PRECONS III: the government locks in prices to build in Cuba

The Cuban government has approved the Construction and Assembly Price System (PRECONS III), a legal update aimed at organizing the construction sector in Cuba, “correcting distortions,” and curbing the unjustified increase in budgets for state projects.

The resolutions of the Ministry of Finance and Prices (MFP) and the Ministry of Construction (MICONS) were published in the Official Gazette No. 45 on May 12, and will come into effect in 60 days, in July.

The new legal framework not only replaces the previous ones - Resolutions 104/2021 (MFP) and 38/2021 (MICONS) - but also signifies a shift in focus: it standardizes the price calculation for all parties involved in state works, whether state-owned or not, and requires a direct correspondence between prices and technical-economic feasibility studies.

The regulations set clear limits: a maximum profit of 15% on direct costs, wage rates up to five times the current rates, and limits on indirect expenses (a coefficient of 1.0 at most on direct labor costs and 0.3 on equipment usage). Furthermore, costs must be verifiable and auditable.

The system requires that the total budget for each project—whether investments, capital repairs, or construction maintenance—must be contained within the approved state financing.

According to Lourdes Rodríguez Ruiz, Deputy Minister of the MFP, “the new regulation is for both state and non-state economic actors in the country, regarding the proper use of the State budget allocated for construction management.”

Cited by the official newspaper Granma, the official explained that the aim is to establish “a construction pricing system that allows state and non-state economic actors to operate on equal terms.”

One of the most sensitive aspects of the change is that it removes the exemptions previously granted to the private sector. From now on, all parties - whether state or private - must operate under the same rules when participating in state projects. Additionally, the payment to contracted workers is limited and investors are assigned the direct responsibility of preparing budgets and feasibility studies.

Antonio Amaury Medina Morante, deputy minister of MICONS, specified that "state entities agree on prices with non-state management forms, but they must be within the approved budget and the intended scope."

It was also reported that six months after its implementation, "the results of both regulations will be analyzed to refine them or timely correct any distortions."

The reform includes a new calculation model outlined in Annex I of Resolution 153/2025, featuring 19 detailed components, ranging from raw materials to taxes. It also incorporates an updated technical methodology (Annex II) and new regulations for the readjustment of budgets for ongoing projects.

The PRECONS III arrives after years of complaints about the disorganization of the sector and numerous violations detected in price formation. Four years after the previous scheme was implemented, the government acknowledges that concerns, violations, and increases in budget calculations persisted, elements that justify its update.

Although the MFP sees it as “a key tool for combating inflation in construction services, promoting a more favorable environment for project development,” its real effect seems to expel micro, small, and medium enterprises (mipymes) and private builders from the public sector, unable to operate under a scheme that does not even allow them to cover their basic costs.

Most construction materials in Cuba are imported and purchased in foreign currencies. Since there is no formal currency exchange market, private construction companies are forced to buy foreign currency on the black market, where the dollar is priced at more than three times the official exchange rate (370 CUP compared to the official rate of 120 CUP).

This gap, combined with a forced banking process without real conditions, drives up the costs of materials and makes it economically unfeasible for small and medium-sized enterprises to carry out public works without operating at a loss.

Among the initial reactions on social media, private entrepreneurs claim that PRECONS III, rather than invigorating the sector, imposes unsustainable barriers for SMEs and private builders, and also warns of caps on salaries, profits, and expenses that they predict will render any commercial relationship with the State unfeasible.

With "equal rules for all" and stricter control from the outset of the budget, the government hopes to prevent each public investment from becoming a financial drain. It remains to be seen whether, unlike previous systems, this one can endure beyond mere paperwork.

The Government of Cuba announced this Wednesday a significant , a measure justified as necessary to ensure the financial sustainability of the industry, but amidst a deep economic crisis, high inflation, shortages of construction materials, and unmet housing demand.

State and private builders, as well as everyday citizens, could be affected by the rising cost of cement, which will impact both public works costs and individual efforts to build or repair homes.

The profound decline in housing construction in Cuba is an unmistakable sign of the economic and social collapse that the country is experiencing: in 2024, 5.5 times fewer homes were built than in 1984 and 15 times fewer than in 2006. In fact, in the worst year of the Special Period (1992, according to economist Pedro Monreal), almost three times more homes were built than last year.

During the first quarter of 2025, only 1,344 houses were built in Cuba, which is equivalent to 12.4% of the planned 10,795, a figure that highlights a worrying setback in the already strained state housing construction program, the structural collapse of the sector, and the government’s ineffectiveness in addressing one of the population's most critical needs.

In contrast, comparative statistics from recent years reveal a persistent pattern: since at least 2014, activities related to tourism have increasingly dominated national investment.

Despite the prolonged stagnation of the sector and the deep shortages affecting the population in key areas such as public health and food production, the Cuban regime continues to prioritize investments related to tourism.

According to economist Monreal, “the contradiction between a declining tourism industry that continues to recklessly consume the scarce investment resources and a food crisis spiraling out of control… reflects, at the very least, a stagnant policy.”

Frequently Asked Questions about the Construction Pricing System PRECONS III in Cuba