KUWAIT CITY: The repercussions of the ongoing war between Russia and Ukraine continue to negatively affect many Arab countries, including Kuwait, reports Al-Rai daily. The interdependence among the countries that are part of the global economic system has led to inflation of basic commodities’ prices in the markets to exceptional rates, driven by the high cost of shipping. One of the main markets affected by the price hike is the local construction sector.
The daily learned that there are defects in the contracts of some construction projects, which increases the possibility of being exposed to a wave of termination of contracts between contractors, entities and individuals, part of which has already started. Some contractors refused to implement contracts that they had signed at the beginning of the year but did not start implementing due to reasons related to the issuance of licenses or considerations related to either party.
They justified this with compelling reasons related to an unprecedented increase in the prices of construction goods. This led to high inflation rates that have strained the contractors’ ability to continue with the implementation. It was learned that contractors reported to some clients that they were unable to bear the difference from their budget, unless the contract value was reconsidered.
According to informed sources, the increase in construction prices prompted some contractors to take protective measures to avoid incurring losses from the price difference that would be incurred if the contracts signed four months ago were to proceed.
They asked the owners of the plots to either cancel the existing contracts between them, or to reconsider the estimated value based on recent prices. The series of price hikes in construction goods is diverse, and includes increases ranging between 8.7 percent and more than 100 percent from January to early June. The recently-recorded increases lead to losses or the implementation of the project with lower quality.
It is clear that the increase in the prices of construction goods was not the only reason that threatened many construction contracts. It was noted that labor prices rose in 2022 by about 40 percent for both normal and specialized workers. This increased the total cost of implementation. Legally, there are two points of view – the first depends on the fact that there is a contract that must be adhered to by the contractor, unless the contract stipulates a specific deadline to start implementation that has been exceeded.
© 2022 Arab Times Kuwait English Daily. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).