Empowering South Africa's Construction Industry for Economic Growth

1. cidb Portfolio Committee (Public Works) 13 March 2006 Gerard Naidoo Infrastructure for South Africa’s economic and social growth Construction Industry Development Board

2. Our aim An enabling regulatory and development framework that builds • A total industry delivery capability to achieve South Africa’s economic and social growth • Empowerment of those historically marginalised • Improved industry standards of performance (quality, employment, skills, safety, health) sustainable industry development

3. SA Backlogs - progress Construction 2004 State of the Nation Address by President Thabo Mbeki 2005 State of the Nation Address by President Thabo Mbeki + Dep. Pres. = ASGISA + Minister Trevor Manuels budget speech

4. SOUTH AFRICA GFCF as a % of GDP 30.0% 28.0% GFCF % GDP 26.0% 24.0% 22.0% 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 1962 2001 1947 1950 1953 1956 1959 2004 2007 2010 2013 THE MARKET GROWTH TREND SOUTH AFRICAN CONSTRUCTION ECONOMY The need to more than double our output in the next 10 years !

5. CHALLENGES AND OPPORTUNITY ! The construction economy in South Africa is set for a decade and more of sustained growth driven by growing investment in Gross Fixed Capital Formation (GFCF), low inflation and low interest rates. • Industry Growth and capacity to deliver • Empowerment and enterprise sustainability • Challenges for contractor development • SMME Development • Procurement and delivery • Construction Charter and Scorecard implementation • Role of the cidb and strategic partners There is an urgent need to develop quality contracting capacity and skills and to elevate enterprise development in the context of broad based empowerment and meeting the challenges of ASGISA’s implementation. Construction Industry Development Board

6. Our Strategic Challenge Enabling regulatory & development environment Double output – 10 years Empowerment Growth Sustainable enterprises and emergence into mainstream economy convergence in focus Capability Delivery Skills & systems efficiency Consistent procurement & delivery environment Performance to drive improved value to clients and society! Quality, safety, health and environment, employment

7. Converging focus towards Contractor Development Other development programmes + EPWP Skills CIDB Enterprise And Contractor Development Framework Alternative Technologies and Service Delivery Models Material Suppliers Manufacturing Construction Industry Development Board

8. SOME KEY SUCCESS FACTORS TO ACHIEVE ENTERPRISE DEVELOPMENT Finances Continuity of profitable work Effective practices (roles and procurement) of: - Clients - Built Environment Professionals Skilled Contractors and Labour Materials (Economics) Construction Industry Development Board

9. Key Challenges • Inability of small contractors to engage skills and inability by industry to project the skills demand • Inability to monitor empowerment • Lack of a comprehensive approach to contractor development • Inability to target procurement and development strategies at different contractor categories.

10. Key Challenges(continued) • Continuous inflow of new entrants undermining sustainability of contractors • A misconception that construction and enterprise development equate to job creation • Closing the first and second economy gap • Inconsistent procurement and delivery practices by clients and that impede sustainable contractor development • The failure of current procurement practices

11. Our Strategic Challenge The ability of the construction industry to deliver will affect job creation in all sectors and feed directly into the goals of ASGISA Empowerment Growth “A key development constraint lies in the dispersed nature of the industry and its clients – cidb has developed a range of instruments & programmes that will drive convergence in development focus” Capability Delivery Performance

12. Objectives • A growing contracting capacity to deliver on SA infrastructure • Improved performance of contractors • Sustainable empowerment and development Streamline Client Procurement CIDB Registers (CRS) Finance Client Development Programmes Skills dev Delivery Mgt National Construction Week Charter Process Affirmative Procurement Contractor development as key to the cidb Mandate ENABLERS South Africa’s construction output will need to double in less than 10 years !!! development through partnership Construction Industry Development Board

13. DPW (+ EPWP) & other Public Sector Clients CETA Financial Institutions CIDB Participating Registered g Contractors Development Agencies/Service Providers DTI Materials Suppliers Other Stakeholders Established Industry & Private Sector Possible stakeholder linkages for sustainable impact Construction Industry Development Board

14. Proposed Construction Sector Interventions(Short-Medium Term) Expand NDPW incubator programme in collaboration with provincial public works, ensuring that all contractors are registered Promote next round of EPWP learnerships (grades 1 and 2) and ensure that all contractors are registered Establish key lessons from existing development programs (eg. ECDP-CIP, Vukuzakhe, etc.) Identify suitable willing and able clients and enter into partnership agreements for implementation Construction Industry Development Board

15. JOB CREATION Labour based best practice guidelines (resource to stakeholders in job creation goals of Expanded Public Works Programme) Effective and efficient delivery & procurement Toolkit – infrastructure delivery management system for the public sector (supporting tool) - a basis for IDIP (capacity building) - Manual for road construction (to all contractors) - Contractor Development (by targeting through registers) - Procurement reform and sustainable: Standard for uniformity in construction procurement

16. ASGISA ACCELERATED GROWTH GEARING FOR DELIVERY JOB CREATION EMPLOYMENT SKILLS Accelerated and Shared Growth Strategy

17. CIDB ROLE IN ASGISA IMPLEMENTATION • Public Sector client capacity (Under-expenditure) CIDB Role: • Toolkit “Delivery Management System” and IDIP • “Centres of Excellence” and Outreach • Capacity building to promote best practice (Roll-out Progressing) • Industry skills shortage CIDB Role: • Study of skills shortage in the industry • Development of a industry skills development plan (JIPSA + ESDA) • Promote framework for contractor development • Maximise the potential of the EPWP and other initiatives to create jobs CIDB Role: • Promote the labour based technologies • Infrastructure Delivery Management System • Promote best practice in labour intensive method Accelerated and Shared Growth Strategy

18. PROPOSED ASGISA INTERVENTIONS 1) Public sector procurement reform & delivery Management2) Maintenance of existing and proposed Infrastructure (National Business Plan/ Framework + Labour intensive)3) Skills development = Skills Audit based on large projects = Projections on capacity and requirements + Dept. of Education tertiary institutes + Construction Week + CETA/ DTI / DPE + artisan training= DPW (JIPSA + Employment Skills Development Agency - ESDA )4) Contractor development = cidb registers = empowerment and SME growth, EPWP learnerships and ECDP’s, DTI INDUSTRIAL STRATEGY - CONSTRUCTION SECTOR +_DTI-SEDA’s + ICT, cidb Industry performance.5) Materials supply and manufacturing: Local/ abroad - Material manufacturing and pricing, 6) Research and academic excellence Accelerated and Shared Growth Strategy

19. cidb • All about a systems approach to industry development • To achieve double our output over next 10 years we cannot function “business as usual’’ = Alternative delivery methods and Innovation needed by all ! Systematic approach to progressive improvement! IMPORTANCE OF SYSTEMS?

20. IMPORTANCE OF SYSTEMS?

21. Construction Registers Service and their role in meeting the challenges • National Register of Contractors • To drive improving performance of contractors • National Register of Projects (+ I-Tender) • Promote client practices that shape a transforming, healthy and sustainable industry • Roll-out • Through Standard for Procurement Uniformity in Construction • Future: Register of Professional Service Providers + Material suppliers • Registers are the bridge between the 1st and 2nd economy • Registers are the grounding for long term sustainable employment • Our contractors are on the EPWP learnership programme and being monitored • Incubator Dev Prog. is being provincially rolled out

22. Class of Works by grading

23. - Register of ProjectsLinking demand and supply • Client tender adverts – automatically alerts tenderers (public sector clients) • Logging award of tender (or cancellation) – automatically updates contractor’s record (public and private sector clients eg. ICCF) • Information on projects nationally Fully automatic website operation – creates transparency

24. Breakdown by Class of Works

25. Key conclusions from registers • Registers – living tool, continuous learning – significant adjustments made • Registration within 21 days (14) • + 8500 contractors registered • Bulk of work done by black contractors (significant youth and women) • Contractors get continuous work – able to consolidate and grow • Can identify capacity gaps & focus development programmes for growth, capacity & performance = targeting development Role of clients is key to delivery & development!

26. IMPLICATIONS - Need to double output over next 10 years- Coming out of history of declining investment- Need for infra-structure investment focus with maintenance- Streamlined procurement processes required (RoC, RoP, IDIP,etc ) - Public Sector reform (IDIP + toolkit and guidelines)- Skills study and strategies (Promote & support workforce skills dev)- Maintenance strategy- Outreach centres based on partnership- cidb registers targeted Enterprise Development cidb CONTINUED WAY FORWARD

27. Strategic Leadershiptowards sustainable job creation • A total delivery capability • A proudly South African construction industry • An industry that delivers to global standards Thank You INFRASTRUCTURE DELIVERY FOR SOUTH AFRICA’S ECONOMIC AND SOCIAL GROWTH