Construction

Building capacity

Murray & Roberts Construction is overcoming a number of historic challenges to gear up for new opportunities as the growth trend in fixed investment gathers momentum

Two decades of decline in an industry competing for limited opportunities compounded by internal problems experienced by Murray & Roberts in the late 1990s, have taken their toll on the performance of Murray & Roberts Construction over the past few years. In recent years, Murray & Roberts Construction steadily consolidated its southern African provincial and regional building and civil construction operations in an effort to deliver better value and develop the critical mass required to engage anticipated market opportunities.

Now, as major new opportunities start to materialise, the business, like the industry, faces the challenge of having to build new capacity virtually overnight.

In the past year, the Group has introduced a number of critical measures, including the appointment of a new top leadership team and a special focus on 2010 projects under separate executive
management, to develop sustainable capacity in the local engineering and construction sector and ensure the successful delivery of major projects awarded in recent months.

MD Gordon Taylor was appointed in April 2006 and he has identified three key strategic themes that he will drive within the business as it engages an era of unprecedented opportunity.

PERFORMANCE DISCIPLINE

This involves getting the basics right – consistently, including market development, choice of client and quality of project. Targeted projects will undergo a stringent process of evaluation to mitigate risk and the highest levels of attention to detail will be given to contract negotiation, project costing and understanding of specifications.

“The ability to accurately forecast the outcome of a project in the dimensions of quality, time and cost is a hallmark of top performance in project companies and will form the core of our project reviews,” says Gordon.

ENGINEERING/TECHNOLOGICAL PROWESS

Murray & Roberts Construction has invested in technical capacity to complement its investment in people and this will help to differentiate its business.

The Enterprise Resource Planning (ERP) project, which is being implemented in all of the Murray & Roberts contracting businesses to strengthen project delivery, is an important component of this investment and the construction business will be able learn from the implementation efforts of other Group companies, such as Concor, Cementation and Engineering Solutions.

In an environment of skills shortages, where demand exceeds supply in project managers and other key personnel, Murray & Roberts Construction will have to work smarter and harder to maintain superior technological capability. This will involve redeveloping a competence in engineering and project services within the business and building on previous successes in the Group’s core competencies of design-build and industrial design.

“The reputation of our Group is built on some of the construction icons of our time. We have done it successfully before and we will succeed again,” says Gordon.

ADAPT OR DIE

A growth environment brings exciting new challenges. Over the past few years the greatest challenge has been to find work and secure it against fierce competition.

More often than not this meant pricing below sustainable levels.

“In the future, we foresee an environment where there will be more than enough work. Our challenge will be to understand which work to say no to and how we are going to retain key skills. If we get it right, we will increasingly take on work that has been negotiated instead of tendered, for clients that we anticipate will provide ongoing opportunity. The projects will align well with our capabilities and will be completed at sound margins with lower levels of risk.

“To achieve this, we will have to align more closely with the business objectives of our key clients and focus on areas where we can create value for clients and shareholders.”