Which events in the 40 year old history of Budimex would you describe as milestones?

The most important were: privatization in 1992, entering the Warsaw Stock Exchange in 1995, winning a strategic investor, the Spanish group Ferrovial, which now holds a 59% stake in Budimex (2000), the takeover of Dromeks in 2000 and restructuring in 2003. All companies dealing with construction were included in Budimex Dromex, while development activities became the responsibility of Budimex Nieruchomości.

Currently Budimex SA is a company in charge of one of the largest construction groups in the Polish market. We employ some 6,000 workers and operate throughout Poland. We are present in practically every sector. We build roads, bridges, motorways, hotels, schools, housing, factories and sewage treatment plants. This year’s turnover amounts to PLN 3.5 billion and keeps growing at a fast pace. Our three basic companies are Budimex Dromex, Budimex Nieruchomsci and Budinex Danwood. The first of these generates some 85% of revenue, while the other two some 5% each.



These companies offer services in building transport infrastructure, residential, office and industrial construction, as well as ecological facilities. What investments in each of the areas would you describe as flagship projects?



I would single out infrastructure projects, because their implementation entails the largest amounts of funding, both out of the state budget and EU funding. We are one of the main players in Polish road construction. Road building projects account for over 50% of our revenue. In terms of infrastructure, the flagship projects include the Płowiecka/Marsa junction in Warsaw’s Trasa Siekierkowska thoroughfare, Białobrzegi and Radzymin ring roads, as well as the Wyszków ring road, which is currently being built. Among buildings erected by Budimex is the Licheń basilica. We are involved in residential construction in Warsaw, Poznań and Kraków. These are all middle-range housing projects, although a tower in the Warsaw estate of Murano, now under construction, will feature suites on floors 10 to 17 with breath-taking views of Warsaw. But our main construction area are the Warsaw boroughs of Wola, Ochota and Mokotów. Sewage treatment plants top the list of ecological consttuction projects. EU funding out of the Operational Programme Infrastructure and Environment are manily earmarked for sewage disposal installations, which is mainly the concern of small local firms. We are interested in large sewage treatment plants. We have built such facilities in Zamość and Gdańsk. We are currently building a large sewage treatment plant in Poznań.



What are the company’s activities on foreign markets?



We focus on the Polish market, which accounts for 90-95% of ouor revenue. But traditionally about 1,000 of our workers are present in Germany, where we have been involved from the very start. It is still a lucrative market, though as Polish wages catch up with western wages, many of the Polish workers are thinking of coming back home. We used to be present in the East, but due to current demand for engineeri9ng personnel elsewhere, we decided to suspend our operations there.



The company has won a number of awards. In this year’s edition of the Laur Klienta (Customer’s Laurel) competition Budimex Dromex own the first prize in the Construction Services category. Which of the prizes are you particularly proud of?



It’s the prizes awarded by clients, because it means they are happy with what we do.



What investment projects is the company currently involved in?



We recently signed important contracts, mainly in the area of infrastructure. One provides for the design and construction of a motorway section – a ring road around Wrocław to the tune of PLN 638.8 million net, as well as the Zachód (Westway) rapid transit road in Zabrze (PLN 245.4 million net).

We have applied for licences to build A1 and A2 motorway sections. When it comes to the 90 kilometre long Konotopa-Stryków section of the A2, our competitor is the Staleksport consortium. Our bid for the 180 kilometre Stryków-Pyrzowice section of the A1 was recognized by the General Directorate of National Roads and Motorways as the best one. Negotiations on the terms of the licence are to start imminently. Should Budimex win both licences, this would markedly boost its image.



The cost of building a 14.5 ring road around Wrocław is nothing compared to the cost of a 10 kilometre section of the S8 expressway from Konotopa to Prymasa Tysiąclecia Avenue in Warsaw: all of PLN 2.15 billion gross.



This particular section is in fact the north-western part of the planned Warsaw ring road. Apart from a dual carriageway, the project provides for an overhaul of the whole road system in the area, including the construction of over 9 kilometres of access roads, as well as junctions, 24 viaducts, as well as of a railway siding to the Lucchini steel mill. It is necessary to build 150 thousand square metres of tunnel walls and five reinforced concrete water reservoirs. This investment project, whose construction started on March 15 cannot be compared with run-off-the-mill motorway construction in an open field, over which a bridge needs to be built from time to time, as well as a small junction every twenty kilometers or so. When I realized that, considering the complexity of engineering tasks and the scale of the project, no Polish company was able to implement it within such a short period of time by end-2010, I invited the presidents of three other leading construction companies to launch the project together. Since the project involved four massive junctions, each of the companies will build one of them, as well as a section of the road in between. We are starting at the same time. I believe we will make it. In fact, we are slightly ahead of schedule. Within the consortium Budimex Dromex SA acts as the investment leader. It co-ordinates all the work and deals with the investor (GDGKiA) on others’ behalf. We have a 27% stake in the undertaking, as much as Strabag Sp. z o.o. and Mostostal Warszawa SA. Warbud SA holds a 17% stake. I’m sure that a fine stretch of road will be built to become a showcase for each of the construction companies.



How about other construction areas?



For Budimex Nieruchomości we are building the Murano estate of 750 apartments. Construction is underway on a luxury apartment complex for Sabe SA in Miedzyzdroje on the Baltic coast. This marks the first stage of an investment project, which we intend to complete late next year. Then comes stage two, possibly three. However, the situation on the financial market has changed. Banks have tightened their credit policies. It is not as easy for investors to sell apartments as before.



What’s your view of the situation in the Polish construction industry? The Polish Association of Construction Industry Employers, of which you are President, affiliates 100 construction companies of different size.





The credit crunch, which makes it difficult for private investors to obtain loans, is a serious problem for housing construction. As soon as the situation is back to normal, other problems are likely to remain. I would like the government to amend the law on public procurement, as well as to introduce a package of legislation drafted by the Ministry of Infrastructure concerning spatial planning and other issues, which would make it easier to implement investment projects. This would offer the Polish construction industry some breathing space. I would like public investors to absorb EU funds at a faster pace. The association encompasses all the largest Polish construction companies (70% of general contractors), which are able to use 50-70% of their capacity.



The association is involved in lobbying on behalf of the industry…



The Polish Association of Construction Industry Employers represents its members in contacts with the government and Parliament. We are asked to give our views on proposed bills and directives concerning construction. We liaise with the Ministry of Infrastructure. We are active within the Tirpartite Committee for Construction. We managed to convince the government that Polish companies are capable of building everything themselves, and that Poland does not need to involve general contractors from China.

We are still canvassing for FIDIC terms of contract drafted by the International Federation of Consulting Engineers to be accepted as binding. Currently an investor only focuses on his rights resulting from FIDIC terms of contract, without having to accept the responsibilities. Another issue we are canvassing for is that contracts should be signed in the Polish currency, the zloty. The risk of exchange rate fluctuations must not rest on the shoulders of the general contractor. In an unstable market, this translates into higher prices. Another thing is that prices must not always be fixed. They can be set as an estimate and then adjusted, to reflect the situation on the labour market, changing prices of materials etc. Large contracts are implemented over a longer period of time. In the bid it is necessary to take account of inflation, wage increases and prices of materials. When an investor opens particular bids, he may be in for a bit of a shock. The tender for the second line of the Warsaw underground was cancelled when it turned out that the bidders asked for twice as much as the investor expected. Construction companies have already experienced a rapid hike in the prices of steel, cement and other construction materials.

The construction industry has always has a low return on investment (4-5%), but it entailed a small risk, because all the formalities were arranged by the investor. Our responsibility was to build on time and up to expectations. Now we obtain a construction permit instead of the investor. Investors must realize that contractors are their partners and not opponents, like in a boxing match. The point is not to knock each other out, but for two winners to emerge: the construction company, which has demonstrated to its shareholders that it is earning their profit and the investor, who can be proud of the results of his construction work.