OCTAGON contractor within four infrastructure projects although the sector dropped by 28% in the first five months

    Lacking consistent public investments the road infrastructure, a sector which should support the entire economy, dropped by 27.7% in the first five months of this year, Ziarul Financiar writes, reporting the data of the National Statistics Institute (INS).

    The steep decline registered by the construction works was generated by lower investments in public projects. Thus, investments reached 7.5 billion lei (1.7 billion euro) in the first five months, a 26% decline on the same period of last year, according to the information displayed on the Finance Ministry website. Investments accounted for 1.1% of the GDP between January and May.

“The elections have not influenced the road infrastructure sector positively and this is due to the fact that we have not reached political stability yet. During the elections a great amount of construction investment funds are redirected, through budget amendments towards public sectors which could bring votes, such as pensions, to influence the electorate.”, said Alexandros Ignatiadis, co-founder and shareholder of OCTAGONCONTRACTING & ENGINEERING, in an interview broadcast by ZF Live.

   Despite the sector decline, OCTAGON contracted works on three infrastructure projects this year.

Piata Presei Libere 1

   The newest infrastructure project of the company is “The underground passage from Piata Presei Libere” (Bucharest). The company is performing here geotechnical works: diaphragm walls D 9,950 sqm, thickness 80 cm.

Piata Presei Libere 2

   The company is also working on the rehabilitation of the railway Brasov- Simeria, section 2 Coslariu- Sighisoara, sector Micasasa- Coslariu, the works consisting in the execution of bored piles D 1,000,anchorages, stone columns and sheet pile installation, a project within which Aktor is general contractor.

    OCTAGON is also executing bored piles for sections A, D and E, sector 2- Lugoj- Deva Highway, for the contractor Salini Impregilo.

The Constructions Agenda: Geotechnical construction market worth around 93 million euro in 2013

 Local geotechnical construction and foundation market, estimated at 93 million euro, will most probably maintain this year at the 2013 level, according to opinions of the managers in the area. Significantly dependent on the construction sector, the geotechnical works market has positive growth perspectives, but lack of liquidity and excessive fiscal requirements on the market, investors’ low confidence in market economy are still obstacles against sustainable resumption of the entire sector’s activity. Another market characteristic at the beginning of 2014 is the slowdown of public investments, also confirmed by the National Statistics Institute (INS), which reported for the first quarter of the year, a 27.3% decline of engineering construction sector. There are 25 specialized companies at national level, Bauer, Octagon, Soletanche Bachy, Terratest Geotehnic, Zublin Romania and Edrasis Construct S.R.L., being among the leaders.

  

  According to Alexandros Ignatiadis, co- founder and shareholder of Octagon Contracting &Engineering- one of the main special foundation and geotechnical construction companies in Romania, with a 19.6 million euro turnover in 2013- this year will not be different from the previous. 

“The first trimester brought a 3% contraction of the construction sector, while the GDP went up by 3.8%, therefore this sector was not a growth engine for the economy. The private sector was revived by the construction of two malls in Bucharest and of several factories in the country, but these investments have not generated profit yet.  These results combined with the activity slowdown in the public sector have led to the -3% contribution of the construction sector to the GDP “, said Octagon manager.  At the same time the incoming elections have not influenced positively the construction sector either, due to political instability. “During elections a great part of investment funds is redirected, through budget amendment, towards public sectors which can bring votes, such as social protection, to influence the electorate.” explained Alexandros Ignatiadis.

Positive estimates for foundation subcontractors

  The 25 companies specialized in geotechnical construction execution, foundations, bored piles and  drilling, which perform works on projects located countrywide, reported a 93 million euro turnover for 2013, according to most recent data published on the website of the Ministry of Public Finances. The results show a 4.4% growth against 2012, when the companies reported a total turnover worth 88.7 million euro. Business growth is followed by an 11.4% decline in 2012, on 2011.

In terms of value, geotechnical construction market ranks at the 2010 level. In 2014, the sector evolution will keep being influenced by the financing of the infrastructure and energy sectors works, while the 2015 operations will represent the results of current political decisions.  Failure to cash receivables from the state, uncertainty related to private sector financing, low value of public investments in infrastructure and continuous change of the economic stimulation policies are among the difficulties which will be present on the market this year. Another fundamental issue is disloyal competition generated by certain companies which disrespect employment laws, maintaining low quality standards.

New contract awarding rules have not solved market issues

  The new contract awarding rules, voted by the European Parliament at the beginning of this year bring, according to constructors, a plus of security and transparency in public works legislation, but they do not simplify it.

“The two directives in force will be replaced by three directives and the number of legislative provision pages will almost double. We have to mention, though, the fact that the expertise and qualification of the personnel will be used as assessment factors when the level of performance significantly depends on the quality of the personnel involved in the execution of the public acquisitions contract. At the same time many controversial and contradictory aspects remain unclear, which leads us to believe that this new rules package reaches its purpose only partially.” explained ing. Carlos Vasquez, Country Manager al Terratest Geotehnic.

The new rules do not solve the prioritization issue or the issues related to the lowest price criteria. “This can significantly affect the quality of delivered projects. More detailed and deep changes regarding this aspect are necessary.” said Octagon shareholder.

OCTAGON delivers new office project: building A of Hermes Business Campus is ready

Hermes Business Campus building A - outside view

OCTAGON delivered building A of the office complex Hermes Business Campus, located in Bucharest, on Dimitrie Pompeiu Blvd. The company was general contractor and performed infrastructure and superstructure works, after having delivered foundation works in 2011.

Interior 2 Hermes Business Campus- building A

Interior 1 Hermes Business Campus- building A

Interior 3 Hermes Business Campus- building A

The office complex will have a 78,000sqm total leasable area and 14 levels, four of which will be underground levels and will be built in several stages.

Interior 4 Hermes Business - building A

Interior 5 Hermes Business - building A

Interior 6 Hermes Business - building A

Hermes is a “green” project, which will be audited for BREEAM certification. 

Underground 1 Hermes Business - building A

Underground 2 Hermes Business - building A

Front desk Hermes Business Campus - building A

Green Gate office building, the foundation of which was built by OCTAGON, has been delivered

 Green Gate, the office building the foundation of which was built by OCTAGON has been delivered 19 months from the beginning of the construction works. The building has 12 floors, a 31,000 sqm leasable area and is locate on 22 Tudor Vladimirescu Blvd., in Bucharest.  Works required investments worth  57. 5 million euro, Constructiv writes.

 The general contractor of the project was Bog’Art, while OCTAGON performed geotechnical works: diaphragm walls, bored piles, dewatering systems and crown beam. OCTAGON delivered the foundation on November 2012.

 Green Gate is one of the few BREEAM projects built in Bucharest and the biggest office building delivered this year in the capital. “Green” technologies among which rainwater, soundproofing façade that rejects heat, energy efficient elevators and vertical gardens were used for the development of the project.

OCTAGON in TOP 100 ROMANIAN CONSTRUCTORS drawn by Business Construct

Over 3.4 billion euro in turnover, profits exceeding 230 million euro and 34,000 jobs – these are the main coordinates of the biggest 100 constructors that were active on the local market in  2013. Construction industry is dominated by Romanian players, accounting for about 60% of the top 100 constructors, but the biggest profit share, almost 150 million euro is cashed by foreign groups from Italy, Austria or Germany, active on the local market, Business Construct writes. The magazine drew up a top of the first 100 constructors in Romania in 2013, according to turnover.

OCTAGON CONTRACTING & ENGINEERING ranks on the 55th position with a 20 million euro turnover in 2013 a spectacular growth against 2012 when the turnover was 8 million euro. The main projects performed by OCTAGON in 2013 were Hermes Business Campus (7-9 Dimitrie Pompeiu Blvd.) and Green Court Bucharest (2-4 Gara Herastrau Street), both located in Bucharest, as well as Shat Al Basra Electric Power Plant (Basra- Irak).

The first top 10 positions in the ranking are filled by:
⦁    Strabag S.R.L. - turnover = 233 mil. euro
⦁    Straco Grup- turnover= 140 mil. euro
⦁    Hidroconstructia- turnover = 136 mil. euro
⦁    Delta ACM 93- turnover = 123 mil. euro
⦁    Euro Construct Trading 98- turnover = 105 mil. euro
⦁    Tirrena Scavi Condotte Cossi- turnover = 93 mil. euro
⦁    Strabag A.G. – turnover = 91 mil. euro
⦁    Tehnologica Radion- turnover = 81 mil. euro
⦁    Tehnostrade- turnover = 77 mil. euro
⦁    Astaldi Spa- turnover = 72 mil.euro

In the almost 9 years of activity OCTAGON was geotechnical works contractor for 4 of the first 10 players: Straco Grup, Strabag S.R.L., Euro Construct Trading 98 and Astaldi Spa.
The top was drawn up based on the turnover reported at the end of the year and includes information about the net profit or loss and the headcount of each company. The 2012 financial results are also presented in parallel for a full perspective of the business evolution. The data provide a view of the way in which the local construction market evolved last year, considering that the industry has lost about 40% of its value since 2009, due to investment cut, both in the public and private sector.

The turnover of the biggest 100 players last year declined by almost 10% against 2012, while the cumulated net profit almost tripled, to over 230 mil. euro. This was due to the fact that the construction works volume dropped triggering a decline of the constructors’ business as well. The companies focused on optimizing their business and opted for cost cuts, Business Magazin also writes.

Cost cuts reflected best in the evolution of the employee number. The 100 constructors had around 34,000 employees in total last year, after letting go 5,000 people against 2012.
An analysis of the constructors based on the capital nationality shows that of the 100 top firms, around 40 have mainly foreign shareholders, the turnover of these companies totaling 1.4 billion euro, a 7% decline against the previous year. At the same time, foreign constructors had almost 5,800 employees last year, 800 people less than in the previous year. These data reveal that foreign managed with 17% of the employees of the top 100 constructors to generate 41% of the turnover, resulting into better productivity.