1 00:00:00,000 --> 00:00:03,400 Speaker 1: Well, you would, of course have been watching the situation 2 00:00:03,520 --> 00:00:06,440 Speaker 1: around fuel prices, and they've been a few reminders today 3 00:00:06,720 --> 00:00:09,520 Speaker 1: about how extensive and long term the knock on effects 4 00:00:09,560 --> 00:00:12,960 Speaker 1: of higher fuel prices could be. First the Civil Confidence 5 00:00:13,039 --> 00:00:15,000 Speaker 1: Index compiled by F and B in the Bureau for 6 00:00:15,040 --> 00:00:18,600 Speaker 1: Economic Research. This is confidence in the civil construction industry, 7 00:00:18,800 --> 00:00:21,520 Speaker 1: falling from fifty two to forty three in the first 8 00:00:21,520 --> 00:00:24,040 Speaker 1: three months of this year. Then a warning from master 9 00:00:24,120 --> 00:00:27,520 Speaker 1: Builders South Africa that fuel prices could affect projects and 10 00:00:27,680 --> 00:00:30,280 Speaker 1: crucially the agreements that govern them, and you can imagine 11 00:00:30,280 --> 00:00:33,240 Speaker 1: the long term nature of some of these agreements. Roy 12 00:00:33,240 --> 00:00:36,320 Speaker 1: and nissis the executive director of master Builders South Africa. Roy, 13 00:00:36,680 --> 00:00:38,120 Speaker 1: good evening. I think you've had to step out of 14 00:00:38,120 --> 00:00:40,280 Speaker 1: something to speak to us, so I really appreciate the time. 15 00:00:40,400 --> 00:00:43,320 Speaker 1: Thank you. We all know fuel prices affect the price 16 00:00:43,360 --> 00:00:46,440 Speaker 1: of a construction project. How worried are you about there 17 00:00:46,520 --> 00:00:48,040 Speaker 1: knock on effects on your industry? 18 00:00:49,560 --> 00:00:53,720 Speaker 2: Yes, indeed, Stevian, we are one of the industries that 19 00:00:53,920 --> 00:00:58,560 Speaker 2: are directly affected by the fuel prices. This is so 20 00:00:58,760 --> 00:01:02,880 Speaker 2: because we rely a lot on it for our operations, 21 00:01:03,440 --> 00:01:08,600 Speaker 2: the transporting of the material, transporting of our employees to 22 00:01:08,680 --> 00:01:13,120 Speaker 2: construction site and the use of the machinery that we 23 00:01:13,280 --> 00:01:17,840 Speaker 2: use on site, so significant pushing of our costing goes 24 00:01:17,880 --> 00:01:21,800 Speaker 2: through full well. So whenever there is a huge adjustment 25 00:01:22,280 --> 00:01:25,800 Speaker 2: of fu well more especially upward adjustment of fuel, we 26 00:01:26,400 --> 00:01:27,440 Speaker 2: will suffer a lot. 27 00:01:28,240 --> 00:01:32,399 Speaker 1: I mean, many contracts were signed long before anyone had 28 00:01:32,480 --> 00:01:35,200 Speaker 1: any idea that this could all happen. Could that lead 29 00:01:35,240 --> 00:01:37,560 Speaker 1: to quite a difficult situation. The last thing anyone wants 30 00:01:37,560 --> 00:01:40,320 Speaker 1: in a construction project is a dispute about the costs. 31 00:01:41,440 --> 00:01:47,280 Speaker 2: Yes, indeed, it will definitely affect project delivery timelines because 32 00:01:47,720 --> 00:01:51,240 Speaker 2: when you get to an into a contract, you agree 33 00:01:51,280 --> 00:01:55,440 Speaker 2: on a commencement date and the completion dates. So with 34 00:01:56,400 --> 00:02:02,600 Speaker 2: the high prices of material control, diesel and other things, 35 00:02:02,720 --> 00:02:06,320 Speaker 2: it will definitely affect it in that manner, and in 36 00:02:06,360 --> 00:02:09,240 Speaker 2: some instances it will affect some of the projects in 37 00:02:09,320 --> 00:02:12,480 Speaker 2: terms of the dispute because when you are a mean 38 00:02:13,360 --> 00:02:19,960 Speaker 2: to build, you know your your your your your your assets. 39 00:02:20,040 --> 00:02:22,079 Speaker 2: For example, you're building and will tell you, I've got 40 00:02:22,120 --> 00:02:25,240 Speaker 2: time frame within which it had to start operating. If 41 00:02:25,280 --> 00:02:27,640 Speaker 2: you're building a shopping center, you've got a time frame 42 00:02:27,680 --> 00:02:30,560 Speaker 2: within which it would be operating. And if they are deleted. 43 00:02:30,919 --> 00:02:34,000 Speaker 2: Then then the disputes are deplayed. Then it becomes a 44 00:02:34,040 --> 00:02:38,840 Speaker 2: problem for us. So it's very very much significant for us. 45 00:02:38,840 --> 00:02:43,040 Speaker 2: It will as well interrupt the procrammance circles because now 46 00:02:43,600 --> 00:02:47,799 Speaker 2: contractors will have to embark on looking at the agreements, 47 00:02:47,880 --> 00:02:51,800 Speaker 2: trying to get extension of time, trying to adjust the 48 00:02:51,880 --> 00:02:56,200 Speaker 2: contract to a factor in those prices. Because in some 49 00:02:56,280 --> 00:02:59,280 Speaker 2: instances I can tell you without that in my mind 50 00:02:59,320 --> 00:03:02,240 Speaker 2: that if I'm in a project, this a multi year 51 00:03:02,280 --> 00:03:05,800 Speaker 2: I mean multi year projects, if it were to continue 52 00:03:06,000 --> 00:03:10,000 Speaker 2: with the pricing that was agreed apparent at the beginning 53 00:03:10,000 --> 00:03:14,240 Speaker 2: of the contract, you can go without approfit. Profit margins 54 00:03:14,240 --> 00:03:16,920 Speaker 2: in the construction circus students are very very low. 55 00:03:17,960 --> 00:03:20,000 Speaker 1: I mean, I mean, and that's really the issue. So 56 00:03:20,440 --> 00:03:23,720 Speaker 1: if you're you know, someone involved in one of these projects, 57 00:03:24,080 --> 00:03:27,119 Speaker 1: how do you resolve it? What do you do? I mean, 58 00:03:27,200 --> 00:03:31,880 Speaker 1: do you actually try and have a conversation with your customer? 59 00:03:32,000 --> 00:03:34,400 Speaker 1: Do you do something like that now? I mean, do 60 00:03:34,440 --> 00:03:36,080 Speaker 1: you try and do it early on? 61 00:03:39,040 --> 00:03:43,400 Speaker 2: Yes, for contracts that have already been inmentered into a 62 00:03:44,040 --> 00:03:48,800 Speaker 2: running the most prudent way to approach it is for 63 00:03:49,040 --> 00:03:54,160 Speaker 2: the parties to get together and try to spread this 64 00:03:54,680 --> 00:03:59,240 Speaker 2: risk because nobody knew about it at the point of contracting. 65 00:03:59,280 --> 00:04:02,320 Speaker 2: No one knew that would be in a situation where 66 00:04:02,320 --> 00:04:05,600 Speaker 2: we are now. So that is one of the areas 67 00:04:05,680 --> 00:04:10,040 Speaker 2: that we're encouraging our members contractors in the mean to say, 68 00:04:10,440 --> 00:04:14,920 Speaker 2: look at renegotiating the contracts and see if it can work. 69 00:04:14,960 --> 00:04:18,800 Speaker 2: It must work, because if nothing like that happends, then 70 00:04:18,839 --> 00:04:20,960 Speaker 2: it creates a problem. That's where you end up with 71 00:04:21,720 --> 00:04:25,200 Speaker 2: the disputes. But for contracts that have been started, we 72 00:04:25,400 --> 00:04:29,920 Speaker 2: encourage our members to actually look very carefully. You know, 73 00:04:30,160 --> 00:04:33,120 Speaker 2: they are costing requirements. It's a difficult student because you 74 00:04:33,200 --> 00:04:37,320 Speaker 2: don't know this time around it's you know, eight run 75 00:04:37,440 --> 00:04:39,800 Speaker 2: four desil. Next time it may be fourteen round. The 76 00:04:39,880 --> 00:04:42,520 Speaker 2: other time it may be twenty even so you can't 77 00:04:42,560 --> 00:04:45,920 Speaker 2: really tell exactly where you're going to be. So it's 78 00:04:45,960 --> 00:04:49,240 Speaker 2: something that needs to be continuous at this point in 79 00:04:49,320 --> 00:04:52,320 Speaker 2: time up until things becomes normal. But for now, you 80 00:04:52,720 --> 00:04:53,479 Speaker 2: really do not know. 81 00:04:54,120 --> 00:04:56,240 Speaker 1: The other thing, Roy, if I were in your business, 82 00:04:56,400 --> 00:04:59,800 Speaker 1: and many businesses will be in this position, someone might 83 00:04:59,839 --> 00:05:02,520 Speaker 1: be in the negotiation about building a new shopping center 84 00:05:02,680 --> 00:05:05,360 Speaker 1: or something, and the client will just say, we need 85 00:05:05,400 --> 00:05:07,559 Speaker 1: to wait for this to be over because we can't 86 00:05:07,560 --> 00:05:10,720 Speaker 1: sign an agreement. Now I don't know what's going to happen. 87 00:05:10,760 --> 00:05:12,360 Speaker 1: And isn't that really a problem for you? 88 00:05:13,440 --> 00:05:15,920 Speaker 2: It's also a problem and not only for us as 89 00:05:16,480 --> 00:05:19,360 Speaker 2: the sector, but it's a problem for the economy because 90 00:05:19,440 --> 00:05:23,360 Speaker 2: our affect is one of the drivers of economic growth. 91 00:05:23,560 --> 00:05:28,120 Speaker 2: So if you left project postponed up until the war 92 00:05:28,200 --> 00:05:30,600 Speaker 2: has ended, which we don't know when it's going to end, 93 00:05:31,320 --> 00:05:34,320 Speaker 2: it will it will effect. It will affect the economy. 94 00:05:34,360 --> 00:05:37,240 Speaker 2: And when the economy is affected, it affects the employment, 95 00:05:37,640 --> 00:05:42,040 Speaker 2: it affects you know, the economic development of you know, 96 00:05:42,080 --> 00:05:45,919 Speaker 2: the countries. It affects so many things. So that will 97 00:05:45,920 --> 00:05:50,359 Speaker 2: not be attainable. You know, option that the right option 98 00:05:50,520 --> 00:05:53,160 Speaker 2: is to look at ways in which we can continue 99 00:05:53,160 --> 00:05:56,360 Speaker 2: with the project. We can continue with the work at 100 00:05:56,360 --> 00:05:58,400 Speaker 2: the end, and we can continue even with work that 101 00:05:59,000 --> 00:06:02,320 Speaker 2: was planned to happen, because despite the fact that there's 102 00:06:02,440 --> 00:06:06,279 Speaker 2: war and interruptions, economy has to run on the other side. 103 00:06:06,760 --> 00:06:10,080 Speaker 1: And I mean the other problem is some industries can 104 00:06:10,160 --> 00:06:14,279 Speaker 1: maybe avoid some fuel i mean costs in some ways, 105 00:06:14,880 --> 00:06:17,400 Speaker 1: but you can't. I can't imagine you know, some mid 106 00:06:17,440 --> 00:06:20,520 Speaker 1: mixer running on electricity, that. 107 00:06:20,800 --> 00:06:24,000 Speaker 2: Is correct, Stivin. We use machinery a lot, so yeah, 108 00:06:24,279 --> 00:06:27,920 Speaker 2: it can be on electricity. It can be on electricity 109 00:06:27,920 --> 00:06:32,719 Speaker 2: and just a mere transportation of the the material, a 110 00:06:32,760 --> 00:06:36,080 Speaker 2: mere transportation of employees to the site. You know, you 111 00:06:36,160 --> 00:06:37,320 Speaker 2: can't use electricity. 112 00:06:38,560 --> 00:06:40,480 Speaker 1: I mean all of this. I mean the other problem 113 00:06:40,560 --> 00:06:42,640 Speaker 1: is the share uncertainty, isn't it right? I mean, no 114 00:06:42,680 --> 00:06:45,919 Speaker 1: one knows what's going to happen, and that uncertainty affects 115 00:06:45,960 --> 00:06:49,000 Speaker 1: every single long term industry there is, including us. 116 00:06:49,960 --> 00:06:55,000 Speaker 2: Yes, definitely, Stivian and many would argue with me that 117 00:06:55,040 --> 00:06:59,680 Speaker 2: you cannot plan for, you know, global disasters like war, 118 00:07:00,320 --> 00:07:03,360 Speaker 2: you know, outbreak of this. This is like COVID as 119 00:07:03,400 --> 00:07:07,400 Speaker 2: we had it. But the reality is that study at 120 00:07:07,440 --> 00:07:11,720 Speaker 2: some point we need to appreciate that these things are 121 00:07:11,760 --> 00:07:14,080 Speaker 2: going to happen in one way or the other. And 122 00:07:14,120 --> 00:07:16,120 Speaker 2: I think as a country we need to begin and 123 00:07:16,160 --> 00:07:18,680 Speaker 2: even at it's the factor. We need to begin to 124 00:07:18,840 --> 00:07:20,880 Speaker 2: look at ways in which we can deal with this, 125 00:07:21,040 --> 00:07:23,680 Speaker 2: because it's so sad for us. We're coming from the 126 00:07:23,800 --> 00:07:31,160 Speaker 2: devastation of the twenty or eight economics, you know, the 127 00:07:31,200 --> 00:07:35,640 Speaker 2: global financial yesactly, yes, and then we had COVID ninety 128 00:07:36,360 --> 00:07:39,040 Speaker 2: six years down the line, and trying to recover from it. 129 00:07:39,240 --> 00:07:42,560 Speaker 2: We did a little bit well last year, numbers are 130 00:07:42,600 --> 00:07:45,720 Speaker 2: showing some improvements. Then now we have got this challenge, 131 00:07:45,760 --> 00:07:48,560 Speaker 2: so it's really really devastating. 132 00:07:49,080 --> 00:07:53,280 Speaker 1: Ryan Nissi, thanks so much, Executive directed Master Builders South Africa. 133 00:07:53,480 --> 00:07:55,040 Speaker 1: No one's going to be spared from this, I have 134 00:07:55,120 --> 00:07:55,520 Speaker 1: to say.