Construction Industry Development Board

(cidb)

Overcoming the Barriers to Effective Service DeliveryEffective Service Delivery

CESA Conference and AGM

Wednesday, 06 October 2010

Ronnie Khoza, CEO

development through partnershipcidb

Presentation Outline

• Background and Brief Scan

– Historical/Current situation in RSA-the

positives

– Historical/Current situation in RSA-the

negatives

• Barriers to Effective Service Delivery• Barriers to Effective Service Delivery

• Strategic Solutions

• Where to after “2010” (2010 FIFA World Cup

Infrastructure) & Concluding remarks

Background and Brief Scan

Current situation in RSA-the positives

• History of Credible BE professionals

• Credible councils and VA’s

• Credible infrastructure-not just the new stock

• Capability and capacity-at all times

• Regulated construction industry• Regulated construction industry

• Flexibility to collaborate

• International experience

• Performance under pressure

Background and Brief Scan

Current situation in RSA-the positives

• Leader in the region/on the continent

• Excellent banking and financial systems

• Political stability?

• Good people!

• 2010 Infrastructure –amazing story of capability • 2010 Infrastructure –amazing story of capability

and capacity

Achievements - Public Sector Investment

Achievements - Public Sector Investment

Achievements - Public Sector Investment

Achievements - Private Sector Investment

Background and Brief Scan

Current situation in RSA-the negatives

– History of skewed education system

• History catching up with us?

• 16 years of general deterioration-self inflicted?

– Poor skills development focus

• Approach not holistic• Approach not holistic

• History catching up with us?

• Challenges with complacent tendencies

• Not also dealing with specific skills

Background and Brief Scan

– Poor culture of planning

• Planning not long-term (enough)

• Not integrative enough/narrow based

• Role clarification?

• Planning for the country

• Funding-not as prioritised as it should be

– Price escalations/VOs– Price escalations/VOs

– Starts and stops

– Delayed payments/security of payment a

concern

• Maintenance – not prioritised in many cases

Background and Brief Scan

– Capacity/skills shortage-clients

– Poor alignment of objectives/prioritisation

– Litany of legislation (good and bad)

• Challenges with poor

compliance/litigations/corruption

• Staff not coping with volume and • Staff not coping with volume and

training/high staff turnover

– Payment delays

Payment Delays; Contractors

2009

14 to 30

60 to < 14

120+

90 -

30 to 60

0% 25% 50% 75% 100%

2007

2008

National Department

Public Corporation

Private sector

14 to 30 60 to 90

< 14 days

120+

90 - 30 to 60

Payment Delays; Contractors

0% 25% 50% 75% 100%

Regional / District Council

Metropolitan Council

Provincial Department

2009

14 to 30

60 to < 14

120+

90 -

30 to

Payment Delays; Client’s Agent

0% 25% 50% 75% 100%

2007

2008

Class of Works Per Province - Grade 1

GB CE ME EP EB SW TOTALEastern Cape 8157 2646 171 183 97 1091 12346

Free State 2859 1031 175 79 53 409 4607

Gauteng 13529 4143 712 738 295 3581 22999

KwaZulu-Natal 15508 7036 616 278 239 2905 26582

Limpopo 5229 2468 293 358 107 805 9260

Mpumalanga 4848 1748 323 249 83 539 7790

North West 3314 874 153 109 31 525 5006

Class of worksRegion

North West 3314 874 153 109 31 525 5006

Northern Cape 678 168 39 21 26 94 1026

Western Cape 3761 890 171 123 123 1050 6118

Total 57883 21004 2653 2138 1054 10999 95734

GB: General Building CE: Civil Engineering ME: Mechanical Engineering

EP: Electrical Engineering (Infrastructure) EB: Electrical Engineering (Building) SW: Specialist Works

Actual number of companies registered = 69,981

Class of Works by grading-Grade 2-9

GB CE ME EP EB SW TOTAL2 2054 1535 172 100 123 458 4442

3 547 509 80 50 78 85 1349

4 768 706 123 120 140 113 1970

5 487 542 180 154 133 172 1668

6 513 591 75 58 39 52 1328

7 209 227 40 36 19 32 563

8 60 78 19 10 3 7 177

9 32 52 24 19 4 10 141

Class of worksGrade

9 32 52 24 19 4 10 141

Total 4670 4240 713 547 539 929 11638

GB: General Building CE: Civil Engineering ME: Mechanical Engineering

EP: Electrical Engineering (Infrastructure) EB: Electrical Engineering (Building) SW: Specialist Works

There have been 6,444 upgrades on the Register to

date for Grades 1 to 9. Black owned enterprises

constitute 85 % of all upgrades.

Actual no. of companies registered: G 2-9

Grade Total

2 3369

3 1067

4 1644

5 1237

6 1012

7 442

8 145

9 90

Total 9006

development through partnershipcidb

Stats- Exponential Growth

• Increase in registrations� Dec 2004 – 1500

� Dec 2005 – 7500

� Dec 2006 – 27500

� July 2007 – 42000

� Dec 2007 – 55 000

� End March 2008 > 65 000; End March 2009 >80 000; Jan 2010>100 000

80000

100000

120000

18

0

20000

40000

60000

80000

All Active only

Barriers to Effective Service Delivery

Summary of Barriers

• Short term, non-integrated planning-clear programme

• Security of funding – long term

• Traditional approach to construction procurement

• Poor definition of scopes of works

• Maintenance not planned and budgets not prioritised

• Poor predictability-currently• Poor predictability-currently

• Skills shortage/capacity- clients, esp municipalities

• Payment delays

• Transformation/delivery-competition?

cidb Development Framework

Empowerment Growth

contractor

Delivery

Performance

Capability

developmentcontractor

The priority focus!The priority focus!

Solutions

• Long term and integrated planning-NPC coming on Board!

• Innovative funding and private sector involvement: PPP/bonds/etc----long-term

• Alternative delivery models: funding and shorter delivery times

• Standardised scopes of works?

• A regulated construction industry

• Artisan training based on the old approach:

– cidb ESDA

• Internal capacity-SOE role and infrastructure Departments/Municipalities

• Education value chain: secondary(maths & science)/tertiary/continuous education with mentoring

• Sustainability and regional collaboration

Where to after “2010” and Concluding Remarks

– Lack of speed and momentum-gap

• Poor expenditure

• Delivery

• Skills training/development

• Jobs and job opportunities

Concluding remarksConcluding remarks

• There are opportunities

• Government still committed to prioritising infrastructure (?)

• Water and wastewater treatment

• Power generation capacity

• Roads

• Private sector

Thank YouThank You………..Thank youThank YouThank You

………..Thank you

development through partnershipcidb