TTRADE — The price of construction is no longer a key decision factor

Thursday, March 4, 2021
TTRADE — The price of construction is no longer a key decision factor

The price of construction is no longer a key decision factor

General contractor TTRADE specializes in the professional management of industrial and commercial projects. The company, which has been working in the Ukrainian market since 2012, has constructed and equipped over 500 objects. Today it is the No.1 sandwich panel importer in Ukraine. Alexey Lobanov, Sales Executive at TTRADE, talked with Alexey Prokhorenko (CEO of a partner company GTInvest) about what is happening in the construction market, what we should expect 2021, about new projects, trust in visited business, pricing model, and open book principle. TTRADE is one of the few general contractors in the country with its own fleet of construction machinery, which allows them to implement cost-efficient projects compared to their competitors.

- How has the crisis affected your business and customer relations? Is there consolidation with your market competitors in your segment?

The construction business is always the first to feel the blow when a crisis or decline in the economy hits. Our clients do understand the problems of rising prices for construction materials. Everyone understands that the shortage of raw materials affects project costs in the future. We have been maintaining friendly relations with our partner companies for years and are always ready to undertake the risks should a difficult or unpredictable situation occur.

- What is now happening in the industrial constructions market and what are the main trends for 2021?

Last year, the construction of new industrial buildings in our country was stagnant. 2020 made some dents, business went online, so the bulk of construction falls on warehouses and logistics centers. The construction price of such projects rose from $300–350 per sq. m. in 2019 to $400–450 per sq. m. (without the cost of land).

In 2021 we are observing a positive dynamic in the quickly assembled buildings. Society has adapted to the new conditions, foreign investors are ready to invest in the development of this business line. The number of requests for design and construction financed by foreign investments has increased by 6% compared to the second half of 2020. The constraining factor is the need to wait for the land market opening. It is worth noting that the construction price is no longer a key factor in the decision process. If a business is opened from the ground up and European technologies are used down the line then the priority is to invest in the "right technology".

- How harder or easier has it become to keep the leadership on the market?

If you fulfill all your obligations to your clients, work transparently with an outlook for future projects, it is not hard to stay a leader. I do not even notice now how clients approach us one after the other. You could say that it has become easier, but only because there are fewer players on the market. Many construction companies have not been able to survive the crisis without losses. During the construction market drop, the competition has soared significantly. Customers have started construction projects only with contractors they can be confident with (major construction companies). Companies without a proper foundation had to shut down. Our company signed up six new contracts in 2020. There are fewer projects compared to 2019. However, the level and scope of projects and the level of our revenues have increased.

- What should your customers pay attention to when ordering your services?

In new buildings, the most important thing for investors is the maximum efficiency of each square meter. It can be achieved when the building "covers" specific business processes as opposed to the processes that are adjusted to a building. We work according to the principles used by advanced international construction companies — the open book principle. A client has the right to hold a tender at any moment for any job or material, should any doubts about the pricing come up. If our customer wants any stage of a project done by another contractor, we as a general contractor subcontract them and manage the entire project execution. We are one of the few general contractors in our country that use our construction equipment. We are a representative of manufacturers of basic building materials, which enables us to implement projects with high-quality materials at reasonable prices.

- What is the most unusual project you have ever worked on?

Each project has a unique value for us, and when a client makes adjustments to a standard project, it often becomes non-standard. The ability of a contractor to quickly find a way out of difficult situations at the lowest cost possible shows the level of their qualification. One of our repeat customers — MHP (Mironovsky Hliboproduct Agroindustrial Holding). The projects we implement for them are all non-standard. At least because of the requirements, we must meet. Technical supervision even measures the level of force to tie up screws and whether it complies with the standards.

- What new products do you introduce to the market? How do they come about?

Construction across the world does not stand still, and as this direction develops, so do we. Frequent trips abroad to the international building exhibitions allow us to embrace new things and introduce them to our country. Training of staff by European manufacturers empowers us to solve technical problems at a new level. Siphon-vacuum drainage systems, lightweight structures, self-extinguishing materials with low thermal conductivity, and many other innovations. It makes it possible to maintain our leading position. Innovation is the future, and those who take the first step into the future become #1 in our market.

- How long does it take to estimate a new project and implement it starting from the estimation?

There are no standard figures. It all depends on the magnitude and complexity of the project. I can only give an example: the production hall, the floor area of 6500 sq. m. can be designed in five months. The implementation will require around ten months.

- What technological innovations do you use in your business?

BIM is an objective demand of today's market, a possibility to provide integrated solutions and a comprehensive approach. Architectural and construction professionals can plan, design, build and operate buildings and infrastructure more efficiently. It will minimize risks and extra costs not only for construction but also for maintenance of a building.

Besides, highly energy-efficient equipment operates on a construction site.

- How have eco-trends affected your niche/business/product?

Some have just started following new trends, but for us, it has always been the norm. When implementing projects, we apply the LEED or BREEAM guidelines for energy-efficient and ecological design. When making decisions, we consider the entire project lifecycle, not just design and construction, but also an operation.

- How does global warming affect your business?

Seasonality is a factor in the construction market. In our country, winters have always made it partly complex to implement projects. But when average temperatures rise, we can eliminate several construction processes. We use modern building materials with the highest possible solar energy reflection index SRI (solar reference index).

In the design of facilities, we provide the maximum reduction of "heat island" (shading of the site). Thirty percent of the area is set aside for outdoor space, while twenty-five percent of the outer space is located under the tree crowns and planted with greenery. On top of that, a minimum of 75% of parking spaces is placed under a canopy. The canopy roof is covered with one of the following options: vegetation (green roof) or a system of generating alternative energy (solar collectors or photovoltaic panels).

- What are the rules of life that help you grow?

One of the basic rules is never to compare me with someone worse or better than me. It is vital to do everything possible so that "I" today am better than "I" was yesterday.

- The whole world is chasing better service. What attention do you pay to this?

Our reputation is crucial to us. We implement projects so that clients would want to bring us again in their future projects or recommend us as a construction company to their partners. We fulfill all our contractual commitments strictly following the terms and budget. To efficiently work in our market it is imperative to cooperate successfully with all counterparties — suppliers and design companies.

- Tell us about the automation of the business processes in your company? What IT solutions do you use in your company?

To boost the efficiency of communications between departments, employees, management, and sub reps the workflow in our company is built on a CRM-system. Project management is executed with Spider Project.

- What is your outlook for the next five years?

TTRADE is a fast-growing construction company. Today we are implementing 100 mln hryvnias ($4M) projects and more. Foreign investors are the lion's share of our clientele. Their technological and operational requirements are much higher, and we have to continuously improve and find new solutions. It has allowed us to go one step ahead and leave behind many competitors. To date, there we have implemented many projects that meet European standards for our foreign customers and their products have been successfully certified. Given that the territory of Ukraine has a good transportation infrastructure and a lot of other advantages for the placement of production facilities, we can reliably serve as a reliable construction partner.

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