More than 20 completed projects, including 3 branded hotels, 5 projects undergoing construction, and reconstruction of several historical buildings – this is what the portfolio of BK Construction looks like. In 2017, the BK team with 25 years’ worth of construction experience, merged with m², taking over the latter’s construction and engineering activities.
Forbes Georgia enquired about the results of the merger, as we sat down with the Managing Partner of m², and the CEO of BK Construction, Shota Berekashvili.
Let us start from the beginning. How did you get into the construction industry?
BKConstruction first appeared on the market under the name of BKCapital. However, the team behind the company had started out years again Moscow. Choosing the right professionals to work with is the primary actor that determines success in the construction business – afterwards the process proceeds smoothly.
The founders of our company boast 40 years of experience operating in the construction industry. They started off in Kutaisi Construction Trust, headed by my father and as of 1992 were doing business in Moscow. Times were tough back in the 90s, however my father, Tamaz, managed to recruit and retain a great staff. He personally trained these professionals and formed a strong team with whom he managed to implement new technologies and run the company smoothly at a time, when nothing was being built.
The company’s activities between 1992 and 2009 were largely focused on public buildings, including the construction of schools, kindergartens, offices, as well as commercial and residential complexes. The company has also been involved in multifunctional district constructions. As of 2009 we have started operating in Georgia under the brand name of BK Capital, until in 2017, the company was rebranded BK Construction.
Did you simply change the name, or did you also adopt a new concept?
The main reason for rebranding was our company’s impending 2017 merger with m², which transformed BK Capital. We created a completely new, modern brand with a clear vision for the future, vast experience and direction towards honing our standards.
We also made sure to select a relevant brand name for the firm. Most of our work goes into benefitting the m2 projects, however we also do business with third parties.
It’s worth noting that the merger with m2 provided BK Construction with a great opportunity to grow and strengthen its position on the market, yet the scale of the project posed new challenges. However, our company has never backed down from challenges; we’ve always been ambitious to grow. Our rebranding and transformation allowed us to mature, while also increasing the scope of the m2 activities. Nowadays, we offer our clients comprehensive services throughout the whole project cycle including project planning and construction management.
Going back to 2009, could you tell us a bit about what the market looked like back then?
In 2009-2010, the construction market was only just beginning to take shape in Georgia. There were very few companies that could carry out large-scale construction– no more than 2 or 3 firms, ourselves included. In 2010, we undertook a highly ambitious and interesting project -the reconstruction of the Bank of Georgia HQ. This was our first major project. On one hand, it was unique due to its architectural complexity, naturally posing as a challenge for us as a construction and engineering firm; on the other, due to its role in defining the city’s identity and skyline, it placed an increased sense of responsibility on us as we were working on its reconstruction. Moreover, Office buildings are more complex in their nature than residential developments: they require more detailed engineering solutions, including complicated heating, ventilation and safety systems. In 2009, none of the local construction companies had the experience or the expertise to carry out a project of this nature in Georgia.
With the first successful project under your belt, what impact did it have on your business and its subsequent development? Would you say that it was the most difficult project for you?
Naturally, the reconstruction of the Bank of Georgia headquarters is a project of great pride for us, as it represents an integral part of the architectural fabric of the city. I would like to stress the point that this project required caution and considerable responsibility. The building was virtually reborn. We are also proud of the funicular reconstruction project, which we carried out in 2010-2011. Construction of the Iveria Holy Virgin Cathedral on the Makhata Mountain stands out due to its historical significance. We are currently working on a huge project – the Saburtalo City Mall, with the total buildable area of 120,00 square meters. BK Construction made a 2.7 million GEL investment to purchase new technology for this project. These modern systems and professional planning allowed us to complete the steelwork of this massive project within one year’s time.
However, we have even greater challenges ahead of us. I would highlight a modern urban development project, which we planned together with the Canadian-American firm ZGF. The modern neighborhood will be constructed on a 10-hectareland and shall include residential, commercial and office buildings, as well as spacious recreational areas, parks and sports facilities. This is a unique project for us, as we are building a new neighborhood based on European and American models, set to affect the cityscape, making it more attractive. I am particularly delighted to note that we’ve built three internationally branded hotels in Georgia – Ramada Encore Tbilisi, Moxy Tbilisi by Marriott and the Radisson Collection Tsinandali. These projects provided us within valuable experience. Since 2009, approximately 70% of our projects have been carried out in cooperation with m2. Each successfully completed project was better than the last one. Therefore, the merger with m2 was a logical continuation of our collaboration.
The market is clearly better regulated today than it was 10 years ago…
We welcome the latest developments in the construction industry. I am referring to the introduction of more stringent safety norms and health and fire and life safety regulations. This shall place us on an even footing with other development companies. I would also like to stress the benefits of the recent fundamental standard changes that regulate both construction safety and quality.
It’s noteworthy that our joint projects with m2 complied with 90% of the aforementioned regulations even before these came into effect. This has always been associated with substantial costs. However, we are operating in a high-risk environment, which requires adherence to high standards of health and safety for our specialists, as well as to the general construction norms. Our engineers and workers are invaluable to us. This was the case before the regulations, and it is the case now.
How will BK Construction benefit from this new market? What will be the company’s competitive advantage?
Generally speaking, construction is a complex industry, and we can view the issue of competition in broad terms. Competitive environments in the fields of engineering, steelwork, façade work and decoration differ from each other quite radically. There are also substantial differences based on the project type, whether it is a residential or a commercial project, a hotel or an office block. For example, we face fierce competition in residential construction, while the opposite is true with regard to hotels, as there are few Georgian companies that can carry out such complex work. Our advantage is our strong and experienced team of engineers and technical personnel, which brings together both young and older professionals who share their knowledge and expertise with each other.
Furthermore, we are operating modern systems, and are constantly looking to upgrade them. This speeds up the construction process, that benefits both the client and us, as our technological advantage gives us the edge over other companies in the context of healthy competition. In short, our competitive advantages are our resources, our experience and our willingness to constantly strive for development.
How difficult is it to source qualified workforce in Georgia, and what is your perspective about the labour market asymmetry, which we often hear about?
Our company’s main asset is our staff. BK Construction currently employs up to 150 engineers and technical personnel. These people are our wealth, as they bring decades of experience in their respective fields of expertise to the table. They are the core and the brain of the company. They plan and design each stage of every project.
Naturally, the subsequent development of the project is dependent on a specialist workforce; our company relies on highly qualified individuals in this regard. As of today, BK Construction employs approximately 1,100 people, but in light of the scale of our planned projects, this number is set to at least double over the next two years. We believe that we will be employing as many as 2,500 professionals in the near future.
How do you plan to double these figures? Tell us more about your future projects.
We are planning to build up to 1,000,000 m2 over the next five years. Most of this work is related to the m2 projects, but we are also actively working with third parties. As stated earlier, we are planning to double our workforce, but we are also facing the reality of shortage in qualified engineers, technical experts and other specialists in various areas of construction. This led us to the idea of establishing a vocational college of construction in Zestaponi. Construct2 is a joint project between m2 Real Estate and the Ministry of Education, Science, Culture and Sport. Its total investment value is $4 million. Through its 11 short-term vocational courses in engineering, the college will prepare up to 600 certified specialists each year; simultaneously the state programme will train labour safety and environmental technology experts. The college will receive its first wave of students in March. Academic courses will run between 2 and 3 months, and will be followed by three-month paid practical training at one of our facilities. Tuition at Construct2 is free and graduates will have the opportunity to become involved in BK Construction projects.
In summary, what is the main prerequisite for achieving success in this business?
You must know what you want to achieve, and who you want to achieve it with. When we were working in Moscow, we were constantly thinking about returning home. We wanted to implement large-scale, high-quality projects in Georgia. However, this was not possible during the 1990s. Our main achievement was maintaining a team of professionals who have stayed on the same page and shared the core values that determine success of our work – they are highly qualified, motivated and united as one big family. I am delighted that we are now fulfilling our dream – we are back in Georgia and doing what we love, with the same team and a new sense of determination.