Project outsourcing to drive growth of construction firms

The Department of Trade and Industry (DTI) and construction firms see overseas projects and engineering service outsourcing (ESO) as future drivers of growth for the country’s construction industry.

In a statement, the DTI said the future drivers of growth for the construction industry were identified during a webinar on seizing construction opportunities under the new normal, organized by the agency with the Construction Industry Authority of the Philippines and the Philippine Overseas Construction Board (POCB).

“As we all know, construction services sector is one of the major revenue-generating sectors of the country, whether in local or foreign business dealings. Despite a major decrease in the number of Philippine construction services exporters from over a hundred in the 1980s to 37 at present, the overseas construction industry still contributed its share to the economy: a total amount of $116.08 million,” Trade Undersecretary for trade promotions Abdulgani Macatoman said.

For his part, Norman Macapagal, executive vice president of EEI Corp. and president of EEI Ltd. Inc., said the construction industry is expected to rebound after the COVID-19 outbreak.

In the meantime, he said, construction firms should prepare for the industry’s recovery by quickly transforming the business and looking at opportunities such as foreign projects.

“In our company, we have been talking about changing our procedures because they are too long, with too many signatures involved. When the pandemic came in and we were on lockdown, the procedures that we were discussing for over a year were suddenly simplified. We were forced to look at new construction techniques and methods because of the need to survive,” he said.

EEI has been undertaking construction projects since the 1970s.

Macapagal said construction firms interested in bidding for foreign projects should study taxation and labor regulations of the country where they want to participate, as well as of the POCB.

In starting operations in a foreign country, he said the construction firm has the option to either establish a temporary branch, a permanent office, or to partner with a local company.

Ernesto de Castro, president of Esca Inc. and Esca International

Inc., said ESO offers opportunities for the country.

ESO in the Philippines was valued at $250 million or one percent of the country’s total outsourcing sector, and 0.5 percent of all ESO in the world in 2016.

“We are already number one in voice services, but the challenge is to move from voice to non-voice, in particular, to go into the high valueadded activities under KPO (knowledge process outsourcing) and link these services embedded to manufacturing, such as finance, design, and engineering,” De Castro said.

To take advantage of opportunities and develop ESO in the country, he said Philippine engineers should be trained on building information modeling (BIM) or a process used to plan, design, construct and manage buildings and infrastructure.