Builders looking at "abandoning" work because of additional costs

The problem affects public and private building projects. | Marcelo Sastre

Majorca Daily Bulletin reporterPalma15/05/2022 15:07

Builders in the Balearics are considering "abandoning" work because of the rising cost of building materials. Sandra Verger, CEO of the builders association in the Balearics, says that they are studying terminating contracts because the penalties for doing so are lower than the extra cost of materials. In certain instances, this additional cost is more than 20 per cent. Building companies have been dealing with this situation since the middle of last year, but it is has been exacerbated by the war in Ukraine.

This association is aware of some work having already been abandoned. Meanwhile, and as an example of how an "enormous gap" has emerged between the value of contracts and prices having to be paid for materials, the association has applied to the Balearic High Court for a suspension of the tender to extend the Palma Metro to Parc Bit.

Verger argues that price increases should be shared with developers, be these from the private sector or public institutions. The builders cannot fully assume the additional costs.

She believes that the current situation is unsustainable, as it is threatening the viability of construction businesses. At present, 58,230 people are employed by the sector in the Balearics. But if the problem continues, many of these jobs could be at risk. And if work is abandoned, there will be job losses.