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Construction companies expect an increased order book pipeline, increased private sector work, and worker productivity enhancements in 2024
Construction firms in the Sub-Saharan Africa and Middle East and North Africa (MENA) region are expecting a ‘busy and profitable 2024’. The majority of players in the segment are anticipating ‘an increase in revenue and projects’ according to the results of a survey conducted by RIB Software in November 2023.
The survey comprises 292 responses from industry players, with 75% in Sub-Saharan Africa and 25% in Middle East and North Africa. The majority of responses were gleaned from building (31%), civil (27%) and general contracting (17%) operations. The majority of companies (87%) said they had recovered from the COVID-19 pandemic, citing rising input costs (51%), margin pressures (39%) and attracting and retaining qualified individuals (30%) as their three greatest challenges over the past 12 months.
RIB Vice President MEA, Peter Damhuis noted that 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,” he outlined.
Going forward, construction companies expect an increased order book pipeline (45%), increased private sector work (43%), sustainability (39%), worker productivity enhancements (37%) and government-led infrastructure spend (29%). Projections for 2024 in terms of revenue and project pipeline are cautiously optimistic. Some 39% of respondents expect to increase their revenue by between 5% and 10%, while 27% expect increased revenue of 15% or more, RIB said in a statement.
In terms of project pipeline projections for 2024, 29% of respondents expect an increase of 15% or more, another 29% expect an increase of between 5% and 10% and 24% expect an increase of between 10% and 15%, it added.
Economist Dr Roelof Botha, a compiler of the Afrimat Construction Index (ACI), is said to echo the sentiments shared by RIB Software, driven by 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 sector in South Africa.
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, UAE/Dubai, Bahrain and Kuwait in the year ahead and beyond.
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, RIB Software explained.
Given his firm’s specialisation in digital transformation, Damhuis noted that RIB welcomes the focus on digital transformation. He remarked, “The construction industry is notorious for being somewhat behind the curve when it comes to digital transformation. A well-thought-out digital transformation strategy can help construction companies improve their margins and ensure they meet budget and time deadlines.”
When choosing construction software, respondents will be prioritising functionality (31%), ease of use (32%) and cost (13%) in 2024. 52% of respondents said their companies will spend more on IT in 2024 than they did in 2023 and 30% said their spend will be the same as 2023. The technologies they intend to focus on in the year ahead will be on estimating and planning software (37%), cloud and real-time collaboration (26%) and project management software (10%), RIB outlined.
When asked whether they would be exploring ISO19650 standards and compliance to the standard ISO, 38% of respondents affirmed they would be. In addition, 52% of respondents said they expected the number of projects involving Building Information Modelling (BIM) to increase. In response to questions about the greatest risk factors relating to their businesses in the year ahead, 76% of respondents cited rising costs due to global unrest as the greatest risk factor, followed by fuel prices (51%) and construction mafia (50%).
Only 0.02% of respondents in the MENA region said the construction mafia represented a risk, while 48% of respondents in the SSA region cited it as a significant risk to their operations. In addition, 42% of respondents said they have carbon reduction strategies in place, with 41% saying that progress in the carbon reduction space remained the same as in the previous year and 26% saying more progress was made over the past 12 months.
Concluding, Damhuis pointed out that the overall 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.” |
