Construction Industry Development Board Bill: briefing & voting

PUBLIC WORKS PORTFOLIO COMMITTEE
11 October 2000
CONSTRUCTION INDUSTRY DEVELOPMENT BOARD BILL: BRIEFING AND VOTING

Department of Public Works delegation: Mr C Makama, Director-General Mr T Sokuthu, Miss Lindelwa, Mr J Govender and Mr S Hudson

Documents handed out:
Construction Industry Development Board Bill
Slide Presentation (see Appendix 1)

SUMMARY
The Department of Public Works gave background information on the processes leading to this Bill being tabled, mainly on the crisis that the construction industry is in at present and the extent to which the proposed Bill would alleviate and address this crisis. The committee unanimously voted in favor of the Bill.

Dominating the meeting, however, was a squabble after the members had voted. The Democratic Alliance proposed a debate on the Bill in the House which was initially objected to by other members, especially the ANC who preferred a mere declaration of the Bill to a debate. Members called upon the DA to come clean and raise its concerns in the meeting rather than in a public debate. Members eventually agreed with the DA proposal for a public debate.

MINUTES
Mr Jerome Govender gave a presentation on the processes leading to the Bill. After the presentation, members were given an opportunity to raise any concerns they might have in respect of the Bill. As there were none, the members voted unanimously in favor of the Bill.

Immediately after the voting, Mr Opperman (DP) proposed a public debate on the Bill which was rejected by the ANC committee members. The reasons for Mr Opperman's proposal were requested but he refused to disclose the reasons for his proposal but insisted on a public debate of the Bill.

The Chairperson pointed out that in introducing the Bill to Parliament, he would clearly state that all parties had voted in favor of the Bill - something which could make a joke of the DA's proposal for a public debate. After a short deliberation, the committee members (including the ANC) relented and agreed to the DA's proposal for a public debate.

Discussion
Q. Mr Opperman (DP) - Can members of the stakeholders' forum be appointed to the Board?
A. Mr Hudson - Yes, they will be appointed on the basis of competency, leadership qualities and taking into account the needs for representivity of different groups (i.e. women, race and regions).
Q. Mr Radebe (ANC) - The Bill stipulates that a member or person should vacate a political office before being appointed into the Board. What does this mean?
A. Mr Hudson - It means vacating the political office and not the party affiliation.

Appendix 1:
PROGRESS TOWARDS THE ESTABLISHMENT OF THE CONSTRUCTION INDUSTRY DEVELOPMENT BOARD (CIDB)

Inter-related set of Problems
· Volatile and unstable industry
- Impact on sustainable development
· Costs continuously being driven down by clients
- Often translates into poor performance and quality as contractors attempt to recover margins elsewhere
· Historical barrier for entry to the emerging sector
· Public Sector delivery management

White Paper Strategies
· Growth and Stability of the Construction Industry
· Enhanced industry performance (through Best Practice)
· Promoting new industry capacity (skills development and promoting the emerging sector)
· Developing the role & capacity of the Public Sector

Need for the CIDB
· cannot be addressed in piece-meal approach
· cannot be effectively dealt with by either Public or Private Sector alone
· need for a focussed national agency to provide support to assist public and private sector organisations meet this challenge

Core focus areas emanating from the White Paper
[PMG Editor's Note: Graphs not included]

Priority Programmes
· Programmes that have proceeded before establishment of the CIDB
- Emerging Contractor Development Programme
- Affirmative Procurement Policy (Targeted Procurement)
- Project Management Course for the Public Sector
- Delayed payments by the Public Sector

Role of Government
· Client
- Value for money
· Facilitator
· Regulator
· Social & economic responsibility
- Ensure industry growth and development

Enabling Legislation to Establish the CIDB
[PMG Editor's Note: Diagrams not included]

Preamble
· CI - Indispensable role in the economy
· Instability, volatility & structural problems
· Unique nature of industry
· Constraints to emerging sector
· Investment constraints - need to promote
· Impact on public - quality, productivity, she
· Need for leadership, drive best practice
· Vision for industry development strategy

Preambles to each chapter
Chapter One - Definitions
- Best Practice means a desirable & appropriate standard, process, method or system in relation to the delivery process and the life cycle of fixed assets
- Organ of State means an organ of State as defined in section 239 of the Constitution of RSA, Act No. 108, 1996

Chapter Two - Establishment of the CIDB
Objects of the Board
- To promote the contribution of the Construction Industry
- Provide strategic leadership
- Determine & establish Best Practice
- Promote :
* Best Practice
* Uniform application of policy
* Ethical standards
* Sustainable growth
*Appropriate research
-Implement Government policy

Powers, Functions and Duties
-Must implement policies, programmes & projects
-May initiate policy refinement and development in cooperation with Government
-Must facilitate communication
-Must establish a stakeholder forum
-Must provide information on Best Practices, performance improvement, etc.
-Must determine Best Practice priorities in consultation with Government
-Must establish and maintain:
*Register of Contractors
*Best Practice contractor recognition scheme
*Register of Projects
*Best Practice projects assessment scheme
-Must promote the uniform application of policy throughout all spheres of Government
-Must identify and advise on Public Sector delivery constraints
-Must publish a code of conduct
-May monitor economic activity and measures according to which Public Sector spending is scheduled
-May consult with organs of state to determine construction related budgets and application
-May develop, promote and update the construction industry research agenda

Chapter Two - Appointment of the Board
· At least 9 but not more than 13 members
· Appointed through a formal process
· Criteria will comprise a reasonable balance of expertise and knowledge whilst broadly reflecting the race, gender and geographic composition of SA
· Remuneration determined by the Minister in consultation with Minister of Finance

Chapter Two - CEO of the CIDB
· CEO appointed by the Board in consultation with the Minister
· Five year contract period
· Subject to performance agreements, etc.
· Remuneration determined by the Board as approved by the Minister and Minister of Finance

Chapter Two - Stakeholder Consultation
· The Board must constitute a Stakeholder Forum to inform it on matters that affect Construction Industry Development
· Comprises individuals with experience, skills, expertise necessary to inform the Board appropriately
· Represent Stakeholders
· The Board must at least once per year convene a meeting of the Stakeholder Forum with the Minister

Chapter Two - Evaluation & Review
-Submit an annual business plan for approval by the Minister
-Submit an annual report.
-Be subject to an independent evaluation every 5 years to determine the relevance and value added by the CIDB

Chapter Three - Register of Contractors
· Tool for managing risk; promoting best practice; nature & performance of contractors
· Single register (reciprocity with other statutory registers - NHBRC)
· Mandatory for public sector
· Private sector use will be encouraged but not prescribed
· Viable to operate because of IT developments
· Phase 2 - Contractor Recognition Scheme

Chapter Four - Register of Projects
· Gather information on nature, value and distribution of projects
· Projects above a certain value will be registered (continuation of current situation where all projects are subject to some sort of registration)
· Projects above a certain value subject to a registration fee
· Best Practice Project Assessment Scheme (phase 2)
- after establishment of RoP
- projects above a prescribed value subject to assessment

Chapter Five - Financial Management
· Subjects the Board to the Public Finance Management Act (PFMA)
· Deals with funding of the Board, financial year end, etc.
· In terms of the PFMA, the Board is the accounting authority and the members are jointly and severally liable

Chapter Six - General
· Matters such as restriction on the use of name, enforcement of Code of Conduct, secrecy, etc.
· Consultation
-The Minister must ensure appropriate consultation with other affected Ministers
· Regulations
· The Minister may, by notice in the Gazette, make regulations on any matter that is required or permitted to be prescribed in terms of the Act

Envisaged Benefits of the CIDB
· Core national competence and resource national authority recognised by the public and private sectors.
· Reduced duplication of effort
· Improved risk management and reduced cost.
· Accelerated transformation and development
· The establishment of best-practice
· Sector status reports
· Improved planning parameters for industry training requirements.
· Standardised and simplified contracts
· Enhanced development of emerging sector.
· Enhanced public sector capacity to manage the delivery process

Process ahead
· Legislation
-State Law Advisor
-Portfolio Committee
-Parliament and National Council of Provinces
· CIDB
-Operational and Implementation plan
-Framework for regulations