The Indian construction industry has grown by leaps and bounds for the past decade and a half and accounts for more than nine per cent of India´s GDP. Exposure to global construction technologies and best practices have significantly improved the quality of construction and reduced the project duration, with special focus on safety standards.
The shift from in-situ construction to factory-controlled pre-engineered high quality construction has changed the requirement of engineering, materials, and skills for the construction industry. In pre-engineered buildings (PEB), customer requirements are custom-engineered and high quality material is delivered to site in ready to erect condition where semi-skilled people assemble these components using cranes for faster construction.
PEB concept gained impetus in the Indian markets in the early 2000, and the usage of steel and especially PEB has been growing very rapidly ever since. In the year 2000, when Kirby Building Systems started its operations in India, PEB concept was not well-known in the country. The acceptance of this concept can be credited to its promotion by Kirby on a large scale basis as also the opening up of the economy and a number of multinationals setting-up their facilities, giving preference to metal buildings over conventional methods. Changes in government regulations, industry friendly policies, and promotion of India as the preferred FDI destination also resulted in heavy FDI inflows, thereby giving a further boost to the PEB technology.
Over the last eight years, many players have entered the PEB market. With more players in the scene, we will have more PEB buildings around, thereby increasing the visibility of and the demand for these buildings in the market. In the current scenario, anyone planning to put up a factory or a warehouse immediately thinks of a PEB with the industry yet to achieve its true potential. Some of the main PEB applications include factories, warehouses, workshops, showrooms, petrol stations, site offices, supermarkets, aircraft hangars, cold storages, metro stations, shipyards, sport stadiums, offices, etc.
The perception about PEB being costlier is only a notion as the industry has grown by more than 15-20 per cent during the first decade of this century, and is growing at a slower rate for the last 5 years or so due to global economic factors. This growth in itself shows that these structures are not very expensive but slightly costlier than concrete structures, and in some cases where the area is very high, PEBs are found to be less expensive than RCC buildings. Also with companies looking for faster project completion, which in turn will give faster returns on their investments, PEB is the only one stop solution to fulfill their requirements.
All these buildings are unique in nature, with different steel sections and customised as per the requirement of the customer. In this regard, it is not possible to provide per square feet construction cost of any PEB as the total cost involved is of steel and can be calculated only after the initial design is completed based on the estimated output of the building weight.
PEB is one of the first choices when it comes to sustainable and green buildings. Kirby India is in the forefront of this innovation and is leading the revolution of green construction in the country through its PEB technology. Steel is the preferred material for all prefab structures and PEB uses steel which is more than 80 per cent recyclable. These buildings are cost effective, energy efficient, and provide better quality environment as they are cooler in hot conditions due to the favourable roofing material and natural ventilation. The use of sky lights and solar panels on rooftops will meet daylight and captive power requirements, and at the same time reduce emissions and gain carbon credits under clean development mechanism. Effective usage of insulation material, louvers, and other materials also help in making PEB one of the most preferred green buildings.
Like many other precision industries in India, PEB industry is also facing many challenges. One of the main challenges faced by the PEB industry in India include acceptance among the Indian corporates, which is still moderate when compared to developed economies. But in the last decade there has been increased acceptance of PEB due to rapidly expanding industrialisation in the country. The changing market environment has led to an increase in shift towards more advanced technologies with one of them being PEB due to increasing demand from customers for faster project completion, which in turn would give faster returns on their investments.
Some of the other challenges faced by the PEB industry include price volatility of raw material, mainly steel, availability of skilled manpower, etc.
But the economic conditions before the second half of 2014 changed the dynamics of the industry with new investments or capex announcements dropping drastically due to the demand slump in the domestic market, weak exports, low business and consumer confidence, rising current account deficit, weakening rupee, and many other internal and external factors.
Construction contributes to more than 66 per cent of total steel consumption, and in advanced countries more than two-thirds of the buildings are made in steel. The government should promote steel as a construction material for speedy implementation of projects and avoid cost overruns and project delays.
Our government is planning for implementation of 100 smart cities and this can be efficiently done using pre-engineered steel construction as done in developed countries, providing an affordable and sustainable material for construction. Concessions in the form of tax incentives could also be extended to steel construction industry.
The industry is moving from warehouses and offices to highly complex pre-engineered sections in infrastructure, such as power plants, steel plants, ports, oil and gas utilities, and so on, which require very specialised design skill sets. With adequate attention from the government, this industry can dramatically reduce construction time for industrial and infrastructure sectors. Pre-engineered construction impacts speed, quality, and pricing of industrial construction, has green benefits, and a high resale value. It´s not surprising then that Indian industrial construction is eminently poised for a big PEB wave, given India´s renewed focus on infrastructure and the new industrial thrust.
The Central government´s Make in India campaign and recent approval of ordinance for amendment of Land Acquisition Act for development of infrastructure and industry related projects will further give a boost to the economic growth as this was one of the major hurdles in delay of implementation of many projects. These reforms and many other such initiatives in the coming future as promised by the government are expected to make the Indian construction and infrastructure segments much stronger and increase their percentage share in the overall GDP contribution, thereby giving a positive growth momentum to the PEB industry over the next decade or so.
This article has been authored by D Raju, Managing Director & CEO, Kirby Building Systems India Pvt Ltd.