Octagon Contracting & Engineering : construction market

Showing posts with label construction market. Show all posts

Thursday, October 30, 2014

Alexandros Ignatiadis- interview The Money Channel: A licensing system and BVB listing could help Romanian construction companies participate in bids for large infrastructure projects

Romania is supposed to build 656 km of highway and 2,226 km of express roads by 2030, according to the Transport Master Plan, presented by the Minister of Transport Ioan Rus, at the beginning of October. The highway projects included in the Master Plan are Sibiu - Braşov (103 km), Ploieşti - Comarnic (49 km), Craiova - Piteşti (115 km), Comarnic - Braşov (54 km), Braşov - Bacău (158 km) and Gilău - Borş (177 km), the total estimated cost for these projects, reaching 6.28 billion euro. Moreover, the Master Plan includes the construction of express roads totaling approximately 2,200 km, the necessary funds for these projects accounting for around 17.5 billion euro. According to the document, 2,674 km of trans-regional roads, 293 km of EuroTrans roads and 172 km of city belt should be built, the total of necessary funds for the development of the road sector standing at 26.1 billion euro.

Alexandros Ignatiadis, co- founder and shareholder of the company OCTAGON CONTRACTING & ENGINEERING, commented on the Master Plan and offered solutions which could help Romanian construction companies participate in public bids for large infrastructure projects, during the TV show “Metropolis”, broadcast by the “The Money Channel”.

The Money Channel: What is your perspective on the Master Plan presented by the Minister of Transport at the beginning of October?

Alexandros Ignatiadis: The Minister of Transport presents a Transport Master Plan on a regular basis. It is our obligations to the European Community to send this report, but the question marks are related to the lack of responsibility towards the objectives within the previous Master Plans. We never find out which of these have not been reached and who is responsible for the positive or negative results. In the private sector, companies that do not perform, pay through low profits or even losses, for the failed objectives. In the public sector we do not have an evaluation and control system, which could hold those governing the country, accountable. Each new government sends optimistic messages related to the plans for the ongoing terms, but at the end of the term, the results are always disastrous.

The Money Channel: What changes should occur on the construction market to allow Romanian contractors to have access to road infrastructure projects?

Alexandros Ignatiadis: A major issue, which stops Romanian construction companies to participate in such large bids, is the weak capitalization. The financial burden, represented by bank guarantees and performance guarantees, combined with long delays on payments made by the state, which is the beneficiary of these projects, are the main causes why Romanian companies cannot stand the competition against foreign companies. A method to attract capital would be through Bucharest Stock Exchange, but right now there is no Romanian construction company listed on the Stock Exchange.

The second negative factor is the interference of politics in public bids, which could be eliminated by licensing the construction companies. Through licensing, only the companies with a certain level of capitalization and a certain level of expertise would have access to bids. Right now, the Romanian legislation allows any company, set up six months ago, with a share capital of 200 lei and obviously devoid of the necessary expertise, to be eligible for the construction of large infrastructure projects. The only condition is to partner with other companies willing to provide technical or financial support.

The licensing of construction companies would stop the phenomenon of “flat companies”, set up over night, politically backed, which vanish right after the end of the term of those who have supported them.

Licensing could also solve the issue of contested results, which prolong almost three times the life cycle of a project.

We all know that, within all European projects, the funds are allocated for a certain term and if the implementation of the project exceeds the initial term, the funds can no longer be absorbed. In Romania the execution terms of infrastructure projects are prolonged 3 to 4 times due to the mentioned issues, and at the end of each year we manage to always wonder about the same thing: why do we absorb such a low percentage of the allocated European funds?

Romania had, at the end of last year, 644 km of highway, 16,466 km of national roads, 35,587 km of county roads and 32,190 km of village roads. According to the Master Plan, there are no express roads in Romania.

You can watch the show here:

Wednesday, October 15, 2014

OCTAGON ranks 20th in Top 100 General Construction Contractors in 2014

OCTAGON CONTRACTING & ENGINEERING ranks high in “Top 100 General Construction Contractors in 2014”, compiled by IBC Focus. The company ranks 20^th among the 100 selected companies, after having reached an 87 million lei turnover in 2013.

The first 300 general contractors with the NACE code 4120- construction works for residential and non-residential buildings were considered for selection, depending on the turnover and on the number of ongoing projects in the past 12 months. IBC Focus used 4 different sources of information: the Ministry of Finances, the National Trade Registry, the Investment Report and the answers received from companies, after filling relevant questionnaires.

The top excluded the companies registered under NACE code 4120 which perform other activities than the construction of residential and non-residential buildings; companies that are part of a group of companies already represented in Top 100 General Contractors by another company; companies that reported turnover and activity at the end of 2013, but when the information was collected were in insolvency, liquidation, radiation or dissolution; companies that did not have any ongoing construction project in 2013.

The company ranking first in top 100- Strabag SRL had a 1.1 billion lei turnover, while the last company in the top posted a 30 million lei turnover.

The first 10 positions in the top were filled by Strabag, Bog’Art, Astaldi Spa, Aktor Societate Tehnica Anonima Aktor, Vega 93, Con-A, P.A.B. Romania, Danya Cebus Rom, Constructii Erbasu and Aedificia Carpati.

2013 marked a strong recovery of OCTAGON CONTRACTING & ENGINEERING on the construction market. The company contracted six new projects and performed construction works worth around 20 million Euro- 87 million lei, in Romania and in Irak, where Octagon has a branch.

Thus in 2013 OCTAGON became general contractor for the office complex Hermes Business Campus- located in Bucharest, Dimitrie Pompeiu Blvd. OCTAGON performed superstructure, electrical and sanitary installation and HVAC, concrete reinforcement works, the construction of the underground levels -4 and -3 and lifted the superstructure of building B. The works were worth 13 million Euro.

In 2011 OCTAGON build the foundation in top- down system, for two underground levels, within the office complex Hermes Business Campus.

Another project representative for the office market in Romania, in which the company was involved, is the office complex Green Court Bucharest (Gara Herastrau St.- Bucharest) where OCTAGON performed infrastructure and superstructure works for buildings A and B.

OCTAGON started last autumn the special foundation and infrastructure works on the office building PC Business Center (7- 9 A Bucharest- Ploiesti Road).

In 2013 OCTAGON also started the special foundation works on two projects in Iraq: Al Zawraa Stadium in Baghdad and the Electric Power Plant 1,250 MW Shatt Al Basra.

Hermes Business Campus

Green Court Bucharest

PC Business Center

OCTAGON CONTRACTING & ENGINEERING

For more information click HERE.

Phone: (+4)021.232.39.20

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Tuesday, September 16, 2014

Interview BURSA CONSTRUCTIILOR- Alexandros Ignatiadis: Our anchor during the crisis was the Iraqi market

Alexandros Ignatiadis

Octagon will end 2014 with a 16 million euro turnover, a decline on the turnover reported last year, according to the estimates of Alexandros Ignatiadis, co- founder and shareholder of the company. The anchor of Octagon during the crisis was the Iraqi market, he told us during an interview, stressing that the company wants to consolidate its position in this country, where it already has two ongoing projects. Alexandros Ignatiadis believes that the Romanian construction market needs restructuring, as it operates on 900 million euro annual losses and as in the past 20 years it has been negatively affected by political instability. Mr. Ignatiadis told us that the beginning of the year was characterized by effervescence in the private real estate sector, but, after the end of the first semester, many projects have slowed down.

Hermes Business Campus- building B

Reporter: How did the company’s activity evolve in the first year half and what is your forecast for the second half of the year?

Alexandros Ignatiadis: The first half of the year evolved positively for Octagon. We finished the construction of the first building within the office complex Hermes Business Campus, where we were general contractor and we contracted new civil, geotechnical and infrastructure works. The turnover for H1 of 2014- 6.6 million euro, is similar to the one of H 1 2013, so the financial perspectives for 2014 are optimistic.

Green Court Bucharest- building B 1

Reporter: Will 2014 be a better year than 2013 for Octagon?

Alexandros Ignatiadis: Even if it included number 13- that allegedly brings bad luck, 2013 was one of the best years OCTAGON has had so far. Two of our remarkable successes were the fact that we became general contractor for Hermes Business Campus and also having delivered the first building of the complex Green Court Bucharest, developed by Swedish real estate giant Skanska. We ended the year with a 19.6 million euro turnover, and we estimate a 16 million euro turnover for 2014.

Reporter: How do you see the short and medium term evolution of the construction market?

Green Court Bucharest- building B 2

Alexandros Ignatiadis: The construction market needs restructuring, because something is fundamentally wrong in this industry. A 4 billion euro market is operating on 900 million euro annual losses. It is an overcrowded market, which has been negatively influenced by political instability in the past 20 years. The short and medium term evolution will only be positive if this regulation occurs and if the state grants fiscal incentives for the sector consolidation. There is also a law draft initiated by the Romanian Association of Construction Entrepreneurs (ARACO), to eliminate from the competition, the companies set up overnight, that have access to public projects worth hundreds of millions of euro. Another solution would be to merge several Romanian companies in order to create companies with a superior financial power, able to access tenders for very high value projects. The construction sector is still a brake for economic growth, due to the fact that the political stabilization process has not ended yet

Reporter: How have the orders generated by public and private investments, evolved this year?

Alexandros Ignatiadis: Due to the fact that 2014 is an electoral year, most of the public funds have been directed towards areas able to attract voters. The construction sector is not a priority for the state this year, but we have been slightly affected, as we are not involved in major public projects. The private sector is dynamic this year. We participate in tenders for projects within all the segments of the construction market.

PC Business Center- superstructure 1

Reporter: Consultants say that the new real estate developments market, including the residential sector, has started to perform better this year. What is your perspective?

Alexandros Ignatiadis: The year started dynamically in the private sector and this gave new hopes, but after the first semester many announced projects have slowed down.

Reporter: What will be the engine of the construction market in the next period?

Alexandros Ignatiadis: Inevitably, after 4 years of stagnation, infrastructure will be the engine of the construction market.

Reporter: What are the short and medium term development plans of Octagon?

Alexandros Ignatiadis: In a stagnating market, our priority is the consolidation of the economic position and keeping the existing clients.

PC Business Center- superstructure 2

Reporter: How would you evaluate the tax level in our country?

Alexandros Ignatiadis: The tax level is acceptable against other EU member states, but the number of taxes must be reduced and wage inflexibility must also relax.

Reporter: What are your most important ongoing projects?

Alexandros Ignatiadis: We have ongoing projects in Romania and in Iraq. In Romania we are working on two office buildings and five infrastructure projects. We are working on building B of the Green Court Bucharest office complex, located on Herastrau St.- Bucharest, after having delivered building A, at the beginning of the year. The complex will have three office buildings in total.

A project started last autumn, on which we are currently working, is the office building PC Business Center, located on 7-9 A Bucharest- Ploiesti Road. We initially performed the special foundation and infrastructure works and we are now building the superstructure.

In terms of infrastructure projects, last summer we started the geotechnical works to “ Presei Libere Square Underground Passage” (Bucharest). We are also building bored piles and metal sheet pile retention systems in Craiova on a passage over the railway. Another project is the functional rehabilitation of Revolutiei Square in Slobozia, where we are building sheet pile retention systems and we are performing drilling for dewatering systems. We are also building bored piles for sections A, D and E, sector 2- Lugoj- Deva Highway, for Salini Impregilo.

At the same time we are continuing the retention works with columns and sheet piles at the project “Rehabilitation of Brasov- Simeria railway, Coslariu- Sighisoara section”, where FCC Construccion is the general contractor.

In Iraq we have two projects: Electric Power Plant 1250 MW Shatt Al Basra in Basra (Iraq) and the residential project Iraq Gate Residential, for Iraqi developer Almco. In both projects we have been contracted for the execution of geotechnical works.

Shatt Al Basra Power Plant- Iraq

Reporter: Many construction companies, among which Octagon, have expended abroad as well. Octagon is developing in Iraq. Is this a good solution for survival during the crisis?

Alexandros Ignatiadis: Our anchor during the crisis has been the Iraqi market. We have decided to try another market with long term growth perspectives and that has liquidities for infrastructure projects. The security issues have been an addition advantage for us, as they keep competition away. Right now we are building awareness and we are waiting for the political system to stabilize. The fact that we have two ongoing projects is a positive sign and comes as a confirmation of the fact that we had good intuition when we decided to expand there.

Reporter: Do you plan to expand in other countries as well? If yes, where exactly?

Alexandros Ignatiadis: Right now we are focusing on consolidating our activity in Iraq, but should the opportunity of entering a market with high growth potential arise, we will certainly take it.

(www.constructiibursa.ro )