Transcript
Speaker: I think that's kind of like the first thing. Like I think, Jase, were you a chippy, I think, when you were a young fellow? No, no, no. No. Was that rigged? If I claim that someone's going to call bullshit.
Speaker: i I definitely did work like as like a laborer and like a TA on on um projects at school and and through uni, but no, never a chippy. But you learned the moments that are like- The other CEO.
Speaker: love Given my quote in my DIY at home, if I claim that my wife would write into the show. It's going to be a serious list of to do's.
Speaker: Of grievances.
Speaker: Welcome back to the Offsite Podcast, where we cover all things major construction and technology. I am Jason Lansini coming in from Germany. Again, with me is co-host Carlos Cavaglio in London. Hello, Carlos. And we are joined today by special guest that actually knows construction, Kelvin Kuhmenguy.
Speaker: ah Kelvin is a is someone recently who's made the transition from construction, from running major projects to the dark side and has joined the team here at Aphex.
Speaker: Kelvin, thank you very much for also ah for or accepting the invitation to join us for a combo, mate. Ah, pressure makes a diamond. We'll be right. I love the subtle dig there of Jason saying, I've brought on Kelvin today, someone who actually knows about construction. ah oh sorry. i was trying so was I was being self-deprecating because i feel like it I feel like it was so long since I've actually done anything. basically for that Thanks for the intro. Thanks for assuming that I know what's happening in construction.
Speaker: So, Kel, the normal system is that Carlos will typically share some interesting fact that he's like a week, but this week he's he's come up blank and and we were just talking before we started recording.
Speaker: ah You had actually an interesting fact to share. Oh, yeah. Yes. So I was listening to podcast yesterday, which talked about all the UK tariffs or the US tariffs and the chaos of the world.
Speaker: um And my ears always prick up when a country called Palau is mentioned. That's where my old man's from. Small group of islands in the North Pacific. And it was one of three countries to get exempt from the tariffs.
Speaker: So like Russia, Ukraine and middle old Palau. was about, I don't know, 20,000 native Palau Islands. It's not in such a big country, ah but it was exempt from tariffs. So do you, any theory as to why that it was exempt? I just forgot.
Speaker: I think maybe chat GBT hasn't recognized it yet or something or Grok hasn't recognized it yet. Or whatever one they use. the yeah But God, it'd make you really angry if you're one of the penguins that got the tariff and then an actual country of people did it. Oh, that's good. So what do we do? We export everything out of Palau. Every company's incorporating in Palau these days.
Speaker: Yeah, they've got a booming... I think she moved to Plough. Beautiful scuba diving spot. Beautiful. No tariffs. ah By the time you set the company up, the the tariffs would have changed again anyway. So ah who knows what to do.
Speaker: Today, we are covering three interesting topics. So first of all, given your background, Kel, we are going to... We cover a topic we we discussed maybe a year or so ago around and ah checking in with technology and where construction management is going with things like AI coming along and and what that would mean if if we were someone entering the industry or thinking about entering the industry today. Then we're going to also, this feels like a callback to a bunch of older episodes. We're going to check back in on a topic we covered at least a year ago, looking at non-software construction technology. That's a really complicated way of saying essentially hardware and see what has, what's moved in that space since then. i think we're going to share some of the things that we're watching. And then finally,
Speaker: We're hitting the third topic that I love talking about, which is ah international contractors entering other international markets and some recently raised concerns about some pretty heavy underbidding practices that are happening in some markets.
Speaker: So I guess to set the topic up with the accelerating pace of technological change in construction and the globe in all industries, so particularly AI, we are, I guess, seeing and observing, at least on say social media and other spaces, more conversation than ever or how about how careers in this industry will evolve, what it will be like to run a construction project in five or 10 years time.
Speaker: And there's this kind of like spectrum of predictions. You get people like right out on on one end where there's a prediction that robots will do everything on site. um Some people predicting that like AI systems will manage all aspects of planning and coordinating the work and the people on site won't even know you know why certain decisions are being made. to this kind of other world where it's like maybe people are in a world of like a co-pilot where humans are making decisions and then increasingly will get smarter and smarter or assistance.
Speaker: I think when i when I observe these conversations, it makes me think about some questions at least from my own perspective of of what it was like coming into the construction industry, why someone would come into the construction industry. And this idea that like you make a decision to enter an industry and five or 10 years later, you're really like getting the grasp of things and making an impact and the industry will have changed substantively.
Speaker: So i don't know either of you have ah have a ah view about, you know, Kelvin, from your background of, you know, having recently made the switch over, you've probably seen just in your time in the team at Apex of like the set of tools that at least we even use and how different that is from the world in construction today. Has that impacted your view of like where the world might be heading for those different Totally.
Speaker: Totally. Well, I think they still come across by like the same themes. Like I've probably done a talk to like graduate engineers a couple of years ago and they're probably very similar themes to what I've probably described now. So maybe I'll, I've done a little prep on this. So maybe I'll just talk through what I think some of the general themes I'd tell to someone entering the industry and we can just jump off at each one.
Speaker: I'll get my notebook out there.
Speaker: So like the first one I had, which is is pretty the obvious one, you'll probably hear it at every talk is like learn how to learn to understand like the why, the how and like the for crying out loud moments, like I had a different word in there, but like the old crap moments and like that that's sort of like a get there by working in the industry in whatever capacity, preferably self-perform and bonus points if it's got a bit of surveying comp in there as well, which I think is probably the UK bias as well.
Speaker: because And I think that comes from like, you know, being a labor on site, being a chippy, like just getting engaged with the industry. So I think that's kind of like the first thing. Like I think, Jase, were you a chippy, I think, when you were a ah young fellow? No. Was that rigged? If I claim that someone's going to call bullshit. Okay.
Speaker: i I definitely did work like as like a laborer and like a TA on on um projects at school and and through uni, but no, never a jimmy.
Speaker: but But you learned the moments. The other CEO. love Given my, called in my DIY at home, if I claimed that my wife would my wife would write into the show,
Speaker: It's a serious list of to-dos after that game. Of grievances. like no. what No, like but when I was an undergrad, like I worked for a small tier subbie, doing like doing rhythm drainage lines, um doing some pavement work. And yeah and I learned like heaps, exponential in that sort of undergrad year.
Speaker: yeah And then when I got out of uni, worked for sort of a larger organization. I started working in tendering initially. And my yeah like my my focus was straight into spreadsheets and all these other different tools, which I was like, it felt like so jarring coming from actually working on site.
Speaker: So I think it's like so important to just get out there with small small company, yeah self-perform, all that sort of stuff. I think similar to what you described, end up with this like spreadsheet focus versus like a real world tangible what's possible, what it takes.
Speaker: And then similarly, you probably see, you know you said with smaller outfits, you probably get the perspective of different levels of the supply chain. Yeah, and you start to know like this is this is ah this is family, like all your actions have consequence and ties to the business.
Speaker: yeah ah ah I was at a contractor conference the other day and they were talking about the like ah this huge issue where engineers aren't going out and doing setting out, things like that, because um the time they're spending as a site engineer is getting shorter and shorter and everyone wants to get promoted quick and quicker rather than kind of doing their time to learn their trade.
Speaker: You can imagine whilst we might be spending more time in the office and using tools to do things quicker and faster, the day when something goes wrong, it's your ability to react is actually that experience that you've been there and done it rather than like using a tool to find the answer. so well Yeah.
Speaker: This first theme that I'm talking about is like just building that contextual information, like building the syntax in yourself of how the industry works and how a small business works. Yeah. Yeah. um yeah That was my number Going to a subcontractor and actually seeing the full process.
Speaker: Like big contractor, you're normally like one part of something. And um yeah, I'd imagine going, I've not done it myself, but tier two, tier three, it must be, you must get this well-rounded view um compared to what you'd get at ah at ah at a main contractor.
Speaker: Yeah, awesome. So, Kel, number one, kind of like go slow to go far, kind of spend the time building the experience on the ground, because if you move up too quickly you don't get that context, you're at some point going to hit a spot where something's gone wrong and you haven't, you're out you kind of get exposed for being, ah I don't know, i like a spreadsheet jockey or something like that. um Cool. What was number two?
Speaker: Number two, I think is probably the what the basis of this talk of what was about. It's really about like sharpening the tool, like improving the skill set. And I spoke to a few colleagues on this being like, what would you do to sharpen your you know sharp and the engineers but before they get to work with us? And you know one of them that came up quite commonly was like learning how to code how to script um something in Python. And that was from a lot of my engineers ah friends, which are sort of from a design background.
Speaker: And I found that fascinating because they're like, even if we go to this sort of AI revolution and it does a lot of it for us, we still need to debug and we still need to edit things and change things. So being able to read that language is super important. Just to double double click in that for, because like um with your then like contractor background on and delivery, do you think that's a skill that you would have ever used in the construction side? I suppose if I was good at VBA basic, you know, that one that you could do macros on a spreadsheet, maybe, but that's probably as far as I probably ever would have taken. yeah Because yeah, like you kind of pointed out, I think there's a,
Speaker: there's a There's a school of thought which is like, oh, well, coding is going to be redundant in some period of time. There was predictions from ah there predictions from the CEO of Anthropic a month or two ago, which was like by the end of this year, all code will be written or some ridiculous percentage of code will be written by AI.
Speaker: So it's really hard to know what the advice is here. Like what would you... Do you think organizations would want to trust that all the time or we want someone to go to read it and understand it? I don't know. I flip-flop on this topic a lot because i hear all the arguments for not ah trusting it, but you can just as easily, like some of them are quite far-fetched and you could just as easily have an employee do something that you don't understand or know.
Speaker: the amount of times I've gotten emails from say a person at a company, a thinking that we're emailing Jason at another company. And I've got like all, I've got like five contracts emailed to me and you know, all that kind of stuff. So I think it's just like a new,
Speaker: thing and so people are coming up with all of the things to be worried about and to be optimistic about but i think having done it myself so many times i've gone from like i don't trust this thing to to but i'm not going to double check it anymore because it's right more often than i am on certain certain topics so I don't know.
Speaker: I don't know if I was, if I had a, I had a relative or a friend that was like in high school or in early university, would I, take would i I, would, I always think I would have, should have done computer science at university.
Speaker: um I don't know whether I'd advise someone to do the same thing now. I think this is probably just as controversial. So exercising this skill of like distilling lots of information and then like presenting it and summarizing it into like a concise plan, chat GPTs and the AIs of the world can do that for us.
Speaker: But I think humans will need to do this through like personal contact, ah through various data sources. And I think it's a skill that is always so important. And like, I can imagine someone coming through high school, like to exercise that skill, like plan your family's holiday or something, ah you know, and then hear people complain about how the plan was wrong and you cooked it.
Speaker: You spent too much on this. This took too long. and And like, that is just getting you ready for being an engineer. Like you'll do your best, you'll coordinate with everyone and it'll still be wrong.
Speaker: 100%. And that that idea probably even goes further, right? Like, which is, I'd imagine that overlaps with your suggestion of um work in the field, work in smaller contractors, because you'll get that feedback.
Speaker: uh of this didn't work that method of you know the supervisor will tell you the way that you were going to build that was totally nonsensical uh you know this approach is slowing us down so you get that feedback mechanism really often as well ah And I suppose coming off that, it was really yeah quite the obvious one, which everyone talks about is just getting comfortable communicating. Like even when I went to through uni, ah though we had these courses which try to push us in front of people and present and talk and things like that. It's so awkward for a bunch of engineers to to do that.
Speaker: It was always quite quite an embarrassing ah sort of presentation. And then just the last one I had was, ah you know, if you can like find a mentor, I think is is is probably one of the best advice I would have is is you can find someone the industry to pick their brains because as you see, it's changing so much ah just to kind of lean off them is super important.
Speaker: So if I was to try and play them back, if I've done a good job of note taking as we've been going through it through, there's like this idea of um of going slow to go far where you're trying to build up as much real world construction experience closest to the tools as as possible.
Speaker: Then you talked about the idea of like sharpening the tools or building skills. You referenced the idea of like some technical skills. And then the next one was something around maybe building some of like the softer skills, getting feedback around things that worked and didn't work and being able to like deal with that.
Speaker: I probably consider that all part of like sharpening the tool. Like it's all a skill set, whether it's a technical thing or a soft skill. Uh, the third thing I was going to say was, uh, like if you're going to do construction, uh, or engineering, I think you still need to be confident to pursue something that else that gives you energy.
Speaker: And I think that's really important because, uh, you'll like 10 generally on site, you tend to work lots of hours and you tend to build relationships with lots of different people. And I think people naturally just find it energizing to speak to people that are interested and invested in something else.
Speaker: ah Sometimes we don't always want to talk about what's happening on site. You know, you know, what's the next free game coming up? ah What are you into? do you have a bike rise or i you this? And if if you're trying to fake it, say, Oh, I've got all this stuff planned. People can see right through it, you know?
Speaker: I think it's just about being authentic and being interesting. Like ah like most of the day, like on construction site, you're a people person. And if you're not interesting, a bit hard to be a people person sometimes.
Speaker: So ah to to to kind of boil it down, let's say like a 18 year old Jason comes to speak to you, Kel, and says, as I'm thinking about, you know, i um I can do maths. I don't really know what I want to do.
Speaker: I'm told engineering is a good option. and I'm thinking about like construction. Would you recommend that's something that I do? I made a few calls around some friends prior to this and three of them said run. Okay, cool. I suppose the next one would be, but the yeah, 100%. Run because I'm asking you or because of the construction industry? Calvin, keeping a view on, um obviously you said it's important to get like time on the tools, learn the trade.
Speaker: would you back an enterprise, an apprenticeship over degree model, if that's the case? Like, do you think that time as an apprentice is, is, um,
Speaker: It's important. I know we're going to be slightly biased towards the fact that you've got the degree, but give your thoughts ah now? Yeah, so I didn't, you know obviously didn't go the apprentice route. I've seen people that come up that way. And I think the toughest thing that they find when they come into a big project is like how to understand the systems and the structure and how things communicate.
Speaker: And I think quite commonly, um the organization wouldn't train people that way. And then they become this sort of jarring figure that sort of like bulldozes their way into discussions. and And I think sometimes you in any corporate world, it's kind of playing the system a little bit. And if there's no training in how to kind of work through all that, it makes it quite hard for them.
Speaker: ah But do you learn that at uni, though? Because we didn't learn anything about the tools, the systems, the relationship side. It was all like a lot of foundational... knowledge. That's a good point. Yeah. I don't know what I would do.
Speaker: I suppose to be contentious, I probably would pick up a trade if I could. the So, yeah. so Because you're right, Carlos, you don't really learn that stuff in in in a university degree, but i think I think you get repeated exposure to a bunch of those things, which you wouldn't and in an apprenticeship.
Speaker: um I was just thinking like as a when you're a graduate, like day one, you're greeted with I don't know how many tools, whereas as apprenticeship, you'd probably sort of learn them over time along with the on-site stuff so it's probably quite a beneficial path the tools on site generally don't change um that fast but like you could go to ah as a graduate you could be introduced to tools and systems and processes on a project and then go to another project they'd completely different you have to learn again anyway Whereas if you spend some time, two years on site, learning how to get up set up formwork, lighting pins, like do some of the really really fundamental things, that's not going to change on each job you go to. And a really good skill set to understand. Yeah, obviously, like the specific skills like setting up, that is those things are going to be replaced and automated.
Speaker: But the knowledge of what how it works... drives is kind of like an unlock for the next layer of knowledge. So it's kind of like learning it, even if it's in a non-useful and trite way, gives you the ability to understand that it's kind of like ah knowing how a computer to works is very helpful to writing code, even though you don't need to know how the computer works.
Speaker: So yeah, back to your, back to the, after your friends said run away, um what else, what else was discussed? A lot of what I just fed back to you is like those sort of three fit themes was that, you know, sharpening the tool, ah you know, improving the school set and then youre really understanding the why and delving into the details of But going construction or not? Like what, why would you, would you say do it, do it, don't do it. Why it do it? Why don't do it? Why?
Speaker: Uh, I'll put you on the spot. football spot And I'm going to make this decision. i'm going to make life changing career decisions off the back of Calvin. So often ask that to me, Jase, like my wife and I are both engineers and we're like, would you, is your daughter going to be an engineer? We're like, heck no.
Speaker: Run. She already started.
Speaker: All right, let's jump on to just jump on to another topic, Carlos, unless you've got anything to add. No, let's do it. right, cool. Well, ah early last year on the podcast, we did a kind of like a round the horn of different technology that we had observed, seen starting to get commercialized inside of construction.
Speaker: outside of the space of like software because there's a billion different software tools out there but those spending the extra effort and time to build something uh quote unquote hard in hardware uh we ran through a bunch of them we we we looked at like whether we thought they would be useful viable etc I thought it'd be kind of interesting to check back in on that space and some of the things that are proving potentially increasingly interesting.
Speaker: So ah maybe carli i think I feel like Kel and I have dominated the combo so far, but i know I know you were pretty keen on the old, was it the exoskeleton last time? Yeah. Yeah.
Speaker: Yeah, I linked into a couple. But no, the first one I thought I'd mention um is a ah piece of kit that will actually build block and brick walls. So there's obviously, we went through that phase where everyone thought 3D printing buildings was like this viable method, but you need these huge gantries. It's not very practical. It's quite hard to set them up for like...
Speaker: some gain. But this organization called Fastbrick have a piece of kit where imagine like a like a big Arctic sized truck with an arm off the back of it, kind of like the arm that you would see in like a car manufacturing facility. So like ah a robotic arm.
Speaker: um So you can just park up next to a site and you feed in design and it will just build by picking up and placing bricks the entire structure of the building, which is pretty cool.
Speaker: Yeah. So I think way more mobile than 3D printing because the setup on that is quite extreme. It's like super quiet. It's almost got zero, no sound to it. It could work 24 hours a day.
Speaker: They claim zero waste, which is quite substantial based on the accuracy of placing these bricks and not actually damaging anything. um So it's probably quite a boring thing.
Speaker: because you're taking away all the excitement of actually building on site and just letting this this truck go to work. But um yeah, super efficient. You could really build things in the most remote areas.
Speaker: All you need is the yeah the engine running on the the old truck and Yeah. So I just shared a link because I i think the the folks on Bricks and Bytes podcast have profiled a European a company called Monumental that are doing a similar thing. okay And yeah, I do. i think the area is kind of interesting. there There's obviously spots where it's like,
Speaker: easy to set up and add the spots where it's like increasingly difficult. So I don't know if the form factor of the one that you're talking about, is it something that's like for houses or for what what are the sort of best use cases?
Speaker: The particular vote the example I was looking at is a house. um But the floor plan of it, it's not like ah a small bungalow. It's like quite a structure. So you can imagine it being like schools and other...
Speaker: yeah and other things like it's not gonna like smash out a skyscraper. You can imagine having multiple units if you needed to. So it's quite ah it's quite a scale. um The way I've described it probably sounds smaller than it is, but pretty cool.
Speaker: Yeah, awesome, cool. Kel, anything that jumped out to Yeah, I got one. um I've seen this, I did some research with this company. Am I allowed to say the company's name? don't wanna give them- You can remember. We can beep it out later. We'll block it out, yeah.
Speaker: the company's called RoboRigger. Have you mentioned this on this podcast before? No, is that the one that's like on the hook of the crane? Yeah. So imagine this kind of, um it's it's like this sort of unit that's got a gyroscope in it and it's got a little computer and CPU, et cetera.
Speaker: And, you know, you use it for rigging up anything and it can, it it obviously when it's rigging, it it actually takes all the telemetry data and like tracks, like how many lifts you've done per hour and, yeah And then also, you can because it's got a gyro in it, you can actually use it to sort of twist as well.
Speaker: And then you can also self-release as well. um I'm surprised I don't see it more commonly. it's there isn the little There's even a little camera in there as well, so you can sort of remote release. Yeah.
Speaker: When I looked at the product a couple of years ago, there was like maybe three case studies and now they've got a lot more. So I take it it's taking off um and that, you know, you can fix this onto a, you know, a spreader beam or something like that.
Speaker: But yeah I think that this is clutch, you know, getting people out of the the lifting zone, um you know, tracking how many times you're doing a lift, like on any job or most sort of building jobs, at least the job is driven by the, the heartbeat is the crane, right? Yeah. And if you you get all this sort of data as to how many lifts it's done during the day, you know,
Speaker: how many times it stopped you to wind. ah And then you can also have that added benefit of um not being underneath the low when you need to release it or something like that as well. yeah i thought it was I think it's a great tool, this RoboRigger. I think that's a really good shout out because the um the other thing is you you obviously have a recording of like weight and a lot of the telemetry inside of each of the cranes, but they're obviously like completely siloed from each of the other things and they're not connected to one system.
Speaker: So it's kind of like the equivalent of, you know, people putting like ah those tracking devices on pieces of earth moving equipment where it's like, it's getting, it's like collecting all that data across there start like um a mixed fleet of cranes.
Speaker: Yeah. um So yeah, I think the rubber rig is exciting. Do you see it as like something that a contractor or a project is purchasing or hiring or is it something that the the crane hirers are going to buy? I was looking at,
Speaker: but ah hiring it for a project we had coming up a while ago. So we were looking at lifting precast down like a sort of very narrow ah area and we wanted to be able to release it down there. We were only using it for sort of eight months and it just made sense to hire it.
Speaker: um Yeah. But we were looking, it be one of those things that we would sort of, um we would probably push the crane supplier being, hey, we want to do this. um yeah And they make the capital investment.
Speaker: exactly. Yeah. Yeah. Is it odd that a lot of this data is not captured in the actual rig itself? It's captured in the crane, but the, the, you know, some of these cranes are like, they're all super old.
Speaker: Yeah. Okay. Uh, and so you, you, you, you can't get to the information very easily. I don't know if like hook time, like how many times it, oh, maybe it would be in the crane as well. Yeah, no, no, no, no. And it gives you more as well, but like some of the real basic stuff, like the weight of the load, you know, up and up but yeah, there's a bunch of, I agree with you. I think it's, uh, I think it's really interesting.
Speaker: If it is a shout out, the other team were really good to deal with. You know, helped explain that what it can do, what it can't do. Yeah, it's a great product, I think. Yeah, awesome. No, I think that's a good shout. I'll do this. I'll do mine really quickly. So this is one of the ones that we, I think, Carlos, you raised it last time. The guys at Advanced Construction Robotics, they have built these two robots.
Speaker: One's called TyBot and one's called IronBot. and they are rebar placing so there's iron bot which basically places rebar and tie bot which does what it says on the tin it ties rebar the optimal use case here and from all the case studies that i've seen is like bridge decks are probably a key starting point uh because it has like a big gantry span that it can run along IronBot machine or robot i does an average rate of 500 pounds an hour, whereas TieBot here, which would presumably come in after and do a bunch of the ties, will do 1200 ties per hour.
Speaker: I tried to normalize some of those ah metrics. so Yeah, iron bots claiming like 2.3 tons per hour. Tie bots claiming yeah like 9, 1,200 ties per hour. So the combined is, the combined is i think, basically 2.3-ish tons. Basically, I think the limiting thing is the iron bot.
Speaker: I think it depends on what your reference point on manual tying and placement is. so ballpark uh from data that i've seen is somewhere in the range of uh 0.2 to 0.4 tons per person per day in rebar kel what would you use as your factors for ah placing rebar on bridge decks uh would you just describe sounds about right because i know i've had teams before that say like a person should lay a ton a day but then they don't factor in the like setup and the tying and stuff at the end That's a metric was going to spit back to you, but yeah, what you've described. Yeah, I know. I was i was racking my brain on whether we ever hit that on a project.
Speaker: um but that was the metric that I that i had in my head. That does in an hour what a gang of six or seven people does in a day. No, that's per person. Well, the question is like how long you lay this. and So let's say hypothetically this ran 24 hours a day.
Speaker: So it's doing, what's that? 50 ton. But the problem is you're not going to have bridge decks that you can, I don't think you're going to have bridge decks that you can run at 24 hours a day on. because i think The one I'm thinking about is um runways.
Speaker: loads of airport runways are reinforced concrete and yeah it's a perfect environment for a long sort of linear continuous piece. Yeah, that would be um massive. Yeah, but I think part of the problem ah is that because it's so fast,
Speaker: it becomes, it it isn't the bottleneck. So it's definitely more efficient than people. I think if you do the comparison, it's maybe twice as efficient as people from a cost basis. But if you can't, if you can to only run eight hours, then you're waiting for the next deck to be set up.
Speaker: it's It's suddenly the numbers start to get a bit increasingly wonky. So I think in certain use cases, yeah, runways is a really good shot. I'd be interested if anyone does do it to have a look.
Speaker: Okay, final topic. So um almost like on cue, we talked ah previous weeks about ah bunch of different markets where we had observed or heard from people in the market that there was this increasing presence.
Speaker: looming of international contractors either directly competing or, you know, even purchasing subsidiaries, local subsidiaries to bid on ah major infrastructure projects.
Speaker: And recently, in the last week or two, a news article came out that talked about European contractors flagging a the danger of low priced bids from state owned contractors impacting the the profitability and and the fairness of competition in major government funded European construction projects.
Speaker: So for background here, there's like this industry body, which is the European Construction Industry Federation. They said over the past decade, we've seen an increasing number of public infrastructure projects being awarded to state owned enterprises from third countries, particularly China, at extremely low prices that European private companies cannot compete with.
Speaker: On top of that, European Union has opened its public procurement markets to third countries to a large degree, while many other kind of economies have limited appetite to liberalize market access.
Speaker: This is ah on topic not only because of the recent news article, but it's like the the question of is it best value for money that that the that the market is getting for the infrastructure that they want to build?
Speaker: Is it weakening a critical industry that the local economy needs? ah Should they put tariffs on it um like Trump and make it harder for business? So yeah, what's the what are people's thoughts on this idea of cheapest price versus the importance of having this industry locally?
Speaker: It's a big topic, right? But I think for me, if we at a high level, before we dig into maybe some of the details, I think the biggest thing is it's about like transparency, the organizations working rather than where they're from.
Speaker: Will these organizations ah adhere to like the standards and the the bar that we set within then like our countries and and others that are similar? And ah don't have an issue with fair competition, open market, people coming in and winning work as long as they actually hit those standards.
Speaker: The difficult one with with China and ah some of the Gulf states is They're winning work in other countries, but they won't allow contractors to win work in their own countries. So it's not exactly this mutual benefit of open market.
Speaker: That is kind of the the spanner in the works, but from a competitive point of view, I think it's a good thing, as long as this it is transparent. So to to give some more color to this in terms of like put some meat meat on the bone. So ah there was a bridge project in Croatia.
Speaker: The project was won by a subsidiary of the China Communications Construction Company, CCCC. ah with a bid approximately 72 million euros lower than the next competitor.
Speaker: And ah there was a bunch of complaints from Austrian and Italian companies that they can't compete ah because it's a non-economic bid. There was ah a project, a Belgrade-Budapest railway was getting a bunch of scrutiny because there was this agreement between Hungary and China, which potentially violated a bunch of EU directives.
Speaker: And then there's been a bunch of these investigations run by the European Commission on bids on projects um from usually typically Chinese um contractors that ah that seem to be making non-economic bids. And then in response to that recently, ah Norway was building a Stad ship tunnel project, ah which they politely um rejected the...
Speaker: requests from two Chinese contractors to bid on the project. So yeah, like, uh, there's definitely like a a global theme to this, uh, in, in line with the the conversation about what's say happening in the U at the moment.
Speaker: Obviously sometimes it works taking low bids because if all of them failed, you would stop seeing it, but we still see it because people are able to deliver work for less money and that's great for the taxpayer.
Speaker: It allows us to do more. It allows more projects to be funded. so you're constantly having to balance against this. Well, if it does work, we've saved loads of money. Like if you boil it down to to cash.
Speaker: There's obviously the benefit of open market because there's always going to be skills or expertise that you're not going to have homegrown. So like there's a lot of like Austrian and central European tunneling contractors that do really well around the world because they're more experienced than others.
Speaker: You don't want to restrict the market, but to then pick and choose when based on the country, you're then in a really difficult hole politically.
Speaker: the yeah Going back to your opening point there, like they and think the to still man the argument for ah being more restrictive, I think if you you could simplify the discussion to say it's better to have for the for the country to have a lower bid for its infrastructure because the infrastructure is cheaper.
Speaker: But I don't think that the cost of the infrastructure is the full economic story of the infrastructure for the country. ah Because if the international contractor brings a bunch of their own workforce in to complete the project, then suddenly you have a totally different like wage and salary and then income tax ah structure here.
Speaker: There's probably less people building or buying houses because that group of people will probably leave after the project is completed. So I don't think just the price of the bid is the full story. But that's never...
Speaker: it's never like really inside of the evaluation method for the the awarding of the project though yeah you would expect them to become a little more bit more crafty the idea that people bring over their workforce that could be dealt with with various rules like if you're gonna win work in this country you need to have ah certain percentage of individuals that are like homegrown sounds word, that's a phrase used in football, but um locally sourced labor.
Speaker: So yeah that you can deal with those rules. Those rules exist. If you take like Canada as an example, there's a lot of European contractors that then JV with local contractors over there to meet a bunch of those rules or requirements.
Speaker: Kel, what about you? Because know this conversation is happening also in Australia where you are. Yeah, I think there was an article in AFR, like maybe in March, I think there was um some big leaders, some Australian construction companies saying the same thing. I'm unsure where i where I sit on it. It's it's ah it's a tough one to solve.
Speaker: Cost of infrastructure is going up and up and up. And if someone says they can do it for cheaper for the same standard, most voters would say, yeah, let's pick them. um But I think the question mark comes back to what Carlos was saying. Like, is it the same standard in terms of safety, quality? How do they disrupt the industrial environment?
Speaker: um ah Yeah, I think it's super tough one. There's a lot of ideas around, yeah, you can start to mandate local procurement, local employment, those sorts of things.
Speaker: But I think just those requirements as well start to basically add more of a burden to the, like those things on their own are basically making it more inefficient. It is, it does feel like a damned if you do, damned if you don't type of thing. And I think probably it comes down to some determination of like, is a local contracting talent base and,
Speaker: like set of companies, a kind of like strategic requirement for a country. Because if it is, then you can make arguments that are like non-economic to say protect it.
Speaker: But if it's not, then you start to say anyone can bid, but here's some rules that you kind of have to play by. i recall back when i was graduate engineer, I was bidding on jobs in Singapore. And there was this discussion of China coming in and winning a lot of the works.
Speaker: Yeah. In that area. um Nowadays, that company doesn't bid on work in Singapore anymore. So it's fascinating to see what's changed there in the last 15 years. Yeah. The company that work for is no longer competitive over there.
Speaker: Yeah. I think that's a story in a lot of, ah markets over time. Like you can look at lots of contractors across say Asia, Kel, where the roots of those companies were European or Australian contractors that went there and then maybe left like Balfour Beatty used to be in every company, Balfour Beatty were everywhere.
Speaker: They had subsidiaries in the Middle East, in in Australia, in in Asia. And there's still companies there that are like the the remnants of the thing that they left and that grew into their own company, ah like like first Balfour.
Speaker: um So, yeah, it's very it's very interesting ah how that progresses. All right, we're definitely out of time. So, ke thank you very much, mate. I hope that was was an interesting combo for you. Therapeutic. Therapeutic, good.
Speaker: Carlos, you want to read us out, mate?
