CIDB, DOSM assess impact of rising building costs amid West Asia conflict

PUTRAJAYA (April 15): The Construction Industry Development Board (CIDB) is collaborating with the Department of Statistics Malaysia (DOSM) to assess the actual impact of rising building material costs following the West Asia conflict on the local construction sector, said Deputy Works Minister Datuk Seri Dr Ahmad Maslan.

He said the collaboration enables the Ministry of Works to obtain more accurate percentage increases through scientifically based inflation calculation methods.

“DOSM has figures and calculation methods that are carried out periodically. It uses a reliable approach, not merely estimates,” he told reporters after visiting the Setia Perdana Activity Centre project site at the Prime Minister’s Department here on Wednesday.

Ahmad said the assessment must be carried out in detail by examining the actual components in a construction project.

“For example, in a building project involving about 50 items, we need to identify how many items are truly affected and to what extent the impact is,” he said.

Ahmad said the impact of cost increases varies by project type, with road construction and maintenance reported to be more affected than building projects.

He said rising diesel prices have placed significant pressure on operational costs for road contractors due to the use of heavy machinery such as lorries, bulldozers and rollers that depend on the fuel.

“Conversely, for building construction projects, the impact of diesel price increases is more limited as fuel usage is not as high,” he said.

Ahmad said cost increases in the construction sector are not necessarily caused entirely by the current conflict, but are also influenced by existing supply chain factors that had already affected prices previously.

In a related development, he said only 4% of the 855 projects under the supervision of the Public Works Department (JKR) nationwide are currently classified as sick projects, typically due to delays in progress by contractors.

“When we study the causes of sick projects, many are linked to weaknesses in project management, as well as financial management,” he said.

Ahmad also inspected the progress of the Setia Perdana Activity Centre project at the Prime Minister’s Department here on Wednesday, which was supposed to be completed in 2024 but has experienced significant delays after being granted six extensions of time.

He said the contractor was found to have failed to comply with several basic requirements, including not attending site meetings, lack of skilled workers and poor work planning.

As such, he said the ministry will review the next steps, including the possibility of contract termination, to ensure the project can be completed without affecting public interest.

Ahmad stressed that the ministry does not encourage repeated extensions of time, as it reflects implementation issues and could potentially increase project costs.

“Each extension of time carries cost implications. If the contract is terminated, the government would need to appoint a completion contractor through a new tender, which would also involve additional costs and a timeframe of two to three months,” he said.

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