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Opportunities for Hill’s South Africa Subsidiary in a Changing Market

These are significant times for South Africa-based Binnington Copeland & Associates – a 100% subsidiary of Hill International – as it positions itself to win major contracts in the power, energy and infrastructure sectors following a major decline in commodity prices and a slowdown in demand.

 

“Our traditional clients are in the mining industry, but this sector is under huge pressure which caused a lot of capital projects to be postponed and left a gap in our billable work,” said Tinus van Rensburg, BCA’s Managing Director and also a claims Vice President of Hill International. “We had to change our focus to other sectors quickly and in a very big way. Our most notable commissions currently are in the power [Eskom] and oil and gas [Transnet NMPP pipeline and coast and inland terminals] sectors, and other infrastructure related claims and dispute work.” In particular, BCA is focusing heavily on the oil and gas sector and setting its sights on some major projects that are to be rolled out soon in South Africa and neighboring Mozambique.

 

High on the list of BCA, and its affiliate Binnington Chiba Consultants, is ‘Operation Phakisa’, a South African government-backed multi-billion dollar initiative aimed at developing certain key sectors of the country’s economy on a fast-track basis. “Upgrade of all maritime ports is being taken up under the Transnet Ports initiative and will entail a spend of some $4 billion to service the oil and gas sector,” he said, noting that work on the mega project is expected to be kicked off in nearly 14 months. “We are working to get a foothold in this initiative and positioning ourselves to be where the action is. Some initial infrastructure activities are starting shortly and we are lining up to win contracts,” van Rensburg said. BCA is also actively monitoring prospects for work in Mozambique, where the US company Anadarko Corp and its partners are aiming to develop a major gas export project. “We have adopted a multinational approach, with stakeholding by Hill through a number of offices, to win the gas project contracts,” he said. BCA has also positioned itself through its membership in the South Africa Oil and Gas Association (SAOGA) to win contracts locally.

 

Impact of low oil prices

 

Low oil prices have had a big effect on the roll-out of the projects with planned facilities being delayed. But some initial infrastructure work is still expected to take place in the near future. “We have done a lot of marketing and business development and are creating platforms of operations to be involved with the projects,” van Rensburg said. BCA has, on previous occasions, taken up claims cases against South Africa’s prime oil and gas company Sasol and also Anadarko. However, the expectation this time around is for these companies to award contracts. A downturn in the construction industry, with more than 60,000 employees being currently retrenched and that figure growing further, BCA is still managing to get work. “We are very fortunate that a number of disputes have come our way recently, which keeps us busy,” he said. The Black Economic Empowerment element – a clause that makes it mandatory for project sponsors to award certain percentages of work to ‘Black companies’ – and its proper implementation is also opening up opportunities for BCA. “There are no large construction companies that truly reflect this requirement, and consequently a lot of the [easier] work is subcontracted to Black companies. We have an initiative to assist these Black companies with their contracts,” van Rensburg said.

 

Given the cyclical nature of any commodities, the price of crude is expected to bounce back sooner rather than later. But, in the meantime, van Rensburg has plans for growing BCA’s line of business along with Hill International.  “We have a total complement of 65 at the moment and are in a growth phase with two or three employees hired each month. BCA, transformed into Hill International, will be a dominant player on the whole continent with an aim of establishing offices in at least another four to six countries in Africa. This can only be achieved with extensive marketing and business development activity and in collaboration with Hill’s project management team, as the best partners for Africa,” he said.

 

Hill acquired BCA in May 2013 and the partnership has served both companies well. Looking ahead, the global reach of Hill as a claims consultancy and project management company will only be reflected in more contracts being awarded in South Africa and its neighboring countries.

 

By Ashok Dutta