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Construction of Sarkandaugava overpass has resumed; negotiations with the client on offset cost increases will continue

Construction work on the “Riga-Skulte” overpass with access roads is gradually resuming. At the same time, negotiations with the client on offset cost increases regarding constraction materials are continuing.

“LNK Industries is a responsible cooperation partner and understands the importance of the project for the residents of Riga and the Pieriga region. We hope that responsible actions will also be taken on the part of the client to reduce the developer’s losses due to the abnormal increase in the cost of construction materials, and it will be possible to complete the overpass construction this year,” notes Kaspars Ratkevičs, a Member of the Board of LNK Industries.

“Currently, we are also continuing negotiation process with subcontractors about a possible schedule of work, taking into account the availability and cost of materials. LNK Industries is only asking to be compensated for the increase in subcontractor costs. In fact, we are currently acting as a mediator, trying to find possible solutions and compromises so that the work on-site could continue,” said Ratkevičs.

Representatives of the developer also note that at the present time, the entire construction industry operates under huge ambiguity. No one can predict what will happen to the cost and availability of construction materials in a month or two. The industry has entered a period when making long-term forecasts is almost impossible. Builders hope that the situation will not worsen and that work will continue until the overpass is commissioned.

As is well known, after the Russian Federation’s hostility towards Ukraine on February 24, 2022, which led to a wide range of international sanctions against legal and natural persons of the Russian Federation and the Republic of Belarus, the cost of construction materials has increased significantly. For some categories of construction materials prices increased several times, in addition, there are construction materials that are very difficult to obtain, such as construction materials made of iron and steel.

The general partnership “Personu apvienība OTC”, which includes JSC “LNK Industries”, road construction company SIA “Binders” and SIA “LT Betons” performing the work on the overpass, in March and April received notices from all subcontractors and suppliers involved in the main work, about sharp price increases caused by exceptional circumstances and the unpredictable economic situation.

It should be noted that both the Public Procurement Act and the oversight guidelines of the Procurement Monitoring Bureau give client the right and ability to cover actual price increases.

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