Contractors demand adjusting prices of existing projects

Construction contractors have called on the government to adjust prices for existing contracts according to the Public Procurement Rules (PPR) and update the rate schedule for new ones as they are struggling with ongoing projects due to recent hike in material costs.

Prices of some construction materials have soared nearly twice, forcing many contractor companies to shut operation altogether, the association said in a discussion meeting organised at the capital's All Community Club on Sunday.

Contractors also demanded the reduction of VAT and Tax for contracts from 14% to 4%.

"The pandemic has already hit us hard. On top of it, prices of construction materials including rod, cement, stones, bitumen, aluminium as well as diesel have been constantly rising over the past year," said Abdur Razzak, general secretary of the association.

"Continuing the ongoing projects has become nearly impossible," he added.

He said that the price of rod per tonne is currently Tk90,000-95,000, which is over 60% more than the price in March 2021 when it was Tk55,000-60,000.

Prices of water supply, drainage, electrical materials and other construction related items rose 40-94%. Besides the wages of workers, supervisors and skilled workforce have increased 60-70%.

"In particular, the price of diesel has gone up from Tk65 to Tk80, which has increased the cost of transportation and operation of machinery. Prices of all imported construction materials and equipment are rising at an alarming rate amid the ongoing war between Russia and Ukraine," observed Razzak.

Further elaborating their struggle, Razzak said that the Advance Income Tax (AIT) last year while filing tenders was 5% which has been increased to 7%. 

"Under the circumstances, the progress of projects is far from satisfactory and the contractors are not getting bills because of failing to attain expected progress," he said.

"On one hand we are struggling to continue the projects at hand and on the other we are not being able to bid for new projects," said Rafiqul Islam, the president of the association.

"Unless the prices are adjusted, it will be impossible for us to deliver the projects," added Rafiqul.

As the ongoing projects are "Fixed Rate Contracts", the contractors called on the government to adjust the prices through issuing a circular under special arrangement.

They further called on the authorities to allot needed funds under 'price-contingency' during cost estimation of construction projects and consider temporary withdrawal of import duty on raw materials.

Leading contractors, including Rakibul Alam Dipu, chairman of SS Rahman Group, attended the meeting.

Currently, 232 contractors are implementing Tk22,829 crore worth Roads and Highways Dept works while 1,000 contractors are handling Tk19,000 crore Public Works Dept works. Besides, LGED is running 143 projects worth Tk30,000 crore.