CIDB & CBE 2020/21 Annual Performance Plans; with Deputy Minister

Meeting report

Deputy Minister of Public Works and Infrastructure opening remarks
Deputy Minister Noxolo Kiviet gave apologies for the Minister who was attending a Cabinet meeting. Covid-19 is taking a toll on the economy and on people but this Committee was meeting to ensure that every cent spent by government is spent effectively and efficiently. These two bodies, CBE and CIDB, are responsible for ensuring that as government works to reconstruct the economy with strategies that ensure growth and development that the building professionals and companies are assisted to empower themselves and contribute to economic growth. This is especially so as the President during the State of the Nation Address identified infrastructure development as a catalyst for economic growth. Capable and ethical leadership is required to help with that mandate to ensure that people with entrepreneurial skills are supported in a manner that gives hope to South Africans that we grow as a country. The CBE and CIDB will be speaking through their CEOs with their board chairpersons present. The Ministry is at the Committee’s disposal to ensure that there is accountability for every cent spent from the public purse.

Council for the Built Environment (CBE) 2020/21 Annual Performance Plan
Dr Sitsabo Dlamini, CBE board chairperson, stated that it is not all doom and gloom, but rather an opportunity to devise an economic recovery strategy that leans towards infrastructure-led economic growth. The stimulation for robust economic growth is at the core of the strategy going forward. The CEO will go into more detail but they have aligned the CBE transformation programme of action with the goals of economic transformation and job creation to build the capacity of the state and encourage active citizenry. Fundamental to CBE's mandate of regulating, coordinating and advising is to ensure that the public interest is protected above all. CBE is aware that what we have been accustomed to will have to change and that we will have to embrace a new normal. He asked the CEO to present.

Ms Priscilla Mdlalose, CBE CEO, presented assisted by her colleagues, Ms Lindy Jansen van Vuuren, CBE Chief Financial Officer (CFO) and Mr Mokgema Mongane, CBE Chief Operations Officer (COO).

Ms Mdlalose highlighted that CBE plays a key role in the oversight over its over six councils. CBE aligns its new five-year Strategic Plan with the Department's priorities and outcomes. The challenges faced by the construction sector were highlighted. Youth unemployment remains high but it is difficult to mentor youth when companies are not doing well. Unfortunately, the Covid-19 pandemic will only exacerbate this if there is a decline in the economy. Slides 14 illustrated the transformation problem as it shows that 73% of registered Built Environment Professionals are white while only 19% are black. The next slide shows that candidates on the registers of councils are 60% black while 28% are white.

The Chairperson asked to keep the presentation brief due to time constraints and Mr Mongane summarised the rest of the presentation (see document).

Construction and Industry Development Board (CIDB) 2020/21 Annual Performance Plan
Ms Nonkululeko Sindane, CIDB board chairperson, said that we are in unprecedented times. She was not going to give a long introduction but emphasised that Covid-19 will have a big impact on the CIDB budget.

Mr Cyril Vuyani Gamede, CIDB CEO, noted that the Act will be amended which will enable CIDB to do what they need to do. Historically the industry has been exclusive and making the industry more inclusive is a top priority. CIDB is aligned to the seven-point plan of the Department and that is how they devised their strategic plan. Key to transformation in the construction industry is infrastructure expenditure. Government should spend their infrastructure budgets. This is key to developing skills and candidates need exposure to projects. It is important that legislation is improved to ensure compliance as the maximum fine is only R100 000. There has been an improvement in registration, but last year the progress came to a halt as there was a strike which created a backlog. The CIDB medium term expenditure framework (MTEF) sees an increase in budget which means it is still manageable. There has been a recent reorganisation which contributed to this increase.  

Discussion
Mr W Thring (ACDP) asked how many apprenticeships have been garnered in the construction sector as a means to increase capacity and skills? With the focus of raising the capabilities and skills of the emerging sector participants, which budget sectors does CIDB anticipate will be amended in light of the Covid-19 pandemic and why? Slide 33 shows that research and development equals 3.6% of the budget but research and development ought to be at the cutting edge of the CIDB. Does CIDB agree with this and if so what will be done to improve the budget  for that programme? There is an obvious disconnect between the registration of built environment professionals (73% white) and candidates  (60% black). Could CIDB explain the discrepancy? The MTEF estimates are given in thousands of rand, it is assumed that this is incorrect and that it is actually millions? Slide 25 annual targets refer to the internet of things and fourth industrial revolution initiatives, do these target include rollout of 5G? If so, has there been health risk assessments of the 5G impact on employees and ordinary citizens?

Ms M Hickling (DA) stated that CBE states on slide 35 that there was an annual transformation indaba on 31 March since the Committee's oversight visit last year. What has CBE done to address the challenges of transformation of built environment professionals and their registration?  What measurements have been put in place by the CBE to make the process more streamlined? Slide 40 talked about the education programme. How has the CBE extended their programme to promote careers in the building environment? This question has been raised before: what criteria are used to assess schools to ascertain what schools are used? Could CBE explain the inconsistency in the accreditation process and how this is being addressed?

Ms S Graham (DA) emphasised she had asked this question before: what is the value add to registered professionals, what is CBE doing to support the professional bodies? How is CBE attracting registered professionals? What incentive is given? Even government is not using registered professionals when they do government programmes? Why do they not incentivise the use of registered professionals to increase the number of people registering with the body? The transformation indaba costs a lot of money while there is not a lot of participation. Is there not a better way to address transformation as opposed to just holding an indaba every year which just becomes a talk shop that does not create good results for transformation initiatives? Why is everyone working in silos when there are ways in which Public Works as a whole can facilitate these entities supporting each other as opposed to these meetings used for stating their problems. There are  mechanisms in the Department  that can help with these problems.

Ms Graham encouraged CIDB to make use of the Expanded Public Works Programme for CIDB and contractors. Is it not possible to look at developing this programme to look at ways in which contractors can come on board and facilitate the process of identifying people who can be stepped up into the construction environment. People who did not have an opportunity to complete school can then be developed by a contractor. This can be a way for CIDB to support new people coming into the construction environment.

Ms A Siwisa (EFF) was concerned that the budget allocation for transformation initiatives has gone down as per Slide 20. How do they giving people skills yet transformation is not happening? The CBE councils have come to this Committee and stated what they are struggling with that. How is CBE going to address the problems that the CBE councils are having? There are still cases of people being exploited. Slide 41 shows that the research and advisory allocation has gone down. How is CBE then going to establish an information hub? In Quarters 1 to 3 nothing is happening. These long term goal need to be broken down into quarterly short term goals to ensure that everything is on track. CIDB had three programmes previously; while in 2021 it has four programmes. The budget allocation is the same while it is now bringing in procurement and development and also focusing on provincial offices with the same budget. Will this not affect their financials at a later stage?

Ms Siwisa said that there are still contractors who are struggling to get any work or assistance from CIDB. Does it know how many injury on duty cases have been registered and what assistance has been given? There are people getting injured on site and who are then forced to continue to work as they are not protected, especially in rural areas. Does the CIDB have such cases? How many are there and how many have been resolved?

Mr M Mmoiemang (ANC) appreciated the presentations and the Deputy Minister's remarks about ensuring clear alignment in what CBE and CIDB are doing and the work of the Department of Public Works and Infrastructure (DPWI). In historically disadvantaged communities, there is a lack of contractors when it comes to grade seven to nine. The programme needs to have a more rigorous approach in ensuring that young contractors are better capacitated. Another concern is the registration of contractors. The public sector procurement system needs to make more of an effort in expediting regulations. Is the moratorium on downgrading contractors still on? Nothing has been said about that or revision of the report from the last engagement. Is there progress on that? CIDB has a history of working with municipalities and it critical to succeed there to ensure that infrastructure is used to transform the economy.

Mr T Brauteseth (DA) remarked that on slide 26 of CBE presentation there is reference to a hotline to report fraud or irregular expenditure. He asked how many calls were received by this hotline and what action was taken on these calls? It is easy to say that there is a hotline, but it is important to ensure that action is taken. Slide 30 of the CBE presentation refers to risk mitigation and cutting down on irregular expenditure. His concern was at the wording that in 2020 the procurement procedure is still being "developed". The Public Finance Management Act (PFMA) has been around since 1999 but CBE is still deciding what procurement measures to develop. The PFMA clearly sets out procurement measures and procedures. Is CBE working on its procurement measures only now? Transformation and upskilling people is critically important. Has CBE considered apprenticeships? Has it engaged SARS to find out about giving companies tax credit for such apprenticeships in the construction industry? 

Mr Brauteseth said CIDB refers to risk mitigation of cost efficiency on Slide 9. CIDB wants to place operators on certain grades so that they can handle certain jobs and that is commendable. The concern which has been raised before is that some people are given work then they just take the money and do not complete the work. CIDB seems to think that once they approve someone to do that grade of work and then these people do not perform , it is the client's problem. CIDB should have a list of the bad actors. When someone does not perform, they are placed on this list and should not be given an opportunity again. If CIDB pushes these actors forward; CIDB should also take action against them. Slide 10 it states that the industry has low levels of fraud and corruption – surely that is a false statement? There is no way that the construction industry has low levels of fraud and corruption. Can CIDB please clarify this? Due to the high levels of fraud and corruption our roads and the built environment are falling apart.

Mr M Tshwaku (EFF) requested that CBE and CIDB do their work as the concern about transformation has been raised before. There are a lot of students, but the students are not being accredited. Please scrap the indaba; the Committee should take a resolution to scrap this. Do not do the indaba, it does not work, it is just a talk shop. They should find ways to deal decisively with transformation. They are just regurgitating presentations and lamenting the same issues. They are not to start blaming Covid-19. Challenges that have been raised last year already are not being dealt with such as transformation and assisting the six council presidents with this. There are a lot of professionals but they do not have jobs. He is pleading with the Deputy Minister to put budget into transformation.

Ms L Shabalala (ANC) asked if CIDB has ever checked the grading and transformation credentials of insurance-based contractors. The contractors are not demographically representative. CIDB spoke about the organogram. How is vacancy rate and what is the timeline for filling the vacancies there is performance driven oversight. How far is CIDB with the situational analysis as the Gauteng Premier talks about two million job losses. How much is to be appropriated to the construction industry? Can both entities reassure the Committee on the guidelines for contractors on how they look after their employees? How are they adhering to guidelines? In the post Covid-19 era, can both CBE and CIDB be outward looking as the Deputy Minister always says.

Ms S van Schalkwyk (ANC) requested that all performance indicators should have timelines and note the people responsible for each indicator. This will enable the Committee to do proper oversight and give the Auditor General a proper indication of when they have performed. Both CBE and CIDB must provide updates in their quarterly reports so the Committee can monitor demographic compliance in their staff establishment and their vacancy rate. On the challenges with the skills development pipeline, can they indicate how they are liaising with the Departments of Employment and Labour and Basic and Higher Education. With the fourth industrial revolution, especially now during the Covid-19 period, there needs to be assistance with equipment. Funds have been allocated by different entities to assist learners. How will they redirect funds to assist learners with immediate needs during Covid-19?

Ms H Boshoff (DA) submitted her written question in the meeting chat and asked how many appeals have been finalised in the set time frame of 60 days.  

The Director General was welcomed as he had joined the meeting earlier.

The Chairperson was concerned about transformation. The sector has not yet transformed. He said there is no linkage or complementary work between CBE and CIDB for transformation to occur. Can they clarify how they will work together in ensuring that registered professionals comply with the best practice guidelines? He noted that Members had spoken about encouraging the use of registered professional and not working with professionals who have not registered. 

CBE response
Ms Mdlalose, CBE CEO, replied about the demographics for registered professionals and registered candidates. The registered professionals show the history of the country – the people who were advantaged were mostly white and male. The reason transformation has been slow is due to the lack of exposure of candidates to project work. In the last meeting the CBE council presidents highlighted that most of the projects are still benefiting the white private sector. It is difficult to resolve this in a short period of time. CBE is working together with voluntary associations and the Department to assist the black professionals. In order to transform the black candidates, they need to be exposed to the practical experience of projects. CBE has a candidacy programme and the six councils are also doing the same programme and try to match candidates to mentors. Sometimes the candidates struggle with the application of their theory work. There are also discussions with the SETA to secure funding to get mentors. They are trying to support candidates and ensure they progress to become registered professionals. She confirmed that the MTEF figures represented millions and not thousands.

As a result of an indaba, there have been some adjustments – one being the candidacy programme. The candidacy programme is there to equip candidates to become registrable. The indaba delegates also discussed procurement policies. CBE is working through the Department on this and CIDB is also part of the process in giving input on procurement. Another item looked at is the rotation of registered professionals and in getting professional bodies in helping them with the candidates. Ms Mdlalose has requested a meeting with the South African Local Government Association (SALGA) as one of the problems identified is that municipalities are using unregistered persons. In working with SALGA they want to encourage municipalities to use registered people. Hopefully within this five-year period, it will be possible to change the attitude of the municipalities.

Mr Mongane, CBE COO, replied about the role of 5G and its health risk saying that in the first year a cloud strategy plan will be developed. This plan will address all 4IR issues which will obviously include 5G and  health issues. Under its Administration programme, it will be looking internally at how to use technology to improve efficiency and effectiveness of CBE processes.

In response to what CBE has done to promote registration, the structure of the candidacy framework has been developed. The candidacy framework shows the key players are the six professional councils, the employers and the workplace. It shows precisely what the workplace must do. One of the main challenges was that many workplaces do not have this programme and, if they do, it is not structured.

The high school programme will undertake a careers awareness programme across all the provinces. It will partner with the Department of Basic Education to reach as many schools as possible. The extent of this programme will be guided by budget.

On accreditation and the inconsistency in how this is addressed, CBE is mandated to ensure the consistent application of accreditation policy by the six profession councils. The six councils administer the accreditation of universities and other academic institutions. Sometimes when engaging with universities and other institutions of higher education it takes time to do the accreditation. CBE helps to guide this process to ensure consistency and standardisation.

On the value add CBE gives to the six bodies, Mr Mongane  replied that before the year 2000 when the Act was put in place, a study found that there was conglomeration of bodies in the built environment. There was no overarching body to address this. The Act states that CBE should promote sound governance of the built environment professions and ensure uniform application of norms and guidelines set by the profession councils. The uniformity is important to ensure that the built environment operates as one and not in silos. CBE develops these policy frameworks based on best international standards.

On why the research allocation has gone down, CBE wants a centralised research hub for research institutions around the country. During the current financial year, they have already developed the Knowledge Management Platform, which is an IT platform. This platform will be loaded with essential information. That is why the budget has gone down.

There are no targets on the APP for Quarters 1 to 3, but the annual operation plan is more detailed and it show what activities have been done on a month to month basis.

Mr Mongane replied about apprenticeships and giving tax incentives to companies to do this. CBE does something similar called the Structured Candidacy Framework. This framework is similar to artisanships, but looks at professionals. The suggestion of tax credits should be taken up to incentivise employers. 

He replied about the appeals dealt with by CBE. During the last financial year, 15 appeals came to the CBE and they were able to address all 15 within the 60-day framework. These appeals are usually from the public when professionals did not conduct their work properly or are professionals complaining about registration or questioning a decision made by a professional council. A system has been developed to ensure that they can consistently address appeals within 60 days.

Mr Mongane replied to the Chairperson's question on how CBE and CIDB work together. The CIDB mandate is to oversee contractors and companies while CBE oversee the individual professionals which are employed by these companies. That is the link between the two. They want to go to CIDB and request to see their register of contractors and then ensure that all these companies implement the Structured Candidacy Framework which will fast track the development of candidates so they can be registered as professionals. The Profession Act for each of professional bodies state that only registered people may undertake certain work. This encourages registration. The skills development pipeline from school all the way to university encourages students to register. Those programmes are also in place to encourage registration.

CIDB response
Mr Gamede, CIDB CEO, responded to the questions on research and development and apprenticeships. CIDB’s emphasis have not been to collect the data, but through the skills development standard they enable contractors to access people who need skills developed. The industry has asked CIDB to revise the fee they pay development trainees as this fee is claimable from clients. As part of their research and development, CIDB will increase its database of what it is collecting. They are engaging the Construction Sector Education and Training Authority (SETA) as it should have that data. On the Covid-19 impact on the budget, the CIDB budget is made up of roughly 60% fees and a 40% Department grant. Covid-19 will lead to people struggling to pay their fees, but it is not yet known to what extent it will affect CIDB. This will be closely monitored when the fees come in. There was a concern that the research and development budget is just 3.6%, but before the restructuring, the research was embedded in different programmes, it was not a standalone. They are currently in a transition where research and development will be a standalone programme and they will be increasing this budget as they go along. Some of the funding is being negotiated with SETA and some of the funding will come from the best practice fee. It will be an increasing budget going forward.

Mr Gamede replied that EPWP people do the bare minimum because they get the bare minimum as a stipend. The best practice fee will help with skills development because there are two standards: enterprise development standard as well as skills standard. On the ground there are a lot of young people who have done a lot of theory, they have done N3 in various trades and when there is some work they go in there. Some money from the best practice fee can be used to improve the EPWP going forward.

Statistics of people injured on duty are handled by the Department of Labour, but going forward some statistics can be shared with the Committee. The moratorium on downgrading contractors is still on. They were hoping to revise it this year. However, Covid-19 will make it challenging to revise it as there is an amount that a person must earn at a certain level, but with Covid-19 people are unable to earn to a certain level. There are revised values for different grades, lower grades have 50% more access to the value of the projects that they can do. This came from interaction with stakeholders.

On the District Development Model, CIDB is in the process of closely working with municipalities and metros who have asked questions about contradictions in and misinterpretations of the CIDB Act. They are working with Treasury to ensure that there is proper training at local government for the programme.

Mr Gamede replied to the question about CIDB taking the approach that it is the client’s problem when actors do not perform. CIDB has developed a contractor performance rating system which has been given to clients. The challenge is this system is optional which has led to only 3% of clients returning these forms. In future they need to look at regulations to make this compulsory as part of the implementation of projects.

He noted there was a typo on slide 10 on fraud and corruption and said it is actually the opposite; it should be high – it was a typo.  The vacancy rate at CIDB is due to reorganisation. By the end of the financial year, the vacancy rate should be lower. CIDB does not really assist schools, but they are working with the University of Johannesburg where there is a centre of excellence that helps them with research. They have even assisted them with Covid-19 research.

Mr Gamede replied that the linkages between CBE and CIDB have been clarified by the CBE CEO. From the CIDB side, they look at companies who are implementing projects, they look at contracting companies, not individuals. If the company does not behave in the implementation of the project, then CBE will sanction the company.

Further questions
Mr Brauteseth said that the question about the hotline was not addressed. Could CBE please send the Committee a report on what calls have been received by the hotline over the last year and what action have been taken. He still wanted clarity on what CIDB will do with bad actors? He requested a detailed list in writing of all fraud and corruption incidents over the last year and what action was taken.

Ms Siwisa was still struggling to understand how they can still struggle with transformation even 26 years into democracy. Are they saying all the Parliaments in the past never addressed this? One CBE council raised that it was not getting enough financial assistance from CBE. How far is CBE in addressing this? How does it make sense to spend less money on transformation, but they want to give people more skills to go into the workplace?

Mr Tshakwu wanted an honest answer on what value add people will get if they register with CBE? There are companies who are not registered – the Committee had used the example of Sasol. It is not a requirement to be registered with the professional bodies. What is the incentive to register? What concrete steps will be taken to enforce registration? The CBE council presidents came to the Committee and said there are many professionals who are not getting jobs. What are they doing to ensure that people get jobs? There is a crisis – 74% white people get a job, while black people are not getting jobs. The Committee is getting impatient. They should use the Independent Development Trust to skill people. How are black professionals going to get jobs?

CBE response
Ms Mdlalose, CBE CEO, replied that the CBE does get reports on the hotline, they will compile a written report and send it to the Committee. On transformation, unfortunately a lot of engagement with companies is needed. The companies are responsible for employing candidates. CBE is working with industry. On the transformation funding appearing to be  reduced, she explained that in previous years transformation and skills were together, but now they have been separated in the budget. CBE takes note of what Members are saying about the indaba and that they should rather engage industry directly. With the Draft Public Procurement Bill, CBE has requested the inclusion of a rotation system by National Treasury. They are taking forward the concerns raised by the CBE council presidents to the relevant departments.

Dr Dlamini replied about the progression of black candidates into registered professionals and transformation. Currently stats show that there are 73% white professionals on the CBE databases. In the February meeting with the Committee, they asked for assistance on this matter and identified policies that hinder transformation. They have identified how these barriers to transformation can be eradicated in the built environment space. Through the Department of Public Works, they initiated serious discussions on this matter and they are engaging Treasury. The scope of professionals who do not have work and candidates who find it difficult to get absorbed is quite broad. They have proposed coming up with a monitoring system. Currently government is sitting with over 200 projects that were active before Covid-19 started. They need to do an analysis and see how many of these projects are using black professionals and how many candidates are these projects absorbing. In a space of two months it would be possible to make the necessary interventions. Professionals who are currently sitting without work could get deployed to these projects. Candidates who have graduated but do not have work could get deployed into these projects. They have also identified areas of collaboration with CIDB where professionals can absorb candidates to get the necessary experience.

CIDB response
Mr Gamede, CIDB CEO, reiterated that there is a system for clients to rate the contractor, but at the moment this is voluntary. There is nothing that forces the client to return that form. This leads to a very low return with only 3% of clients returning forms. A possibility to address this problem is to make it a regulation that when you are given a project part of it includes rating the contractor. If there is a regulation, they will have to go into an approval process. They also need to include it in the renewal process. So when contractors renew their grading, how they performed should be taken into account. It is a legislative process so it may take a little bit longer. CIDB will compile a written report on fraud and corruption and send it to the Committee.

Ms Sindane, CIDB board chairperson, stated that the two critical issues must be undertaken by government. The government, as main procurer, should ensure that work is given and that work is given out on time. Feedback should be given on whether people are performing or not performing. The biggest challenge is that there is work, but that it is not being allocated on time. There are a number of tenders that have not been awarded. People cannot get the qualifications and skills they need if they are not working on projects. There is cognisance of the disproportionate demographic divide. The reason is that white private companies get work from the public sector. That is why their candidates will go faster because they are exposed to work. It should concern Members of Parliament. Ultimately projects should be given. There is very little that CBE and CIDB can do to grant this experience to candidates.

DPWI response
Mr Molatelo Mohwasa, DPWI Acting Deputy Director General: Inter-Governmental Coordination, clarified that given Covid-19, the tabled budget will be adjusted. There has been communication from National Treasury requesting a department submission on reprioritising of baselines. There is R130 billion requested for existing baselines. It important to put money on transformation, but at the same time budget is needed to help with pandemic. CIDB does not just leave the problem of bad contractors with clients, but clients have a responsibility to report to CIDB to keep a list of contractors who perform badly. The Ministry has ensured that there is a registry of registered professionals. From 2021, it will be compulsory.

The Deputy Minister stated that transformation depends on the attitude of people. There needs to be an active driver and everyone should assist each other to drive transformation. Entities should move from an inward approach to an outward approach. Both CBE and CIDB have been given instruction on some of the issues. The Committee noted the six months’ timeframe to complete the necessary tasks. This will propel CBE and CIDB in what needs to be done for transformation. The working groups are important for inclusivity and integrating. Transformation is at the centre of what the Ministry is emphasising.

Concluding remarks
Mr Mmoiemang commented that there is still a lot of work that needs to be done by both CBE and CIDB. Focus should be on transformation. For transformation to happen, research and development is important to put money where your mouth is. The six CBE councils cannot give excuses. It is critical to ensure regulations and policies are put in place that enable councils to do this work. The voluntary nature of the CIDB and CBE feedback needs to come to an end. Government should ensure that the work and projects that they are expending on are used as a transformation tool. The Committee is also aware that a lot is expected in reprioritisation due to Covid-19, but even with reprioritisation, transformation must not be compromised.

The Chairperson emphasised that transformation must happen. CBE and CIDB do not have the necessary legislation at hand and the current legislation needs to be amended to drive transformation.

The Chairperson thanked everyone and adjourned the meeting.