Real Estate Industry
Construction sector is the biggest success story of this decade. An indicator of economy’s health, a major factor in sustaining the growth momentum is witnessing unprecedented demand from emerging market economies. Governments, regulations and private sector are all aligned in the same direction of building world class infrastructure to support the growth story. Companies from developed economies are seeking opportunities to contribute to the growth story and in the process revive their stagnant topline. Huge investments from private sector are pouring to bridge the gap between allocated funds and huge demand thereby forging public-private partnerships.
Key trends shaping the industry:
Opportunistic Growth: Different sectors are offering different levels of growth, power sector being at the top. To sustain immediate needs of economic growth, Governments are focusing on fewer sectors. This trend is attracting private equity funds from across the world to few segments resulting in skewed growth in the sector.
Entry of new players: Licensing of projects to build roads and ports are attracting unrelated companies to win licenses and allocate the projects later to core infrastructure firms there by getting benefit in between. Many companies have followed this route to develop competencies in this sector and later on become a mainstream construction company.
Innovative business models: Due to high leverage nature of construction industry, players are increasingly experimenting with new business models to keep their balance sheet clean and to be able to take more projects in future. Public-private partnerships, use of SPVs and identification to new revenue streams are giving impetus to the sector towards sustainable growth.
Challenges facing the players involved in the industry:
Project Execution: Due to numerous reasons infrastructure projects fail their deadline of completion. Main challenge faced by players is to maintain a collaborative ecosystem of suppliers, contractors and risk management institutions to carry on the project in time. This requires specialized management skills that construction companies lack at the moment since their core competency lies in design and executional skills.
Supply Constraints: Local players are facing capacity constraints in supplying equipment to construction players. This has provided opportunity to large and capable players to supply equipment intensifying competition.
Shortage of expertise: Huge capacity additions are challenging power sector players in building high capacity plants due to the specialized equipment and skills needed to manage them. Airports and port infrastructure are also facing similar issues challenging incumbent players to raise their skillsets to international level to keep their growth sustainable.
How can BMGI help?
BMGI has built expertize in project management and business transformation skills that have been used successfully to help construction companies deliver quality results. BMGI has contributed in expediting project execution by streamlining operational processes across the construction ecosystem to deliver benefits to the entire set of players. Developing strategic options in sourcing and building world class skillsets using benchmarking techniques has distinguished BMGI from others in supporting construction industry for the last decade.
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