Agrement South Africa & Construction Industry Development Board: 2010 Annual Reports

Public Works and Infrastructure

15 November 2010
Chairperson: Ms N Ngcingwana (ANC)
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Meeting Summary

Agrément South Africa (Agrément) presented its 2009/10 Annual Report, noting that it had achieved a clean audit. It operated in an innovative area, where there were no previous standards set, and developed its own internal criteria to test products. Agrément supported Government policy on rural development and service delivery. Its products could be used in remote rural areas because of their technical and socio-economic advantages over conventional products. Most of the products were cost effective, easily transportable and environmentally friendly. The difference between Agrément and South African Bureau of Standards was outlined, noting that Agrément dealt with innovative non standardised products, developing its own criteria to test these products, whereas SABS promoted and maintained standardisation and quality, by developing compulsory specifications and enforcing their compliance with technical regulations. It was noted that transformation within Agrément was on track, with 75% of its staff female or black. Agrément reported to the Department of Public Works (the Department or DPW) and aligned itself with the Department’s strategic policies. It had closer collaboration with applicants and stakeholders, and modern methods of construction enhanced service delivery and contributed towards global sustainability initiatives. Its innovations were outlined, noting that 845 formal applications for technical assessments had been received and 494 certificates had been approved and awarded in line with other Agrément organisations worldwide. It had a budget of R9 million and spent R8.5 million.

Members expressed concern that Agrément French name would not be widely understood. They asked if Agrément had offices throughout the country, whether it carried out sufficient awareness, including with secondary and tertiary students and the community, to enable full awareness of its programmes, and also questioned the initiatives with municipal offices. This was particularly relevant for the building of roads in rural municipalities. They also questioned why Agrément products were used world wide yet South African roads were potholed with seemingly no solution in sight, and questioned whether it had communicated with the Department or Portfolio Committee on Transport. They asked to which countries Agrément exported products, and the type of products, and how these were tested, and questioned if it had any authority to stop sub-standard products entering the country or being used. Members were informed about the new Bill that hopefully would extend such powers to Agrément.

The Construction Industry Development Board (CIDB) briefed the Committee on its 2009/10 Annual Report, and its challenges and priorities. Although there was an unqualified report, there was a matter of emphasis about the irregular expenditure arising in a non-approved finance lease. However, corrective plans of action had been put in place to address the problem issues. CIDB posted a surplus of R14.5 million, largely attributable to higher income. It had under spent on its budget. The two pillars of its mandate were the provision of an enabling environment that stimulated sustainable growth, reform and development, and the regulation of the construction industry. Areas prioritised had included training and contractor development, the review of the registration criteria, finalisation of registration amendments to accommodate the emerging sector, improved communication with stakeholders, research and development and academic excellence, industry performance and best practice, establishment of the construction contact centres in all provinces, and the register of professional service providers. It had improved target setting and discussed the four core programmes and their highlights. An extensive outline of the corrective action plans for financial improvements was outlined.

Members asked about gender issues, commented that the Annual Report looked expensive and questioned why this was done, and asked about the policies and procedures to
address planning, implementation, and monitoring issues. They questioned the need for condonation extensively, and why this was raised only in this year. They also asked about performance training and the review, asked for confirmation of the use of an Agrément member, Mr Noyana, asked about the status of the construction charter, and noted that this was beyond CIDB alone. The relationships with other sector entities were discussed. Members enquired how CIDB addressed the problem of some contractors who posed as its agents, and asked about the participation of youths and people with disabilities in the construction industry. Members were concerned about the grading of emerging contractors and felt that these should be represented at the CIDB Board. They raised issues around the expenditure and requested breakdowns or costs and salaries.

Meeting report

Agrément South Africa: 2010 Annual Report presentation
Ms Ntebo Ngcobo, Board member, Agrément South Africa, explained that Agrément was a French name which meant ‘fit for purpose’. Agrément South Africa (Agrément) certified non standard construction material with the help of various experts, and although it was based at the Centre for Scientific and Industrial Research (CSIR) in Pretoria, it had a presence in the Eastern Cape

Mr Joe Odhiambo, Chief Executive Officer, Agrément, briefed the Committee on Agrément South Africa’s supportive role in the approval of alternative construction technology, which was aligned to Government’s service delivery. He highlighted that it had achieved a clean financial audit and had acquired an ISO 9001 certification. The newly acquired laboratory equipment had reduced the turnaround time of technical tests and this was also made possible by highly skilled technical staff.
 
Agrément reported to the Department of Public Works (the Department or DPW) and aligned itself with the Department’s strategic policies. It supported Government by reducing the risk of untested but innovative construction systems and products. He highlighted that Agrément certificated products could be used to fast track service delivery and emphasised that it was vital that local authorities took cognisance of the certificated non-standard building systems and products.

Agrément had improved its communication with applicants for technical assessment, and there was closer collaboration with stakeholders. Use of modern improved methods of construction enhanced service delivery and contributed towards global sustainability initiatives. During the year under review, Agrément aligned itself with some of Government’s key priority areas, which included creation of work and sustainable livelihoods, education, health, crime prevention and rural development.

The key distinction between Agrément and the South African Bureau of Standards (SABS) was that Agrément looked at innovative non standard products, whereas SABS was a statutory body that promoted and maintained standardisation and quality. Agrément operated in an innovative area where no previous standards existed, and thus developed its own internal criteria to test products. SABS developed compulsory specifications based on national standards, and enforced their compliance with technical regulations.

Transformation within Agrément had been addressed considerably, with 75% of staff now either black or female.

Agrément South Africa had achieved 174 valid innovations, 79 of which were building products, 82 were building systems and 13 were road products. A total of 845 formal applications for technical assessments had been received and 494 certificates had been approved and awarded in line with other Agrément organisations worldwide. Approved certificates were awarded to projects such as the Roadcem non-traditional soil stabiliser used in conjunction with cement for road-based stabilisation. This was suitable for rural roads and was cost effective compared to conventional stabilisers. Frictionpave thin bituminous road surfacing system was used for building roads at a lower cost, but had a higher performance rate, thus reducing the amount of environmental degradation.

Although Agrément South Africa operated on a small budget of just under R9 million, its total expenditure was R8.5 million. Agrément was committed to service delivery and accountability in accordance with its mandate, and contributed towards fast-tracking rural economic development.

Discussion
The Acting Chairperson commended Agrément for its presentation and clean financial audit. She commented that the French name of the organisation could give rise to confusion about its meaning.

Ms N November (ANC) also commended Agrément for the clean audit and asked whether it had offices throughout the country, or just in Pretoria. She asked about the extent of Agrément’s awareness programmes in schools and their effectiveness. Ms November also commended Agrément on transformation but noted that nothing had been said about the involvement of youths and people with disabilities.

Ms Ngcobo responded that Agrément invited students from the universities and mentored them during their holidays, and, through this process, one student had been recruited as a member of staff.

Mr Odhiambo added that Agrément was part of the CSIR and participated in students’ visits with it. In addition, Agrément interacted with tertiary students and high school youths through various programmes such as the Youth and Science Conference, the Sciencefest exhibition in Pretoria; the Youth Week and Take a Girl Child to Work week.

Mr M Manana (ANC) commented on the attendance of the members of the technical sub-committee and noted that only one member had attended all four meetings. He asked if there had been quorums at those meetings. He also questioned the discrepancy in payments for the meetings attended by Ms Khomotso Choma, Mr Twedi Seane, and Ms Nozi Shabalala and Dr Mohammed Tayob. He asked for a breakdown of salaries for different individuals and noted that top management in entities and parastatals generally earned higher salaries.

Ms Ngcobo explained that although technical sub-committee members attended meetings at different times, there had always been a quorum at these meetings.

Mr Pat Ncube, Acting Chief Financial Office, Agrément, responded that details of salary packages for the Chief Executive Officer and other staff members would be provided to the members later. He indicated that salaries for top management were approved by the Board. He reminded Members that Agrément operated within the CSIR, which had a salary skills band that determined the salaries for various levels. He noted that Board remuneration depended on National Treasury guidelines.

Mr Odhiambo acknowledged the error in Ms Khomotso Choma’s payment, and assured Members that this would be rectified, and that a detailed breakdown of individual salaries would be provided to the Committee later as requested.

The Acting Chairperson noted that questions about transformation within Agrément, awareness programmes to motivate students and number of offices throughout the country had not been answered.

Ms Ngcobo responded that Agrément invited students from Grades 10 to 12 to universities where it show-cased the programmes offered and the options that were available to enable them to decide their career path.

Mr Odhiambo said that Agrément had offices in Pretoria and a presence in the Eastern Cape. He explained that, given Agrément’s size, it could not afford to open numerous offices. However, if its mandate increased, there could be economic justification for offices to be opened in other provinces. Agrément supported provinces from its base in Pretoria.

Mr Odhiambo acknowledged the shortcomings in the involvement of youths and people with disabilities, and said that Agrément tried to target people with disabilities in their recruitment drive. He added that the majority of Agrément staff was comprised of people below the age of 30, and these people were considered to be youths.
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The Acting Chairperson commented that while Agrément’s work was important, most people had not heard about it and therefore its presence in all provinces would help to publicise it. She added that she had heard about schools invitations from CSIR, but not previously from Agrément and thought that school children needed to be motivated about Agrément’s programmes.

Ms November recommended that rural municipalities should be invited to hear information from Agrément about the technology used in building roads.

Mr Odhiambo outlined the various activities that Agrément had done as part of its awareness programme. Last year Agrément participated in the three-day Municipalities Building Control Officers’ seminar held in Pretoria, and shared information about its activities. It advised the South African National Roads Agency to accept only Agrément certified products, and planned to extend similar advice to various municipalities. At its 40th anniversary in 2009, Agrément interacted with 400 professionals from various entities and informed them of its activities. It interacted with other Government agencies and was a member of the stakeholders committee of the National Home Builders Registration Council (NHBRC), the Construction Industry Development Board (CIDB), the Council for the Built Environment (CBE) as well as SABS and the National Regulator for Compulsory Specifications (NRCS). Mr Odhiambo added that Agrément had made a presentation to the Portfolio Committee on Human Settlements, and informed members there of its activities.

Mr Manana expressed satisfaction with Mr Odhiambo’s response. He noted that Mr Mohammed Tayob’s payment issues should be rectified as well. He stressed that the breakdown of salaries for top management should be provided to the members.

Mr L Gaehler (UDM) asked whether there was any mechanism in place that informed the stakeholders about the products that could be used in building roads in rural municipalities, given the certification of Roadcem soil stabiliser.
He noted the availability of cheap building material on the market and asked whether Agrément had systems to control their importation, and if it did anything to make people aware of its own well priced products.

Mr Odhiambo responded that currently Agrément had no mandate to stop the influx of cheap products into South Africa. However it had proposed that, in the new Bill, it should be given the mandate to stop the influx of sub-standard material into the market. Currently it interacted and consulted with other Government authorities and implementing agencies, and made them aware of the impact of cheap products and the availability of Agrément certified products that would be a sustainable alternative.

Mr Gaehler commented that career guidance should be made available to students from Grade 8 and asked the Agrément could assist in that regard.

Mr W Doman (DA) asked how Agrement’s performance would be enhanced if it became a legal entity. He also asked how Agrément kept track of products used, especially overseas, and whether it was Agrément’s responsibility to market these products.

Mr Odhiambo responded that the proposed Bill to change Agrément to a separate entity was a result of work that had been done by the Department of Public Works. Agrément was currently part of CSIR, which reported to the Department of Science and Technology, although funding for Agrément came from Department of Public Works. DPW had embarked on stakeholder consultation and the outcome was the need for the development of a business case for Agrément’s separate existence. He added that Agrément had fulfilled its mandate for the past 41 years, and would be guided by its principal agent. Agrément would be able prevent sub-standard products if its mandate was changed through the Bill.

Mr Odhiambo said that Agrément had no capacity to monitor individual entrepreneurs outside the South African borders. However, Agrément offices in countries such as France, United States of America (USA) and the United Kingdom of Great Britain (UK) would contact Agrément SA to check the testing protocols used for specific products that were brought there. Agrément member states had a partnership through the World Federation of Technical Assessment Organisation (WFTAO) for recognition of each other’s products, but had the mandates for final approval of products brought into their country. Therefore, Agrément indirectly got to know about the use of its products in other countries.

Ms Ntebo added that Agrément was not responsible for marketing the products it certified, but marketed itself through invitation of stakeholders such as CIDB, where it showcased the certified products.

Mr Doman recommended that Agrément should remain small, as it was not involved in product development and sought relevant technical expertise from industry if necessary. He expressed satisfaction that Agrément interacted with universities and other professional organisations, and added that these organisations should motivate their members to come up with products relevant to the country’s needs. 

Ms Ntebo responded that Agrément had no plans to grow bigger than at present, because it invited technical experts to assist in testing products and it would be impossible to have experts in every sphere accommodated within the entity. She explained that Agrément had to match CSIR industry salaries to avoid excessive staff turnover.

Mr K Sithole (IFP) asked how Agrément supported Government policy and whether it had programmes that responded directly to President Jacob Zuma’s call for rural development countrywide.

Mr Odhiambo responded that Agrément indirectly answered the President’s call through the approval of new, innovative and cheaper products such as the Frictionpave thin bituminous road surfacing system, which could be used in developing rural roads.

Mr Sithole asked for clarification on Agrement’s delivery on its strategic plan, with special emphasis on its mentorship programme and financial sustainability.

Mr Odhiambo said that the mentorship of junior evaluators and financial sustainability were ongoing as part of the planned progress. Agrément had a three year rolling budget and a continuous human resources development target, which was achieved annually and replicated throughout the three years. Similarly the financial sustainability targets were achieved within the allocated budget of R10 million.

Mr C Kekana (ANC) expressed his displeasure with the French name Agrément, and requested that a local name be considered to avoid confusion. He had initially thought that it was linked to agriculture.

Mr Odhiambo acknowledged that the name was unfamiliar, but added that this issue could be addressed by the Department of Public Works and Agrement’s Board.

Mr Kekana expressed concern about potholed roads and the poor workmanship and professionalism in the construction sector. He noted that 20 000 houses had been demolished in the Eastern Cape, although there was a huge backlog for housing. He called for systems to be put in place to control sub-standard work and asked whether there was a way to ensure that good quality houses would be built without wastage of resources.

Mr Odhiambo expressed hope that the forthcoming Bill would grant Agrément the authority and mandate enjoyed by its sister organisations world wide, to enforce construction regulations that left no room for sub-standard workmanship. He said that overseas it was a criminal offence to build sub-standard houses.

Ms N Madlala (ANC) asked for clarification on the development of performance-based criteria for assessment of energy-evaluation software, as well as for cold-mix asphalt.

Mr Odhiambo responded that the two criteria had been finalised and published on Agrement’s website. He said Agrément had received a number of cold-mix asphalt applications. This was one of the exciting products that had potential for far reaching consequences. The repair of potholes in the past required a lot of machinery, but new criteria had been developed for cold-mix asphalt, which was portable and made it far easier to repair potholes.

Ms Madlala asked to which countries Agrément exported products, and the type of products.

Mr Odhiambo responded that test protocols were given to its sister organisations in the countries in which they operated, which allowed them to make independent judgements on products brought into their countries, on the strength of the tests done by Agrément SA. This in turn facilitated the export of South African products to other countries. He added that South African products had been used extensively in Australia, New Zealand, United States of America, Canada, Europe, Africa and the Far East. Agrément SA was recognised and respected internationally.

The Acting Chairperson commented on the irony that Agrément certified products were used overseas, yet South Africa battled with the problem of potholes and poor roads. She asked when the Bill was expected to be tabled in Parliament.

Mr Odhiambo responded that the minutes from the Portfolio Committee on Public Works reflected that the Bill would be tabled in 2011.

Mr T Magama (ANC) commended Agrément for its clean audit and noted that it had no matters of emphasis.

Mr N Magubane (ANC) also commented on the potholes on South African roads and noted the substandard workmanship by the companies contracted to do the repairs. He requested that Agrément should invite Members to showcase its products.

The Acting Chairperson commented that Agrément had invited Members to its office in Pretoria, where they were shown houses that had been built using Agrément certified products.

Ms Ngcobo responded that Members would again be invited at the appropriate time.

The Acting Chairperson asked whether Agrément had done a presentation to the Department of Transport.

Mr Odhiambo responded that Agrément had not presented to the Portfolio Committee on Transport, but only to the Committee on Human Settlement.

The Acting Chairperson commended Agrément for its presentation, and the clean audit that it had achieved.

Construction Industry Development Board (CIDB) Annual Report 2009/10
Prof Raymond Nkado, Board Chairperson, Construction Industry Development Board, noted that the Board (or CIDB) had focused on priority areas of contractual development as part of its mandate, and on the registration criteria for contractors in the various categories, with a view to responding to the imperatives of the industry. CIBD also looked at the Phase 2 of the Register of Contractors. The term of the current Board would end in December 2010, and the process of nominating the new Board was under way. Although CIDB received an unqualified audit report, there was an emphasis of matter

Mr Ronnie Khoza, Chief Executive Officer, Construction Industry Development Board, briefed the Committee on the CIDB’s performance and the challenges experienced during the year under review, as well as outlining future plans. The CIDB’s two pillars of its mandate were the provision of an enabling environment that stimulated sustainable growth, reform and development, and the regulation of the construction industry.

Mr Khoza outlined the challenges and priorities for 2009/10. The areas prioritised were training and contractor development, the review of the registration criteria, finalisation of registration amendments to accommodate the emerging sector, improved communication with stakeholders, research and development and academic excellence, industry performance and best practice. It had also focused on improved registration processes, setting up software and electronic document management systems to combat fraud, the 2010 FIFA World Cup expenditure, establishment of the construction contact centres in all provinces, and the register of professional service providers.

Mr Khoza discussed the performance information of CIDB, which had been described as on-going for a long time, owing to the nature of its business and the structure of the various programmes. CIDB improved its target setting through various interventions. He noted that targets of the reporting period were revised, but these had not been approved by the Minister, and therefore CIDB had reverted to its original targets.

Four core programmes were discussed. The Growth and Contractor Development focused mainly on the national contractor development programme and the management of the construction contact centres and provincial officers. The Construction Industry Performance (CIP) gave institutional support, although funds had not yet been approved, and would be piloted from CIDB’s internal resources. The Procurement and Delivery Management (PDM) and Construction Registers Service (CRS), together with the electronic document management system, improved service excellence.

He then outlined the highlights of the four core programmes. These included signing of the Memorandums of Understanding (MoUs) with Nedbank, in addition to those already signed by ABSA, and Standard Bank, in terms of the National Contractor Development Programme (NCDP). There had been establishment of three Construction Contact Centres (CCCs), although the North West Province had procurement problems. The Procurement and Delivery Management (PDM) had improved Infrastructure Delivery in the public sector (IDIP).

Mr Peter Mongwenyana Chief Financial Officer, Construction Industry Development Board, tabled the financial performance of CIDB; report of the Auditor-General and corrective action plans (see attached presentation for full details). He noted that in the 2009/10 financial year, a surplus of R14.5 million was achieved when compared to the figures budgeted. The bulk of this came from registration fees of R12.9 million and R1.5 million was from interest revenue. He said the total budgeted expenditure was R95.5 million, but the actual expenditure was R82.1 million, which resulted in an under spend of R13.4 million, the bulk of which was attributable to unexpected revenue of registration and interest. He noted that in the 2007/08 financial year, the revenue for 2007/08 had dropped by 14%, and an additional allocation was requested from National Treasury. This meant that revenue from Government increased by 41%, from R41.8 million in the previous year, while revenue from registrations increased by 33% from R35.3 million. The total expenditure increased by 12% for the year under review, when compared to the previous financial year, and the bulk of this related to staff and marketing costs, which increased by R6,784 million and R0,783 million respectively.

He noted that the CIDB received an unqualified report in the 2009/10 financial year. However, there was an emphasis of matter relating to irregular expenditure, where two items were highlighted: the finance lease of R357 000 and rental of office furniture of R738 000. CIDB had entered into a five, instead of a three year lease, and therefore sought condonation of the finance lease, on which it still awaited National Treasury’s response. In the meantime, CIDB had signed off a sole service provider for furniture rental while a competitive tender to replace rental furniture would be put out in November 2010.

He noted that the Auditor-General (AG) had raised a number of issues in its report, and in response CIDB had designed a Corrective Action Plan (CAP), setting out timelines within which issues had to be resolved, the responsible official, and the specific action that was to be taken to resolve the issues. Monitoring of CAP would be done by the Chief Executive Officer, the Audit Committee and the Board.

The AG also developed a key controls document for the 2010/11 financial year, and listed measures that CIDB had to take to avoid qualifications. The list included capital assets, presentation and disclosure, revenue and debtors, expenses and creditors, finance leases, journals and performance information. All of this had to be monitored on a quarterly basis.

Mr Mongwenyana finally explained that the fruitless and wasteful expenditure of R71 000 was being attended to through stricter reconciliation controls. He said its debtors were erroneously refunded because no reconciliations had been done prior to September 2007.

Mr Khoza assured the Committee that CIDB had expected a clean audit for the new financial year.

Discussion
Ms N November (ANC) noted with concern the gender imbalance of the CIDB team. She noted that the picture in the Annual Report showed only four women who wore the Bafana Bafana T-shirts and asked how the 214 T-shirts had been distributed.

Mr Khoza responded that CIDB had a female at the executive level, and many women at director level, as well as the fact that advertised positions gave priority to female applicants. He said the team shown wearing the Bafana Bafana T-shirts comprised of the Board and leadership team. The total CIDB staff, the Board and the Audit Committee all received the T-shirts.

Ms November commented on the ‘beautiful’ Annual Report, but said that it looked expensive.

Mr November asked why the CIDB had no approved and documented policies and procedures to address planning, implementation, and monitoring issues.

Mr M Manana (ANC) commented on the condonation issue, and asked why this issue appeared as a matter of emphasis in the 2009/10 audit report, when it was in fact something that happened eight years ago.

Mr Khoza responded that the main reason for the condonation was that CIDB had signed a five instead of a three year lease, and assured Mr Manana that there was nothing wrong with the procurement process. It was possible to get condonation on disclosure of details, this disclosure had been done, and the National Treasury would reconsider the matter on that basis. He said a recommendation had been sent to the Director General that the condonation be given. He added that National Treasury would not give a condonation if the deal was suspect.

He then explained that the issue of the condonation of the lease agreement was not applicable to the rental of furniture. He said the furniture issue appeared in the current financial year because CIDB, although not finding problems previously with the approach it had used, had now admitted to the AG that it had erred and should have submitted to National Treasury a disclosure of how the furniture lease had been done, which would have cleared the air. The Corrective Action Plan dealt with these issues fully.

Mr Khoza said that Professor Nkado had discussed the condonation issues. He assured Members that the procurements of CIDB were totally compliant. He noted that renegotiating the rental lease would have cost more if it had been done to comply with the regulations, and had advised management to request condonation from the National Treasury. He said CIDB was confident that it would be granted condonation. This was a once-off error that had been fixed.

Mr Manana asked whether the performance training scheduled for November/December 2010 had already taken place or whether it would be done at all. He asked whether targets to be reviewed for submission had been completed.

Mr Khoza that the performance review was in progress and would be finalised. He said that before the end of November the executive authority would be approached to approve the targets that had been set.

Mr Manana asked whether Mr Noyana was the same individual who was also a Board member of Agrément.

Mr Khoza noted that Mr Noyana had been part of the Built Environment for a long time and actively participated in constructor development. He was a member of the CIDB’s first Board. Mr Khoza noted that it was advantageous to have members who worked in organisations that purported to do the same thing. He added that Mr Noyana worked a lot with small contractors who would need the information supported by Agrément as well as information from the CIDB.

Mr Manana asked about the status of the Construction Charter, and asked whether the provincial stakeholder workshop for KwaZulu Natal (KZN) had taken place.

Mr Khoza responded that status of the Construction Charter was a matter beyond the CIDB, but added that as soon as there was a Charter chapter, the CIDB would align itself in the rollout out of the Charter to various provinces. The DPW facilitated the process. He emphasised that CIDB worked through partnerships to deliver on various things. He gave the example of the North West, where launch of the Construction Contact Centre had been delayed due to procurement problems by the DPW.

Mr Khoza noted that there had been two outstanding stakeholder workshops in KwaZulu Natal and Limpopo, but that these had been resolved. Limpopo had not yet secured a date but KZN had done so. He said all stakeholder workshops were linked to the previous stakeholder forum of 2009. A new phase of the provincial stakeholder forums would be done every year.

Mr Manana asked whether the risk management committee had been set up.

Mr Khoza responded that the risk management committee had been set up. It had been established that CIDB’s risk profile required a different Board Committee, as opposed to everything being done through the Audit Committee.

The Acting Chairperson asked for clarity on irregular expenditure of R1 million and lack of documented and approved internal policies and procedures to address planning implementation, monitoring and reporting processes.

Mr Khoza noted that Ms November and the Acting Chairperson had asked a similar question about policy procedures. He responded that it the policy that had been developed now was similar to the way in which CIDB used to do things, but the AG insisted that these be reduced to written policy and procedures so that everybody would know how it was done.

Prof Raymond Nkado added that these had been signed at the Board level.

Mr L Gaehler (UDM) asked for clarity on the advert in the City Press that warned contractors about issuance of fraudulent certificates.

Mr Khoza responded that some contractors had paraded as CIDB agents, and CIDB therefore warned the public that it had no agents. Instead it had Construction Contact Centres where people could submit their applications. He said five senior staff had been suspended for fraudulent activities and one had resigned. Disciplinary action and police investigations were underway.

Mr Gaehler commented about the composition of the Board, noting that the established sector was well represented compared to the emerging sector.

Prof Nkado responded that the Board composition was determined by the executive authority. The advert for nominees was nationwide and the Minister appointed Board Members who in turn were approved by Cabinet. The current board had a wide spectrum of representation and Mr Canon Noyana represented small contractors. The DPW, and not CIDB, determined the Board’s composition.

Mr Khoza added that a representative Board was essential. He said the Act stipulated that Board members should be knowledgeable about the industry, as well as having financial and labour expertise, among other areas. CIDB had other mechanisms, such as the Stakeholder Forum, which drew the emerging sector on board.

Mr Gaehler commented about the large number of grade ones and thought that they stood no chance of advancement. He noted that grade one contractors were eligible for work valued at R650 000, while most of Government construction projects started at R2 million, and called for a policy that would address these inequalities.

Mr Khoza requested that the issue of grade ones be addressed separately.

The Acting Chairperson made a point of correction and indicated that grade ones started with R200 000 and grade 2s were awarded work valued at R650 000.

Mr Manana noted that there was some improvement in the register and grading compared to 2008/09. He indicated that last year he had asked about the participation of youth and how many young people had been graded, but his request had not been answered.

Mr Khoza responded that information had been sent out regularly, and wondered whether Parliament received it too. He said the youth were banded together with women and black contractors, but promised that the next report would reflect a breakdown of youth register and grading as requested.

Mr Gaehler asked why the Construction Sector Education and Training Authority (SETA) was not prepared to fund CIDB, as reflected in the Annual Report.

Mr Khoza noted that the former Chairperson of the SETA, who was also a CIDB Board member, had facilitated that CIDB had access to the SETA. CIDB applied twice but no reasons had been given why its application had been unsuccessful. He added, however, that the attitude had changed and a Memorandum of Understanding had now been signed. An Employment Skills Development Agency (ESDA) should have been established by the SETA, but the former management was against it. Industry asked CIDB to see to the establishment, and CIDB then applied to the Department of Labour to establish the ESDA, and permission had been granted. New SETA management expressed interest in ESDA and CIDB had decided to start a pilot while it waited for funding. He was optimistic about the improved working relationships.

Mr Manana noted that R720 000 had been spent on the Board Committee for the year ended 31 March 2010. In 2008/09, R17 000 was spent on travel allowance, yet R423 000 was spent on the same line item in 2009.10. He requested an explanation.

Mr Mongwenyana responded that more meetings were held in 2009/10 than the previous years, and these had been necessitated by Board Task Teams that had taken place. He said a thorough analysis and breakdown would be provided as requested.

Mr Manana thought that the Annual Report reflected unnecessary expenditure which flew in the face of Government’s call for Departments and entities to cut their spending.

Mr Khoza noted the concern expressed by Mr Manana, but indicated that it was only the Annual Report cover that looked “fancy”. He noted that CIDB had felt the need to celebrate the contribution by the construction industry, and this was a once-off glossy design.

The Acting Chairperson noted that the Annual Report had not reflected people with disabilities.

She commended CIDB for the meeting it held in Mpangeni, Durban in 2007, to address the concerns of emerging contractors, and said such meetings would prevent fraudulent activities within the sector. She then thanked CIDB for its presentation.

The meeting was adjourned.

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