The builders’ lobby has asked the state government to immediately consider raising outlay over the value agreed upon for various projects in view of rising costs of labour and other material inputs beyond agreement period.
The builders warned that it would not be possible for contractors to work at the present standard schedule (SS) rates.
The Builders' Association of India, an all-India body of engineering construction contractors, has called an official meeting of its members on Saturday to demand revision of rates, taking into account the rise in cost of various components.
The association said the problem for them started in 2005, after the Centre introduced National Rural Employment Guarantee Scheme to provide guaranteed employment to people in villages for a certain number of days each year in a bid to stop migration to urban areas.
This, BAI said, has had an impact on availability of unskilled and skilled workers in cities, resulting in a huge increase in cost of labour, besides other materials.
At the same time, the association said, most engineering procurement and construction packages have stretched beyond five to seven years due to multiple reasons, like land acquisition, rehabilitation and resettlement issues, delay in project clearance, and more so because of delay in payments.
According to some BAI members, cost of labour and material components have risen by 50 to 60 per cent, leading to huge negative cash flow.
The association said this has impacted the net worth of many construction age-ncies, with financial collapse of several small and medium contractors, and even some big contractors.
Giving an instance, the association said in 2004-05 sand cost Rs 70 per cubic metre, but now comes for Rs 700 to Rs 800 per cubic metre.
Similarly, the cost of metal and labour has gone up by 350 per cent to 400 per cent. All these factors have resulted in slowdown in projects, the association stated.
Unless the government factors in escalating cost of labour and other material for work done beyond agreement period, projects cannot be completed, the association said.