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

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

3. development through partnership SA Backlogs - progress Estimates in 1994Progress by 2004 Housing – 1.4 to 3 million unitsHouses built for the poor – 1.6 million Electricity – 60% had no access70% of households have been electrified Clean water – 16 million with no access Clean water – 9 million people got access Adequate sewerage – 22 mil without access 63% of households now have sanitation 70% secondary school enrolment85% enrolment by 2002 2004 State of the Nation Address by President Thabo Mbeki Construction 2005 State of the Nation Address by President Thabo Mbeki + Dep. Pres. = ASGISA + Minister Trevor Manuels budget speech

4. development through partnership SOUTH AFRICAN CONSTRUCTION ECONOMY THE MARKET GROWTH TREND The need to more than double our output in the next 10 years !

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

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

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

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

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

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

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

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

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

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

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

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

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

18. development through partnership PROPOSED ASGISA INTERVENTIONS 1) Public sector procurement reform & delivery Management 2) Maintenance of existing and proposed Infrastructure (National Business Plan/ Framework + Labour intensive) 3) Skills development = Skills Audit based on large projects = Projections on capacity and requirements + Dept. of Education tertiary institutes + Construction Week + CETA/ DTI / DPE + artisan training= DPW (JIPSA + Employment Skills Development Agency - ESDA ) 4) Contractor development = cidb registers = empowerment and SME growth, EPWP learnerships and ECDP’s, DTI INDUSTRIAL STRATEGY - CONSTRUCTION SECTOR +_DTI-SEDA’s + ICT, cidb Industry performance. 5) Materials supply and manufacturing: Local/ abroad - Material manufacturing and pricing, 6) Research and academic excellence Accelerated and Shared Growth Strategy

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

20. development through partnership IMPORTANCE OF SYSTEMS?

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

22. development through partnership Class of Works by grading

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

24. development through partnership CLASS OF WORKS NoVALUE AVERAGE % BY TOTAL CE29R 5, 263, 206, 295.27R 181, 489, 872.25 79.24 % EE9R 158, 439, 459.63R 17, 604, 384.40 2.38 % GB53R 407, 911, 947.30R 7, 696, 451.84 6.14 % ME23R 810, 150, 899.32R 35, 223, 952.14 12.19 % SN2R 1, 090, 083.96R 545, 041.98 0.01 % SO1R 849, 063.33 0.01 % Grand Total:117R 6, 641, 647, 748.81 Breakdown by Class of Works

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

26. development through partnership Challenges  Public sector client capacity  Sustainable Development of historically disadvantaged enterprises  Inability to monitor development of contractors  Lack of comprehensive approach to contractor development  Inability to target development strategies at different contractor categories  In consistent procurement and delivery practices by clients that impede sustainable contractor development  Inadequate research and knowledge The CIDB commits to addressing the constraints

27. development through partnership Public Sector Delivery Capacity CIDB Role -Toolkit “Delivery Management System” and IDIP -“Centres of Excellence” -Capacity building to promote best practice -Best Practice Guidelines for labour based construction CIDB – role (contribution)

28. development through partnership Sustainable Contractor Development -Development of “3Rs” Best Practice Guide – Contracts “Know your rights, responsibilities & risks” -a concept programme for enterprise development of registered contractors -Development of information and knowledge tools for contractors, clients and development institutions e. JBCC and GCC training materials and project IMS -Establishment of outreach centres based on partnerships -Harnessing the power of the RoC for monitoring -Targeting specific contractors using the RoC -Refinement and support to existing contractor development programmes e.g. Contractor Incubator programme -Best practice contractor recognition scheme CIDB Role (contribution)

29. development through partnership Knowledge and research  National research agenda  Body/ Network of Knowledge  Library of construction procurement best practice  Professional Skills - Procurement and delivery - Industry development issues CIDB role

30. development through partnership Inconsistent procurement and delivery practices  Roll-out of the Standard for uniformity in Construction Procurement  Toolkit delivery management system CIDB role

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

32. development through partnership Thank You INFRASTRUCTURE DELIVERY FOR SOUTH AFRICA’S ECONOMIC AND SOCIAL GROWTH  A total delivery capability  A proudly South African construction industry  An industry that delivers to global standards Strategic Leadership towards sustainable job creation