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Tuesday November 1, 2011
GET the MRT project going before rising costs make it more expensive.
Over the last 18 months, the price of steel, from bars to bolts, on the world market rose by as much as 20% due to the increase in demand from China (two-thirds of the world’s construction projects are underway in south China) as well as reduced exports from Russia, the Ukraine and other major producers.
This price increase is exacerbated on the local front by the removal of the super subsidy for diesel for commercial vehicles, bumping up transportation costs of the mostly imported steel from ports of entry to construction sites by 30%.
The continued rise in construction costs will have wide implications on the construction sector.
Present projects will see an increase in costs and will be subjected to variation orders raised by contractors.
Of course, budget overruns are imminent, and above all there will be a higher risk of project delays and in worst case scenarios, failures.
It is therefore crucial that projects like the My Rapid Transit, which is long overdue, are started sooner rather than later.
The longer we wait, the higher the bill is going to be and the higher the chance of delays and project failures when costs cannot be contained.
The last thing a vibrant and bustling city like Kuala Lumpur needs is an MRT project that didn’t take off because of hefty bills.
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