The construction sector in South Africa need to undergo radical change if they are to have a better outlook. In an overview of the construction sector in South Africa for 2016, Frans Pienaar, chair of Inyatsi Construction said there is too much transformation window dressing in the sector and too many entities come up with solutions that satisfy scrutiny, but do not offer real change.
He added that very few companies are really keen on transformation and have a wrong way of approaching it. Society is more than ever tired of money being misspent, in Pienaar’s view.
“Quality and delivery are going to be emphasized by the society and authorities in 2016. Transparency will therefore increase and poor service delivery will become difficult to hide,” he said.
Information can easily go viral in the wake of social media’s new platform, thus the challenge remains to improve business efficiency to survive in the competitiveness of the business environment. Building of sound structures remains necessary for the construction industry.
Due to the fading of construction activity in the mining sector, Pienaar anticipates a balancing act in the construction industry in 2016 owing it to the rise in home building.
He however points out to studies that reveal though it will have an influence on the construction industry it will probably not be enough.
“The clientele should engage businesses that are prepared to make radical changes to make transformation profitable,” said Pienaar.
With major industry players still beyond bringing real impact, there will be minimal change as long as they have a stranglehold on the industry.
Pienaar views the small and growing contractors as “strangled by a history and systems that benefit the more established companies” and says the general legislative framework benefits the larger and more established companies and excludes new entrants, according to studies.
It additionally slows down the profitability of smaller entities as financial services are more costly for smaller entities and sometimes these methods are not even available to them,” said Pienaar.
This area remains a major challenge which we must put more focus to aid new entrants to the industry.
Pienaar envisions that the transport, energy and power sectors will remain under immense pressure as other areas of infrastructure will get higher priority.
Energy, in his view will remain a stronghold in terms of growth and opportunities. The opportunities will however be slow because the lead times on these kinds of projects are very long.
The biggest portions of investment in the energy and power sectors will be in manufacturing and mechanical and electrical supply investment rather than construction industry as a whole. Associated industries will therefore benefit more than the construction industry, said Pienaar.
The civil engineering, which is a tidbit of the mechanical and electrical manufacturing components, would be an example.
He also envisions constraints in the mining sector in 2016 due to the pressure on commodity prices. As a result, he cautioned that some rationalization could happen in the South African mining sector.
Studies show that a huge portion of construction sector growth will be driven by urbanization in the next decade with the market for housing projects also expected to soar high in 2016.
“This will in turn lead to a huge demand for housing which will put infrastructure under pressure. The deficit in housing across Africa is on the increase and the trend is set to continue for a period of time. Innovation in this area can be a significant aspect in the growth of the industry, said Pienaar.
Many of Africa’s cities cannot maintain their current levels of population and economic growth with the current pressure on infrastructure. There is therefore the need for the countries to enhance their infrastructure which vary from city to city based on stage of development, priorities and affordability. The basic needs for power, water and sanitation, transport and logistics, housing and ICT top the list for most.”