Infrastructure companies looking for the next big thing as the pandemic drags on

By Arjay L. Balinbin, Senior Reporter

INFRASTRUCTURE COMPANIES are focused on finding new opportunities as they contend with pandemic disruptions to their operations as some construction markets dry up, while juggling an imminent full-scale migration to innovative building methods and data-driven processes.

During the dry months, the industry was working rapidly to maximize the good weather needed to pour concrete, and was not immune to the headaches posed by quarantines and labor shortages. Builders posted a growth rate of 25.7% in the second quarter, helping drive a gross domestic product gain of 11.8% for the period, the National Economic and Development Authority said.

Trade Secretary Ramon M. Lopez said the growth is a result of the government’s efforts to balance lives and livelihood as it takes “calculated and calibrated” measures to mitigate the risks that comes with reopening the economy.

The government’s pandemic-related restrictions are focused “on the less essential activities while allowing the rest of the economy, especially the essential and labor-intensive sectors… to operate, so as to save jobs and income,” he said in a statement.

Megawide Construction Corp. said that, as a result of the pandemic, there is greater pressure in terms of project delivery, taking into consideration the shortage in manpower and rising cost of materials due to limited production.

“Understandably, clients (are) more exacting in terms of meeting costs and timelines during the pandemic, which we (understand) as an experienced contractor,” Megawide Chairman and Chief Executive Officer Edgar B. Saavedra said in an e-mail interview.

“The entire industry had to quickly adjust to new safety considerations as well as government directives, apart from supply chain issues and the like. Fortunately, our vertical integration and earlier investments in engineering technologies such as precast enabled us to adapt quickly to both client and regulatory standards,” he added.

Aboitiz Construction Executive Director Antonio Peñalver said customer behavior remains the same, but the company is now more cautious in its decision making.

“(The company has) adapted to the new way of doing business, which is through virtual contacts,” he said in an e-mailed reply to questions.

“The awareness and concerns of our customers about health standards have heightened (to the point) that they would expect an equivalent level of safety or health assurance,” said Roberto V. Bontia, the president and general manager of MPT South Corp. and its two main expressway companies to the south of the capital — Cavitex Infrastructure Corp. and MPCALA Holdings Corp.

Mr. Saavedra said Megawide’s precast business, which started expanding prior to the pandemic, has given the company more opportunities.

“We are minimally affected by the labor shortage as precast installation requires minimal manpower compared to typical construction methods. It also enables us to practice physical distancing in line with government protocols. Finally, we were also able to catch up to project timelines because of the higher speed and standardization offered by the precast process,” he said.

NEW OPPORTUNITIES
Aboitiz Construction said the pandemic helped birth a “big shift” strategy.

“This a comprehensive business pivot that will enable the company to navigate the changing market dynamics, refocus priorities, implement changes, fuel recovery, and find new business value,” Mr. Peñalver noted.

To spur business growth, Aboitiz Construction is pursuing traditional industrial projects this year.

The company is “thriving further from transport and water-related infrastructures, marine works, and transmission lines and substations,” Mr. Peñalver said.

As for Megawide, Mr. Saavedra said the company intends to maximize the gains it has achieved, reorganize, and continue to pivot and look for new opportunities.

“We will focus more on infrastructure projects in lieu of residential and commercial projects; and continue maintaining a diversified order book, sustaining EPC (engineering, procurement, and construction) revenue growth momentum onwards from Q3 (third quarter of) 2020,” he added.

MPT South saw the importance of accelerating its pursuit of digital transformation and the systematic application and use of data it generates.

“These initiatives will drastically improve our key processes and most importantly the delivery of service to our customers, our motorists,” Mr. Bontia said.

Aboitiz Construction is also implementing an innovation program to improve the company’s practices, processes, and systems in support of its “big shift” strategy.

“To adapt (to) the impacts of the pandemic, our aim is to digitize and simplify our processes to harness execution excellence. With innovation, we want to address the issues and gaps in various areas of work in Aboitiz Construction. Our team members have a lot of ideas to improve our processes and we want these ideas to translate into real solutions that would create long-term value for our stakeholders and contribute to our business growth,” Mr. Peñalver said.

Megawide’s Mr. Saavedra said: “We will… continue improving and automating our processes, including engineering, procurement, human resources management and financial management initiatives and build on our five-year roadmap of core businesses, namely EPC, airport, and landport.”

POST-PANDEMIC MARKET
Aboitiz Construction believes the market will bounce back strongly after the pandemic crisis.

“A lot of projects that are on hold… and there will be massive demand for resources from construction companies,” Mr. Peñalver said. “Those who are ready for this surge in demand will surely benefit.”

“At Aboitiz Construction, we are making adjustments by preparing our people through training and studying new technologies that will promote efficiency. We are also strengthening our organization by hiring new talents to anticipate the requirements in the future,” he added.

Megawide expects a boom in infrastructure projects, particularly railways and utilities. As a result, the company’s precast technology “can be utilized to its full competitive advantage,” Mr. Saavedra said.

“Precast is less reliant on manual labor and enables faster completion and higher standardization with building components pre-manufactured off-site,” he said.

“Additionally, there are so many opportunities for railway infrastructure that will boost our order book to unprecedented levels, with a burn rate extended from 2-3 years to 4-5 years.”

Megawide also anticipates real estate or housing development along the railway alignment to follow such infrastructure developments.

MPT South expects the adoption of cashless payment systems to increase.

“To this end, we are already undertaking studies and projects for implementation by which we could improve our existing systems both at the front and backroom of our operations and processes, enabling a better, more efficient cashless setup,” Mr. Bontia said.

“The travel patterns of our customers in all likelihood would continue to adjust given the widespread adoption of work-from-home arrangements, as well as the shift in viewing health as a ‘common concern for the good of all,’” he added.

MPT South also expects to extract valuable insights as it gains traction on its digitalization and data analytics initiatives.

“They will be relevant in navigating the post-pandemic market dynamics and realities,” Mr. Bontia noted.

MPT South is a unit of Metro Pacific Investments Corp., one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group.