How builders are coping with high cement cost
The construction industry is a catalyst and an indicator of a nation’s economic development. Availability and affordability of building materials contribute immensely to the quality and cost of housing. The increase in cost of building materials poses a significant threat to both the construction industry and people aspiring to own houses. Construction firms are apprehensive that the general rate at which prices of building materials are increasing will have far reaching effects.
Ronald Atwiine, a structural engineer from Excite Construction, says the persistent price increase of construction such as cement and iron bars, is a major hindrance for the sector. “Cement has been increasing since early 2000s. It used to be Shs27,000 now you are lucky if you get a bag at Shs40,000 since prices vary from retailer to retailer,” Atwiine says.
As a solution, Atwiine says most firms are now adopting less common brands, which she says are cheaper. “I have it on authority that big projects such as the Karuma dam project are using new brands. Some other firms are using brands from Kenya,” he reveals.
This failure to maintain steady cost projection on construction projects is a serious issue of concern both to the client and project contractors. Most contractors quote prices based on their projected estimates. Unfortunately, the prices change so quickly that the initial budget figures become completely unrealistic. One of the most serious problems of this instability is that it forces contractors to complete projects at sums higher than the initial quote or even abandon them in drastic cases.
“Making money in the construction industry these days is next to impossible. You get a project of Shs100m and your profit is just Shs10m, which also goes in overheads and contingency.
“At times, there is no profit at all, which clients never seem to understand. Just imagine you got a project in December in 2017 when cement was Shs35,000 but this project runs for one year. and along the way, the price of cement shoots up to Shs40,000 as it has now, this means you will end up using your profit,” Atwiine explains.
Pius Louis Chelimo, from Trinity Technical services, says government projects are even worse for firms because they hardly make any profits.
“Can you imagine that when we bid, they expect us to give quotations of the 1990s because that is what they use? It is my prediction that if nothing is done to stabilise the sector, then we are headed for hard times,” Chelimo notes.
Hasfa Nakazzi, a site manager, expresses concern over the far reaching effects of the hike of cement. She reveals that she has had to halt two of the projects she was supervising because the client could not afford the cement and steel bars.
“To an ordinary person, this might seem like an individual problem but I know many other projects that have been halted due to this. If this trend is not reversed, it will result in an acute shortage of affordable housing for middle and low income families,” Nakazzi observes.
Loss of jobs
She further adds that the construction industry’s extremely diverse workforce will also be left jobless.
“This is a sector that employs differen individuals such as unskilled workers and skilled workers, craft, and managers like myself who will be temporarily out of work. You cannot imagine how many calls I get in a day from my former employees desperately asking when work will resume,” she relates.
Chelimo also notes that many firms are facing scarcity of contracts as clients put their plans on hold due to the prohibitive price fluctuations.
“A few years ago, clients were competing to have the best building, this habit fuelled construction and allowed engineers and associated firms to thrive. I ask my colleagues daily only to be informed that even for them work is as rare as moon rock,” he relates.
He is concerned that unless there is intervention, this consistent high cost of construction materials might result in compromised workmanship.
He envisages great danger for the construction industry and the nation at large if the contractors and their clients resort to the use of substandard or insufficient materials for construction projects, in order to minimise costs.
“Some clients are resorting to clay as the binder instead of cement, some engineers are thinking of alternatives to steel following the government’s ban lower quality twisted Y bars, which has meant abandoning the use of scrap,e which was a cheaper raw material,” Chelimo relates.
Reason for price hike
The prices of a bag of cement and other manufactured building materials have on average increased by between Shs5,000 and Shs11,000 within a month, triggering a countrywide crisis in the construction sector.
Some retailers, according to our surveys, are hoarding or rationing stocks and many are hiking prices to cash in on the crisis amid panic buying by prospective home owners.
The two biggest cement producers; Tororo Cement factory in eastern Uganda and Hima Cement in Kasese, which collectively account for 80 per cent of the market share, blamed declined production on reduced electricity supply.
They, however, declined to share specific information on the amount of electricity required to power their machineries for optimal output against what they are currently receiving.
What can be done?
According to Ronald Atwiine, a structural engineer, the remedy is to invite other cement manufacturing companies into the country.
“Recently, I was in Ethiopia and was surprised to find that construction materials there are half the price here because there are many industries. You hike your products; you get kicked out of the market. That is the kind of arrangement we need here,” Atwiine observes. He adds that there is also need for research to find substitutes for these products, for example interlocking bricks do not require cement to join them. You just interlock them and build a wall.
