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Sat 4 Feb 2017 01:15 AM

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Delayed payments said to be key issue facing UAE contractors

New report says that delays are negatively impacting ability to deliver quality project within budget and on time

Delayed payments said to be key issue facing UAE contractors

The single biggest issue for UAE contractors and sub-contractors is cashflow amid sustained delays in payments, according to a new report by Colliers.

The Colliers Abu Dhabi and Dubai Construction Cost Benchmarking report said the delays "negatively impact the industry’s ability to deliver quality projects within budget and on time".

The real estate consultancy added that they should not be viewed as a problem solely for construction companies, and needs to be acknowledged as an issue that "affects the industry as a whole".

The report said that weakening global construction commodity pricing over the past two years has given a much needed buffer to the industry.

However, it said that going forward commodities including crude oil, aluminium, iron ore and copper are predicted to gradually rise.

"This combined with fuel/subsidy cuts and the introduction of VAT in January 2018, will put upward pressure on construction costs for the next two years," Colliers added.

According to the report, some of the more notable price movements over the 12 month period from Q3 2015 to Q3 2016 include increases in aggregate and sand, blocks, concrete, sanitary ware and glass and mirrors.

It added that prices of cement, timber, diesel, uPVC pipes and switches and sockets all fell during the same period.

On average, for a second consecutive year, material pricing has remained stable. In the context of overall construction costs, the 2016 movement in material prices represents a variance of -0.4 percent to 1.2 percent on 2015 costs, depending on the building type, design and specification.

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