Construction sites operate non-stop to meet delivery date

Newsroom 04/02/2008 | 15:49

Construction companies working locally have increased the pace of works on construction sites for projects which should soon be completed, in an attempt to deliver on time. They have opted for a 24-hours-a-day, seven-days-a-week schedule, with workers coming in three shifts per day to meet the expected delivery time.
On Baneasa Shopping City's site, due to open this spring, construction workers from Bouygues Romania are on site from dusk till dawn, even during the weekends. The usual program is anyway longer than eight hours per day, as it starts at seven in the morning and ends at eight at night, with workers coming in two shifts.
The same 24-hour-per-day construction program is also the norm at Liberty Center, another Bucharest mall due for delivery this year, according to Irina Stan, marketing manager at Mivan Development, the company developing the project. Mivan's other project due for delivery this year, residential compound New Town Residence, is less demanding for workers on site, as activity is from Monday to Saturday, for almost 11 hours per day. Liberty Center will be opened in November this year, and New Town, towards the end of the year.
The tight schedule, the large number of projects a construction company undertakes at the same time, and the lack of sufficient construction workers make it more difficult for them to keep up with delivery dates. However, construction companies manage to complete works on time, as most of the developers say they will inaugurate projects on the scheduled dates.

Penalties for delays, but bonuses for on time delivery
When delays occur, developers say they are caused by a mix of changes in the project itself, changes of design or logistics, apart from construction problems.
If the construction company is to blame for delays, developers usually apply financial penalties, or, in the worst case scenario, even cancel the contract or refuse to pay the due amounts to the construction company, said Michael Lloyd, principal and managing partner with the Baneasa project.
Developers include such clauses in their contracts with construction companies. For a contract worth EUR 158 million to build a project in Romania, construction company Danya Cebus should pay EUR 83,000 per each day of delay in the first month, according to data from the latest financial report from Africa Israel, Danya Cebus's mother company. The penalty per day amounts to 0.05 percent of the cost of construction works. After a month, the cost per day of delay is EUR 45,000, but no more than EUR 8 million in penalties in total, according to the same document.
Foreign developers sometimes promise bonuses to construction companies which deliver on time or even before schedule.
TriGranit managed to deliver Polus Center Cluj last year on the announced date, but Arpad Torok, chief of leasing and development director with the company, says it was tight. “In a city like Cluj, having two or three projects under construction at the same time means attracting the entire workforce in the county,” he explains. “We have been using workers from Bucharest, Moldavia and from several other regions,” says Torok.

Pressure on construction wages and on site delivery of materials
The shortage of workers and several simultaneous projects undertaken by the same contractor are not the only problems which may lead to a tight schedule. Construction materials suppliers are also facing issues in delivering orders, while producers have started to increase production capacities and invest in fleets to deliver the construction material directly to the construction sites.
The lack of construction workers has put pressure on salaries. Wages on the construction segment have already increased by half up to four fold in the last year, for some positions. Project manager and technical manager positions have seen the biggest salary increases.
The average gross monthly salary in construction will stay this year at around EUR 154. Associations of construction workers hope it will an average of EUR 650 per month by 2009, which is the current level in Hungary and Poland.
The local construction market needs to plug a gap of 150,000 workers as qualified personnel in this market are currently working abroad. According to the latest reports, there are 360,000 workers on building sites in Romania. The latest figures show that there are more than 100,000 construction workers outside Romania, in Israel, Germany, Spain and Italy, according to data from the Romanian Association of Building Entrepreneurs (ARACO).
On a construction market growing by 30 percent year-on-year, the number of Romanian workers in the field is decreasing. Several years ago, there were 800,000 workers in construction in Romania, compared to 300,000 registered workers at the moment, plus 100,000 personnel working without legal papers, according to data from the Romanian Alliance of the Construction Employers' Confederation.

By Corina Saceanu

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