NOTE: THIS STORY WAS FIRST PUBLISHED IN THE BOHOL CHRONICLE’S SUNDAY PRINT EDITION WHICH HAS A SEPERATE EDITORIAL TEAM.
Bohol contractors, barely able to keep their heads above water, have raised distress signals forewarning a worst-case scenario of a province-wide stoppage of its public infrastructure project contracts with three government agencies and the Local Government Units (LGUs).
A staggering estimate of P4 billion worth of public work projects are in peril as local contractors are desperately trying to determine the best way to mitigate the runaway construction costs besieging the industry.
Battered by the rapid rise of prices due to a constantly evolving Covid-19 pandemic, force majeure, supply chain uncertainties and global geopolitics, majority of Bohol contractors sought the intercession of the four government entities where the bulk of their projects are now in various stages of implementation “to review and consider requesting price escalation of contracts” for approval of the Government Procurement Policy Board (GPPB).
The letter was addressed to the heads of the procuring entities – Department of Public Works and Highways (DPWH), National Irrigation Administration (NIA), Department of Agriculture (DA) and the Local Government Units (LGU’s).
A contract price escalation, as defined by Republic Act 9184 or the Government Procurement Reform Act refers to an increase in the contract price during contract implementation on the basis of the existence of “extraordinary circumstances” as determined by the National Economic Development Authority (NEDA) and upon prior approval of the GPPB.
The GPPB is the principal body created under RA 9184 responsible for procurement policy formulation and the implementation and monitoring of effective public procurement reform.
LOCKDOWN
Sixty-six contractors were one in manifesting their deep concern over the mounting expenses for fuel, oil, aggregates, cement, steel bars and other related materials estimated to have reached 80% of direct cost.
Engineer Abella de Vera, President of the eleven “medium A” member Bohol Contractors Development Organization, Inc. and Engineer Petronilo Sarigumba, President of the fifty-five “small B” category members of the Association of Bohol’s Construction Companies Inc. jointly urged the heads of concerned government agencies and the LGU’s to treat their request as “urgent” and relay to the GPPB to act on the contract price escalation to avert a “highly probable” situation “that our companies will cease operating.”
SKYROCKETING COSTS
According to Sarigumba, the cost of diesel fuel per liter has spiked from a post-Odette price of P45 to the present P66, aggregates, a basic material for construction (gravel, crushed stones, sand) which is 90% sourced from Leyte climbed from P8.50/cu.m. to P9.50 landed cost.
Similarly, steel bars rose by 70%, cement from P210/45 kilo bag to P230 including the cost of plywood, nails and wood.
BEYOND CONTROL
The contractors also cited the “extraordinary circumstances” that led to the skyrocketing of construction materials starting with the Covid-19 pandemic that shut down the local economy on March 16, 2021, followed by the devastation caused by Super Typhoon “Odette” and the strangling effect of the Russian invasion of Ukraine that drove fuel price hikes to unprecedented levels since 2008.
Considering the volatility of the cost of construction related materials, vitally important is the expeditious timeframe the request of the contractors will be acted upon by the concerned government agencies to forestall any delay in the completion of essential public work projects in the province. (Chito M. Visarra)