By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Not only are the price of construction materials “through the roof” but contractors have to tell their customers there are “escalating costs” that must be recovered on all projects.

Quentin Knowles, the Bahamas Society of Engineers (BSE) president, told Tribune Business that dealing with the economic fall out of the COVID-19 pandemic is still taking a toll on the construction industry, but oddly enough projects have not stopped at all. In fact, “projects have ramped up in the last two years, to my surprise,” he said.

Mr Knowles noted, however: “The cost of goods, especially for what we do for things like conduits, pipes and fittings, all of those things are now through the roof and out of control. Now that the pandemic is ‘over’ we thought that things would stabilise, but for me as a contractor I cannot give my customers prices that are valid for more than 30 days, because some of my suppliers in Miami will give me a quote that is only valid for three days because they cannot guarantee the price.”

The volatility in the price of construction materials has caused many contractors to tell their customers that “there are escalating costs that must be recovered”. Mr Knowles added: “Of course they don’t like it but it is what it is. This pandemic was a force majeure. Those were very unusual circumstances and it does cause prices to escalate.”

As a result of the confusion in the market over the supply chain challenges coupled with pandemic related work shortages, some manufacturers have also taken advantage of the situation and raised prices when they didn’t need to. “A combination of all of that has caused prices to go through the roof.”

Mr Knowles also said: “There are provisions in contracts that allow for contractors to claim on force majeure, which is like a disaster or a strike or political unrest and things of that nature, which caused escalation in costs.”

Leonard Sands, Bahamian Contractors’ Association president, told the media he estimates there is an overall 60 percent rise in construction related materials since the start of the COVID-19 pandemic.

Regardless of these escalating cost of materials, the construction sector has not slowed down at all. “It’s kind of hard to stop a project when it is 50 percent complete, because how do you stop that project? You have no choice but to finish because it will probably cost you more money to sit on an asset that is incomplete,” said Mr Knowles.

He added: “You may also run into contractual issues when you delay a project so there is the liability to exposure as well. But interestingly, I thought during the pandemic that all of the work would have slowed down, but we just continued like it was before. The bottom didn’t drop out. The increase in prices presented a risk, but we have to deal with it.”