Contractors say body needed to regulate unreasonable price fluctuation of materials

With prices of construction material perpetually rising, local construction contractors say an authority is needed to keep fluctuations at reasonable levels so that contracts do not suffer.

“There is constant increase in the prices of cement and steel and contractors are affected because when we put in a tender it based on existing prices,” said Wangchuk, a contractor.

A representative of Samdrup Construction agreed that in the absence of a regulatory body to look into spiraling  prices of raw materials it was  becoming a challenge for contractors.

Some contractors sought intervention from the Construction Development Board (CDB) while some approached the Construction Association of Bhutan (CAB) The CDB said they are not the authority to regulate raw material prices. “We are responsible for registration, classification and monitoring contractors and in helping contractors with other issues,” said a CDB senior official who added that trade department might be the relevant government agency.

The trade department’s Office of Consumer Protection (OCP) say they have no authority in regulating prices. “Only in exceptional cases when prices levied are exorbitantly high, we interfere and take action,” said OCP’s legal officer, Chencho Zangmo.

Few contractors suggested that since the Construction Association of Bhutan is already dealing with the welfare and promotion of the construction industry, it should form a price regulatory board within and help.

CAB General Secretary Wangdi Gyeltshen said they are not responsible for regulating prices of raw materials. “Actually we have never thought of it and no formal complaints have been registered as of yet,” said Wangdi Gyeltshen adding that prices move according to the market and therefore they will not be able to intervene.

Contractor Wangchuk said that while it is understood that price fluctuations are part of the deal in a free market but there should be some control when increases are unreasonable.

“Even raw materials manufactured in the country are subject to almost yearly increases and I don’t understand why,” said Wangchuk.

Wangchuk also pointed out that the escalation clause in the tender are not very pronounced and are not taken very seriously.

The escalation clause guarantees a change in the agreement price once a particular factor beyond control of either party affects the value of  determined contract. “Some departments and engineers remove the escalation clause and the contractors cannot reclaim any amount due,” Wangchuk said. “There are no strict measures and uniform directive and somebody ought to look into such matters too.”