international
construction
november 2013
WORLD NEWS
BANGLADESH
The Asian
Development Bank (ADB) has approved
a US$ 250 million loan improve water
supplies to the Bangladeshi capital city
Dhaka. The Dhaka Environmentally
Sustainable Water Supply Project will
cost a total of US$ 675 million and
includes a new raw water intake at
the Meghna River with a 2 billion litres
of water-per-day pumping station,
together with a 500 million litre-a-day
treatment plant Gandharbpur.
VIETNAM
The World Bank has
banned Vietnamese contractor Thang
Long Infrastructure Development and
its affiliates from winning contracts
it finances for 2.5 years after the
contractor admitted wrong-doing. It
misrepresented information as part of
the bidding process for three urban
development and poverty reduction
projects in Veitnam.
EUROPE
Construction output in
August was down -2.5% across the
EU’s 28 member states, according
to Eurostat. The largest year-on-year
falls were in Portugal (-12.8%), Italy
(-10.6%), Bulgaria (-9.5%) and Poland
(-8.9%). The highest increases were
seen in Hungary (+14.6%), Romania
(+8.9%), Spain (+7.0%) and Sweden
(+5.0%).
ZAMBIA
The African Development
Bank is to provide up to US$ 150
million for improvements to Zambia’s
power network. The funds will support
construction of a 300 MW coal-fired
power plant as well as the revamping
of the Maamba coal mine. Zambia
is currently experiencing electricity
blackouts and is heavily reliant on
drought-sensitive hydropower.
EUROPE
European contractors
achieved revenues of
€
168 billion
(US$ 229 billion) outside their domestic
markets last year, up +7.2% on 2011,
according to a survey of 169 companies
by European International Contractors
(EIC), a trade association representing
internationally active European
construction companies. The full news
report starts on page 12.
US
Peter Blake, CEO of equipment
auctioneer Ritchie Bros, is to step down
in May next year after a decade in the
role. He joined the company in 1991
and has been as CEO since 2004.
HIGHLIGHTS
GLOBAL
Counting the cost
fraud
Unethical practices be costing the construction
industry US$ 860 billion per year, and this could
rise as growth accelerates
T
he construction industry needs to do more to tackle corruption
according to a new report from Grant Thornton. The consultant
estimates that fraud could cost the industry between 5% and 10% of
total output, or as much as US$ 860 billion per year.
Clare Hartnell, Grant Thornton’s global leader for real estate and
construction, said, “More companies need to take their head out of the sand
and recognise that fraud and corruption costs, not only in terms of profits,
but also a company’s reputation. It’s a real threat to growth. It is often seen as
the cost of doing business. This does not have to be the case.
“Information technology and the internet offer both threats and
opportunities. There are many data analytics tools that can help to identify
and thereby prevent fraud.”
Grant Thornton’s findings are based on research carried out in Australia,
Canada, India, the US and the UK. The company said that as growth returns
to the global industry, the opportunities for fraud will increase.
Fraud and corruption in construction can take several forms, from false
billing, through to collusion with competitors or paying bribes. These
increase costs and inflate the contract price.
The report,
Time for a new direction: fighting fraud in Construction
,
argues that this does not have to be the case and makes recommendations
to help companies avoid falling victim to fraud. One is to make better use
of information technology to fight fraud – an area where construction
companies lag many other sectorse.
The report also recommends companies put aside reputational issues
and speak more openly about the issue of fraud. This will foster a greater
willingness by companies to prosecute the perpetrators, it said.
Ms Hartnell added, “This will send out a message that the construction
industry is not open for fraud.”
6
SWEDEN
Pat Olney to leave Volvo CE
President of Volvo Construction
Equipment (Volvo CE) Pat Olney
is to leave the company to take up
a post with an unnamed but non-
competing engineering company in
the US. He will remain with Volvo
until the end of this year.
Mr Olney joinedVolvo CE in 1996
and held a number of management
positions before becoming
president in May, 2011.
“I have had a long and
rewarding career with
Volvo, and for that I
will always be grateful.
As such, this was not an
easy decision. I have had
the ambition to relocate at some
point to North America and this
opportunity was simply too good to
pass up,” said Mr Olney.
Volvo Group president & CEO
Olof Persson said, “Pat has done an
excellent job during his career with
Volvo I regret that he has decided to
leave Volvo. At the same time I fully
understand and respect his
desire to move to North
America for professional
and personal reasons.”
A
statement
from
Volvo added that it had
begun the search for a
replacement for Mr Olney.
INDIA
Infrastructure
support
A funding facility of US$ 700
million has been approved by
the Asian Development Bank
(ADB), targeting investment in
31 road, railway, airport, urban
infrastructure and energy projects
throughout India.
The ADB said the loan was
designed to assist the Indian
government’s Infrastructure Finance
Company Ltd (IIFCL), a state-
owned fund that had a pipeline of
349 infrastructure projects as of
the end of March this year, with a
total project costs of around US$ 90
billion. The ADB said this pipeline
was expected to grow by an some
40 to 50 projects per year between
2014 and 2019.
The Indian government estimates
that US$ 1 trillion in infrastructure
investment is needed to achieve
economic growth of +8.4% under
its current five-year development
plan.
Cheolsu Kim, lead finance
specialist
in
ADB’s
South
Asia department, said, “Poor
infrastructure is one of the biggest
drags on growth and development
in India and there is a large
investment funding gap of about
US$ 113 billion during the 12th
Five-Year Plan for 2012-2017.”
