Time bomb for construction projects the increase in the cost of materials

By Eleni Botas

The increase of raw materials has caused serious concern in the Construction Groups – at European level – where already 4 out of 10 companies have been forced to cancel or stop their projects as their costs have skyrocketed by more than 22%.

According to the latest figures cited by the European Construction Federation (FIEC) and based on a survey conducted by the Spanish National Construction Confederation (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 the ongoing projects and thus avoid a wave of cancellations or shutdowns of construction sites.

According to the research, the increase in the price of raw materials threatens the viability of many large projects as it has increased their total cost by 22.2%.

In fact, according to the research, the materials that have become more expensive in the last three months are wood (125%), stone (68%) and copper (63%).

75.6% of the companies active 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 aluminum.

The study shows that the lack of materials during the works has caused in more than half of the cases, delays in the implementation of the projects without affecting the deadline. 21.8% of the research companies have chosen to stop the work, while 12.3% have delayed, among other things, the deadlines for the completion of the project.

The construction company is in favor of creating an automatic balancing system that makes it possible to cover the additional costs taking into account the price changes after the opening of the bids, both up and down, seeking to provide stability in the contract.

CNC has considered various models that facilitate the submission of claims by manufacturers to the State or the implementing body of the project. Thus, any company that is affected by the large increase in the price of raw materials can request the extension of the duration, the modification of the contract or the 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 delays in the management and execution of projects, together with this increase in prices and labor shortages, will cause a serious problem, which can lead to a significant slowdown in growth.

In Greece, the issue of increasing construction is now the concern of all companies in the construction industry and large real estate companies. Due to the rise 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 square meter. .μ. will rise to 1300 euros per sq.m.

But also in the case of a Leed certified office space the cost has skyrocketed to 1,500 euros per square meter, when before the increases the cost reached 1,150 euros per square meter.

The issue of increases in materials was mentioned a few days ago by the President of the TEE, George Stasinos, who directly and officially raised the issue of reviewing the budgets of new and ongoing projects, stating that: “We must immediately resolve an issue that we already have ahead With the accumulation of increases in materials, the cost of the projects has changed. Let me not go into percentage examples per material, we know what is happening…. We must now provide solutions. on the basis of which he calculates the budget for the projects, and at the end of the day the companies that do the projects are paid, not only for the new projects… If this is not done for the existing projects, the ones that are running or have been assigned, I am afraid lead companies to close in the end, due to huge costs that are not reimbursed and in the end the projects will not be done “.

However, the situation does not seem to normalize as in September the prices of materials recorded a new increase of 5.1%, as price increases were recorded in all but the individual categories of materials.

In particular, price increases were in: Diesel-Diesel (24.8%), Reinforcing Iron (17%), Copper Pipes (15.7%), Copper Pipes (14.3%), Radiators (8.7%) ), Bricks (6.1%), Plastic pipes (5.8%), Plastic pipes, synthetic, fiber cement (5.2%), Stainless steel railings (5.2%), Garage door mechanisms (4.1%), Safety glass (3.6%), Aluminum frames (3.1%), Garage doors (2.9%), Wooden wardrobes (2.8%), Interior doors (2.5%), Plastic, acrylic, water ( 2.5%), Building timber (2.2%), Cement (2%), Wooden windows (1.9%), Marble slabs (1.9%) and Ready-mixed concrete (1.3%).

According to ELSTAT, the general price index for construction materials of new residential buildings increased by 5.1% in September 2021 compared to the corresponding index of September 2020, compared to a decrease of 0.5% when comparing the respective indices in 2020 with in 2019.