Abe Thela 13 May 2014

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1 Abe Thela 13 May 2014

2 2013 theme Sustainability is Everyne s Business Sustainability Indicatrs: educatin, ecnmic and plitical certainty, jb creatin, eradicatin f crruptin, and respnsible develpment CESA Sustainability Guideline Dcument and Reprting Prcess Checklist CESA Cde f Cnduct Quality Management System (QMS) Business Integrity Management System (BIMS)

3 Sustaining Cnsulting Engineering is Key t Grwing the Ecnmy Creatin f an envirnment fr implementatin f NDP and practice f cnsulting engineering

4 2014 Presidential Theme Cntent: SA Sci Ecnmic Cntext Natinal Develpment Plan Rle f Cnsulting Engineering in the NDP What shuld Gvernment be ding differently?

5 SA is a Demcratic Develpmental State Previus Initiatives: RDP, ASGISA, GEAR, NGP, etc. Achievements: Ecnmic grwth (withut creating jbs) Grwth in infrastructure investment: Access t services Mega infrastructure prjects Grwth f the CE sectr: Emplyment 12,600 24,360 Turnver R4.6 billin 24.5 billin

6 Overarching triple challenges unemplyment ver 25% pverty 48% belw pverty line inequality Richest 20% earning 70% f natinal incme Prest 20% earning 2,3% f natinal incme Lwer ecnmic grwth

7 Inadequate infrastructure allcatins

8 Business Cnfidence Belw 50 level

9 Capacity Utilisatin 91%

10 Plicy instrument t Develp SA Ecnmy Decrease unemplyment frm 25% t 6% Eliminate inequity Triple ecnmy by 2030 Infrastructure Develpment Key t sci ecnmic develpment Scial Infrastructure Ecnmic Infrastructure Natinal Infrastructure Plan (NIP) 18 Strategic Integrated Prjects (SIPs) Supprted by: Presidential Infrastructure Cmmissin (PICC) Infrastructure Bill Cmmitted gvernment spending

11 Gvernment Budgeted Infrastructure spending R847 billin in next 3 years Expected grwth f 4% per year < cnstructin cst Existing and new prjects Implementing agents: SOE s and gvernment departments < NDP expenditure target: R1.1 trillin

12 Infrastructure Systems Sci-ecnmic System Technlgical System Natural System

13 Needs Science Technlgy Theries Engineering Tls Needs Resurces and Needs Infrastructure and Benefits Sciety, Ecnmy and Nature

14 Needs Science Theries Resurces and Needs Infrastructure and Benefits Sciety, Ecnmy and Nature Tls Technlgy Needs

15 Cnsulting Engineers: Prvide independent advice t clients Technical advise in the prcurement f cntractrs Design and supervisin f cnstructin wrk Facilities management services Services fr the safe decmmissining f ld infrastructure Transfer f skills and knwledge t clients The rle f Trusted Advisr Are we?

16 Cnsulting Engineers Cntributing t the NDP bjectives: Generates emplyment pprtunities fr millins f unskilled, semi-skilled and skilled wrkers Imprves the quality f life f citizens - impacts psitively n inequity Cntributes t ecnmic grwth: Stimulates the develpment f ther ecnmic sectrs Attracts freign investment

17 Is this rle adequately recgnised by clients wh emply cnsulting engineering services? N Persistent Challenges: Regulatry Institutinal

18 Prcurement practices Access t wrk pprtunities by small and emerging CE firms Internatinal cmpetitin Cnslidated / jint BBBEE screcard requirement Scpe versus fixed term appintments

19 Prcurement Practices Current Prcurement Price and BBBEE Functinality and Quality nly minimum prequalificatin threshld Is price the apprpriate basis fr cmpeting fr cnsulting engineering services? Reduces cnsulting engineering t a cmmdity which is demand driven Cmprmises the ability f the prfessin t: innvate, train staff and attract yung engineers t the prfessin.

20 Relegates relatinship frm Trusted Advisr status t cntracting Assciated prblems cmmn in cntracting: Scpe creep, Variatin rders, etc. Reduced quality f service Results in client dissatisfactins

21 Extract frm recent CESA interactin with the City f Tshwane: Fees n cmpletin f services have als been deviating frm riginal tendered pricing by multiples f up t 2 r 3 which is unacceptably higher than the best practice limit f 20% variance frm budget.

22 What shuld be the basis fr Prcuring Cnsulting Engineering Services? Cnstitutinal Imperative equitable, transparent, fair, cmpetitive and cst effective Aim: t prcure n best pssible terms Optimise the ttal prject life cycle csts Cnsulting engineering: dictates hw infrastructure is cnstructed and maintained impacts n cnstructin and maintenance csts.

23 Internatinal Best Practice Qualificatins Based Selectin (QBS) Quality and Cmpetence Prject scpe develped jintly Services required t develp scpe mutually agreed Negtiate equitable fee Advantage: Reinfrces Trusted Advisr status f cnsulting engineer Deplyment f adequate resurces Innvate and add value Savings fr taxpayer and cmmunity

24 Interim: Reintrduce quality as part f the ttal prcurement pints calculatin alngside price and BBBEE cidb Methd 4 Separatin f prcurement f BEPs frm the prcurement f general gds and services Cnduct a cmprehensive review f the existing prcurement system: Impact n infrastructure prvisin Sustainability f the cnsulting engineering sectr Develp QBS prcurement system incrprating B- BBEE requirements

25 Gvernment engagements in prgress: Treasury Individual rle players Infrastructure Task Team Cmbined business and gvernment

26 Access t wrk pprtunities by emerging and small firms Outcry ver lack f access t large prjects Significant prtin f membership f CESA 80% Vehicle fr empwerment in the sectr Lack f resurces, expertise and experience Prpsal: Targeted prcurement prcedures fr participatin in large prjects Set gals: fair, equitable and cst effective Prcess: streamlined and mnitred

27 Internatinal cmpetitin Prpsal: T have built envirnment prfessinal services designated as lcal Advantages: Preferencing f lcal cmpanies ver internatinal cmpanies withut a presence in Suth Africa Cntributes t the grwth & develpment f the sectr Cntributes t lcal emplyment Prcess: Applicatin being rewrked fr submissin t Department f Trade and Industry

28 Requirement fr a cnslidated/jint BBBEE screcard fr unincrprated Jint Ventures / cnsrtium / trusts: Discurage frmatin f JVs JVs crucial fr skills transfer Add a cst burden t the sectr

29 Prpsed frmula / calculatr fr cnslidated JV B- BBEE screcard: Where: JV B-BBEE level is the jint venture cnslidated B-BBEE screcard M pints (a, b, c, etc.) is the B-BBEE pints f each member M interest (a, b, c, etc.) is the percentage (%) interest f the members in the jint venture Calculated at bid evaluatin stage

30 Scpe versus fixed term appintments fr cnsulting engineering services Municipal Finance Management Act: Fixed 3 year term appintments Increase csts Delays infrastructure implementatin Prpsal: Cnsulting Engineers be appinted based n scpe f wrk their services are required fr; and The Municipal Finance Management Act is revised accrdingly.

31 Lack f Capacity Crruptin Erratic Infrastructure Investment Educatin

32 Lack f Capacity Inability t: create cnsistent prject pipeline Adequately define prject scpe apprpriately prcure Manage & mnitr cntracts Persistent infrastructure budget underspending What is needed is plitical will: Emply apprpriately qualified peple Imprve wrking envirnment Interim: Secndment & PMO Use retired engineers

33 Crruptin Still rampant 2012/13 financial year: R2bn wasteful expenditure R26,4bn irregular spending R2,3bn unauthrised spending Hinders develpment, depletes f public purse, distrts markets and hinders investment Welcme - Public Administratin Management Bill CESA cmmitted t fight crruptin thrugh litigatin fund and partnerships

34

35 Cyclical Nature f Infrastructure Investment Creates uncertainty: Skills develpment Resurces planning & develpment Business investment Cnsulting Engineering Sectr s Plea: Uninterrupted and grwing infrastructure spending fr the NDP perid

36 Educatin Schls infrastructure prgramme. Must be cmplemented by imprved quality f classrm teaching and verall schl management. Lw success rate at universities Public educatin crisis: pr teacher supply and prvisining nrms pr quality f teaching and its impact n learning.

37 Educatin (Cnt.) Current initiatives: Implemented - cmpulsry grade R learning (lng term) Cmpetency tests fr matric markers. Assessment teachers perfrmance in the classrm. Perfrmance related pay. Teaching career f chice pay salaries t attract tp achievers

38 NDP will never materialise withut the expertise f the Cnsulting Engineering sectr this industry needs t be supprted and develped by: Implementing NDP by increasing infrastructure spend t 10% f GDP t 2030 Creating a cnducing envirnment fr private sectr infrastructure investment Imprving prcurement and regulatry envirnment Creating technical capacity and capability within Gvernment t prcure services Imprving quality f educatin in particular maths and science

39 Abe Thela 13 May 2014

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