jfm feb

Paul M’Crystal, Gauteng Regional Head of Facilities Management, CorporateReal Estate Solutions at Barclays Africa and new SAFMA Chairman is excited about the challenges and opportunities lying ahead for the FM industry. Oh yes, for him the sky is truly the limit.

EXCUSEME...WHILE I TOUCHTHE SKY

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PROACTIVE PROPERTY MANAGEMENT

jFMjFMJournal of Facilities Management

INSIDE: BLOCKBUSTER BUDGETING FOR FMs

FEBRUARY 2015 JFM No 114ISSN 2071-9299

ALSOMeet the new SAFMA Board

EDITOR’S COMMENT

There have been a number of blogs on FM sites that have been asking for help in doing an audit of their facilities prior to the main audit.

If this is purely an in-house function, and if the FM (Ops) and FM (Strat) have not been briefed properly, the entire audit can be disastrous and the person or persons doing the main audit will have grounds for a re-as-sessment.

I looked at a US FM audit to determine if the FM division had been allocated the pre-audit time correctly and found the briefing to be absolutely thorough and extensive. I won-der how many local companies follow suit.

We all know, the purpose of the Facilities Management Division (Division) of the General Services Department (GSD) is to provide safe, efficient, comfortable, attractive, and functional buildings and facilities.

The main audit report stated: “We found that the Division lacked adequate and docu-mented internal controls to mitigate nine of the threats we identified during our Risk Assessment process. Based upon our Risk and Vulnerability Assessments, the Division agreed to develop formal procedures to improve its internal controls in all three work sections.

“The audit objective was to identify the operational threats facing the Facilities Management Division and the controls the Division had in place to prevent, eliminate, or minimise these threats. Specifically, the FM team conducted a Risk Assessment and Vulnerability Assessment of the Division’s operational threats and corresponding controls. Based on the team’s Risk and Vulnerability Assessments, we identified several threats for which the Division had no corresponding controls in place.

“In developing our Risk Matrix, we reviewed the potential threats associated with the following three Facilities Management work sections: 1) Building Management; 2) Contracts and System Services; and 3) Maintenance Support Services.

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Taking the pain out of auditing

Terry Owen

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February 2015 jFM 1

“We also conducted an overall Vulnerability Assessment for the Division. A Vulnerability Assessment shows the rela-tionships among (1) a threat’s inherent risk, (2) the relative strength of the Division’s internal controls, and (3) the Division’s level of vulnerability for each threat and the extent of audit testing.”

Thorough and incisive, I’m sure you’d agree, and yet some of the comments I’ve heard “around and about” don’t come anywhere near this. One company (core business) manager was heard to quip “our audit is sometimes more like a drummer with no hands.” To say I was shocked would be an understatement.

Help may be needed in the form of experts in finance, tax, valuation, pension, and information technology (IT). Such experts may assist the auditor with meas-uring fair values, valuing financial instru-ments, determination of physical quan-tities, amounts derived from specialised techniques, or interpretations of regu-lations or agreements. The use of an IT expert is a significant aspect of most audit engagements. When deciding whether an IT expert is to be used, a primary concern is the extent to which IT is used in pro-cessing accounting information. The pres-ence of complex information technology may require the use of an IT expert.

The auditor is still ultimately respon-sible for work performed by the expert. In relying on the expert, the auditor should evaluate competence and objectivity of the expert, audit the inputs used by the expert (census data for actuary) and tie out the output (estimate should be found in the financial statements or disclosures), and review the expert work for reason-ableness, including the reasonableness of assumptions.

It’s a complex area, hence the many blogs I’ve received and JFM will be cover-ing this soon, complete with case studies.

It’s an issue not to be missed!

CONTENTS12 Solar power Help your business keep power on.

16 Steering strategic FM Paul M’Crystal reaches for the sky.

20 Finance for FMs Part two of an exclusive must-read.

28 Meet the new SAFMA Board All aboard for FM journey.

Property focus

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Cape Town’s city centre soars

February 2015 jFM 4

Over the past few years Cape Town’s central city has attracted huge investment with numerous major new developments, reno-vations and additions completed, says Selwyn Sharon, commer-cial broker for Pam Golding Properties in the Cape Peninsula.“Further new commercial and mixed-use developments planned for initiation in 2015 are a positive re-enforcement of the city’s vibrant business district which has successfully evolved over the past decade to incor-porate a strong ‘live, work, play’ ethos and in so doing, attract a burgeoning and complementary residential component.”He says in the commercial prop-erty market, where ever-increas-ing operating (utilities) and rental costs impact on tenants and landlords, the majority of office layouts now favour an open plan environment with boardrooms or small meeting rooms utilised to meet clients and a strong focus on kitchen and staff recreational areas – with some offices even installing showers for cyclists and runners. “Security of premises and park-ing facilities also plays an import-ant role, particularly as users in the IT industry, designers, mar-keting and creative businesses need to cater for being open longer hours.”Last year (2014) saw consider-able progress in projects under-taken and completed. Notable new commercial properties – comprising office space with ground floor retail such as res-taurants and coffee bars, include the new landmark skyscraper, Portside, which is almost fully occupied by Old Mutual and First National Bank as well as sub-sidiaries such as Wesbank, and some smaller tenants. The new 22 Bree Street, anchored by Bowman Gilfillan, is almost fully tenanted, while the top end of Bree Street has become extremely popular, with landlords receiving frequent requests for restaurant, retail and office spaces. A small owner-oc-cupied property in this same street has been modernised with new finishes and parking added, making it impactful and instantly recognisable. A major

renovation is underway and nearing completion at 130 Strand Street – to accommodate a col-lege. Touchstone House, near Portside, where commercial, namely office and ground floor retail units, have been sold via sectional title, is also well under construction.On Foreshore, a new parking garage has been added to the Standard Bank building, enabling it to offer tenants a reasonable parking ratio, while Roggebaai Place, situated behind SARS and comprising a gross lettable area (GLA) of 12 500m2, has just been completed with some space still available. In addition, an eight-storey office block at 19 Louis Gradner Street has been refur-bished and now incorporates on-site, secure parking.In the trendy De Waterkant area, in the sought after Hudson building, where Sharon has concluded 90% of the leases, a new triple-storey loft has been added. Available to let at a rental rate of R185 per square metre, this exceptional modern unit of 420m2 has high end finishes and a large terrace. Opposite The Hudson, the newly completed, mainly residential mixed-use development, The Mirage, incor-porates a retail component with a boutique hotel planned.“On the fringe of the central city, on Somerset Road in Green Point, new residential develop-ments have transformed the area, where any small building is being sold, demolished and sectional-titled into predominantly residential units. A new develop-ment, 22 Somerset Road, is now complete with tenants moving into this small, modern building with two striking glass facades. Also on the fringe, the Kloof Street area remains very popular among restaurateurs and small businesses. However, very few new buildings are con-structed due to heritage issues, high acquisition costs and the absence of large properties to redevelop.”Sharon says Sea Point is also being upgraded at a rapid pace. The refurbished ‘Galleria’ which is now renamed ‘The Point’ is an exciting new development with multi-tier retail and P-Grade

The Hudson exterior

The Hudson Extension One

The Hudson Extension Two

offices. The building is almost fully tenanted and offers gen-erous, secure parking for both tenants and customers. An apartment building is being built on the corner of Main and Glen Roads, where a McDonald’s out-let has already opened.“Other major projects are cur-rently under construction in the city centre and immediate vicinity, with special attention given to parking ratios, green

or energy saving technology, P-Grade modern finishes and the latest office design, with emphasis on open plan and maximising spaces. In this upper end – P-Grade buildings, office rentals in De Waterkant and new city office developments are approaching the R200 per square metre mark. However, compared to other city centres in cities in Europe or the USA, this is still extremely inexpensive.”

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PROPERTY FOCUS

February 2015 jFM 5

Marc Wainer

Marius Muller, Chief Executive Officer of Pareto Ltd.

Redefine Properties today announced the acquisition of the Leaf Capital portfolio of prop-erties for R4,1-billion, equating to an initial income yield of 8%, substantially enhancing Redefine’s office portfolio in the Western Cape.Marc Wainer, Executive Chairman of Redefine Properties says: “Acquiring this trophy portfolio is a strategic triumph for Redefine. It is underpinned by high-quality income streams from its large, excellently located, premium grade office precinct assets.“The transaction includes a number of significant proper-ties such as Black River Park and the Wembley Square Development. These assets change the face of our Western Cape portfolio, which will now include the top five percent of quality office blocks in Cape Town.” In Gauteng, the acquired assets include Bryanston properties Silver Stream Business Park,

Redefine reels in Leaf CapitalSilver Point Office Park, Crawford House and Hampton Park. It also comprises Clearwater Office Park in Strubens Valley and Centurion Gate in Centurion. Leaf Capital is an unlisted company with nine substantial property assets in Gauteng and the Western Cape. The prop-erties are well-located in major metropoles and benefit from strong lease covenants and quality tenants, such as Amazon, Medscheme, Kumba Iron Ore, Dimension Data, and the Green Building Council of SA.The portfolio is underpinned by strong lease covenants with 37% of the portfolio expiring in more than five years. The fund has maintained a tenant retention ratio of 82% (94% excluding buildings earmarked for refur-bishment) as well as delivering growth in lease renewals of 1,51% at a weighted average escalation rate of 8,1%.In addition, the portfolio offers future additional develop-ment potential as it includes

developable bulk at Black River Park, The Boulevard, Silver Stream Business Park and Centurion Gate.Redefine will pay the purchase consideration through assumed third party debt of approximately R1,9- billion, 80% of the balance will be settled through a place-ment of shares and 20% funded from existing cash resources.

While subject to Competition Commission approval and other conditions, the deal is expected to take commercial effect from March 1 2015.Wainer says: “This strategic transaction advances our strat-egy to grow a quality, diversified portfolio of properties that sup-port sustainable and growing performance for our investors.”

The greater the dominance of a property asset, the more pro-tected the property investment will be in 2015’s subdued economic markets, says Marius Muller, CEO of SA property giant Pareto.He adds this is true for all cat-egories of commercial property. “For office and industrial property, a prime location in a dominant business node will reinforce a quality, defensive asset,” says Muller. Offices have had a tough run with weak fundamentals at play in recent years. “The office mar-ket is likely to continue to take a beating in 2015,” he says. “There are still new office developments coming to market, although this is expected to be tempered by SA’s electricity crisis. So, if a develop-ment isn’t tenant-driven, it needs to be a top quality building in a prime location with competitive occupation costs, if it has any chance of attracting good tenants in the current market. That’s a tall order.”For retail property, Muller stresses

‘Dominance essential’ for retail propertydominance is essential, whether it be on a neighbourhood, local, regional or super-regional basis.“Shoppers aren’t prepared to buy in the same way they did previously. In this market. You want a shopping centre that is the first choice with customers, and can stand up strongly against any competition, or new market entrants,” says Muller.In achieving this, it isn’t only the size and location of the shop-ping centre that plays a big role, but how well a mall’s tenant mix meets its shoppers’ ever-changing needs.Muller foresees the entry by, and dominance of, international retail brands playing an even larger role on the SA retail landscape in 2015. “Unfortunately, South African retailers do not seem able to react fast enough to the com-petitiveness of these new market entrants,” says Muller. “While we have some of the most mature and experienced retailers in the world, it would seem their historic

lack of competitors of substance has left them exposed in the cur-rent environment, and not able to dominate in their local market.”Muller points to Edcon as being the big elephant in the room. “There is some concern around this retailer, which is carrying enormous debt at huge interest rates, squeezing its bottom line. It also seems to be challenged around merchandising and in-store experience. But, Edcon certainly isn’t alone in trying to deliver a meaningful shopping experience that appeals to today’s shoppers.” He adds: “Sadly, we will see land-lords having to exit some of the more traditional SA retail brands in favour of the better performing international brands.“This transformation is also being driven by SA’s consumers, who remain under pressure on the economic front, so are spending less. “After the global financial crisis in 2008, South Africans bounced back with a lot of unsecured

lending, but this was artificial and unsustainable. The household debt service risk has now started reducing. So, it gives us more confidence that our retail figures are a reliable reflection based on solid, sustainable growth. This is good for the market. It’s a sign of an economy and industry that is now growing on better princi-ples.”With more conservative spending likely in 2015, consumers are not only looking for great value from the products they buy, but to benefit from an enjoyable experi-ence while they are buying them.

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PROPERTY FOCUS

February 2015 jFM 6

Atterbury Property has confirmed it will develop the new head office of PwC at Waterfall City, Midrand, which will be an iconic 26 storey building and the first high-rise within the booming precinct. This follows the signing of a lease agreement between PwC and Attacq on January 15 2015 confirming the development of new headquarters for the leading accounting and professional ser-vices firm at Waterfall City.The R1,5-billion high-rise build-ing, comprising 40 000m2 of modern offices, is designed to house 3 500 PwC employees in an efficient, optimally designed workplace. It will be developed in a prime location overlooking the Waterfall City Park and 127 000m2 Mall of Africa super-regional shopping centre, which are under development and set to open in 2016.Attacq Waterfall Investment Company (AWIC) holds the development rights to the presti-gious Waterfall City, and is 100% owned by JSE-listed Attacq. Atterbury Property Developments is responsible for coordinating this commercial real estate project for and on behalf of AWIC.Atterbury Property’s Director of Commercial Development, Jeanne Jordaan, comments: “We are proud to work with PwC as the developer of its new head office which is set to become a landmark building for South African business in Attacq’s pion-eering Waterfall City.”Earthworks for the new PwC building has already commenced and construction will begin in the first quarter of 2015. The project is expected to take 36 months and scheduled for completion in the beginning of 2018.The PwC Tower is designed by LYT Architecture and will be constructed in phases due to the unique twist design of the struc-ture. It gently twists through in its height to frame the grand urban park which forms the green heart of Waterfall City. The building is also is designed to conform to the internationally recognised LEED (Leadership in Energy and Environmental Design) silver stan-dard. Guy Steenekamp, a director at LYT Architecture says: “The brief

Waterfall’s first high-rise set to soarfor the PwC Tower at Waterfall City called for an iconic building form that would be unique to the development and which would mark the property as a new top tier destination for business. Given the height of the building and that it is situated on a high point in Waterfall City, it will easily be the tallest structure on the corridor between the Sandton CBD and the Pretoria/Tshwane CBD. The PwC Tower will be vis-ible from almost anywhere within a 30km radius.” Adding to the tower’s uniqueness is its positioning adjacent to the Waterfall City Park, which is set to be a lush and vibrant public green space in the tradition of world-class cities across the globe.Jordaan says: “It has been proved that responsive and meaningful open spaces improve quality of life and adjoining prop-erty values. The Waterfall City Park has been designed around these principles.”Waterfall City Park will span 1,3ha of beautiful green parkland and a link to Mall of Africa at its Town Square. Waterfall City Park is positioned atop five levels of super-basement, which are already under construction, and encircled by the bustling Waterfall City, with its mixed-use develop-ment including offices, as well as the mall itself.“The park grounds are in the perfect position to provide well-designed social and recrea-tion amenities in the heart of this modern hub – for city dwellers, office workers, residents and visitors alike.” The attractive gar-dens provide a playground for a multitude of outdoor activities and recreation options and also include an intimate amphitheatre with an interactive fountain and stage area,” says Jordaan.Waterfall City is South Africa’s largest urban concept develop-ment, designed to provide every-thing expected of a world-class modern city, with all the conven-iences of a leading-quality urban environment. It is strategically located between Midrand and Sandton, spanning land on both sides of the N1 highway from the Woodmead to Allandale inter-changes.

In addition to PwC, the bur-geoning Waterfall City continues to attract leading businesses including Servest and Colgate Palmolive, Cell C, Group 5, Altech, Digistics, Massbuild, Cipla, Golder & Associates, MB Technologies, Virgin Active, Premier Foods, Dräger S.A, Westcon Group, Novartis, Covidien, Cummins and Honda Motor SA. Atterbury has offices at Waterfall City and Attacq’s head-office is also based there. Waterfall also features a Netcare Hospital.

An artist’s impression showing the scale and unique twist design of the new PwC head office high-rise development at Waterfall City.

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February 2015 jFM 8

Retail property has made a strong positive contribution to South Africa’s growth in recent years, with numerous new shopping malls coming to market – each ploughing investment in the econ-omy, creating jobs and crafting retail assets and social hubs for their communities.Gavin Tagg of Retail Network Services, has helped deliver many successful shopping cen-tre developments and believes, despite weaker economic fun-damentals, there are still exciting new opportunities for shopping centres in 2015. Tagg’s prognosis for retail property in 2015 highlights five dominant trends:1. CautionA cautious approach is needed by retailers and retail developers in the year ahead, advises Tagg. “It’s essential to have sound retail development basics in place to ensure the success of a new shopping centre in this flat-growth, rising-interest economy,” he notes. 2. Know-howWith high stakes, a proven track record of delivery is essential and new retail schemes should be left to experienced developers. “This market is unforgiving,” cau-tions Tagg, who notes there are inexperienced retail developers who are muddying the waters

Five key retail property trends for 2015

right now. “It is essential to astutely assess every detail of a potential project: site assessment, rental levels, tenant mix, aes-thetics, finishes and more. This requires insight that can only be gained from experience.”3. Rural shopping centresThere are still huge opportunities in the area of rural retail in South Africa and Tagg is bullish about this sector of the market. Even in these areas, outside of South Africa’s major metropolitan nodes, developing the right product is essential for success. “A rural retail development must be aspir-ational yet affordable,” advises Tagg. “It should also have all the fundamentals in place to, in theory, stand up to the same tests which would apply to a mall in an urban environment. You can’t cut corners for rural shopping centre development.”4. Better retailWith a slew of international retail-ers entering the South African market, our local consumers will continue to reap the ultim-ate benefit. Tagg believes that international retailers operating in and entering South Africa are improving the local retail offering considerably. This puts pressure on local retailers to be more com-petitive. The new wave of retail competition is improving choice,

pricing and the overall retail experi-ence for shoppers throughout the count and is set to continue during 2015.5. Listening to consumersThere’s a renewed focus on customers and “what does the consumer want?” will become an ever more important consideration in planning retail centres. “There’s no room for developers’ egos to dictate what they would like the consumer to want or for architects to lead developments,” says Tagg. Among Retail Network Services’ current projects, it has success-fully completed the leasing of Tugela Ferry shopping centre. Located in the rural district in KwaZulu-Natal, this 14,723m2 shopping centre is an excellent answer to the question “what does this shopper market want?” Shoppers in the area are badly in need of retail facilities and are underserviced in all areas, with the most basic retail needs not provided for in this small, but strategically important, town. It is Tugela Ferry’s first shopping mall and will open in April 2015.With investment from Copper Zone and the retail leasing know-how of Retail Network Services, Tugela Ferry residents will no longer have to travel substantial distances, at a considerable cost, to do most of their shopping and

banking. Tugela Ferry is located 45km north of Greytown, 77km south of Dundee and 105km east of Ladysmith. All are a very long way to travel to access meaningful formal retail. Besides providing much-needed shopping, banking and services to the community, Tugela Ferry Mall is also strengthening the town’s central role in the area. The lively Tugela Ferry is a major town in the heart of the Msinga District of the Umzinyathi District Municipality. It is on the Tugela River’s northern bank and is a seat of the Tribal Authority Government for the area. Making shopping easy, Tugela Ferry is on the main route which goes right through town. Retail Network Services is a full-service specialist retail leasing company with an excellent record of successes to its name, and Tugela Ferry Mall is poised to join its impressive line-up. “Tugela Ferry Mall will go beyond bringing great, well-suited everyday shop-ping to local customers, it gives shoppers what they want and meets important social and eco-nomic needs for its consumers,” says Tagg.

PROPERTY FOCUS

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Tugela Ferry shopping centre

Gavin Tagg

OFFICE MANAGEMENT

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February 2015 jFM 10

“Expect massive competition in the scramble for good property and tenants,” says Izak Petersen, Dipula Income Fund CEO, of SA’s commercial property sector in 2015.He foresees a year that will bring heaps of hard work for the sec-tor, with only select opportunities of good assets available to the market.“I fear that electricity issues are going to frustrate and slow down business. Some property develop-ments may have to be shelved due to a lack of electricity supply,” says Petersen. “However, you’re likely to see innovative solutions to get around this challenge.” There will be relatively limited speculative development activity in the market.Looking at positive drivers that may counter the slow economic growth and electricity supply chal-lenges, Petersen points to falling oil prices as a bright spot that will provide some cushion for rising inflation, but cautions that the weak Rand will have somewhat of a counter effect. “We believe that rates will remain unchanged in the short term, which bodes well for property.”Offices are likely to remain the weakest link for commercial prop-erty in 2015. “They already face

‘Scramble for good property, tenants’oversupply issues with a lack of big users. Our tough economy also adds to the pressure on the sector due to the elasticity of demand and price sensitivity of its users – especially smaller and medium users,” says Petersen.Also, Petersen warns most tenant-driven developments for big users will result in increased vacancies as they vacant existing space. Looking to other commercial property sectors, Petersen believes retail and industrial property should hold up better. “Although, we do not see either one shooting the lights out, and retail turnovers are likely to be under pressure with consumers remaining under strain.” He adds: “Despite the challenges ahead, we still anticipate listed real estate to outperform bonds, cash and equities. We further expect to grow Dipula’s net income well in excess of inflation and grow our portfolio organically by executing our sizeable development and acquisition pipeline of more than R1-billion.”Dipula Income Fund is a JSE-listed REIT with exceptional B-BBEE credentials. It is man-aged by its 100% black owned management company. Dipula originated from two majority black-

owned property funds, Mergence Africa Property Fund and Dipula Property Fund. Management own a large stake in Dipula and are strategically aligned long-term investors in the fund. Dipula’s diversified property portfolio comprises more than 180 retail, indus-trial and office properties countrywide. By gross lettable area (GLA), Dipula’s portfolio is mostly con-centrated in South Africa’s economic hub of Gauteng. It is also weighted towards retail property, which com-prises more than 50% of its portfolio.

South Africa’s listed property sector was a key driver of per-formance from South Africa’s top unit trusts, and Raging Bull Award recipients, in 2014.Five of the 12 best performing funds for the year were domestic real estate funds.Laurence Rapp, Chairman of the SA REIT Association, says: “This highlights the excellent performance of SA REITs and listed property in 2014. Listed property outclassed equities, bonds and cash to deliver total returns of 26.6% and become South Africa’s top performing asset class for the year. It has also comfortably outperformed all three other assets classes over 10, five and three years.”

Absa Property Equity Fund, which recently scooped the Raging Bull certificate for the Best South African Real Estate Fund over three years and, on a risk-adjusted basis over five years, was the top domestic property fund, and ranked third overall, with a total return 39.67% for the year to 31 December 2014, according to Morningstar. Following it, in overall fourth place is Plexus Wealth BCI Property Fund with returns of 35.29%. In tenth, eleventh and twelfth place respectively, Sesfikile SCI Property Fund returned 28.82%, SIS Property Equity Fund returned 28.28% and Hollard Prime Property Fund

returned 28.26%.Rapp adds that besides SA listed property driving the outperformance, it is also increasingly being included as an important component in more balanced, retirement and institutional funds.“2014 was a watershed year for listed property, the investment community really stood up and took notice of the asset class. Adding to its superb track record of strong performance, the introduction of the new REIT structure to SA in 2013 provided a best-of-breed, internationally recognised structure for the publicly traded real estate sector.

Listed property underpins performance of top unit trusts

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Izak Petersen

OFFICE MANAGEMENT

INDABAIncorporating

2015FACILITIES MANAGEMENTFM XPO

03-04 June 2015 | Gallagher Convention Centre | Johannesburg

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Load shedding, blackouts and power shortages are going to be a part of our home and business lives for years to come. In recent days, we have been sharply reminded of the days

of blackouts in 2008 that shut down mines and other major producers. It was then considered a national emergency. Recent outages and the return of load shedding have served as a sharp reminder that we are still operating off an inad-equate and unstable electricity infrastructure, and that our capacity reserves have dropped from 40% to about 6% this year, way below the international norm of 15% that allows for routine maintenance and closures.

SOLAR CAN PROVIDE ALL THE POWER YOU’LL NEED

You can help your business retain power in these load-shedding times – and still remain energy efficient. By Teresa Kok.

We have become complacent about a steadily deteriorating situation. At the same time, rapidly escalating electricity prices at the current rate are simply unsustainable and unaffordable for many. There is also growing pressure for us to adopt renewable energy as a means to lessen our impact on the environment and our reliance on fossil fuels.

One of the key ways in which residential, commercial and industrial energy users are looking to ease their electricity costs as well as better secure their energy supply is through photovoltaic (PV) electricity generation.


RENEWABLE ENERGY

SOLAR CAN PROVIDE ALL THE POWER YOU’LL NEED

What is rooftop PV?A rooftop photovoltaic power station, or rooftop PV system, is a photovoltaic system that has its electricity-generating solar panels mounted on the rooftop of a residential or commercial building or structure. Solar panels, which consist of solar cells, are exposed to sunlight or solar radiation and generate electricity which is called a photovoltaic effect.

This solar power flows via cable to a device called an inverter which converts the direct cur-rent (produced from the panels) to alternating current and that power gets synchronised with the Eskom grid and allows it to be fed into the network and supplies you with electricity.

With the inverters synchronising the solar power and the Eskom grid, that power can be fed directly into your inter-nal electrical network and save electricity. So every KWh generated by the solar sys-tem is a kWh less required from Eskom or from local utility.

Planning for a PV system will require you to analyse your electricity use, imple-ment energy efficiency measures, study local council codes and feed-in require-ments (if any), decide if you want to oper-ate your system entirely off grid or use a hybrid or grid-connected solution, and then finally select the technologies and supplier to help you meet your objectives.

Why PV?Many clients like the appeal of a grid-tie PV system which allows them to use PV during the daylight hours to power their homes and businesses – and then to switch over to grid electricity at night. If you consider that most businesses have their peak demand during the day when they operate, and many homes have processes like washing, ironing, mowing, pool pumps and so on taking place dur-ing the day, then using the energy from the sun during the day makes great finan-cial sense.

A grid-tie system allows you to per-form all your daytime activities for free, powered by the sun, and save on the more costly battery back-up needed to store PV electricity to use at night time. Many businesses also use PV in conjunc-tion with other power sources like diesel generators to provide a continuous source of power.

Depending on your electricity usage and size of your PV system, most will amortise their costs within five to seven years. This is the very best investment you can make right now to safeguard your supply, your productivity, your safety and most of all take control of rapidly escalat-ing electricity costs for years to come.

Implement energy efficiency measures earlyImplementing energy efficiency measures in your existing home or business before you buy your PV system will reduce your electricity use and allow you to buy a smaller and less expensive system. For example, converting geysers which are usually your biggest electricity users to solar or heat pumps, installing LED low energy lighting, using gas for cooking, putting movement and day/night sensors on office lighting and so on.

If you’re designing a new building, consider working with the architect and builder to incorporate renewable energy

“We have become complacent

about a steadily deteriorating

situation. At the same time,

rapidly escalating electricity

prices at the current rate are

simply unsustainable and

unaffordable for many.


solutions into your design from the outset. In fact, some measures are already legislated. Energy efficiency in buildings is no longer just the preserve of those wanting to do the right thing. What was a voluntary standard has been written into law in the SANS 10400-XA: Energy Usage in Buildings, and SANS 204: Energy Efficiency in buildings. This requires a focused solution for areas such as water heating, whereby 50% of all hot water in new houses needs to be produced by methods other than electrical element heating.

Analysing your electricity needsCalculating your electricity needs is the first step towards getting PV ready. A thorough examination of your electricity needs helps you determine the following:• The size and cost of the system you will

need.• Fluctuations in your energy usage during

the day and over the year to manage peak demands.

• Energy saving measures you can imple-ment to reduce your electricity use and thus save on costs for the PV system by being more efficient.

By conducting a load analysis, One Energy will record the wattage and average daily use of all of the electrical devices that are plugged into your central power source such as refrigerators, lights, televisions, PCs, power tools and machinery. Some loads, like your refrigerator or electric fencing, use elec-tricity all the time, while others, like power tools or large format printers, use electricity intermittently, known as selectable loads.

Codes and RegulationsEach municipality handles the connection of PV systems to the grid differently. Yet, as the price of electricity continues to increase, more municipalities are entertaining the idea of connecting solar PV systems to their grid. The words net-metering and feed-in-tariff are commonly used in conjunction with PV systems but consideration of your municipal office is required.

Each region has its own set of codes and regulations that you will need to follow to add a PV system to your home or business. It will determine whether you decide to con-nect your system to the electricity grid or use it in place of grid-supplied electricity. You can also plan your system to take advantage of future expected changes to feed-in tariffs which are very likely given Eskom’s supply challenges and need for grid relief.

Types of PV ConnectionsConsider these alternatives - A solar PV sys-tem with:• System 1 - No batteries, grid connected

system

• System 2 - Some batteries, grid con-nected system

• System 3 - Only batteries, no grid con-nection

System 1 is used to supplement your energy usage. In the event of a blackout or power outage, your solar system is forced to shut down. Therefore, even if the outage occurs in the middle of the day during full sunlight hours, no power will be produced. If net-me-tering is allowed, this type of system pro-vides a one for one credit on your monthly electricity statement.

System 2 is commonly referred to as a hybrid system and with the correct installa-tion will act as a UPS (uninterrupted power supply) in the event of a power outage. The PV system will charge up the batteries first and the excess production will supplement your household/ business energy needs. Many of our clients start with system 1 with a plan to build up to a system 2 and then add battery back-up at a later stage as their budget allows to build up to a system 2 con-figuration. The great benefit of solar PV is that it’s entirely scalable and you can add to it as your needs grow.

System 3 is useful for areas where no grid exists. The energy produced will charge up the batteries which should allow for three days’ worth of energy needs and these bat-teries will feed the power requirements of the property.

It is important to note that adding batter-ies adds to the cost and therefore the sys-tems are ranked from the least expensive to the most expensive.

What is the cost to install PV?There are various aspects that play a role when we look at the cost, the first being the size/scale of the system. The advantage of

“If we look at a typical solar plant,

your initial capital layout would

be in the beginning when you

purchase the equipment and on

average takes between 5-7 years

to offset the costs, but then for the

expected 25 years or more of the

lifespan of your panels, you will

get free electricity.


solar is the long life expectancy. If we look at a typical solar plant, your initial capital layout would be in the beginning when you pur-chase the equipment and on average takes between 5-7 years to offset the costs, but then for the expected 25 years or more of the lifespan of your panels, you will get free electricity. The initial upfront cost is the only cost involved with solar. After that, because there are no moving parts, the maintenance on the system is very low.

Typically, a 4kW system which is usually sufficient for an average household (without battery banks as per system 1) would cost in the region of R75k and could easily be funded on our monthly repayment option for around R2 100 per month depending on your selected payback period and credit rating. Your electricity savings are very likely going to cover most of your monthly loan

RENEWABLE ENERGY

payments as well. On a 4kW config as per system 2 with battery backup, costs would start in the region of R125k. Once fully paid, you have an incredible investment and asset for your property that keeps saving you thousands of Rands each year, for many years to come.

Site visits and energy audits are neces-sary in order to provide costs on larger sys-tems for commercial operations, which One Energy also provides.

About One EnergyAssessing the potential for energy savings and prioritising key areas for improvement through renewable energy can be a chal-lenging task if one does not know where to start from. The skills of the company’s experienced renewable energy professionals provide enormous value in this process.

The company offers an extensive range of renewable energy technology to firstly make your building more efficient, and once we have done your energy measurement and audit, we’ll design a PV system for power generation. We provide retrofits for existing buildings, through to completely new installations. We handle projects from small rooftop solutions for residential clients, right through to large scale commercial and industrial PV projects.

We provide monthly finance options for smaller residential and commercial clients who can offset the capital costs against their electricity savings, as well as fully bankable PV solutions with lease agree-ments for very large industrial and commer-cial projects. n

Teresa Kok is Director at One [email protected] or (011) 894 2209 / 2767


STEERING STRATEGIC FM – IT’S A THRILLING RIDE!


The Facilities Management business is not for the faint-hearted and if you are involved in the busi-ness, there is no doubt that you will be having the ride of a lifetime. Paul M’Crystal, Gauteng Regional Head of Facilities Management, Corporate Real Estate Solutions at Barclays Africa, and newly appointed Chairman of SAFMA, can attest whole-heartedly to this.Terry Owen reports

SERVICE EXCELLENCE

Paul M’Crystal, Gauteng Regional Head of Facilities Management (FM), Corporate Real Estate Solutions (CRES) at Barclays Africa, is the kind of person that

we could use more of in South Africa.An optimist, but certainly not blind to the

challenges facing the country, he knows that he has his work cut out for him as the newly appointed president of SAFMA. He is really excited about the future, not only for the country, but for the FM industry. He is truly set to inspire both the Board and the industry.

M’Crystal says that Barclays Africa has opted for an outsourced FM service model, and it’s working exceptionally well.

In 2012, in South Africa and as part of a Global Outsourcing Programme, CRES entered into a five year partnership with Tsebo Outsourcing Group (Operating under the DSFM banner), to deliver FM services to a Ba

rcla

ys A

frica


portfolio of 941 properties and over 1,2 million m2 of real estate. It created a market leading operating model that places the customer at the heart of the operations and delivers value and effectiveness while protecting the company’s people and assets.

The scale of such a partnership is ground-breaking and is based on a delivery model with a clear focus on excellence in FM Services. In fact, the deal with Tsebo was the biggest outsource agreement in the country. The news which was published in JFM early last year unfortunately elicited some negative responses such as “It will never work”. The truth is, it has worked, and mainly due to the nature of the companies involved and the structure that has been put in place.

Paul fulfills a strategic role within FM where he is required to engage with senior leadership teams in order to identify their FM requirements. He also spends a lot of time on the continued improvement of the FM service provided to Barclays Africa. Paul is responsible for FM service delivery across Gauteng Property portfolio which spans 600 000m2.This equates to 50% of the country’s total portfolio and includes corpor-ate offices, branches and cash centres.

“The customer is at the heart of every-thing we do in FM and we have managed to live by this rule, mainly through the dedi-cation shown by the FM team. We believe

that staying close to the customer is key to excellent customer service and this is dem-onstrated through our weekly visits to our branches in the urban areas together with monthly visits to our branches in the rural areas”, says M’Crystal.

Regarding the FM structure at Barclays Africa, M’Crystal says that he has a counter-part in Cape Town who manages the operations of our facilities in the Western Cape, Northern Cape, Free State and North West and another in Durban whose portfolio includes KwaZulu Natal, Limpopo, Mpumalanga and the Eastern Cape.

“The outsource model provides us with teams who are based throughout the coun-try. This enables us to deliver a high quality and consistent FM service to our customers across a total area of 1,2-million m2 space.”

M’Crystal says that strategic FM is becoming increasingly important.

“What we’ve done from a SAFMA point of view over the last two years is highlight the strategic components of FM. The stra-tegic side of FM, concerned with ensuring maximum efficiency of our buildings together with optimising the buildings’ operating costs, requires early project involvement. Greening is also now a strategic priority and applies to both new and refurbished build-ings. Refurbishment projects are the most exciting and most challenging within the FM industry. By increasing the energy efficiency

Less cost No need to hire expensive access equipment like scaffolding or cherry pickers. Gutters up to 4 storeys high can be cleaned from ground level.

Less time No constant moving of ladders or access equipment means effective cleaning in a fraction of the time compared to traditional methods.

Less risk The Health and Safety issues normally associated with working at height are minimised or completely removed.

SpaceVac is the world’s leading manufacturer of high level vacuum cleaning & inspection systems.

SpaceVac SA, Units C12 & C13 Prime Park, Mocke Road, Diep River, Cape Town 7800. tel +27 (0)7369 03088 e-mail [email protected] web www.space-vac.co.za twitter @spacevac_sa

Higher, Safer, Faster

CALL USFOR TICKETS TO OURTRADE OPEN DAY ONMARCH 4TH 2015

of our buildings, we are able to reduce our buildings’ operating costs upfront and ensure ongoing sustainability.”

M’Crystal says as newly elected Chairman of the Association, his mission is to raise awareness of the exciting and chal-lenging industry of FM.

“When colleagues ask me what I would like to achieve this year, my response is always that I would like to get those in the FM industry to engage more with one another. There are so many opportunities to learn through knowledge sharing among

“The outsource model provides

us with teams who are based

throughout the country.

This enables us to deliver a

high quality and consistent FM

service to our customers across

a total area of 1,2-million m2

of office space.

Barc

lays

Afri

ca

Ground-breaking architectural structures of Barclays Africa


colleagues – both operationally and strategic-ally. For example, following the successful outsourcing of FM services, a colleague could share their learnings and experience through a post-implementation review.

“Another point to consider is the in-house versus outsource debate. Organisations are opting more frequently to outsource the FM service in order to receive a perceived higher quality service.

“At last year’s SAFMA conference I was asked to speak on the benefits of outsourc-ing. One of the points that was made was that I could not believe that an external pro-fessional could be as passionate about FM as an in-house professional. My experience with outsourced Facilities Managers has been so positive my opinion on this has radically changed.

Working with our outsourced partner has been a complete “game-changer” for me. They are among the most passionate and dedicated people that I know and I now strongly believe that in order to be successful in the industry, as an in-house professional or an outsourced partner, one should to be very passionate about the field” he says.

“An increasing number of professionals in the industry are interested in becom-ing accredited in the industry and many employment agencies are only pursuing applicants with the necessary accreditation. Accreditation is a strong indicator of an indi-vidual’s deep understanding of current indus-try trends. FM accreditation is now a require-ment globally with support from organisations such as IFMA (The International Association for Managers of Facilities) and BIFM (British Institute of Facilities Management)”.

He says that as part of the accreditation process, Facilities Managers are participating in various FM knowledge sharing sessions (both strategic or operational focused) in order to stay abreast of current trends.

M’Crystal says that there is a new “buzz” within the FM industry.

“FM professionals are becoming more innovative in their thinking with increased involvement in the entire value chain of build-ing management from the early stages of building design through to building handover and maintenance. FM is no longer perceived to be an administrative role in the business but rather one that requires skillful negotia-

Less cost No need to hire expensive access equipment like scaffolding or cherry pickers. Gutters up to 4 storeys high can be cleaned from ground level.

Less time No constant moving of ladders or access equipment means effective cleaning in a fraction of the time compared to traditional methods.

Less risk The Health and Safety issues normally associated with working at height are minimised or completely removed.

SpaceVac is the world’s leading manufacturer of high level vacuum cleaning & inspection systems.

SpaceVac SA, Units C12 & C13 Prime Park, Mocke Road, Diep River, Cape Town 7800. tel +27 (0)7369 03088 e-mail [email protected] web www.space-vac.co.za twitter @spacevac_sa

Higher, Safer, Faster

CALL USFOR TICKETS TO OURTRADE OPEN DAY ONMARCH 4TH 2015

tion (for example, contract negotiation) and in-depth understanding of the value prop-osition of FM in managing business impacts and risks.”

“This is an exciting time of change within the industry and I look forward to working with SAFMA to further develop and advance the FM profession in 2015. The FM industry is vibrant and compelling and I really can’t imagine a more satisfying profession”. n

SERVICE EXCELLENCE

Paul M’Crystal – new SAFMA Chairman


A new book, The South African Facilities Management Handbook, is very eagerly awaited by FMs throughout the country. It is due to be published in mid-2015. As a taster, we’ve been given the permission by the authors to use the Finances for FMs section of the book. We published Part 1 last month and this month, the conclusion of the chapter looks at operational budgets.

Operating budgetsWhere capital budgeting generally has a medium to long term view, operational budgeting has a short term

view, normally focusing on the next year. Although the focus of the two budgeting disciplines is different, they are interlinked. For example, the replacement of an old piece of equipment may be the result of operational budgeting and analysis which highlighted the fact that the old and obsolete technology is causing unaccept-able operating and maintenance cost. Likewise replacing the old equipment will have a direct influence on the operating and maintenance cost of the department or organisation. It is, therefore, crucial to involve all disciplines and expertise in the

FINANCE FOR FMsHOT OFF THE PRESS – AND EXCLUSIVE TO JFM

PART 2

development of the budgets (operational and capital) to ensure that the full picture is optimised and not any one department or discipline to the detriment of any other. In order to achieve a successful budgeting process, thereby gaining all the benefits that budgets have to offer, top management’s involvement and support is non-negotiable. Only if top management sees and treats budgets as an important tool in the planning and control processes of the organisation will the rest of organisa-tion follow and reap the benefits.

However, no budget can guarantee success nor can it be a substitute for proper management of an organisation, but it will greatly contribute to preventing failure of a business. As the old cliché goes: “Failing to plan is planning to fail”.

Budget Lift-Off


FINANCE FOR FMs

There is currently no publication that can be deemed as a “standard” or reference work for Facilities Management in South Africa. Each country around the world differs in what the work of a Facilities Manager entails and therefore the need for a South African standard, guide or handbook was born. Bouwer Kleynhans did the CFM examination through IFMA in 2011 and realised how different the American knowledge base was from what we do in South Africa. He started pondering with the idea of writing a handbook for South Africa and managed to enter into a contract with a publisher to produce the work. Facilities Managers are involved in such a diverse range of disciplines that he had to assemble a team of knowledgeable people in the various disciples. Workshops were held to determine what should be addressed or not and the team of authors ended with 14 chapters for the book and commenced with the writing of the publication. If all goes according to plan it is envisaged that the book will be available during the middle of 2015. Bouwer Kleynhans is the Managing Editor and there are nine co-authors working on the various chapters which are:1. Introduction2. Management3. Occupational Health and Safety4. Financial Management5. Legal Contracts6. Operations7. Maintenance8. Utilities Management9. Technology10. Space Management11. Project Management12. Greening of buildings13. Quality assurance14. Property ManagementChapter 4 on Financial Management is written by Gerrit Kok, a CA with experi-ence in various fields of finance and with experience on Facilities Management projects. As an introduction to the book we are publishing extracts of the Financial Management chapter over two months. As can be seen from the extracts the authors are of the opinion that Finance is of the utmost importance to comprehend and is dealt with in detail for Facilities Managers if they are to engage with CFO’s and decision makers in organisations.

The South African Facilities Management Handbook“

Purpose of budgetsBudgets have a number of functions in an organisation.

Planning - Budgets are first and fore-most part of the planning processes of an organisation. Senior management develops the strategic plan for the business, the implementation of which gets mapped out through the budgetary process. Even though the budget provides a Rand and Cent outline of the goals and objectives of the organisation as well as the individual functions or departments, formulating the budget requires a great deal of detailed plan-ning of activities and estimating the timing of these activities. Furthermore, it requires predictions as to what the future may hold for the organisation and devising plans to deal with expected and even unexpected

circumstances. The budgeting process should not be seen as a linear sequence of events where senior management pro-vides the strategic goals which guides middle management to plan the required activities to implement the strategy and which is then costed to arrive at a budget. In practice, budgeting is an iterative process whereby the strategy is provided, plans drawn up and costed and the results reviewed. It may then be necessary to adjust the plans or even the strategic goals in reaction to the results of the first pass budget or in reaction to plans not being feasible. This process continues until everyone is happy that the budget and the underlying plans have been optimised. Figure 3 demon-strates how the process may unfold.

it is critical to not only develop

a comprehensive and effective

maintenance (including appro-

priate asset replacement) plan to

ensure that timely maintenance

is performed but also to prepare

a supporting financial budget to

make sure that adequate funds

are available when required.

Goog

le


Figure 3: Budgeting process

Moreover, planning is a continuous pro-cess, in conjunction with financial control, which is discussed later on. Management should continuously measure actual per-formance against budgets to ensure that the goals contained in the budget are still appropriate and relevant. Any organisation operates in an ever changing environment and the plans and budgets should con-tinuously be reviewed to ensure that new challenges are addressed and opportunities seized. Deviation or non-achievement of budgets may well indicate problems in cer-tain areas, but it may also be an indication that the operating or commercial environ-ment has changed. Exceeding budgets may be applauded, however, it could also be an indication that budgets were too low or that targets have been set too lenient. The point is that budgets need to be constantly reviewed and adjusted to ensure the optimal performance of the organisation.Decision making – Budgets have a dual purpose insofar as it is a decision-making tool. During the budget development process, management and staff are forced to consider all foreseen eventualities that the organisation or the individual department or function may face and to make decisions on how these situations should be approached. This will include decisions around risk appe-tite and mitigation measures, even though risk may not be a formal item on the budget “agenda”. For example, the team needs to assess the risk of a negative event hap-pening such as a machine breaking down followed by an estimation of the potential loss if such an event occurred, which in turn is compared to the cost of preventing the situation, for example by replacing an ageing piece of equipment or the cost of softening the impact, by taking out insurance for instance. This leads to decisions around the allocation of resources and the prioritisation of events and actions in order to develop the final budget.

Once the budget is set, it should be used as a tool to guide the day-to-day decision making of the various managers in order to ensure that these decisions contribute to the profitability of the organisation and the achievement of its overall goals.Coordinate activities – Organisations may comprise of many departments, functions and geographic locations, each facing its own challenges and opportunities. Furthermore, divisions may be directly or indirectly dependent on each other to meet their objectives, for example, the produc-tion department is dependent on facilities management to ensure that machines are working at optimal capacity at all times. Budgets serve to coordinate all the activ-ities and allocation of resources across the organisation to ensure that all areas work toward a common purpose.Communication – In order to prepare a proper budget, communication through-out the organisation is paramount. Senior management needs to communicate the overall strategy and their requirements to their subordinates. In turn, subordinates, from middle management down to grass root level, need to communicate the resources (including people, equipment, funding.) they require to achieve the required performance. Staff should be encouraged to provide their views throughout the process. Not only will this contribute to the budgeting process, but it will also serve to facilitate the buy-in of staff, at all levels, into the budget which should lead to a sense of ownership since they were part of the process.

Good communication also contributes to improve the quality of information available to budget setters and management and consequently improves the decisions made. The beauty of this is that the information is obtained at very low cost by management who would have had to spend a lot of time, effort and even money to obtain the same quality of information when an organisation is marred by poor communication.

Once the budget is set it serves to com-municate the vision and goals of the organi-sation to all staff and even outside parties who may have an interest in the organisa-tion, such as banks (lenders) and investors. In addition, it communicates the actions required and limitations that may exist on certain items. Finally, it plays an integral part in the communication of the performance of a department, or the organisation as a whole, as it provides a benchmark against which progress can be measured.Evaluation – A detailed and comprehensive budget could and should play an integral role in the evaluation of managers and staff. The budget should be translated into key performance indicators (KPIs) for each and every member of staff in such a manner that

the collective effort of all staff to meet their KPIs will result in the achievement of the overall budget of the organisation. Staff per-formance should be measured continuously against these KPIs to be able to identify any remedial action required as soon as possible. For example, if routine maintenance targets are not met or budgets exceeded it could be an indication that the persons assigned to the task require training or assistance or bet-ter resources such as tools or materials.Motivation – Motivation is closely linked to evaluation. Budgets need to pose a chal-lenge to individuals and groups collectively, but it should not be totally unachievable. The mere fact that a proper budget has been prepared, with input from all staff, and has been well communicated, already provides tangible targets to work towards. Once these are distilled into KPIs it provides very specific targets to each individual.Control – A budget forms an important part of the financial control of a business. Deviations from budgets serve as indica-tors to management on where to focus their attention. For example, higher than budgeted cost of sales could indicate poor procurement procedures, excessive waste in production or pilfering of stock. Similarly can higher than expected maintenance cost indicate abnormal rework required due to poor workmanship or poor quality components used or it could indicate that a particular machine is due for replacement or perhaps even highlight lethargic perform-ance by staff due to motivational issues? However, the best and most thorough budget will be worthless without diligent managerial commitment to review actual performance against the budget, to iden-tify exceptions, to investigate the cause or causes of the deviations and to implement corrective actions and measures, which may also include the necessity to amend the budget or plans.


Developing a budgetAs for capital budgeting, discussed earlier in this chapter, the budgets discussed here need to be distinguished from the budgets developed for cost accounting purposes. The facilities manage-ment department or function is concerned with the cash cost required to fulfil its function as opposed to determining the physical cost per unit of its output. The facilities manager will have little to no interest to determine what it costs to replace a light bulb, for instance. This may be useful to know if facilities management services are sold per item. Instead of allocating all cost on a full absorption basis to the changing of a light bulb, that is costing the time required to change a bulb, plus the materials required, plus a portion of overheads and depreciation of the tools attrib-utable to the changing of the bulb, the facilities manager will rather look at how many bulbs may needs changing during the year and determine how many technicians need to be employed to ensure that all those light bulbs are replaced, each within the agreed timeframe. The total cost of the replacement bulbs and the total cost of staff to be employed or the cost of the work outsourced to a service provider will be included in the budget.

Costs linked to activitiesIn order to estimate costs with a reasonable degree of accuracy and understand how costs behave, as discussed in the beginning of the chapter, it is important to understand what the cause of each cost item is. In other words, one needs to determine the driving factor for each cost. It is necessary to ensure that the root cause of each cost is determined, which may not always be totally straightforward. For example, the level of salaries and wages are determined by the number of staff employed. However, the number of staff employed is determined by the tasks that need to be performed, which is different for different categories of staff. If we continue with the example of the cleaning supervisors (see semi-variable cost earlier in this chapter), the number of cleaning supervisors required is determined by the number of clean-ers. In turn, the number of cleaners required is determined by the area to be cleaned or per-haps a combination of the area to be cleaned and the number of people accommodated, for example, kitchens and bathrooms will require more cleaning effort (time) if more staff work in the building. Once these relationships are determined, management only needs to focus on estimating the level of the cost driver and for the facilities management department this may well be an input received from another department or departments. For instance, the HR department may collate the total staff numbers projected for the year ahead by all the other departments (including the facilities management department). This will inform the

facilities management department of how many cleaners will be required. Management also needs to determine the cost per “unit”, in our example, that would be the salaries or wages of cleaning staff and cleaning super-visors. This cost per employee will remain fixed regardless of the number of staff employed.

Budgeting is most often done using spread sheet software but may also be done by using other suitable software such as the budget-ing module of the organisation’s accounting system. Once the cost and activity ratios are modelled/ programmed, making sure that the coding allow for practical implication, such as the fact that there cannot be fractions of staff members, management can focus on the cost drivers to optimise the budget.

Future vs History“There is nothing new under the sun” accord-ing to the proverb taken from Ecclesiastes. Even taking this statement purely on face value, it may provoke some debate. However, few will dispute the fact that we can learn a lot about the future by studying events of the past. This holds especially true when it comes to developing budgets. In the first instance management needs to consider any signifi-cant differences between the previous year’s budgeted expectations and actual results and assess whether these indicate a permanent shift in any of the assumptions that need to be incorporated into the current budgets. For example, does the higher than expected inflationary price increases represent a once off blip or new trend? Figure 5 provides exam-ples of factors that may cause costs trends to permanently change and behave different than expected. It should be noted that this is not intended to be an exhaustive list.

Significant deviation from historic budgets may also be an indication of an underlying problem such as equipment reaching the end of its useful life and requiring higher than usual maintenance. Clearly this needs to be factored into the operational budget for the period under review but more importantly remedial action needs to be planned and included in the capital budget of the organisation.

Management needs to take care to ensure that an extrapolation of historical trends is justified. A number of factors may exist that warrant a deviation from prior year trends, for example:• New, more efficient equipment may have

been installed requiring less maintenance• New vendors may have led to improved

procurement terms or new procurement strategies proved to reduce cost of consum-ables, etc.

• Efficiency of maintenance staff improved due to training on certain machines or by the employment of an experienced technician on a specific machine.

• Sale or sub lease of underutilised space.

FINANCE FOR FMs


Negotiate cost items and performance levelsNegotiation should form an integral part of setting budgets. Negotiation should in the first instance happen internally. As stated before, budgeting serves as a communication tool. By negotiating performance levels all parties involved get the opportunity to com-municate his/ her concerns, requirements, and so on, and also to hear and understand the position of the other parties. Negotiations may, to some extent facilitate the coordina-tion role of budgeting in that parties attain a better understanding of what is required to achieve certain performance levels and can ensure that the required chain of events hap-pen in a coordinated manner. Furthermore, as said before, budgets should serve to motivate staff. By negotiating per-formance levels, which could be in terms of certain output but also in terms of savings or cost containment, staff is made part of the process and it should consequently be easier to obtain their buy-in. There is also a better chance that targets and budgets are not unrealistic.

Management may offer performance incentives such as bonuses, time off or other privileges to obtain commitment to achieve certain performance levels. Care should be taken that these are not too easily achievable nor too difficult to achieve. Also, the incen-tives should be commensurate with the effort and/ or sacrifice required.

Secondly, negotiation should happen with external service providers, whether new contracts are negotiated or existing contracts being renewed for out-tasked services. This could be a pure price negotiation or it could be a renegotiation of service levels with or without a price adjustment. In order to obtain the best prices, a competitive tendering pro-cess may be considered. Due the onerous process involved, this is only really suitable for major or high value contracts. For smaller contracts it may be sufficient to obtain a

number of quotes. Management needs to decide on the number of quotes required which may be different for different items.

A word of caution. Where budgets are prepared for out-tasked services, staff may obtain informal quotes from potential service providers to be able to complete the budget. This may cause an expectancy with suppli-ers and may provide potential suppliers with information well in advance of the rest of the market which could jeopardise a fair tender process.

Amendment of budgetsIn order to ensure that budgets remain rel-evant and useful, as a management tool, it is more often than not necessary to update the budget. Management may, however, be reluctant to do this on a regular basis as it requires time and effort to do so. Amending budgets does not have to be a difficult and tedious process. With the aid of modern software packages, of which spreadsheet applications are argu-ably the most popular, this process could be “automated” to a large extent to ensure that budgets recalculate automatically when one or more inputs are revised. This requires some initial investment in devel-oping a budget model which meets all the organisation’s requirements and that could be used for many years. A well-built budget model will be easy to amend if new require-ments are identified.

Clearly budgets should not be revised every time budgetary items are exceeded or objectives are not met or when there are signs that certain budget elements will not be achieved. Budgets serves as a critical role in the cost control process and any deviation, including positive deviations, should be ana-lysed to identify the causes for the deviation. Any amendments should be thoroughly motivated and approved by an appropriate level of management. This should, where possible, be the same people responsible for

Currency depreciation (or appreciation) Increase (decrease) in cost of imported spares and replacement components.

Increase (decrease) in cost of consumables containing imported chemicals.

Extraordinary increases in fuel prices Increased transport cost passed on to consumers through increased product cost.

New or additional taxes such as new tolls or increase in excise duties.

Increased import cost or increase in transport cost recovered from customers through increased product cost.

Above average wage increases due to union action.

Increase in affected labour cost or increase in goods and services bought due to higher labour input cost.

Political unrest in the jurisdiction of a supplier.

This often increases cost of raw materials used in the production of products required due to perceived supply risk as a result of the unrest – for example oil during unrest in the Middle East.

approving the original budgets. The following are examples of reasons

which will warrant a change to the budgets:• Mistakes made in compiling the original

budget. The cause and nature of the mis-take should be determined to make sure it is avoided in future.

• Deviations due to market factors, for example, price increases above expectation due to industrial action, increase in demand for products or decrease in supply of the products, etc.

• Significant shifts in economic indicators such as jumps in exchange rates and periods of above average inflation.

• The availability of new technology or new products.

• Changes to the organisation, for example, expansion of the operation, new premises or reducing the operations by selling or closing down a division.

• Strategic changes will most probably lead to changes in the budget. Management may decide to outsource certain tasks which were previously done in-house.

Amended budgets have a number of benefits• It provides a measure against which actual

results can realistically be measured, resulting in meaningful exceptions that pro-vide management with useful information.

• It provides an updated summary of what can actually be achieved under current mar-ket conditions.

• The amended budgets can be compared to the original budgets which may reveal further trends that could lead management in their decision-making processes.

Budgeting methodsThere are a number of ways to compile budgets, each serving a specific purpose with its own advantages and disadvantages. The choice of an approach will be influenced by:• The size of the organisation. In smaller

organisations top management tends to be closer to the day to day operations of the

Figure 5 – Factors that may cause permanent shifts in assumptions and trends


organisation than is the case in large organisations.• The diversity of the organisation. In organisations

with a broad focus and many business lines or service offerings it is difficult for top management to have an intimate knowledge and understanding of the daily working of each business line or service offering. Furthermore, it will be near impossible for a small management team to be abreast of all fac-tors, external and internal, that may impact on the performance of each of the business lines of the organisation especially given the fast paced, com-petitive environment within which organisations have to operate.

• Complexity of the operations. Again the more com-plex the operations of the organisation, the more difficult it would be for top management to fully understand the detailed functioning of the various business lines.

• Geographic spread. Where an organisation is spread over a wide geographical area and especially when it has operations in different jurisdictions, subject to different laws and regulations, top management would struggle to understand all that is required to operate in each area.

• Management styles within the organisation. Top management may prefer a more autocratic manage-ment style as opposed to promoting participation by lower levels of staff in the decision-making processes. This is often found in an owner managed business or within businesses with a high level of bureaucracy. In organisations with a more flat organisational structure, it is far easier for lower levels of staff to interact with top manage-ment.

Conversely, the choice of a budgeting methodology will influence the quality of information within the organisa-tion, how information is communicated throughout the organisation, the participation of various levels of staff in the decision-making processes of the organisation and how staff perceives these processes. It will further impact on the contribution that staff of all levels is able to make on the strategic vision of the organisation.

Top down budgetingWith a top down budgeting approach, senior management develops a budget based on their strategic goals for the organisation and their understanding of the business. The overall budget is then disseminated into budgets for the various functions or depart-ments of the organisation and imposed on the function or department managers, who then have to develop a detailed budget within the constraints of the budget handed down to them.

Where a function or department can demonstrate that the budget they received is inadequate to meet the required results and can properly motivate an increase to their budget, senior management needs to revise the allocations to other departments in order to make the additional budget available to such a function or department. Senior management needs to ensure that such a budget is based on clear and defensible rea-soning which is communicated to and under-stood by all levels in the organisation.

A top down budgeting approach offers a number of benefits:• It is easier to ensure that budgets are

aligned with the overall strategic goals of the organisation.

• Lower levels of management and staff are more inclined to focus on efficiency and on setting priorities since they are forced to work within the parameters of the budget they received.

• It may be a cheaper process as it is often a less iterative process.

• Operational managers are freed to focus their time and energy on what they do best, namely to run the daily operations of the organisation.

• Senior management expresses their object-ives and expectations from the outset, thereby guiding the budgetary process.

• Senior management does not have to rely on and wait for input from lower levels of management and staff in order to finalise budgets.

• It is easier to keep long-term plans and strategy in mind as top management is in a better position to focus on the “bigger pic-ture” and to determine the overall direction of the organisation.

However, top down budgeting also has a number of disadvantages:• Budgets may be unrealistic due to a

lack of knowledge and understanding by senior management of what is necessary to deliver the required output. Budgets may not allow for adequate resources to achieve the desired performance, but in some instances it may provide too many resources.

• Top management may experience difficulty to obtain the buy-in of lower levels of staff

FINANCE FOR FMs


and management as these employees have not been part of the budgeting pro-cess.

• Senior management may have to expend great effort and incur significant cost to research and obtain the required infor-mation to prepare the budgets. This may cause the process to be more expensive than entrusting the budgeting to the experts that work throughout the organi-sation.

In similar vein, the section continues to dis-cuss bottom up and zero based budgeting. From here the section continues to look at expense control and how budgets feed into the control of expenses and how facilities management may fit into the overall costing structure of the organisation. It also explores the type and quality of information required for successful expense control. The follow-ing is an extract of the introduction to the expense control section.

Expense controlIt is clear that for an organisation to exist it needs to make revenue. However, to survive and more importantly to be profitable the revenue needs to exceed the costs of the organisation. Most facilities managers have little direct involvement in the revenue side of the equation, even if it is a facilities manage-ment services organisation that does the facilities management on behalf of third party building owners. However, facilities managers play a significant role on the cost side of the equation.

Expense or cost control is all the activities of management aimed at planning, monitor-ing and optimising the cost of an organisa-tion. An effective cost control system not only focuses on the actual cost but also consid-ers the behaviour of employees within the organisation. Staff behaviour can be changed through positive enforcement offering various incentives for behaviour in line with manage-ment’s expectations or negative enforcement by penalising unacceptable behaviour.

Cost control is, therefore, not only the recording of cost and comparing it to a pre-set budget, but it is the measurement of actual cost, comparing the actual cost to the budgeted figures and taking appropriate action. Cost control is a continuous process constantly working to achieve the results expected by management. Even when the planned results are achieved or exceeded, management cannot afford to lower their guard.

Cost control should not be confused with cost cutting, which is typically a knee jerk reaction when an organisation is faced with financial crisis. This usually entails a short sighted reaction to improve profitability, which may have a place when an organisation’s

survival is at stake. Once the crisis has been averted the organisations may well find that they have restricted their capacity to regrow the business or seize opportunities that may exist due to an improvement in business con-ditions. Consequently, additional costs need to be incurred to regenerate the lost capacity. This leads to a further cost concept, namely opportunity cost.

Opportunity cost represents the value of an opportunity lost by pursuing and alterna-tive option. In this case the opportunity cost would be business lost due to inadequate capacity as a result of excessive cost-cutting. It is clear that cost savings alone cannot guarantee business success.

A sound cost control regime needs to be aligned with the overall medium to long term strategy of the organisation. Cost con-trol therefore begins with thorough planning and as we have discussed in the sections above, planning begins with a properly developed budget, which is continually reviewed and amended to incorporate les-sons learnt and changes in the business environment of the organisation.

Due to the integral role that procure-ment plays in expense control, the section explores some of the aspects to consider in order to establish an effective and effi-cient procurement regime. Here follows an extract from the Procurement section:

ProcurementProcurement forms the basis for most expenses incurred by an organisation. Good procurement procedures are, therefore, a fundamental pillar of a cost control regime. Consequently, an organisation stands to gain the following benefits from a proper procure-ment strategy:• Ensuring that the right price is paid for

the goods. This may not be the cheapest

price available, but, a fair price consid-ering the quality and service required.

• Preventing fraud by staff members. Staff may be awarding contracts to connected parties such as family members, who may not be capable of delivering the goods or who may be able to deliver on the contract but at prices above that generally available in the market. This is a major problem for governments, but pri-vate organisations are in no way immune against this happening. Furthermore, staff members may receive some form of “reward” from suppliers for placing orders with them, such as kickbacks, which the supplier may recover by inflating invoice values.

• Avoiding collusion between suppliers which reduces the competiveness of the market, resulting in increased pricing.

• Improving pricing from suppliers through optimal order quantities. This is more applicable to larger organisations who can buy in bulk through a centralised pro-curement function, rather than allowing each geographical location to do its own purchasing. Organisations need to com-pare the cost of holding stock to possible savings as a result of bulk purchasing.

• Ensuring that the organisation obtain the right quality of product or service. Poor quality goods and services may well end up costing the organisation more. For example, poor quality lubricants for a high usage machine may require replace-ment of lubricant more often than would be the case with the correct grade of lubricant or even higher levels of break-downs due to excessive wear and tear on the machine. Even quality that signifi-cantly exceeds requirements may also end up costing the organisation more than it should.


Gerrit Kok

Bouwer Kleynhaus

Proper procure procedures may include the following:Pre-authorised suppliersPre-authorised suppliers or service providers. Where organisations purchase a variety of relatively low cost and high volume items such as stationery, cleaning consumables and spare parts, it would be worthwhile introducing a panel of acceptable suppliers. This would entail the procurement depart-ment or procurement manager or any other person independent from the operations team, who uses the items, to develop a panel of suppliers or service providers from whom the organisation may buy.

The requirements for suppliers on the panel need to be developed with the tech-nical staff to ensure that the correct quality of goods and services are procured. Prices, and other criteria, from panel members should continually be assessed to ensure the service provider continues to meet the requirements at reasonable prices.

Some large companies choose to iden-tify key services to be out-tasked and then negotiate a standard rate with a number of competent service providers to be used as and when necessary. This would typically be applicable to organisations with various loca-tions and for services that could be subject to varying requirements, for example security. A certain service level is agreed with a num-ber of security companies at a standard rate for various services which are then deployed where needed.

Other aspects considered in this section are a multi quotes process, how to run open and closed tendering processes, customer assisted purchasing and some practical aspects of contract negotiation contract management. It is worth noting that an entire chapter is dedicated to contracts related to the facilities management function.

Following procurement, the section continues with stock control for reasons set out in the extract depicted below:

Stock controlAlthough one would normally associate stock control with production companies, it is a discipline applicable to any function where some form of inventory is maintained or where supplies or spares are utilised to deliver the required service, such as facilities management. As with a solid procurement policy, a sound stock control regime also contributes to the containment of cost and mitigation of risk.

Stock control is the management of stock levels, with the aim to balance the cost of stock holding with the savings to be had through bulk buying and the risk of service interruption due to out-of-stock situations. Stock control also includes the physical

security measures to protect the stock.A number of costs are associated with stock holding:• The opportunity cost as a result of capital

(cash) being tied up in stock on hand. In other words, stock represents money that could have been used for other purposes, such as the repayment of debt or to take advantage of lucrative investments.

• Ordering cost. This includes the cost of staff placing the orders, the cost of the staff receiving and checking the delivered goods.

• Storage costs, which is the cost of the space used to store the stock such as rent, salaries of store keepers, cost of stock counts and cost of insurance against damage or loss.

In order to determine the level of stock to be maintained, the facilities manager should consider the advantages and disadvantages of various stock levels.Advantages of high stock levels:• Stock levels are easy to manage since no

complex optimisation analysis is required and there is little to no pressure on the placing of orders and managing timely delivery of the orders.

• There is little to no risk that stock will run out. This is important where facilities management functions are delivered under a strict service level agreement with signifi-cant penalties for non-compliance.

• Bulk discounts for large order quantities could reduce the direct cost of stock.

Disadvantage of high stock levels:• Higher opportunity cost as more cash is

tied up in stock.• Higher storage and insurance cost.• Stock items may become obsolete before

it is used or in the case of excessive spare parts for a particular machine, the parts may never be used once the machine is sold or scrapped and there may be no resale market for the spares especially if newer technology is available in the mar-ket.

• If the stock include perishables, for example where the facilities management contract includes canteen services, the excessive stock items may perish before it can be used.

Advantage of low stock levels• Minimise opportunity cost as less capital is

tied up in stock.• Higher efficiency and flexibility to adjust

to any changes in demand for any stock items or due to new technology becoming available.

• No significant impact as a result of stock obsolescence or perishing of stock items.

• Lower stock carrying cost as less space is required to store inventory, fewer staff required to manage stock store, etc.

Disadvantage of low stock levels• Higher risk of running out of stock items

which could have a significant impact on the organisation. For instance, if it is key spares for a pivotal machine in the organisation or stiff penalties that may be incurred if repairs are not completed in line with stipulations in the service level agreement.

• Management of stock may become overly complex to ensure orders are placed in time, minimum stock levels maintained and that orders are executed within the required timeframes.

• Stock ordering cost may significantly increase as more staff is required to place the high number of orders.

• The organisation will not be able to optimise order sizes to take advantage of possible bulk discounts or to minimise transport cost – to deliver one part costs the same as to deliver a delivery van full of parts.

• The organisation becomes dependent on the efficiency of the suppliers to deliver stock on time

The section subsequently looks at principles to consider when determining stock levels, and ordering quantities and the importance of physical security over stock. The section con-cludes with a high level overview on bench-marking as a further tool in an organisation cost control process. n

FINANCE FOR FMs


MEET THE NEW BOARD2015 is the year that FM is going to make its mark in South Africa, and the new SAFMA board members, as the custodians of the industry, are excited!JFM is just as excited, even more so that we are now part of TE Trade Events, who hosts the expo alongside the FM show as well as FM breakfast seminars throughout the year.As a kicker to a great year ahead, we are profiling the SAFMA board members, from whom you will also be hearing a lot of during the year. Tapping into their knowledge and expertise is most definitely the way to go!

WHO AM I?I am a specialist in the field of Facilities Management and head up the Facilities Management division for Eris Property Group, one of South Africa’s leading property groups with over 500 retail, industrial and commer-cial properties under management. Some of the key properties which fall in my port-folio include the Merchant Place Campus in Sandton, the newly completed 4 Star green star rated building, 102 Rivonia Road and the Johannesburg Stock Exchange.For the last 14 years, I have been serving on SAFMA’s board in various positions.

QUALIFICATIONSNational Diploma (N Dip) Business Management, Pretoria TechnikonBachelor of Science (BSc) Facilities Management, Hanze Hogeschool, NetherlandsMaster of Science (MSc) Facilities Management and Asset Maintenance, Heriot Watt University, Scotland

REGISTRATIONSAFP (Accredited Facilities Professional, SAFMA)

Andre Klopper

PROFESSIONAL MEMBERSHIPSSAFMA - Director, International Relations,Global FM - Director, representing South Africa on the board of Global FMSABS TC267 - Founding Member of the technical committee for Facilities Management, developing standards both for South Africa and for the International Standards Organisation (ISO)

CURRENT ROLE AS HEAD OF ERIS FMResponsible for the strategic management of the FM division in all aspects.

ROLE IN SAFMAI am the director of SAFMA responsible for International Relations and am also the SAFMA director serving on the board of Global FM repre-senting South Africa in the organisation.

OBJECTIVE FOR 2015The South African Facilities Management industry is highly regarded as an important player in the international market and more importantly as the gateway into Africa. The objective for 2015 is the further strengthening of our relationships with other role players internationally and to foster stronger ties with international FM associations who share the same aspirations as SAFMA.


PROFILE

Cliff Hocking

David Pierre-Eugene

Maja Macdougall

WHO AM I?Clifford John (Cliff) Hocking QUALIFICATIONS: National Diploma: Organisation and Work StudyNational Diploma: Business Management

CURRENT MEMBERSHIP IN PROFESSIONAL SOCIETIES:SAFMA

WHERE I CURRENTLY WORK:Owner and Principal Consultant, Wilconox Facilities Management Services. A specialist Facilities Management and Public Private Partnership consultancy busi-

ness providing strategic, tactical and oper-ational advisory services to all sectors within the built environment in Southern Africa.

CURRENT RESPONSIBILITY WITHIN SAFMA:Board member responsible for training, education and development.

WANT TO ACHIEVE:A 2015 annual conference that sets a new benchmark for facilities management confer-ences internationally.A steady, sustainable and no surprises set of rules that govern facilities management training courses and workshops that are pre-sented around the country.

WHO AM I?David Pierre-Eugene

QUALIFICATIONS:Btech Architecture, PBM, PDP, Certificates in PM and Interior design

WHERE DO I CURRENTLY WORK?I am currently working for Discovery and will have been with the company for 15 years on January 2, 2015. I originally joined Discovery in 2000 to manage the company’s new head office project (155 West Street in Sandton)

but since then my role and responsibilities have grown and I now head up the real estate and facilities department for the group.

AREA OF RESPONSIBILITY IN SAFMA:Director responsible for Marketing

WHAT I WOULD LIKE TO ACHIEVE IN MY AREA IN 2015To promote SAFMA as the industry voice by creating awareness of tangible benefits to corporates as well as members and thus growing our membership and profession.

WHO AM I?Maja Macdougall

QUALIFICATIONSNational Diploma in Human Resources Management. (1989)

CURRENT EMPLOYArcus Facilities Management Solutions

KEY EXPEREINCEDirector and Shareholder of Arcus Facilities Management Solutions and managing the head office operations which include Human Resources, Finance, IT, Property Management and general office operations as well as the Training Academy. I also assist with large project mobilisation and consulting plus strategic planning for the company as a whole. With this experience and exper-tise I am able to render high level specialist services to a multitude of private and public sector clients.

My experience ranges from the establishment and operations of large facilities to specialist consulting services to private and public sector services in the fields of mobilisation, strategic planning, large scale staff transfers, tender procurement, outsourcing models, operational planning, asset management, budget and costing models. I have successfully performed assessments/audits on large facilities and provided turnaround FM strategies for these. Currently AFMS has a staff compliment of over 650 staff and a turnover of R150-million.

SAFMA DUTIESI have been on the SAFMA Western Cape Committee for over 10 years as committee member and regional chairperson and currently hold the position of Treasurer and Director of SAFMA. As Treasurer I manage the finances of the organisation, set the budget and mon-itor the expenditure and income – focusing on best use of funds for the benefit of the SAFMA membership.

SAFMA 2015Focus for 2015 will be increasing revenue, reducing debtors and allocating the budget into areas that will generate income for the organisation as well as increase value to the membership. This includes more marketing spend to attract members, spend on various research projects (salary benchmarking is one of them) that will add value to the mem-bership and continuing with the successful conferences.


WHO AM I?Nathanial Clarence Reddy

QUALIFICATIONS:BSH-QS, BSC-PD, PRQS, PRCPM, MRICS, M.PMSA, AFP

WHERE I CURRENTLY WORK:I am employed within the LDM Group, which incorporates Oxygen Infrastructure Solutions. The LDM Group is a South African and Level 1 B-BBEE organisation, which in 2014 celebrated 30 years of service excellence in providing “solutions for the built environment” that are focused on “adding value beyond measure...” My career commenced at age 16, playing a part-time role in a family-run project develop-ment business. I have since worked for some of the largest globally recognised market leading firms in my line of expertise. This early and continued exposure and involve-ment in the working world has awarded him the opportunity to participate as a key influ-encing resource on many prestigious private and public sector projects both nationally and internationally.

My knowledge and understanding of the built environment is founded on experience and formal training throughout the whole lifecycle of projects and assets which has skilled me in the following areas of advisory:• Independent Certifier• Facilities Management• Lenders Technical Advisor• Public Private Partnerships• Turnkey Property Development• Procurement And Cost Management• Programme / Project Controls And

Management• Business Strategy, Development And

Management

AREA OF RESPONSIBILITY IN SAFMA:Director responsible for regional chapter development

WHAT WOULD YOU LIKE TO ACHIEVE IN YOUR AREA IN 2015To improve member integration and know-ledge sharing at a regional level and to grow membership in a meaningful and sustainable way.

Nathanial Clarence Reddy

Eric Thabiso Khoncha

WHO AM I?Eric Thabiso Khoncha

QUALIFICATIONSQualified Mechanical and Structural ArtisanN4 Mechanical (Randfontein Technical College)

WHERE DO I CURRENTLY WORK?I am currently a managing member of Superfecta Trading 209cc. Superfecta is a general engineering and facilities manage-ment company operating nationally. I have been with this company since its inception in May 2002.I am currently Chairperson of Luka Investment in the Rustenburg area in the North West.I am also responsible for the strategic advice regarding the company’s future and overseeing its current direction. My early responsibility in mining was the reclaiming of the raw material at the Doornkop Plant at Randfontein Estates Gold Mine.

PROFESSIONAL MEMBERSHIPSSAFMA, ECA, CIDB, ECB

CURRENT RESPONSIBILITIES BESIDES SUPERFECTASAFMA – Vice ChairmanLuka Investments – ChairmanZamori/SFT JV – Board member

RESPONSIBILITIES AT SAFMAOrganisational Development

OBJECTIVES FOR 2015To make Superfecta a formidable, competitive, world class service provider nationally and internationally and to crack global market opportunities.

MEET THE NEW BOARD

June 2013 jFM32

Cummins Power Generation 7

FM Expo 9, 11

Franke IBC

Gelsa Lighting 10

MacDonald & Company IFC

Maclaren Air Conditioning 31

Marmoran OBC

Spacevac 19

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