Prices for construction work may rise in 2014

Despite the fact that at the moment the construction market is experiencing a decline, prices for such work may increase.

The increase is expected in the middle of 2014. Despite the fact that some working conditions for construction companies or private individuals have been improved, in particular through the SRO construction industry legislation, on the whole there are many factors that complicate doing business in this segment. One of the prerequisites for rising prices of construction work is the increase in the price of construction materials. Many builders set prices for various kinds of work in direct proportion to the cost of the materials used. Therefore, it is natural that an increase in prices for consumables will entail an increase in the price of construction work. Almost 70% of construction companies and contractors said that the prices of building materials were raised by other companies. But more than half of the firms or private individuals said that they had raised the markup on the construction materials used in the work themselves. Another factor that leads to a stagnant market for construction services and work is imperfect legislation and weak investment activity. Both big investors and private customers this year have drastically slowed down investment in construction. As many companies report, their production capacity is running at a little over 60%.Many contractors only have orders for the next six months, and some have one to three months’ worth of work. Many companies can not get access to profitable orders due to monopoly in the construction business. In the sphere of legislation it is necessary to establish clear norms and construction criteria in accordance with international standards. It is also important to eliminate, as much as possible, the barriers to business in the administrative structures. It has become easier to obtain a SRO certificate. But all other measures will also help revive the construction industry, make it more dynamic and profitable. In turn, firms will be interested in maintaining affordable prices for their services.

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