Rising diesel prices fuel hike in construction costs

Manpower shortage ups labour charges; bricks become costlier
Last Updated 22 June 2014, 19:03 IST

Construction costs have gone up considerably in the City in the past few months due to a big increase in the prices of sand and cement.

The prices of the two major construction materials have shot up mainly due to the increase in transportation costs triggered by frequent hikes in diesel prices.

The construction costs are increasing also due to a rise in labour charges.

25 per cent rise

If those from the transport and construction industry are to be believed, the overall construction costs have gone up by nearly 25 per cent in the past few months. The high costs, coupled with shortage of general labour and skilled labour, have hit the construction industry hard.

B S Channa Reddy, president of Sand Lorry Owners’ Association, Karnataka, told Deccan Herald, “The component of logistics or transportation usually has little bearing on the cost of construction. But the transportation charges have gone up by 12 per cent to 15 per cent in the last one year.

At a recent price fixing meeting with cement manufacturers and dealers, it came to light as to how the margins have been dwindling in the wake of rising taxes, VAT and other costs.” He also added that ever since the practice of auctioning sand has been stopped and the licence system has been introduced, there have been all sorts of illegal activities taking place.

He said that this was one of the major factors that has lead to the substantial increase in the cost per truckload.“Earlier, it used to be Rs 35 to Rs 40 per cubic feet. However, now, it is between Rs 65 to Rs 70 per cubic feet,”  Reddy said.

12-15 per cent toll hike

“Frequent hikes in diesel prices and an hike of 12-15 per cent in toll to be paid on highways have added to the burden. For instance, a round trip toll between Chennai and Bangalore costs Rs 3,000, while a round trip between Ahmedabad and Bangalore costs Rs 14,000,” he said.

Change over six months

Manandi Suresh, director of Manandi Developers, told Deccan Herald, “In the past six months, the overall cost of construction material has gone up by at least 25 per cent, whereas the cost of a finished product like an apartment has only seen an increase of 8 to 10 per cent. The most expensive construction commodity is sand, followed by labour charges. There is a severe shortage of skilled workers in the civil field, which leads to an increase in labour charges.”

“Another important component which has become dearer is the bricks. Transportation costs and rentals of equipment required for construction have also seen a considerable increase in the past few months, because of hike in diesel prices. Since construction material has to be transported in lorries, we cannot really blame the transporters for the hike. The prices of steel and iron have not gone up as substantially as other articles,” he said.

(Published 22 June 2014, 18:59 IST)

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