Con­fi­dence lev­els among con­sult­ing en­gi­neers hit rock-bot­tom

Cape Times - - BUSINESS REPORT - ROY COKAYNE roy.cokayne@inl.co.za

CON­FI­DENCE lev­els in the con­sult­ing en­gi­neer­ing sec­tor de­te­ri­o­rated to their low­est level ever in the first six months of this year, with many com­pa­nies re­port­ing that they were op­er­at­ing in sur­vival mode.

The lat­est Con­sult­ing En­gi­neers SA (Cesa) bian­nual eco­nomic and ca­pac­ity sur­vey said the sen­ti­ment fell sig­nif­i­cantly to reach a record low net sat­is­fac­tion rate of just 27 per­cent in June.

It said large firms were by far the least con­fi­dent with only 15.4 per­cent con­fi­dence com­pared with 69.1 per­cent for medium-sized firms, 57.9 per­cent for small firms and 57.8 per­cent for mi­cro firms.

“Peo­ple are clearly very wor­ried about the over­all out­look for the con­struc­tion in­dus­try in gen­eral and the econ­omy,” the re­port said.

How­ever, the re­port said firms be­lieved the low­est point in the cy­cle had been reached, with over­all con­fi­dence lev­els im­prov­ing to 47.1 per­cent for the six months to De­cem­ber this year and to 45.6 per­cent for the six months to June next year.

Fee earn­ings in the first six months of this year de­creased 10 per­cent com­pared with the last six months of last year. The re­port said this was “quite a mas­sive drop in such a short space of time” and fol­lowed a 2 per­cent in­crease in the last six months of last year, but earn­ings were ex­pected to in­crease marginally in the sec­ond half of this year.

It added that 71.6 per­cent of firms were not sat­is­fied with profit mar­gins, com­pared with 61.2 per­cent in the pre­vi­ous sur­vey, with only 3.9 per­cent of firms re­port­ing their mar­gins as good, 24.2 per­cent were sat­is­fied with their mar­gins and no firms re­port­ing that their mar­gins were ex­cep­tional.

Firms re­ported that 38.8 per­cent of their over­all in­come was still out­stand­ing. Con­tri­bu­tions to fee earn­ings by the pri­vate sec­tor in­creased to 46 per­cent, which was slightly above the two- and five-year aver­age.

The con­tri­bu­tion to fee earn­ings by pro­vin­cial fell to 11 per­cent from 17 per­cent in De­cem­ber last year and that of lo­cal gov­ern­ment to 12 per­cent from 18 per­cent. The re­port said the con­tri­bu­tion to fee earn­ings by sta­te­owned en­ter­prises (SOEs) slumped to 5 per­cent from 15 per­cent.

“This is quite a stark de­cline and makes sense with very slow roll-out of projects re­ported from the SOEs. We also spec­u­late that with the rad­i­cal changes at the ex­ec­u­tive level, this is stalling projects,” it said.

The re­port said the pub­lic sec­tor was gen­er­ally re­garded as the most im­por­tant client to the in­dus­try and, de­spite the re­duced con­tri­bu­tion by the pub­lic sec­tor in the past six months, stressed that the role of the pub­lic sec­tor re­mained crit­i­cal to the en­gi­neer­ing pro­fes­sions.

It said fraud and cor­rup­tion were af­fect­ing the ethos of the coun­try’s so­ci­ety, with a lot of talk and lit­tle ac­tion ac­com­pa­ny­ing the grow­ing ev­i­dence of cor­rup­tion.

“Cesa is aware that mem­bers are un­der pres­sure from con­trac­tors and cor­rupt of­fi­cials to cer­tify pay­ment for work not com­pleted. This is re­garded as an ex­tremely se­ri­ous mat­ter for Cesa,” it said.

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