Building costs in Sri Lanka higher than other countries in region

Jun 08, 2015 (LBO) – Head of Sri Lanka’s Chamber of Construction Industry says building cost in the Island is higher than in some of the other Countries in the region and lacks a skilled work force.

“There are concerns among the investors and developers, that the construction cost in Sri Lanka is higher than in some of the other Asian Countries,” Surath Wickramasinghe, President of Sri Lanka’s Chamber of Construction Industry said while addressing the “Build SL 2015”, recently.

“However, if the cost is to be reduced, the negative list issued by the Treasury to the BOI (Board of Investment), with a view to protecting the local manufacturers which is now in force, has to be revisited.”

“The situation today is that some of the major items such as steel bars, ceramic ware, aluminium extrusions and carpets etc are cheaper in the Region,”

“In this context, if the cess could be removed or reduced, for such materials only, then the building costs can proportionately be reduced, making our industry more competitive.”

Another reason for construction costs to be high, Wickramasinghe says is the skills shortage in the sector.

“This has been caused by the skilled personnel leaving Sri Lanka for better prospects overseas and this is now a major problem facing the construction industry,”

“Unfortunately, the share of the young school leavers, joining the industry, is marginal, despite the opportunities in the industry being much more remunerative and challenging, working with new technology,”

“Several Government agencies are now training the young, but the demand is much more. The variety of jobs on offer are immense and the industry are looking for trainees from all parts of Sri Lanka, including the North and East.”

Job training opportunities as fabricators, welders, crane operators, electricians, plumbers, masons, glaziers, refrigeration and air conditioning technicians are available, Wickramasinghe said.

“We like to request the Government to assist us regarding this matter and also to introduce a Pension Scheme to ensure security for long term employment in the informal sector of the construction industry.”

Sri Lanka’s construction industry sector has been growing at the rate of 22 percent, and contributes 7 percent to the Island’s Gross Domestic Product.

Unfortunately, Wickramasinghe says these figures have now slightly declined and it is necessary to re-build the confidence among the stakeholders of the industry, by ensuring a continuity of work.

If so, we are confident that the acceleration will continue in the future, he said.

In his speech Wickramasinghe also spoke about constraints facing the construction industry regarding procurement.

“Regarding procurement, one of the major constraints facing the construction industry, is due to not following the published procurement procedure by the executing agencies,”

This is applicable not only for the road projects, Wickramasinghe said but, also for other contracts.

“For example, the delay of the Northern expressway, under construction is reported to be due it not following a proper and appropriate procedure by the relevant Agency,’

“The Chamber of Construction Industry (CCI) is in a position to advise the National Procurement Agency regarding an appropriate procurement policy, since our membership includes high caliber professionals in all sectors relating to the construction industry,”

“The selected contractors should be given the deals again, but the profits could be shared among more local contractors through more joint ventures.”

He also said that they (CCI) support the previous policy decision, to award the Northern expressway contracts to the local contractors, who have proven their capabilities to construct expressways.

“Therefore, the new Government in order to “fast track” the urgent Northern expressway project should re-constitute the procurement strategy to ensure the contractors’ capabilities to undertake a project of this magnitude.

“This may be achieved, if the local contractors who have been selected for individual packages, are requested to form joint ventures with other local contractors.

“It is pertinent to mention that the respective contractors have invested heavily on machinery, equipment and also manpower resources, to undertake the projects.

Therefore, Wickramasinghe says they will suffer financial and other losses if the project is to be stalled at this stage.