Most of construction industry expects busy, profitable 2024, survey shows

“Some Positive news”

9th February 2024

By: Schalk Burger

Creamer Media Senior Deputy Editor

A survey of the construction industry by construction software company RIB Software indicated that the industry in the sub-Saharan Africa, Middle East and North Africa (Mena) region is looking forward to a busy and profitable year, with the majority of players expecting an increase in revenue and projects.

The survey showed that 45% of industry players were looking forward to an increased order book pipeline, 43% of respondents expected increased private sector work, 39% would focus on sustainability, 37% would aim for worker productivity enhancements and 29% expected government-led infrastructure spending, says RIB Software Middle East and Africa VP Peter Damhuis.

Projections for this year in terms of revenue and the project pipeline are cautiously optimistic. About 39% of respondents expect to increase their revenue by between 5% and 10%, while 27% expect increased revenue of 15% or more.

In terms of project pipeline projections for this year, 29% of respondents expect an increase of 15% or more, 29% expect an increase of between 5% and 10%, and 24% expect an increase of between 10% and 15%.

The more favourable climate reflected in the survey is one economist Dr Roelof Botha, who compiles the quarterly Afrimat Construction Index (ACI) on behalf of mining and materials company Afrimat, also attests to.

The ACI points to the focus on renewable energy, the need to overcome logistical challenges, government spending on various projects ahead of the election and sustained growth in new capital formation as key drivers for the construction sector in South Africa.

Further, in 2024, 53% of industry players will focus on digital transformation as a key strategic initiative, while 50% intend to implement lean construction principles, 44% will look at expanding their business offerings and 38% intend to expand their geographical reach.

Notably, 52% of respondents said their companies will spend more on information technology this year than they did in 2023, and 30% said their spend will be the same as in 2023.

The technologies they intend to focus on in the year ahead will be estimating and planning software (37% of respondents), cloud and real-time collaboration (26%) and project management software (10%).

The survey also showed that 38% of respondents said they would be exploring ISO 19650 standards and compliance with the standard ISO.

Additionally, 52% of respondents said they expected the number of projects involving building information modelling to increase.

In terms of the greatest risk factors relating to their businesses in the year ahead, 76% of respondents cite rising costs owing to global unrest as the greatest risk factor, followed by fuel prices at 51% of respondents and the construction mafia at 50%.

Significantly, only 0.02% of respondents in the Mena region say the construction mafia represents a risk, while 48% of respondents in the sub-Saharan Africa region cite it as a significant risk to their operations.

Meanwhile, only 42% of respondents have carbon reduction strategies in place, with 41% saying that progress in the carbon reduction space remains the same as in the previous year, and 26% saying more progress has been made over the past 12 months.

The three greatest challenges for the industry over the past 12 months are rising input costs (51% of respondents), margin pressures (39%) and attracting and retaining qualified individuals (30%). The majority of companies, or 87%, say they have recovered from the Covid-19 pandemic.

Rising input costs can largely be attributed to supply chain disruptions following the pandemic and exacerbated by the turmoil in Ukraine and Gaza.

“This has led to an increase in prices of key construction materials, such as cement, diesel and asphalt, affecting initial budgets and resulting in even thinner margins for the industry,” Damhuis said.

The rising price and demand for oil could see some Middle East countries benefit from future oil and gas construction projects, with construction expected to increase steadily in Qatar, the United Arab Emirates, Bahrain and Kuwait in the year ahead and beyond, Damhuis added.

“The overall the industry outlook is positive for 2024. This is encouraging, especially for Sub-Saharan Africa where the industry has been faced with significant challenges such as the construction mafia, rising costs, a dearth of talent and projects not coming to fruition quickly enough,” said Damhuis. 

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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