Agrément South Africa, Council for Built Environment, Construction Industry Development Board, Independent Development Trust performance in 1st & 2nd quarters 2011

Meeting report

Agrément South Africa presentation
Mr Joe Odhiambo, Chief Executive Officer (CEO) of Agrément South Africa, briefed the committee on progress made in dealing with the technical assessment of innovative construction products and materials. Applications received and certificates offered were above target, as were the number of certified systems under custodianship in the areas of building products, building systems and roads products.

The entity was still a component of the Council for Scientific and Industrial Research (CSIR), but reported to the Department of Public Works (DPW). The DPW had given clarity regarding the status of the Agrément Bill, which it was tabling in Parliament, and had indicated that its funding would be based on its future mandate. Agrément had continued its strong emphasis on the development of human resources to enhance the skills level and efficiency of technical staff, and the technical committee had improved greatly in terms of both numbers and skills, where reliance had to be placed to a large extent on industry experts. Transformation had been addressed, with 92% of the staff being either black or female.

The entity was audited as part of the CSIR Built Environment Unit, and had received an unqualified audit for the past few years. Current expenditure was running at 51% of budget, and was in line with expectations.

Agrément was contributing to the national presidential imperatives and global sustainability by undertaking technical assessments of innovative construction products. One of these was the thin concrete road-surfacing system which had been piloted in the Pretoria area by the CSIR. The system had proved effective, and was labour intensive, and would be rolled out to other areas of the country. Another innovation was the soil-cement construction system, where bricks could be made in situ using a mixture of 7% cement and 93% local soil, mixed with water. The concept had been initiated in Limpopo Province, where women had made the bricks and built their own houses, and it was intended to replicate the project in all the other provinces.

Agrément was contributing to the fast-tracking of rural economic development by allowing the safe introduction of appropriate and suitable products.

Discussion
Ms C Madlopha (ANC) said the fact that Agrément had exceeded its targets was appreciated, but wondered whether this was because the targets were not realistic, or set too low.

Mr Odhiambo said the targets were based on the entity’s historical performance, but had also been increased in line with the trend among comparable organisations around the world.

Ms Madlopha said the search for cheaper products should not result in a compromise on quality.

Mr Odhiambo assured her that the products under discussion were not only less expensive, but also superior in performance to conventional products.

Ms Madlopha said that while Agrément was meeting its transformation targets, she wanted to know at what level blacks were being employed, and whether the entity had an employment equity plan.

Mr Odhiambo said because Agrément was part of the CSIR, its policies were in line with that organisation’s employment equity policies. Transformation had been achieved “across the board,” including at senior levels.

Mr L Gaehler (UDM) asked what Agrément needed to do in order to obtain a legal mandate to act against defaulters against the country’s laws and standards.

He was supported by the Chairperson, who expressed concern that products which did not meet South African Bureau of Standards (SABS) requirements could enter the local market, and there was no mandate to criminalise those responsible.

Mr Odhiambo said the entity was working closely with DPW on this issue, and would comply with any mandate it might receive.

A representative of the DPW confirmed that a business case had been developed, and a process involving National Treasury had been initiated. It addressed the criminalising of non-certified products, and would result in only SABS or Agrément-approved products being allowed into the country.

Mr Gaehler said the problem with the new technology, which was good, was that it was available only in the cities. Agrément had limited funds, so it would not be able to roll the project out into the provinces and rural communities. This would have to be done by the DPW, and he asked if there were any plans for this.

Mr Odhiambo said this question would have to be answered by the DPW.

Ms N November (ANC) asked about the inclusion of disabled people in the transformation process.

Mr Odhiambo said Agrément was focussed on this issue, and was going all out to recruit people with disabilities.

Ms P Ngwenya-Mabila (ANC) said the fact that Agrément had exceeded its targets in some areas implied that it might have required additional funds to achieve this. She asked whether this had resulted in funds being shifted from other programmes.

Mr Odhiambo said cost-cutting measures had been implemented, which meant that Agrément had managed to exceed its targets within its budget. However, it would welcome any additional financial allocations.

Mr K Sithole (IFP) asked about the relationship between the technologies being developed by the CSIR and those of Agrément.

Mr Odhiambo said the Portfolio Committee on Human Settlements had seen a range of CSIR-developed innovative construction materials, and Agrément was working closely with the IDT to ensure that these products would be rolled out with Agrément accreditation.

Mr P Mnguni asked whether there was a plan to bring youth into the ranks of Agrément.

Mr Odhiambo said the entity had an outreach programme involving visits to schools to bring in the best students and offer bursaries and learnerships.

Council for the Built Environment (CBE) presentation
Dr Mpoti Ralephata, CBE Acting CEO, said the entity’s performance was significantly improved, compared to the first quarter. Its work was grouped into four programmes. These covered Administration, whose aim was strategic management and administrative support, encompassing internal CBE processes and operational risk assessment; the Skills Academy, whose objective was to improve skills in the built environment area so that there could be transformation in the sector; the Centre for Innovation and Integrated Planning, which aimed to facilitate integrated planning within the professional councils and sought to reorientate professional expertise towards the “challenges of the day;” and the Public Interest Programme, which dealt with matters such as the identification of work, registration, regulation and the appeals processes which took place in the Council.

Highlights during the second quarter had been the completion of Identification of Work (IDoW) draft regulations for three councils, and two IDoW exemption applications had been submitted to the Competition Commission. Policy position papers on Continuing Professional Development (CPD), Standards Generating Bodies (SGBs) and Recognition of New Professions had been submitted to the Minister for consideration and approval.

Although the CBE was satisfied with its business planning process, it faced challenges in both its project management and quality management systems. These should be overcome during the third quarter. Information technology problems had caused the Council to miss its Communities of Practice (COPs) targets. In all four of the CBE’s programmes, it was lagging behind in terms of its planned performance and budget to date, but there was no need for “red lights” yet, and it was still on track to meet its full year targets.

Areas of concern included the need to confirm the situation surrounding the hosting of the Built Environment Indaba, as the CBE was still awaiting a response from the Minister regarding proposals from the Education and Research Committee. Work also needed to be done on the execution of the some of the Council’s projects, which were being delayed owing to human resource constraints. A further problem area was the finalisation of appeals, which were taking longer than the 60 days stipulated in the Act.

The CBE was experiencing challenges in finalising the Memorandum of Agreements (MOAs) with the professional councils. So far, two had signed and a further two had shown a willingness to sign, but the remaining two were still undecided. Significant risks were imposed by the CBE’s inability to fully execute the mandate it had been given by the State, with the key risk driver being stakeholder engagement. Not much could be achieved unless the CBE developed proper alignments between itself and the professional councils, and it was working hard to achieve this.

The demographics of the memberships of the professional councils revealed that transformation remained an important issue. Whites represented 66% of all registered BE candidates and professionals, and blacks only 20%, and in terms of gender, males made up 88% of the total, and women only 12%. However, blacks made up 59% of candidates, against 40% whites, and the number of female candidates was higher, at 22%. This indicated that change was taking place, if one looked at who was entering the profession. What was needed was statistics to show how many candidates were entering the registered ranks because if this did not happen, there would be no real progress. Each council had its own specific challenges, but it was essential for the gap to be closed.

Discussion
The Chairperson said the CBE needed to accept blame for the delays in holding the Built Environment Indaba and finalising the MOAs with the professional councils, and needed to ensure that these issues were attended to by the DPW.

Ms Madlopha asked what challenges were being experienced regarding the implementation of the quality management system, and what CBE was doing about it.

Dr Ralephata said quality management software had been procured, but it had not been used, partly because the CBE did not have the information to “populate” the system. The key contents were the CBE business processes – its policies, procedures and standards – and the focus was on getting them approved so that they could be loaded on to the system.

Mr Gaehler asked what steps the CBE took to place students on completion of their studies.

Dr Ralephata said students sponsored by the CBE were placed in employment, and in one instance, a company had approached the entity and asked for students to be placed with them.

Ms N Ngcengwane (ANC) expressed her disappointment at the lengthy delay in having the CBE Bill passed into law, as this was the main reason for the challenges facing the entity. The Committee had offered to help the DPW resolve the matter, as it was “sitting on a time bomb,” but did not seem to be aware of it.

Ms Madlopha asked what courses were being undertaken by students being monitored through the Skills Academy.

A CBE representative said the courses taken by bursary students covered all those within the built environment, embracing engineering, architecture and landscape architecture, quantity surveying, construction project management and valuation.

Mr Gaehler said transformation of the professional councils posed a major problem. The country urgently needed skills, as the present shortage was preventing the DPW from carrying out its core function. He asked why the problem persisted, year after year. Most companies which were members of the professional councils, derived work from the government, and therefore there should be legislation to stipulate that contracts would be awarded only to those companies which assisted students entering the profession.

Mr Sithole said it seemed as if the councils would never achieve changes in the racial profile of the professions, and described the situation as “chaos.” He asked what the Portfolio Committee could do to assist the DPW to remedy the position.

Mr Mnguni asked what efforts were being made by the CBE to compel reluctant councils to sign MOUs, and suggested that they were not signing because they were led by people opposed to transformation.

Dr Ralephata said the professionals themselves were not “the industry”, with many of them working in companies which had a number of other professionals. They did not necessarily employ people, but rendered services to other companies. The challenge with placement of candidates usually lay with the “third tier” – the recipients of the services. Graduate engineers, for example, needed to be placed in manufacturing industries, not in the councils. The councils merely provided mentorship for the graduates. It was up to the manufacturing sector and the mines to take them on. If the CBE relied solely on the professionals to achieve transformation, it would “take forever.” The “third tier” needed to be involved in taking on the candidates, so that they could be mentored.

Ms Portia Tau Sekati, CBE Board Chairperson, said that in respect of the MOAs, there had been engagement with the professional councils. They had been invited to give feedback on why they had not signed to date. This was a last step to get an official commitment from them, and the situation now was that if they did not sign within the next few weeks, the matter would be handed over to the DPW – to whom they reported – for authoritative action. Transformation was a critical concern, to the extent that a “transformation committee” had been established within the CBE, and this would drive the process aggressively.

The Committee Chairperson commented that CBE was “not pushing hard enough,” and needed to “walk the talk.” She asked the DPW to take cognisance of the issues raised during the discussion.

Mr Butcher Matutle, Acting Chief Operating Officer, DPW, undertook to report back to the Department and would brief the newly-appointed Minister.

Construction Industry Development Board (CIDB) presentation
Mr Peter Mongwenyana, CIDB Acting CEO, reported on the entity’s key performance areas of Growth and Contractor Development (GCD), Construction Industry Performance (CIP), and Procurement and Delivery Management (PDM). An achievement in the PDM programme was the gazetting and publishing of the compliance report in July, and investigations by means of an “audit blitz” into non-compliance to CIDB prescripts by public sector clients had shown that 97 out of 100 were in breach of the regulations.

The Construction Register Service (CRS), which was concerned with the effective and efficient registration of contractors, was achieving a targeted 48-hour turnaround for dealing with queries to resolutions. However, owing to a backlog developing in the administration unit, the registration renewals of grade 2 to 9 contractors increased to 22 days, instead of the 21-day target. The backlog was almost cleared by now.

A big issue with the CIBD was fraud, and a two-day Fraud and Awareness Workshop had been held for CRS staff in September.

Action plans would be implemented to deal with issues raised in the Auditor-General’s report, such as monitoring and evaluation, system efficiency, and the formatting and alignment of the Annual Performance Plan, Strategic Plan, and quarterly and annual reports. Income from registrations was 15% higher than budgeted, so this was an area where the Board would be asking for roll-overs.

Discussion
Mr Sithole sought additional information on the Fraud and Awareness Workshop, and the type of cases they dealt with. It was also suggested that the scale of the problem might make it necessary to hold these workshops twice a year, instead of once.

Mr Gerard Naidoo, Programme Manager, CIBD, said that the outreach programme, coupled with tough punitive measures against former CRS employees found guilty of transgressions, had sent a “clear message” regarding fraud, and the trend was now down.

Ms Ngwenya-Mabila said transformation presented a challenge for the CIDB, particularly in the area of grading contractors. She wanted to know if there had been any progress in the upgrading of BEE contractors.

Mr Naidoo said transformation could be measured in terms of progress of upgrading (vertical) or growth and sustainability (horizontal). There had been a marked growth in black-owned contractors, which now represented more than 70% of those businesses up to Grade 6. However, at Levels 7 to 9, transformation was not where the CIDB would like to see it, although there had been upgrades in the past quarter

Independent Development Trust Presentation
Mr Vukani Mthintso, Integrated Service Delivery Executive, IDT, said the two strategic goals of the entity were the implementation of targeted and people-centred interventions for sustainable development in marginalised and impoverished communities and to ensure that the IDT was an efficient, effective and compliant public entity and development agency. To achieve these goals, it was in the process of transformation.

He conceded that the IDT was not performing well in certain aspects of community development. This was primarily due to the time lag involved in engaging with the community before embarking on projects. Another factor was the economic downturn, which had affected plans to secure funding from private sector corporate social responsibility budgets. So far, R2,58 billion had been spent on public mandated social infrastructure programmes, which represented an enormous growth in the IDT’s portfolio. What was being spent on black economic empowerment this year (R1,1 billion) was equivalent to the IDT’s total budget just two years ago.

From an organisational point of view, the IDT had received a clean audit, with a good level of compliance on governance issues. There would be a focus on staff development in the next two quarters, so that staff would be equipped to deal with the challenges of the transformed IDT.

A comparison of financial trends showed that the IDT spent R1,82 billion on government priority outcomes in the first two quarters this year, which was R500 million more than the whole of 2009/10, and R570 million more than in the same period last year – a phenomenal growth for the entity. Of this amount, 62,7% was spent on school building projects. Overall, over R1,2 billion was allocated to economic development, jobs and livelihood, education, human resources and skills development. Looking at expenditure on empowerment, R1,21 bn was spent on Black Economic Empowerment (BEE), R417 million on women and R152 million on youth. A total of 11 597 IDT jobs had been created against a full-year target of 16 079, while Expanded Public Works Programme (EPWP) jobs in the non-state sector (NSS) had reached 33 622, against the annual target of 14 625.

There were three policy recommendation areas which would require the involvement of the Committee. The first of these was the Alternative Construction Methods (ACM) pilot. An analysis of 12 schools involved in the pilot had shown potential savings averaging 55%, compared to conventional building methods. While ACMs were faster and more cost effective, and had comparable features to conventional structures, there were several drawbacks. There were acute training needs when considering the use of unskilled rural workers, ACMs were capital-intensive, and technologies were based mainly in large cities. There needed to be a conscious policy decision to build these industries in rural areas. It was also difficult to convince communities that ACMs were of comparable quality, and it was of paramount importance to engage communities before embarking on such a project.

The IDT had been awarded R700 million over a three-year period in the MTEF allocation by the Department of Human Settlements (DHS) during the fourth quarter of the 2010/11 financial year for the Rural Household Infrastructure Programme (RHIP). Progress in this project to provide water and sanitation had been a subject of interest by the Human Settlement Portfolio Committee and the IDT was regrettably presented as a poor performer without the key stakeholders mitigating the perception. Only 4 959 toilet structures had been completed, against a target of 16 000 for the year.

The third area involved the EPWP, where the reduction of NSS jobs was of great concern, as it was having an adverse effect on the communities which the IDT had targeted. Furthermore, inadequate non-wage incentives were deterring larger non-profit organisations (NPOs), which had greater potential to create sustainable subsidised jobs, from participating in the programme.

Potential areas for growth included crime prevention, renewable energy, rural electrification and corporate social investment.

Discussion
Mr Sithole said he had seen some of the toilets which had been constructed in KwaZulu-Natal, and they were very small and the workmanship was poor. He asked why the DPW did not use the CSIR construction model.

Mr Mthintso conceded that there had been quality problems. As the implementing agency, the DPW faced the twin pressures of implementing quickly and implementing correctly. A report had been compiled on measures to be taken to address the issue, and this would be made available to the Committee.

Ms Ngwenya-Mabila referred to an exchange programme, in which ten students were sent to China, and asked how they had been recruited, and how long they would spend in that country.

Mr Mthintso said these were top students, who had been recruited from various institutions, such as the University of Johannesburg and the University of Fort Hare. They had indicated they were committed to the concept of rural development, and the objective was to give them broad exposure to information and communication technology (ICT) so that they could employ those skills in rural communities.

Ms Madlopha and Ms Ngwenya-Mabila both commented that it would be better to recruit from rural universities, where students were used to rural conditions. Those who grew up in urban areas might last a couple of years in a rural environment, but would probably then want to return to the lifestyle they were used to.

Ms Madlala asked how soon the DPW would be in a position to transfer the skills needed for local communities to carry out the maintenance on ACM projects, as well as to set up ACM industries outside urban areas.

Mr Mthintso said social facilitation was critical, otherwise it would not be possible to protect or maintain the facilities. Communities who were involved in the maintenance plan could be trained to look after them.

The Chairperson suggested that the IDT should look into the possibility of ACM bricks being used in EPWP projects, rather than bricks being bought.

Mr Mthintso said this would be a matter for the DPW to decide on.

Several members congratulated the IDT on the progress made in several areas, with Ms Madlala commenting that they were “setting a good standard.”

The meeting was closed.