South African Federation of Civil Engineering Contractors
Suid-Afrikaanse Federasie van Aannemers vir Siviele Ingenieurswerk
PORT ELIZABETHTel (041) 3686367
Fax (041) 3686156
Cell: 0839556446
e-mail: / 39 Buffelsfontein Road
Mount Pleasant 6070
Port Elizabeth /
MINUTES OF THE MEETING BETWEEN THE DEPARTMENT OF ROADS & EXPANDED WORKS OF THE EASTERN CAPE AND REPRESENTATIVES FROM THE EASTERN CAPE MEMBERS OF SOUTH AFRICAN FEDERATION OF CIVIL ENGINEERING CONTRACTORS (SAFCEC)
AND CONSULTING ENGINEERS OF SOUTH AFRICA (CESA)
HELD AT THE DEPARTMENT’S KING WILLIAMS TOWN OFFICES
ON FRIDAY, 8TH MAY 2009
PRESENT:
DR M ANNANDALE DE VILLIERS (MDV):Department of Transport
BH JORDAAN (BJ):Department of Transport
MM NDUDANE (MN):Department of Transport
N POYA (NP):Department of Transport
C FLANAGAN (CF):CESA
C NORTHWOOD (CN):CESA
M STEMELE (MS):CESA
R COX (RC):SAFCEC
C GIDANA (CG):SAFCEC
D EBERHARDT (DE):SAFCEC
W GEYER (WG):SAFCEC
D MCINTOSH (DM):SAFCEC
APOLOGIES:NIL
- Dr De Villiers opened the meeting with apologies for the delay as they had been called to an urgent meeting by the new MEC for Roads and Public Works, Ms Pemmy Majodina. She then welcomed all to the meeting and expressed the Department’s pleasure and interest that a meeting of this nature was now taking place. She expressed the Department’s sentiments that a meeting of this nature was important to enable the Department to liase with the two bodies that formed an integral part of the construction industry in the Eastern Cape. Dr De Villiers introduced the remaining members of her Department.
DM then introduced himself and expressed gratitude to Dr De Villiers for the
opportunity the meeting presented to discuss items of mutual interest.
The remaining members of SAFCEC and CESA all introduced themselves.
MdV then suggested that the meeting take the form of going through the items as per the Agenda.
2.The Department of Road’s proposed budget for construction work for the next two years
2.1MdV explained that severe budget constraints had been placed on the Department by National Treasury and that the Department had been instructed to introduce measures to reduce costs going forward. She informed the meeting that the maintenance budget for 2009/2010 was R749m in-house construction and capital projects R820m and there had unfortunately only been a 5% increase in the budget which would result in a deficit of about R500m and basically she agreed that the budget was declining in real terms when you took inflation into account.
In answer to an enquiry MdV confirmed that all monies in the previous budget had been allocated and spent.
3.Programme for proposed construction works that will be advertised for tender over the same period
3.1MdV told the meeting that the Department would make available an extract from their Budget Statement 2: 2009/2010 which would detail the proposed work for the next two years. Copies of this statement were handed out at the end of the meeting.
4.Department’s policy with regard to maintenance contracts for rural roads in the Eastern Cape
4.1MdV stated that there was a huge backlog in the maintenance of the existing roads in the Eastern Cape. For information, the Eastern Cape has 5000kms of surfaced road; 38000km of gravel roads and 7000km of unproclaimed access roads. It was the Department’s intention to increase their in-house capacity for road maintenance. The reason being that the Department felt the costs of construction and maintenance of roads using the normal channels of consultant and contractor had substantially increased over the past few years. The Department felt that more in-house work would result in an overall cost saving. However, MdV assured the members present that the Department had no intention of substantially reducing the percentage of work carried out by the private sector.
Several of the SAFCEC/CESA members queried the Department’s assumption on in-house costs versus private sector costs. CN told the meeting that he had worked in the KwaZulu Natal Roads Department for 17 years and had undertaken substantial cost comparisons between in-house work and private sector work. The results of these exercises had convinced him that the in-house model was more expensive than private sector construction.
CG and other SAFCEC/CESA members then gave examples of their observations of apparent inefficient working conditions of in-house construction units.
MdV disagreed and said that it was still their intention to strengthen their in-house capacity and had put into place methods of monitoring efficiencies of these units.
The SAFCEC/CESA members and the Department were divided on this subject and agreed to disagree.
5.The Department’s recent tender advertisement for a substantial quantity of road construction plant
5.1MdV and BJ confirmed that these tenders had been advertised and that this tied in with their policy of expanding their in-house construction units. WG enquired as to how the Department costed their plant on construction and BJ confirmed that items of plant are amortised over the working life of that plant.
CG again queried the efficiency of the in-house utilisation of plant and enquired as to the apparent lack of urgency in repairing broken down plant on some of the existing in-house construction units. There appeared not to be the same urgency when compared to plant on private sector contracts.
6.Targeted roadworks tenders for CIDB Ratings 5-8 Contractors
6.1MdV agreed that the Department had recognized this problem and it was their intention to endeavour to unbundle some of the larger contracts in order to give work to these marginalized sectors. The Department recognized the importance of the development of the low CIDB rated contractors as these CIDB grades consisted mostly of emerging contractors and obviously the Department recognized the importance of their development.
7.Late payment to Contractors and the effects thereof
7.1MdV stated that in the normal course of events there should be no reasons for late payments for work done by the private sector. NP said that problems arose when large variation orders had been authorized by Consulting Engineers which had not been agreed with the Department. On many occasions this resulted in overspending of budgets which then resulted in a shortage of funds on a particular project. NP felt that both the Consulting Engineers and the Department were both to blame for this as there were times when the officials in the Department failed to monitor contract spending.
MS expressed his disagreement that Consulting Engineers were predominantly responsible for the contractor overruns as in the majority of cases Consulting Engineers keep in close contact with the officials in the Department.
RC explained that Department officials who regularly attended contract site meetings were made aware of variation orders and possible overspending on contracts yet this information did not seem to be relayed to the correct officials in the Department.
NP agreed that the Department had not insisted that checks and balances had been built into contract documents and explained that the department was busy amending current contracts and would ensure that all future contracts had these checks and balances clauses included. NP also confirmed that as their financial year end was the end of March each year payments of certificates between mid March and mid April were often delayed. CESA and SAFCEC members felt that this was an unfortunate situation and felt that steps should be taken by the Department to overcome this difficult payment period as contractors were still faced with their normal costs which had to be settled over that period.
MdV stated that they would look into possible solutions to this problem.
8.Is the Department’s staffing sufficient to implement their budget
8.1MdV agreed that in the Department there was an acute shortage of technical staff, however, they had recently taken on a number of well qualified engineers and technicians. She further agreed that they were probably short of 6 or 7 engineers mainly in their design office. The Department has established a Centre of Excellence in Graaff Reinett with the intention of training technical staff and in addition had set up a training programme for the registration of professional engineers working for the Department.
CESA/SAFCEC members enquired as to the experience of the recently employed engineers as even in the private sector there was great difficulty in employing engineers and technicians. MdV confirmed that the Department felt that these new appointments had the necessary experience.
9.Department’s policy with respect to outsourcing work versus doing work in-house
9.1This subject had been extensively discussed earlier in the meeting.
10.Training with an emphasis on emerging contractors and consultants
10.1This has been discussed under Item 8.
11.How can the Department use the services of SAFCEC & CESA effectively
11.1WG explained that SAFCEC had an excellent programme for emerging contractors which consisted of a theoretical and practical mentorship. He suggested that at the next meeting we should invite Christia Uys, SAFCEC’s lady in charge of these schemes, to attend the meeting and explain more fully to the Department SAFCEC’s training programmes.
In addition our training schemes had been favourably looked at by SANRAL and Transnet and we were confident that at this stage SANRAL would be using our services on the contracts that they controlled. MdV said that they would be happy to listen to a presentation.
12.Future regular liaison between the Department and SAFCEC & CESA
12.1All agreed that meetings of this nature were of great importance to the Industry. MdV suggested that meetings of this nature take place every quarter and the date was set for the next meeting at 16th July 2009.
It was felt that separate liaison meetings might be necessary with CESA or SAFCEC on various subjects of mutual interest. These meetings would be set up by NP.
13.1General
13.1MdV thanked all for attending and felt that it had been a important informative and constructive meeting.
13.2DM, on behalf of SAFCEC and CESA, thanked MdV and agreed with her sentiments and thanked her for allowing time to make meetings of this nature possible considering her busy schedule.
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