A $367 billion infrastructure pipeline is at risk due to government practices that are "killing" small to medium businesses, civil contractors representing 40,000 workers say.
A report released on Friday found NSW small-medium contractors are increasingly fighting over a smaller pool of government construction contracts, in favour of big multinationals.
Contracts valued at less than $50 million had dropped from 41 per cent of all NSW government construction contracts to 23 per cent in the past seven years, the report says.
One in two contracts are worth more than $500 million - far beyond the reach of small businesses.
Civil Contractors Federation NSW, which commissioned the report, said members were clear that current procurement processes were "killing their businesses".
"The figures released today underscore the reality familiar to many NSW civil contractors," the peak body's chief executive, Kylie Yates, said in a statement.
"They are cut out of government projects by unfair contract terms and project bundling which benefits the biggest multinationals."
The analysis estimated a $367 billion pipeline of NSW civil construction work across all sectors over the next decade.
About two-thirds will be spent in the regions.
Ms Yates said the forecast revealed a "worrying trend" of project bundling by agencies that threatened the industry's sustainability, undermined job security and increased costs to taxpayers.
“We have a once-in-a-generation opportunity to deliver renewable energy, affordable homes and connected communities, but it hinges on the removal of unnecessary red tape," she said.
The report as a parliamentary inquiry probes a possible overhaul of government contracting after the Minns government's own concerns about declining local manufacturing.
The inquiry was told this week small businesses were missing out due to complexity, overly onerous contractual or tender obligations or "just a sheer lack of awareness".
"This is not just a loss for business but a loss of competition," Small Business Commission Chris Lamont told MPs.
A government spokesman accused the coalition of sending thousands of jobs and billions of procurement dollars overseas during its 12-year term.
The procurement inquiry would "begin unpicking the mess the previous Liberal-National government made, and focus on directing more of our dollars to support local workers and growing the NSW economy," the spokesman told AAP.
“We look forward to receiving the inquiry’s recommendations."
