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You are here: Home Features Featured July 2016 Times are tough in construction
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Times are tough in construction

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Times are tough in constructionConditions were challenging for the South African construction industry in 2015, and the forecast for 2016 has not been optimistic either. CLAIRE RENCKEN investigates

There is no doubt that large and small companies in the construction industry are facing plenty of challenges. According to Construction Review Online, the top five challenges facing the construction industry in Africa are:

1) The constant rising cost of projects:

This is as a result of the rise in prices of steel and oil, caused by the weakening of the local currency against the dollar. Most companies quote for a project, only to realise later that it has cost more than they budgeted for.

2) Corruption issues:

The construction industry in Africa has suffered at the hands of corrupt individuals and organised crime. Some companies, for instance, are allegedly paying top African government officials to receive tenders. This has brought the construction industry into disrepute.

3) Lack of skilled labour:

When construction opportunities arise in African countries, contractors are often forced to look for skilled labour from other counties – these employees usually demand higher-than-average salaries. Currently the continent is unable to produce enough skilled labour and professionals who have the ability and knowledge to handle this work.

4) Safety on site:

With the large number of incidents involving employee injuries in the industry, companies are now spending more on insurance and compensation.

5) Capital supply constraints:

It is getting tougher for construction companies to get financing, as investors are losing confidence in the industry.

WHAT DOES THIS MEAN FOR THE TRANSPORT INDUSTRY?

Construction companies are also facing the same challenges as found in other industries concerning their fleets. An increase in the fuel levy, another rise in interest rates and the new consignor/consignee legislation all load more costs onto an industry that is already struggling to remain profitable.

Standard Bank business vehicle and asset finance head, Toni Fritz, recently stated that transport operators competing for market share, in an environment dominated by shrinking profit margins, will respond in various ways to the increased costs created by these major changes.

“Small and large operators who would normally consider buying new trucks will now probably lengthen their replacement cycles to avoid the higher costs of replacing vehicles. However, this will have implications on maintenance costs, which increase as vehicles become older.

“For smaller operators, in particular, that are working on the fringes of the industry and at low margins, these costs could lead to reduced maintenance, which is a concern when the roadworthiness of vehicles is taken into account,” says Fritz.

Also, coping with an increased fuel price will, most likely, see transport costs being passed on to customers. However, in regions where competition is tough, many operators will be forced to absorb the additional cost – again with an impact on maintenance and road worthiness, she notes.

“One cost that still has to be quantified is the cost of new consignor/consignee legislation. This will demand certain standards from transport operators moving more than 500 t of freight a month,” says Fritz. “Despite the legislation’s focus on reducing the overloading of vehicles and damage to roads, while also demanding that operators be insured – changes that are to be lauded – the costs of adhering to the law will, undoubtedly, have an impact on the industry.”

Therefore, now more than ever, the onus will be on original equipment manufacturers to provide a premium service to their customers. This includes, but is not limited to, optimal return on investment, reduced running and maintenance costs, fuel efficiency and comprehensive warranties.  

Equipment training solutions from Cat Simulators

Simulator training provides a way for students to become familiar with, and gain understanding of, machine controls, while learning proper operating procedures, before training on actual machines.

A variety of training exercises designed to address each of the skills associated with operating actual machines are represented in different work environments, such as construction and mining.

By uniting simulated worksite applications and conditions with realistic controls, Cat Simulators provide hands-on learning in a safe and economical way to enhance traditional operator training programmes. Experienced operators can also benefit from simulator training by refining skills to increase production levels.

Some of the benefits of training with Cat Simulators are:

• Train any time – day or night, regardless of weather conditions;

• Costs are reduced;

• Several operators can be trained on multiple machines at the same time;

• Operator training performance can be tracked through built-in testing; and

• Difficult manoeuvres can be practised repeatedly until fully mastered.

 

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