Contractor demand one time escalation for ongoing projects

The Constructors Association of Pakistan (CAP) has called upon the government to award public sector contractors a one-time escalation for ongoing projects. This will help to reconsider the escalation formula for saving the additional burden in the prices of construction material in past half year. Prices of steel, cement, bricks and other construction material has registered an average increase of around 70 percent in comparison with the last year. As the escalation in the prices of construction material impacts both the developers and contractors of government projects. However, the developers can add the increased prices to their end cost for private buying but contractors in the public sector has to follow the agreed prices. Some 80 percent of the constructors in public sector development projects are small constructors and they are unable to continue the work or participate in new bidding. As the steel prices have reached Rs 188,000 per tons from 104,000 per tons in March 2020, cement prices touched Rs 710 per bag from Rs 480 per bag, Bitumen from Rs 64,700 per tonnes to Rs 119,130 per tons, aluminum doors/windows from Rs 475 per square feet to Rs 825 per square feet and other materials also increased with the same ratio. The abnormal increase in fuel and energy prices, abnormal rise in exchange rate and increase in sea freights are the factors contributing to increased cost of construction. Constructors Association of Pakistan (CAP), Chairman Engr Kamal Nasir Khan has claimed that the stoppage of ongoing construction projects and boycott of new tender would cause a direct impact of Rs 100-120 billion to the government. However, the industry has allied with construction and this will result a further dent on the national exchequer.