The Civil Engineering Contractor February 2019 | Page 3

COMMENT Civil engineering contractors in five years Eamonn Ryan - editor [email protected] P resident Cyril Ramaphosa has made a huge commitment to the country with his stimulus package and his negotiating of USD100-billion in funds from international organisations. However, that money will have limited impact without the necessary supply chain and procurement processes in place to get that spend into the market where it is needed. There are already a lot of projects in place that have been designed by consultants but are sitting idly on the shelf in order of priority — but going nowhere. For them to be unlocked and released requires a procurement process that is going to transparently award the contract into the hands of contractors. What is required is a proper tender adjudication process and at the moment, that process is blocked. This is primarily owing to a culture of fear due to the high profile of corruption, so that even perfectly legitimate contracts are not coming to market. Even honest government employees are reluctant to award a contract for fear of being accused of making the wrong decision. In this environment, it is easier to make no decisions. www.civilsonline.co.za The process of developing new supply chain and procurement processes for large infrastructure projects is being conducted by National Treasury in a transparent manner, involving input from organisations such as CESA, SAFCEC, and SAICE. There was something in place called SIPDM (National Treasury’s Standard for Infrastructure Procurement and Delivery Management), drafted with professional assistance, but which received backlash from municipalities for being too complicated. A simpler version has since been drafted and put out for public comment. Comments from professional organisations such as SAICE are to the effect that the rules are now too simple to ensure transparency, compliance, and control. They want more steps for bigger, more complex infrastructure projects: the bigger the project, the more control is needed and the more steps requiring higher-level approval. There is an entirely different procurement process for spending on goods and services such as school supplies. Originally, Treasury had one procurement process for no matter what was being procured — and it was inappropriate for large infrastructure projects. To have Treasury recognise that large projects require different rules is in itself a major step — albeit it needs a bit more work. The bigger task will be the huge amount of training and certification required at municipal level to implement the new procurement rules. Supply chain managers and procurement officers have to be trained to use the system properly, award contracts, and get the spend happening. This is where the delay will occur and may affect the state of the civil engineering contractors’ market over the coming five years. It takes time. Even if the money were there right now and a supply chain system implemented immediately, it would still take time to identify projects; pass the conceptual stage; bring on the team of professionals to do the design process; have the tender process conducted by trained municipal officers; and award the tender. It is only when the contractor is on site that the economic impact is felt, and workers are hired before completion and handover. This all takes a few years. There are of course some projects that have already gone through the design phase and are ready for tender, which could materialise on the market fairly quickly. The big money and the job creation (among the people who need the jobs) happens only when the contractor is on site — getting to that stage is what needs to be accelerated. It is especially urgent that contracts located in rural and poor areas be accelerated so the impact can be felt, resulting in the recruitment and training of local people. However, the consensus seems to be that this stage is at least a year away, with no sudden upturn in business activity expected until then. A slow, gradual upturn is anticipated, but even for that to happen carries the caveat of a supply chain process first being put in place and operating smoothly. CEC February 2019 | 1