Construction – a time of challenges

Luc Williams

One of the key problems encountered by the construction industry in recent years was the high increase in the costs of construction materials combined with problems with the indexation of concluded contracts. The burden of price increases – in the vast majority of cases – fell on the investment contractors.

Janusz Signetzki, president of the management board of WPIP Construction, general contractor and designer present, among others, on the warehouse and industrial market, pointed out during the panel “Construction – a time of challenges” that construction companies are agile organizations, adapt to the changing market and cope well.

As he recalled, WPIP Construction constructs buildings for private clients – Polish and foreign corporations – but also has extensive experience in the construction of facilities under the Public Procurement Act – both in the version before and after the amendment to the regulations, which entered into force on January 1, 2021 . and clarified the issue of valorization of construction contacts.

– It shows the direction for tenders that disregard the Public Procurement Act. Today, looking at our clients, and these are private clients, especially developers, because we have many investments for warehouse and logistics developers, there is virtually no indexation. The same applies to residential projects. In my 25 years of work at WPIP, I have never seen any warehouse or residential developer increase the price for the general contractor in an emergency or force majeure situation – said Janusz Signetzki.

As he said, when the war in Ukraine broke out, when the price of mineral wool jumped from PLN 350 to almost PLN 800, and the price of sheet metal from PLN 50 to PLN 150, many contractors tried to sit down and mediate with investors.

– In the case of private clients, where there is a direct relationship, companies found a golden mean, but it was more of a meeting in the middle and the scale of the increase was divided between two sides – he explained.

– Today, negotiations in private investments are sometimes worse than in public tenders, where the issue of indexation has been regulated and this indexation takes place in contracts over 12 months – he added.

Therefore, according to the president of WPIP Construction, a good direction would be to prepare – based on solutions from public procurement law – guidelines enabling contract valorization for private entities operating in a tender procedure, bypassing the public procurement law.

The difficult situation of the construction industry in recent years was confirmed by Jakub Nagraba, director of the general construction division at Budimex. In his opinion, the general construction segment did well in solving the problems it encountered, and one of the elements that significantly helped the industry survive difficult moments were the guidelines created as part of the indexation of public contracts.

Although similar system solutions do not exist in the case of private clients, Jakub Nagraba pointed out that he has recently observed increasing responsibility and maturity on the part of private investors.

– Seeing the difficulty in implementing the project in accordance with the standards included in the project, as well as with the technical conditions, private investors notice that the area in which the contractor can take on risks is limited. Of course, this is not a global approach, but the trend is very positive, he said.

The investor's perspective was presented by Marcin Mochocki, member of the management board and director of investment implementation at PKP PLK. During the debate, he admitted that the company had not coped with the challenges related to the huge investment program that had been implemented in recent years. He pointed to many years of investment delays that were not the fault of the contractors, and “definite chaos in project management”, which were carried out completely contrary to any good investment project management practices. For the future, he announced solutions that would organize cooperation with contractors and facilitate the implementation of tenders.

Anna Glanowska-Szpor, managing director of the construction sector at ING Bank Śląski, also spoke about the condition and future of the construction industry during the debate. As she pointed out, the source of optimism may be the release of funds from the National Reconstruction Plan, which brings with it a chance to launch many new investments.

The new opportunities that lie ahead for the industry include: Janusz Signetzki also commented on the release of funds from the KPO. He estimated that in a few months there will be a construction boom and both general contractors and ordering parties should be prepared for it from the point of view of strategic management.

– Next year will most likely be much better in terms of construction and assembly production than the previous one, which is what I wish to everyone here, because all good things are ahead of us – said the president of the management board of WPIP Construction.

He also drew attention to the change in the approach to partners that is taking place in the industry.

– We are talking about partnership ties, customer orientation, but also subcontractors and service providers. A lot has changed in this respect. There is more respect for people. ESG says a lot about it, about stakeholders, about values, about working with partners – concluded Janusz Signetzki.

He also encouraged young people to work in the construction industry, because – he explained – it is interesting, satisfying and well-paid.

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