Insiders' Opinions
Published in The Civil Engineering Contractor in November 2006

What do contractors and consultants think: will they cope with the construction avalanche coming their way?

Focus on  support infrastructure by André du Preez, managing director of Power Construction

“We are not the size of company that would put in a single-handed tender on a stadium contract but we certainly have the resources in Cape Town, Port Elizabeth and Gauteng, to handle the supporting infrastructure and roads that must accompany such developments, either on our own or in joint venture with others. While you’ll understand that I can’t disclose our business strategies, our order book and future prospects means that we won’t be tempted by high-risk contracts and we prefer to stick to our knitting, doing what we do best. The industry is experiencing the longest growth phase in its history and there are signals that this could level off after 2010 so one has to be circumspect about how one expands in terms of personnel and capital equipment.

The biggest concern that faces the industry is not that we won’t have the money to accomplish the 2010 stadiums and infrastructure, but whether or not the public sector has the personnel to organise the work. We are facing a capacity crisis even in the large metros and, while there are initiatives to get professionals back into the sector, the seriousness of the shortfall is often understated, meaning that it is worse than reported. This may lead to more turnkey projects, such as the N2 Gateway sewer, which are being completed in association with ASLA. It’s safe to say that, if the City of Cape Town hadn’t gone the turnkey route, the job would probably not have been as advanced. Design-and-build turnkey contracts are the only way to get the work done, in my opinion. As far as equipment shortages are concerned, we seem to be OK at the moment although there are periodic shortages of tyres. We do supplement our fleet with plant hire on an ‘as required’ basis. Of greater concern than equipment shortages is the lack of skilled operators and their decimation through Aids and HIV infections.

There is little doubt that the pressure for qualified people is on, right across the spectrum, and the Construction Education and Training Authority has failed in providing a stream of trained artisans to the industry. Large concerns, including us, have had substantial in-house training programmes in place for several years, with great success, but the demand is pushing up salary expectations and there is noticeable poaching going on within the industry – that is not good in the long run.

When the construction demand flattens off, there could be an over-supply of skills and then we may see a ‘last in, first out’ scenario so staff will need to consider the longer-term situation, and not just short-term gain.

We have structured employment packages to assist in withstanding the temptation of being ‘poached’. The Power Group includes four black economic empowerment (BEE) companies – all established for several years and each with a BEE stakeholding of 51%. These companies tender for work individually and partner with us, as well as other contractors, providing specialised skills, but generally there are not enough BEE companies. While efforts and initiatives such as the Construction Industry Development Board are welcomes and encouraged, the generally limited levels of experience available from emerging contractors means that there will be limited opportunities in 2010 construction projects, which will almost certainly have to be fast-tracjed if they are going to be ready on time.”