Construction Industry Development Board Strategic Plan, Business Plan and 2009/2010 Budget

Meeting report

Briefing by the Construction Industry Development Board (CIDB)
Mr Ronnie Khoza, Chief Executive Officer; CIDB, briefed the Committee on the Board’s strategic plan and business plan (see attached document).

The presentation included an overview of the CIDB’s mandate, vision and mission.  Within an external context, the CIDB supported interventions in infrastructure delivery skills and public sector delivery. Within the internal context, the focus was on developing operations and growth, specialisation, reducing risk exposure and implementing business systems and software upgrades.

The strategic objectives of the CIDB focused on strengthening the organisational capacity, improving service delivery, research and development, implementing phase 2 of the registration programme and reforming the procurement process.

An organisational chart of the CIDB and details of the six major programmes were included in the presentation.  The programmes were growth and contractor development; construction industry performance; procurement delivery management; construction registers services; leadership, governance and stakeholder relations and corporate services.  Performance measurement criteria and target dates were set for each programme.

The major key focus areas were the registration of contractors, specialist service providers and projects, the development of a revenue model, reform of the public sector procurement process, the enforcement of compliance to regulations, the improvement of public sector delivery and the development of a national infrastructure maintenance strategy.  Measures to minimize risk and fraud included the establishment of a Risk Committee.

Mr Khoza emphasised that the CIDB did not develop contactors - the mandate of the Board was to compile a register of members. During the first phase of the registration programme, the CIDB concentrated on registering members. The second phase focused on specialisation.  The issuing of CIDB certificates was discontinued.  The presentation included tables of the classes of works by grading, the gradings per province and the number of construction companies per designation registered by the CIDB.  To date, the total number of companies registered was 72 565, of which 2 258 were suspended and 70 307 were active.

Mr Raymond Nkado, Chairperson; CIDB, presented the budget for 2009/2010. The key factors taken into consideration in formulating the budget were listed in the presentation. The total expected revenue was R95.582 million.  Expected expenditure allocations were: personnel: R42.738 million, administration: R22.187 million, operations: R27.587 million and capital: R3.07 million.

Discussion
The Chairperson requested an explanation for the failure of the CIDB to establish all the offices by the end of the year, as were promised.  He wanted to know how the CIDB expected previously disadvantaged contractors to gain the required level of knowledge.

Mr Khoza explained that the reason why some of the offices had not been established was that the Department of Public Works had not provided the necessary office space and resources to the CIDB.  Training programmes offered by the CIBD were attended by persons who did not qualify as contractors.

Mr Z Mlenzana (COPE; Eastern Cape) wanted to know what the CIBD’s strategy was to improve the training of and to promote the small and medium-sized contractors.  He remarked that the Skills, Education and Training Authority (SETA) was responsible for training and he wanted to know what role was played by the CIBD in monitoring the effectiveness of the training provided.  He felt that the Department of Public Works needed to develop a strategy to involve small companies as well.

Mr Khoza replied that the CIBD was not responsible for training and did not have a strategy in place.  The CIBD was responsible for facilitating the registration of contractors.  The registration process of grade 1 companies had been simplified.  A grade 1 company could register over the counter and did not have to wait for 21 days before knowing whether the application was successful or not. The construction industry SETA was responsible for the training of contractors.

A Member of the Committee asked for clarity on how the CIBD operated as few people knew about the organisation.  He believed that the CIBD needed to increase communication with the broader community, in particular with students.

Mr Khoza advised that the CIBD did have a program in place to communicate with people and to inform them about the CIDB.  However, the Board had found that most of the attendees at the information sessions did not qualify as contractors.  The CIBD planned to engage with universities on the courses offered and encouraged students to complete post-graduation courses.

A Member of the Committee remarked that small contractors were unable to secure Government contracts unless they were registered with the CIBD.  He asked what assistance was available to small contractors who did not have the means to register with the CIBD.

Mr Khoza explained that the CIBD was mandated to facilitate the registration of contractors and was not mandated to train contractors to enable them to meet the registration requirements.

Mr H Groenewald (DA; North West) asked if more jobs would be created in the construction sector after the 2010 boom.  He wanted to know what job opportunities were created in the less affluent provinces.  He asked what measures were put in place to curb bribery.  He asked if the CIDB had any control over the structural deterioration of school buildings.  He felt that the CIBD needed to facilitate more training in road-building as the condition of the roads in the country was poor.  He asked what the status was of the Majuba power station (in Mpumalanga province) as the contractors had left the construction site because they had not been paid.

Mr Khoza advised that the CIBD planned to develop new job opportunities in construction and road building projects.  He said that the CIBD had a forensic unit to deal with cases of bribery and fronting.  The unit met on a weekly basis to check all applications for registration.  The unit has had some success in uncovering incidents of bribery and corruption.  Any CIBD employees involved were disciplined.  He was unable to provide any information concerning the Majuba power station as the CIBD had not been informed and did not have the jurisdiction to investigate the matter.  He pointed out that the client was responsible for dealing with the payment of contractors.

Mr M Jacobs (ANC; Free State) remarked that upgrading to a higher grade required money.  He asked how many black-owned companies were registered as a grade 9 company and were involved in large construction projects (e.g. stadiums).  He asked how the CIBD developed contractors after they were registered.  He wanted to know how the CIBD developed small companies without providing the necessary funding.

Mr Khoza replied that the financial and work capabilities of a company determined the registration grading of the company concerned.  Small companies could be employed as sub-contractors by the larger companies or they could enter into joint ventures.

Ms P Themba (ANC; Mpumalanga) commented that the presentation document contained errors.  She wanted to know what challenges were faced by contractors and what support was provided by the CIDB.  She asked how many women in each province were registered for each grade.  She requested a breakdown of the black-owned companies on the register.  She asked what awareness programmes were presented in the provinces.

Mr Khoza apologised for the error in the presentation document and undertook to provide the Committee with a corrected copy.  He advised that the presentation document included a breakdown of the companies registered with the CIBD.  He said that three of the thirteen members of the Board were women and were appointed on the basis of their skills and knowledge.

Mr M Tau (ANC; Northern Cape) asked what measures were implemented by the CIDB to fight poverty and unemployment.  He asked how emerging companies were protected from abuse by large companies.  He asked how many disabled persons and young persons were registered.  He wanted to know if penalties were applied to unregistered companies that managed to acquire contracts.  He asked if the CIDB had formed partnerships with the Department of Public Works or only shared the premises of the Department.

Mr Khoza apologized for omitting the data on companies owned by the youth. The CIDB was engaged in discussions to develop software for use by disabled persons.  Regarding the matter of abuse of emerging companies, he pointed out that all the companies concerned had to have attorneys to advise them on the legal aspects of entering into a contract.  The provincial Departments of Public Works were responsible for the effective operation of the construction contract centres but only the KwaZulu Natal Department had been supportive.  In another province, the opening of the office was delayed because Telkom had not installed telephone lines.

The Chairperson wanted to know what risks were established by the Risk Committee and what mechanisms were in place to monitor the performance of contractors.

Mr D Feldman (ANC; Gauteng) asked if the CIBD had information on the construction and repair of housing as the Board was working with municipalities.  He asked what criteria were applied in the grading of companies.  He wanted to know how many registered companies were owned by black, coloured and Indian persons.

Mr Khoza explained that the CIDB dealt with public buildings, stadiums and roads and did not deal with housing.  He said that companies were registered according to their qualifications and financial capabilities (i.e. was the company in a financial position to carry out the contract or not).

Due to a lack of time, Mr Nkado and Mr Khoza were unable to answer all the questions asked by the Members of the Committee.  They expressed appreciation for the constructive questions asked by Members.  It was apparent that the mandate and responsibilities of the CIBD were not clearly understood.  The CIBD did not exclude black-owned companies from obtaining contracts but the clients had the power to amend contracts and making the new contract more suitable for companies with higher gradings.  The CIDB had limited powers in the industry and could only play a facilitating role and apply quality assurance in the registration process.

In conclusion, the Chairperson noted that more could be achieved if all parties concerned worked together.

The meeting was adjourned.