capacity building programmes … proceedings/powerpoints/greyling_erica.pdfmany programmes for...

““BUILDING CAPACITY FOR SUSTAINABLE DELIVERYBUILDING CAPACITY FOR SUSTAINABLE DELIVERY””

CAPACITY BUILDING PROGRAMMES CONTRACTOR DEVELOPMENT

AND EMPOWERMENT

Erica GreylingSeptember 2012


QUESTIONS

Many programmes for capacity building and empowerment of contractors exist, yet it seems as if the required results are not achieved. Why not? One should ask some questions:

• What support systems are available?

• Are the processes functionally well?

• Who is targeted?

• What support is actually needed by the contractor?


AN ATTEMPT TO CLARIFY THESE QUESTIONS…

• Understand the business environment (Construction sector)

• Real life data and findings (specific reference to the Free State)

• Identify real challenges (Cause and effect analysis)• The success of capacity building efforts in the

construction sector• Translate challenges into value chain opportunities


BACKGROUNDEconomic state of the construction sector in the Free State is very

vulnerable.

• New Plan for Comprehensive Sustainable Human settlement development includes social and economic amenities and infrastructure.

Challenges with existing support systems

• Government and other institutions developed broad support systems for regulating the industry. The CIDB is instrumental in the grading of contractors. However, the rating systems targets the enterprise and not the individual. If a contractor fails to sustain workflow, the enterprise is downgraded.

• Recent studies conducted for the cidb and the ILO revealed that small and medium contractors face challenges and frustrations. Most relates to systems and processes.


Background

• The construction sector performance in the Free State: one month -8%, 3 months -5.5%, 12 months -30.1% and 36 months -0.8%. This pictures the reality of the challenging construction sector in the Free State. A decline of 30% over a year emphasizes the need to enhance competitiveness and sustainability.

• Quality control and monitoring through for example the NHBRC support the housing market but due to a lack of capacity and a shortage of building inspectors at municipality’s frustration and delays are experienced.

• The development framework for the construction sector is regulated by significant legislation, policies and regulations.

1. Mike Schüssler, economist and BOE private client’s barometer


BackgroundFormulating intervention strategies based on the identification of symptoms alone is

not sufficient and will not address problems at the root. A deeper understanding of the underlying systemic reasons for market failure within the value chain will enable the selection of relevant development and employment intervention and strategies.

The underlying systemic constraints are identified through value chain research and proper constraints analysis. The underlying reasons are preventing the value chain from achieving certain economic and social targets; and highlights potential pathways for change. It further helps to identify leverage points for potential solutions and intervention strategiesContractor development programmes such as the EPWP and the CIP offers great opportunities through labour intensified and mentoring systems, yet the contractors are frustrated.

Skills development

The SETAS in particular the CETA were established for skills development. Few employees benefit from the CETA and huge amounts are reported unspent. Skills development plans are not developed and applications not submitted.


Background

Funding

• Funders, like the DTI offer grants for strengthening the capacity of contractors. The funding criteria however requires latest financial statements, VAT clearance certificates and 20% financial contribution. Most of the contactors have limited financial management skills and resources.

• Development corporations like the FDC offer bridging finance and loans. The question could be asked if the funding and loan criteria are conducive for supporting the construction sector. Loans are structured horizontal whilst the expenditure in the construction sector follows an S‐curve. An average of 7% profit margin for the construction sector is forfeited with wrong costing and pricing calculations. (In) affordability, poor and underpayment is experienced. Financiers and other financial business services view the construction sector as a high risk industry. The loan structuring does not favour the construction sector. Government treasury payment policy to pay contractor within 30 days is not punctually implemented. There is a breach of confidence in the construction sector. The Procurement policy is not implemented.


Background

Success rate

• The success rate of the small to medium construction enterprise remains low. For the small and medium contractor to survive and be sustainable, they have to operate SMART, have a continuous workflow and funds and be equipped with resources and skills to be competitive.

• The construction sector like any other sector is competitive. Many contractors find it difficult to survive and almost all of them have a secondary non‐construction related income.

Employment

• Unemployment of 25% (if reliable, it could be far more) remains a challenge for the whole country.

• A medium size contractor could provide at least 30 job opportunities. The construction sector is labour intensive and offer avenues for huge employment creation. In addition, the value chain of the construction sector offers business service and enterprise development opportunities The capacity of contractors directly impact on creating employment opportunities


RESEARCH APPROACH

• Understand the construction sector• Determine contractor development initiatives• Profile of the medium size contractors• Test 25 SME’s perceptions• Test other role player’s perceptions• Record challenges faced by medium construction enterprises• Conduct a Cause and Effect Analysis • Analyse Value chain opportunities • Identify Development and employment opportunities• Recommend proposed action (amongst others improved

governance efficiency).


AIM OF THE STUDY

The International Labour Organisation with assistance of Probucon aim to:– provide an overview of the profile of the medium

contractor in some parts of the Free State, – identify the challenges faced by contractors and

identify opportunities for:• enterprise development and • employment opportunities


SYSTEMS APPROACH


DEVELOPMENT FRAMEWORK

• Prioritise sustainability, unemployment, poverty alleviation and inequality on all projects (1)

• The Free State will have to expanded an average of 4.5 % per annum over the next eight years if the province is to achieve the minimum of 250 000 jobs under the national government employment creation plan (2)

• Sentiment is to support the small to medium scale sector. • The working age population has been increasing at three

times the rate of job creation over the past decade (3)

1. The State of the Free State Province address during February 2012 2. Moses James, target provincial government economist 3. South African Institute of Race Relations (SAIIRs)


Construction Sector Performance


THE CONSTRUCTION INDUSTRY CHARTER

• Transformation of the construction sector forms part of legislation that must be implemented as part of the procurement process.

• The sector code responds to industry needs and progress over time. All sector employees are required to use the charter as a measurement of the Black Economic Empowerment (BEE) component in procurement but harmonisation is still required between the Broad-Based Black Economic-Empowerment Act and the Preferential Procurement Act.

• Different sectors within the construction industry collaborate as a unified industry to draw up a road map of where the industry should be going with a shared understanding.


The Construction Industry Charter

• The Construction Industry Charter focuses on sustainable transformation through seven elements of ownership: management control, employment equity, enterprise and skills development, corporate social development and procurement. Practice guidelines of the Charter in particularly towards three components should be re-thinked, and include:

• Employment• SME development• Reconstruction and development

(Engineering News. 2009 Carla Thomaz, Edited by: Brindaveni Naidoo. Engineeringnews.co.za)


SKILLS DEVELOPMENT

• The Skills Development Act of 1998 clearly states that employees should be exposed to two days training for every twenty two days of work and that a minimum of 2% of project budget should be allocated towards a training programme.

• The skills development Act also allows for a compulsory 1% of the salary and wage bill towards a skills levy.

• Cognitions of relevant National legislation, policies and strategies that seek to accelerate socio-economic growth through skills development and to enhance human capacity.

• To successfully address key objectives identified for education and skills development, No. 37 of 2008 Skills Development Amendment Act, National Skills Development Strategy and the Human Resource and Development Strategy for South Africa bears relevance.


Skills Development

• Macro priorities are directed by amongst other the New Growth Path, APEX priorities, Artisan Development Initiatives and the Industrial Policy Action Plan. The main message communicated in all these documents are:– Provide the skills required by the economy, build capacity and provide

resources across society, – Quality skills are needed that primarily focus on priority and scarce skills, – Skills for sustainable growth and development should be promoted, – Learners must be taken from education into a career path with a labour market

strategy that includes handholding, mentoring, coaching and work-based skills development,

– Mixed skills (high, intermediate and low) i.e. management, technical and generic is high in demand, especially whilst targeting SMME development towards self- employment is essential. Management skills and new venture creation skills on different levels will assist self-employment,

– Promotion of skills to enhance the industrial and manufacturing sectors and promote value chain development and

– Huge emphasis is placed on youth development and rural development(Department of Labour Government Gazette, No 23045, 25 January 2002 page 8)


CONTRACTOR DEVELOPMENT

The Contractor Development Policy, 2007 emphasises the importance of contractor development • The effective transformation of the construction industry includes creating an enabling

environment, looking at supply side interventions (availability of procurement opportunities) and also ensuring that there is technical, management and financial support for the contracting entities within the development programme.

• Competence-based The development of a pool of contractors that are highly skilled and able to compete with the best, both in the development environment and also in the open market for infrastructure development opportunities is visualised. Thus, sustainable and self-sufficient contractors are visualized.

• Implementation tool Successful contractor cevelopment for small and emerging contractors focusing on sustainable enterprises, poverty alleviation and job creation is targeted. Contractors with CIDB grading designations of one (1) to six (6) in all the various classes of work are included.

(Construction Development Policy, 2007)


KEY ROLE PLAYERS

• Provincial Departments of Public Works are major role players in the construction sector. They have a legislative mandate to implement Broad Based Black Economic Empowerment (BBBEE), Preferential Policy Framework (PPF), gender equality, youth training and employment across all goods to be contracted to external service providers

• The Construction Industry Development Board (CIDB) was mandated through the Construction Industry Development Board Act 38 of 2000 to support contractor development and emerging sector participation throughout government and industry. The CIDB in collaboration with the National and Provincial Departments of Public Works were mandated to devise and implement a National Contractor Development Programme (NCDP). The participating stakeholders commit their efforts and resources to develop previously disadvantaged contractors, by:– establishing an enabling environment for contractor development,– enhancing and strengthening contractor development mechanisms, including

Emerging Contractor Development Programmes (ECDP’s)– facilitating performance improvement of contractors– supporting the creation of a pool of skilled artisans, supervisors, technicians and

technologists for the construction industry(CIDB website: http://www.cidb.org.za)


Key Role Players

• The rating system targets the enterprise and not the individual. This raises some concerns. The enterprise and not the individual is graded. If a contractor fails to sustain workflow, the enterprise is downgraded If government spends their budget, it is the easiest way to create jobs in the construction sector.

• The role of the CETA is under-defined. They should not only facilitate training but also fulfill a research and information role.

• FET Colleges role must be redefined to provide qualified artisans. Construction methodology needs to be up-scaled. Proper artisan training centres are inevitable. Trade, training and development are essential.. Alternatively the contractor must have access to a database of qualified artisans (sub contractors).

• The NHBRC is currently under capacitated. The number of building inspectors needs to be drastically increased. Municipalities need to employ and train a sufficient number of building inspectors


Emerging Contractor Development

• Contractor development models in South Africa are combinations of EPWP and ECDP models, but are being applied across all Grades, with the objectives of contractor development and job creation, enterprise development and improving the performance of established contractors.

• The contractor development programme (CDP) aims to create an enabling environment within which selected existing contracting enterprises can develop into sustainable contracting enterprises. (Preference is applied in the accessing of work so that enterprises owned and controlled by blacks, women and the disabled persons are advantaged).

• The enabling environment comprises of two elements, namely– Steady access to work opportunities– Access to work opportunities is achieved through sourcing suppliers on incubator-designated

projects from the Incubator Supplier Register. This is also achieved to some extent by concentrating development efforts on a level of contracting enterprise that can operate in the sustainable R1, 5 million to R30 million market range identified. The number of players in the market place can be expected to be in line with the number of opportunities.

• The key elements of the support measures being:– Access to mentorship– Access to financial support– Access to information– Access to any other development support that would be relevant for contractor development


Expanded Public Works Programme

• The Contractor Development Programme is located within the context of the Expanded Public Works Programme (EPWP).

• The Economic Sector intervention of the EPWP is aimed at utilizing general government expenditure on goods and services to provide the work experience component of small enterprise learnership or incubation programmes for small and emerging enterprises.

• This intervention is implemented through infrastructure projects from the various provincial departments.

• Investment in human resources in the form of training and skills development and opportunities for the historically disadvantaged individual South Africans (HDISA) whilst encouraging active participation is promoted.

• For the effective transformation of the sector an enabling environment is needed. • The supply side interventions (availability of procurement opportunities) and

technical capabilities, management and financial support for the contracting entities within the development programme.


PROFILE OF THE SME(Free State)

Designation Black owned

% Women owned

% Youth owned

% Total grades

Ceiling value of tenders

1 4607 95 2093 43 1518 31 4851 200,000 2 252 94 126 47 54 20 269 600,000 3 42 89 18 38 8 17 47 2,000,000 4 59 77 28 36 12 16 77 4,000,000 5 65 78 19 23 12 14 83 6,500,000 6 46 61 17 23 8 11 75 13,000,000 7 10 42 5 21 3 12 24 40,000,000 8 3 33 2 22 9 130,000,000 9 5 No limit 5084 2083 1615 5435


WHY TARGETING SME’S?

• A relatively small proportion of medium size contractors in the Free State fall within the level 4-7 grading of the Construction Industry Development Board.

• A substantial number of permanent and temporary employment opportunities are created by medium contractors.

• The development of the medium size construction enterprise is inevitable for growth and development of the region.

• Skills development, employment and contractor development is guided mainly by the Department of Public Works and the Construction Industry Development Board.

• Contractor development programmes are implemented but not without stumbling blocks.

• Challenges, perceptions and inputs of contractors in a demarcated area provides for distilling ideas and processes.


PRELIMINARY FINDINGS

• Government expenditure in the Free State on housing compare to the amounts budgeted is alarming.

• Government as the biggest investor in infrastructure and the construction sector only managed to spend 15 % of the Free State budget for 2009/2010. The Free State withdrew 17 000 units because there was no money, but at the end of the year millions was transferred to another province.


RESPONSES


CONTRACT DOCUMENTS AND ADMINISTRATION

Main challenges identified by the respondent’s are:• Late payments• Guarantee and Retention• Exploitation• Variation order• Development and main contractor• Main contract• Relationship between main and sub contractor

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FINANCIAL CONSTRAINTS

Main challenges identified by the respondent’s are:

• Access to finance /funding• Cash flow, bridging finance• Loan and repayment structure• Escalation• Bookkeeping, administration, accounting

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PROCUREMENT AND SUPPLY CHAIN

Main challenges identified by the respondent’s are:• Uncompetitive procurement practices and

corruption• Pre tender knowledge• Tender awarding• Tenderneurship• Political interference in the tendering process• Sourcing of products and services• Operations and production• Defects – effects practical completion dates• Supplier agreement

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CHALLENGES WITH COMPLIANCE


• Occupational health and safety• Labour issues and quality work questioned• Building standards• Uncontrolled entry to construction

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CHALLENGES WITH GOOD GOVERNANCE


• Non Transparency and corruption• Reliability and professional conduct• Limited information and communication• Uncompetitive business environment• Enterprise sustainability

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CAPACITY CONSTRAINTS


• Capacity constraints• Inadequate training, mentoring and

coaching and • Limited business development support

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BUSINESS (C0NSTRUCTION)ENVIRONMENT

• The construction sector is a highly competitive industry • It is well regulated and the development framework well

defined but evidence suggest that the reach of these interventions is distorted

• Most medium size contractors have moved into a survival mode and have secondary businesses not related to the construction industry in order to be sustainable. This is leading to competitive deficiency rather than competitive advantages

• To improve the capacity, employment and SME development a thorough understanding of the challenges faced by medium construction enterprises and value chain opportunities should be clear


COMPETITIVE DEFICIENCY

Competitive deficiency identifies by the contractors include:• No clear strategic direction• Lack of management knowledge and skills, proven core

competencies• Inferior intellectual capital relative to leading rivals• Short on financial resources to grow the business and pursue

promising initiatives• Weak balance sheet burdened with too much debt competitive

deficiency• High overall unit cost relative to key competitors• Sub-par profitability because of lack of knowledge and insufficient

systems • Resources that are not well matched to address key success factors

in the construction industry, i.e. equipment and finances

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Competitive Deficiency• Weak and unproven product innovation capabilities• A product/service with casual attitudes or features inferior to those of

rivals• Too narrow product line relative to opposition• Weak reputation (of some) and Weaker dealer network than key rivals• Lack of adequate distribution capabilities• Behind on product quality, research and development and technological

know-how• In the wrong strategic group (some CIDB graded companies operate far

beyond capabilities)• Losing market share because low/poor performance, to minimum

standard• Plagued with internal operating problems obsolete facilities• Behind rivals in e-commerce capabilities• Too much underutilized human resources (EPWP workers) and • Low plant capacity

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COMPETITIVE ADVANTAGES

• Preferential procurement policies are favoring PDI SME’s

• Training, capacity building and other support are available-Government (including municipalities), CIDB

• Budgets for human settlement development and infrastructure is increasing progressively per year.

• The larger construction and civil construction firms in the Free State are targeted for turnkey projects and offer potential sub-contracting opportunities for smaller firms.

• The EPWP and incubator projects allows for learner and contractor support. Mentoring is available for a SME on an incubator project.

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Competitive Advantages• Local Municipalities have local economic development

strategies and support SME development through their IDP’s. • Municipalities favour broad-based black economic

empowerment. Municipalities mainly invest in infrastructure development.

• Their Integrated development Plans (IDPs) and Local economic (LED) strategies show initiatives and plans to promote employment-rich and pro-poor economic growth.

• The development of women and the youth receives attention. Several human settlement projects (including rental units) are planned.

• Major infrastructure projects including roads, storm water, and sanitation are planned annually.

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Competitive Advantages• Employment and decent work requires an

enabling environment for enterprises, • development of entrepreneurship, and• technology knowledge of the local market, • governance and important stakeholders are

essential. • Well developed and defined mechanisms,

processes and structure to address local needs must be applicable.

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Competitive Advantages• Municipalities could be involved in supporting the construction

sector through:– Market access and local competitive advantage– Active private sector institutions and linkages (co-

operations, forums )– Infrastructure provision and development– Access to integrated and open markets (buy local)– Access to effective and efficient support services and

resources– Local organizations and groups and associations

representing the construction sector– Active participation and ownership of the development

process by all stakeholders– Learning from success and failures

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VALUE OF OUTCOMES FOR DEVELOPMENT EFFORTS

• Understand the problems faced by SME’s within the construction sector

• Analyse strategic development, employment and enterprise development opportunities within the Key drivers of value:– systems efficiency, – product quality – product differentiation – Social and environmental standards– business environment

• Target sustainable development


CONCLUSIONDespite well formulated policies for the construction sector and development efforts

implemented by government to improve SME’s, small and medium construction enterprises are disadvantaged in an extremely competitive construction environment.

• SME’s reflect poor human resources management, low financial resources, poor business planning and poor investments.

• SME’s failed to perform within the set quality, time frames and budgets. • Contractor’s competency is questioned. • Competence-based performance needs more than skills and experience. • Knowledge, ability, attitude and aptitude fall short. • Contractors need individual development plans. • Capacity is nestled in the individual but should be enterprise-based. • A disparity between enterprise capacity and individual contractor competence exist. • The CIDB grading system targets the enterprise and not the contractor. • Productivity and decent work conditions are compromised. • Due to limited knowledge, contractors have to outsource critical enterprise

competency. • A decent work deficit exists.


Conclusion• Health and safety compliance on construction sites requires human resource

capacity. Accidents on site, liabilities and claims against contractor are the result of limited capacity. Health and safety queries result in construction sites that are closed and non-payment of insurance claims. The SME could face legal and criminal charges. Health and safety requirements put an additional administrative load and burden on the emerging contractor.

• SME’s struggle to get sufficient work. Disadvantaged groups are further disadvantaged (hungry and no energy - work for food). Decent work deficit results in non interest in the construction industry and delivery of no/or low quality work. Productivity and working conditions are not sufficiently aligned.

• Ethics and integrity in the construction sector is questioned. Corruption and non-transparency in the procurement processes are recorded. All construction role players don’t honor the code of conduct of the construction sector. Trust and reliability of bigger contractors that is awarded turnkey projects damage good relationships. Suspicion amongst contractors exists. Relationships and trust are jeopardized.


Conclusion• Most of the damages to the profitability of the contractor are already done in the

bidding phase (tender price, unit price, company structure, etc.). Their sustainability is also compromised.

• Contractors don’t have enough knowledge of the JBCC and GCC, professional contracts used for the construction sector. Construction contracting information sessions, workshops, training are needed.

• Contractors need development support whilst kept to pre 1994 terms and conditions. The perception exists that professional teams operate pre-1994.

• Contractors feel intimidated by the knowledge of the professionals and the condition clauses. The professional team exploits this aspect to the determent of the technical uninformed contractor. The professional team put huge pressure on the contractor to perform. Poor documentation and low level of details and specification is not transformation-orientated and contractors have to interpret drawings with limited insight. Wrong interpretations could cause fatal damage to the enterprise. Poor interpretation of tender specifications and requirements could lead to poor performance and poor quality work. Professional teams are often offensive towards the mentors. The impact of the South African excellence model for mentorship is hampered. Professional teams need to be re-orientated towards development projects.


Conclusion

• Mentorship /coaching/handholding programmes are developed but should be redefined and introduced in the bidding phases of a project.

• The lack of integrated and communication system of government fails the mentor initiative.

• EPWP projects require additional support and exit strategies. Currently the outcomes of EPWP are not achieved. Contractors are frustrated with EPWP learners. EPWP learners can’t contribute to production due to lack of knowledge and skills. Labour contracts are inefficient. Contractors have limited capacity to facilitate the EPWP programme.

• All development objectives could not be convoluted within a single programme.


Value Chain


Recommendations

Applied systems• Enterprise-based management systems, policies and procedures

development are needed• A revisit of pre 1994 professional systems and conducts to

reconstruction and transformation practices• Other governance value additions (policy, product, profit, people

and resource protection) should also be considered, not only profitability

• The CIDB contractor grading system is not scientifically monitored. The individual versus the enterprise grading needs to be revisited. Because a contractor fails to procure work, they are downgraded.The CIDB grading system needs to be revisited to address the real concerns in the construction sector.

• Continuous professional development and grading of level of competence is needed


Recommendations

Applied systems (cont)• A clear divide between emerging contractor development and

established contractor processes should be made. Maximum standard to be applied for development contractors – not the commercial minimum standard that earmark certain projects for contractor development

• The DPW is encouraged to use the JBCC or GCC standard contract documentation to simplify the conditions of contracts, and contractor development practitioners should provide training that will ensure contractors have the basic knowledge and understanding of these contract conditions. No compromise on project quality requirements should be acceptable

• A system of “labour-only” for lower CIDB graded contractors might be an option.


Recommendations

Mechanisms and process for Contractor Development Programmes• The cycle of the incubator programmes and other contractor development programmes

should be reviewed • Processes and capacity for learners in the expanded public works programme should be

supported by well defined systems • Policy change regarding the implementation of the contractor incubator and EPWP

projects (development projects) should be considered• Supporting organisations for emerging contractor development have become inevitable. • The ECDP should establish clear inclusion criteria and minimum entry level

requirements in line with the focus of the ECDP and adopt models for screening contractors to evaluate the suitability of contractors to the ECDP and to be able to identify contractors who are best able to succeed on the ECDP. The DPW should provide guidelines for screening models for ECDPs, appropriate to the various target grades

• The ECDP should adopt mechanisms and/or business processes to ensure that the entry level contractors who have succeeded and shown potential in the Programme are continuously supported after they have exited the Programme

• The DPW should provide guidelines for exit strategies, taking cognisance of the target contractor grade and maturity level at the exit point from the Programme

• Follow-up strategies and/or career pathing could be investigated.


Recommendations

Client and professional team capacity• Training, handholding, mentoring coaching of officials and

implementers could address deficiencies • Government as the dominant role-player must develop their own

capacity to plan, implement monitor and evaluate• A separate division for development versus commercial projects

could be effective.• Professional team re-orientated towards development projects • A unit standard based approach for design and manage

developmental construction projects (for professional consultants)

• The professional team and government should improve the quality of documentation


Recommendations

Financial support• The DPW should develop and/or adhere to guidelines for payment dispute

resolutions for use within the ECDP. ECDPs should comply with a 14-day payment cycle rule. Government treasury payment policy to pay contractor within 30 days needs to be punctually implemented. There is a breach of confidence in the construction sector. Payment policy must be implemented

• Funders, like the Department of Trade and Industry (DTI) offer grants for strengthening the capacity of contractors. The funding criteria however require latest financial statements, VAT clearance certificates and a 20% financial contribution. Most of the contactors have limited financial management skills and resources

• Development corporations like the Free State Development Corporation (FDC) offer bridging finance and loans. The question could be asked if the funding and loan criteria are conducive for supporting the construction sector. Loans are structured horizontal, whilst the expenditure in the construction sector follows an S-curve


Recommendations

• Most medium size contractors struggle with bridging finance and cash flow.

• Establish a construction gap finance fund or a construction guarantee fund (similar to the Housing guarantee fund), alternatively, a construction support fund for bridging finance is proposed. The retention guarantee only limits the risk of the client

• A construction development corporation to design and structure funding and loans relevant to the needs of the construction sector should be considered

• Financial institutions to revisit the loan structuring for the construction sector

• Financial institutions to understand the construction sector andfinancial curve of the industry through information sharing

• Retention fund to serve as risk mitigatorCIDB website: http://www.cidb.org.za Report. Status Quo of Contractor development. 2009


Recommendations

Procurement (demand side supply)• The Procurement policy must be implemented• Affect pre-project handholding. Implement support mechanisms earlier in pre-tender

phases• Beyond compulsory site meeting, additional tendering support mechanisms are

needed• Revisit tender evaluation and adjudication practices according to the procurement

policy• Re-implement a Roster system • Reconsider the establishment of unbiased tender adjudication committees• Fair procurement, payments and labour practice oversight organisations must be

mandated to protect the interest of all parties on site• Transparent and accountable tender evaluation and adjudication processes on

municipal as well as provincial level dedicated tender committees and a roster system for contractors Corruption and non transparency hinders fair competition and to retain expertise in the construction sector the system needs to be rectified.

• Standing “Tender evaluation and adjudication committees” could be established to publish tenders and results on a weekly basis.


Recommendations

Information and communication• The contractor must have access to a database of qualified artisans (sub

contractors)• Nominated sub contractor systems must be vigorously applied • Centralised construction information and communication resource centres

to share research, tender information, access to technologies and product information.

• Facilitated networking is a chain of interconnected libraries with peer guidance and expert mentoring.

• Construction Contracting information sessions, workshops, training• Tender information and support centres• Design, develop and establish a real-time information portal linked to

relevant departments and key stakeholders• Portal linked to the tender bulletin information on trends, research and

development for the construction sector


Recommendations

Specific skills development• Contractors need contract and project management skills and

competence • Training programmes covering skills development i.e. information

technology (IT), finances, business management, contract and project management and administration

• Specific training courses in financial management for contractors, tendering, costing and pricing

• There is a shortage of proper qualified artisans. Specialisation in trades offer opportunities for sub contractor development, i.e. shop fitting, carpentry, designer furniture, designer finishes, landscaping, painting, site cleaning and finishing off before handover, improved low tech paving manufacturing and laying, window frame manufacturing, welding, fencing, home maintenance and consumer education


Recommendations

Training and mentoring• The ECDP should consider formal training provided with the

contractor competence model of the CIDB Best Practice Contractor Recognition Scheme and implement systems to ensure the quality of training provided by training providers –possibly through a ‘Training and Mentorship Section’ within the ECDP or Public Works Department to continually monitor and evaluate the training and mentoring processes, using only mentors registered with the SACPCMP. Training could be in line with business development, such as entrepreneurial training, information and technology, and the facilitation of networking and business. Contractors identified need training in tendering, costing and pricing, as well as the technical aspects of construction.


Recommendations

Training and mentoring (cont)• The mentor system should form part and parcel of the

implementation. • The professional team should be re-orientated according to

transformation processes and real development needs • Mentorship, coaching, handholding programmes introduced in the

bidding phases of a project• Mentors’ roles communicated to all stakeholders and supported by

developmental capacity • Mentors’ availability in the pre-tender phases to enhance project

sustainability• The mentoring system needs to be expanded and formalised. A

diverse mentorship system offers supporting employment opportunities


Recommendations

Continuous development

• Compulsory continuous contractor developmentprogrammes

• Continuous development programmes forprofessionals

• Could be introduced for enterprise development• A merit system that link the enterprise with the

individual competence


THE WAY FORWARD

capacity building programmes … proceedings/powerpoints/greyling_erica.pdfmany programmes for...

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