The global construction industry has escaped the worst of the recession, even though there will be places "where things will fall apart", says KPMG industrial, automotive, pharmaceutical and construction industries director Gavin Maile.

However, he adds that South Africa is unlikely to be one of these places.

The audit, tax and advisory firm has released its fourth global construction survey.

The survey, concluded in November last year, covers construction companies in 30 countries, including South Africa, with revenues ranging from $250-million to $5-billion.

Maile says the good news is that 53% of respondents note that they still have the same project pipelines, or bigger, than 12 months ago.

Also, 64% of all respondents are confident that profits will rise or stay the same over the next year.

However, when considering specific regions, contractors in Africa, Europe and the Middle East appear to have been harder hit by the recession, with 54% indicating that their projected profit rates have declined.

"In South Africa profit rates for new contracts are coming under pressure, especially in the housing sector, with numerous contractors bidding on each contract," adds Maile.

Just under a third of global companies report that they have managed to stick to their margins when winning new business.

Maile notes that the overall margin picture may still change as the long-term work contractors secured prior to the recession was still negotiated at good margins, while new work may not come on such good terms.

Most companies which took part in the survey say that they have worked hard at becoming leaner over the last 12 months as the recession has set in.

Only around 35% of companies have managed to avoid job cuts.

The recession has also brought about a sharper focus on risk, with 73% of respondents in the KPMG survey noting that they have increased their focus here over the last year.

"There is no room to get things wrong in this environment," comments Maile.

Bid evaluation risk is seen as the single biggest concern.

However, all things considered, the construction industry is still on solid footing.

KPMG engineering and construction practice international sector leader Geno Armstrong says that there is a perception that the global financial crisis has devastated the construction industry.

However, "while it certainly has had a significant impact on the way these companies do business, we've found that they view these conditions as an opportunity to get leaner. When the recovery does finally arrive, these companies should be well-prepared to succeed".

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