Builders like Supertech turn to technology to offset sharp rise in costs
Oct 03, 2012
Source : The Economic Times


NEW DELHI: Builders across the country are increasingly turning to technology to offset the sharp rise in the cost of construction amid a slowdown in sales. Some real estate developers are investing in plants to manufacture pre-fabricated walls and ceilings while others are bringing in methods that not only double the pace of construction but also reduce the requirement of precious steel.
The innovations come at a time when most developers have suffered a sharp slide in margins over the past few quarters. Developers are finding different ways to reduce cost, says Sanjay Dutt, executive managing director, south Asia at property advisory firm Cushman & Wakefield.
The cost of inputs such as cement and steel has risen by 35-40 % over the past two years and labour rates have more than doubled. "Margins are down by 50% for us because of higher commodity prices and slower home sales," says RK Arora, managing director of Noida-based builder Supertech , which has invested Rs 200 crore to set up a plant in neighbouring Greater Noida to produce standardised pre-fabricated walls and slabs. "Pre-fabrication is done in a controlled environment, so quality and finishing are better," says Harleen Oberoi, executive director , project and construction management at construction services firm AECOM.
"It also reduces the need for labour considerably ." Pre-fabrication allows developers to save 15-20 % of construction cost and as much as 40% of the time. "If we can manage to finish on time, we will be able to maintain our margins," says Shaishav Dharia, head of strategy at the Mumbai-based Lodha Group. The company is focusing on setting up a more reliable supply chain that would minimise delays.
In its township project in the Mumbai suburb of Dombivali, the company has started using lightweight blocks, which are 15-20 % lighter and reduce the use of steel and cement by 10-20 %. "This is a straight 2-4 % addition to our margins ," says Dharia. Lightweight blocks require 5 kg steel per sq ft compared with 6 kg in the case of regular bricks, a saving of about Rs 50 per sq ft coupled with the reduction in the requirement and costs of labour for installation. Moreover, the supply of regular bricks is not reliable , especially in Maharashtra. Rising labour costs account for 35-40 % of a project today, as daily wages for an unskilled labourer have gone up to Rs 200 from about Rs 100 two years ago and Rs 500 for a skilled labourer, up from Rs 250.
Lodha and Supertech are building high-rises in Mumbai and Noida, where conventional building techniques would result in time and cost overruns. To speed up construction, the two builders have invested in new shuttering technology that helps them complete a slab in a building in seveneight days, compared with almost a month required in the conventional method. Shuttering is the mould used to set concrete in a building and this new variety is lighter and can be moved automatically from one floor to another , requiring 70% less labour.
"The cost of procuring the technology might be high initially, but it pays back by way of huge savings ," says Arora. Bangalore-based Puravankara Projects is using foam-based concrete for making its internal walls, which brings in efficiency and requires less labour to be done, says the company's chief operating officer, Jack Bastian Nazareth.
"Value engineering at the beginning of a project increases the speed of construction ," says Nazareth, adding that the company has been able to save up to Rs 120 per sq ft using this technology, which yields a better finish, reduces the need for plastering and can be finished with just one coat of paint.
What's New
Pre-fabrication allows developers to save 15-20 % of construction cost and as much as 40% of the time Lightweight blocks require 5 kg steel per sq ft compared with 6 kg in the case of regular bricks. This saves of about . 50 per sq ft coupled with the reduction in the requirement and costs of labour New shuttering technology helps builders complete a slab in 7-8 days, compared with almost a month required in the conventional method. 

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