JP Holmes, National Head: Specialist Property Line of Business at Bryte Insurance
South Africa’s construction sector has witnessed several challenges since its peak due to the 2010 FIFA World Cup.
Among these have been high rates of unemployment, a continued low economic growth environment, declining levels of investor confidence as well as public sector infrastructure spending. What’s more though, is the growing threat of construction mafias, ongoing project delays and collusion charges have been among the contributors in the sector shedding over 30 000 jobs in the past year.
Construction sector conundrum:
On your mark…
Suffering debilitating losses in recent years, many large construction companies are a shadow of their former selves. Now, COVID-19 is worsening an already dire situation. With so many businesses defaulting to survival mode – the world over – productive partnership, alternative solutions and endurance are even more vital to weather this storm.
Questions raised include:
- How to work within constraints and identify the challenges as well as opportunities this new normal presents?
- What does efficient adaptation and sustainable growth really entails in a dynamically evolving and immensely unpredictable environment?
- How to maximise on human capital?
- Is our business model future-fit?
While there may not be clear answers to many questions, undoubtedly, the urgent revitalisation of South Africa’s construction sector is critical. Once contributing R110 billion, many predict it can again reach highs reaching over R100 billion by 2024. Meaningful collaboration and sustainable efforts across the entire value chain – government, construction business, private investors, employees, suppliers, etc. – is however imperative.
Get set…
Here’s what brokers should encourage businesses to consider:
- The company you keep
- Identify (existing and anticipated) exposures and moderate against these using the experts such as risk engineers, brokers, underwriters, etc
- Choose your insurer and intermediary, carefully. They have a tremendous responsibility in supporting the sector’s evolution and the capacity to present solutions to the challenges within the sector
- Your insurer/intermediary must re-evaluate their product and service offerings, shifting the focus to confront the changes presented by existing, emerging and anticipated exposures
- Insurers/intermediaries demonstrating genuine partnership, commitment and collaboration, will stand the test of time
- The weakest link
- The pandemic is challenging how the construction sector – as well as those within its value chain – strategise, implement and operate amidst widespread uncertainty
- There is no room for weak links hence issues must be promptly addressed
- Revise for relevance
- Revisit the specifics within contracts to ensure accuracy in pricing, roles, deliverables, greater accountability across the sectors gatekeepers, etc. and to safeguard against possible compliance issues
- Build dexterous businesses
- Reimagine customer needs and how to address these together with opportunity-cost benefits. Should your client look more closely at pre-made/modular construction?
- Ripple effects
- Factor in delays and the ripple effects of risks such as COVID-19 (human resources, legislative changes, investment constraints, etc), more effectively
- People, first
- Ensure strict alignment to new norms pertaining to health and safety regulations as well as best practice
- As technology usage intensifies, ensure talent development keeps pace
- Focus on bringing in talent from diverse backgrounds and ensure the highest levels of transformation
Go…
While it is difficult to predict what the aftermath of this pandemic will look like, there are certainly a myriad of life-long lessons that may be learnt by those who are keen to interrogate them. The battle of resilience in more robust and innovative ways is one that continues to require diverse talents, the right partners, resourceful thinking, agile approaches and measured risk-taking.
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