Some positives seen amid the dismal South African construction environment
South Africa’s construction industry is currently in a bad space, but there are some positives and the country has the necessary capabilities to turn the situation around if it adopts the correct strategy, Pinsent Masons says.During a panel discussion exploring South Africa’s future infrastructure potential at Pinsent Masons’ Africa Infrastructure Conference, in Johannesburg, on Thursday, Pinsent Masons partner Rob Morson indicated that procurement activity in the construction sector was slow.
He lamented that 2018 had been the worst in 20 years for the country’s construction industry, with three of the largest construction firms currently in business rescue. However, he did point to underlying positives, such as the growth of medium-sized contractors and the country’s “incredible” engineering and fabrication capacity.WBHO legal manager Fiona Park, speaking specifically on project finance, echoed these positive sentiments.She noted that there were signs of political will to invest more in infrastructure, while the private and public sectors and banks are also willing to do their part to contribute to infrastructure development.
Basil Read group commercial head Norman Milne, however, took a more negative view.He averred that the construction industry is currently “on a precipice, staring into an abyss, and now looking as if it is teetering and falling forward.”He indicated that, after 2010, the industry had stagnated. He said the industry had to carry some of the blame for taking on the wrong projects and managing projects badly.In the past, he said, such mistakes could be mitigated, as the industry could rely on windfall projects that generated super profits. However, this was no longer the case and one mistake could result in significant losses for a company.
He also pointed out that, in other countries, government was considered a reliable, assured client, that paid on time and dealt with claims timeously. However, this was not the case in South Africa. Meanwhile, Infrastructure Options director Dr Ron Watermeyer called for a rethinking of the industry and a regrouping to get things right. He suggested that companies ensure they plan better, have a stronger pipeline of projects, have the capacity to deliver and rethink the way things are done in the industry.