More bad news for SA construction

2019-02-07T12:00:17+00:00February 5th, 2019|News|
Federale Stene
Timber iQ
Specialised Exhibitions (LOCAL SOUTHERN AFRICAN MANUFACTURING EXPO 2019)

Construction companies, currently clinging on by their fingertips waiting on government to release funding for infrastructure development, will be disheartened to read the construction market’s Industry Insight’s report indicates that tender activity slumped by 20% year-on-year in the fourth quarter.

The intelligence firm also reports that postponements of general tenders increased by 24% year-on-year due to the postponements in the building sector increasing by a massive 117%. The postponement rate is the number of projects postponed expressed as a percentage of the total number of tenders received during the same period.

While the report did indicate there were 144% more ‘higher value building projects’ out to tender in the fourth quarter, this was tempered by the fact that the number of larger civil projects contracted by 41% year-on-year.

David Metelerkamp, an Industry Insight economist, says historically they saw an increase in tender activity in the run-up to elections, as well as ‘a sharp drop-off post-election’.

Metelerkamp says the construction industry ended the 2018 calendar year with rather disappointing tender award activities, with more depressed levels compared to an already beleaguered 2017.

“With fewer projects out to tender, and fewer projects awarded, the short-term effect suggests further contraction in the local construction market. The recent increase in postponements aggravates an already precarious situation,” he adds.