Agrément South Africa 2014 Strategic & Annual Performance Plan

Meeting report

Agrément South Africa Strategic Plans, Annual Performance Plans and Budgets for the 2014/15 Financial Year
The Chairperson indicated that the presenters from Agrément South Africa (ASA) had  requested a meeting with him prior to the committee meeting, to provide him with background about ASA, as well as the issues that would be discussed. This meeting would have been relevant to the previous Chairpersons.

Ms Ntebo Ngcobo, Board Member, ASA tabled the apologies of the Chairperson of the ASA Board, Mr Mninawe Silinga, and indicated that she was standing in for him. She introduced Mr Joe Odhiambo, Chief Executive Officer, ASA. She also tabled an apology from Mr Louis Oppenheim, and introduced Mr Thabelo Tshikomba, Finance Officer, Council for Scientific and Industrial Research (CSIR).

Ms Ngcobo indicated that ASA was founded in 1969 and was 45 years old. It was situated at the Council for Scientific and Industrial Research (CSIR) in Pretoria and funded by the Department of Public Works (DPW or the Department). ASA had eight board members. Its mandate was to offer reports and certificates of fitness of purpose for non-standardised or unconventional products, construction systems and materials, since there was no other standard for them in South Africa. Therefore ASA looked at applications of a product and assessed the product to certify whether it was “fit for purpose”. Furthermore, it formulated and updated performance criteria that were used as a guide for testing products.

Ms Ngcobo discussed the presentation layout, the vision and mission of ASA, as well as the typical product development cycle within ASA. ASA also worked within the construction industry by providing innovative ways of building. ASA did not build houses but it facilitated innovation by assessing a product and then certifying, by way of a validity stamp, that the product was fit to be used in the construction area. Within the building industry, the national regulator for construction standards dealt with design standards and provided guidelines for the building industry, and the South African national standards board compiled the standards for building materials. These entities worked hand in hand to ensure that quality within the industry was achieved. 

She reminded Members that ASA was situated in the CSIR building, and outlined how it fitted into the typical Product Development Cycle. CSIR was involved in doing the research on the product. ASA compiled the performance criteria. The South African Bureau for Standards (SABS) developed the criteria for tests and methods. The product was then assessed by ASA to determine if it was fit enough to be used in the construction industry. Once a product had been in the market for long enough, SABS would then compile a fixed set of standards, which would then be used as a ‘norm’ for that product. For example, plastic bathtubs started with an ASA process and eventually SABS had to write a standard for the product.  

ASA has met its annual targets and achievements. Unemployment, poverty and inequality were addressed by using the products supplied by ASA. ASA encouraged job creation, towards reducing poverty and inequality, and supported and aligned itself to government’s growth path, which set a goal of 6 million job opportunities by 2019.

The Chairperson interjected and asked how ASA achieved job creation.

Ms Ngcobo replied that the products supplied by ASA facilitated job creation because some products supported local job creation. For example, certain bricks could be created by local labour and therefore support job creation.

Ms Ngcobo discussed the Strategic Infrastructure Projects (SIPs) and National Development Plan. SIP had five core functions (see attached presentation for full detail) around promotion of balanced economic development, opportunities and job creation. In these projects, ASA-certified products could be used.

Mr Joe Odhiambo, Chief Executive Officer, ASA, outlined the recommendations of SIPs and National Development Plan (NDP) vision 2030. ASA believed that these projects were integrated to have the necessary impact. There were currently 18 SIPs, many of which related to infrastructure. He gave examples, saying that SIP 1 was to produce new minerals, and by beneficiating the minerals ASA would be able to create new products and use innovative ways of construction, thus helping to move the country to the next level of development. SIP 13 related to building schools, and SIP 12 to revitalising public health facilities and other facilities. ASA believed that its certified products – such as the hyper-compressed brick - could have the potential to create jobs. If this method of construction was promoted, there could be tremendous benefits to job creation, community development, addressing poverty and reducing the gap between the rich and poor. ASA believed that a comprehensive solution that looked at the problem in hand and came up with a solution and innovative project would move the country ahead. 

The NDP was to look at the next 20 years, to move to Vision 2030. ASA believed that using the NDP plan would move the country forward, but entities needed to engage with the NDP to determine how to implement and supplement the objectives.

ASA believed that by mainstreaming the hyper-compressed earth block method of construction, the community could be empowered, and by using members of local communities, the cost of construction would be lowered, allowing those communities also to build their own houses, rather than relying on government. This would lead, in turn, to poverty reduction. This model also attempted to mobilise the nation with a common vision, to develop common platforms for delivery and to build partnerships with labour and business. ASA believed that if the community members were involved in the planning structures, they would have a sense of ownership of that particular infrastructure and would be less likely to vandalise. Thus, he felt that the ASA, whilst not actually building houses, did play a development role, to move the economy to the next level.  

Mr Odhiambo reiterated that a government that worked well would do much more than deliver more houses. It would make it possible for communities, including women and youth, to build and own their own houses by demystifying construction.

Mr Odhiambo noted that the organisational structure of ASA consisted of the Board, the Technical Committee, Technical Agency ASA and Industry Technical Experts. ASA was a technical agency that reports to the Board. Within ASA, there was a technical committee that provided certificates for each product. However, the approval of each product could not be done by ASA, and instead, approval was done at a Board level, with the Board comprising industry experts of the particular product being assessed. For example, if the assessment was for road works, experts in that industry would approve the product. Not all the experts were in-house and they were often called in to assist, if and when necessary.

The Board reported to the National Department of Public Works and also made regular presentations to the Portfolio Committee on Public Works. ASA worked closely with the National Department of Public Works, and he gave examples of quarterly meetings held with the DPW and Director-General, quarterly meetings with the Minister of Public Works, and DPW representatives present at the last three Board meetings. ASA also submitted quarterly reports to the Department, and the Department was aware of what happened within ASA on day-to-day basis. ASA also attended MinMEC meetings, and sat on discussions on a number of strategic intervention projects within the national Department. 

Mr Odhiambo indicated that ASA was a highly transformed agency that emphasised skills development. Approximately 50% of its staff were young people who had been involved in a structured training programme. In addition, ASA conducted outreach programmes at Universities and structures of higher learning.

The Minister of Public Works approved the 2018/19 strategic plans, and both this and the Annual Performance Plan had been submitted to Parliament, for tabling, in March 2014.

ASA acted in terms of the National Building Standards Act 103 of 1977, which was the building industry regulation standard, and was read with the National Building Regulations. He reiterated that ASA did not regulate standardised products; but only looked at products that were not covered by national standards.

Mr Odhiambo noted that ASA was well governed and had a good Board. ASA had eight Board Members, whose current term expired at the end of September 2014. It had several years of good financial statements, held strategic planning sessions annually, followed King 3 policies, and had a widely-representative board.

Mr Odhiambo explained more about the Quality Management System, noting that it was a collection of business processes focused on achieving the quality policy and quality objective of a product. The applicant must comply with ASA’s quality management system, which was broadly based on the SANS 9001: Quality Management System, a set of standards that were widely implemented worldwide. It was vital that quality management systems be in place to ensure that products were innovated in terms of the prescribed standards approved when the product was tested in the laboratories. Quality was monitored on a regular basis. He reiterated that ASA worked closely with SABS and the local authorities, and used the approved quality management implementation strategy.

ASA’s technical outputs over a period of five years were discussed, to indicate that its targets were not out of line from a historical perspective. During the five-year period, ASA achieved or exceeded its performance requirements. In looking at the strategic output, ASA has also achieved its targets, and performance had actually exceeded targets over the last few years in many respects (see attached presentation for full details).

ASA was the only member from Africa on the World Federation of Technical Assessment Organisations (WFTAO). WFTAO was a worldwide network for coordinating and facilitating technical assessment of innovation, sharing ideas and resources. The creation of task teams of common interest was important within the organisation, and he gave the example of a recent network being established to produce a common format for environmental product declaration, to be used as a standardised measurement for all WFTAO members.

Mr Odhiambo concluded by giving a detailed explanation of some of the technical outputs using innovative construction technology, which met the developmental goals of the national building regulations and the SIP. For example, Weber Brush Coat was a single-coat application for waterproofing walls. Exelis Development Building System was sand-wood based, in which fibre cement and polyurethane were used to create lightweight walls that were energy efficient, earthquake resistant, waterproof and low maintenance.

Mr Thabelo Tshikomba, Finance Officer, CSIR/ASA outlined the financial aspects of ASA, and tabled slide 33, which set out the financial figures for 2014/15 to 2017/18, specifically the external income figures and the net margin figures on the table. He then presented slide 34, setting out audited figures for the last five years, although he indicated that because this slide was prepared prior to the 2013/14 audit, the figures were not audited, but final audited figures would be included in the Annual Report. The total income for 2013/14 was R10 million, which included the local and international income and the grant from Parliament. The total expenses were R10.3 million, which included the running and administration costs and salaries. He set out the overheads, and noted that the nett margin (listed here as R698 271) was less in the final statement.

He noted a typographical correction to “financial comments” on slide 35, and noted that the annual grant was channeled from DPW to CSIR, the legal public entity. The funds were ring-fenced and only used for ASA. ASA worked like a public entity, on its own, but fell under CSIR. All finances for ASA were subjected to government process and treasury regulations, and were audited. CSIR had received an unqualified audit report for the last few years and had been hailed as an example of good financial management. This included ASA, as CSIR audited financial statements included the ASA’s financial position.

Discussion
Ms P Adams (ANC) asked for an indication of any transformation within ASA since 1994. She asked why there was a decrease in the human resources (HR) amount in the 2009 to 2011 period, and why overhead costs had almost doubled between 2010 and 2012. She asked, in relation to slide 33, what constituted “other income” and wanted a definition of casual employees, and how long they would remain under this designation. She asked by whom the car allowances were received. She asked if indirect cost recovery and indirect cost recovery unit were the same, as seemed to be indicated by the figures.

Ms Adams also asked about the process of establishing a new board, whether the current board members could serve another term, and whether the new board would have more female representation.

In respect of slide 10 Ms Adams enquired what the role of ASA was in ‘demystifying’ construction. Lastly, Ms Adams asked whether WFTAO assessed its members to determine if they were on the same level and/or whether there was capacity building within WFTAO.

Mr K Mubu (DA) asked what relationship ASA had with the Provincial Departments of Public Works. He also asked how did ASA relate to private individuals who came up with new ideas, whether it had a fund or other assistance to individuals who had ideas or a product that they wished to improve upon. He also asked whether ASA had any programmes designed to provide small businesses with technical skills or to assist them with new ideas.

Mr Mubu asked, given the September date of expiry of terms of office, when the new board would be elected and appointed.

Mr Mubu asked whether ASA had cheap and accessible building material products on the market, which were available to the poor to be used to build their own houses. He wondered if ASA, being the only African member of WFTAO, had a relationship and/or collaboration with SADC and SADC countries.

Mr S Masango (DA) enquired why ASA targets were similar, and reflected a ‘54’ score in so many cases. He also enquired how ASA was able to target complaints and had a score of ‘67’ in that regard.

Mr Masango also asked how ASA scope included building regulations as mentioned in slide 8. He asked if there had been any engagement with the Department of Human Settlements in relation to building innovations. He asked whether the products were cost effective, affordable and whether they were available from the building stores

Mr Masango requested clarity in respect of slide 10 and the reference to ASA creating 11 million jobs by 2030, and said that the slide seen alone seemed to be suggesting that ASA would be creating 11 million jobs, and it should be cautious about the way it phrased the references. He asked for a few examples in which ASA’s products had created jobs, adding to the Chairperson’s earlier question during the presentation, when Ms Ngcobo had clarified that ASA products had the ability to create jobs in some cases.

Ms N Sonti (EFF) asked how ASA intended giving the communities access to building their own houses, and how the quality of those houses would be monitored and assessed.
 
Ms Ngcobo answered the question regarding ‘other income’ and ‘external income’. She replied that when certificate holders or applicants applied for a certificate, or when they brought their product to ASA, they were required to pay a fee, which was recorded as an ‘external income’.

Ms Ngcobo replied to questions on the Board, noting that the process of electing a new Board was currently under way. The current Board had met with the DPW, which noted that it had already conducted interviews. Until the new Board had been elected, the current Board would continue to serve, and ASA would not be placed in a situation where it was operating without a Board.

Mr Tshikomba responded to the question regarding the increase on overhead costs, explaining that this was in relation to shared services costs for 2012. ASA paid a share of the costs to CSIR for Human Resources (HR) support. He was not sure offhand what exactly caused the increase, but would confirm and revert to the Committee with the full explanation. The indirect cost recovery and the indirect cost recovery unit figures related also to shared services and executive levies. He advised that there was possibly a mistake, because these figures were normally not the same, but he would also enquire into those and revert.

Mr Odhiambo expanded on this, by saying that there were estimates for indirect cost recovery and indirect cost recovery unit. CSIR provided a shared service to ASA that ASA paid for. The shared services were divided into two categories: cost recovery and cost recovery unit. The cost recovery unit was based within the unit, for example legal services, communications, finance, HR and office accommodation. The other services were shared ‘CSIR wide’ over the 60 buildings within the CSIR campus.

Mr Odhiambo answered the question on transformation, confirming that ASA was highly transformed, as the demographics on slide 12 indicated. This included the Board and the technical committee. He noted that car allowances were made in accordance with National Treasury guidelines that were applicable to all public entities.

The “other” costs on slide 33 covered issues related to insurance of an individual, and, for instance, UIF would be included as an HR expense. Answering the question on ‘casual employees’. Mr Odhiambo explained that ASA had 15 technical staff members. ASA dealt with complex matters and it would be too expensive to have a full team of experts covering every possible area in-house. Experts in specific fields would be hired as and when their services were required, and  they would be paid an honorarium, in line with National Treasury guidelines. Most of the experts worked because they wanted to assist ASA and not for the income that was paid to them, as this was considerably less than their usual earnings in private consultancy.

Mr Odhiambo pointed out that the Board currently had three women, and DPW had advised that the new board would be more representative in terms of gender and other factors. In respect of the recruitment process of the Board, he advised that the vacancies were advertised in February 2014 and applications closed within two months, in line with National Treasury regulations. The Department then set up a committee, this process was ongoing and it was hoped that the new Board would be appointed soon. Board members could only serve two consecutive terms.

Mr Odhiambo indicated that ASA’s role in ‘demystifying construction’ was outlined in slide 5. ASA did not conduct the research on a product, but the testing, to ensure that a product was fit for purpose. Once the product was certified fit for purpose it could then be referred to the SABS and can then be used as a standardised product. ASA’s role was part of the corporate governance procedures that included complying with the Constitution and the Building Standards Act and Regulations. There were building authorities that enforced building regulations. He emphasised that whilst ASA does not actually build the houses, it did play a role in “de-mystifying” the process of building.

Mr Odhiambo noted that products creating jobs included the hyper-compressed earth block, which simplified construction to make it possible for ordinary people to build houses. It was an engineered block, similar to a clay brick. If the machine was made available to the communities, they would be able to build their own houses. A pilot project was launched in Limpopo at one of the poorest rural communities. People of the community were taught how to use the earth-compressing machine, that extracted soil from the ground, then 7% of cement was added to create a building block that met the standardised requirements. This enabled the community to build their own houses and the community was transformed within a short space of time, and had more of a sense of ownership. Only one technical person was required to assist with this process.

Another example was the ultra thin concrete system used to build roads, which was labour-intensive, and thus created employment. Mr Odhiambo stressed the point that if people had a sense of ownership they would not destroy the buildings and infrastructure.

He gave another example in which CSIR was involved in the roll out of computers in rural areas, but had found, on its return to that community, that the computers had been stolen. CSIR changed its approach and model, including the community and emphasising that the computers were for the benefit of the community and belonged to the community, not individuals, which had altered perceptions, and ten years later all computers were being properly used, and none had been stolen. Mr Odhiambo believed this was because the community was involved in the decision-making that provided the infrastructure. The country needed to achieve beneficiation of its mineral produce without relying on the West.

Mr Odhiambo indicated that the products were cost effective. The cost in respect of the hyper-compressed earth block was almost zero, as the labour and other costs were borne within the community. If this method was adopted, the area would also be completely developed. He encouraged government to involve the community in building houses, as opposed to giving a tender.

Mr Odhiambo said that ASA had a relationship with the Ministers and provincial MECs and that ASA interacted with Heads of Departments, and sat on task teams with provincial departments. He also indicated that the provincial departments contacted ASA if they faced challenges.

In relation to questions on individual innovations, he said that ASA did not fund individuals. However, there were other government agencies that did fund individuals and/or small businesses and ASA directed any individuals to the relevant agencies. He agreed that small businesses were the drivers of the economy. ASA provided people with technical skills in house but ASA also conducted outreach activities at universities and other centres of higher learning. ASA also had a relationship with other government agencies, who sat on each other’s boards – such as SABS.

Mr Odhiambo accepted and noted that the reference to the 11 million jobs could be misleading.

He explained that the issue of collaboration with SADC countries was raised at WFTAO. SADC countries knew about ASA and referred innovative products to it for assessment. He said that ASA also received enquiries from SADC countries about certain products. ASA thus supported SADC countries, it worked with SADC and it also sat on various regional technical and advisory bodies within SADC.

Mr Odhiambo took note of the comment in respect of targeting complaints. However, he indicated that for every client that came to ASA, a survey was conducted by an external third party, and the performance review was based on this survey.  

Mr Odhiambo confirmed that ASA did have a relationship with the Department of Human Settlements, and would be meeting again with it later this month. ASA sat on a number of the Department’s boards, and was involved in some of the task teams.

Mr Odhiambo indicated that the innovative construction technologies were the future of building construction, and hoped it would be merely a matter of time before everyone started using them.

The Chairperson informed ASA that he would like there to be an ongoing relationship with ASA. Many pertinent questions had been posed by the members. It was important to consider any legislation that affected ASA, and MPs needed to consider whether the legislation enacted years ago had not become a hindrance to future progress. It was also important for ASA continually consider the legislation and keep Members of Parliament informed.

Mrs Adams asked for an explanation on the name of ASA. She asked if its employees were trained. She asked how many consultants were employed by ASA and whether the organisation was doing anything to minimise the use of consultants. In respect of the meeting between ASA and the Chairperson prior to the Portfolio Committee Meeting, she asked whether there was anything that the Committee needed to know about the asset register.

The Chairperson said that Agrément’s name was French, but the entity could confirm further. The reconciliation of the asset register was a broader question to which the Department of Public Works must answer.

Ms Ngcobo responded that ASA received funding from government, but this was not sufficient to hire consultants on a full time basis. ASA’s scope of certification was also very wide, and accordingly it always outsourced or invited consultants as and when their services were required.

The Chairperson clarified that Mrs Adams was asking the question because certain entities abused the use of consultants to avoid employing full time employees. It was acceptable to use consultants when required, but not to rely on consultants to avoid full time employment.  

Mr Odhiambo added that ASA used experts in relation to certain issues. He also indicated that the experts would not want to be employed on a full time basis but were happy to share their expertise. He repeated that ASA paid the experts an honorarium in line with Treasury guidelines, and irrespective of the amount that they could earn hourly in practice, ASA paid about R1000 per day, which included research. ASA had done a lot to minimise the number of consultants used – for example, if was no longer outsourcing the structural testing unit and the condensation and thermal assessment. There had also been initiatives on skills development and skills transfer within the in-sourced departments.

Mr Odhiambo was excited about the innovations that were likely to be in widespread use in the near future. There were driverless cars being created. There had been talk of transparent concrete and aircrafts with windows to enable passengers to see outside. This was the future, and things were transforming rapidly. Accordingly, ASA believed that its mandate was even more relevant now than it had been before.

The Chairperson thanked the delegates for their presentation, and Members for their input.  

The meeting was adjourned.