Why construction projects can take up to nine months to get under way

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06-11-2026
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The National
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South African contractors say it can take seven to nine months to move a construction project from tender award to the start of work.

About R3 billion in large water projects is reportedly still awaiting funding and permits before construction can begin in 2027.

Public-sector infrastructure spending is expected to reach R1.07 trillion over the next three years, including about R205.7 billion by municipalities through the Medium-Term Expenditure Framework. National Treasury confirms the figures in its 2026 Budget Review.

The figures come as contractors face delays, rising input costs and funding constraints.

According to Industry Insight’s Preferred Supplier and Competitor Survey, conducted among active contractors across construction sites in South Africa. The survey covered 38 projects worth R2.70 billion at current prices in October 2026. The projects spanned 16 material categories and six provinces.

Elsie Snyman, a construction analyst at Industry Insight, said this was down from 52 projects worth R5.28 billion in September 2026. The surveyed projects were mostly awarded in March 2026.

“The Eastern Cape and KwaZulu-Natal each had 10 projects, while Gauteng's six projects (R841m) were almost as valuable as the Eastern Cape's ten (R851m). The professional team was the deciding factor in 61.1% of recorded producer choices, well above its 12-month average of 52.9%,” Snyman said.

Municipal approval delays

Property developers have previously told The National that costly municipal approval delays can threaten projects before construction begins.

Bureaucratic bottlenecks can increase financing, professional and construction costs. Prolonged delays may make some projects economically unviable.

Much of the market is still being driven by older projects, many of which were awarded in 2024 and have been slowed by funding gaps, late payments and community disruptions, Snyman said.

Fuel and material costs add pressure

Price became a more important factor in contractors’ decisions, accounting for 15.1% of recorded choices in October, compared with a 12-month average of 8.9%.

Contractors also faced fuel-related increases affecting bricks and concrete of between 1.5% and 9.5%. Some public-sector contractors switched to cheaper products.

At the beginning of October, petrol 95 increased by R3.33 a litre, while diesel increased by R3.24 a litre.

Mthobisi Dlamini, founder of Aethex Strategy Group, said diesel was particularly important to the construction sector because its impact extended beyond vehicles. It affected the movement of cement, steel, equipment, plant and other materials, as well as construction machinery and logistics.

“The bigger issue, in my view, is project economics. Construction projects are generally planned around relatively defined cost assumptions. When fuel rises sharply, the effect can move through several layers of the development chain: contractor operating costs, logistics costs, subcontractor pricing and ultimately the cost of delivering the completed asset.”

The infrastructure intelligence company said the impact could be significant for projects that were already marginal.

A developer may have to absorb part of the increase, renegotiate with contractors, delay work or reconsider a project’s timing and feasibility. Larger developments, particularly those involving extensive earthworks, bulk infrastructure or long supply chains, may face greater exposure.

Rising construction costs also affect property development. Developers must consider how much of the additional cost can be passed on to buyers. If the market cannot absorb the increase, profit margins are compressed, affecting affordability, development feasibility and expected returns.

According to Dlamini, fuel prices matter to the construction industry beyond the pump. They are an input into the wider development economics of a project.

He said the current environment also highlighted the importance of building greater resilience into project planning. Developers need to understand not only a project’s headline cost, but also how vulnerable its cost base is to external shocks such as energy prices, logistics disruptions and exchange-rate movements.

Fuel prices could remain high

In its October 2026 Monetary Policy Review, the South African Reserve Bank said fuel prices had increased sharply since March.

Between March and October 2026, the Gauteng diesel price rose from R18.53 a litre to R31.95, while 95-octane unleaded petrol increased from R20.30 to R30.25, according to the review.

“These rapid price rises are linked to major oil supply disruptions caused by the Middle East and Russia-Ukraine conflicts. But motorists could be stuck with high prices even after these conflicts end.”