Road Pavements Forum

1. Labour intensity Strategy and Framework for the Implementation of Infrastructure Projects in Gauteng Road Pavements Forum Presented by: Jack van der Merwe Pr. Eng Date: 25.11.2003

2. Our Vision “Labour Intensive Construction method will be a way of life for all infrastructure projects in Gauteng.” “Of course not all projects will yield the same labour intensity, so targets will be set by project type by category with some projects which lend themselves to labour intensive methods going as high as 50% and some as low as 20% labour intensity.” Gauteng Premier - Jun 2003

3. What are the key success factors? Political will - you have that from the Gauteng Executive Council, the Growth and Development Summit commitment and the ANC Paradigm shift by all stakeholders - this meeting today is part of the process to get this shift happen and more will be done Long term capacity building plan - the blocks are in place, we need to all set and work towards these goals Long term incremental approach with departments’ resource allocated accordingly - you have the commitment from the Gauteng government that we shall re-orientate our budgets towards infrastructure development using labour intensive construction methods. Gauteng Premier - Jun 2003

4. Conclusion “In conclusion, ladies and gentlemen, I want to reiterate that the success of this programme is very dependent upon effective partnerships amongst all stakeholders - government departments, local authorities, trade unions, professional bodies, learning institutions, construction industry players, civil servants and communities. Without your active participation and belief that this can be done, it will be difficult for us to achieve our objectives. In addition to commitment, we are going to need all the inputs and participation we can get from all stakeholders to develop the capacity we need to make this programme a success. Labour Based Project management skills, supervisory as well as labour based construction management skills need to be developed at an accelerated pace for us to reach the kind of levels we are targeting.” Gauteng Premier - Jun 2003

5. Presentation outline • Aim of the Strategy and Framework • Approach followed • Historical and current perspective • Current status • Potential • Implementation implications • Practical guidelines

6. Aim of the strategy and framework • To report on the implications of a total labour approach • To indicate the potential for improved labour content • To illustrate the impact of total labour concept • To achieve balanced solution for private sector participation • To recommend where private sector can contribute to job • creation

7. Philosophies and actions adopted Approach followed • Poverty alleviation, job creation and Public Works projects. • A move from contemporary technology to “total labour” concept • “Total labour” is the optimal mix between people and equipment • Assessment of potential socio-economic impacts • Analysis of labour intensity potential and intervention options

8. Historical and current perspective “total labour” • Great Wall of China • Egyptian Pyramids • Roman roads • Labour content = 70-90% Historical perspective • Optimal balance – choice in the planning stage • Devise implementation tools Current perspective To maximize job opportunities, the focus should be on appropriate mix of people and equipment.

9. Provincial Capital Expenditure Budget

10. Status Quo Analysis of the labour intensity in the current CapEx Budget • Levels of labour intensity Low level (Conventional) = 6% Second level (LABMAX) = 36% Highest level (Labour Intensive) = 50% • DoH, DPLG are mainly conventional with high potential • Labour content of certain projects has great potential • Labour Intensive (LI) projects reached 37% labour content

11. Factors with Financial Implications • Time to deliver • Scope of work • Continuity of work • Quality • Appropriate technology • Terrain and environment • Training • Risk assessment • Research and development Compared with conventional construction techniques, the following factors have implications on labour-based projects

12. Contractor risks For contractors, labour-based construction is fraught with much greater risks than capital-intensive construction • Cost of training • Effectiveness of training • Greater supervision is required • Labour strikes • HIV/Aids • Inefficient labourers • Difficulty in dismissing labour

13. Ex Ic/Tc = E x [Lmax + Mv + Emin + OCv] / Tc Balancing of investments Where: E = Escalation factor that keeps up with inflation rate and maintains the investment level in sustainable manner Ic = Investment cost (capital) Tc = Time constant (duration of any one financial year) Lmax = Labour cost to reach maximum rational levels Mv = Material costs; variable; this covers availability and sourcing of material from the closest source to sites Emin = Equipment costs to reach minimum rational levels OCv = Other costs, i.e. professional fees, land, VAT, etc. P and G’s are applicable to land, material and equipment.

14. Alternative technologies New alternative construction technologies can lead to improved labour content of projects without jeopardising the cost and quality • i.e. • Excavation of all service trenches with backfilling by hand • Leveling of sites by hand • Mixing mass concrete and mortar by hand • Excavation of all foundations by hand • Manufacturing of trusses and paving bricks on site • Construction of road pavement by hand • Use hand methods in programmable maintenance • Building surface drainage systems by hand

15. Potential analysis – Labour content Current % Strategic objective % Departments Roads 14-26 26-40 Education 29-36 41-44 Health 24-34 37-44 Social Services 33-34 41-44 DACEL 34-43 41-55 Public Works 29-36 41-44 Sports and Recreation 29-36 41-55 Development Planning 8-17 25-55 Housing 9-36 25-55 Local Government 9-36 25-55 TOTAL 25 42

16. J = Number of jobs N = Total project cost, including, 14% VAT, professional fees, profit and escalation. D = Professional fees (e.g. 12%) A = Total value of land, administration and legal cost M = Total value of materials P = Total value of plant and machinery (P will tend towards 0 with an increase in labour content) L = Labour cost per unit per day. L1 = Daily wage (e.g. R55.00) L2 = Supervision costs, administration pertaining to labour, UIF contribution, etc. (e.g. between 12% and 40 % of L1 depending on the labour technology, i.e. LABMAX, LI applied). L3 = Training and skills development cost (e.g. 8% of L1) L = L1 + L2 + L3 Norms and standards All Departments and Implementing agents will follow the same norms and standards in measuring and reporting on labour intensity J = [{(N*(1-d/100) – A – M – P)/1.14}/L]*110

17. Implementation implications • Legal framework Alignment of Procurement Policy : Technical / Tender documents and criteria of award • Measuring contractors performance • Capacity to implement • Dormant capacity • Capacity exist in • Professional fraternity • Building industry contractors • National departments • Tertiary education institutions • Delivery mechanisms • Paradigm shift : contract options • Opportunities for BEE and SMME’s

18. Impacts • Social impacts • Employment, income and better nutrition • Poverty alleviation • Reduced crime • Increased self-esteem • Economic impacts • Employment growth of 14.2% per annum • 49 200 new jobs in 3 years • Increase in local economic multiplier effects • Transport and energy savings • Capacity building, economic empowerment • Greater cost recovery for infrastructure services • Total project costs • Decrease in cost effectiveness • Increase in labour costs and decrease in capital cost

19. Considerations for Implementation • Long-term programme • Secure long-term support • All departments • Involve private sector • Involve organised labour • Redesign of projects • Re-orientate budget • Continuous capacity building • Skills development programme • Communication strategy

20. Practical guidelines (1) Committee system to oversee monitoring • Political committee - Chaired by MEC of PTRW, Health, Education, DPLG, Housing and Agriculture - carries political mandate to oversee programme and act as communications channel • Stakeholder committee - Chaired by DDG (PW and management services) – to channel information and communication • Labour intensity monitoring committee - Chaired by Chief Director Professional Services – to monitor programme results and impact of strategy

21. Practical guidelines (2) Long term programme goals, are • Reorientation of public expenditure on infrastructure at provincial level • Obtaining cost effective high standard buildings with maximum appropriate mix of people and machines • Implementing provincial infrastructure projects based on defined output measures indicators of • Time • Cost • Quality • Number of jobs • Labour content

22. Practical guidelines (3) Critical areas of intervention • Bulk excavations • Excavations in service trenches • Carpentry • Short production run joinery • Hand mixing of mass concrete and mortar • Road pavement maintenance • Road ancillary works

23. Practical guidelines (4) Project Planning and Implementation • Planning the project • Design the project concept • Project Business Plan • Technical documentation • Contract documentation • Tendering and procurement • Project and programme monitoring • Capacity building and support

24. Thank you