In the heart of Europe, the Republic of Croatia is grappling with a significant trend that’s sending ripples through its construction industry. Since 2018, construction work prices have been on a steady climb, presenting unique challenges for the country’s strategic infrastructure projects, many of which are co-financed by the European Union. The crux of the issue lies in the stringent rules governing EU-funded projects, particularly the implementation period, eligible costs, and performance indicators. As costs escalate, so does the need for increased national co-financing, a process fraught with bureaucratic hurdles.
Mariela Sjekavica Klepo, the lead author of a recent study published in ‘Građevinar’ (which translates to ‘Civil Engineer’), delves into this trend, offering a comprehensive overview of the national construction market up to 2020. Her analysis, which explores the market from both technical and economic perspectives, provides a historical context for understanding the current situation.
The study reveals that the price surge is not merely a fleeting phenomenon but a result of complex supply and demand dynamics. “The increasing costs on these projects generally requires an increase in the amount of national co-financing, with implementation difficulties arising from the necessary approval procedures for such increases,” Klepo explains. This trend is particularly challenging for large-scale infrastructure projects, which are the backbone of Croatia’s energy sector development.
The energy sector, which relies heavily on infrastructure development, is feeling the pinch. As construction costs rise, so do the overall project costs, potentially leading to delays and increased financial burdens. This could impact the sector’s ability to meet its goals, including the transition to renewable energy sources and the modernization of existing infrastructure.
The study’s findings underscore the need for a strategic approach to managing construction costs and project implementation. It suggests that understanding the historical trends and the factors contributing to the price increase is crucial for developing effective strategies. This could involve revisiting procurement processes, enhancing supply chain management, and fostering a more competitive market environment.
As Croatia continues to navigate this challenging landscape, the insights from Klepo’s research could shape future developments in the construction and energy sectors. By addressing the root causes of the price surge and implementing proactive measures, the country can ensure the successful completion of its infrastructure projects, ultimately driving economic growth and energy sector development. The research, published in ‘Građevinar’, serves as a valuable resource for policymakers, industry stakeholders, and researchers seeking to understand and address the complexities of the construction market in Croatia.
