Wednesday, 21 January 2009 02:00

Murray and Roberts JV contract cancelled

South African-based construction firm Murray & Roberts says that the Salam Resort joint venture project in Bahrain has been cancelled.

Wednesday, 21 January 2009 02:00

Murray and Roberts JV contract cancelled

South African-based construction firm Murray & Roberts says that the Salam Resort joint venture project in Bahrain has been cancelled.

Monday, 19 January 2009 02:00

Construction groups bank on state work

Construction companies are counting on the government’s multi billion-rand spending programme in infrastructure projects to see them through the lean economic times caused by the global credit crunch, which has seen work from the private sector dwindle.

Construction IndustryThe global economic meltdown has created a lot of uncertainty for construction companies, most of which saw private sector work decline towards the end of last year.

A number of private sector clients of construction companies have suffered cash flow problems due to the financial crisis, which has affected certain projects.

From the second quarter of last year, the construction sector has been severely downgraded by the stock market on fears of a recession and depleted future work opportunities.

With commodity prices plummeting in recent months, the mining sector, which provides a big chunk of work to several construction companies, has scaled back on capital expenditure.

However, with the government reiterating that it will not put the brakes on its infrastructure spending programme, construction companies will be seeking more exposure to this public sector investment.

In his medium-term budget speech last year, Finance Minister Trevor Manuel said the government would continue to invest in several areas of infrastructure, including rail, roads, ports and energy in a bid to boost economic growth.

Group Five CEO Mike Upton said last week the group had a “reasonably good” order book to see it through the turmoil. “This (the order book) is quite well in tune with the public sector spending. The private sector has taken a turn for the worst, with capital spending, especially in mining, expected to drop significantly,” he said.

At the end of June last year, the group's one-year order book stood at R8,5bn, which it said at the time reflected its strategic positioning in the public infrastructure cycle with a mix of 65:35 in favour of public works.

“We are not negative at this stage but cautious.

“Our projections are not the same as last year, and we are not seeing the same security of work as we did six months ago. We have seen a number of projects from private sector clients that have been curtailed in recent months due to the credit crunch.”

WBHO CEO Louwtjie Nel said with work from the private sector drying up, the company was shifting emphasis towards government projects.

He said whereas two years ago the split between public and private sector work was about 20:80, that split was now about 50:50.

“We were traditionally focused on private sector clients, but we are now swinging in a big way towards government infrastructure work, such as roads, energy and hospitals — which should get us through 2009 quite comfortably.

“Beyond that, nobody really knows what is going to happen,” he said.

Nel said the group’s civils division was feeling the pinch the most as work, especially from the mining sector, had almost dried up.

“But overall we are now getting well exposed to government spend.”

Murray & Roberts said its outlook for this year had not changed from what it was in November when the group reported that it had been forced to restructure its operations in the light of the global credit squeeze.

The group said then that it had delayed or suspended some of its projects as some of its clients felt the pinch of the credit crunch.

“There are a number of significant public works and other strategic opportunities in the group's domestic and international project pipeline that are likely to proceed and which will provide stability through the difficult times ahead,” it said.

 

Record order books are expected to help construction stocks maintain decent earnings growth in the new year, but beyond that the future is uncertain as the global credit crisis eats up future work opportunities.

Construction IndustrySouth Africa‘s big-four construction firms boast a combined R120 billion order book, thanks to the phenomenal sector growth in the lead-up to the 2010 Fifa World Cup, as well as developments in other markets.

While these order books will certainly build up construction groups‘ coffers, the global economic slowdown – which is expected to deepen next year – may open floodgates of project cancellations and delays.

So, while “the outlook for next year is pretty decent, future work opportunities have been reduced”, says one analyst, who declined to be named.

Already Murray & Roberts, the country‘s largest construction firm, has had to adjust its books after its Trump Tower joint venture in Dubai was suspended, wiping R3,2-billion off its R61-billion order book, although the firm landed a R6-billion contract to build a terminal at Dubai International Airport shortly after this.

Underscoring predictions of the tough trading conditions ahead are union claims that Murray & Roberts is planning to axe workers as the rough trading environment restricts its ability to expand.

Group Five disclosed in an interview that there “had been a small and immaterial reduction” in the number of projects in the African mining sector and that “one small housing project” for a mining firm had been cancelled.

Eskom has also terminated the procurement processes for the proposed multi-billion-rand Nuclear-1 power plant project.

Aveng and Murray & Roberts were in two separate consortiums bidding to build the power plant, with Aveng saying the termination was “understandable” and that it had confidence in the continued infrastructure roll-out in the markets in which it operated.

“I don‘t think we have seen the last of these project cancellations and delays,” the construction analyst said.

Project flow from the mining sector is expected to worsen in the new year, with Group Five having already seen a slowdown in African copper mining.

Mining companies across the world are cutting back on production as weakening commodity prices bite into earnings, with Anglo American and Anglo Platinum expected to slash capital expenditure in half when they announce revised spending plans next week.

Together with public sector spending, construction companies also based their original rosy 2009 outlooks on “continuing demand for commodities”, which was expected to spur expansions in the mining sector, although many miners are now cutting back.

Aveng has downplayed the impact of the global crisis, saying its project pipeline remained strong, but it is “taking longer for clients to finalise projects”.

For the next few years the sector is banking on South Africa‘s multibillion-rand infrastructure spending, but if the national treasury is unable to raise funds offshore to counter shrinking foreign capital inflows it may need to reprioritise its spending plans.

South Africa is spending R600-billion over the next three years to upgrade and build new roads, power generation and transmission, rail, ports, pipelines, hospitals, prisons and schools.

Another analyst said the fact that Eskom – which accounts for the bulk of the infrastructure package – had to shelve its nuclear project suggested that even governments, albeit to a lesser extent, were feeling the pinch of tighter credit lending.

“Those with no exposure to public sector spending are in for a rough time,” the analyst said.

But all big-four construction companies are comprehensively exposed to this multi-billion-rand package, with Murray & Roberts saying it will drive annual growth of 15% to 25% through to at least 2014.

 

Top JSE-listed construction companies Aveng and Murray & Roberts were removed from the JSE Top 40 index of blue chip companies.

Top JSE-listed construction companies Aveng and Murray & Roberts were removed from the JSE Top 40 index of blue chip companies.

Tuesday, 09 December 2008 02:00

Murray and Roberts wins Dubai project

Engineering and construction company Murray & Roberts has been awarded a major contract to build a terminal at Dubai International Airport with joint venture partner Al Habtoor.

Al Habtoor Murray & Roberts Takenaka Joint Venture has been awarded the contract for Concourse 3 at Dubai International Airport for the Department of Civil Aviation.

South African construction firm Aveng is disappointed by power utility Eskom's decision to abandon its nuclear project, its chief said.

The Melrose Arch Piazza construction site was voted one of the safest places to work in Gauteng, winning six safety awards from the Master Builders Association

Construction IndustryAt the annual Gauteng Regional Master Builders Association Safety Awards, Amdec Property Development, a company noted for its construction safety records, won first prize for being the ‘Most Proactive Client’ while the Melrose Arch Piazza Scheme won the safety award in the ‘R500-million plus’ category while Murray and Robert’s site agent Miguel Teixeira was voted the ‘Best Site Agent’ and Murray and Roberts sub contractor Bronsair (Pty) Limited won the ‘Best Sub Contractor’ award. Their safety officer on Melrose Arch Piazza, Paul Smit, was placed third in the Best Safety Officer category.

Other parts of the Melrose Arch precinct were also honoured - the Melrose Arch hotel which also forms a later phase of the Piazza Scheme won the ‘R200-million to R500-million’ category.

Adriaan La Grange, Amdec project manager notes he is proud of the company’s safety record on development projects throughout South Africa: “Our safety record at this site an excellent lost time injury frequency rate of 3.09. This is very good considering we have about 2 500 workers on site at any given time and are facing certain challenges like building close to public areas.”

Amdec has over 20 years of industry experience and a current development portfolio in excess of R4,5 billion ranking it as one of the country’s biggest private property developers.

Amdec is currently responsible for the development of, amongst others, Melrose Arch and is also undertaking the refurbishment of the landmark Consolidated Building in the Johannesburg CBD. In the Cape it is developing the new Virgin Active in Steenberg as well as extending and refurbishing Westlake Lifestyle Village. The luxury retirement lifestyle village Evergreen Muizenberg is another of Amdec’s Cape Projects. In the Eastern Cape, it is undertaking the development of the new mixed-use suburb of Parsonsvlei.

Amdec always has specific and stringent requirements for safety, explains La Grange. “For Amdec, any development is also about the process – it’s not only the outcome but how it is achieved. We believe Melrose Arch Piazza to be one of the most high profile and exciting developments in Africa right now and are committed to get everything right.”

Rui Santos, director of Murray and Roberts, puts it simply: a safe site is a happy and productive site. “This is vital to achieve good production levels and to build quality developments,” says Santos who is positive about the high standards of safety which have been achieved on the site. M&R has always had a proactive safety and unitary culture with commitment from top management which reflects it’s corporate priority.

“We are always aiming to up the standards. Amdec is a particularly proactive client and they take a daily interest in the safety of the site. We work together with an independent safety consultant and have in place a number of safety initiatives for the workers,” notes Santos.

Safety initiatives on the Melrose Arch Piazza site include:
Stop. Think.
This is a system of sign language that ensures clear communication between workers which is effective regardless of language barriers and noise on the site. This is an outreach campaign by M&R to all employees to improve safety awareness and to strive for zero harm in the workplace.

Induction
Prior to any staff member or subcontractor staff member coming on site, they are trained in all aspects of the safety and the rules of the site. In addition to creating the foundation for safety, this also creates a platform for skills transfer, creating a ripple effect and providing hands-on experience in working safety.

Daily ‘Toolbox Talks’
These morning meetings are interactive exchanges between the foreman and team on site. Issues discussed include debriefing the previous day’s work, planning the tasks to be carried out that day and the associated safety elements, as well as discussing the potential risk each activity entails. This also provides an opportunity for all staff to communicate any potential risks which they may have noticed. These forums allow appropriate information and lessons to be shared across the site.

Auditing of subcontractors
Subcontractors are stringently audited before they start on site and these audits are continually revalued during while the subcontractor is undertaking their tasks on site. Contractors are involved in site meetings, audits and incident investigations and are required to report regularly on their safety performance.

Daily risk report
Here potential risks are identified, communicated and addressed immediately to ensure prevention. Near misses are reported daily and investigated as if the event occurred to ensure incidents are not repeated.

High-visibility bibs
This is a Melrose Arch Piazza site specific requirement. They are worn by everyone on site and are a proud statement of the commitment to safety.

Safety incentives
Staff members are given monetary rewards for reporting risks or working safe. Each person is encouraged to take ownership of safety and answer ‘me’ to the questions ‘who is responsible for safety on site?

Safety Training
M&R’s aim is to maintain the highest occupational health and safety standards and safety training plays a major role in an industry where shortage of skills is a huge challenge. Benefits of quality training are reaped by having low accidents and incident rates. The process of managing safety is driven through a continuous improvement cycle so that zero harm is achieved and maintained.



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