Summary of the company's history
Iceland Prime Contractor (IPC) is one of Iceland's oldest construction companies originally established as a sole-source military construction contractor in 1954.
In 1997 the company was reorganized into a limited liability company and subsequently listed on the Iceland Stock Exchange where it is still the only listed construction company. With acquisitions and internal growth it is now one of two biggest construction companies in Iceland. It is very actively participating in every sphere of the construction industry such as residential housing, commercial buildings, official buildings and other special buildings, earthmoving, airfield and road construction as well as hydro-electric power projects and such complicated projects as radar stations on mountain tops in remote areas.
Technical Advances and Staff Training
At the time that IPC commenced operations, the equipment and expert knowledge required to carry out defense construction projects was not readily available in Iceland, other than to the Americans and their own contractors. When IPC took over the contracting for the US Naval Air Station marked an important stage in the industrial history of Iceland and became a substantial educational tool in the construction industry sector. Various machines and tools were imported which had not been previously seen in the Icelandic construction industry; these were soon used in various construction projects all over the country.
IPC and their predecessors, United Contractors, supported the diversification of construction workers by sending employees to training seminars in the USA, as well as providing specialised training for particular projects locally. In this way, IPC had a considerable effect on the development of the Icelandic construction industry. This was done with the support of the Icelandic government, not to mention the Americans, who naturally wanted to ensure that the transfer of knowledge continued in line with the demands of the complex projects which the company carried out as contractor to the US Naval Air Station.
Structural Changes
From 1990 onwards, it became clear that there was growing support for a change in the arrangement concerning contractors in Iceland As an increasing number of defense projects were being financed by the NATO Building Fund, NATO member states were in favour of competitive bidding. In 1992, the Icelandic government agreed that the competitive bidding for NATO projects would be open to companies from all NATO countries.
Since 1996 the system in which the Icelandic government nominated contractors to negotiate for projects on the NATO Base has been reduced by stages with the aim to finally reach and support open bidding from any and all contractors.
A New Company
Iceland Prime Contractor (IPC) was established on May 31, 1997, with the assumption of specific assets and liabilities of IPC, as well as all the contractual agreements that the company had amassed as contractor to the US Naval Air Station from 1954 onwards.
From 1998 until the present day, substantial changes have taken place regarding the operation and administration of the company. The company target is to be a multi-faceted company in all spheres of building operations, regarding both financing and implementation, with a growing proportion of its work in the field of its own projects and creations.
At the end of 1998, Iceland Prime Contractor owned an 80% share in two real estate companies, Landsafl hf. and Skafl hf. Landsafl has substantially increased its share within the real estate market, with a current total investment in long-term rental buildings of approximately USD 47 million (ISK 4 billion). In March 2000, Landsafl founded Taekniakur in conjunction with Iceland Telecommunications. The role of Taekniakur is to assume responsibility for construction projects at the intersection of Grensasvegur and Sudurlandsbraut in Reykjavik, where, amongst other buildings, the new headquarters of Iceland Telecommunications will be stationed.
A Year of Changes at IPC
In 1999, many changes were made concerning the operation of Iceland Prime Contractor. The company made substantial investments, in keeping with the policy of the Board concerning the future direction of the company. In 1999 the IPC bought all the share capital in two well-established construction companies, Armannsfell hf. in Reykjavik and Alftaros ehf. in Mosfellsbaer. During the year the company also acquired all the share capital in Ulfarsfell Construction Company hf. The only area in which Ulfarsfell had been active was in the ownership of two building sites, Blikastadaland in Mosfellsbaer and a site in Alftanes. Development and project realization have already begun in Alftanes, while Blikastadaland awaits development as a future community for 2000 inhabitants, with accompanying industrial and service areas.
Vision for the Future
A turning point has been reached in the operation of IPC. The company has now achieved the goals set by the Company Board and is a multi-faceted contractor and real estate enterprise. The project status of IPC and its subsidiaries is good despite a reduction in the number of projects within the NATO base.
Iceland Prime Contractor is now one of two largest and most powerful contracting company in Iceland. The changes that have been made have enabled the company to continue as a strong competitor in all construction industry. The financial strength of IPC is very good, and the intention is to expand into other areas with targeted development of financial operations.
Purpose of the Company
The partnership Iceland Prime Contractor was originally established on the initiative of the Icelandic government, and the operation of the company was based on annual nominations by the Minister for Foreign Affairs to fill year-long contracts for the US Naval Air Station. The company was originally established to fulfil Iceland´s contractual obligations toward the United States, according to an agreement on contractual projects which was signed in 1954.
The chief points of this agreement included the following:
- That all contracts on behalf of the US Naval Air Station would be carried out in such a way as to prevent a negative influence on the Icelandic economy
- That Icelandic contractors, nominated by the Icelandic Government, would take on all projects of which they were capable
- That Icelandic contractors would assume the operations of residential camps and workshops of American contractors who had previously carried out projects there
- That Icelandic standards would be followed with regard to design of those US Naval Air Station buildings not classified as defense buildings.
The Americans primary request was that an Icelandic contractor should be available which would be so powerful and well-prepared that it could take on, at short notice, any construction project that was needed. The founding of IPC, with the participation of the State, was the method used by the Icelandic government to ensure that this would happen, and IPC always fulfilled the required agreements.
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