Houses in Cuba: The government imposes a new system to control construction and housing.

Cuba limits profits in construction and requires the application of a new pricing system for all projects. The legislation is published in the Official Gazette of this month.unes.

A new resolution published this luneMay 12th in the Official Gazette of the Republic It establishes a profound change in the way construction prices are calculated in Cuba, with direct implications for both state entities and non-state management.

The new system, called PRECONS III, replaces the previous model in force since 2021 and will be mandatory starting in July.

Limits are set on profit and indirect expenses

One of the key changes is the imposition of a cap on builders' profits: they cannot exceed 15% of certain direct costs such as labor, equipment use, and other related expenses. This restriction applies equally to state-owned enterprises, cooperatives, MSMEs, and self-employed workers working on publicly funded projects.

Maximum coefficients are also established for indirect expenses, with a cap of 1.0 on the cost of direct labor and 0.3 on the cost of equipment use, which seeks to prevent artificial budget inflation.

More detailed budgets with mandatory support

All projects must have a detailed budget, supported by official price lists for materials, labor rates, and hourly equipment costs. A descriptive report and detailed technical documentation must be submitted, and these must be auditable and verifiable by the authorities.

The Ministry of Finance and Prices, together with the Ministry of Construction, will oversee the process through inspections and financial controls. The parties must also agree on fixed or closed prices in the contracts, except in exceptional cases.

Recognition of payments for difficult working conditions

The new system maintains the approved salary scales as a reference, but allows for additional payments in cases of adverse working conditions, provided they are justified by a technical and economic analysis. This provision officially recognizes the difficulties faced by many construction crews on complex projects or with logistical limitations.

Impacts and restrictions on non-state management forms

MSMEs and self-employed workers working with the State must strictly adhere to the budget approved by the investor. They will also be required to pay sales tax, although the corresponding amount cannot be included in the price of the service, to avoid shifting this burden to the end customer.

The regulation also prohibits arbitrary markups from being applied to the transportation of supplies or the use of equipment, requiring each expense to be itemized and justified.

Possible impact on the cost of housing and public works

This new system could curb excessive prices in the axiscucconstruction, especially in the housing sector, where multiple cases of overvaluation have been reported in recent years. However, experts warn that if not accompanied by an improvement in the supply of materials and current wage rates, PRECONS III could stifle small builders and reduce the axiscucion of community or family projects.

For ordinary citizens, this reform will mean that any government-related project must be based on clear, documented, and verifiable budgets, which can help detect overpricing and ensure greater transparency.