How to handle recession in the construction sector?

At this recession the Real Estate Company should launch Low cost Houses with easy mode of payments. I think this is the best time to cover the middle class in II class cities. 

Listen to the latest demand of the situation !! Then take steps to fulfill demands with cost-cuttting, profit reducing etc.

Recession should slow down the work & Not Stop the work !!

According to me Whenever you set cost-cutting objectives, consider long-term factors, such as your company’s anticipated growth. Set challenging, but realistic, goals that take into account both your internal and external limitations.Similarly under this situation you should do effective cost cutting without affecting the quality of the product.So that we can retain our customer.

To handle the recession in construction sector, one must need to utilize the resources at the optimum level and reducing cost by finishing the work on time. Due to this panis, created by recession, most of the companies tend to delay in completing the project, Hence, the cost increases in the way of compensation, per day of labour and many other factors. Thus, the company should complete the project on time.

Proper planning is very important before investing in a project like, budget allocation, resource allocation, manpower need, time frame. If one follows things like this , one can construct high quality housing @ resonable price. Because with quality comes the profit. Rather then the brand name of the builder normal individual focusses more on quality. This way recession will automatically go out of construction sector. Individuals have money to invest, buit they do not have the faith on the builders anymore.

Secondly, different loan schemes can be offered iwth the help of banks. Presently, home loan rates are anyways low.

Thirdly, government should pass more tenders for new projects like flyovers, bridges, metros, any things like that, so the construction companies get more projects, and ultimately more people are employed.

Thus, these things can help in wiping out so called "recession" from construction sector. Any suggestion is appreciated.

..Utkarsh Agarwal

Reduce employment tax by half for the hiring of people who are long-term unemployed – the government envisages increased employment for people who have been out of work for over a year in the region of 4,700 new jobs in 2009, 6,000 in 2010 and 4,700 in 2011.

The biggest planners(Head of states) need to help out from crisis by selectively inject funds at macro -level to remove sectorial  imbalances, so that in couse of time, the nations facing the pinch of crisis the most, could come out of it and contribute in a long way for sustatined development.

This will help in creating more demands and less job cuts.........

Any amount of efforts towards cost cutting and better profit margins boils doing the following :

Minimize WASTAGE :  Plan Procurement, Storgae and Usage of Materials and also reconcile the Material Consumed periodically to Minimize and control wastage. This is MAndatory as MAterial amounts to 70% of Construction Cost.

Minimize COST of POOR Quality: "DO IT RIGHT FIRST TIME" -  This has to be religiously followed in all the processes of the Construction Project by every one to avoid redundancy and repetitive works leading to additional costs. Also this will gain CUSTOMER CONFIEDNCE whose benefits are intangible to measure.

If the above 2 points are itself concentrated on and implemented, it can definitely increase the profit margin by a substantial amount (say 5%), which is mandatory to SURVIVE the RECESSION...!!!

Ours is an ill conceived economy unlike well conceived ones like US and other developed nations.

If our construction crew need  to be active there need be constant demand for housing and commercial spaces and inventories for the same. Everyone knows that it is not Americans who deviced the subprime loans but Indians started this and is still doing it. Only difference is Indians charge their creditworthy borrowers subprime rates. Reasons are many.

1)Banks have only limited functionality, just retail lending expecially PSU banks here.

2)They are regulated to supply subprime loans to even the credit worthy borrowers even coporates.

3) there is no risk management practices per se to ascertain creditworthiness of all borrowers adequately or to categorize them.

4)They cannot handle derivative products so that revenue stream could  be enhanced.

5)No Investment Banks per se in India to support wealthy investors.

These are few reasons why revenue streams of Banks are purely based on retail and corporate lending and they need to collect maximum spread between savings and lending.

So Banks cannot lend enmasse to home and commericial space customers only a slected few. So the demand for construction projects cannot rise expecially in downturns.

If more functionality can be incorporated in the Banking sector then we can put our construction crew to growing demand from this.

Our country is run on Marxian socialistic lines from independents. There were some changes not many incorporated during the globalization times and it paid off. Now once we decide on our future course of action and well conceive our economy we cannot generate the demand in construction or in any other sectors and the nations wealth can be enhanced by doing so.

There is shortfall of skilled labours. It is amust to improve this strength.

 I think it should stimulate new forms of work placement, traineeships and occupational training for new employees & existing employees and increase the number of available places to meet the needs of the labor market and to allow for individual coaching for unemployed people.

I m agree with the Idea givan by Vikas

According to me boost the construction sector by reducing tax on restoration, construction and maintenance work on private houses – this tax reduction of the costs up to a maximum threshold, which will be equivalent to a maximum tax reduction worth for each individual in a year. Such measure will increase employment in the construction sector also.

The construction industry is very vast it includes real estate as well as infrastructure works. Just merely specifying a remedy for a particular sub sector of construction will not help. All sub sectors need to be targeted as an individual industry, then only the efforts will reap some fruits. like, a common man's tax exemption limit should be raised if he's investing in buying a house currently it is around 1,50,000/- that can be doubled, banks need to be more proactive in disbursing loans. All this will create demand and thus can help the real estate sub sector to come out of recession. For, Infrastructure sector govt should announce tax holidays for all companies investing in infrastructure and should make it mandatory that the  pricing of the services thus given by the infrastructure project should be kept at a minimum so that people can use it more often thus creating demand.Last, but not the least, that we all should get the word recession out of our heads because if we all start spending we will automatically be out of it.

I think this is the right time to do more R&D in the field of low cost or cost effective construction techniques. Demand will be always there if houses are given at affordable price to customers. So the construction cost should be optimised to make the feeling of value for money in buyers.

By outsourcing the specialized jobs such as grouting, drilling, waterprofing, heavy earthmoving requirements etc, in construction projects will surely increase the itemwise cost but the capital investments will be under control and it also will reduce the commited liabilities on the company wrt the skilled manpower and the interests on the investments. The lateral expansions can be thought after the bad time is over. Moving cautiously will save the sector from the hammer of recession