Let us be honest with each other, times today are tough: that being said it is now more expensive to build a building than it was in the past. Labor is becoming more expensive, skilled and complex to manage and materials are expensive. With a wide array of vendors to choose from, quality is something no company should compromise on.
There have been cases of construction claims where labor and materials used (along with their pricing practices) were put into question. In Turkey, where the recent earthquake devastated the city of Gaziantep and other nearby towns put into question architectural integrity of buildings and cases of construction claims started rising there.
Though natural disaster was the main excuse used, the head of Turkey’s construction society is a graduate of theology and the buildings were of poor quality. Hence, the government and the construction companies plus contractors are facing a lengthy series of construction claims cases which can result in prison sentences.
What would be the ideal scenario in avoiding claims cases in materials and labor avenue?
Each construction company dreads construction claims. They are an unpleasant occurrence and have often snagged construction projects. A lot of projects get hit by numerous unforeseen events, especially delays due to natural and unnatural causes. Many of these events play a part in formation, resolution and dispute of construction claims.
It is always important to ensure each term is settled properly and on good terms.
Costs of materials, equipment and labor have always been a cause of concern. No client ever wanted to be scammed or swindled by a contractor on materials and wanted to have a building made of questionable materials. They always want to be sure they are getting the better end of the stick.
Is pricing a cause of concern?
Pricing is no doubt a cause of concern. Contractors, companies, workers, vendors, clientele and all other parties involved do not want to be paying exorbitant amounts.Â
Consider the case of a public apartment complex with an aim to give the working class their own home at a good price. If the materials came at a high price, the per unit price of those apartments would go up unless and until they were subsidized.
THis is the very reason costs need to be managed properly. If costs of construction materials go out of control, then the whole project will become expensive. Public housing projects often are subsidized by state authorities and so are their materials.
Even if the project is private, pricing regulations are helpful because if prices are unregulated then everything will get out of hand.
What do industry professionals and associated consultants have to say about the issue?
The COVID-19 exacerbated the price of materials, equipment and labor due to lockdowns and work being put on hold. It turned worse in developing countries where rule of law is a problem, pricing is hence out of control. Here are some things to check to ensure pricing is right.
Each contract should be properly checked
The contract is an indicator of pricing. Project advisory experts reveal that a contract has clauses and provisions that can compensate contractors and other parties involved for rise in prices, problematic tender pricing and covering risk of inflation.
A lot of industry experts are yet to see such a clause. However, these days, contracts in construction are seeing amendments following the effects of the COVID-19 pandemic. If contracts allow contractors to claim additional expenses due to pandemics, natural disasters and inflation, then they can be claimed.
A lot of contracts are often examined and they have allowed time extensions after the pandemic. However, a legal basis for them is necessary.
Amendments made in laws, legislations and regulations can be either beneficial or problematicÂ
Industry experts reveal that changes in laws (which can be either progressive or regressive) are responsible for ruining things or fixing them. A regressive government can cause inflationary patterns to go high and can also cause mayhem, may tak extortions from contractors, materials makers, steel companies, construction companies and the like.
Whereas a progressive government keeps taxes in everyone’s favor and if they see an opportunity of lucrative investment and returns in the construction, construction materials and steel sectors, they will favor it and ensure it becomes much better. They in fact will make sure pricing is competent and pocket friendly to support construction and industry as a whole.
Natural disasters can cause issues as well
At times a natural disaster can strike, destroying an industrial area, a city or a particular region (Turkey’s city of Gaziantep and adjoining areas got hit by a massive earthquake recently). This takes time to recover and reconstruct, and there can be a shortage of materials.Â
At times, materials are needed in one area more than the other due to skyrocketing demand following a disaster. This can cause fluctuations and irregularities in pricing and availability.
