The rising cost of construction is having a "significant" impact on Bermuda's building industry, according to the Construction Association of Bermuda's president Alex DeCouto.

Mr. DeCouto said that most notably the price of steel, copper and PVC had increased, allied to shipping costs climbing at the same time, culminating in higher costs across the board for builders and those in the construction sector.

But he does not reckon projects currently underway will see big price increases because sub-contract and supply contracts have already been set at the start of work.

"Further down the supply chain suppliers may be getting caught out, but not at the project level," said Mr. DeCouto.

But there is less good news for projects still in the pipeline, added Mr. DeCouto.

"On projects which are still at the budgeting or tender stage, price levels will be at extreme risk of increase, even in the short term, because commitments have not been made," he said.

Among one of the main price hikes in commodities has been that of steel, Mr. DeCouto said, with prices of materials in general very volatile at the moment.

"Steel in particular is highly volatile at the moment, we have seen 30 percent to 50 percent increases since the beginning of the year," he said.

"Suppliers quoting projects to contractors will now only hold their prices for 30 days and some are trying to negotiate escalation clauses on future purchases which is not good.

"A reinforcing steel supply contract for instance on a building like the HSBC site might take a year to fulfill and you can imagine what the steel markets might do over that time period."

He believes that construction firms' profit margins will be reduced on those elements that were not able to be bought out, and if costs are rising and contracts are fixed, inevitably someone will lose out, whether it be the local contractor or the foreign supplier.

And he does not see an end to the current problem any time soon, with what is happening globally having a big effect on the Bermuda market.

"We live in a global economy and pricing is very efficient," he said. "When demand increases in China at the kind of volumes we are seeing, it is felt all over the world."

Another factor which has contributed to the rising cost of construction, according to Mr. DeCouto, has been the increase in the price of cement by MaxCem since it took over the Bermuda Cement Company in December last year, with prices for distributors going up three times, each time by about three to five percent, as the company cited fuel charges as the main reason behind the hikes.