The construction industry is an important part of the local economy, accounting for almost 5% of GDP. Central bank data projected this figure would fall to 4.7% in 2016, a 0.2-percentage-point decrease from the year before. The bank also expected the construction and quarrying segment would contract by 7.6% in 2016. This downturn in construction activity in recent years has been caused by two main factors.

Cyclical Downturn 

The first is the slump in international oil and gas prices, which has fed through to a general slowdown in the economy and a reduction in public and private sector demand for construction projects. According to the “Economic Survey for 2015” from the Central Bank of T&T (CBTT), construction activity decreased “substantially” that year with a 1.5% GDP fall for the sector. The CBTT noted that cement sales, a key indicator, also dropped by 1.5%. These numbers contrasted sharply with 2014, when the sector’s share of GDP grew by 2.9% and cement sales increased 7.7%. Retail sales of construction materials and hardware items also fell steeply in 2015. Although full-year data had not been released for 2016 at the time of press, evidence suggests a continuation of the downturn. Indeed, in its Monetary Policy Report of November 2016, the CBTT noted that cement sales in the first nine months of the year had plunged by 21.2% to 405,600 tonnes. The bank added that with some government projects delayed or suspended, larger construction companies were shifting their focus to smaller, private residential projects where demand remained more resilient. The bank estimated that overall construction activity had fallen 20% year-on-year in the first half of 2016.

Changing Of The Guard 

The second factor holding back construction was the change in government. The People’s National Movement party, led by new Prime Minister Keith Rowley, replaced the People’s Partnership Party following the September 2015 general elections. Traditionally, there is a hiatus during political transitions on the islands, when a new government assesses the state of construction projects inherited from its predecessor, alongside new ones it may wish to start, including those promised during the election campaign. The administration then works out a fresh list of priorities and funding sources. This, in addition to the appointment of new departmental teams, and the time needed to adapt existing developments or commission new projects, means public works activity usually slows sharply in the first year of a new government.

Capping Debt 

A number of key industry players have made it clear that several long-standing conditions are continuing to pose significant challenges for the sector. Issues surrounding fiscal austerity and the government’s commitment to capping public sector debt as a proportion of GDP has meant it can be difficult in the short term to finance big public works projects.

For example, the previous administration had relied on government-to-government funding for a range of initiatives, such as the San Fernando Teaching Hospital, completed in 2014 and the first hospital to be built in Trinidad in 30 years, as well as two ongoing projects, Couva Hospital, which is set to open in stages and was financed by concessionary loans from China, and the long-delayed Point Fortin Hospital.

The construction of a highway in the south linking Debe to Point Fortin has also been dogged by problems related to financing. Work on the project by OAS Construtora of Brazil stopped in 2015 after a series of contractual disputes. The newly elected T&T government then terminated the contract after the company proved unable to continue. The delivery model for this type of project is being reassessed with a view to having more local contractors involved in the construction. Rowley later announced in January 2017 that construction of the Point Fortin Highway would recommence in April 2017. The prime minister said the project would be broken down into smaller modules with tenders invited primarily from local contractors. His government, he added, would concentrate on hospital and road projects, which would be used to rekindle economic activity and jump start the economy. Kit Kennedy, managing director and vice-president of engineering consultancy WSP Caribbean, told OBG, “Though growth in the sector has slowed significantly over the past two years, we expect the industry to pick up progressively in tandem with the commencement of the new government’s road infrastructure projects.”

Leadership Changes 

As part of a ministerial reshuffle in late 2016, Rohan Sinanan took over as head of the Ministry of Works and Transport, replacing Fitzgerald Hinds, who was moved to the Ministry of Public Utilities. In a press release Sinanan said his predecessor had done much of the work to put commissioning structures in place and identify infrastructure needs. “The government has its policy in place with regards to infrastructure and new developments and new projects, and completing the existing projects,” Sinanan said in November 2016. He added that he intended to ensure accountability and transparency, and that there would be no waste of taxpayers’ money. It is anticipated that government home-building programmes will boost construction activity. In late 2016 it was announced that the government had awarded a TT$145m ($21.7m) contract to NH International Caribbean to build a 160-apartment complex called Mahogany Court at Mount Hope by the end of 2018. Randall Mitchell, minister of housing, said 12 organisations had bid for the project tender, which was overseen by multinational auditing firm PwC. The public-private partnership (PPP) model is the first being used by the new government, with the state providing the land and NH International raising finance for the building work.

Cemex Takeover 

In April 2017 Sierra Trading, a subsidiary of Cemex, the Mexico-based global cement firm, became the majority shareholder of Trinidad Cement (TCL), the country’s largest cement manufacturer. Cemex increased its equity to 69.83%, paying $86.36m for the additional equity, which was purchased four months after Cemex announced a takeover bid for the T&T company in which it previously held a 39.5% share. In January 2017 Cemex had improved its original offer, raising it from TT$4.50 ($0.67) per share to TT$5.07 ($0.76). As well as T&T, TCL operates in Jamaica and Barbados. Prior to the takeover bid, TCL posted, in October 2016, a 12.2% fall in revenue for the first nine months of the year to TT$1.43bn ($214.4m), caused by what it described as a “precipitous fall in construction activity” in T&T. In the 12 months to the end of September 2016, the company reported earnings before interest, tax, depreciation and amortisation of $77m and net debt of $113m. Cemex said the successful bid – originally made at a premium of 33.3% of TCL’s share price – would see the firm continue to operate as usual and remain listed on the local stock exchange.

The Cemex bid to gain majority control of TCL was seen as confirmation of the company’s underlying profitability, and in effect a vote of confidence on the ability of the domestic construction industry to rebound. Nonetheless, it is expected to be some time before the local construction sector and cement demand recovers. Presenting TCL’s nine-month accounts to shareholders, its chairman, Wilfred Espinet, and director, Nigel Edwards, stated, “We expect that construction activity will remain challenging for the group, particularly in T&T, and Barbados; in addition, we are seeing increasingly aggressive competition in the region.” Readymix West Indies, T&T’s largest pre-mixed concrete supplier and a subsidiary of TCL Group, made a similar market assessment. In mid-2016 the company reported a first-half fall of 42% in concrete sales and a 39% drop in sales of aggregates, citing strong competition and price cutting. It added that it did not expect any improvement in market conditions that year, and would focus on cost reduction and improvements in operational efficiency.

Building Standards 

T&T enjoys generally benign natural conditions. It is situated south of the main hurricane belt and has not suffered major earthquake damages in living memory. However, Trinidad was hit by a major hurricane in 1933, and has experienced a number of non-lethal earthquakes and tremors. In the year to January 2017 a total of nine low- to moderate-intensity earthquakes were reported, with the most powerful registering 5.9 south-west of Scarborough, Tobago, in December 2016. For this reason, and due to other potential hazards such as fire, mudslides and flooding, a number of construction industry stakeholders have called for the introduction of a national building code to reflect best practice and modern safety standards. The idea has been championed by the Caribbean Industrial Research Institute (CARIRI), which has called for precautionary work to prepare for possible natural disasters as a matter of urgency. Lisa Ramoutar, head of CARIRI’s civil engineering unit, has suggested a starting point would be to introduce a small business code. The 2010 Haiti earthquake has heightened awareness of the risks. According to CARIRI, the commissioners and contractors on some recent building projects have voluntarily used international building codes, but this was not always the case. Lax building standards were a factor in the structural damage and partial collapse of two multi-storey units at the Las Alturas housing development in 2012. Kennedy told OBG, “In order to keep pace with international benchmarks, T&T would benefit from adopting stricter building standards to encourage sustainable development.”

Nevertheless, some companies are taking initiative and getting ahead of the curve by adopting stricter, more progressive standards. In 2016 real estate developer RGM launched Savannah East, the country’s first building certified by the Leadership in Energy and Environmental Design (LEED). LEED standards were developed by the US Green Building Council and are internationally recognised as being more efficient and environmentally sustainable. T&T’s new National Insurance Board of T&T building, launched in 2017, was also built in accordance with LEED standards. In addition, in 2017 China’s Shanghai Construction Group (SCG) will begin work on new headquarters, which will incorporate sustainable building practices and solar panel technology. “There is growing emphasis on sustainable building practices in T&T, and construction companies that take the lead will certainly stand to benefit,” Michael Zhang, SCG’s managing director, told OBG.

Private Contractors 

Private contractors had a challenging year in 2016. Apart from one or two big projects, oil- and gas-related construction work dropped off due to the slump in hydrocarbons prices. This has reduced demand for the development of offshore structures and facilities. In response, some firms are pursuing energy construction opportunities in nearby markets including Guyana and Suriname. Thomas Chanona, CEO of contracting firm Kee-Chanona, told OBG, “The current gap in Guyana’s local capacity presents an excellent opportunity for construction companies from T&T to gain a foothold in that market, by working with their Guyanese counterparts.” In the home market, it is hoped that the development of PPPs will facilitate access to a wider range of funding sources and create new business. However, some industry players have suggested that adjustments are needed to the terms of current PPP models to make them more attractive and give private sector participants greater security. Demand in the commercial and office building market has also slowed as a result of the recession.

Branching Out 

Mikey Joseph, former president of the T&T Contractors’ Association (TTCA), told OBG that because of the downturn in business many contractors were operating at only 30-40% of capacity. With fewer big projects on their order books, companies were seeking out other opportunities, consistent with economic diversification. Joseph told OBG there could be opportunities building agro-processing plants, in line with government plans to revive agriculture. There was also interest in hotels and other tourism-related projects. Health tourism was also of interest. The industry welcomed news of plans to build a 120-room Hilton Hotel at South Park in San Fernando, which is scheduled for completion by mid-2018, as part of a development that may also include affordable housing. Many companies were refocusing on residential construction, partly because banks were more willing to lend money for such projects. In May 2017 Ramlogan Roopnarinesingh was elected to serve as president of the TTCA.

Cash Flow Concerns 

A significant problem faced by contractors in 2016 was delays in payment for public and private sector projects, causing cash-flow difficulties. At the time of the annual budget speech by Colm Imbert, minister of finance, in September 2016, the government was estimated to owe contractors around TT$2bn ($299.4m). Efforts were being made to secure agreement on a reduction in the backlog. Press reports cited contractors complaining that slow workflow had led to staff lay-offs and some equipment being sold.

Design & Build 

Brian Lewis, director of T&T-based architecture firm acla:works, told OBG the local construction industry was going through a downturn, but was resilient, having previously navigated its way through boom and drought periods. “We have always managed to bounce back,” he told OBG, though he noted he was concerned by two structural factors causing additional difficulty this time. The first is the growing use of design-build business models, and the second being the increasing share of business taken on by foreign contractors. Lewis pointed out that in the traditional model, a client hires designers who draw up architectural plans and building specifications. Contractors are then hired, sometimes via competitive bidding, to carry out the building work based on these pre-established specifications. However, because of pressure to minimise costs, T&T has seen growing employment of the alternative design-build model, where the client directly hires a contractor or building company to do all the work required, including the architectural design component, which may itself be sub-contracted. Under this model the contractor has far greater negotiating power relative to the architect, and may put greater emphasis on cost control at the expense of building quality. There have, in fact, been a number of cases in recent years questioning the quality of large projects.

Foreign Players 

A second problem highlighted by Lewis was a tendency among private and public sector clients to assume that foreign consultants and building contractors are superior to homegrown ones. He attributed this to a certain lack of self-confidence. While acknowledging the undoubted expertise of large international groups, he argued that local firms were not always given a fair chance to compete for contracts and that their valuable local expertise was often overlooked. He felt a case in point was the TT$344m ($51.4m) design-build contract in 2014 for the National Insurance Board of T&T’s headquarters in Port of Spain, which was awarded to Bouyges Batiment of France. Despite these concerns, some international groups understand the need for local expertise on contracts, and Lewis said that for this reason his practice was now winning almost as much local work from foreign clients as it was from domestic ones.

Local Content 

Although some local content regulations have been introduced in the energy sector, none exist for the local construction industry. Joseph has called for state agencies to be required to use at least a mandatory minimum level of local content in construction on the islands. “They must first and foremost ensure the development of our people by providing meaningful employment, inclusive of training programmes and opportunities for skills development,” he said. Lewis added that public and private sector clients need to be more aware of local building and design capabilities, and at least consider them alongside international companies. High demand for project services is also creating opportunities that can be filled locally. “Demand for quality project managers currently outstrips supply, so there is significant opportunity in the provision of project management services to serve firms looking to outsource this role,” Kennedy told OBG.

Facilitating Investment 

According to the World Bank’s “Doing Business 2017” report, it takes T&T 273 days on average to issue a construction permit, placing the country 149th out of 190 countries in dealing with construction permits. Recognising this, the Ministry of Planning and Development, in partnership with the Ministry of Trade and Industry, announced in February 2017 plans to automate the construction permit system and bring it online. According to the official press release, the new system “will increase efficiency, reduce the logistical burden for the applicants, simplify processes as well as improve management oversight, transparency and customer service delivery.” However, while the announcement is promising, it was not accompanied by a deadline for implementation.

Shipyard Hopes 

The government and private sector partners continue to discuss a number of potential large-scale infrastructure projects. Hopes for the construction sector rest on one, or several, of these projects, being given the green light, leading to increased contracting work. One option is the proposal to build a large-scale, $500m shipyard as part of a diversification strategy to develop the country as a trans-shipment and maritime repair hub. A lobby group of interested parties, known as the T&T Shipbuilding and Repair Cluster, has long been supporting the idea. The cluster has a commercial subsidiary, the Shipbuilding and Repair Development Company of T&T, which has proposed that the yard be built at La Brea, in south-west Trinidad.Supporters say that after the widening of Panama Canal was completed in 2016, the envisaged dry-dock could accommodate the larger New Panamax cargo ships, as well as Aframax oil and liquefied natural gas tankers (80,000-120,000 dead weight tonnage), which are typically used by neighbouring Venezuela to ship oil.

There have also been suggestions that consideration be given to the shipyard operating on a round-the-clock basis, modelling itself on Singapore. Initial discussions were held on possible funding from the Export-Import Bank of China, with the China Harbour Engineering Company a candidate to carry out the work. Whether such a project would boost the local construction sector will depend on a number of factors. Some in the industry doubt there will be sufficient demand for ship repair to make the yard viable, stating that maritime traffic on Asian routes near Singapore is much heavier than in the Caribbean. There are also other shipping-related projects on the cards, such as the expansion of facilities at Port of Spain. If this, or a similar project, materialises, much will also depend on how much of the work is carried out by an international contractor, whether local content requirements will be established, and therefore how much work goes to local contractors.

The Big Hope 

Due to fiscal constraints on public spending, a number of construction companies hope for greater employment of PPPs. Government officials are also enthusiastic about PPPs. Nadira Lyder, coordinator of the Ministry of Finance’s PPP Unit, told OBG that the authorities were looking at a range of PPPs which would help diversify the economy and stimulate economic activity. Updates to regulatory framework will bring PPPs under the umbrella of recently approved procurement legislation, and an Office of the Regulator is being introduced. Further adjustments may also be necessary to harmonise T&T’s legislation with an evolving set of CARICOM recommendations. “I am looking at the recently completed Couva Hospital, and at the potential for having it operated and run as a PPP,” Lyder told OBG. “Getting this right will be the key factor to getting further PPP projects up and running.”

Under the previous government, the 230-bed hospital, set on 25 ha of land, had been built and equipped by the SCG, as part of a government-to-government loan agreement. While the project had been successfully completed, there was no business plan for running the hospital, or central government budget to hire doctors and staff. Lyder’s unit was therefore advising ministers on options to run it as a PPP, either as a full public, public-private or private facility. Options included using it as a medical training centre and as a centre for medical tourism. The broad outline was that the government hoped to reach a concession agreement with a private partner or consortium, which would make any additional necessary investments, run the operation as a going concern, and generate a revenue stream to pay off the debt owed to China while contributing to fiscal income. Depending on the business plan, the PPP could build accommodation on the site, allowing medical tourism patients to stay during their treatment. That work might, in turn, be sub-contracted to local construction firms. Perhaps more importantly, a successful PPP project at Couva would open the doors for similar arrangements in the infrastructure sector.


A gradual recovery in the number of projects is expected on construction firms’ order books for 2017. Current performance in the sector hints that an improvement could come, based on a moderate pick-up in the energy sector and greater public sector demand. Progress is being made to develop PPPs and push forward with the project pipeline.

To a large extent, the strength of the recovery will depend on the availability of finance. Most industry players agree there is definitely still work to be done, with many projects awaiting finalisation of funding before they could be initiated. From a private sector contractors’ perspective, Joseph said he expected to see a continuation of the pressures being faced by the sector throughout 2017, although there was a chance it had the possibility to be “a bit better” than in 2016.