Why professionals in the construction sector need a solid understanding of financial concepts.
The Big 5 Hub recently published an interview with Managing Director of APT Management Consultancy, Jayan Balakrishnan, on how built environment professionals need a basic understanding of finance in order to manage large construction projects successfully. While the article was based on the construction sector in the United Arab Emirates (UAE), FLOORS in Africa magazine found his insights to be particularly relevant for the South African construction market.
“For any organisation, a lot of financial decisions are actions that are taken by non-finance people,” he says. So those people are influencing more finance that the finance guys themselves actually. So it’s quite important that these people know what the impact of their decisions are when they act on something,” said Jayan.
Many project managers, contractors and engineers don’t necessarily have a degree in financing, but certain concepts related to expenses, profit, different types of cash flow, equity and financial statements are part and parcel of construction jobs. Jayan continued by saying that people in the construction sector need to be trained in finance in order to ensure they remain competitive in the market and comply with regulations, seeing as new federal laws are going to be implemented in the UAE’s construction sector. One of the main changes in the UAE’s regulations relates to VAT, which will force companies to keep proper auditing records.
“It doesn’t matter if VAT will be incorporated within your industry or not because it is mandatory to keep proper records. Anyone can be affected in some way. Be prepared because you will only be aware after the regulations come into place,” said Jayan.
These comments are particularly relevant for local professionals. Enhancing your finance knowledge and keeping accurate records of all the various financial aspects of a project is crucial to the success of your project and business.
Thanks and acknowledgement are given to www.thebig5hub.com for the information contained in this article.