Construction Industry Development Board: Progress Report

Meeting report

PUBLIC WOKS PORTFOLIO COMMITTEE
12 June 2002
CONSTRUCTION INDUSTRY DEVELOPMENT BOARD: PROGRESS REPORT

Chairperson: Inkosi WM Hlengwa

Documents handed out
Construction Industry Development Board Report

SUMMARY
The Chairperson of the Construction Industry Development Board together with its Chief Executive Officer outlined the progress they have achieved since the appointment of the Board in 2001. The Committee felt that the Board has taken some "great strides" after listening to its progress report, considering the short space of time since its establishment.

MINUTES
The briefing on the progress of the Board was given by the CIDB Chairperson, Mr. B Bruce, and the CEO, Mr. S Hodgson. See Powerpoint presentation for content of the briefing.

Mr Hodgson said the construction industry is a national asset that faces many problems and challenges that need to be addressed such as the gap between need and capacity. The legislation which brought about their existence, the Construction Industry Development Board Act [No 38 of 2000] had been enacted in December 2000. The Construction Industry Development Board is the body charged with overseeing the construction industry and its members were appointed by May 2001 and the CEO by December 2001. Their vision is the creation of sustainable development and employment opportunities. From inception they had a quite a number of engagements with stakeholders such as academics and emerging contractors. They have also developed a Business Plan and submitted it to the Minister of Public Works for approval. They have set up procurement procedures and a sound financial management system and transformation cuts across all their objectives.

The Board has recruited six operational managers but three had declined the offer of appointment. Presently they are pulling together a stakeholders forum. They have also called for tenders for an information technology platform for the registration of members of the construction industry. They have developed a budget proposal (including outsourcing IT as this is not a core business) that has been submitted to Treasury. They have drafted a response to address the capacitation of emerging contractors because of the benefits of this in terms of socio-economic investment. Their website will be up and running by next week and members will be in a position to access information and promote partnerships because CIDB cannot do that alone. They also need to transform the way business is conducted in the construction industry

Mr. Bruce continued with the briefing. He said that it is worrying to them that there is the impression that the CIDB has been slow in moving but the CEO only came on board in December 2001. He said that they are privileged to have the CEO with them in terms of his experience and ideas. He said transformation is fundamental in the industry and in the next five years their performance will be measured by what communities will look like. This is one of their fundamental objectives, together with the creation of employment opportunities for South African communities. Presently the industry contributes only about 2.2% of the GDP. They have had a capacity constraint in delivering the forecasted 8% of the Gross Domestic Product but they are starting to unlock the constraints of the industry. They are changing the processes and systems for the industry in order to represent SA's demographic figures. He said the teaching of builders requires some form of infrastructure. Material manufacturers and suppliers have generally been ignored and the Board wants to bring them into the mainstream economy because they also have an interest in developing the industry.

He said remarks have been made about the slow pace of moving the industry forward but the industry has a capacity problem and the lack of qualified people from the marginalised communities is also hampering progress. This forces the Board to concentrate on transformation in the industry because it runs across all themes. They have also to find the right mechanism to secure the involvement of the financial sector.

Discussion
The Chairperson thanked the delegation for the presentation. He asked if the Act that brought about the existence of the Board had any constraints associated with it. He noted the challenge of HIV/AIDS and asked how this is going to impact on the industry.

Mr. Hodgson said there are few problems that they need to sort out about the Act. One provision states that the Board needs to consult with every Government Department and the other issue is how to replace a member when that member leaves the Board.

Mr. Bruce said HIV/AIDS is quite an important issue that impacts on the industry. In the manufacturing sector where there is permanent employment it is clear that they are beginning to see the impact of the disease through high levels of absenteeism. In the construction industry, employment is of a casual nature or project-based or some of the work is sub-contracted therefore the ability to monitor the effect is difficult.

Mr. Moonsamy (ANC) asked the delegation to throw some light on the position of emerging contractors.

Mr. Middleton (DP) requested copies of their Business Plan for 2002/3 and asked if the Board has a performance agreement signed by the CEO. He wanted to know what constraints the Board was experiencing and how it hopes to overcome these as well as its programme for the rural areas.

Mr. Oppermaan (DP) asked if they have any projections regarding the environmental impact of their programmes.

Mr. Bruce commented that these were not easy questions to answer. They had held some road shows to publicise the CIDB and its programmes with the Department of Public Works and have engaged some consultants to look at the problems that are being experienced by emerging contractors. They have developed a Business Plan to address these problems in the few months that they have been existence. Government has provided a vehicle that is going to address skills shortages and their mandate is to work on the development of the construction industry as a whole - but not concentrating on certain areas alone such as rural areas. Perhaps some of these problems can be solved by the stakeholders forum as they will get an input from emerging contractors next week at a forum meeting in Pretoria. On the issue of gender, the Board consist of twelve members - three of whom are females and eight of the members are Black.

On construction industry development in rural areas, his impression was that in many cases their focus is too much on the development of more emerging contractors. By creating more contractors, they are disempowering the industry. The industry must create sustainability and bankruptcies are rife in the emerging sector. Therefore targeted procurement is critical in order to achieve capacity in the emerging sector and they must get a better understanding of the procurement process.

The Chairperson said they must move very quickly in that regard. He gave the example of fifty taxis making use of the same route with the potential of fifty commuters. As a result of the crowded route, conflict became the end-product of poor planning.

On their recruitment plan Mr. Bruce said they may not have filled all the vacancies but out of six positions advertised for line management, two hundred applications were received, fifty were short-listed and twenty were interviewed. Three of the six people offered positions did not take them up and they have been re-advertised. The performance agreement of the CEO is with the remuneration committee of the Board and their Business Plan is sitting with the Minister. He said for the last ten years there has been a sharp decline in the industry but they are getting work from abroad and Africa. For African countries, they do take along equipment plus key personnel. He noted that some people who have moved from South Africa to work on projects in Africa, for instance in Mozambique, had been exposed to malaria and had even contracted HIV/AIDS.

He added that international contractors coming to South Africa do not necessarily have a commitment to the South African socio-economic imperatives. Therefore the industry has to develop a capacity to deliver rather than rely on international contractors. The cement manufacturing industry has 3.3% growth so there will be no need to import this product in the near future as they have the capacity to deliver. On the environmental impact of their projects, he noted that in the past, environmental issues were not on the top of the agenda but now there is a new awareness. Mr. Bruce concluded that with regard to housing, they are looking at building rental housing stock that will be closer to the working place as opposed to the present housing system. They are also looking at involving the banking sector in this development.

Mr. J Schippers (NNP) said Mr. Bruce had mentioned that in South Africa there is a high number of unskilled people and wanted to know what is the Board doing about that situation.

Mr. Hodgson replied that if the industry starts with the kind of growth that they are forecasting then that situation will be able to rectify itself. When people find out there are no opportunities, they start to reinvent themselves. For instance, if brick manufacturers say capacity does not exist, they must become involved in capacity building - they have to encourage a change in the system.

Mr. Moonsamy (ANC) pointed out that employers have not been complying with the Skills Development Act.

Mr. Hodgson said that employers across the board have not understood the growth that they are envisaging but CIDB plans to go out and convince role players on how to overcome the lack of skills by creating partnerships. He commented that he had had a meeting with their SETA because training in the construction industry takes place in the working environment and in this country the system of apprenticeship had been done away with. Government gives back 50% of the money invested in training by employers but does not take into account salaries paid to trainees in an industry such as theirs. Employers were reluctant to train people as this investment does not benefit them.

Mr. Moonsamy made the comment that the Tanzanian Government had given land to SA exiles and when the exiles had left, there was an entire infrastructure in place. This was due to the architectural efforts of Mr Hodgson.

Mr. Hodgson said that the work that was done in Tanzania which Mr. Moonsamy is raising - is the type of work that is done by Public Works.

The meeting was adjourned.