Filenews 9 November 2021
By Eleni Bota
Serious concern in construction groups - at European level - has been caused by the increase in raw materials, where already 4 out of 10 companies have been forced to cancel or stop their projects as their cost has skyrocketed by more than 22%.
According to the latest data cited by the European Construction Federation (FIEC) and based on a survey conducted by the National Confederation of Construction of Spain (CNC), the explosive rise in raw materials has forced 4 out of 10 companies (39.5%) to stop the projects they are carrying out, while urging the government to take measures to ensure the viability of ongoing projects and thus avoid a wave of cancellations or closures of construction sites.
According to the survey, the increase in the price of raw materials threatens the viability of many major projects as it has increased their total cost by 22.2%.
In fact, as mentioned in the survey, the materials that have become more expensive in the last three months are wood (125%), stone (68%) and copper (63%).
75.6% of companies operating in the construction sector report significant shortages or delays in the last three months in the delivery of basic materials such as wood, steel or aluminium.
The study shows that the lack of materials during the work has caused in more than half of the cases, a delay in the implementation of projects without affecting the deadline. 21.8% of the survey companies have opted for the closure of works, while 12.3% have delayed, among other things, the project completion deadlines.
The construction association is in favour of creating an automatic balancing system that makes it possible to cope with the extra costs by taking into account price changes after the opening of tenders, both up and down, in order to provide stability to the contract.
CNC has examined several models that facilitate the submission of claims by the developers to the State or the project promoter. Thus, any company affected by the large increase in the price of raw materials can request the extension of the duration, the modification of the contract or compensation for breach of the contractual financial obligation.
According to the President of the Confederation (CNC), Pedro Fernández Alén, the increase in raw materials is one of the main threats to the implementation of European funds. There is a risk of absorption, as the delay in the management and execution of projects, together with this increase in prices and the lack of labour, will cause a serious problem, which can lead to a significant slowdown in the rate of growth.
In Greece, the issue of the increase of building works is now of concern to all companies in the construction sector and to large real estate companies. Due to the increase in material prices the construction cost has increased by 20% to 30% which translates into an additional charge of 200 to 300 euros per square meter, This means that an apartment of 1000 euros per square meter with the latest price increases the selling price per sq. m. will rise to 1300 euros per square meter.
But also in the case of a Leed-certified office space, the cost has skyrocketed to €1,500 per square metre, when before the increases the cost reached €1,150 per square metre.
The President of the Technical University of Greece, Giorgos Stasinos, also referred to the issue of increases in materials a few days ago, who directly and officially raised the issue of revising the budgets of new and ongoing projects, stating that: "We must immediately solve an issue that we already have in front of us and is dangerous. With the accumulation of increases in materials, the cost of projects has changed. Let's not go into percentage examples per material, we know what's going on.... We must now provide solutions. The State should immediately proceed to a revision of the prices of the materials based on which it calculates the budget on the projects, and at the end of the day the companies that make the projects are paid. Not just for the new projects... If this is not done for the existing projects, the ones that are running or have been awarded, I fear that companies will be forced to close in the end, due to exorbitant costs that are not compensated and in the end the works will not be done."
The situation, however, does not seem to be normalized as in September the prices of materials recorded a new increase of 5.1%, as price increases were recorded in all individual categories of materials.
In particular, price increases were in: Diesel-Diesel (24.8%), Iron reinforcement (17%), Copper pipes (15.7%), Copper conductors (14.3%), Radiators (8.7%), Bricks (6.1%), Plastic pipes (5.8%), Plastic pipes (5.8%), Plastic pipes, synthetic, fiber-socimente (5.2%), Stainless steel railings (5.2%), Garage door mechanisms (4.1%), Safety glazing (3.6%), Aluminium frames (3.1%), Garage doors (2.9%), Wooden wardrobes (2.8%), Internal doors (2.5%), Plastic, acrylic, water (2.5% ), Construction timber (2.2%), Cement (2%), Wooden windows (1.9%), Marble slabs (1.9%) and Ready concrete (1.3%).
As announced by ELSTAT, the general price index of materials for the construction of new residential buildings showed an increase of 5.1% in September 2021 compared to the corresponding index of September 2020, compared to a decrease of 0.5% that occurred when comparing the corresponding indices in 2020 with 2019.
Source: Capital.gr
