TOGY talks to
A construct in developmentNovember 10, 2017
Herbert George, National Infrastructure Development Company (NIDCO) chairman, talks to TOGY about the company’s recent restructuring efforts and ongoing projects. NIDCO was created by the government of Trinidad and Tobago in 2005.
NIDCO works to expand the government’s Public Sector Investment Programme through important infrastructure projects. The government body is responsible for overseeing procurement, project management and construction management services. NIDCO has adapted to the economic downturn and now looks to expand regionally while bolstering local content development.
• ON OPTIMISATION: “We are trying to do two things. First, we want make NIDCO the right size. It is our view that the company has too many people chasing too few projects. Second, in moving forward, we want to put policies and systems in place to enable the use of leaner construction. Part of our objective is to be the project management company of choice for the government. Our mission is to bring value to the table, to deliver value for money, to deliver a quality product and to deliver it on time.”
• ON GROWTH AND TRANSPORTATION: “Regarding the energy sector, the focus is to open up growth opportunities throughout the country. One cannot accomplish that objective with the inadequate road networks that we currently have. We must improve the ground transportation infrastructure. For example, getting to Toco along the existing northeastern link is a task, although it is a mere 36 kilometers from the developed eastern end of the Churchill-Roosevelt Highway. The new Valencia-to-Toco Roadway will go a long way in improving access to the whole northeastern region of Trinidad, an area that has been identified as a growth pole, similar to the development that took place in the Point Lisas area many years ago.”
George also discussed NIDCO’s aspirations regarding regional development, specifically in regards to Guyana and Suriname. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Herbert George below.
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What are NIDCO’s objectives and development programmes for 2017 and 2018, given the country’s reduced revenue environment?
We are trying to do two things. First, we want make NIDCO the right size. It is our view that the company has too many people chasing too few projects. Second, in moving forward, we want to put policies and systems in place to enable the use of leaner construction. Part of our objective is to be the project management company of choice for the government. Our mission is to bring value to the table, to deliver value for money, to deliver a quality product and to deliver it on time.
As we move forward in these lean times, a primary objective will be to maximise our value in all areas to our client. Previously, our focus was to act as a main agent to the government for procuring infrastructure services. After procurement of these services, we continued as project managers in implementing the projects. A new value-added service will be to reach out to other government agencies with non-infrastructure projects to provide procurement and project management services. That is one thing we are trying to accomplish for the rest of this year.
What key infrastructure projects is NIDCO currently involved in and which ones do you have in mind relating to the energy industry?
We have a number of projects that were rolled out by the government when they came into office in September 2015. First there is the continuation of the project to extend Solomon Hochoy Highway to Point Fortin, which is located on the southwestern peninsula of the country. When NIDCO’s new board took up office in October 2015, the company was forced to terminate OAS Construtora, a Brazilian firm previously engaged on this project. We are now continuing the unfinished development with the use of local contractors. Work is continuing on the section of roadway from Dumfries Road to Point Fortin. We are on schedule to complete the 27.1-kilometre stretch by the end of 2019.
The extension of the Churchill-Roosevelt Highway from Cumuto to Manzanilla is another new project that was rolled out by the government. This project will be delivered in phases. To date, we have completed the procurement of a local contractor to undertake the first 5 kilometres of the project.
Additionally, NIDCO has been tasked with delivering four other new priority highway projects, which include the Valencia-to-Toco highway and the first ferry port at Toco, which will enhance maritime travel between Trinidad and the sister isle of Tobago. We are also looking at the improvement of road links between Port of Spain and Chaguaramas in the west. There are other projects which include coastal protection, bridges reconstruction and highway interchanges.
Regarding the energy industry, the focus is to open up growth opportunities throughout the country. One cannot accomplish that objective with the inadequate road networks that we currently have. We must improve the ground transportation infrastructure. For example, getting to Toco along the existing northeastern link is a task, although it is a mere 36 kilometres from the developed eastern end of the Churchill-Roosevelt Highway. The new Valencia-to-Toco Roadway will go a long way in improving access to the whole northeastern region of Trinidad, an area that has been identified as a growth pole, similar to the development that took place in the Point Lisas area many years ago. The road from Cumuto to Manzanilla is the first phase and will eventually be extended to the eastern area of Mayaro. This will serve the drilling and other oil exploration activities taking place off the east coast.
What else is being done to improve transportation networks? How will these developments affect the surrounding community?
We have already mentioned the completion of the extension of the Solomon-Hochoy Highway to Point Fortin, which will open up the entire southwestern peninsula. As previously stated, working boots are on the ground. We are using small work packages that are being undertaken by local contractors. These packages are helping to generate job opportunities for the local communities that are being impacted by the roadway. This is particularly useful since the employment opportunities in that region have been depressed.
As previously mentioned, we are extending our offerings from the heavy civil infrastructure works to include project management services to other governmental agencies. The implementation of these projects may include building construction and procurement services, to name a few. We are prepared to do whatever capacity building and institutional strengthening is required to complement our present skillset and enable us to successfully undertake the suggested projects. To the extent that Petrotrin and other operators will require those types of services, NIDCO is poised to become an important player in the country’s oil and gas industry.
However, our people must feel comfortable that they have the necessary skillset to take on and deliver projects that are outside of their present comfort zone. Until there is success in that development, I think that it would be premature to venture into areas associated with non-civil works such as those from Petrotrin and other companies in the energy industry.
What has been the impetus of NIDCO’s recent push to restructure the company into a slimmed-down entity?
Before we can look at that possibility, we must first improve our performance matrices. In recent times, we have had challenges with those matrices which may not be very encouraging to propel us into a position where we can enter into cash-for-equity arrangements. By restructuring, we hope to address our current cost for manpower to make ourselves more self sustaining.
The cash-for-equity concept works fine when you have a profitable enterprise. However, NIDCO is only just about breaking even in some cases. We have to get that model right. We have to get back to the point where we work within our revenues so that the fees we generate from our activities are adequate to support our operations. Our present revenue per employee is just far too small.
How can the government’s commitment to strengthening local content policies help mitigate the work ethic in the labour force?
One thing the government articulated when it came into power was that we need to try to use more of our local resources. There are contractors who have lots of idle equipment. Therefore, the model used for procuring services on our projects should be such that it does not disadvantage those contractors. For example, if one were to tender the Valencia-to-Toco Highway as one project, where the value might be as high as TTD 3 billion (USD 443 million), local contractors would be unwilling to take on that level of construction risk. If it was tendered as a single project, chances are it would be tailor made for foreign contractors.
Given that the government prefers to engage local contractors, one way of realising this objective is to break up the project into smaller work packages. Those packages would be much more attractive to local contractors. The empirical evidence is that we have generated greater interest among local contractors to respond to our requests for proposal on these otherwise large projects, by cutting them into smaller packages that are more manageable.
We have also taken a closer look at the source of material used on our various infrastructure projects. No longer are we prepared to accept the argument that we do not have the right type of material in large enough quantities for the construction of our developments. In the past, we have accepted that argument and have imported large quantities of aggregate, regionally and extra-regionally, to carry out projects. The new paradigm is to tailor our designs to meet the specifications of the locally available materials. For example, on our sister isle, Tobago, we have a large deposit of andesite which is a superior road-building material that is being mined on a small scale at the Studley Park Quarry. Efforts are underway to increase operations at that quarry, thereby increasing the throughput to cater to our project needs.
The effect of that initiative will be a significant reduction in the hemorrhaging of foreign exchange in the country. Further, it will increase economic activity in both Trinidad and Tobago.
What value can NIDCO add by participating in infrastructure developments in the region and neighboring countries such as Guyana, Suriname and Venezuela?
We have not yet marketed ourselves outside of the country, but yes, this is a possibility. We have the know-how regarding road infrastructure development, port development, construction and shoreline protection. We can also provide project management services for large infrastructure projects in the region. We are experienced in those areasand will certainly be looking at the possibility of extending our services into the region as one way of increasing our revenue and ensuring our ongoing sustainability.
What are the underlying factors that will be key to the company’s growth and productivity in the next five to 10 years?
One factor will be the transformation of our human resources. We have to be successful in adopting lean project management policies and procedures, where we minimise waste and maximise value added. We have to get into the practice of managing projects and bringing them in on time, in accordance with the schedule and within the budget.
In the past, we have done some fairly sizable projects in Trinidad. We just need to get some more experience under our belt so that our human resources will be better equipped to handle those capacities as we venture into other areas. However, I believe, that our current portfolio of projects will provide us with the requisite capacity to meet the new strategic vision of moving into the Caribbean and Latin American region.
Right now, we do a great deal of rehabilitation work in Trinidad. We have a lot of going on: the coastal protection works in addition to the roads. I would like to see us handle those things and do them successfully. That will give us the confidence to move forward and attack some of these new projects.
There will also be new challenges related to the goals set by the government to generate 10% of its electricity from renewable sources by 2021. Achieving this goal will require some level of infrastructure construction. We are likely approaching the day when we will be faced with the construction of windmill farms. As such, we can envision our contribution in the construction of the associated physical infrastructure.
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