Cost of building materials up by 50 per cent — Sabah builders
KOTA KINABALU: The cost of construction materials, especially steel, has gone up by 50 per cent in May this year from a year ago, according to Sabah Builders Association (SBA).
It said the upward climb started in the final quarter last year with the resumption of global business activities, which had been adversely affected by the Covid-19 pandemic in the first nine months of 2020.
“For instance, the prices of T10mm steel bars that are commonly used in slabs, beams and columns, have shot up by as much as 40 per cent to circa of RM3,470 beginning of this month, from RM2,485 per tonne in October 2020,” said newly-elected SBA president Henry Tsen.
He added that suppliers had also informed SBA members that the prices were still going up in response to higher demand expected.
For comparison sake, he said the average cost of steel constituted about 10 per cent of the total construction cost of a doublestorey terraced house – meaning the overall construction cost would go up by five per cent; thereby cutting into the profit of contractors which would be in the region of five per cent for most building contracts.
For ongoing projects, he said contractors would have no choice but to absorb the increase in cost.
“However, for small and mediumsize contractors with no strong financial resources, they would have to close shop eventually.”
On another note, Tsen said SBA welcomed the announcement by the Construction Industry Development Board (CIDB) on the recommendation of the ‘Variation of Price (VOP)’ clause to be included for all government projects to reduce the burden of contractors being affected by the current building material inflation.
“Previously, all government contracts had provision for VOP, but this was abruptly deleted on April 1, 2015.
“We see no justification to omit the VOP clause in view that there is no room for abuse as the terms have been spelled specifically with the formula for increase or decrease, based on monthly prices statistics published by the Department of Statistics.
“By having the VOP clause, it is a win-win situation for both the government and contractors, as tender prices would be lower since contractors would not need to put a higher price to offset the possible increase in prices. This, coupled with the clause allowing for a reduction in prices of the material if prices drop, would contribute substantial saving for the government,” said Tsen.
He said SBA intended to pay a courtesy call on Chief Minister Datuk Seri Hajiji Noor at his office in the State Administration Centre (PPNS) to present a memorandum highlighting the predicament faced by the construction industry in Sabah, and also to push Hajiji to start more state projects to stimulate the local economy.
SBA also wanted to apply for a piece of state land with the objective of setting up a Contractor Academy as well as the SBA office premises, which should facilitate training of skilled workers like carpenters, bricklayers, masons, welders, and crane and excavator operators.
“This shall complement the existing CIDB ABM Construction Academy, which SBA has noted as having limited capacity, and not churning out sufficient number of skilled workers.
“Over the last decade, locallytrained and skilled workers have not been many; therefore, limiting their potential to replace foreign workers. By training more skilled workers and employing them in the construction industry, contractors could be less dependent on employing foreign workers,” he said.