Construction companies are requesting a six-month extension for the completion of public works projects in an effort to cope with price increases that have exceeded 60% since the start of the war in the Middle East.
In a joint press conference held yesterday by SATE, PEDMEDE, PESEDE, and STEAT held yesterday, the four contractors’ associations emphasized that they are seeking more time to fulfill their contractual obligations to the government, thereby allowing prices to stabilize.
At the same time, they are calling for a review of the projects by the Ministry of Transportation in order to incorporate price increases, as provided for by law, and to ensure the projects’ viability.
“The war in the Middle East has devastated us. It is impossible for us to absorb the shock,” said Zacharias Athousakis, President of the Panhellenic Association of Technical Companies (SATE).
It should be noted that at the start of the war in Ukraine, when a similar wave of price hikes occurred, the Ministry of Transportation offered these two specific options. Specifically, a six-month extension was granted to construction companies that requested it, so that the project could continue at lower prices, while contractors who met the schedule would receive a bonus.
Market sources report that most companies opted for the extension, as many of those that completed the project within the allotted time are still waiting for their bonus.
The Organizations’ Preferences
Although all four organizations face the same challenges, their proposals differ.
Smaller construction companies prefer a revision of the projects to account for price increases, while the larger “players” in the industry seem to favor a six-month extension.
George Syrianos, president of STEAT—whose members include TERNA S.A., METKA, and AKTOR S.A.—stated that “the sector’s unified stance for the first time means that the issue has gone beyond what anyone can accept.”
“A blanket six-month extension of project deadlines would mean that, through this extension, companies would be given the opportunity to address the problems that have arisen; and these companies, having already taken on an extremely high level of risk over the course of the year, over the past few months, would be able to simultaneously address this situation in a different way, so as to balance out the problem,” Mr. Syrianos emphasized.
“For those who do not opt for the extension, there should be—when someone takes these risks—an arrangement involving some form of financial compensation, which has various characteristics. However, if no measures are taken, the problem will persist in any case,” he added.