PPPs Can Increase Industry TransparencyMon, 11/05/2018 - 16:55
Q: How did Grupo TADCO establish its relationship with the government for work in Mexico’s infrastructure industry?
FV: Taller de Arquitectura, Diseño y Construcción (TADCO) was founded in 1985 to support the reconstruction of Mexico City after the earthquake that leveled the city. Through the years, the company transformed into one of the Mexico’s most important construction companies. During this time, we had an opportunity to work with the federal government, supervising a penitentiary project. These types of projects are complex and only big construction companies such as GIA, ICA or Prodemex can carry them out. This is how we became a consultant for the federal government.
Q: What are the main factors that will differentiate companies within the infrastructure industry?
JP: We are betting on three different factors for our future development: technology, innovation and PPPs. In the future, projects will not be delivered on paper but on disks and flash drives. Technologies such as BIM and REVIT will push disruption within the construction sector and push the country forward. It is also surprising that in some projects or areas we are still constructing using the same methodologies as we did years ago. This is why it is vital that we innovate in our construction systems and bring change to the sector by integrating new materials that are more sustainable and that will not only cut down construction times but also increase safety.
Q: Which subsectors are attractive to Grupo TADCO and under what schemes?
JP: In a country like Mexico, I believe PPPs are the future for the development of the country. I think that the private sector is much more efficient than most public entities. In terms of segments, housing is an area we believe will be very active in 2018. The country’s housing deficit, particularly in the social housing segment, will require the construction of many homes in the next few years. Mexico’s cities are trying to close off their urban centers and migrate toward more vertical developments. Another sector we are hopeful will pick up is public education and more projects will be tendered in the future through PPPs. Outside of Mexico, we are also looking to launch supervisory and consulting services in Central and South America.
FV: We will also see a great amount of activity in the health sector through various hospital tenders from ISSSTE and IMSS. Over the years, we have actively participated in this sector and we are starting to enjoy the fruits of our labor.
Q: How has Grupo TADCO financed its growth and how does it want to continue funding its participation in new projects?
JP: We have credit lines with banks and our participation in NAIM has increased our flows but we are looking for new options to finance our growth. Additionally, we are working on our corporate governance structure to align with the interest of investors. We want to establish an administrative council and comply with other specifications that both banks and the BMV require. Transparency will help us not only improve our day-to-day activities but also to expand and realize our growth expectations.
Q: Why is it so difficult to retain human capital within the construction and engineering sectors in Mexico?
FV: Within the construction sector, the turnaround of human capital is becoming a real challenge. There is a great amount of competition within the industry because these new generations are embracing more skills, especially through technology. Grupo TADCO has experienced many challenges with the fast evolution of technology. People who are continuously learning and training themselves are in high demand from all companies, therefore creating a gap. We are at an important juncture and the sector has to adapt quickly. We see a great opportunity in the niche of BIM and REVIT.
JP: Millennials are particularly difficult to understand. They are more worried about the human aspects of a company, more than just the compensation. They want more time out of the office and want to have more freedom. The company decided to offer more flexible working hours and home office to adapt to the needs of new generations.
Q: What has been Grupo TADCO’s experience working with SACMAG and NACO in the supervision of NAIM?
JP: The main challenge we are facing is the terrain. It has been incredibly difficult to stabilize the location’s subsoil to a point where both NACO and the CICM have decided to stop fighting nature and work in phases. We want it to sink homogeneously and for this we designed each part of the airport with more than 10,000 specialized instruments. We implement an observation method in which we benchmark each and every instrument to ensure the equal sinking of the terrain and that it is behaving as it was expected to in theory.
Q: What legacy does Grupo TADCO want to leave in Mexico and what are its expansion plans?
JP: Grupo TADCO wants to collaborate with more international companies and provide an added value with our in-depth knowledge not only of the industry but of the country. This is why we have been able to create alliances with European and US companies. We understand how the government operates, which is a great strength that these new companies need to be successful in Mexico. We want to show that Mexican companies can integrate this cutting-edge technology into infrastructure projects and that they have a great deal to offer to the international market. Our alliance with SACMAG, for instance, has allowed us to begin working in some South American countries.
The presence of corruption and the lack of transparency in various government processes scares many international players. They believe that Latin American countries have high corruption, creating a large barrier to entry. Many international companies have had the experience of investing in tenders only to discover the tender was manipulated. PPPs will professionalize the system and eliminate these barriers for international companies.
Q: What are your recommendations for the next administration to improve infrastructure processes?
JP: I think that we need more openness from various governmental agencies to include more private sector participants in infrastructure projects. There are many basic services that could be drastically improved if placed under a PPP scheme.
FV: One of the biggest problems within the infrastructure industry is that tenders for projects begin in the middle of a presidential term. It should be from the very beginning of a presidential term and everything should have already been adequately planned so that, in the six years of the term, the projects will actually be completed.