Construction industry faces perfect storm

Even roads and bridges get tired of load and stress; of the daily rhythm and grind of life – just like you, me, and everyone we know. Imagine all the hulking trucks and delivery vans passing through these structures, 24/7.

This is what’s happened to the Candaba Viaduct, a trade route between Metro Manila and Central Luzon. Visible signs of deterioration are everywhere, which means the bridge poses great danger to motorists.

Engineering consultant AMH Philippines, the firm tapped by NLEX Corp. to examine the integrity of the Candaba Viaduct, said the bridge traversing the provinces of Bulacan and Pampanga is nearing its fatigue life of 50 years.

This means that just like humans, aging infrastructure like the Candaba Viaduct tend to lose strength over time. Thus, their capacity to bear weight gets compromised when they are put through sustained pressure from heavy, bulky vehicles.

Last July, therefore, NLEX started prohibiting 12-wheeler trucks from using the southbound lane of the Candaba Viaduct until safety upgrades to the five-kilometer bridge are completed. It directed 12-wheeler trucks to take alternate routes for the meantime.

Under its temporary traffic rerouting, NLEX offers diverted trucks two options on how to reach their destinations. The alternate routes require the trucks to traverse through multiple towns in Pampanga, Nueva Ecija, and Bulacan, an added distance of some 100 kilometers.

NLEX is right in doing this. Safety should always be the topmost priority, especially in critical infrastructure.

The situation, however, has given birth to a major problem for businesses in general, but especially troublesome for the construction industry because literally, the delivery of construction materials has hit a snag. The result is that costs have risen and travel time has doubled.

It’s a particularly challenging situation for construction companies because even before the Candaba closure, the cost of construction materials has already been going up, no thanks to the impact of the COVID-19 pandemic, Russia’s lingering war against Ukraine, and supply chain problems.

Seeking government help

It’s the reason that the Philippine Constructors Association Inc., a non-political organization of contractors from different categories, suppliers, and manufacturers, appealed to the government to help address the problem of rising cost of construction materials.

“COVID-19 has continued to impact the progress of the construction projects nationwide for the past two years. This, as we critically manage to protect our workforce and prevent the spread of the deadly virus. The cost and expenses borne by our contractors to avert the effects of the pandemic have not yet been fully recovered – resulting in partial and in some cases, a complete shutdown of operations. For others this also meant a discontinuation of their businesses,” PCA said in a letter to the Department of Trade and Industry.

“The spiraling costs of construction materials remain in a steady upward course with no clear indication of reprieve on its destructive and disruptive consequences,” it added.

Construction materials include reinforcing steel bars, cement, aggregates, fuel, and other consumables.

Other problems

Aside from rising prices of materials, there are other problems, Jorge Consunji, president and CEO of DM Consunji Inc., said in a recent chat.

DM Consunji is a member of PCA and one of the largest contractors in the country.

Other problems include right-of-way problems, quarry permits, delayed payments, and other COVID-19 related claims and payments.

The result is a perfect storm for the construction industry, he says.

Amending the Procurement Law

Other contractors lament that Republic Act 9184 also does not allow contract price adjustments for government projects, which makes it difficult for contractors, especially when costs go up such as what is happening now.

Thus, the industry is pushing for amendments to the law. It may indeed be high time to revisit the law not only in consideration of the situation of our local contractors, but also on another matter - to ensure that the controversial Pharmally deal does not happen again.

Property developers

Going back to the construction industry, even giant property developers are feeling the pinch, says some property tycoons I’ve talked to.

Against this backdrop, we might see a slowdown in construction because of rising costs, which would be extra difficult for smaller firms; a slowdown in demand for property because of higher prices, and worse, downsizing or closures of some of our local contractors.

We don’t want to see any of these scenarios happening, especially because the property sector, the construction industry, and every other related business, significantly contribute to our local economy.

There are roughly 12,000 licensed contractors in the Philippines.

Imagine their contribution to the economy and the tens of thousands of workers they employ and the economic activities they create.

The government, for sure, must help shelter them from this perfect storm.

Iris Gonzales’ email address is [email protected]. Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com.