03 June 2009

Prospect for the Construction Industry.

A couple of days ago, someone posted a little question on my comment box. Here it goes...

Hi Eric,

What's the prospect of the construction industry going forward? R U dependent on the government sector to get projects. If not then how many % of ur jobs r from government sector?

Kiaramas Gateway.

I personally expect 2009 to be a 'mixed fortune' year for the construction industry. It will be very competitive in terms of securing new projects and contracts. However, as I had mentioned previously, the contractors with the most number of projects and a heavy order book would benefit the most. With the lesser private contracts being rolled out, the drop in demand would be a drop is material prices too - hence those with the bigger order books would benefit.

Twins, Bukit Damansara.

During the boom times, we have had a 70-30% percentage difference - 70% are private contracts and the remaining are government based. During a difficult time like this, we would rely more on government contracts - as the government offers more security in terms of cash flow and payments, hence ideally we would like to increase that percentage to about 50-50. Our current breakdown is about 62% private jobs vs 38% government based - so I think we are quite safe here. Our private developer clientele consists of carefully selected, financially sound and distinguished developers - as we are very careful on the paymaster side.

Smart School in Putrajaya.

Our current order book, whereby the bulk of it was secured last year is expected to last us well within the next 2 years. We are still actively and constantly participating in various government and private tenders - and we hope to secure a couple of these contracts.



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