Get ready to strike when the market improves – top tips from a CFO

Light emerged at the end of the tunnel last week as the Reserve Bank announced cutting the official cash rate to 5.25%. While there's  still a long way to go, it’s a step in the right direction for the construction and infrastructure industry.

Harrison Grierson’s Head of Finance Stephen Sangster explains what the cut means for our industry and how members can prepare their organisations from a financial point of view.

What does the recent lowering of the official cash rate mean for our industry?

"It’s a step in the right direction, that’s for sure. Like a lot of other consultancies in the construction and infrastructure industry, our clients have had a real lack of confidence in the economy. And for good reason. The mix of political and economic uncertainty has meant both developers and consumers are being exceedingly cautious.

"Funding projects has been a real challenge. Even though we’re still in a contractionary environment and further rate reductions are needed to make a meaningful difference, the lowering of the OCR is a signal we have turned a corner. The development community has been waiting for indicators like an OCR cut as a signal that activity will start to increase." 

What other recent developments are having an impact in the industry?

"Our local government clients are busy having conversations around debt limits and how they can deliver the infrastructure needed to cater for urban growth.

"Specifically, the Local Water Done Well policy looks at supporting councils by improving access to finance for water infrastructure investment by council-controlled organisations. This is effective immediately, enabling these entities to reduce pressure on ratepayers to finance investment in critical water infrastructure.

"The Government has also recently announced they intend to set up a bi-partisan national infrastructure agency with a 30-year plan. This type of long-term planning is what the industry thrives on, and it is really encouraging to see this type of thinking around how we plan and fund infrastructure in Aotearoa.

"Funding for projects in the public and private sector has been a real challenge recently so, whilst these developments will take time to make a material difference to the market, it’s great to see progress in this space."

Top tips to capitalise on improving economic conditions

  • Maintain a laser focus on cost control
    "Most businesses will have undertaken a thorough review of their cost base within the last 12 months. With the inflation risk reducing and increased activity levels on the horizon, it’s important to ensure that costs remain well managed, and these hard-won savings are not eroded."

  • Ensure you have the right access to funding
    "Keep talking to your bank to ensure you have the right access to funding when you need it. Cash is king is a little cliché, but for very good reason!"

  • Be crystal clear on your strategy and be able to clearly define what makes your proposition unique and valuable
    "At Harrison Grierson we’ve just launched our updated three-year strategy which really focuses on our point of difference and how we can deliver for our clients. This has been an incredibly valuable process to get everyone engaged and aligned on where we are going and how we do business."

  • Keep investing in your people
    "This period of lower activity has been an ideal time to upskill your team, so they are current on the latest trends and technologies. This is vital to ensure that you have the right skills and experience to be able to meet the pipeline of work ahead, as well as stay ahead of the challenge of holding onto your key talent as the market warms up."

  • Continually strengthen customer relationships
    "So that your business is top of the list when the work starts to come through, it’s paramount that you keep up those connections with clients. Just a phone call or an email is all it takes to stay relevant and front of mind." 

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