ArabianBusiness.com reported that in the face of rising costs, contractors no longer want to sign fixed-price contracts. The report cited some contractors in the UAE as saying that they are fed up of being forced into signing fixed price contracts as the construction cost crisis worsens.
Mr Philippe Dessoy GM of Besix said “We are quite fed up with the situation as our hands are tied. We sign fixed price contracts with developers yet suppliers keep raising their prices and eating into our budgets. Suppliers can not be blamed as the price of cement and aggregates are going up.”
Mr Thomas Barry GM of Arabtec Construction said that “Contractors definitely want cost-plus contracts, especially given the current circumstances. More and more attempts are being made by contractors to include the price escalation clause in contracts with developers. Fixed-price contracts are no longer safe and the risk factor is too high to make business sense any more.”
Rising materials costs have crippled the industry since the turn of the year, leading to several projects either grinding to a halt or being totally abandoned. But to correct the situation, cost-plus contracts need to be implemented now as contractors have already begun turning down jobs. But developers still prefer to execute projects through fixed-price contracts.
Source: SteelGuru - News.
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