‘Road construction profit margins under pressure’
By Nchima Nchito Jr
Thu 12 Nov. 2009, 04:00 CAT
PROFIT margins in the road construction industry are under pressure, Raubex Construction has revealed. Raubex is a construction company with operations across Southern Africa.
According to engineering news, Raubex financial and commercial director Francois Diedrechsen attributed the lower profit margins in the construction industry to a sizeable increase in the number of companies vying for especially smaller contracts.
“This happens every few years. It is just history repeating itself. Usually, within a few years these companies are gone,” he said.
Recent tender results indicated that in order to secure new work locally, current operating margins in the company's Roadmac and Raubex Construction divisions would continue to be adjusted to account for the increased competition, particularly in the light road surfacing sector.
The company stated that in Zambia, conditions were more challenging due to exceptionally high rainfall impacting on the re-gravel contracts while Rehabilitation contracts with a high content of cement and bitumen were also affected negatively by supply issues. It further states that the strength of the South African rand against the Zambian kwacha resulted in increased input costs having a negative effect on operating margins.
Diedrechsen, however, said the company delivered a “satisfactory performance”, despite challenging conditions in the first half of the year.
“Our international expansion is progressing well following the successful establishment of our footprint in Namibia, and this has already led to further work being awarded to Raubex in that country. In addition, a number of new projects were secured locally following the interim period,” said Diedrechsen.
“We expect the performance of the second half of the year to improve, and remain confident that our strong financial and operational position will allow the group to maintain its performance in the medium term.”
Labels: CONSTRUCTION, RAUBEX CONTRACTORS, ROADS
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Suspension of 42 firms licences has affected contract prices, says RDA
By Jack Zimba
Wednesday July 23, 2008 [04:00]
ROAD Development Agency (RDA) acting manager for construction and maintenance Robby Ngulube says the suspension of licences for 42 companies has reduced participation and pushed the price of the contracts up. Ngulube said in Mbala that most of the contractors were factoring in risk costs in their contracts.
“Actually during the time the 42 companies were blacklisted, most of the contractors had started factoring in risk cost, fearing that they might delay in mobilising or do shoddy works,” he said.
Ngulube, however, said the ongoing works did not suffer as a result of the ‘blacklisting’.
Meanwhile, the RDA has announced that it will, in three weeks’ time, advertise for bids for the construction of the Mbesuma Bridge.
The construction works on the bridge across the Chambeshi River were discontinued after the government faced problems with the contractor, Miller Construction.
And RDA head of public relations, Loice Saili, said there was need for people to understand the nature of jobs awarded to contractors.
She said that people usually complained of shoddy works by contractors because they did not understand what was agreed with the contractor.
“We have a problem when we don’t explain exactly what is going to happen on a project. Members of the public need to understand what exactly the contractor has been engaged to do,” said Saili.
And Raubex Contractors Limited general manager Braam Kriek has commended the government for its efficiency in dealing with contractors.
In an interview in Mbala after the RDA handed his company a K120 billion contract to resurface the Kasama-Mbala-Mpulungu Road, Kriek said this was the best time in the construction industry.
“Since we started in Zambia, this is the best time in the construction industry; the client is well organised, our payments are on time so it is going very well in the construction industry,” he said.
And responding to concerns that Raubex had too many contracts, Kriek said the company was the fourth biggest contractor in South Africa and had enough resources to carry out the contracts in Zambia.
“We are very comfortable with the amount of work we have at the moment and that will not affect the quality of our work,” he said.
Mpulungu district commissioner Willie Simfukwe had raised concern that Raubex was awarded a lot of contracts around the country and wondered whether that would not affect the quality of their work.
Currently, Raubex has seven contracts.
Labels: CONTRACTORS, RAUBEX CONTRACTORS, RDA, ROBBY NGULUBE
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