Construction Industry Development Board Second Quarter Report: briefing

Meeting report

PUBLIC WORKS PORTFOLIO COMMITTEE
20 June 2007
CONSTRUCTION INDUSTRY DEVELOPMENT BOARD SECOND QUARTER REPORT: BRIEFING

Chairperson: Mr F Bhengu (ANC)

Documents handed out:
Construction Industry Development Board Second Quarter Report

Construction Industry Development Board (CIDB) website

Audio Recording of the Meeting

SUMMARY
The Committee was briefed on several important issues pertaining to the Construction Industry Development Board (CIDB). Several key questions and comments were made on CIDB’s performance, effects of the 2010 construction boom on the local construction industry, CIDB’s capacity, how the grading process works, establishment of Construction Contract Centres (CCC) offices, Gauteng’s CCC offices, linkages with the Department of Public Works’ regional offices, the issue of mud-schools, CIDB’s computer technology, contractors with a lower grading.

Members emphasised serious concerns as to the time and process it takes for companies to register with the CIDB. The delegates from CIDB explained that the delays were usually due to companies not submitting the right documentation with their registration papers but also the huge numbers of applications that they had received. Also CIDB had in the past experienced extreme staff difficulties due to a lack of training. Many of the applications were Grade 1 contractors that had not done any previous construction work. Serious concerns were raised about the bad attitudes of some consultants. The delegates from the CIDB assured the Committee that companies that were not registered with the CIDB would not be allowed to get contracts. The establishment of CCC offices also enjoyed great emphasis in the meeting and the delegates explained that the establishment of offices is a priority for the CIDB.

MINUTES
Construction Industry Development Board (CIDB) Second Quarter Report
Mr Ronnie Khoza (CEO: CIDB) stressed the fact that the CIDB was given a specific legislative framework and mandate and had to keep in-line with this at all times. In referring to projects for 2007/8 the following issues were highlighted: the Construction Contract Centres (CCC), the National Contractor Development Programme (NCDP), the National Infrastructure Maintenance Strategy (NIMS), the President’s Call Project, the National Youth Service (NYS), support offered to the research agenda, stakeholders forum and human resource development.

He explained that the Gauteng province have requested to establish their own CCC offices in Soweto, Johannesburg and Pretoria. The Soweto office has been problematic in its functioning due to a break-in in which many computers were stolen but added the problem is being addressed. It was emphasised that the CCC had already established several offices but that more would be added in the second phase of the project.

Other important issues that were presented were: the stakeholder forum register statistics, the Register of Professional Service Providers (RoPSP), Anti-Corruption-Partnering Against Corruption Initiative (PACI), the nominations of new members to the CIDB and the challenges faced by the CIDB

Also noted was that all projects were published on the CIDB website.

Discussion
Mr B.Radebe (ANC) commented that there had been contractors who had previously rejected CIDB in totality because of the CCC offices’ slow response to applications. He emphasised that there were many things that needed to be clarified. Many were opposed to the CIDB because of the poor service they received from Construction Contact Centres (CCC). He commented that SA will because of the 2010 World Cup, experience a tremendous boom in the Construction Industry and asked why, given that, there is such a long delay in the registering of companies with the CIDB.

Ms C.Ramotsamai (ANC) raised her concern as to the current capacity of the CIDB. She wanted to know why there were such long delays in the registering of companies. She expressed her deep dissatisfaction with the lack of service by the CIDB, commenting that people are complaining and suffering as a result. She said that the CIDB could almost be likened to the Department of Home Affairs. She wanted to know how the CIDB went about the grading-process, asking whether private jobs done by individuals were taken into account in the process. She also enquired as to why Gauteng was allowed to have their own CIDB offices’ and whether they would still function within the mandate given. In referring to the eradication of mud-schools she wanted to know, given that this was allocated to the individual provinces’ budgets, what is done in cases where provinces had insufficient money for this.

Mr L Maduma (ANC) asked whether the CIDB had any links to the regional offices of the Department of Public Works. He also wanted to know how service-providers were selected and also what CIDB was doing to ensure that the providers are bridging the gap between black and white owned companies. He commented that the issue of mud-schools was a sensitive one and wanted to know how a complaint in this regard would find its way to the CIDB given its current infrastructure.

Mr S Opperman (DA) commented that technology should be employed in getting information from offices to the CIDB database and website. During an oversight tour of the Committee, it was found that one particular contractor was not registered with the CIDB but was still getting work. He asked if it was still possible for a company to obtain contracts despite not being registered. He also enquired how the 5000 youths, mentioned in the report, were selected.

Ms N Ngcengwane (ANC) commented that in the Committee’s oversight into the CIDB, one problem that had become very apparent was the long time taken to process new registrants. She wanted to know whether CIDB computers were linked to main office. Referring to the presentation, she asked how CIDB aims to improve the "settlements" of contractors.

Mr H Cupido (ACDP) asked the CIDB to explain how the process of relaying information from the provincial offices to the main office in Pretoria worked, seeing that there had been many complaints about this. Also as there were so many contractors with a lower grading, how would they benefit from 2010 construction?

Ms Ramotsamai commented that in many instances it was consultants who were driving the projects. Consultants in many cases had an "I can make you or break you" type attitude. She enquired what CIDB was doing these predominantly white consultants and what was being done to identify black consultants.

Mr Khoza commented that the CIDB in conjunction with the Department of Public Works had commissioned a study focusing particularly on artisans. In referring to the eradication of mud schools, he said that the Minister would be launching this project and that it was not a CIDB project. The CIDB would however be assisting in certain areas of the project.

He commented that the slow pace of registrations was due to the sheer numbers of registrations which presented an enormous challenge. The number of registrations grew at an enormous pace already totaling in the region of 35 000 and with only 50 temporary workers and nearly 700 applications a week, the CIDB had difficulty coping. However the backlog had now been eliminated. He explained that before a registration could be accepted, all supporting documentation had to be submitted which was often not done and would result in a company not being registered. In the future no application would be accepted without all supporting documentation.

The Chairperson queried how, when responding to a complaint, the CIDB actually communicated this to the complainant.

Mr Khoza replied that the CIDB had now employed a manager that went around the country to communicate and also assist contractors in registering.

Mr E Moolah (CIDB Programme Manager) emphasised that CIDB’s register had grown at a phenomenal pace, saying that the current projection is around 50 000 by December 2007. The bulk of the Grade 1 companies that have registered had not done any projects before. The impact of the CCC is already being felt but the actual capturing will start only from the 1 August. All CCC’s offices will be able to capture information for processing by the head office.

Mr Maduma expressed his concern saying that the bulk of companies in Kwazulu Natal believed that the CIDB was not doing a good job. Many of them questioned why some companies’ grading remained low even if they had been handling projects amounting to millions.

Mr Moolah commented that in future registration of the Grade 1 companies would be able to take place over the counter. He explained that the differentiation in grading between Levels 1-4 were not very hard but that Levels 6 –9 becomes very complex, which meant that the CIDB head office would always have a role to play in the registration processes. The CCC offices will start out small with a staff complement of around three and all applications will be made live and linked to the head office.

Mr Moolah said that upgrades remain a challenge but pointed out that the CIDB have already made 1700 upgrades of which 86% were black owned. Private sector work is recognised by the CIDB but he added that the challenge with this, was documentation supporting the project. He pointed out however that the CIDB cannot become too loose with registration as they are also accountable to clients. It was illegal for companies to be awarded contracts if they were not registered. He added that labour contractors do not need to be registered with the CIDB.

Ms Inba Thumbiram (CIDB Programme Manager) explained that she had only been with the CIDB for two weeks. She commented that the master-servant relationship was inherited from the colonial past and that it is almost traditional practice for the professional teams to see the smaller contractors as subservient. She explained that CIDB should employ globally accepted practices into their strategies to try and address this issue.

Dr Rodney Micford (CIDB Programme Manager) stated that clients should be taking responsibility for attitudes and behavior of consultants and in rectifying their behavior towards the smaller contractors. He referred to the concern that 2010 World Cup opportunities for contractors would be lost due to registration problems. He emphasised that such opportunities were not accessible to the registered projects but to the registered contractors. Projects were deemed only as an instrument to measure performance. The reason for the Level 9 companies not reflecting black ownership, was because these companies were Publicly Listed Companies, which made it difficult to assess who the shareholders are.

Referring to the awarding of 2010 tenders, Ms Thumbiram emphasised that it was difficult for the CIDB to regulate this because the manual that had been compiled was mainly for compliance to the broader industry requirements. Tenders were rewarded by the individual cities according to their own precepts and requirements.

Dr Micford pointed out that the expected boom resulting from the 2010 World Cup would continue way beyond 2010.

Mr Khoza said that the challenge in the Construction Industry was to avoid it being politicised. All construction companies must be registered with the CIBD so that the industry can be regulated effectively. He commented that another great challenge was the Grade 1 companies of which 80% had no real knowledge of construction. The role of the CIDB was only to provide support and not to get involved in the adjudication processes as this would result in much controversy. It was very difficult for the CIDB to get involved with the situation with the consultants but clients should be playing a bigger role in this.

In referring to 2010 he explained that it was too late for many companies but that companies should concentrate on what’s beyond 2010. On the matter of contactors in the KZN area he conceded that there had been many challenges but that it should be understood that many CIDB staff had previously not been well trained but the problem was being addressed. He emphasised, however, that the CIDB had moved a long way and that value has been added. The budget constraints remained a huge challenge for the CIDB. In terms of the capacity, those currently employed by the CIDB were just adequate but if more projects were to be added, more staff would be needed. The CIDB did liaise with Provincial Departments of Public Works on a regular basis. He concluded by requesting an open line of communication between CIDB and the Committee saying that this would add value to the working of the CIDB.

Ms Ramotsamai said that it would be a good if a defined list of requirements for registration was given to construction companies. The Chairperson also commented that a user guide could assist companies in the registration process.

Mr Radebe thanked the delegates, expressing his appreciation for the CIDB programs, but asked that the frustration of the people on the ground be given attention.

Mr Khoza noted that in future some board members from the CIDB would accompanying the delegation.

The meeting was adjourned.