Contract Corrections Expected Mainly in Transport, Utility, and Water Projects

The government has adopted a conclusion aimed at preventing delays in construction works contracted with the public sector establishing that cost increases of up to 10 percent will be borne by the contractor, while those above that will be the responsibility of the public client.

Contract corrections with builders due to rising material and energy costs are expected mainly in transport, utility, and water management projects, said Minister of Spatial Planning, Construction, and State Property Ivan Paladina on Tuesday.

On Tuesday, the government adopted a conclusion aimed at preventing delays in construction works contracted with the public sector establishing that cost increases of up to 10 percent will be borne by the contractor, while those above that will be the responsibility of the public client.

In a statement after the government session, Minister Paladina said that contract corrections are expected mainly in the sectors of sea, transport, and infrastructure, specifically for transport projects, as well as in the economy and environmental protection in the area of water and utility infrastructure.

He emphasized that cost increases for the execution of works will need to be substantiated. In principle, the client will engage a supervising engineer, an engineer, a project manager, or a court expert in the construction field who will choose from three methods of determining the cost increase, while the client decides how to pay the additional prices. 

Cost increases can be determined for any period for which an increase in the elements of the cost of works can be substantiated, said Paladina.

The government states that due to uncertainty regarding the final profitability of executing public procurement contracts, a decrease in the number of bids in public procurement procedures has been observed, as well as an increase in the number of terminations of existing contracts.