As prices skyrocket, contractors seek more funds for projects

Following a marked increase in the price of construction and other materials, contractors have sought the government to revise project costs commensurate with the rise in prices.

Though the government has hiked project costs by 12-14% - for the first time in three years - contractors contend that the increase was inadequate and calculated on six-month-old prices.

Speaking to DH, D Kempanna, president of Karnataka State Contractors’ Association said that many contractors were facing problems due to increased prices. “There is a clause in all tender agreements which provides for any rise in prices. But, it covers only three items - cement, steel and asphalt,” he
said.

Prices of all raw materials have increased now. “The Association will hold a meeting during the course of the week to discuss the issue,” he said, adding that revision of costs would be necessary.

Public Works Minister C C Patil acknowledged that the cost of materials such as bitumen has increased due to the war between Ukraine and Russia. The government will provide for cost escalation as agreed to in the tender documents, he said, adding that there was no proposal at the government level to revise costs for various projects.

Sources in PWD said that after a gap of three years government had revised project costs to account for inflation. “Generally, project costs are increased 6% every year. However, over the last three years, it was not revised due to the pandemic. This year, the government has decided to increase it by 12-14%,” a senior official said.

However, Kempanna said that the revision was based on six-month-old prices. “Rates have increased further since then,” he said.

Watch the latest DH Videos here: