South Africa’s construction industry growing, states PwC report

construction-damiendutoit-flickrProfessional network services provider PwC has released a report which states that South Africa’s construction industry is growing stronger and“looks poised” to support the country’s infrastructure development

The findings of the report are based on the financial results of top 10 construction companies by market capitalisation on the Johannesburg Stock Exchange (JSE).

Despite a host of financial challenges in the past three years, South Africa’s construction industry is growing stronger as individual companies are performing well and public infrastructure committments are higher, said Andries Rossouw, partner at PwC.

The report revealed that capital expenditure by public sector institutions increased by 11.7 per cent since 2011, with total expenditure amounting to US$18bn. New construction work increased only by 3.5 per cent, whereas plant, machinery and equipment purchase increased by 55 per cent.

In addition to the increase in construction projects, the report also shows that average salaries have increased compared to other sectors. “The increases are indicative of the skills shortage and efforts by the construction industry to retain key resources in anticipation of the potential upswing,” added Rossouw.

The companies surveyed in the report have agreed that there are certain factors to consider while attempting to stabilise the industry. Among these factors, integration of risk and performance management to help anticipate negative events, is imperative to construction companies, stated the report.

Common risks have been identified as health, safety, environmental sustainability, compliance with laws, growth and expansion. In addition, movement of foreign exchange too has an impact on the construction segment, as they dictate the timelines of projects.

“Transforming the construction industry is seen as a business imperative. We see skills development and resulting employment equity as one of the biggest challenges currently facing the industry. The new landscape requires improved governance, adequate risk management practices, improved transparency and disclosure to the board, audit committee and stakeholders in respect of taxes," concluded Rossouw.

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