Construction cost goes up 20pc
The construction cost in Bangladesh has gone up by 20 per cent in the past year because of the surge in the price of raw materials, which could affect the implementation of development projects, said industry people.
Prices of steel, cement, bitumen and stone chips have surged in the last one year due to the rising demand for raw materials globally after economies reopened following the ease of the coronavirus pandemic.
"As a result, the cost of construction has gone up by 20 per cent," said Mir Nasir Hossain, a former president of the Federation of Bangladesh Chambers of Commerce and Industry.
Steel prices jumped 44.22 per cent in the past one year as millers hiked the rates in the wake of spiralling scrap prices in the international market. Now, it is being retailed at Tk 77,500 per tonne, up from Tk 53,000 a year ago.
The price of stone chips increased by 56.41 per cent, bitumen 59.52 per cent, and cement 19.44 per cent.
Bitumen prices in international markets have gone up to $670 per tonne this week from $420 in 2020.
Per 50kg bag cement sells for Tk 430, which was Tk 360 in July 2020, according to the industry people.
Hossain says the execution of the annual development programme (ADP) would be affected as contractors would struggle to keep implementing projects because of the financial strains stemming from the increase in the price of major materials.
Local contractors will be in trouble as procurement entities don't adjust prices for the projects with tenure less than 18 months despite the price escalation of raw materials, he said.
The Public Procurement Rules, however, support the cost adjustment, said the entrepreneur, adding that the cost is adjusted for foreign contractors.
"Under the circumstances, local construction companies are worried. Some even may stop construction works in fear of bankruptcy."
Ghulam Mohammed Alomgir, chairman of Max Group, said the provision for price adjustment must be included in all existing and future government projects to accommodate the abnormal price hike of construction materials and the increased cost of construction.
Planning Minister MA Mannan said it is a matter of concern that the construction raw material price has increased abnormally in the global market. But as per current rules, there is no provision to adjust the price.
He, however, suggested contractors keep patience and continue implementation work, as the government has formed a committee to find ways to adjust the cost of projects.
"We want to solve the issue quickly as its impact will befall on the ADP implementation. The fallout of Covid-19 has already affected the implementation of development projects."