Page 90 - Risk Report 2024

1. Functional State 2. Politics

The sector relies on a robust, functional state, where State- Geopolitical tension, political unrest, riots, strikes, and disruptive
funded infrastructure and maintenance projects catalyse events create a climate of uncertainty, with the SA election
business opportunities and job creation. Service delivery outcome having added another layer of unpredictability. Key
failures (mainly water and electricity) impact construction risks are that current town planning and local authority approval
projects through stoppages, delays, and increased costs. Sector delays will be exacerbated with the change in government and
entities invest in water recycling and alternative power supplies that disruptive events will cause project delays. Changes in
at higher project costs to clients, construction companies, Government policies, laws and regulations relating to land use,
and the overall economy. Client expectations have evolved, zoning, urban planning, and the environment will impact the
expecting property developers to provide uninterrupted industry and disrupt construction projects.
essential services where the State fails to do so.

3. Economy 4. Social Security
Due to eroded investor confidence and market volatility Domestic uncertainty is compounded by declining political,
triggered by local and international uncertainties described social, and economic conditions, which may cause construction
above, businesses are delaying major decisions, and customers companies to restructure their businesses with resultant
are altering their spending patterns, impacting economic impacts on staff wellbeing and increased unemployment.
growth. Construction companies focus on agility to adapt
to changing market conditions, reduce the impact on staff,
improve resilience (through comprehensive insurance coverage
against unexpected events), and financial management (to
ensure healthy cash flow, mitigate delays and infrastructure
shortcomings), while addressing client and investor concerns
to maintain trust and stability.

5. Rule of Law 6. Water
Construction mafias (colloquially ‘business forums’) and Uncertainty is compounded by water interruptions (often
corrupt officials extort money from contractors, subcontractors, planned for by contractors and included in project costs).
and developers, causing project delays or abandonment, and Deteriorating water infrastructure due to the lack of maintenance
increased costs. Tender fraud, corruption, and bid rigging forces construction companies and property developers to
affect sector entities who rely on State-issued tenders. build the required infrastructure on behalf of Government
Collusion between all role players in the sector necessitates to ensure adequate water supply to their developments or
increased investment in security measures and legal actions projects. Construction companies could work with Government
to protect staff, contractors, and assets. Industry has called on to find solutions to build water preservation, water recycling,
Government to act against criminal extortion and corruption, water purification solutions together with innovative solutions
and to dismantle these networks to safeguard the integrity of to reduce water pollution.
construction projects and protect the interest of legitimate
stakeholders.