Industry and government dynamics - Government has recently announced the consortia appointed to undertake border post upgrades valued at several billion rand, as well as a loan from France aimed at rectifying infrastructure failures caused by years of under-maintenance. There have also been announcements highlighting the need for numerous new schools in Gauteng, while the ongoing water crisis continues to dominate headlines.

However, the challenge with government remains one of timing and execution. Promises are often made ahead of municipal elections, but delivery is frequently delayed or fails altogether due to a lack of political will. Furthermore, while government has finally acknowledged that billions of rands were misspent by state entities, the introduction of additional checks and balances is likely to result in delays in contract awards as costs and tenders come under increased scrutiny.

Government policy has a direct impact on investor confidence, and ongoing challenges around governance, policy certainty, and service delivery continue to place significant strain on the South African economy. This raises an important question as to how sustainably the construction industry can grow while investor confidence remains constrained.

Challenges faced by contractors - The construction sector operates within a complex environment where economic performance, access to funding, fuel costs, crime, and politics all play significant roles. Contractors are additionally burdened by late payments and, increasingly, by challenges associated with unqualified and inexperienced consultants.

Defective design work is common, with smaller and mid-sized contractors often receiving inadequate engineering support. Instructions issued to contractors are, in many instances, insufficiently substantiated and not always aligned with accepted engineering standards or best practice.

In some instances, government entities appear to face challenges in consistently applying robust controls, particularly when appointing consultants. There is often insufficient scrutiny to ensure that consultants are suitably qualified, registered with ECSA, and capable of delivering the work for which they are appointed. Credit must, however, be given to the Department of Public Works and Infrastructure for its efforts to address systemic issues affecting the construction sector.

A fragile industry - Overall, the construction industry remains extremely fragile. The collapse of several major construction firms, combined with government’s increasing reliance on international contractors for large-scale projects), has reshaped the sector. The most vulnerable participant in this supply chain is the contractor, who ultimately represents the insurance industry’s core client.

In 2025 alone, approximately 67 construction firms were liquidated, representing a year-on-year increase of 175%. This statistic underscores the level of financial and operational pressure facing the sector.