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Cesa members’ optimism for 2018 waning

23rd November 2017

By: Anine Kilian

Contributing Editor Online

     

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While the net satisfaction of Consulting Engineers South Africa's (Cesa’s) member firms improved significantly in 2017, they do not have high hopes for 2018 owing to the current political landscape, amid revelations of state capture and corruption allegations across key government entities.

“Our member firms mostly depend on these key client bodies being functional and in continuous pursuit of competent and professional consulting engineering services for infrastructure development to sustain their business operations and maintain a steady workforce of professional practitioners,” noted Cesa CEO Chris Campbell in a statement on Thursday.

Still, the net satisfaction rate of Cesa members increased by 8.8 percentage points from 87.5% in the last six months of 2016 to 96.3% in the first six months of 2017, according to the industry body’s biannual economic and capacity survey for January to June 2017.

“Expectations for the last six months of 2017 are still relatively positive, but levels of optimism are waning for next year, particularly among larger and medium-size firms,” said Campbell.

He stated that, based on the outlook for business conditions in the next 12 months, confidence levels among larger firms fell to below 50% for this time next year.

Medium-size firms reported equally satisfactory levels for the first six months but also expect weaker conditions for next year.

Small to micro-sized firms reported the lowest confidence levels, with no real change expected in the next 12 months.

Capacity utilisation of technical staff improved to an average of 85.1% after having slowed over the previous two surveys to 82.5%. 

“Just over a third of the firms expect no change in utilisation, while just over 2% expect a slowdown,” said Campbell.

Larger firms reported the highest capacity utilisation at 91%, while medium-sized firms averaged a rate of 84.5%. Smaller firms reported the lowest rates of 78.8%.

Larger firms were also the most optimistic regarding the outlook for utilisation, as close to 70% expect an improvement, while most small and medium-sized firms expect rates to either remain static or decline.

Fee earnings in the first six months of 2017 increased by 5% compared with the last six months of 2016, which was relatively unchanged compared with the same period in 2016.

The increase was better than the expected 7% decrease, as reported by firms in the previous survey when predicting the outlook for the first six months of 2017. 

Larger firms reported an increase of 5%, while earnings for medium-sized firms ended flat, and small and microsized firms reported an increase of 14%.

Fee income rose to R26.6-billion, annualised, at current prices as at June 2017.

“Earnings are expected to remain flat in the second half of 2017, although larger firms expect a marginal increase of 1.3%. Medium-sized firms are less optimistic, expecting a drop of 8%,” said Campbell.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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