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Monday, April 12, 2021

Road construction. GDDKiA: over PLN 19 billion for investments, inflation may hit road investments

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The General Directorate for National Roads and Motorways since the beginning of the year signed 10 contracts for the implementation of new tasks with a length of approximately 140 kilometers. Their value exceeds PLN 3.87 billion. Road workers indicated that price increases – mainly steel – had not yet affected the implementation of road investments, but such a scenario is being taken into account.

“The current situation in Poland and in the world creates many risks and challenges that we have to face, and their solution is not always up to us. Regardless, we are continuing our work. This year we have already signed 10 contracts, and we will sign more soon “- said Tomasz Żuchowski, who was quoted in the press release, acting General Director of National Roads and Motorways.

These are contracts signed as part of the government’s National Road Construction Program for 2014-2023 (PBDK) and the 100 bypass Construction Program for 2020-2030 (PB100).

Throughout 2021, road builders plan to spend approximately PLN 19.3 billion on investments.

Possible price increase

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On Wednesday, April 7, GDDKiA met with representatives of the financial, insurance and executive sectors. It was attended by, among others representatives of Bank Gospodarstwa Krajowego, the Polish Chamber of Insurance, the Polish Association of Construction Employers, the Polish Chamber of Commerce for Road Construction, the TOR Economic Advisors Team, the Polish Bank Association, the Export Credit Insurance Corporation, the Central Statistical Office and financial institutions.

According to the analysis of the Polish Association of Construction Industry Employers, in the first quarter of 2021 the number of offers in GDDKiA tenders decreased compared to the two previous quarters. The companies participating in the proceedings submitted offers ranging from 65 to 105 percent. road workers’ estimates. As we read, the lowest offers fluctuated in the range from 55 to 90 percent. budget and were on average about 24 percent. lower than the highest bids in a given tender. In the opinion of PZPB, the key challenges for the near future will be primarily the strong competition between contractors, rising prices of materials and the possible accumulation of investments in 2022-2025, which in 2018 had a negative impact on the margin of contractors.

GDDKiA pointed out that price increases – mainly steel – have not influenced the implementation of road investments so far, but such a scenario is also taken into account by the financial industry.

As explained, “infrastructure investments are seen by many countries as a recipe for a positive economic impulse that can help combat the crisis. The global demand for materials necessary to carry out infrastructure works may therefore increase significantly as the world’s economies recover from the pandemic.”

“The demand for raw materials (steel, asphalt, aggregates) and international competition from countries may affect the increase in prices. During the discussion, representatives of the insurance industry emphasized the need to start talks on securing against sudden increases in the prices of construction materials or their shortages on the market” – we read.

As added, the financial sector also sees threats in the possible increase in inflation, energy commodity prices and electricity. “However, this does not change the general assessment of the prospects for road investments, which are looking good and their market environment is stable” – ensure GDDKiA representatives.


Road construction

Road workers informed that we currently have 4,269 km of expressways in Poland, including 1,712 km of motorways and 2,557 km of expressways. There are 106 tasks under construction from the national road construction program with a length of over 1,365 km and 3 ring roads from the bypass construction program with a length of almost 20 km.

“There are pending tenders for 31 sections of new roads with a length of almost 391 km (21 tasks from PBDK with a length of 303.5 km and 10 ring roads from PB100 with a length of 87.2 km). 106 tasks are under preparation, which will be implemented in as part of PBDK (almost 2,105 km) and 87 ring roads that will be built as part of PB100 (751 km) “- GDDKiA reported.

This year, road builders plan to announce further tenders for 26 sections as part of the National Road Construction Program for 2014-2023 with a total length of 313 km. It will include six sections of the S19 expressway from the border of the province Mazowieckie and Lubelskie to Lubartów (Lubelskie Voivodeship), three sections of the S17 Piaski – Hrebenne road, four sections of the S10 Toruń – Bydgoszcz expressway and three sections of the S6 between Koszalin and Słupsk.

In addition, as part of the program for the construction of 100 ring roads, the Directorate plans to announce tenders for six sections with a total length of 34 km. They will include Tarnów ring roads within DK73 (Małopolskie Voivodeship), Stryków within DK32 (Wielkopolskie Voivodeship), Koźmina Wlkp. within DK15 (Wielkopolskie Voivodeship) or Gorajec and Dzwola within DK74 (Lubelskie Voivodeship).

GDDKiA also intends to announce 96 tenders for works on the existing network with a length of approx. 255 km and an estimated value of approx. PLN 1.79 billion.

PAP / Adam Ziemienowicz

Main photo source: Shutterstock

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