The Construction Industry Federation (CIF) has welcomed measures announced by Government to help deal with inflationary costs in public works contracts describing them as a “positive step”. However they have also outlined their concerns that Government measures will not go far enough to address the high cost base in the sector and underline the need for “essential reforms” of the public works contract.
Currently the public works contracts do not offer the level of risk sharing, engagement or certainty provided by the standardised, international forms of construction contract. This is impacting the level of tendering on Irish projects at present, with many contractors reluctant to put forward proposals.
Speaking in reaction to the Government announcement, Tom Parlon, Director General of the CIF said, “We welcome the measures announced today by the Minister, which are focused on addressing the inflationary impact of the Ukraine conflict on construction materials and fuel. They represent a positive step. However, it is disappointing that these measures will only be applied to all projects from the 1st January 2022 onwards and will not address the exceptional period of inflation since January 21.
“The current situation has highlighted the necessity for essential reforms of the public works contract and the ability of contractors to accept the transfer of risk beyond their control. The CIF and its members have continually called for more collaborative contracts, which manage risk in a more balanced and sustainable way.
“We will be keenly examining the proposed Inflation Framework Agreement, which we understand will allow engagement between public clients and their contractors, address supply chain disruptions and delays and introduce recovery mechanisms for cost increases in construction materials and fuel on a 70:30 basis. However it is clear further significant steps will be needed if we are to establish a public tendering system in line with international standards,” he concluded.