Council for the Built Environment and Agrément South Africa on their Annual Reports for 2012/13

Public Works and Infrastructure

06 November 2013
Chairperson: Ms M Mabuza (ANC)
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Meeting Summary

Two entities of the Department of Public Works – the Council for the Built Environment (CBE) and  Agrément South Africa – presented their annual reports for 2012/13 to the Portfolio Committee for consideration.

The CBE reported that its strategic plan had been reviewed in December 2012, and this had resulted in a realignment of its activities to make the built environment industry more responsive to developmental priorities, such as skills development and job creation. During the 2012/13 period, the CBE had achieved 71% of its goals, compared to only 59% in the previous year.  Twelve CBE bursary students  had graduated – six in engineering, 3 in quantity surveying, two in construction management, and one in architecture.   Among other highlights, progress had been recorded in the Engineering Identification of Work, with all eight engineering disciplines finalised, and only mining engineering outstanding.   Total revenue for the year had grown by 3% to R30.25m, and with expenditure dropping by 6% to R28.2m, the CBE had shown a net surplus of just over R2m.   Although the entity had achieved an unqualified audit opinion, the AG had highlighted several issues.

The CBE sought to ensure that built environment professionals, through their councils, supported the government's growth and development objectives, such as job creation, economic growth, skills development and reduction in green house gas emissions.  A code of conduct policy framework had been developed by the CBE in 2009, and had been operational since then, while all BE councils had developed codes of conduct which governed ethical conduct within the professions.  Failure to adhere to these codes resulted in disciplinary action.  The latest statistics showed a 50% drop in the number of disciplinary cases between 2008 and 2012 – down from 257 to 120 – but the CBE remained worried because the numbers were still high, and a significant number of cases related to professional incompetence.

There were 59 000 registered BE professionals, of which about 70% were engineers, 15% architects, 5% quantity surveyors, 5% construction and project managers, and the balance property valuers and landscape architects.  The challenge to the CBE was in the race and gender breakdown of these figures, which showed that whites made up 81.5% of all registered professionals, compared to 10.8% blacks, 5% indians and 2% coloureds.   This was a dire picture.  The male:female ratio was 86.3:13.7.   The statistics changed when the make-up of registered candidates was analysed.  Here, blacks made up 43.5%, whites 46.5%, indians 6.3% and coloureds 4%.  However, transformation was taking place too slowly.  As statutory bodies, the professional councils needed to have clear linkages with the government's development priorities.  The CBE had put in place interventions to align the business plans, and had formulated a transformation implementation model, which would involve sitting with all six professional councils and agreeing on transformation targets.
 
During discussion, the CBE was strongly criticised for not pushing transformation quickly enough.  It was accused of “failing” the women of South Africa.  Engineers were being sourced from Cuba, while educated youths were languishing on the streets.  Members also commented on the high level of professional fees – which were “unacceptable” – and sought further information on the backlog of appeals and the reason for fruitless expenditure.

The SA Council for the Architectural Profession (SACAP), invited to address the Committee, highlighted four issues which they felt the Committee should be aware of.  Firstly, all the Acts relating to the profession dated back to 2000, and needed to be reviewed, as they had not kept pace with the whole legislative framework of the country.   Secondly, all BE professionals should be taking responsibility for influencing the country's objectives in the areas of health and safety, growing urbanisation, and water and energy conservation.  Thirdly, the profession was currently failing to protect the public.  Complaints of poor service in the built environment were being received from all sectors of the population, who were being impacted by unprofessional people.   The man-in-the-street was not aware of the role of the councils, as regulators, so SACAP was initiating a programme – “Is Your Professional Registered?” – to get the message across that one should not deal with someone who was not registered with a professional council.  A co-ordinated strategy was needed to deal with corruption in the industry.  Finally, there was the impact of globalisation.  Foreign architects were coming to work in South Africa, and there was a need for SACAP to recognise their qualifications.  This required a fair process, otherwise there could be political implications.

Agrèment SA said that as a government agency, the organisation supported government policy.  It had a strong focus on bringing innovative construction technologies to the fore, and as South Africa was a developing country, it had to address infrastructure backlogs in previously disadvantaged areas.  Many of Agrèment SA’s products were suitable for use in rural areas, and these technologies had the ability to improve the roll-out of infrastructure and improve service delivery.  They could help to alleviate poverty, reduce unemployment and diminish the inequalities between the rich and the poor.  However, there was a need for caution in implementation, to ensure the quality of products met requirements. 

A major benefit of the innovative technologies was that they allowed construction to be carried out more quickly and more economically.  Agrèment SA provided an independent authoritative assessment of system performance, assuring fitness for purpose of certificated products.  Its operations led to the improvement in performance of existing products and allowed for the safe introduction of innovative construction products.  The export potential of South African-made products was also enhanced.

Agrèment SA stressed the need for BE professionals to be brought up to date on the new technologies, as many of them had been trained 40 years ago, and were not aware of the advances which had taken place in recent years.  Tender adjudication also needed to be adapted to cater for the new technology.  There were many other issues, involving norms and national standards, decision-making, contracts and certification, which needed to be taken into account.

Members recommended that Agreement should participate in integrated forums comprised of entities involved in infrastructure development, in order to create wider awareness of the new technologies and materials available.

 

Meeting report

Opening remarks
The Chairperson welcomed the delegations from the Council for the Built Environment (CBE) and Agrément South Africa, and conveyed apologies from the Deputy Minister, Mr Jeremy Cronin, and Ms A. Dreyer (DA), Mr N Magubane (ANC), Mr K Sithole (IFP), Ms C Madlopha (ANC) and Ms N Ngcengwane (ANC).

Briefing by Council for the Built Environment (CBE)
Ms Portia Tau-Sekati, Chairperson, CBE, introduced members of her delegation, and mentioned that the entity had received an unqualified audit report from the Auditor General (AG), and while there had been an overall improvement in performance, the CBE recognised there was still much to be done.

Ms Gugu Mazibuko, Chief Executive Officer, CBE, said the organisation's strategic plan had been reviewed in December 2012, and this had resulted in a realignment of its activities to make the built environment industry more responsive to developmental priorities, such as skills development and job creation.  She outlined the strategies and key programmes devised to implement the plan.

During the 2012/13 period, the CBE had achieved 71% of its goals, compared to only 59% in the perious year.  Twelve CBE bursary students  had graduated – six in engineering, 3 in quantity surveying, two in construction management, and one in architecture.   Among other highlights, progress had been recorded in the Engineering Identification of Work, with all eight engineering disciplines finalised, and only mining engineering outstanding.   The reasons for non-achievement of targets, and corrective action taken, were briefly covered.  Governance structures and processes were described.

Total revenue for the year had grown by 3% to R30.25m, and with expenditure dropping by 6% to R28.2m, the CBE had shown a net surplus of just over R2m.  This improvement had been achieved on  the back of deferred projects.  Although the entity had achieved an unqualified audit opinion, the AG had highlighted several issues.  The financial statements submitted for auditing had not been prepared in accordance with the required reporting framework of the Public Finance Management Act (PFMA), and the entity had accumulated a surplus without the prior approval of the National Treasury, in contravention of the PFMA.  Furthermore, 29% of performance targets had not been achieved.  Financial statements had not been prepared in accordance with GRAP, and fruitless expenditure of R215 000 had been incurred.

The CBE had 27 staff members at the end of the financial year, with their total compensation adding up to R14.3m.  The demographic breakdown was 81.5% black, 11.1% white and 7.4% coloured, while the gender  ratio was almost 60:40 in favour of women.

Ms Mazibuko said the CBE sought to ensure that built environment professionals, through their councils, supported the government's growth and development objectives, such as job creation, economic growth, skills development and reduction in green house gas emissions.  A code of conduct policy framework had been developed by the CBE in 2009, and had been operational since then, while all BE councils had developed codes of conduct which governed ethical conduct within  the professions.  Failure to adhere to these codes resulted in disciplinary action.  The latest statistics showed a 50% drop in the number of disciplinary cases between 2008 and 2012 – down from 257 to 120 – but the CBE remained worried because the numbers were still high, and a significant number of cases related to professional incompetence.

On the subject of professional fees, she said this matter was in the jurisdiction of the Competition Commission, with the CBE playing an oversight role and providing policy guidelines.  The fees were determined by the individual professional councils.  The CBE was currently developing a policy framework that would guide the recognition of BE professions that fell outside the ambit of the CBE Act, such as town planners and land surveyors.  Other key policy developments had been the drafting of registration regulations, and a policy position paper on continuous professional development, and how this function could be used as a lever for the industry to contribute to skills development.  There were now only six unaccredited programmes within the BE, compared with 23 in 2009.

Ms Mazibuko said there were 59 000 registered BE professionals, of which about 70% were engineers, 15% architects, 5% quantity surveyors, 5% construction and project managers, and the balance property valuers and landscape architects.  The challenge to the CBE was in the race and gender breakdown of these figures, which showed that whites made up 81.5% of all registered professionals, compared to 10.8% blacks, 5% indians and 2% coloureds.  This was a dire picture. The male:female ratio was 86.3:13.7.  The statistics changed when the make-up of registered candidates was analysed.  Here, blacks made up 43.5%, whites 46.5%, indians 6.3% and coloureds 4%.  However, transformation was taking place too slowly.  As statutory bodies, the professional councils needed to have clear linkages with the government's development priorities.  The CBE had put in place interventions to align the business plans, and had formulated a transformation implementation model, which would involve sitting with all six councils and agreeing on transformation targets.

Other areas of concern to the CBE were the skills challenges in the industry and at municipalities, registration bottlenecks, lack of a central repository for information and research on BE issues, compliance with time frames for processing legal appeals, and lack of information for the general public on BE issues.

Discussion
The Chairperson said that the issue of professional fees had been raised at a meeting with the DPW the previous week, where consultants had been accused of charging fees that were very high.  The DPW did not have the power to regulate fees, and when the issue had been raised two years ago, the CBE had not had regulatory powers either.  This had become a burning issue which needed to be attended to, as the fees were at an unacceptable level.

Ms N November (ANC) said that despite the non-achievement of targets, there had been improvement.  However, more details should have been given on the corrective action to be implemented.  The problem of contractors not disclosing prior supply chain violations could be curbed by implementing a thorough screening process.  She expressed disappointment that the demographic breakdown had made no reference to people with disabilities.

Ms N Madlala (ANC) wanted to know if the panel of chairpersons appointed to hear appeal cases were drawn from the professional councils. 

Ms P Ngwenya-Mabila (ANC) asked what the extent of the appeals backlog was.  What had caused the fruitless expenditure of R215 000 – and who had been responsible for this? In addition, she asked why was mining engineering still outstanding in the Engineering Identification of Work process and where did the bursary students go after they graduated.

Mr J van der Linde (DA) asked for a demographic breakdown on the 33 bursary students, and wanted to know if they were employed by the CBE after graduation.  Alsi, he asked how the entity was attracting whites, coloureds and indians to join its staff complement.

The Chairperson said that at last year's Built Environment Indaba, there had been outcries from professionals over a wide range of issues.  These had included bottlenecks in the registration process, the dominance of the professions by elderly white males, and a resistance to allowing new blood to enter.  The CBE had been asked to take action, but this did not seem to have happened.  She asked the CBE to provide a full report on what had happened since the indaba. 

Ms Mazibuko responded that race and gender had been the key issues raised at the indaba.  Arising from this, the CBE had come up with a transformation framework which had been developed into a detailed implementation plan.  This had been presented to the DPW.  The next step would be to sit with each professional council and discuss the plan in detail.  Each council would be required to establish transformation targets, and the final report would show their commitment to these targets.

She acknowledged that disability statistics should have been included in the report.  The CBE's target had been 2%, but this had not been achieved.

The Chairperson said the presentation showed there were 51 253 male and 8 112 female registered professionals.  There seemed to be no sense of urgency in anything the CBE was doing to correct this imbalance.  The Portfolio Committee had suggested a model for the entity to follow in order to fast track transformation. Educated young people were becoming frustrated.

Mr Edgar Sabelo, Acting CEO, Engineering Council (ECSA), said the model had been discussed and the process had actually started.  A trust had been formed and the roll-out would be piloted with the University of Johannesburg.

Ms Mazibuko said the CBE was aware it was not meeting its own staffing targets, particularly in respect of the Indian population group.  When short-listing for positions, whites, indians and coloureds were being prioritised, but this could be done only with vacant and funded posts.  

All 33 bursary students were from historically disadvantaged backgrounds.  When they graduated, they went  into industry and became registered as candidates with the various professional councils.

Ms Maphefo Sedite, Chief Financial Officer, CBE, provided explanations and clarifications on several points in the presentation where Members wanted further details on financial and human resource issues.

On the issue of contractors who did not disclose, as required, the CBE was working with the DPW and other organisations to screen them beforehand.  If they were on the CBE's database, it would be known that they complied with National Treasury's requirements.

The fruitless expenditure had been incurred in the 2011/12 year, and was related to the appointment process for the CEO, which had been stopped abruptly.  Condonement had been sought from the Minister.

The CBE's internal audit unit had been somewhat weak on the GRAP issue, with the result that a new internal audit service provider had been appointed.

Ms Mazibuko said the panel of chairpersons to address the appeals were all knowledgeable in law, and depending on the case, it would be an independent industry expert – but not from the council.  At the end of the financial year, there had been a backlog of nine cases, and four of those had so far been addressed.  A written update would be provided to the Committee.

Regarding the identification of work for mining engineering, she said there were nine disciplines within engineering, and the mining discipline had some reservations over the draft proposals.  Specific and detailed matters were involved, but the CBE, ECSA and the mining engineers were working on the issues and a resolution was expected.

The Chairperson urged the delegation to “get on” with answering the issues raised.  She referred again to the indaba, which she described as badly organised.  It appeared to her that the CBE was not organised – it was not “hands on”.  It was failing the women of South Africa.  Parliamentarians should not have to keep on fighting for women to get senior positions.  The CBE was now talking about badly framed annual performance plans, while the Committee was only interested in hearing about service delivery.

Ms Tau-Sekati thanked the Chairperson for the “honest feedback,” and apologised for the factors which had resulted in organisational challenges at the indaba.

The issues surrounding professional fees were currently with the Competition Commission (CC), which  had been developing a policy position to take to the DPW.  The CC had now indicated the matter was within its jurisdication, and would soon be pronouncing on the fees.

Mr Sabela said the situation with the identification of work for mining engineers was that the Ministry of Mineral Resources had said that ECSA's regulations were too vague.  These had been tightened, and would be submitted to the next meeting of the council.  ECSA was aggressively promoting the engineering profession to attract new recruits, particularly from previously disadvantaged groups. Road shows were being taken to schools, tertiary institutions and companies. Young role models were being used to persuade young people that engineering did not need to be the preserve of “old,white males,” which in their eyes, was “not cool.”  ECSA had approved a transformation implementation plan, which it was currently aligning with the CBE transformation framework.

At the invitation of the Chairperson, representatives of some of the professional councils gave a brief update on the state of transformation within their entities.

Mr Neville Naidoo, Acting Registrar, SA Council for the Architectural Profession (SACAP), highlighted
four issues which he felt the Committee should be aware of.  Firstly, all the Acts relating to the profession dated back to 2000, and needed to be reviewed, as they had not kept pace with the whole legislative framework of the country.  Secondly, all CBE professionals should be taking responsibility for influencing the country's objectives in the areas of health and safety, growing urbanisation, and water and energy conservation.  Thirdly, the profession was currently failing to protect the public. Complaints of poor service in the built environment were being received from all sectors of the population, who were being impacted by unprofessional people. The man-in-the-street was not aware of the role of the councils, as regulators, so SACAP was initiating a programme – “Is Your Professional Registered?” – to get the message across that one should not deal with someone who was not registered.  A co-ordinated strategy was needed to deal with corruption in the industry.  Finally, there was the impact of globalisation.  Foreign architects were coming to work in South Africa, and there was a need for SACAP to recognise their qualifications. This required a fair process; otherwise there could be political implications.

The Chairperson said it was known that the DPW had serious problems when it came to finding skilled professionals. It was now importing engineers from Cuba, while South Africa's children were languishing on the streets. The Department was in the process of reopening workshops, but the CBE was not assisting it.  Were there sufficient quantity surveyors and valuers to help complete the state's asset register by next year?   The CBE had to answer that, but these issues had been raised in the past, and there had been no movement. The CBE had been told to push for transformation, but it was not pushing enough. South Africa could no longer depend on the outside world to supply the skills it needed, and it was up to the CBE to do the work it was supposed to do.

Briefing by Agrèment South Africa
Ms Adelaide Ranape, Board Member, Agrèment SA, introduced the delegation and apologised for the absence of the Chairperson, who was overseas on business.

Mr Joe Odhiambo, CEO, Agrèment SA, said that as a government agency, the organisation supported government policy.  It had a strong focus on bringing innovative construction technologies to the fore, and as South Africa was a developing country, it had to address infrastructure backlogs in previously disadvantaged areas.  Many of the entity's products were suitable for use in rural areas, and these technologies had the ability to improve the roll-out of infrastructure and improve service delivery.  Agrèment SA could help to alleviate poverty, reduce unemployment and diminish the inequalities between the rich and the poor.  However, there was a need for caution in implementation, to ensure the quality of products met requirements.  A major benefit of the innovative technologies was that they allowed construction to be carried out more quickly and more economically.

Mr Thabelo Tshikomba, Financial Administration, CSIR/ Agrèment SA, gave a brief overview of the entity's financial statement.  Operating income of R9.95m was made up mainly of a grant of R8.7m, and contract income of R1.2m. However, a loss of R165 624 had been incurred, mainly due to income from contracts falling by R266m compared to the previous year.  There had also been an increase of 6% in employees ' remuneration.

Mr Odhiambo highlighted the contribution made by the entity’s products.  Agrèment SA provided an independent authoritative assessment of system performance, assuring fitness for purpose of certificated products.  Its operations led to the improvement in performance of existing products and allowed for the safe introduction of innovative construction products. The export potential of South African-made products was also enhanced.

Mr Odhiambo concluded the presentation by stressing the need for CBE professionals to be brought up to date on the new technologies, as many of them had been trained 40 years ago, and were not aware of the advances which had taken place in recent years. Tender adjudication also needed to be adapted to cater for the new technology. There were many other issues, involving norms and national standards, decision-making, contracts and certification, which needed to be taken into account.

Discussion
The Chairperson said she had expected the issue of bonuses to have been raised in the presentation.

Ms Ngwenya-Mabila said the annual report had made no reference to the entity's human capacity, so it could not be determined if the increase in employee compensation was due to an increased staff complement, or to the payment of bonuses.  If bonuses were paid, were they based on performance?
How was the organisation dealing with the fact that it had made a R166 000 loss?   She asked if Agrèment SA participated in any integrated forums – such as involving the Construction Industry Development Board, the Department of Human Settlements, or other departments dealing with infrastructure – so that more relevant people could become aware of the alternative technologies and materials available.  Did members of the board attend meetings regularly, as required?

Ms Madlala said she was keen to learn more about the entity's certificated products, because many of them could be used in RDP houses, provided they were not more expensive than conventional products.

Ms Ranape said the board represented a forum for creating awareness of Agrèment products, as it included representatives of the Council for Scientific Research (CSIR), the South African Bureau of Standards (SABS), the National Home Builders' Registration Council (NHBRC) and the NRC.

Mr Tshikomba said bonuses were included in the remuneration figures, although he did not have a breakdown available.

Ms Ranape said there were a total of 15 employees, of whom 11 were male and four female.

Mr Odhiambo said the 6% increase in remuneration was “pretty modest”.  The annual salaries were not great, but the staff who worked at Agrèment SA were dedicated researchers, who were there because they enjoyed their work.

The deficit of R166 000 would be absorbed by the organisation. Historically, there were some positives and some negatives, but they balanced out in the end.

He confirmed that board members were diligent and highly professional, and attended board meetings as required.

The Chairperson said she hoped Agrèment SA would continue its work in the interests of the people of South Africa.

The meeting was adjourned.

 

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