Companies like Buwog Development, which have agreed fixed prices, are currently continuing to build despite the cost increases. The problems will probably become more acute in the medium and long term. According to the main association of the German construction industry, 90 percent of the members complained about price increases and 80 percent about delivery bottlenecks. For many materials, suppliers of building materials are currently only giving prices that are updated daily or not at all. Despite full order books, the raw materials were missing. There are bottlenecks in steel and steel alloys, aluminum, wood, as well as bitumen, tiles and ceramics.
Since fixed prices are usually agreed before construction begins and the costs are still rising, the profits of the construction companies are dwindling. For fear of this, the companies concerned would rather not make any new offers at all. “Due to the long lead times, construction will be completed this year and next, and it will be over by 2024/25 at the latest,” reports the industry associations concerned. “We had record completions in 2021, we’re going to have good completions in 2022, and we’re going to see a slump in 2023.”
When it comes to public contracts, things are looking better for the companies involved: the federal and state governments allow prices to be increased after the contract has been concluded through a so-called “price escalation clause”. This means that the higher costs are passed on to the builder – and thus the taxpayer.
The problem is not only buildings, but also civil engineering such as roads, tunnels and railways. There is currently no improvement in sight: “There is a risk of a shortage of building materials wherever the countries of Russia, Ukraine and Belarus are involved in the process chain,” says a spokeswoman for the Munich-based conglomerate and building materials dealer Baywa. In addition, it is the Corona failures in China that the construction industry is concerned about: due to the drastic lockdowns, there are major failures and delays such as in Shanghai, the largest container port in the world.