OVER the last 18 months, the price of steel -- from bars to bolts -- on the world market has risen by as much as 20 per cent because of the increased demand from China (two-thirds of the world's construction projects are under way in south China) as well as reduced exports from Russia and other major producers.
This price increase is exacerbated on the local front by the removal of the super subsidy for diesel for commercial vehicles, pushing up transport costs of the imported steel from ports of entry to construction sites by 30 per cent.
The continued rise in construction costs will have wide-ranging implications in the construction sector.
Present construction projects will see an increase in costs and will be subjected to variation orders raised by contractors.
Of course, budget overruns are imminent, but above all there will be a higher risk of project delays and, in the worst case scenario, failure.
It is, therefore, crucial that projects like the MY Rapid Transit, which is long overdue, are started sooner rather than later. The longer we wait, the higher the bill is going to be and the higher the chance of a delay and project failure when costs cannot be contained.
The last thing a vibrant and bustling city like Kuala Lumpur should face is a MRT project that didn't take off because of hefty bills.