TOKYO (Nikkei)–With rising personnel costs scaring off construction firms, the Land Ministry has decided to raise the prices it pays for public works projects in earthquake-ravaged areas.
The move is an emergency response to a dearth of successful bids on projects slated for the quake-stricken Tohoku region. Prices will be upped this month for undertakings in Iwate, Miyagi and Fukushima prefectures.
Of the civil engineering projects up for bid in December, 45% went unfilled in Miyagi Prefecture, with 51% undecided in Fukushima. Bidding remains sluggish due to a decrease in the number of construction firms in the Tohoku region following the disaster, as well as labor shortages and skyrocketing wages there.
To reflect market wages in prices, the ministry will lift the unit prices for labor set for each prefecture. Although such revisions are usually performed just once a year in March, the ministry will adjust costs once every three months based on conditions in the disaster zones.
The ministry will also create a joint venture system that will enable general contractors and others from outside Tohoku to join forces with local construction firms to bid on projects. To date, much of the bidding has been limited to construction companies in the disaster zone, with local governments having the power to decide on the projects. The ministry will urge municipalities to use the joint venture system in hopes of securing workers from a wider area.
Under the system, one firm must have a stake of at least 30% for a two-party joint venture. For a three-way joint venture, the minimum ownership is 20%.