Construction World April 2023

COMMENT

Civil construction work has picked up (further) in Q1. The FNB/BER Civil Confidence Index gained 11 points to register a level of 42 in 1Q2023. This is up from 31 in 4Q2022 and is the highest level of confidence in six years. This improved sentiment is underpinned by a marked increase in activity. This also means that sentiment has now increased for four consecutive quarters. It, however, still means that about 60% of respondents are dissatisfied with prevailing business conditions.

T he FNB/BER Civil Confidence Index can vary between a maximum of 100 (which indicates that all respondents were satisfied with prevailing business conditions) and a minimum of zero indicating that all respondents were dissatisfied. A level of 50 indicates that the respondents are equally divided between those satisfied and dissatisfied. The fieldwork for the first quarter of 2023’s survey was conducted between 8 and 27 February 2023. The improved business confidence increased because of better activity. Statistics South Africa reported a (smaller) 1,2% annual decline in the real value of construction works in 4Q2022, from the 3,1% contraction in 3Q2022. Siphamandla Mkhwanazi, Senior Economist at FNB says this may point to a further improvement, possibly in 1Q2023. At the moment improvements come off a low base, but they are improvements nonetheless.

and profitability were at multi-year highs. But, Mkhwanazi cautions that, given the public sector’s poor track record when it comes to delivering infrastructure projects, sentiment may not be as predicted. At the moment indications are that sentiment will keep on increasing on par with the increase of construction work in the civils industry.

The smaller contraction has also led to better profitability after a period during which civil contracts experience profit margin pressure. This, says Mkhwanazi, is what led to the more upbeat mood and increase in the level of confidence. Although anecdotal, the availability of work is expected to trend higher in subsequent quarters, especially in the third quarter of the year for particularly public sector projects related to water and road infrastructure. Should the tenders for the various expected projects be awarded, it will boost construction work (and the industry confidence) for the next few quarters. In addition, there are private sector investment in the alternative energy sector. The better sentiment is because of the broad-base improvement in the business environment. Other indices that measure growth in civil construction activity, employment

Wilhelm du Plessis Editor

IN THIS ISSUE This issue’s cover story took me to Sunnyside in Pretoria where Concor is building a super basement as the first phase on the new Trevenna Office Campus. This is a 68 000 m 2 basement and the logistics required by the contractor and the readymix supplier are meticulous.

EDITOR & DEPUTY PUBLISHER Wilhelm du Plessis constr@crown.co.za ADVERTISING MANAGER Erna Oosthuizen ernao@crown.co.za LAYOUT & GRAPHIC ARTIST

PUBLISHER Karen Grant

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2 CONSTRUCTION WORLD APRIL 2023