India
today is growing at a rapid pace. The demand for infrastructure is
tremendous. With the population being one of the largest in the world,
the need for roads, highways and other infrastructure facilities is big.
New cities and rural towns are dramatically changing into an urban
landscape. This transformation is fuelling growth and providing a launch
pad of an opportunity for a construction company.In the last fifteen
years the flow of funding due to globalization has also made available
the funds required for kick starting these activities. With foreign
direct investment gradually increasing, the investors have been able to
spot the domestic demand that exists and therefore have been constantly
diverting funds to India.
Today
the government works on a variety of models to outsource its
construction activities. A popular model is the build operate transfer
model. Wherein the construction company takes on the expenses of
developing a project, then charges toll from the end users for a set
period and then hands over the project back to the government. This
model is easy on the governments’ pockets and is also profitable for the
construction company. Moreover the projects under this model are
completed much faster as revenues only start once wok has been
completed. As the construction company has a vested interest and has to
earn revenue from the consumers they maintain quality and a speedy flow
of work on site. One of the drawbacks is that most companies have to
take loans and borrowing from banks and other institutions. The recent
rise in interest rates has made borrowing quite expensive. The interest
on these loans cuts a substantial dent in the company’s pocket and they
have to plan carefully on the project feasibility before taking on a
B.O.T model.
Even though challenges exist, the sheer volume of
available work makes the construction industry a lucrative one. Public
infrastructure being the main driving force there are secondary driving
forces such as housing. The flow of foreign direct investment and
globalization has given a rise to job opportunities throughout the
country. With many multi nationals setting up shop here and major
corporations outsourcing their IT work to India, the demand for housing
this workforce is great. This has led to a rapid growthin the housing
sectors. With developers moving fast to pick up prime land, the race for
developing quality homes is exciting.
This
further increases demand for quality construction company where their
services are required for developing group housings, townships, villas
etc. With large projects on the offer they offer a good volume to the
building company. Most of the private projects operate on a slab system
of payment. Certain payment slabs are pre decided. Then as a particular
slab is reached, a running bill is submitted and subsequently upon
checking a payment is released. This is a good and effective way for
making payments as it promotes transparency and quality, as work is
checked on periodic stages for quality. Moreover it also ensures speedy
progress. In most cases there may also be a project management company,
which check the work on the developers behalf and then signs off the
bills.
Overall the construction industry in India is a success
story, with cost effective labor and big demand the industry is posed to
keep growing for many years to come.