Construction Industry on the verge of collapse

LAHORE: Constructors Association of Pakistan (CAP) drawing attention of the government towards soaring prices of construction material has called for allowing inflation effect for ongoing contracts to help save the constructors from defaults.
It claimed that overall prices of construction materials have registered an increase of 43 per cent from March 2020 to October 2021 making constructors unable to even continue the ongoing official projects.
Engr. Kamal Nasir Khan, Constructors Association of Pakistan (CAP) Chairman in an appeal to the government said that the federal government had allowed such an inflation impact in 2004 through SRO No. 26/(183)Plan Cord-II/PC/2004 dated 11th June, 2004.
He appreciated the government plan for construction of five million houses as when construction moves-the country moves. However, being partner in the construction process for materializing the government vision, they think that continuation of work on awarded rates is not possible now.
Giving details, he said steel prices had increased by 76 per cent during March 2020 to October 2021, cement increased by 52 per cent, Bitumen by 101 per cent, cable by 43 per cent, aggregates by 68 per cent, sand by 59 per cent, aluminum by 74 per cent PVC pipe by 52 per cent and ceramic tiles by 24 per cent during the same period. US dollar had also registered increase of 14.56 per cent in the same period while its flight is still continuing pushing prices of construction material further up.
He said construction sector which is the second largest sector, after agriculture, in creating employment and runs more than 40 allied manufacturing industries are directly involved with construction. However, like other sectors pandemic COVID-19 has also impact growth of this sector because of phenomenal increase in the prices of its raw material.
Engr. Kamal Nasir Khan said with overall increase in prices by 43 percent, current construction contracts have become unviable, pushed housing beyond reach of common man and unemployed skilled/unskilled labour and other technicians.
Calling for immediate mitigating steps, CAP chairman requested the government to allow inflation effect, revise escalation formula where already escalation is provided, allow import of steel bars/billet and bitumen on zero tariff and banning cement exports for reduction of its prices in the local market. He was of the view that these steps could help the dwindling construction industry.