Get SA building again
The construction industry has begged the government to declare it an essential service. But it may be among the last industries that will be allowed to return to work under the lockdown plan
The construction industry has begged the government to declare it an essential service. But it may be among the last industries that will be allowed to return to work under the lockdown plan. We spoke to Giuricich Construction Brothers director Nicolo’ Giuricich.
NG: The president has asked industry bodies to make more representations and we are confident something will come out of it that will be more positive than where we are at the moment.
The construction sector is quite employee intensive. How do you manage them and keep them safe?
NG: Well, traditionally the construction industry was always regulated by very stringent safety protocols on site. We’d have to revisit these. New safety rules would have to be adhered to, like social distancing, washing of hands, wearing of masks, so risk assessments would have to be drawn up and implemented. A big role will have to be informing the workforce and educating them. Typically on a construction site every morning there’s a toolbox talk before work starts, and talks are going to have to be held specifically about this aspect. We’d already introduced temperature checks, hand sanitisers, and so on. We would have to issue extra personal protection equipment to workers.
Would you be happy with the trade-off? This all sounds quite expensive and cumbersome … or is it better than having no work being done at all?
NG: Good question, because these measures weren’t priced for when you were awarded a contract. These are additional costs that have to be borne, and we feel that possibly the client would have to come to the party. Yes, it’s a trade-off that will allow us to go to work but we must understand where the construction industry in SA is coming from: the margins are very low, and it won’t be fair that contractors should bear all costs. Hopefully a government-sponsored Covid 19-fund will contribute towards these costs.
What happens to projects that were stopped midway? Is that a bit of a nightmare to get going again?
NG: It’s a huge challenge because you’ll find there are going to be abortive costs. You can’t just pick up and start working where you stopped. For example, reinforcing steel that is exposed to the elements gets rusty and you can’t use [that], it will have to be treated or replaced. Cement, if not covered or stored, gets wet and you can’t reuse it. Your contracts are driven by sophisticated timeline programmes with heavy penalties if you don’t meet the target dates. Normally the contractor is covered by force majeure clauses … you’ll be given additional time but you won’t get any costs awarded related to the extension of time. As a building contractor you have overheads to pay, rent, salaries, and that’s the cost the contractor has to carry.
The sector has been under strain for so long now. The government has not spent money and has often failed to pay timeously. You’ve had site invasions and so forth. Do you wonder if it was a deliberate move to hobble the establishment to bring in new players? Or simply mismanagement?
NG: I think it’s a bit of both. After 2010 there was this lull in activity and also the companies that were found guilty [of collusion] by the Competition Commission paid huge fines and, coupled with the conditions in the industry, the margins just aren’t there. You’re fortunate if today you’re working at a 2%-3% margin. The challenge has been BEE. The rules change constantly. The cheapest company could win a tender but because they don’t have the correct BEE level, they don’t get the contract. So who wins at the end? Nobody. The client pays more for a project where the lowest tenderer hasn’t been awarded the contract. Also, what has been happening is that over the years, the old craftsmen and tradesmen are no longer, who were teaching the new generation their trade. We no longer have the apprentice system … so a similar system should be introduced — where unskilled people can be upskilled and taken through the various paces to arrive at a higher level.
If the government is to get the construction sector back on its feet, what does it need to do?
NG: Allow our labour laws to be more flexible and simplify the implementation of BEE levels, so that the employees at all levels of the company benefit more. These are two major elements that cost a lot of money for contracting companies. Incentives should also be given to companies to employ more people, though there has been an introduction of incentives for youth employment. Perhaps we need to zero-rate certain basic materials — cement, sand, stone, bricks and reinforcing steel. It would assist to breathe some life into the industry. And you need the skilled craftsmen and artisans. That’s why I go back to the artisan training. If you get that right it will make a huge difference to production in the industry.
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