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CONSTRUCTION SECTOR CHARTER COUNCIL BASELINE STUDY: REPORT ON THE STATE OF EMPOWERMENT IN THE CONSTRUCTION SECTOR FOR THE PERIOD 2009 TO 2013 APRIL 2014 Presented by: FF Fongoqa PrEng Chairperson - CSCC. STRUCTURE OF PRESENTATION :. Construction Sector Charter Council

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  1. CONSTRUCTION SECTOR CHARTER COUNCILBASELINE STUDY:REPORT ON THE STATE OF EMPOWERMENT IN THE CONSTRUCTION SECTOR FOR THE PERIOD 2009 TO 2013 APRIL 2014 Presented by: FF Fongoqa PrEng Chairperson - CSCC

  2. STRUCTURE OF PRESENTATION: • Construction Sector Charter Council • Construction Sector Code • Report on the Baseline Study • Conclusion and Recommendations

  3. CONSTRUCTION SECTOR CHARTER COUNCIL • Legal Basis for existence as a Council • Composition of the Council • Mandate and Authority of the CSCC

  4. BASIS FOR EXISTENCE OF CSCC In June 2009, the Minister of Trade and Industry gazetted the Construction Sector Code as provided for in Section 9 (1) of the Broad Based Black Economic Empowerment Act 53 of 2003. The code provides for the establishment of the Construction Sector Charter Council, including its composition, mandate and authority.

  5. COMPOSITION OF CSCC • Government (led by DPW) • Organised business comprising: - Building Contractors - Civil Contractors • Built Environment Professionals • OrganisedLabour (unions)

  6. MANDATE OF THE CSCC OVERSEE, EVALUATE, MONITOR AND REVIEW the IMPLEMENTATION of the Construction Sector Codes. • Sharing information with members of the Construction Industry, appropriate Ministries and SOEs, Verification Agencies, CIDB, etc. • Development and distribution of best practice notes, which provide guidance on construction specific transformation issues • Compile reports on status and track progress of transformation within the construction Industry • Report to appropriate Ministries, BBBEE Advisory Council and provide advice as appropriate.

  7. THE CONSTRUCTION SECTOR CODE (CSC) • Rationale • Objectives • Implications

  8. RATIONALE FOR THE CSC “The construction sector believes that positive and pro-active responses through the implementation of Construction Code of Good Practice would address inequalities in the sector, unlock the sector’s potential and enhance its growth”. The founding organisations of the CSC concluded that the peculiarities of the construction industry warrant a specific sector code, and differentiation between BEPs and Contractors is a given.

  9. OBJECTIVES OF THE CSC • SUBSTANTIAL change in racial and gender composition of ownership, control and management • PROMOTE effective advancement of employment equity • QUANTITATIVE measurement tools for monitoring of BBBEE progress • ACCELERATING advancement of skills development for black people, black women and the disabled • INCREASE procurement opportunities for Black Owned companies • ENHANCE entrepreneurial development and PROMOTE sustainable growth for SMMEs

  10. IMPLICATIONS OF THE CSC • ALL companies whose main business activity is classified as being in the construction sector MUST be measured based on the CSC, incl. suppliers and those deriving 51% of income from related activities • It is a contravention of the BBBEE Act for any entity to have multiple scorecards for the same period • It is mandatory for Public and Private Sector Clients & Industry Regulators (e.g. CIDB/NHBRC etc) to require BBBEE Certificates based on CSC for: • Licensing & concessions • Procurement based on 80/20 or 90/10 • Determining qualification criteria for PPPs • Disposal & Sale of relevant state assets

  11. REPORT ON THE BASELINE STUDY • Objectives • Methodology • Comments on Data • Industry State of Transformation • Conclusion and Recommendations

  12. STUDY OBJECTIVES To establish the state of empowerment and progress of transformation since the CSC was gazetted in JUNE 2009 up to and including 2013 • Reliabledata and informationto determine rate of progress in the transformation objectives of the industry • Establish FACTUAL and SUBSTANTIVE reporting to DPW, DTI, the BBBEE Advisory Council & industry • Engagement with the regulators on areas of alignment with the new/revised BBBEE generic codes based on facts • To identify barriers to transformation & determine strategies to resolve these

  13. METHODOLOGY • Obtained verified scorecards for entities operating within the construction sector, including Contractors and BEPs • Appointed Cuma IT and Blacklite to design an IT system, analyse the captured data and produce the report • Employed data capturers on short term contracts to capture data on a database • Commissioned an independent verifier (SP3 Ratings) to comment on the integrity of the information

  14. COMMENTS ON DATA • 1770 companies (14% sample) participated in the study • 3530 BBBEE certificates received for the study period out of a possible 7080 • 27 BBBEE certificates excluded in study due to non-compliance by some Vas and fraudulent certs • Further non-compliance by some VAs: BEPs verified as Contractors • 1068 (32%) EMEs; 1251 (39%) QSEs and 959 (29%) Large • 90 % of scorecards received from Contractors and 10% BEPs

  15. INDUSTRY TRANSFORMATION • Industry Composition • Overview of Transformation (ALL) • Transformation Trends: BEPs (Large) • Transformation: Trends Contractors (Large)

  16. INDUSTRY COMPOSITION • BEPs: ±2000 companies employing Architects, Engineers, Project Managers and Quantity Surveyors, of which over 80% are QSE and EMEs • Contractors: ± 10,500 companies, of which 9551 are registered with the CIDB as follows: 175 Large Contractors participated in study for 2013 (60% sample)

  17. Overview: Industry Transformation:All Sectors Upward Trend: 64% in 2009 to 85% in 2013 Level 4 and above

  18. Overview: Industry Transformation:EMEs High Contributor to overall Industry Transformation above Level 4: 55% contribution in 2009 and 45% in 2013

  19. Overview: Industry Transformation:Large Enterprises • Upward Trend: 38% in 2009 to 65% in 2013 Level 4 and above (60% in 2012)

  20. Transformation TRENDS: Large bepS

  21. Transformation TRENDS: Large CONTRACTORS

  22. OTHER INDICATORS OF INDUSTRY TRANSFORMATION • QSEs priorities and highest levels of achievement are EE (94%), ED (92%) and SED (90%) • General increase in black and black women ownership in the industry • BO (>50%): From 44% to 59% • BWO (>30%): From 10% to 24% • Largely EMEs and QSEs contribute to this

  23. CONCLUSIONS AND RECOMMENDATIONS (PAGE 1 OF 4) • Low industry participation in voluntary surveys • DTI Regulations to include for mandatory submission of all scorecards by VAs to CCs • CIDB Regulations to include mandatory submission of scorecards by registered companies • Lack of critical knowledge of industry by some VAs leads to misrepresentation and fronting • SANAS and IRBA to raise the bar in training and compliance monitoring of members and take firm action as appropriate

  24. CONCLUSIONS AND RECOMMENDATIONS (PAGE 2 OF 4) • High levels of BBBEE contribution by industry with significant improvement over the years • Industry to be commended on such achievements • Those not contributing to be encouraged to do so through peer pressure and procurement reforms • Industry transformation efforts underlain by high level of achievement in SED, Procurement and ED • These elements can be used effectively to grow the industry through investments in industry priorities. CSCC to lead agenda and set up appropriate guidelines in line with new codes of good practice

  25. CONCLUSIONS AND RECOMMENDATIONS (PAGE 3 OF 4) • Levels of compliance for skills development lower than expected for industry (knowledge economy!) • Huge impact on achieving sustainable industry growth and facilitating high levels of compliance in internal factors such as ownership, management control and employment equity • CSCC, in partnership with CIDB, to investigate causes of this • CSCC and CIDB to facilitate programmes that will lead to better compliance levels

  26. CONCLUSIONS AND RECOMMENDATIONS (PAGE 4 OF 4) • High % of BO and BWO enterprises amongst the EMEs: Scarcity of these amongst Large Enterprises • Good feeder system for meaningful ED and Procurement within industry. Deliberate programmes to be developed • DTI, CSCC and CIDB to develop strategies for increasing No. of Large BO and BWO enterprises: Strategic growth choices for the country: Transforming, Transformed, BO and BWO!!!

  27. SUMMARY • Transformation of the economy as one of SA’s key sustainable growth pillars • The BBBEE legislation, with sector specific codes, and industry programmes form the foundation of this pillar • The work done by industry on a daily basis in compliance with the CSC forms the building blocks • The baseline study tells us that we are generally on the right track, we can overcome stumbling blocks in achieving our goals by putting in place appropriate strategies

  28. THANK YOU!!!

  29. WHERE TO FIND US • The CSCC is based at : • 164 Katherine Drive • Pinmill Farm Office Park • Ground Floor – G Block • TEL : (011) 262 4644 • www.cscc.org.za

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