Today: February 22, 2024

Even in the Covid-19 era, opportunities abound in South Africa’s construction sector

A year into the pandemic, most are starting to find their footing, adjusting to this new normal. Construction as a critical industry is surviving the pandemic despite the hard conditions.

As would be necessary in light of the pandemic, a study was conducted in 2020 by the Construction Industry Development Board to identify the possible short to long term effects of Covid on the industry.

An overview of some of the identified effects is shown in the table below:

Short TermMedium TermLong Term
Job losses and retrenchmentPotential bankruptcy of contractorsMassive job losses
Increases in material costsDecline in income and profitsInterruptions in critical project delivery
Lack of paymentsClients’ inability to finance projectsSuspension and possible site closures
Delays in delivery of projectsJob losses and reduction in workforceIncrease in claims
Supply chain disruptionsDecline in investment by private sectorSupply chain disruption
Cancellation of contractsBusiness and economic uncertaintyInadequate supply of critical infrastructure

As the graphic shows, top noted concerns were around job losses, the survival of contractors, liquidity of the industry (because of late/lack of payment to both contractors and other professionals), disruption of the supply chain, delays in projects, suspension of projects and the future of projects in the industry due to possible lack of investment and general uncertainty.

Despite these very real challenges, construction is a proven resilient industry and this is made clear in the various opportunities that are possible to help sustain the industry during this difficult period while also having the potential to improve the state of construction in South Africa for the future.

A most important boost to the industry will be that involving the Government’s Infrastructure Plan. As of November 2020, government plans to unlock R1 trillion in infrastructure investment. 50 projects worth R340 billion have already been gazetted to jumpstart the process. At a time when government could choose to cut on infrastructure spending in order to save, they have chosen to invest in order to stimulate the economy. This investment could prove crucial in injecting needed funds into the industry on the condition that caution is applied in ensuring that prioritised projects are not long term such that potential benefits are for the future. Projects that are able to provide funding immediately especially to SMMEs would prove helpful to sustaining contractors and professionals struggling through the pandemic.

The use of technology is one that comes to the fore at this time when globally construction is seen as an industry that underuses technology or is lagging behind other industries. Restricted numbers on site especially emphasise the need for quicker, more efficient methods on site. Covid regulations also open up opportunities for technology to be used to keep track of what is happening with workers and safety protocols on site.

For many though, while technology opportunities open up, finances may be a limiting factor; not everyone can afford technology and with the anticipation of the pandemic ending at some point, most may view current challenges as temporary and continue working as best as they can while they wait for the pandemic to blow over. With worries over cash flows and liquidity, many organisations may not feel that technology is a priority, for them staying in business and actually being able to pay workers may take precedence.

For those who can afford technology comes the responsibility of having skilled labour to use it. South Africa faces a skills problem, and this provides an opportunity for upskilling which would be welcome especially for those facing potential job loss. Organisations then need to commit to actually getting the skills training for those who need it; an expense they need to plan for.

A discussion on technology would be incomplete without a mention of modular construction. While it is a concept that has picked up in South Africa, its uptake has been modest, it has yet to make inroads in mainstream construction. The increased use of modular construction would provide an opportunity for the industry to complete projects faster and with reduced costs. These advantages though, can only be realised after there is adequate awareness around prefabrication, and when potential homeowners move beyond considering a proper home as being exclusively brick and mortar.

Delays were identified as a potential concern and while a critical problem, solving them comes with a wealth of opportunities. The industry is fragmented, with most stakeholders working in silos. As the industry plays catch up, stakeholders need to work better together to ensure projects are completed within timeframes, to ensure that cost overruns are kept at a minimum. Issues of best practice and considering value for money over lowest price need to become a priority as the industry works on recovering from the lockdowns and restrictions. Collaboration has been touted as improving project outcomes and this crisis gives the industry a chance to work on promoting cordial relations so stakeholders can work together towards common, beneficial goals that can help revitalise a struggling industry.

The supply chain is critical to the functioning of the construction industry. One might wonder how supply chain disruptions could provide opportunities, yet from lock down in 2020, local suppliers have experienced a business boost due to the materials shortages that occurred. This has been a prime opportunity for local suppliers to shine and reduce construction imports. Doing well during this time can help catapult local supply chains to the top of the list of preferred suppliers in the industry.

Because of shortages, one possible interesting opportunity is that which has been granted contractors in terms of waste on site. Knowing there are shortages, it is expected that sites have been stricter on reducing any wastages and recycling and upcycling should possibly be thriving as the industry works on waste minimisation. It is hoped that contractors are learning lessons on how to tighten expenditure in the future and ensure that construction activities are done with waste reduction in mind.

Finally, contractors especially are learning to work differently. With numbers limited on site, staff needed to monitor covid regulation compliance and contracts in jeopardy, it has been hard to see any silver lining with all the expenses emanating from the pandemic. Theoretically, this is the perfect time to change business models where possible, this is the time to try out any new ideas that could not be implemented before. A balance needs to be found between expense and measures such as workers coming onto site in shifts, downgrading the size of the workforce and preserving jobs, continuing solo or joining up with other organisations to diversify operations beyond contracting. It is unlikely that things will go back to exactly what they were pre-Covid, everyone needs to make decisions that ensure longevity for their organisations and a thriving construction industry.