Undercharging for contracts was an error, says Basil Read chief

SA’s construction industry erred by securing work at low margins to maintain capacity when infrastructure spend dried up, says Basil Read CEO Khathutshelo Mapasa.

“You have to tender with margins that support your business. You must tender for profitable projects. Then you must have a very strong execution capability. The reason construction companies are in this state is because we have so much capacity, we ended up undercutting each other to secure jobs. Before the 2010 Fifa World Cup, we were pushing work away,” he said.

Mapasa said Basil Read had to be “in better parts” of the construction value chain. He said the group should aim for so-called design, build and operate contracts, whereby a contractor is appointed to design and build a project and then operate it for a period of time. He cited the St Helena airport project.

Basil Read’s mining and developments businesses, which are separate legal entities, were successful and self-sustaining, he said.

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