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Sat 19 May 2007 12:00 AM

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Costs and labour issues could hamper building

Polish survey finds concern over building material hikes and workforce growth.

Construction companies in Poland fear that an acute shortage of labour and building materials, as well as rising costs, will cause major setbacks to the industry's growth, according to new research by consultancy firm, PMR.

Despite companies remaining upbeat about the current performance in the country's construction sector, which has witnessed exponential growth over the last few years, rising costs related to salaries, building materials and cement production, could hamper further progress.

A massive 99% of companies questioned predicted a rise in building materials prices over the next year, while one in every nine respondents was convinced of an upcoming hike in wages of construction workers. Workforce growth was forecast by two thirds of the surveyed companies, while one in every seven respondents said that the number of construction permits issued would increase.

But a major concern over the last year has been the shortage of building materials, which has led to contractors facing penalties for late delivery of projects.

"Construction companies are more and more often faced with building material shortages and never-seen-before increases in prices," said Szymon Jungiewicz, analyst, PMR.

"Owing to delays in the execution of orders for building materials, contractors can fail to meet contractual deadlines, which can lead to serious financial problems.

"Should this phenomenon become widespread, it could pose a serious risk to construction companies."

Another serious issue is a shortage of skilled labour, which has led to companies paying higher salaries in order to attract the right staff.

"The shortage of workforce is rapidly becoming a more acute problem for the entire construction sector. High labour costs incurred by construction companies are the second major obstacle cited by respondents," added Jungiewicz.

PMR forecasts that construction and assembly output will rise by 27% in 2007 as the industry experiences rapid growth.

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