Building industry on solid foundation

Construction Turks and CaicosThe infrastructure, management expertise and skilled labour have long been available in the islands for construction projects both large and small.

After declining during the worst of the global economic crisis, construction costs in the Turks and Caicos are showing signs of stabilization in 2013, reflecting growing investment and development trends that are expected to drive up demand for construction labour, even as overall costs are projected to stay relatively flat through 2015.

Cost is an important – but not all-important – factor in any development program, and that’s particularly true in the Caribbean. With national boundaries, import duties, work-permit rules, fees and island-hopping travel requirements, acquiring and maintaining a skilled and locally adapted workforce of construction labourers, craftsmen, engineers, estimators and architects is no small feat.

This is why it is also so essential to the health of the construction industry in Turks and Caicos. It hardly matters if international investors want to put down millions of dollars to build new luxury resorts if the country lacks the workforce and infrastructure to execute their vision.

“The first thing (investors) need to understand, is you don’t have to bring in contractors from outside,” said David Hartshorn, principal of Projetech, a local firm that has been in the industry in Turks and Caicos for 32 years. “There are well-organized, experienced, good-quality builders on island.

“It is important to understand (that) we don’t build here like they do on other Caribbean Islands. Every island is different. You have to design to the tools and the skills you have on the island. All those skills, and all that experience is available here, and has been here for a long, long time.”

That experience was often hard-won. The islands didn’t have much of an experienced work force when the Grace Bay resort boom began in the 1990s. But, after a generation of Islanders returned to the islands from overseas and an influx of talented construction professionals staked their careers to Providenciales, the construction landscape here was vastly different by the time global demand dropped in 2008. The local workforce now has a number of returning graduates with construction degrees, Hartshorn said, “most of them schooled in the British system, which is a very good system, in as much as it collects a lot of detail in the pricing process.”

Annual exposure to tropical storms makes highquality building codes a necessity, and the TCI code typically meets or exceeds the standards of Florida’s famously restrictive rules.

Over the years, a local class of small-scale manufacturers has evolved on Providenciales, offering everything from granite fabrication to finished millwork with prices and quality levels that rival similar products from North America. Since duties on finished products are generally higher than those on raw materials, locally produced construction components typically represent a savings to the developer.

Local service providers with experience in audio, video and electronic-security systems have also put down roots here.

Construction firms in the TCI now offer multiple types of contractual structures, ranging from standard turnkey projects to FFE (Furniture, Fixtures and Equipment) deals. All the usual approaches to project financing and management that a foreign investor might be familiar with are available, Hartshorn said.

“That allows the investor to see a very open-book document that can be sensitized to hit whatever budget they are looking for,” said Steve Thompson, managing director of Projetech.

Materials costs across the Caribbean are largely driven by demand in the United States, said Simon Taylor of the development consultancy BCQS Ltd., and since all the materials used in construction here – even the sand for concrete – must be imported, local materials costs are basically determined elsewhere. Labour costs, which vary greatly from jurisdiction to jurisdiction, were higher here than most places in the Caribbean before the financial crisis, and have since moderated.

While commercial work essentially dried up during the crisis, activity in high-end single-family home construction has grown over the past three years, keeping many of the local firms afloat. The new commercial projects in the pipeline represent a big boost to the construction sector, Thompson said, but what’s booked over the next three years probably doesn’t add up to what the industry was producing seven years ago. So, single-family construction will likely remain a big part of the picture for the short-term.

“We do see that continuing,” Thompson said. “The prime beachfront land (such as Long Bay), while steadily being developed, (still has) capacity over the next few years. Then I think there will be some other beachfront areas that will take off in a similar way.

“It’s a big leap of faith for people coming out of North America or Europe to build a house. They want to know they are getting value for their money and they are working with a reputable contractor. So word of mouth is very important.”

So while construction in the West Indies remains more expensive than most places on the mainland, Hartshorn encourages investors to look at the complete picture. “People should not focus on one side of the equation. It is expensive, but it is also high value,” he said. “(Investors) should take comfort that the skills are here, that the rates are correct here…There are people you can talk to who have repeatedly invested here, have been happy and successful in what they built and developed. There is a track record.”

Image: TCIG Governor’s Office