Raw materials shortage in Construction Sector.

Raw materials shortage in Construction Sector.

30-09-2021Pere Bota

Lack of raw materials in the construction industry is forcing prices up and causing delays of up to 3 months in public and private works.

Public tenders have fallen by 30% this year in the Balearic Islands compared to 2020, according the Association of Construction Companies & Infrastructure Concessionaires, or Seopan.

"There is more demand than supply," said Balearic Builders Association Manager, Sandra Verger.

In the last year, prices have soared by 100% for copper; 30% for wood and steel; 78% for corrugated steel; 56% for aluminium; 85% for bituminous mixtures and 70% for PVC pipes.

In most cases, the increase in the price of raw materials has completely blown the budget.

The budgets that raw material suppliers are giving construction companies and other clients are now only valid for 7 days, whereas they're usually valid for 30-90 days.

“This situation is making it very difficult for builders to put together a budget," said Verger.

Delivery delays are also making it almost impossible for builders to meet deadlines and many public and private contractors could face penalties if projects are not finished on time.

"At the moment the penalties don't apply, because the delays are down to third parties, not the construction companies,” she added.

The shortage of raw materials also affects several other trades, including joiners, metalworkers and plumbers as well as the sale of electrical appliances and fireplaces.

The Builders Association says there’s no evidence of projects being paralysed at the moment, but the increase in prices for raw materials has already been passed on to consumers and that means house prices will increase even more in the Balearic Islands.

Energy

Construction companies and related businesses are also facing higher electricity bills.

There are urgent calls for regulatory reforms aimed at implementing a revision of prices in public and private works and establishing mechanisms for the extension of contractual deadlines.

The National Construction Confederation has warned that in some cases it's a choice of abandoning a project altogether, or facing up to double the costs.

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