Public Works & Infrastructure, Agrément SA, IDT, CIDB & Council for the Built Environment 2019/20 Annual Performance Plan; with the Minister

Meeting report

Independent Development Trust: Annual Performance Plan 2019/2020

Mr Coceko Pakade, Chief Executive Officer (CEO): Independent Development Trust (IDT), said the IDT acted as a state implementing agency that focused on social infrastructure programmes and project management. It worked with all spheres of government through client-specific service legal agreements (SLAs). It operated financially on a cost recovery basis, meaning there was no budgetary allocation from Parliament. The entity currently generated its revenue mainly from management fees derived from managing the implementation of social infrastructure projects on behalf of the government. This had been done in recent years amidst a number of challenges such as budget pressures, capacity constraints and operational challenges. He then went on to briefly explain the Department’s vision, mission and approach:

He said the IDT was governed by a deed of trust which provided for a 12-member board of trustees who served a four-year renewable term. Two of the 12 trustees were appointed by the Minister of Public Works, and the remaining ten through a public selection process. The board then appointed the CEO for a five-year term. The company secretary, Mr V Skosana, reported to the CEO.

During the 2017/2018 financial year, the board had experienced some level of instability, which had prompted the Minister to replace them with a five-member interim board of trustees in April 2018. This had been followed by the audit Committee, which was made up of three independent, external experts and one interim board member.

Describing the IDT’s service delivery model, he said delivery of social infrastructure units on time, within budget and at the right level of quality, was of importance. What allowed for this to be efficient and progressive were the one-stop centre for infrastructure planning and delivery management, quality of construction projects, and delivery cost assessment and assurance. A central state capacity for built environment professional services assisted with this as well. Furthermore, the assurance that job creation for women, youths and people living with disabilities and other designated groups in terms of the Preferential Procurement Policy Framework Act (PPPFA) regulations was of great importance to the Department’s model.

This led to the IDT’s value proposition, which included a number of details. First, there was a value adding skilled and experienced workforce making a verifiable contribution to the construction sector through innovation and best practice. Second, there was the support provision to emerging contractors, enabling them to grow and sustain their businesses, and graduate to a higher Construction Industry Development Board (CIBD) grading. Thirdly, there were the opportunities local and broad-based black economic empowerment (BBBEE) suppliers provided to stimulate local industrialisation and enterprise development. Fourth were the opportunities for black built environment professionals and contractors to increase their participation in the construction industry. Lastly, there was the buy-in and participation by communities in development projects.

Mr Pakade referred to operational challenges facing the Department. In recent years, the IDT had had to contend with a declining business portfolio owing partially to budget cuts by client departments and client disaffection with the quality and speed of its project delivery. Furthermore, the IDT had faced delays in transfer of funds by client departments, exposing the entity to litigation and inadequate technical capacity to deliver on the current portfolio, compounded by an organisational structure skewed towards non-core personnel. Added to these factors, there was poor resourcing of the organization, including outdated business systems and inefficient processes, which impacted on the efficacy of service delivery. Some turnaround plans that were being incorporated to account for this included improved revenue management, improved delivery capacity and business development initiatives.

The five-year strategic plan for the IDT came in the form of two programmes. The first was where the IDT contributes to the state’s capacity to effectively implement development programs. This goal was accomplished through four objectives:

• Provision of efficient, effective and integrated public social infrastructure delivery management services;
• Delivery of quality social infrastructure on time, within budget and scope;
• Employment of a developmental approach in the delivery of programmes on behalf of government, to strengthen community ownership and social cohesion;
• Managing public employment programmess on behalf of the government in order to strengthen job creation efforts.

The second strategic goal was to make the IDT an effective, efficient, and sustainable organisation. This would be accomplished through the strategic objective of being a financially viable, compliant, results-based, efficient and focused organization.

Mr Pakade described how the IDT would contribute to the Sixth Administration’s seven priorities.

Education, skills and health.

The IDT’s contribution towards this was the implementation of public social infrastructure programmes to support the provision of health and education infrastructure. This would include the refurbishment, replacement, upgrade and construction of new school infrastructure and health facilities.

Economic transformation and job creation.

The IDT would supplement this priority through the implementation of public employment initiatives and programmes which contribute to economic development, growth and support to small, medium and micro enterprises (SMMEs), women and youth-owned enterprises. Furthermore, it would promote innovative and alternative construction methodologies and ecologically friendly infrastructure designs in the construction of public infrastructure. Itwould also take part in implementing facility management and small harbour development programmes as part of local economic development.

Help create a better Africa and world.

The IDT would contribute to this goal by implementing public social infrastructure programs to support one-stop government service centres in small towns, and the construction of social infrastructure with the aim of supporting access to services and the enhancement of the citizens’ quality of life.

Consolidating the social wage through reliable and quality basic services

Here, the IDT would contribute by implementing public social infrastructure programmess to support the provision of health and education infrastructure, such as the refurbishment, replacement, upgrading and construction of new schools and health facilities.

Create a capable, ethical and development al state.

The IDT would contribute to this by assisting in the creation of a public sector reservoir of skills in the built environment profession and by implementing the Contractors Development Programme (CDP) to support emerging contractors, focusing on women and youth.,

Mr Pakade referred to the statistics included in the medium term expenditure framework (MTEF) targets and strategic plans. The IDT was targeting to reduce its deficit, and by the next financial year, it should be breaking even. By the following year, it would begin to see a surplus in terms of this target.

The biggest risk for the IDT was the financial audit outcome. There had been an audit disclaimer for the last three to four years, and the IDT would give the Committee details of where they were in this regard soon. It needed to move towards an unqualified audit. He explained that if the Auditor General (AG) found one issue in the expenditure reports, the entire entity would be in trouble. The IDT was being more and more diligent with their reports to ensure there were no mistakes in them.

Mr Pakade concluded that the IDT played a major role in the service delivery value chain of the government by ensuring that the Department of Public Works (DPW) delivered on its mandate of building and maintaining the government’s immovable assets in the form of social infrastructure. Furthermore, the entity contributed to national socio-economic development imperatives, such as the eradication of poverty and job creation. Its strategy was aligned to the government’s MTSF and its strategic themes of poverty eradication and stimulating economic growth. Finally, the IDT took a special interest in policy positions which were relevant to its mandate. Currently, the most pertinent policy directive was the National Development Plan (NDP) Vision 2030, which was the country’s blueprint for national development.

Discussion

Ms S Graham (DA) referred to social facilitation, saying this was an actively critical part of any project and that failure to engage in proper social facilitation could create huge problems in communities. These problems could be seen all around the world, with projects that failed to engage in this correctly. How did the IDT plan to take care of social facilitation to avoid these potential issues? Furthermore, the Committee required clarification about the social infrastructure the IDT takes part in. For instance, did it build all the schools, or did the Department of Education take on some of these projects as well? Were there separate projects by multiple entities going on at the same time, where different departments all did this separately, or does it all get funneled through the IDT? Was it possible to get a list of current proposed projects the IDT was busy with, in terms of schools and clinics, so the Committee could be aware and ensure nothing went wrong? She briefly touched on the employment of people within the organization, saying this required special attention and care by the IDT.

Mr W Thring (ACDP) referred to service delivery to the poor -- something the IDT had indicated was one of their main goals. He said the IDT had also indicated that a large amount of their clientele was dissatisfied with the quality and speed of service delivery. With this in mind, he questioned how the IDT would accomplish this goal, as these two statements were contradictory. What were the measures being used and put in place to ensure that projects were being completed to a high degree of quality? Furthermore, the AG report from 2017/2018 had indicated that only 50% of the IDT targets had been achieved. Expenditure had been R4.3 billion against a target of R6.8 billion. This was a R2 billion deficit. The AG had claimed the IDT was unable to estimate the stage of completion of its projects. How could this be? The AG had indicated it was because it had a lack of technical capacity, which was a major issue. Had this lack of technical capacity been remedied, or had any measures been instituted to adjust for it?

Mr Thring then discussed the IDT goal of wanting to focus on targets dedicated to the youth and women, as the AG had indicated that it had failed to meet the targets for youth and women in the 2017/18 year. What progress had been made to allow the IDT to focus on it this year? Although the IDT had an internal audit committee, he questioned how efficient and effective it had been in picking up the challenges the AG had identified. Had the IDT prioritised the safety of children in schools, working with the Department of Basic Education? Finally, regarding the bold target of creating six million Expanded Public Works Programme (EPWP) work opportunities, this would face the challenge of the skills deficit, a major issue in South Africa. Was this target in any way linked to improving skills in the labour force?

Ms A Siwisa (EFF) questioned when a stable board would be put in place at the IDT? Without a stable board, disclaimers from the AG would continue to flow in. The IDT had identified its challenges in regard to this which was good, but now it was time to put interventions into effect. Speaking directly to contractors themselves rather than consultants acting as middle men, would speed up the the implementation of projects. With regard to billing and the system for collecting revenue, this was also only possible with a stable board. She felt that the IDT was overwhelmed with work and that implementing all these new targets and public social infrastructure without a board could prove too much. She asked for more detail on these projects, such as which provinces and municipalities were involved, and how long these projects would take. This would help to instil confidence in the budget for the IDT. She liked the idea of graduates assisting the IDT, and hoped that it would use this as an opportunity to fully employ them as well. These graduates had the skills that the labour force was missing, and employing them would be useful.

Ms S Kopane (DA) asked if an impact study analysis of the IDT had been carried out. The AG had pointed out that construction contracts were awarded to contractors, many of which were unqualified for the work that was required. How many projects had been given to unqualified contractors? What had been the implications of this, and how had it been resolved? The AG had confirmed that there were cases of financial misconduct by the staff, and had also indicated that disciplinary hearings were not conducted. She asked why these disciplinary hearings were never conducted. She would also like an update on what was happening with the cases being investigated by the Special Investigating Unit (SIU). There were people going to court because of not paying fees -- how many of these cases had taken place?

Ms L Shabalala (ANC) said the structural instability of the IDT was a major challenge. The IDT had to be reasonable about this and remain transparent with the Committee. Although the IDT had touched on this, it became an issue when the structure of the IDT itself was poor. With this in mind, how could the IDT take on all its planned projects effectively? She hoped the future structure reflected the turnaround strategy. Moving from disclaimers to a qualified audit from the AG would not be possible until these challenges had been overcome.

The Chairperson said she appreciated the Minister’s action in appointing an interim board during the challenging time. She asked what was being done in regard to the Property Management Trading Entity (PMTE), and how the IDT was assisting the Department. What was the role of the Treasury in regard to funding issues? What measures had been set in motion to redeem the deficit the IDT had currently accumulated?

IDT Response

The IDT responded that its organization structure would definitely need to change. There had to be a new alignment of roles and responsibilities among the employees. Three days ago, the IDT had met with all the entities they were in business with, and had indicated that they needed to restrict the IDG unit to be able to look at the new mandate of the Department and the responsibilities they had, in order to realign their structure. This had all been initiated already, but what had not been initiated just yet was changing the administrative responsibilities. This would need to be started in order to move towards a qualified audit.

The IDT was not responsible for the provision of infrastructure and facilities at all schools. There were many different companies and entities involved in this. The DPW, for instance, delivered infrastructure in all nine provinces, but also appointed the IDT or other agencies to take this over. Creating a list of all projects the IDT was working on would require a degree of preparation, but it could be done in about two weeks. The Minister had also established a team to look into the issue of competing with the private sector in acquiring skilled labor. Because there were so many entities involved in the same areas that the IDT was involved in, it was currently not on the top of the agenda.

Regarding the awarding of contracts to unqualified contactors, there were professional panels in each of the regions to take on these challenges, which helped to ensure this was a rare situation.

The topic of dissatisfied clients due to a lack in quality was discussed next. The IDT knew this issue existed, and linked it to the capacity challenges that had also been raised by the AG. The IDT needed to review the operating procedures and streamline its business to help reduce these quality challenges. Furthermore, deploying more and more resources to projects that were in a time constraint would address this issue as well. Finally, employing more construction project managers that were qualified would also help ensure quality and efficiency of projects. This was of major importance.

The failure to achieve targets was also something the IDT had been aware of. This was being remedied through reviewing its performance and progress against targets on a quarterly basis. The IDT was also taking into consideration the realities of the combined budget and economic downturns, and addressing this by applying it to the capacity of the IDT to ensure targets were indeed achievable.

The inability to estimate the stage of completion of projects was an issue the IDT would need to look further into, and get back to the Committee.

Although it had not met the previous target for women and youth employment in the last financial year -- women were at 55% and youth at 20% -- this was being addressed by developing an empowerment strategy this year, and concrete proposals through engagement with the board were being implemented.

The internal audit committee had been working fairly well, yet lately there had been very few current transactions and many members had left due to the restructuring and board changes. It had ended up with only one person remaining, but this was being handled by a new professional team who were from a well-recognised audit firm. The IDT was also hoping the AG would also be able to assist in this.

The delivery challenges had been noted and would be part of the turnaround strategy in the future. The IDT had project implementing managers that were mostly not registered. These managers were being put into programmes for further education and training, to the get them professionally registered.

The IDT board had sent out a very clear message about the issue of corruption. There had been a restructuring of the board to actually take this directly on. There was now a social ethics committee, and in response to irregular expenditure, there was a consequence management committee being set up. This committee was responsible for investigating irregular expenditure and for making decisions on the steps to be taken if it was irregular. Another feature was a corruption hotline for use by employees.

There were a few issues involved in estimating the progress of programmes. To begin with, many times contracts would be outsourced to other companies. In these cases, the IDT would be acting like an agent. When something went wrong or was not fully completed, the IDT would be held responsible instead of the company that had been hired. With the new contracts, there were now specific clauses that ensure the client knew who was responsible for what part of a project. This helped the IDT with completion estimation as well, because now it knew exactly what part each party was responsible for and how long each would take.

The IDT recognized that failure to pay in 30 days was a major issue. The Construction Industry Development Board (CIDB) regulations were in place here. The IDT was pushing for unchallenged invoices to be paid on time and in full. There were sometimes problems caused because of the delay in transfers. The National Treasury had been engaged in this regard, and was willing to assist. In the future, the IDT would put their own collection policies in place to help with this, and would collect debt from clients.

In the process of restructuring, the IDT had to make sure the capacity to deliver was there. This could come in the form of the changes to the new board. Many senior managers who would have been responsible for this restructuring, had resigned. This had created problems, and there were still many positions that remained unfilled. The IDT had begun hiring more and more people who had the technical capacity required. The new contracting policy was assisting in this.

Mr Moitswadi Mofokeng, Chief Financial Officer (CFO): IDT, touched on the issue of payments taking up to or longer than 30 days. He explained that this was due to disputes that could continue for five to six months. Furthermore, the IDT reported to the Department on all payments that were due, although service providers were not paying the fees. He acknowledged challenges that project managers faced in estimating how long a project could take to complete, and agreed that a process must be implemented to engage this issue so that management reports were consistent. Regarding project stage completion, the reality was that there was a need for a project management system that could follow progress daily. Funding must be made available to take this on. The IDT was taking more and more steps now towards such a goal, with CIDB guidelines as reference.

Ms Pearl Lukwago-Myeria, Chief Director: DPW, said she was from the EPWP branch and that the IDT was an implementing agent for the Department. It was assisting in reducing the skills deficit in South Africa by implementing training for the EPWP, and was acting as an agency through driving the implementation of programmes. This would be partly funded by the National Treasury. The main objective was the creation of opportunities and ensuring quality services were delivered. The second objective was to include training and skills development in the EPWP. The DPW took on the funding that the IDT was not responsible for in this programme. There was also an agreement with the Department of Higher Education that focused on the National Skills Fund (NSF), where participants who were interested in training were assisted. The NSF had allocated R220 million to assist in achieving this goal.

She acknowledged that the Public Protector was investigating EPWP procurement cases. This was part of the development in the EPWP, which took note of each and every concern raised and followed up to ensure they were being addressed.

The Department responded briefly with regard to the similarities between the IDT’s and the Department’s annual performance plans (APPs). It was explained that the IDT was an implementing agent and that the Department was involved in wider objectives. The APPs were put together following the same formula, ensuring that both were accurate. There was a difference between their targets due to the difference in their mandates, but there were many similarities in the PMTE.

The Chairperson thanked the presenters for their thoughtful responses and presentations. The Committee adjourned for five minutes.

Agrément South Africa: Annual Performance Plan

Mr Joe Odhiambo, CEO: Agrément SA (ASA), said Agrément was an entity that had been established to support the DPW. It had since become more than that -- almost a legislative body when it came to policy-making for construction. In a nutshell, It was responsible for the approval of non-standardised construction systems and for certifying these systems. A key strategic point was that anybody who was certified by ASA was able to establish an enterprise. This then assisted with the goal of supporting the development of the youth and women in South Africa. Everyone had an equal opportunity to establish their enterprises once they had been certified.

Another key point to make was that Agrément SA was a technical agency, not an implementing one. This meant that it was involved only in approving projects and did not themselves construct. It also wrote and published national standards in a non-conventional way to support the quality and certification of construction projects.

The main priority of ASA was job creation and the promotion of certified projects. The intent of this was to instil economic transformation, skills and education development, and to promote the use of programmes in social infrastructure.

He finished his brief presentation by describing that national building standards and regulations that govern everything. The legislation and projects of which ASA was part, were important and far-reaching. It was important to ensure these projects were of a high standard, and this was done through certification.

Dr Jeffrey Mahachi, Agrément SA board member, expanded on the entity’s APP, explaining the roles it specifically played and how their goals were aligned with the seven goals of government. He spoke about their projects, and how these projects had developed their influence through job creation and infrastructure benefits. He said that ASA ensured compliance with legislative policies, and was also present in formulating the policies and procedures to ensure they were compliant with such legislation. It was responsible for promoting innovative construction technologies in South Africa’s infrastructure and construction development processes, followed by conducting technical assessments of non-standardised construction systems and creating awareness of Agrément to help with the construction environment.

Next Ms Edeona Parkerson, Chief Financial Officer (CFO), Agrément SA, addressed the financial aspects of the APP, referring briefly to the budget figures. The self-generated income was R3.3 million, and this was expected to increase to R4 million in the 2019/20 financial year. Funds received from the DPW amounted to R30 million, and were estimated to increase to R31 million in the 2019/20 financial year. The funding model also showed that ASA was matching the income it received.

Referring to the eco-labeling project, she said this was a government-initiated project that was a voluntary method of being environmentally friendly, and was practiced around the world. Products and services that were proven to be environmentally friendly or preferable were used. ASA would be gearing towards type one, the strongest designation out of three categories, in regard to environmental awareness.

Discussion

Ms M Hicklin (DA) asked about recycling initiatives in South Africa. The landfill situation in the country was dire, so did Agrément SA have any initiatives or systems in place to address this recycling crisis? Could discussions between ASA and national or international agencies be opened to address this? She proposed a solution that would allow plastic recyclables to be used to help address another issue in the country in the form of renovating and rebuilding many roads that were below the standard they should be in.

Mr Thring questioned what the turnaround time was in regard to testing approval and accreditation of certificates for innovative products. He related this to the experience a friend, who had been testing an innovative product and it had taken him a few years to be accredited. If this was the usual case, this would hurt innovation. What was ASA’s success in transforming informal settlements that were in need of innovation? Was it utilising innovative products to make these settlements safer as well -- for example, with fire hazards? What was the success of products that assisted in sanitation in settlements, as many had ablution issues?

Ms Siwisa wanted to know if Agrément produced, tested and sold its own products or if there were other entities involved in this process. She also raises the question of whether it conducted evaluations of buildings after they had been constructed to ensure they were safe and met the building codes, with many things being looked over such as exit points, smoke detectors, assembly points, etc.

Mr T Mashele (ANC) asks if Agrément promoted innovative products that they had certified. Was it addressing the skills deficit issue in South Africa? The Department had alluded to the shortage of skilled workers in their workforce, and he asked if ASA was assisting in getting these necessary skills available to the workforce to help South Africa to progress.

The Chairperson referred to the tragic incidents of children losing their lives through dangerous pit toilets at schools, and asked if ASA would be able to certify, if not promote, the installation of safe alternatives as part of the implementation of new infrastructure.

ASA response

Dr Mahachi responded on the issue of recycling materials, and said there was still much work that could be done. He was not aware of any project to assist with rebuilding roads with recycled waste, but there were a number of other systems in place that used products such as plastic bottles. He would need to go back and gather more information on this to provide a more detailed response.

The turnaround time for materials and products was established by three entities, including Agrément. The initial phase of testing went through ASA. This was where it was established if further research needed to be done before a certificate could be given. Testing was done by the institution, and overseas products were also tested. Agrément did not acknowledge international tests, and did its own tests before certifying a product. Tests could run for weeks to months, depending on the product and extent of testing. Construction products could take up to two years, because comprehensive tests had to be done. For example, fire testing could take extremely long, as there was only one laboratory in South Africa that conducted these tests. Therefore, the product had go into a queue, and this in itself could take time and affect the turnaround efficiency. Anything from six months to a year, however, was considered a standard turnaround time.

With regard to sanitation products used worldwide being implemented in South Africa, ASA was not an implementer. It could engage with partners to see where products could be utilised and submit them as a recommendation, but it could not force them to be implemented. It engaged with other departments, like the Department of Science and Technology and the Department of Human Settlements, to see how certain products could be used in settlements to address the sanitation issues. Products had been recommended by Agrément to be used in settlements, but all it could do was this, and certify these products for implementers to use.

Regarding inspecting buildings that had already been constructed, before any construction project was started it had to be approved by the local authority. The local authority would follow the national building regulations. Issues such as fire escapes and exits would have been checked and taken into consideration by these municipalities, as they must be in compliance with the regulations. Agrément then required compliance by the contractors to receive certificates.

For skilled labour, ASA had entered into partnerships to assist with this deficit. For the Department, many graduates from institutions were being trained and employed to assist with the skills deficit. The issue was that although this was happening, graduates were not being hired because of a lack of experience, and therefore the skills deficit remained.

Mr Odhiambo said the ecolabeling scheme was a mandate that had just been given to Agrément. They had not yet commenced with the actual certification process and were still developing systems and procedures which would be used to assess and certify these products. A lot of potential was available here, and ASA was confident they would be able to address any future challenges in this regard.

On the issue of sanitation products in schools and settlements, he said the sanitation exhibition site was on their campus. This was where sanitation product testing commenced. Once this was done, certificates were issued, but Agrément did not actually implement and assist in the development work. That was the responsibility of the departments, like the DPW.

Regarding goods and services, Agrément did not develop and test products themselves, as this would have it playing the role of player and referee. It could assist in advising other entities that conducted testing, however.

On the point of recycling, many products were being certified. For example, there was a tyre that was being manufactured using recycled plastic. The final product looked nice and worked well as a tyre. They were durable and much cheaper to produce. This material was also being used in the production of windows, doors, and other products.

Further questions

A Member referred to the 1977 Building Standards Act, and asked if Agrément accommodated innovation and new technologies in this regard, as the act itself did not seem to have specific provisions for this. Commenting on the building inspector issue, she wanted to know why, if inspections were taking place, poor quality houses were still being built. She also wanted to know more about the link between local government and building inspectors.

The Chairperson brought up the issue of safer toilets for the disadvantaged, relating back to her previous question, and requested further clarity on what Agrément was doing to assist this. She referred to the mandate given to Agrément to be in a relationship with Public Works and other implementing agencies, and asked what links it had with Human Settlements, and if the current projects implemented by Human Settlements were safe and up to code.

Responses

ASA responded that the 1977 Act had been amended a couple times already. The act was functional and qualitative. There were specific requirements in regard to safety and health issues. Innovation was implemented through a part in the act explaining that contractors could also follow the guidelines set up by the national building regulations. These regulations had no mention of innovation, but did point to using performance requirements from Agrément in construction. This was then where innovation was implemented, as the Agrément requirements allowed room for innovative technologies and products to be implemented.

Building inspectors were there to approve the building plans. The building control officer then gave specific requirements that had to be followed on the ground to ensure the construction followed the agreed plan. There was a new process being implemented to professionalise building inspectors. This would allow the inspectors to ensure that what was happening on the ground reflected the plan and complied with Agrément. Furthermore, ASA had quality inspectors that assisted in this.  

For partnerships, ASA had partnered with the National Home Builders Registration Council (NHBRC) for quality assurance on houses. Whatever Agrément certified, the NHBRC recognised and used the product. It also had partnerships with the national Department of Human Settlements that allowed for a number of products to be implemented in infrastructure development.

The Chairperson said that innovation was key to the future of South African development. The meeting adjourned for a lunch break.

Construction Industry Development Board: Annual Performance Plan

Mr Ebrahim Moola, CEO: Construction Industry Development Board (CIDB), went over the board’s legislative mandate, which in simplified terms consisted of five points:

• Strategic leadership to stimulate sustainable growth, reform, and improvement of the construction sector;
• Sustainable growth and participation of the emerging sector in the industry;
• Improved performance and best practice;
• Uniform application of policy and ethical standards, construction procurement reform, improved procurement, and delivery management; and
• Monitoring and regulating the performance of the industry, including the registration of projects and contractors.

The CIDB’s mission had been developed to help this, and was to “exist in order to regulate and develop the construction industry through strategic interventions and partnerships.”

The CIDB was aligned with the President’s priorities, expressed in the State of the Nation Address (SONA) in a number of ways.

Economic transformation and job creation was aligned, for instance, through monitoring public sector expenditure, and providing an annual report on the impact of public expenditure on the industry aimed at enhancing the efficiency and effectiveness of public sector spending, thereby enhancing job creation. It contributed to education, skills and health through enhancing construction skills development. It supported the consolidation of the social wage through reliable and quality basic services through an annual report on the impact of public expenditure on the industry – including the impact on service delivery. It worked towards a capable, ethical, and developmental state through ongoing development support to client bodies, and by declaring the specification for an Anti-Bribery Management System (SANS 1734) as a best practice for combating fraud and corruption in the industry and among large contractors. Finally, it aimed for a better Africa and world through advisory services to medium and large contractors to support them to gain access to trans-border opportunities in neighboring countries.

CIBD objectives

Mr Moola then described the various strategic objectives of the CIDB.

Administration

• Increase alternative revenue streams to 75% by 2020;
• Achieve a fourth level of maturity of the information communication technology (ICT) governance framework by 2020;
• Become a high performing organisation that would achieve all objectives and set targets;
• Ensure that the CIDB complied with all legislative requirements;
• Grow talented human capital by achieving a human capital value-add rating of 10% by 2020;
• Ensure that sound governance practices were implemented in all board decisions and resolutions;
• Become a reputable organisation through sound stakeholder relations and improved customer satisfaction levels by 2020.

Regulation and advocacy

• Enhance compliance with the regulatory framework by increasing the registration of construction projects with the CIDB;
• To achieve a 98% correlation of contracts awarded to the correct level of contractor by 2020;
• To enhance the provincial footprint in support of CIDB strategic objectives.

Development and capacitation

• To Improve availability of developmental support to at least 0.05% of the total construction gross fixed capital formation by 2020;
• Improve the skills development pipeline by providing 4 000 learners with access to workplace learning opportunities by 2020;
• To grow and develop contractors through the establishment of partnerships and other collaborative initiatives.

Industry performance and transformation

• To monitor the growth and transformation of the construction industry in support of achieving transformational targets by 2020;
• To support risk management within the industry to ensure that by 2020 at least 85% of projects achieve a performance rating of adequate or better;
• To improve the capacity and competitiveness of the construction industry by 2020

The CIDB had a total of 27 key indicators -- 12 in administration, six in regulation and advocacy, four in development and capacitation, and five in industry performance and transformation. These performance indicators were in relation to the strategic objectives, and indicated where each objective was being fulfilled or worked on.

The main strategic goals of the CIDB’s key projects were to develop an inclusive and growing construction industry, an innovative and thriving construction environment; a reputable regulator, working in alliance, and sound corporate governance

Mr Sfiso Nsibane, CFO: CIDB, presented on the finances of the Board, including a breakdown of the budget. The combination of government grants, registration fees and finance income amounted to R184.2 million in 2019, indicating that the CIDB’s finances were matching their income.

Council for the Built Environment: Annual Performance Plan

Ms Priscilla Mdlalose, CEO: Council for the Built Environment (CBE), said the Council’s vision was to create a built environment (BE) to meet people’s needs and aspirations, and its mission was to implement projects and programmes that address built environment issues and add value to the built environment professions, government and the general public.

The mandate, as set out in the CBE Act 43 of 2000, was to:

• Promote and protect the interests of the public in the built environment;
• Promote and maintain a sustainable BE and natural environment;
• Promote ongoing human resource development in the BE;
• Facilitate participation by the BE professions in integrated development in the context of national goals;
• Promote appropriate standards of health, safety, and environment protection within the built environment;
• Promote liaison in the BE in the field of training, both in the Republic and elsewhere, and to promote the standards of such training in the Republic;
• Serve as a forum where the representatives of the BE professions may discuss relevant issues;
• Ensure uniform application of norms and guidelines set by the professional councils throughout the built environment.

The main priorities of the CBE were to create a transformed built environment with appropriate, adequate skills and competencies, responsive to the country’s infrastructure delivery, operation and maintenance needs. It aimed for an optimally functioning BE, with a responsive and relevant policy and legislative framework, based on informed and researched positions, and BE professions that operated within a regulated policy and legislative framework. The strategic goals of the CBE were similar to the priorities.

Mr Mokgema Mongane, Chief Operating Officer (COO): CBE, said the performance review of the CBE over the mid-term period showed increasing trends from 2014 to 2018 among the many Councils for the Built Environment Professions (CBEPs). Gender and racial representation were also shown amongst these CBEPs, showing a decent degree of diversity, though white males still predominated. In total there were 39 960 male and 5 103 female registered professionals in the CBEPs.

The performance achievements over the mid-term period from 2014-2018 showed an increase of candidates supported by the CBE, support for the CBE internship programme and bursars, and research papers produced to inform the sector covering various areas of the industry. Improved audit outcomes were also illustrated in these achievements, as well as transformation, such as the signing of a Declaration of Intent at the Indaba.

The CBE’s strategic goals, and their programmes to achieve these goals, were outlined. These covered administration; skills for infrastructure delivery; BE research, information, and advisory services; regulation and oversight of the six BEPCs; and government policies and priorities.

In the development of the APP, the CBE had taken into account the priorities of the President, as indicated in the SONA. Those taken into account included support for black professionals, setting the country on a new path of growth, improving public schooling, infrastructure investment, partnerships with businesses, building a strong and capable state, professional bodies and regulatory authorities to take action against members who were found to have acted improperly and unethically, creating jobs and setting the industry on a new path of transformation and sustainability, and finally to take part in education and skills development.

Mr Mongane gave details of the Council’s five programmes.

Administration

The administrative function was the pivotal support centre for the CBE, contributing directly to the delivery of all strategic outcome-oriented goals. Performance indicators for this programme included a clean audit strategy, an approved ICT implementation plan, and the target for ICT governance policies implemented as per the corporate governance policy framework.

Skills for infrastructure delivery

This programme responded to Section 3(c) of the CBE Act -- to promote ongoing human resource development in the built environment. It contributed to the DPW and its medium term strategic framework (MTSF) outcome for a skilled and capable workforce to support an inclusive growth path. This was done through various initiatives, including strategic infrastructure projects (SIPs), maths and science support programmes, career awareness, and partnering with sister entities. Performance indicators for this programme would be projects to support skills production and development initiatives for SIPs’ identified high demand skills, the number of learners enrolled in the maths and science support programme, the number of candidates and interns placed for workplace training, , the number of oversight reports, the number of municipal, provincial, and national departments and state-owned entities (SOEs) supported in their BE technical capacity, and the number of transformation engagements held with BE stakeholders.

BE research, information, and advisory service

This programme provides informed and researched advice to Government and the public on BE matters identified in the MTSF through sector inquiries. Performance indicators include the number of reports on initiatives and programmes to support technical capacity, research reports, advisory reports on health and safety, and the number of research reports on initiatives to promote labour intensive construction practices in BE projects.

Regulation and oversight of the six CBEPs

This responds to the mandate of sections 20 and 21 of the CBE Act, and contributes indirectly to the DPW and its MTSF outcome 12 for an efficient, effective, and development-oriented public service. The CBE contributes to this outcome by improving the governance of the CBEPs through corporate governance and compliance with the principles of the PFMA, and strategic planning and capacity building. The six performance indicators for this programme include the percentage of appeals finalised within 60 days from lodgment, the percentage of Identification of Work

(IDoW) action plan deliverables implemented, the number of initiatives implemented to enhance governance in the CBEP, reports on the assessment of the six CBEP policies, initiatives developed to enhance governance in the CBEP, and the number of strategic plans, APP’s and annual reports of the six CBEPs submitted to the CBE and DPW.

Government policies and priorities

This was aimed to ensure a BE that was responsive to the developmental and economic priorities of the government. The objective of this programme was to ensure that BE academic curricula and continuous professional development (CPD) programmes embodied health and safety in construction; environmental sustainability; job creation through labour intensive construction and the government’s Infrastructure Delivery Management System (IDMS). The performance indicator for this programme was the number of implementation plans incorporating new knowledge in the BE curricula.

Ms Lindy Jansen van Vuuren, CFO: CBE, presented on the MTEF allocation, showing the breakdown of finances for over the five-year period. The allocation for the next three years would be R56.1 million (2019/20), R59.2 million (2020/21) and R62.4 million (2021/22).

The strategic challenges that impacted on planning for the CBE included poor skills development programmes, inadequate funding and market factors, health and safety issues, capacity constraints, fraud and corruption, data inconsistency, insufficient professionals within the sector, the sector not transformed, a general lack of coordination between the supply and demand of technical skills, and the state not attracting and retaining competent professionals, leading to poor service delivery on public infrastructure projects

The CBE’s response to these challenges was to establish an industry-wide strategy that used a skills development process, such as the CBE skills pipeline, for sustainability in the industry. Other measures included:

• In-depth consultations with stakeholders, as well as partnerships between the public and private sectors and society;
• Establishing oversight of transformation initiatives and advancing human resource development from primary school to professional status, using programmes and awareness creation around subjects required to ultimately enter the BE professionally;
• Driving a structured candidacy programme, and establishing sustainable funding for bursaries;
• Designing a sector-wide monitoring mechanism that the oversight institution would use.
• Conducting research on leading countries in terms of skills needed for artificial intelligence (AI), with the goal of ensuring these skills and knowledge were transferred to South Africans in the BE;
• Professional and accreditation bodies adopting a collaborative approach through supporting the research and development activities at higher education institutions.

Ms Vuuren ended with a short recommendation – that the Committee approve the CBE’s 2019/2020 APP.

Discussion

Ms Graham said she did not fully understand the role of the CIDB, and wanted more clarity on this. Specifically, what were the day to day tasks of the CIDB in regard to the regulation and advocacy programme? She said construction incubators were a major issue, and asked why this was not being pushed to a greater scale nationally? Businesses could not sustain themselves or pay annual fees because there was not enough work, and this made it difficult for start-up companies to join the CIDB. What was being done to assist in this? Lastly, municipalities used the sector education and training authorities (SETAs) to train and approve professionals -- were there any links between the CIDB and municipalities and projects being run similar to the SETAs?

Ms Kopane said transformation was still very slow, and nothing major was happening. This was a concern. Did the CBE have power to regulate legislation? How were professionals decided upon? What did the CBE look for when deciding this? The lack of career guidance was also a concern in respect of professionals and specialisation. Graduates from university were seeing the difficulty in becoming professionals, as there were no mentors available for such training. Did the CBE have any programmes or something similar to assist with skills training to help these graduates join the professional scene? With regard to the internal audit committee, was a company being used to transfer skills? Lastly, had the issue of corruption been dealt with yet and if not, what was the situation?

Mr Thring asked the CIDB if it was aware of the “construction mafia” in KwaZulu-Natal (KZN). Once they got wind of a tender, they would demand a 10% or 20% share of it, and this had led to construction being halted. Were there any plans to try to stop this? The CIDB had set a goal to comply with all legislative requirements, yet the target had been set at 85%. This was a contradiction -- why was the target not set at 100%? Regarding awarding contracts to contractors that were fully qualified, the question was in regard to broad-based black economic empowerment (BBBEE). How was the CIBD balancing the need to ensure that the correct qualifications were present in contractors, while awarding contracts to those who were disadvantaged? The Auditor General (AG) had also indicated that one of the challenges at the CIDB was that many high-level positions were vacant. What was the progress in filling these vacancies?

Mr Thring, addressing the CBE, referred to the ratio of engineers to population in South Africa being 1:2600. International law required a ratio of 1:40. How far had SA come in improving this ratio to comply with this international law? Slide 21 had referred to signing performance agreements by 15 April, but it was now three months behind. How did this affect the CBE? It was vital in South Africa to increase the maths and science programmes, as it had some of the poorest results globally, yet it had one of the largest per capita expenditure on maths and science. What was being done to address this and how widely was this going into the provinces? Lastly, although maths and science were important, coding was required to reach a higher level of industrialisation. What were the CBE’s objectives in regard to coding programmes?

Ms Siwisa said the CBE had discussed monitoring and evaluation, and wanted to know if it had an actual tool that was used to do this monitoring, and how regularly was this happening? Which schools, and in what provinces, were being targeted for the maths and science project?

She asked the CIDB whether the contractors they were assisting included novice contractors or only professionals. Which grades and in which provinces were they targeting for their development programme? As there was a shortage of engineers in South Africa currently, she suggested beginning this development at Grade Nine. What schools were they targeting during the early stages of this programme? What was the role of the CIDB in local government in terms of awarding contracts at level seven?

Mr Mashele  asked what the role of the CIDB in the private sector was. It was known that government or municipalities often decided to use the private sector when specific skills were required. Did the CIDB regulate the private sector? Were those in the private sector subject to the same standards as those in the publicsector? What role was the Council playing in the transformation of the professions that South Africa was lacking? What was it doing to assist graduates who were failing to find jobs and integrate into the work force, causing an even greater lack of skills?

Mr E Mathebula (EFF) said the CIDB had indicated that there were more whites than blacks or coloured people in the BE sector, and it should be more representative of South Africa’s diversity. Was anything being done to register more diverse people in these professions? Were they conducting road shows, as these may be more effective in getting the interest of these people to join the professional scene? There was also no mention of how many people with disabilities were employed in the professions, and no determination of the age differences. Could these statistics be provided? What programmes were being implemented to address all of these shortcomings? Added to this, were foreign expatriates being registered as well? The CIDB had indicated R494 000 had been lost, but there was no indication of what happened. Was this money stolen? Misplaced? What was being done to ensure such an amount was not lost in the future? It was indicated that disciplinary action had been taken, but it was not of a criminal nature. This should have been reported to the police as fraud and corruption, to hold those responsible accountable.

Ms L Shabalala (ANC) said the CBE had many entities listed under administration. The allocation of funds to administration was much higher than to the others -- was this because of salaries? Comparative statistics should be provided in the future to show how they arrived at these budgets, and to which part of each entity the money was going to. What were the demographics within the individual companies involved with the CBE?

She suggested to the CIDB that holding a summit with stakeholders once a year was not enough. What really happened during these summits and who was present, in terms of demographics? What were the issues being discussed during these summits and what were the outcomes? Was it possible for the CIDB to present to the local governments on the projects being implemented and by whom they were being implemented, so that there were no problems between the contractors and local government? This would lead to a greater degree of compliance and therefore a more efficient process. The corruption hotlines may not be as effective as intended, and they should look into the possibility of creating multiple hotlines for each separate entity. Lastly, there had been no mention of exactly what the CIDB did during interventions in regard to transformations -- what was the role here?

The Chairperson asked the CIDB if there was any way to blacklist companies that were run by the construction cartel. It was public knowledge that much of the construction industry was run by the cartel. What was the CIDB doing to these companies? If a company or contractor failed to complete their duty, was there a register of them created to ensure they stayed blacklisted and did not receive contracts in the future? What was in place make those who failed accountable?

What were the exact powers of the CBE? The demographics that had been presented did not represent South African diversity in any way. This needed to be addressed. In regard to candidates, was there a relationship with the Department of Higher Education? If so, which schools and provinces were being targeted to begin with, to establish whether the programme was successful or not?

CBE and CIDB responses

Ms Maphefo Mogodi, Deputy Chairperson: CBE, said the lack of career guidance was an issue that the CBE had identified and was working on. There were programmes being implemented that involved career awareness to do this. It also worked alongside volunteer societies to assist in creating awareness all across the country.

With regard to the ratio of engineers to people, there were just over 45 000 professionals in South Africa. This was a very low number. In 2015, there was a study conducted which determined the demand and supply of professionals in the country, and it had been found that there was a bottleneck causing this issue. Universities were not producing enough professionals due to a lack of mentors or programmes. Now with the further industrialization of South Africa, there was greater access to this sort of education and training through online classes and programmes. I

Regarding maths, science and coding, maths and science were a requirement for engineering, while coding was currently not. This was being worked on to be implemented, and currently professionals were being trained in coding to be able to integrate this into their skills and to stay up to date with technology. In the future, the CBE would ideally want to oversee all maths and science programmes to get a clear picture of where this was lacking.

The suggestion of Grade Nine being when training should begin, had been noted. Currently, however, the mandate of the Department of Basic Education was being engaged to find an ideal starting point for these students. The CBE was also working closely with the Department of Higher Education to assist in this as well. There was a programme being implemented by the CBE to break this gatekeeping issue, to ensure more diversity and inclusiveness in professionals. For instance, those disadvantaged due to not having qualifications but who had clear experience in the field, were being recognised and given opportunities to become officially qualified. There was also a programme being aimed at graduates to ensure the struggle to register as a professional was made easier and more efficient.

The statistics on the age groups and disability inclusiveness had not been reported on yet, and this information would be given to the Committee once they had been collected.

Mr Moola responded on behalf of the CIDB in regard to the mandate, saying the Act was clear that the CIDB had to establish a national register of contractors. This was the key point of the mandate, and was linked to the improvement of the industry.

On the issue of “construction mafia,” the role of the CIDB was to stop this. It was working with entities and other departments to detect these issues. The Department of Public Works, for instance, would be involved in a summit meting with the CIDB in this regard.

The CIDB was designated to monitor companies and entities to ensure corruption was prohibited. Companies that were guilty of collusion were sanctioned by the CIDB.

On the non-performance issue, the CIDB had developed a reporting system that helped it to complete the reports more carefully and efficiently. This helped with late payments, clients and other benefits.

Other issues dealt with by the CIDB included its involvement with SETAs in five provinces on incubator development, and the board’s approval of several appointments to fill vacancies, all of which should be filled within the next two to three months.

The Chairperson appreciates the brevity of the responses from the CIDB and allows the Minister to speak briefly.

Minister’s closing remarks

Ms Patricia de Lille, Minister of Public Works and Infrastructure, said aligning programmes and projects with the SONA priorities was important. Partnerships with the private sector were also important, and the question was how exactly this would be possible. There must be a change to delivering services more quickly, but still delivering quality services to the people. She said she would come back to the Committee with a report on the investigations that had not been covered at the meeting.

The Chairperson agreed that things needed to change, and there would be time to do this together.

The meeting was adjourned.