road pavements forum

Department of Public Transport, Roads and Works

Labour intensity Strategy and Framework for the Implementation of Infrastructure

Projects in Gauteng

Road Pavements Forum

Presented by: Jack van der Merwe Pr. Eng

Date: 25.11.2003


Gauteng Premier - Jun 2003

• Our Vision– “Labour Intensive Construction method will be a way of life

for all infrastructure projects in Gauteng.”

– “Of course not all projects will yield the same labour intensity, so targets will be set by project type by category with some projects which lend themselves to labour intensive methods going as high as 50% and some as low as 20% labour intensity.”



• What are the key success factors?– Political will - you have that from the Gauteng Executive

Council, the Growth and Development Summit commitment and the ANC

– Paradigm shift by all stakeholders - this meeting today is part of the process to get this shift happen and more will be done

– Long term capacity building plan - the blocks are in place, we need to all set and work towards these goals

– Long term incremental approach with departments’ resource allocated accordingly - you have the commitment from the Gauteng government that we shall re-orientate our budgets towards infrastructure development using labour intensive construction methods.



• Conclusion– “In conclusion, ladies and gentlemen, I want to reiterate that the

success of this programme is very dependent upon effective partnerships amongst all stakeholders - government departments, local authorities, trade unions, professional bodies, learning institutions, construction industry players, civil servants and communities. Without your active participation and belief that this can be done, it will be difficult for us to achieve our objectives.

– In addition to commitment, we are going to need all the inputs and participation we can get from all stakeholders to develop the capacity we need to make this programme a success. Labour Based Project management skills, supervisory as well as labour based construction management skills need to be developed at an accelerated pace for us to reach the kind of levels we are targeting.”


Aim of the Strategy and Framework

Approach followed

Historical and current perspective

Current status

Potential

Implementation implications

Practical guidelines

Aim of the Strategy and Framework

Approach followed

Historical and current perspective

Current status

Potential


Practical guidelines

Presentation outline


Aim of the strategy and framework

• To report on the implications of a total labour approach

• To indicate the potential for improved labour content

• To illustrate the impact of total labour concept

• To achieve balanced solution for private sector participation

• To recommend where private sector can contribute to job

creation

• To report on the implications of a total labour approach

• To indicate the potential for improved labour content

• To illustrate the impact of total labour concept

• To achieve balanced solution for private sector participation

• To recommend where private sector can contribute to job

creation


• Poverty alleviation, job creation and Public Works projects.

• A move from contemporary technology to “total labour” concept

• “Total labour” is the optimal mix between people and equipment

• Assessment of potential socio-economic impacts

• Analysis of labour intensity potential and intervention options

• Poverty alleviation, job creation and Public Works projects.

• A move from contemporary technology to “total labour” concept

• “Total labour” is the optimal mix between people and equipment

• Assessment of potential socio-economic impacts

• Analysis of labour intensity potential and intervention options

Approach followed

Philosophies and actions adopted


Historical and current perspective“total labour”

To maximize job opportunities, the focus should be on appropriate mix of people and equipment.

Historicalperspective

Currentperspective

• Great Wall of China• Egyptian Pyramids• Roman roads• Labour content = 70-90%

• Optimal balance – choice in the planning stage• Devise implementation tools


BUDGET ALLOCATION FOR PROVINCIAL INFRASTRUCTURE (2002/2003)

0

5

10

15

20

25

30

Prov.

Road

s

Educat

ion

Health

Soc. S

erv.

DACEL

Pub. W

orks

Sports

/Rec

.

Dev. P

lann

ing

Housin

g

L Gov.

Departments

%

Note: Figures exclude expenditure on equipment, 14% VAT and fees

BUDGET ALLOCATION FOR PROVINCIAL INFRASTRUCTURE (2002/2003)

0

5

10

15

20

25

30

Prov.

Road

s

Educat

ion

Health

Soc. S

erv.

DACEL

Pub. W

orks

Sports

/Rec

.

Dev. P

lann

ing

Housin

g

L Gov.

Departments

%

Note: Figures exclude expenditure on equipment, 14% VAT and fees

Provincial Capital Expenditure Budget


Status Quo

Levels of labour intensityLow level (Conventional) = 6%Second level (LABMAX) = 36%Highest level (Labour Intensive) = 50%

DoH, DPLG are mainly conventional with high potential

Labour content of certain projects has great potential

Labour Intensive (LI) projects reached 37% labour content

Levels of labour intensityLow level (Conventional) = 6%Second level (LABMAX) = 36%Highest level (Labour Intensive) = 50%

DoH, DPLG are mainly conventional with high potential

Labour content of certain projects has great potential

Labour Intensive (LI) projects reached 37% labour content

Analysis of the labour intensity in the current CapEx BudgetAnalysis of the labour intensity in the current CapEx Budget


Factors with Financial Implications

• Time to deliver• Scope of work• Continuity of work• Quality• Appropriate technology• Terrain and environment• Training• Risk assessment• Research and development

• Time to deliver• Scope of work• Continuity of work• Quality• Appropriate technology• Terrain and environment• Training• Risk assessment• Research and development

Compared with conventionalconstruction techniques,

the following factorshave implications

on labour-based projects

Compared with conventionalconstruction techniques,

the following factorshave implications

on labour-based projects


For contractors, labour-based construction is fraught with much greater risks than capital-intensive

construction

For contractors, labour-based construction is fraught with much greater risks than capital-intensive

construction

Contractor risks

• Cost of training• Effectiveness of training• Greater supervision is required• Labour strikes• HIV/Aids• Inefficient labourers• Difficulty in dismissing labour

• Cost of training• Effectiveness of training• Greater supervision is required• Labour strikes• HIV/Aids• Inefficient labourers• Difficulty in dismissing labour


Ex Ic/Tc = E x [Lmax + Mv + Emin + OCv] / Tc

Where:E = Escalation factor that keeps up with inflation rate and maintains the investment level in sustainable mannerIc = Investment cost (capital)

Tc = Time constant (duration of any one financial year)

Lmax = Labour cost to reach maximum rational levels

Mv = Material costs; variable; this covers availability and sourcing of

material from the closest source to sitesEmin = Equipment costs to reach minimum rational levels

OCv = Other costs, i.e. professional fees, land, VAT, etc.

P and G’s are applicable to land, material and equipment.

Where:E = Escalation factor that keeps up with inflation rate and maintains the investment level in sustainable mannerIc = Investment cost (capital)

Tc = Time constant (duration of any one financial year)

Lmax = Labour cost to reach maximum rational levels

Mv = Material costs; variable; this covers availability and sourcing of

material from the closest source to sitesEmin = Equipment costs to reach minimum rational levels

OCv = Other costs, i.e. professional fees, land, VAT, etc.

P and G’s are applicable to land, material and equipment.

Balancing of investments


New alternative construction technologies can lead to improved labour content of projects

without jeopardising the cost and quality

New alternative construction technologies can lead to improved labour content of projects

without jeopardising the cost and quality

Alternative technologies

i.e. Excavation of all service trenches with backfilling by hand Leveling of sites by hand Mixing mass concrete and mortar by hand Excavation of all foundations by hand Manufacturing of trusses and paving bricks on site Construction of road pavement by hand Use hand methods in programmable maintenance Building surface drainage systems by hand

i.e. Excavation of all service trenches with backfilling by hand Leveling of sites by hand Mixing mass concrete and mortar by hand Excavation of all foundations by hand Manufacturing of trusses and paving bricks on site Construction of road pavement by hand Use hand methods in programmable maintenance Building surface drainage systems by hand


Potential analysis – Labour content

Current%

Strategic objective%

Roads 14-26 26-40Education 29-36 41-44Health 24-34 37-44Social Services 33-34 41-44DACEL 34-43 41-55Public Works 29-36 41-44Sports and Recreation 29-36 41-55Development Planning 8-17 25-55Housing 9-36 25-55Local Government 9-36 25-55TOTAL 25 42

Departments


All Departments and Implementing agents will follow the samenorms and standards in measuring and reporting on labour intensity

Norms and standards

J = [{(N*(1-d/100) – A – M – P)/1.14}/L]*110J = [{(N*(1-d/100) – A – M – P)/1.14}/L]*110

J = Number of jobsN = Total project cost, including, 14% VAT, professional fees, profit and escalation.D = Professional fees (e.g. 12%)A = Total value of land, administration and legal costM = Total value of materialsP = Total value of plant and machinery (P will tend towards 0 with an increase in labour content)L = Labour cost per unit per day.L1 = Daily wage (e.g. R55.00)L2 = Supervision costs, administration pertaining to labour, UIF contribution, etc. (e.g. between 12% and 40 % of L1 depending on the labour technology, i.e. LABMAX, LI applied).L3 = Training and skills development cost (e.g. 8% of L1)L = L1 + L2 + L3



Legal framework Alignment of Procurement Policy : Technical / Tender documents and criteria of award

Measuring contractors performance Capacity to implement

Dormant capacity Capacity exist in

• Professional fraternity• Building industry contractors• National departments• Tertiary education institutions

Delivery mechanisms Paradigm shift : contract options Opportunities for BEE and SMME’s

Legal framework Alignment of Procurement Policy : Technical / Tender documents and criteria of award

Measuring contractors performance Capacity to implement

Dormant capacity Capacity exist in

• Professional fraternity• Building industry contractors• National departments• Tertiary education institutions

Delivery mechanisms Paradigm shift : contract options Opportunities for BEE and SMME’s


Impacts

Social impacts• Employment, income and better nutrition• Poverty alleviation• Reduced crime• Increased self-esteem

Economic impacts• Employment growth of 14.2% per annum• 49 200 new jobs in 3 years• Increase in local economic multiplier effects• Transport and energy savings• Capacity building, economic empowerment• Greater cost recovery for infrastructure services

Total project costs• Decrease in cost effectiveness• Increase in labour costs and decrease in capital cost

Social impacts• Employment, income and better nutrition• Poverty alleviation• Reduced crime• Increased self-esteem

Economic impacts• Employment growth of 14.2% per annum• 49 200 new jobs in 3 years• Increase in local economic multiplier effects• Transport and energy savings• Capacity building, economic empowerment• Greater cost recovery for infrastructure services

Total project costs• Decrease in cost effectiveness• Increase in labour costs and decrease in capital cost


Considerations for Implementation

Long-term programme Secure long-term support All departments Involve private sector Involve organised labour Redesign of projects Re-orientate budget Continuous capacity building Skills development programme Communication strategy

Long-term programme Secure long-term support All departments Involve private sector Involve organised labour Redesign of projects Re-orientate budget Continuous capacity building Skills development programme Communication strategy

IMPLEMENTATION PHASING SCENARIO

0

1

2

3

4

5

6

7

8

2002 2003 2004 2005 2006 2007

R b

illi

on

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Jo

bs 0

'000

Budget allocationJobsExpenditure on labour

IMPLEMENTATION PHASING SCENARIO

0

1

2

3

4

5

6

7

8

2002 2003 2004 2005 2006 2007

R b

illi

on

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Jo

bs 0

'000

Budget allocationJobsExpenditure on labour


Practical guidelines (1)

• Political committee - Chaired by MEC of PTRW, Health, Education, DPLG, Housing and Agriculture - carries political mandate to oversee programme and act as communications channel

• Stakeholder committee - Chaired by DDG (PW and management services) – to channel information and communication

• Labour intensity monitoring committee - Chaired by Chief Director Professional Services – to monitor programme results and impact of strategy

• Political committee - Chaired by MEC of PTRW, Health, Education, DPLG, Housing and Agriculture - carries political mandate to oversee programme and act as communications channel

• Stakeholder committee - Chaired by DDG (PW and management services) – to channel information and communication

• Labour intensity monitoring committee - Chaired by Chief Director Professional Services – to monitor programme results and impact of strategy

Committee system to oversee monitoringCommittee system to oversee monitoring



Reorientation of public expenditure on infrastructure at provincial level Obtaining cost effective high standard buildings with maximum appropriate mix of people and machines Implementing provincial infrastructure projects based on defined output measures indicators of

Time Cost Quality Number of jobs Labour content

Reorientation of public expenditure on infrastructure at provincial level Obtaining cost effective high standard buildings with maximum appropriate mix of people and machines Implementing provincial infrastructure projects based on defined output measures indicators of

Time Cost Quality Number of jobs Labour content

Long term programme goals, areLong term programme goals, are



Bulk excavations Excavations in service trenches Carpentry Short production run joinery Hand mixing of mass concrete and mortar Road pavement maintenance Road ancillary works

Bulk excavations Excavations in service trenches Carpentry Short production run joinery Hand mixing of mass concrete and mortar Road pavement maintenance Road ancillary works

Critical areas of interventionCritical areas of intervention



Project Planning and ImplementationProject Planning and Implementation

Planning the project Design the project concept Project Business Plan Technical documentation Contract documentation Tendering and procurement Project and programme monitoring Capacity building and support

Planning the project Design the project concept Project Business Plan Technical documentation Contract documentation Tendering and procurement Project and programme monitoring Capacity building and support


Thank you

road pavements forum

Documents