In a developing country, economic climate change and compliance with regulations and legislation within the construction industry have proved to be major stumbling blocks for property developers.
To exacerbate the natural state of affairs, the Covid-19 pandemic was announced in the first quarter of 2020, which adversely affected the construction sector in South Africa.
Despite operating in one of South Africa’s secondary sectors of the economy, with conditions far from ideal, property developers continue to successfully complete world-class construction projects. Over the years, we have identified a key principle to success: An intentional mindset.
Construction Market Volatility
The construction market in South Africa has been anything but forgiving during the past two years. The unexpected spread of the Coronavirus in 2020 followed by the beginning of a worldwide pandemic, left the industry in a state of turmoil as a result of construction projects coming to a grinding halt. The consequences were enormous and, unequivocally, detrimental to an industry that already faces many challenges. Deadlines were missed, jobs were lost and evidently, capital expenditure in both the public and private sector took a steep downward plunge.
This set of circumstances, however, is by no means unfamiliar territory to those that have carefully treaded this industry. For many years and more seemingly over the past ten years, the construction sector has been, and remains, a volatile trade. In South Africa, compliance with B-BBEE regulations, fluctuating exchange rates, industrial action, health and safety policies, environmental sustainability, financial liquidity, and community engagement are common risks associated with construction projects. In addition, property developers very often have to jump through hoops to get projects approved timeously by council.
One could easily argue that the sudden and extreme changes are what makes it such an exhilarating industry to work in: the highs are extremely high and the lows are exhausting.
The overarching objective for any property developer is to complete a construction project successfully. The definition of success may mean something different from one individual to the next, but is typically a balance of the constraints of the iron triangle so often referred to by project managers: time, cost and scope to reach optimum quality. It is a compromise – and certainly a challenging one. In addition to all the previously mentioned common risks associated with construction projects in South Africa, it is a fundamental success factor that the scope is completed within a given timeframe, at a certain level of quality, and doing so cost-effectively. This is nothing new to developers – in fact, it is part of what makes them good at what they do.
Adamant to pull through the trying times, they have developed a highly elevated soft skill that fuels their persistence: resiliency.
Resiliency has many interpretations. It is the ability to withstand adversity, the capacity to recover from difficult situations and the power to return to one’s original form after being, hypothetically speaking, deformed or compressed. It is bouncebackability.
Interestingly, the word resiliency is also synonymized with flexibility and building resiliency in a volatile environment has equipped property developers in South Africa to withstand drawbacks and adapt to the challenging circumstances they face on a daily basis. But, how?
As a property developer, it is fundamental to appoint a team of professional consultants, for any construction project, that can lead the team to make crucial decisions, manage and mitigate risks and ultimately complete a project to the desired quality, within the required timeframe, and within budget. For any professional consultant, steering the client (in this case the property developer) in the right direction in terms of decision-making, prompting a client to identify potential risks and acting in the best interest of the client are fundamental attributes needed to make a good team great.
A great professional team that possess the required knowledge and expertise can ultimately steer a project to success. A pro-active approach and high standard of service delivery by the professional team, can and will make a meaningful contribution to any construction project. This, in turn, will allow the property developer to focus on other important decision-making tasks such as strategic planning and stakeholder engagement.
Property developers have become accustomed to the ever-changing construction sector trends in South Africa and even more so over the past few years. Despite the precarious circumstances, they have maintained focus to seek and investigate various opportunities within the industry, driving the development of projects that range mainly within the residential and healthcare sectors, and commercial sector to a smaller extent.
We have seen many projects come to life over the past 2 years that would undoubtedly not have been pursued had it not been for a number of property developers that recognized the opportunity to capitalize on competitive tender pricing – even though steel prices shot through the roof – record-low interest rates and reduced property stock in the market.
Although bold risk-takers have proven to be some of the best property developers in the country, there is a fine balance that needs to be maintained in order to be successful. A risk management approach and plan are critical tools that aid calculated risk-taking processes and brings a higher chance of success. The ability to take calculated risks is key to long-term success and building resiliency.
Adapt and Act
You can’t teach an old dog new tricks – a saying most of us are familiar with and certainly a state of mind that is not conducive to innovation and new ways of thinking. Having the ability to adapt to an every-changing environment also requires the will to act, and doing so at full tilt.
Adapting to a new set of circumstances and thriving in such an environment really correlates highly with building resiliency. It is fundamental, not only for property developers in South Africa, but also for consultants, contractors and suppliers to react to the demand of the industry and improve on conventional methodologies, allowing the necessary industry growth across all sub-sectors.
The construction sector in South Africa is a volatile market and the global pandemic has caused great uncertainty within the industry: the public and private sectors have both seen a major fall in activity and although we are experiencing improved growth, we are not out of the woods (yet).
Building resiliency is key to the recovery of the construction sector and property developers have been forced to adapt in the face of adversity. Taking calculated risks, acting swiftly on opportunities that present themselves, and at the same time having an inclusive, well-experienced professional team, are the building blocks to building resiliency.
Property developers in South Africa have managed to build resiliency in an exhilarating industry, showing incredible effort, energy and mental toughness.