Public markets Four ways to pass on price increases
Since the surge in the prices of building materials and other inputs such as energy, the revision of the financial conditions of public contracts has become a leitmotiv among construction operators. The latter have still not found, together with their line ministry, an effective formula for passing on the increases. The problem is more acute for entities that had won public contracts before the outbreak of the health crisis, relating to the construction of large-scale infrastructure still under construction.
Large corporations, in serious financial difficulties, are experiencing significant delays in the performance of certain public contracts or have simply asked to terminate their contract and have their bank guarantees being confiscated, so much so that the National Federation of Construction and Public Works (FNBTP) has sounded the alarm to demand the reactivation of the price index. Obviously, the databases have never been correctly updated to reflect the reality of prices. Consequently, the National Federation of Construction and Public Works is coming back and proposes, in concert with the Ministry of Equipment, a series of measures capable of remedying the dysfunctions that have been noted. These proposals revolve around four essential points.
The first step is to quickly update the price indices and ensure that the values assigned monthly are as representative as possible. To do this, the FNBTP will supply the DATRP (Direction of Technical Affairs and Relations with the Profession, under the Ministry of Equipment) with data relating to the prices of building materials.
The second axis relates to the adaptation of the formulas of revision by way of amendment for the contracts in the course of execution, including the firm contracts and those capped. The goal is to guarantee the economic balance of the contracts and to not penalize companies financially, as provided for in the circular issued last April by the Head of Government. The third proposal by Mohamed Mahboub, new president of the FNBTP, involves the overhaul of price revision formulas, in particular those with global indices which today pose a problem due to the obsolescence of the weighting parameters based on a circular from the ministry of Equipment dating from 1987. The Ministry of Equipment had proposed to study the possibility of reviewing through an amendment a new price revision formula which would favor simple indices by highlighting the most important indicators and changing their weighting. The business community is still waiting.
Hassan EL ARIF
