Builders want mandatory clause on price fluctuations

Saturday June 14, 2008
The Star
Builders want mandatory clause on price fluctuations
PETALING JAYA: The Master Builders Association of Malaysia (MBAM) has requested the Government to consider a mandatory fluctuation cost clause for all future construction contracts due to rising building material and fuel prices. MBAM said in the interim, for existing projects without the clause, builders should be compensated for additional costs due to the increase in material prices.

“This additional cost can be computed using the same mechanism provided in the conventional ‘build' contract for government projects,” it said in a statement yesterday. For future projects, it said, the inclusion of adjustments for price fluctuations should be extended from the conventional “build” contracts, to all “design and build” contracts, direct negotiation contracts and other projects undertaken by semi-government bodies and agencies.

For private contracts, the tender documents should state building materials for private jobs to be supplied at a fixed price and deducted from the main contract. The association said the recent diesel and petrol price hikes were having an impact on its members, while contractors were finding it harder to manage construction costs due to rising material costs. Due to the uncertainty of costs, it said contractors wanted the Government to look into measures to ensure the delivery and sustainability of projects, especially due to some cost-push factors.
The factors included high construction demand due to the sudden implementation of projects under the Ninth Malaysia Plan and the economic corridors; high-end property development projects; and also the continued demand for building materials and labour worldwide.