international
construction
june 2014
WORLDNEWS
EGYPT
Vinci ConstructionGrands
Projets, Bouygues Construction,
Orascom and Arab Contractors have
completedwork on the new Line 3
of the Cairometro fivemonths ahead
of schedule, with the 7.2 km section
of opening onMay 7. Developed in
phases, Line 3 is planned to ultimately
cross the Egyptian capital east to
west, connecting the airport with
the districtswest of theNile over a
distance of nearly 40 km.
NIGERIA
China Civil Engineering
Corporation, a subsidiary of China
Railway Construction Corporation
(CRCC) has signed a framework
contract with theNigerianMinistry of
Transport to build a coastal railway for
the country. A 1,385 km long single
track line is envisagedwith a design
speed of 120 km/hour. The provisional
contract value is US$ 13.1 billion.
GERMANY
German construction
equipment users’ andmanufacturers’
trade association Verband der
Baubranche, Umwelt- und
Maschinentechnik (VDBUM) has
agreed to support a US initiative
to create an industry standard
protocol for construction equipment
telematics. The US-based Association
of Equipment Manufacturers (AEM)
and the Association of Equipment
Management Professionals (AEMP)
announced the initiative in February.
EUROPE
Construction output in
the 28 countries of the EUwas up
+5.3% inMarch compared to a year
ago. Building constructionwas up
+5.4% and civil engineeringwas
+4.3% higher. The biggest year-on-
year increaseswere seen in Slovenia
(+44.9%), Hungary (+34.1%), Spain
(+19.1%) and Poland (+18.4%). The
largest decreasewas in Portugal
(-13.8%).
ITALY
More than 40,000 people from
55 countries visited the combined
Samoter and Asphaltica trade show in
Verona, Italy last month, according to
organiser Verona Fiere. This compares
tomore than 100,000 visitors for
Samoter alone the last time it was
held inMarch 2011. The steep fall
was attributed to theweak Italian
construction equipment market. Dates
for the next Samoter have been set at
22 to 25 February, 2017.
HIGHLIGHTS
GLOBAL
Built assets income
contributes 40% of
global GDP
Countries getmore income themore buildings and
infrastructure they have.
I
ncome from built assets totalled US$ 27.1 trillion, or about 40% of
GDP in30major economies according to a studyby consultantArcadis.
The profit from built assets is defined as the residual income once profit
associated with wages and other factors are removed. This covers profit for
owners, funders, operators and constructors, as well as users, who gain a
benefit fromusing built assets such as roads.
Among the countries studied in theGlobal BuiltAsset Performance Index
2014,Mexico andTurkey aremost dependent onbuilt assets, eachderiving
61% of theirGDP from returns on them. In contrast, the share of Russian
GDP which comes from returns on built assets is only 14%. The global
average is 40%.
In absolute terms, China derives the greatest benefit from its built assets,
with a US$ 6.9 trillion contribution to its GDP last year. It was followed
by the US, where the benefit was put at US$ 5.6 trillion by Arcadis. It is
perhapsno surprise that thebiggestcountrieswith thebiggest infrastructures
generate themost benefit in absolute terms from them.Other high-ranking
countries on thismeasure include India, Japan, Germany andMexico.
However, there is a different picture when looking at the benefit of built
assets on a per capita basis. By this measure, Singapore sees the greatest
benefit per head of population at US$ 29,500 per person. It is followed by
Qatar at US$ 20,500 per person and the UAE at US$ 17,500 per person.
The average for advanced economies is US$ 14,500 per person, but just
US$ 4,000 per person across emergingmarkets.
Looking ahead, Arcadis says the best returns onbuilt assetswill be seen in
developing countries, as they invest to bring their economies up to speed
withmore advanced areas of theworld.However, it highlights some laggard
countries, particularly in Latin America, where slower economic growth
than in the past, infrastructure bottlenecks and rigid labour markets could
threaten investment.
6
UK
Balfour
Beatty
shaken
Balfour Beatty CEO Andrew
McNaughton stepped down in
May following a profit warning.
The company said it is also
is considering selling Parsons
Brinckerhoff, the US$ 2 million
per year US engineering company
it bought in 2009.
Pre-tax profits for 2014 are
now expected to come in at UK£
145 million – UK£ 160 million
(US$ 240 million – US$ 270
million) due to the slow pace
of operational improvements in
Balfour Beatty’s UK business,
particularly related to mechanical
& electrical (M&E) and major
building projects.
On the possible sale of Parsons
Brinckerhoff, the company said a
strategic review had highlighted
this as a way of simplifying the
group’s structure, but that it would
only sell if it could get a goodprice.
The statement continued, “As
anticipated at the time of the
acquisition, there has been growth
in the market towards design
and build and Public Private
Partnership contracts. However,
having professional services and
construction capabilities combined
within one organisation has not
delivered material competitive
advantage for the group.”
Zhang Zheying, deputy chief
engineer at China’s fifth bigget
contractor
Metallurgical
Corporation of China (MCC) has
been expelled from theCommunist
Party ofChina following charges of
corruption.
An investigation by the State-
owned Assets Supervision and
Administration
Commission
(SASAC) –MCC is a state-owned
company – has reportedly found
that Ms Zhang took advantage of
her post to solicit bribes and other
material advantages.
CHINA
Corruptionallegations
Ms Zhang’s expulsion from the
Communist Party is a career-
ending penalty that will prevent
her from holding any public office.
She is now likely to face criminal
charges and accepting bribes can
be punished by death in China,
although a prison sentence is more
common.
According to
iC’s
league table of
theworld’s 200 largest construction
companies, MCC is the world’s
10th largest contractor, with
revenues in 2012 of US$ 28.5
billion.
