Fousek (Obermeyer Helika): Construction costs complicating projects

The financial conditions for construction are getting more complicated for investors, says Jiří Fousek. But even as five years of work on a bank project in Hradec Králové wraps up, new assignments continue to come in for the Obermeyer Helika, which he’s the director of. Fousek calls the new ČSOB headquarters in Hradec one of his “favorite” projects, because his team was involved even from the initial feasibility study for the project. It then tendered for and won the concept design order and subsequently acted as project managers. Fousek says the company estimated the project would take five years to complete (including securing the building permit). In the end, ČSOB employees will begin moving in during September, a mere two months behind its original estimate.

Much has changed in the construction sector in the meantime, but the most radical shift has taken place in just the past quarter of a year. Fousek warns that with construction costs rising radically, investors will soon have to begin making difficult decisions. “The situation is becoming nearly impossible to deal with and in the last month, it’s been crazy,” he said. “We’re following the increase in prices, but in many cases, the materials aren’t even available. It started with steel and reinforcements before moving to insulation, and now we’re talking about bricks.” He said investors have begun putting pressure on his company as general designers and project managers to guarantee costs. “We have pretty hot discussions at the moment because we are not willing to guarantee them.” He warns that the situation for public sector projects could become critical because the public sector isn’t flexible and generally can’t make quick decisions. Private sector investors have banks and shareholders they have to answer to, but they tend to be far more flexible.

“We were discussing this with an investor this morning,” Fousek reveals. “He wants us to sign a contract where guarantee the investment or building costs. He doesn’t want to sign a contract without this kind of guarantee.” The best solution Fousek sees for the situation would require more transparency than many companies are ready for. “If you want to build then you should agree on doing it open book on materials.” He warns there are few general contractors who will be willing to build at a loss. “I know good companies who would rather risk being sued by the investor.”

Which is not to say that Fousek is finding it impossible to find new work. Most recently, Obermeyer Helika was assigned to begin work on the project documentation for Red Court. It’s the fifth building in J&T’s Rustonka office complex, which Obermeyer has bee involved in since 2016. The general contractor for the nine-storey building is Geosan Group. Construction began in July and is scheduled for completion at the end of 2022.

 

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