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Wednesday, 19 January 2011

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Construction industry set to boom:

Local contractors need more projects

Starting his career as a consultant in a semi government organization he later diverted his energy to initiate a company of his own. Today he stands among the leading local construction companies.

The initiator of this initiative is none other than Consulting Engineer and Contractors (Pvt) Ltd Chairman and Managing Director Ashok Randeni. Following are excerpts the interview with Randeni for this week's column.

Q: How did you come up with your enterprise?

A: I was working at the Central Engineering Consultancy Bureau (CECB) after my graduation for five years. There was a time I felt that the working environment is not getting well, so I decided to initiate a company of my own in 1994.

I was able to use the network I have built when I was working and I started with constructing buildings for the Sri Lanka Army and Air Force in Anuradhapura. Currently, we have about 15 project sites throughout the country. Zapco International (Pvt) Ltd, is a subsidiary company of Consulting Engineer and Contractors (Pvt) Ltd., which deals with Bitumenous products.

Q: As an entrepreneur what are the challenges you face?


Ashok Randeni

A: At the initial stage getting contracts was a difficult task but since I had a large network of friends, I managed to get sufficient jobs for the company. Some contractors especially foreign contractors bid for very low rates which makes it difficult to bid for projects.

When undertaking a project we have to maintain our staff and pay them accordingly. Some foreign bidders do not have to pay for their employees but it is totally different in our case. Our projects are widely spread across the country and the other challenge I find in this industry is lack of good managers for projects.

We engage in projects in Colombo as well as in remote areas such as Jaffna, Pothuvil, Panama, Mannar, Pulmoddai and even the A9 road. We have been pioneers who undertook construction activities in the Northern and Eastern areas of the island when the raging war prevailed.

During the war period we constructed a Ramp (green channel) in Medavachchiya utilizing our own funds and maintained same which facilitated and eased movement of vehicle transportation connecting the areas which were not accessible. This was greatly advantageous to the public as well as the security forces as it minimized the interruption of civil activities. Even though we have machinery, cash and material in place without a proper management the task would not be easy.

There is a necessity for trained people for the industry to manage projects well. Many foreign companies bid for local projects which has a bad impact on the industry. The labour cost they have to pay is lower compared to what the local counterparts have to pay. Therefore, we could not bid for the rate the foreign contractors bid.

Q: What are the strengths of the company?

A: I would say human resources as well as machinery are the strengths of the company and we have currently employed nearly 1,500 and we use well maintained machinery.

Q: As an entrepreneur how do you manage your enterprise?

A: I am closely monitoring the work done at the project sites. I recruit fresh graduates and train them properly based on our concept. Throughout the year we train more than 100 graduates from universities and technical colleges. Human resources as well as machinery are the strength of the company. The machinery cost is high and we have to spend much on them at times. So we manage our machinery properly. We have a periodical monitoring system of the performance of each employee.

Q: How did you supply with capital initially?

A: Initial funding came as a fixed deposit of Rs 200,000 given by my father. Apart from that, my father owned a land in my home town, Naththandiya valued around Rs 2 million, which I mortgaged and got finance to establish the enterprise. There should be considerable assets to obtain bank facilities to establish as a business concern. We need to give a bank guarantee in this industry. When we undertake a project normally we are given a 20 percent advance payment but we need to present a performance and unconditional advanced bond to them.

Q: What made you to start a company of yours?

A: When I was working as a consultant in Anuradhapura, a terrorist area at that time, I performed my duties to the best. I had good connection with top personnel in those areas but due to a certain adverse decisions made by the Management of the organization affecting my career compelled me to start my own establishment with the strong idea of becoming a name in the construction field.

Q: What are the strategies you adopt to enhance employee efficiency?

A: We are in the process of giving attractive incentives to our employees as well as offering tour packages. We have an idea to share profit among our leading employees and empowering one or two of them to the status of becoming Board Directors. With the expansion and in keeping with my idea of distribution of authority I have invited two directors from my family to the board of directors.

Q: What is your goal in business?

A: I expect to be among the ten leading construction companies in the South East Asian region. If people are capable and efficient of delivering work on time the task would not be difficult.

Q: What was the growth you had for last year?

A: We have achieved a turnover of nearly US $ 2.2 billion for last year.

Q: What are your future plans?

A: I have decided to diversify from the construction industry to the tourism industry. I have a plan to start a city hotel in Colombo by the end of this year and set up a travel agency. We have a plan to acquire a boutique hotel too.

Q: What is the support you get from your family members?

A: My family has always been with me giving all the encouragement and moral support in my ups and downs and has been my source of strength.

Q: What is the support you expect from the Government?

A: The Government should concentrate on local preference, and also need to improvise and introduce methods and plans to expand the industry and take it to the next level to take it to the regional level and approach the regional market.

Q: What do you think of the construction industry's future?

A: The industry can rise to great heights with the development taking place. With the development trends in the present market we can expect the industry to grow and have a very bright future.

 

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