Wednesday February 28 2018

Construction costs on the rise - report

Prices. A building under construction.

Prices. A building under construction. According to the report released by UBOS, the construction sector recorded a slow increase in costs last year. PHOTO BY ERIC DOMINIC BUKENYA 

By Eronie Kamukama

Kampala. The construction sector recorded a slow increase in prices for the year ending December 2017 compared to December 2016.
The construction sector index for December 2017 released by Uganda Bureau of Statistics (Ubos) last Thursday indicates that one had to pay 0.6 per cent higher for any construction inputs such as steel bars, diesel and concrete products in December 2017 than in December 2016.
The report clearly confirms the everyday struggles that bite the profits of contractors such as Mr Micheal Muhumuza, the director of Kingstone Engineering and Construction Consultants Limited.

“All prices of materials have been going up. In 2016, the general increase in all construction materials was due to the exports to South Sudan. Last year, it was not safe and most people retreated from those markets,” Mr Muhumuza said, adding that even after closure, nothing much has changed.
“It is a very big challenge to contractors,” he adds.
Mr Muhumuza said contractors are hanging in there with little to do about it.

The report
Mr Dick Wanasolo, a senior statistician for construction sector index at UBOS, blamed the slow-paced increase in these annual prices on rising input prices for residential buildings and civil works such as water and road projects.
The report showed civil works as the main driver of prices from 0.6 per cent in December 2016 to 3.1 per cent in December 2017.

Residential buildings also picked up at 0.6 per cent in December last year while prices of inputs for non-residential buildings continued to plunge at 0.8 in December 2017 after falling to 0.9 per cent in December 2016. For instance, from the report, prices of steel bar pipes increased by 16.6 per cent as concrete product prices grew by 12.4 per cent due to steel and operational overheads.
China is to blame for some of these changes and manufacturers are passing on the high prices of imported raw materials to their customers according to Mr Oliver Lalani, the managing director of Roofings Group.

Blamed
“China has cut down the production of steel. They are the biggest exporter all over the world. They cut down production to increase prices and realize better profitability,” he said.
He added: “This has been so for the last eight to 10 months and every month it is going up. We cannot absorb all the high prices so we pass it on to the consumers.”
Mr Lalani says the consumption of construction materials has remained stable amidst the price growth and projected further rise.
“For the next five months, prices will not go down. After that, I do not think anyone can predict what will happen,” he said.

Sector index

The construction sector index for December 2017 released by Uganda Bureau of Statistics indicates that one had to pay 0.6 per cent higher for any construction inputs such as steel bars, diesel and concrete products in December 2017 than in December 2016.

ekamukama@ug.nationmedia.com

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