The construction industry has received a sign of possible better times ahead, with the nominal estimated value of civil construction projects out to tender increasing by 42% in the second quarter of this year compared to the previous quarter.
David Metelerkamp, senior economist at construction market intelligence firm Industry Insight, said the nominal estimated value of civil construction projects out to tender was up by “an encouraging” 38.6% on a year-on-year basis in the second quarter.
“Following some improvement in the estimated tender values during the last two quarters, the annual rate of decline measured over the last 12 months has turned positive and increased by 0.5% year-on-year.”
He added that the more robust quarter-on-quarter increase in the second quarter followed an improved performance in the first quarter of this year when estimated values increased by 1.8%.
He said an increase in the number of Construction Industry Development Board (CIDB) Grade 9 projects, with a construction value exceeding R130 million, out to tender in the second quarter supported this growth.
The number of projects exceeding this value that were put out to tender increased to 22 in the second quarter from 15 in the previous quarter and 10 in the fourth quarter of last year, he said.
Metelerkamp said the majority of Grade 9 projects out to tender were in roads, which contributed 40% of the tenders, followed by water at 27%.
He said the value of road tenders increased by 1% and water projects by 6%.
“Water projects have offered some opportunities over the last year, as this sector has gained some priorities considering the lack of infrastructure investment, particularly on maintenance, and the negative impact of the recent drought in the country.
“This is however the first positive growth in the value of road projects since 2017, and although the growth is marginal at just 1% nominal, it does provide some reprieve and the hope of a more stable outlook for the civil industry,” he said.