantee economic survival."

Mr Pountney, a former President of Solihull Chamber, said: "Confidence in the industry is at a low ebb and it is no secret that last year construction took many body blows. If the 'big boys' think it's tough, the future for construction industry SMEs is looking much less rosy.

"This year's cuts in capital expenditure, coupled with factors such as a near stagnant commercial property sector, a floundering house market, reduced funding for housing and regeneration schemes and tight bank credit, are reason enough for a gloomy outlook. But the situation has been compounded by fewer Government contracts being awarded and concerns that the decentralisation of decision-making will slow up both the planning and procurement of new public sector investment projects."

He went on: "With pressure on margins, increased costs, limited finance available - and the added worry of late payment - is it any wonder that some economic analysts believe that recovery will be delayed by a year beyond the previously very widely predicted 2011?"

Mr Pountney said SME building contractors were finding it harder to win work now than it was three years ago. Many were blaming changing practices in public sector procurement, saying that demanding administration processes and procurement frameworks were major barriers to securing work.

Unnecessary bureaucracy and red tape still strangled much of business, said Mr Pountney, who added: "I know the Government has said it will take steps to free industry and commerce from burdensome regulation. Perhaps it could do worse than start with construction, which, after all, will be greatly needed to support any economic recovery. Let's hope it soon realises this and acts accordingly."