CONSTRUCTION – OPINION
Chairperson of the Western Cape Property Development Forum, its effect extends far beyond transportation.
“ Fuel price hikes affect every stage of the property development process,” he says.“ The impact is particularly significant in site preparation and civil works, where heavy machinery relies on diesel. These costs ultimately flow through the entire project.”
At the same time, supply-chain instability continues to disrupt project delivery. Delays in securing critical materials can stall projects, drive up labour and site costs, and expose developments to further inflation. Contractors are also increasingly forced to source alternative products at short notice, adding costs and introducing potential quality or compliance risks.
Van Zyl also points to delays in approvals and decision-making as a growing source of uncertainty, with extended timelines increasing exposure to cost escalation.
Too many contracts focus on transferring risk rather than managing it.
The consequences can be severe, including budget overruns, project delays, contractor insolvency, contractual disputes, and compromised quality. With margins already tight, even modest cost increases can have significant financial consequences.
Contractors often bear the immediate pressure, particularly under fixed-price contracts where costs continue to rise after pricing has been agreed. The effects ultimately reach developers, businesses, and homeowners through delays, variations, affordability pressures, and reduced project scope.
Sharing rather than shifting risk
“ Too many contracts focus on transferring risk rather than managing it,” says Graham Brookman, Business Development Executive at GVK-Siya Zama Contractors.“ In a volatile environment, fixed-price tenders and unrealistic commercial terms can lead to under-pricing, disputes, financial strain, and compromised outcomes. The most successful projects are those where all stakeholders work together to manage risk."
Industry stakeholders are also calling for more flexible procurement models, transparent escalation mechanisms, and shared-risk contracts to manage market volatility more effectively.
Residential and commercial property owners can also reduce their exposure by locking in pricing early, prioritising local materials, building contingencies into budgets, avoiding late design changes, and appointing experienced, compliant, and financially stable contractors.
Tim Scholtz, Business Development Executive at Washirika 3 Oaks, says early contractor involvement remains one of the most effective tools.“ It improves cost certainty through market insights, procurement planning, and buildability input. It also helps identify high-risk materials, alternative solutions, and supplychain constraints early, allowing risks to be managed proactively.”
From reaction to resilience
Petra Devereux, Executive Director of the MBAWC, believes the industry must shift from reactive cost-cutting towards proactive risk management.
“ The Association can help the sector move from reactive decision-making to planned, more resilient, and compliant project delivery,” she says.“ By sharing industry guidance, professional standards, enhancing collaboration, and providing practical advice on procurement, contingency planning, escalation mechanisms, and important contractual practices, we can help create greater certainty in what is an increasingly uncertain environment.”
Devereux says collaboration will be critical to protecting both projects and businesses from future shocks.
" The construction sector cannot solve these challenges through cost-cutting alone. Greater transparency, realistic budgeting, early collaboration, and fair contract mechanisms are essential to protect project viability, maintain quality, and support long-term sustainability.”
As cost pressures and supply-chain uncertainty continue to reshape the construction landscape, proactive risk management has become as important as cost control.
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