Managing challenging times in Sri Lankan construction
With currency shifts, import restrictions, and various other challenges, not many would fancy a building project in Sri Lanka right now. We spoke to Trevor Morgan, CEO of Shakticola, an architectural design and construction project management company on the island’s southern coast to hear how those challenges are being handled.
What impact is the current volatility in the Rupee having on the construction projects?
Right now contractors are really suffering on contracts they entered before the devaluation so we are having to renegotiate the contracts to include a mechanism to allow for material price fluctuations.
On projects we are currently tendering we have had to agree that a material price fluctuations clause will be agreed.
We are experiencing quite a lot of delays and contractor’s struggle to get hold of building products, even very basic things like cement are sometime difficult to obtain.
How are you managing that?
We are employed to represent the client side on each building contract so the push comes in these issues from the contractors. On contracts that were awarded before the current volatility we are allowing contractors to put in claims for price escalation, asking the quantity surveyor to review and then asking our clients to consider, contractually the clients do not have to agree to price escalation where it is not given in the contract.
What areas in particular are being affected by current restrictions on imports?
The products that are most effected by the import restrictions are;
· Pool tiles – practically unavailable
· Floor and wall tiles – reduced availability
· Pool lights – completely unavailable
· Sanitary ware – reduced availability
· Door handles and general iron mongery – reduced availability
· Structural steel – reduced availability and large price increase
How are those restrictions affecting your projects?
We are having to work with available products which reduces the pallet of finishes we can specify.
Overall, how is the momentum for property development in Sri Lanka in your sector of the market? How busy are you?
Strangely despite all of the issues we are extremely busy and we’re still taking on new projects so it looks very positive. We have a good portfolio of both villa and hotel projects.
Bearing in mind difficulties in pricing any project in Rupees right now, do you still have a rough price per square foot metric for a construction project?
I think it is still around $65 (USD) per square foot.
If so, how has that level changed in recent years?
Over the ten years I’ve worked in Sri Lanka the price per square foot has remained fairly stable in USD but obviously not in Rupees.