The construction sector is experiencing a new boom moment on Ibiza with an increase in the number of projects and approved works. However, there is never total happiness. The decision by the central government to abolish the extraordinary compensation to construction companies that had been established by the Balearic Govern to compensate for the increase in costs has been received with concern and divided opinions in the sector. There is also unanimous concern about the persistence of the rise in costs and materials, as well as the uncertainty about supplies.
In the case of aid to companies to compensate for costs incurred in public works tenders the conflict arose because the central Government felt that the Govern’s decision encroached on its jurisdiction. Finally, Madrid has imposed its criterion when assessing cost overruns and subsidies.
“The Balearic criterion was based on the justification of cost overruns due to the increase of materials, but from now on we will have to be governed by the state scale” explains Roger Parrot, general manager of the construction company Hermanos Parrot. A scale that is based on a weighted formula to which all kinds of variables are added: “If in a job there is more asphalt, concrete or steel, or if there is earth moving or if it is a marine project. If there is an increase in a material of more than 5%, you are entitled to a review,” explains Parrot, “you add variables to this formula and it gives you percentages. It’s complicated but not impossible to understand.
Abandoned public construction projects
Consuelo Antúnez, president of the Pimeef Construction Association, is more reluctant to this change: “If your your costs increased you could ask the Govern for help. I think that there will now be more abandonded tenders”.
According to the Balearic builders association, between March 2022 and January 2023, 87 public works projects have been abandoned in the Balearic Islands, five of them on Ibiza and Formentera.
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