IDT, CBE, cidb and Agrément South Africa on their Annual Performance Plans

Public Works and Infrastructure

02 May 2017
Chairperson: Mr F Adams (ANC)(Acting)
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Meeting Summary

Four entities of the National Department of Public Works presented their annual performance plans and budget for 2017 before the Portfolio Committee on Public Works.

Agrement South Africa reported that their strategic goals are linked to service delivery to promote the safe introduction of innovative and non-standardised construction related products and systems for which there are no SABS standards. An increase in the number of certified innovative construction products may increase the uptake of innovation which, in turn, may promote and enhance the use of innovative and non-standard construction related products and systems.

Regarding technical and quality assessment Agrement SA would ensure that all South Africans attain a decent standard of living through the use of innovative and non-standard construction products for infrastructure development and the certification scheme. The entity would directly and indirectly contribute to National Department of Public Works mandate and National Outcomes through the infrastructure network designed to support the country's long term economic and social objectives and the upgrading of accommodation within informal settlements and accommodation units within the gap market.

The Independent Development Trust reported three global mega-trends that are most likely to impact more on South Africa. First, the urbanisation trend is fuelled by internal migration and that creates more demand for social infrastructure in the urban areas and creating a challenge for rural and small towns. Second, the global economic crisis is going to have a negative impact on SA in terms of poverty, inequality and unemployment, and is going to lead to cutting and other austerity measures. Third, the UK exit from the European Union is creating an uncertain outlook for the global economy due to Brexit. South Africa is likely to be affected because Europe and Britain are its major trading partners.

Regarding the economic environment perspective, the entity stated the economic outlook and domestic growth for SA is on the decline and remains constrained. South Africa's credit rating has been downgraded by Fitch, Moody's and Standard and Poor's. The country's rating has fallen due to poor economic growth, policy uncertainty, loss of business, and the deteriorating value of the Rand. During the first quarter of 2016, the Reserve Bank of SA had projected GDP growth to be around 0.95%, but now the latest forecast is 0% growth for the rest of the financial year.

Then the Construction Industry Development Board stated it is working towards a transformed construction industry that is inclusive, ethical and contributes to a prosperous South Africa. The entity aims to transform the construction industry by increasing infrastructure spend to support and reflect the demographics of SA. This would be indicated through the percentages of the Public Sector Contract Awards Index and construction of Gross Fixed Capital Formation of GDP.

On regulation and advocacy, the entity wants to ensure compliance with its prescripts for registrations, invitation and awards, best practice and standards, code of conduct to stimulate sustainable growth, and reform and improvement of the construction sector. It wants to establish, manage and enhance registers of contractors, Perfect-Satisfaction-Promises and projects that support risk management in procurement and to facilitate development of enterprises and promote performance improvement and transformation within the industry.

The Council for the Built Environment pointed out that Strategic Infrastructure Projects demand competent built environment professionals to drive development. The Council facilitates participation of the registered professionals in these programmes by engaging the six Built Environment Professional Councils to introduce these programmes to institutions of higher learning and through their voluntary associations.

The Council indicated that Built Environment practitioners need to be equipped with relevant skills such as labour intensive techniques to facilitate the implementation of public employment programmes such as the Expanded Public Works Programme. The Council is also collaborating with initiatives to support learners to improve their maths and science results and to encourage them to register for built environment courses. The Council has started an initiative to attract Built Environment practitioners towards registration and to sustain their registration by engaging the Competition Commission on the issue of identification of work.

Members, to ASA, asked for clarity on why there is a lack of a head of financial services, and enquired about the difference the entity is making in the lives of ordinary people; wanted to establish the number of applications for products and non-standardised products to be assessed that have been received so far; and wanted to know if there are municipalities and construction companies that have approached Agrement SA regarding material to be used during tornadoes and shack fires.

Members asked the Independent Development Trust if the research on the fraud prevention plan has been successful; what percentage of infrastructure spend is going to be used to capacitate women and how this is going to be done; wanted to know if there are monies owed to the Trust; asked if late payments to sub-contractors and to the Trust by client departments are caused by the lack of capacity or not, because it appears they continue every year; and enquired why the Department of Public Works did not allocate the Trust’s budget.

Members wanted to know from Construction Industry Development Board how the entity is going to facilitate accessibility to credit for contractors; asked how the entity is planning to achieve skills development; enquired how its plans are going to enhance job creation; and wanted to establish how the entity is planning to deal with collusion in the construction industry.

From the Council for Built Environment, Members wanted to establish what the status quo is regarding gate-keeping in the industry because in the past when young professionals entered the field, they started as interns; wanted to know what the entity is doing to encourage learners to like maths and science; wanted to find out if the 60 days for solving appeals is achievable; and asked for clarity on the CBE Structured Workplace Training Framework.

 

Meeting report

Agrement SA Presentation

Mr Joe Odhiambo, Chief Executive Officer: Agrement SA, informed the Committee that their strategic goals are linked to service delivery to promote the safe introduction of innovative and non-standardised construction related products and systems for which there are no SABS standards. An increase in the number of certified innovative construction products may increase the uptake of innovation which, in turn, may promote and enhance the use of innovative and non-standard construction related products and systems.

Regarding technical and quality assessment, ASA would ensure that all South Africans attain a decent standard of living through the use of innovative and non-standard construction products for infrastructure development and the certification scheme. ASA would directly and indirectly contribute to the National Department of Public Works (NDPW) mandate and National Outcomes through the infrastructure network designed to support the country's long term economic and social objectives and the upgrading of accommodation within informal settlements and accommodation units within the gap market.

ASA would put measures in place to develop criteria and identify suitable experts to conduct the assessment of such products. This would result in reduced water quantities and an impact on the quality of water. ASA is likely to experience an increase in applications for certification of innovative appliances that use less water and also for purifying water for domestic consumption. The percentage of applications of non-standardised construction products is processed within agreed timeframes.

With regard to government wide plans, ASA would support and encourage certification of products that utilise waste materials through development of criteria and identifying suitable experts to conduct the assessment of such products. A percentage of quality inspections has been conducted for ASA and that of issued certificates has been done within agreed timeframes.

Mr Odhiambo also stated their situational analysis centres around external and internal environments, performance environment, and organisational environment. The organisational environment has to do with the organisational structure of ASA. The performance environment deals with technical assessments of applications for evaluation, typical product development cycle, normal and interim certificates, confirmation and distribution of certificates. The internal environment is about the construction sector and the green economy. The external environment looks at the political, economic, social, technological and ecological environments.

Concerning the high-level risk plan for ASA, Mr Odhiambo indicated there is insufficient technical capacity to support ASA because there is a limited pool of professionals. As a result, this makes it difficult to deliver on the core business.  They would still continue to use specialised skills within the entity and there is continuous enhancement of the skills development programme. It is hoped this target would be finalised by 31 December 2018. He also mentioned there is a lack of necessity of ASA certificates because of the industry trends and social acceptance innovative products, and this was affecting their delivery on the core business. The entity continues to make use of available technically qualified specialists in the country, and it hopes to deliver on this current mandate to meet industry requirements and needs by 31 December 2018.

IDT Presentation

Mr Coceko Pakade, Chief Executive Officer: IDT, briefed the Committee on the updated situational analysis. Regarding the external business environment, three global mega-trends that are most likely to impact more on South Africa. First, the urbanisation trend is fuelled by internal migration and that creates more demand for social infrastructure in the urban areas and creates a challenge for rural and small towns. Second, the global economic crisis is going to have a negative impact on SA in terms of poverty, inequality and unemployment, and it is going to lead to cutting and other austerity measures. Third, the UK exit from the EU is creating an uncertain outlook for the global economy due to Brexit. South Africa is likely to be affected because Europe and Britain are its major trading partners.

From the political point of view, the country is characterised by sound policy regime and independent judiciary which creates a positive climate for conducting business. Major reforms and programmes including large investments in social and economic infrastructure are under-way to tackle backlogs and to help stimulate economic growth. The local government elections held on 3 August 2016 have resulted in a changed political landscape and, in some instances, new administrations and political leadership of the municipalities.

Regarding the economic environment perspective, the economic outlook and domestic growth for SA is on the decline and remains constrained. South Africa's credit rating has been downgraded by Fitch, Moody's and Standard and Poor's. The country's rating has fallen due to poor economic growth, policy uncertainty, loss of business, and the deteriorating value of the Rand. During the first quarter of 2016, the Reserve Bank of SA had projected GDP growth to be around 0.95%, but now the latest forecast is 0% growth for the rest of the financial year.

On social environment perspective, the country continues to face huge unemployment challenges. The number of unemployed persons increased by 521 000 from the fourth quarter of 2015 to the first quarter of 2016. The total number of unemployed South Africans stands around 5, 71 million. The number of discouraged job seekers increased by 53 000 in the year to the first quarter of 2016.

Pertaining to the physical environment perspective, fiscal constraints resulting in cuts on the client departments' budget allocations has impacted negatively on the IDT business. In addition, there are threats from some of the client departments to withdraw business from the IDT. The business environment is, generally, fluid and creates uncertainty especially in the construction industry. Throughout the country, there is an emergence of alternative service delivery vehicles e.g. provincial development implementing agencies. The aging infrastructure and the one damaged or destroyed by extreme climate changes poses a huge challenge to development practitioners to initiate climate change resilient social infrastructure.

With regard to the environment organisation perspective, the challenges faced by the organisation largely relate to the human resource capacity to deliver on the mandate of the organisation. The prolonged transformation resulting in the misalignment of the organisation structure with the business poses the biggest risk to the organisation. This implies that the current capacity is inadequate in delivering on the objectives of the organisation. The use of temporary employees has declined over the years, which is good considering that the new labour relations law restricts employers from employing temporary employees for more than three months.

Mr Pakade also took the Committee through the IDT Strengths, Weaknesses, Opportunities, Threats (SWOT) analysis. The following strengths were identified:

  • integrative programme management processes incorporating community development in the service delivery model
  • commitment to poverty eradication, empowerment of marginalised sectors of society and building of sustainable communities
  • national reach with presence in all provinces with access to all spheres of government and a strong client base around the country
  • established working relations with provincial and national governments
  • programme management personnel that are youthful, professional and passionate about development

The following weaknesses were identified:

  • inadequate human resource capacity for site monitoring
  • inadequate programme and project management system
  • systems and organisational capacity not aligned with high growth in programme portfolio
  • shortage of technically qualified staff to meet the growing national infrastructure development programme delivery demands
  • limited effectiveness in instruments at IDT disposal for enforcing compliance to agreements by clients e.g. funds transfer, creditor obligation liquidation, etc.

The following opportunities were identified:

  • positioning as a programme management and development agency tasked with managing and delivering social infrastructure backlogs on behalf of government
  • extension of programme implementation management services to basic services and housing infrastructure
  • spearheading of Green Technology and related innovations in infrastructure development
  • leveraging the organisation's community development competencies, particularly, social facilitation, community empowerment, and job opportunities creation
  • provision of rural development infrastructure programme implementation support services and post-settlement support linked to the comprehensive rural development programme

The following threats were identified:

  • negative audit opinion/disclaimer affecting acquisition and retention of new clients
  • existing clients withdrawing business due to poor project and programme execution
  • loss of critical staff due to uncertainty arising from the long-drawn transformation process
  • budget cuts and delays in transfer of funds by client departments exposes the IDT to litigation due to late processing of service provider payments
  • frequent changes in leadership of client government departments threatens continuity in the IDT's delivery of programmes and meeting of obligations to service providers

Mr Pakade further briefed the Committee about the turnaround strategy of the IDT. In terms of financial government and viability, the strategy looks at the expansion of the revenue base to address the financial sustainability concerns; to strengthen financial management capabilities, particularly, relating to billing and project accounting; and to effectively prevent irregular, fruitless and wasteful expenditure.

The strategy is aimed at attaining a substantially secure business portfolio pipeline and effective complementarity of the IDT to the national and provincial departments of Public Works; and building the confidence of clients in the IDT through effective corporate and financial governance systems and practices.

The turnaround strategy further strives for minimal litigation and elimination of procurement related irregularities; promotes service delivery efficiencies that are customer-centric; establishes and implements an effective early project delivery warning system to improve service levels; and strengthens business intelligence and research in the built environment.

Furthermore, the strategy is aimed at organisational configuration, professionalisation and image building. It is also aimed at developing effective human capital planning, development and talent management strategy; to ensure the organisation is optimally structured and well-resourced; and drive professionalisation of the built environment service offering.

Concerning finances, Mr Pakade stated that the financial outlook of IDT for the current 2016/17 financial year is negative with an estimated deficit of R129.3 million anticipated based upon current trends. Growth in programmes expenditure is expected to be minimal in the short term. The MTEF period covering 2017/18 to 2019/20 continues to reflect a subdued financial position with a total deficit of R410m for the three years. Engagements with National Treasury and National Department of Public Works regarding measures to address the deficit are underway, and the organisation continues to implement cost containment measures.

On challenges the entity is grappling with, he pointed out that delays in transfer of funds from client departments have resulted in IDT not complying with the 30-day payment to suppliers and service providers. Some of these delays have resulted in litigation and delays in programme delivery where service providers have suspended works due to non-payment. It was further noted that management fees continue to be a challenge due to lower programme values for the 2017/18 - 2019/20 MTEF period. A specific level of programme work needs to be guaranteed to ensure a multi-year revenue pipeline. Lastly, the previous two years' negative audit opinion has adversely impacted the organisation, its business and reputation. As a result, the organisation has developed an Audit Action Plan (AAP) and established a disclaimer task team to address the root causes of the negative audit outcome.

(Tables were shown to illustrate MTEF estimates and quarterly performance plan targets and finances)
CIDB Presentation
Mr Mfezeko Gwazube, Acting Chief Executive Officer: CIDB, informed the Committee the CIDB is working towards a transformed construction industry that is inclusive, ethical and contributes to a prosperous South Africa. The entity aims to transform the construction industry by increasing infrastructure spend to support and reflect the demographics of SA. This would be indicated through the percentages of the Public-Sector Contract Awards Index and construction of Gross Fixed Capital Formation of GDP. Regarding the innovative and thriving construction environment, the entity aims to provide mechanisms and support to enterprises to be competitive and sustainable, and to deliver value for money within the construction industry. This would be indicated through the percentages of contractor and Perfect-Satisfaction-Promise (PSP) satisfaction with clients' index, artisan development index, and client satisfaction with contractors and PSPs index.

Regarding the administration programme, CIDB want to increase alternate revenue streams to 75% by 2020. It wants to achieve a 4th level of maturity of ICT governance framework by 2020 so that it improves on the service delivery turnaround times in order to minimise risks. In terms of strategic and corporate governance, the entity wants to ensure that all systems, processes and procedures are effective for the organisation to achieve all targets; to manage and improve on the mechanisms within the CIDB to comply to all legislative requirements; and to provide an all-inclusive timeous human resource value chain and services for optimal human resource allocation, utilisation and efficiency within a trusting relational environment.

On regulation and advocacy, the CIDB wants to ensure compliance with its prescripts for registrations, invitation and awards, best practice and standards, code of conduct to stimulate sustainable growth, and reform and improvement of the construction sector. It wants to establish, manage and enhance registers of contractors, PSPs and projects that support risk management in procurement and facilitate development of enterprises and promote performance improvement and transformation within the industry.

Pertaining to development and capacitation, the CIDB wants to support risk management within the industry to ensure that by 2020 at least 85% of projects comply with contractor and client performance ratings. This would ensure delivery capability through setting of standards and recognition of contractors and PSPs by implementation of recognition schemes. In terms of development opportunities and support, the entity plans to have contractors, clients and PSPs to deliver value for money and socio-economic objectives by ensuring that more resources are spent on development and training and capacity development within the industry that would enhance socio-economic development. The entity plans to increase the number of learners receiving artisan qualification and built environment graduates achieving professional registration.

With regard to industry performance and transformation, the CIDB aims to monitor business conditions, infrastructure spend, contractor development, and PSP development to inform transformation of the industry through different indexes and data. The entity further plans to provide business and policy advisory services to the construction industry to ensure Small and Medium Enterprise (SME) contracts are awarded according to procurement and other regulatory guidelines. In terms of partnership and collaboration, the entity wants to facilitate accessibility to credit for contractors; to network and foster relationships with relevant education, training and industry institutions to develop relevant qualifications and improve delivery mechanisms; and to interact and engage with construction industry related training institutions and influence relevance and development of training and skills development curriculum.

(Table was shown to illustrate budget and finances)

CBE Presentation

Ms Priscilla Mdlalose, Acting Chief Executive Officer: CBE, took the Committee through the updated situational analysis. She pointed out that Strategic Infrastructure Projects demand competent built environment professionals to drive development. The CBE facilitates participation of the registered professionals in these programmes by engaging the six Built Environment Professional Councils (BEPCs) to introduce these programmes to institutions of higher learning and through their voluntary associations.

Poor economic growth had a negative impact on the growth in the construction industry. These were impacted by labour action in 2015. The placement of interns and up-skilling of graduates depend on the functioning economy. The CBE is establishing key partnerships to support placement of interns and workplace training.

Collaboration with government departments is continuing in order to fast track the registration of candidates by introducing CBE Structured Workplace Training Framework. This initiative supports the capacitation of the state which is one of the priorities of the government.

Built Environment practitioners need to be equipped with relevant skills such as labour intensive techniques to facilitate the implementation of public employment programmes such as Expanded Public Works Programme (EPWP). The CBE is also collaborating with initiatives to support learners to improve their maths and science results and to encourage them to register for built environment courses. The CBE has started an initiative to attract Built Environment practitioners towards registration and to sustain their registration by engaging the Competition Commission on the issue of identification of work.

Ms Mdlalose reported the CBE took cognisance of the SONA 2016 priorities which are to resolve energy challenges, grow the ocean economy, and provide water, sanitation and transport infrastructure. The CBE, through working with and supporting the BEPCs, works to ensure there is a skilled and competent workforce within the built environment to support Public Works to deliver on its infrastructural delivery mandate.

On the administration programme, the CBE is planning for an unqualified opinion with no findings. This programme targets the IT Governance Framework, in line with the DPSA's Corporate Governance of ICT Policy Framework, to be implemented by 31 March 2018, and the implementation of the ICT Plan by 31 March 2018.

With regard to the skills development and transformation programme, the entity aims to translate the knowledge generated from its pilot projects into action plans for large-scale cooperative implementation or facilitation and assistance of such. The initiatives of this programme are, amongst other things, to have 150 Grade 12 learners enrolled in a maths and science support programme by 31 March 2018. This would create awareness at school level of built environment professions as viable career choices. The initiative further plans to have 50 new intakes of candidates/built environment graduates in workplace by 31 March 2018. 100 interns would be placed for work integrated learning by 31 March 2018, and to produce one oversight report on the Accredited Academic Programmes by the BEPCs by 31 March 2018.

Concerning the research programme, the CBE aims to provide informed and researched advice to government and the public on built environment priority matters identified in the MTSF. The focus areas of this programme would be to publish one report on initiatives to support infrastructure skills within government by 31 March 2018, produce one research report on the state of readiness of municipalities to implement the Standards for Infrastructure Procurement and Delivery Management (SIPDM) by 31 March 2018, and publish research reports on analysis of the impact of built environment skills development initiatives by 31 March 2018.

In terms of the policy and legislative framework, the focus areas of this programme would, amongst other things, be on processing and taking decisions on received appeals within the prescribed period of 60 days from lodgement; developing an identification of Work Action Plan approved by Council by 31 March 2018; review and align the CBE Corporate Governance Framework with King IV principles of Corporate Governance by 31 March 2018; and produce an assessment report on the six BEPCs Policies alignment with the seven Policy Frameworks by 31 March 2018.

About the developmental and economic priorities programme, the CBE ensures that the built environment curricula and CPD programmes embody health and safety in construction, environmental sustainability, and job creation through labour intensive construction and the Integrated Database Management System (IDMS). The implementation plan is scheduled to be finalised by 31 March 2018. The programme further plans to finalise a benchmarking study on transformation by 31 March 2018.

Ms Mdlalose also reported that challenges that could affect the work of the CBE are around funding constraints experienced by BEPCs; poor coordination of various institutions and departments in the sector that could impact delivery against government outcomes; and the ineffectiveness in driving the transformation agenda. The CBE would continue to collaborate and enter into inter-sectoral and inter-governmental partnerships, and develop Memoranda of Understanding (MoUs) with other government departments, municipalities, and the private sector. The CBE would continue to support the BEPCs to ensure that their strategic plans align with the strategic outcomes of the government.

The CBE is continuing to play a key role in promoting government development priorities through its engagements with role players in the built environment sector, and this is placing more demand for the visibility of the CBE in all nine provinces. The strategic move for the CBE is to work through DPW regional and Provincial offices on some of its initiatives. Metros are targeted as strategic partners as well. Capacitation of the built environment industry is key to the CBE.

(Tables were shown to illustrate budget per programme, sources of income and disbursement, and staff establishment)
Discussion
Agrement SA Presentation
Ms P Adams (ANC) wanted clarity on the assertion that the entity is the centre for the assessment and certification of non-standardised construction products; and wanted to know what the company means by supporting and promoting the process of integrated socio-economic development in SA.

Mr Odhiambo, on certification of non-standardised products, explained that it is not mandatory to have a standard. There is a committee that looks at standards and uses criteria for assessing those standards. Regarding support and promotion of socio-economic development, he indicated it is the mandate of the entity to support economic and social development in its field in the country.

Ms P Majake (ANC) asked for clarity on why there is a lack of a head of financial services, and enquired about the difference the entity is making in the lives of ordinary people.

Mr Odhiambo, regarding the financial services head, stated they use the CSIR corporate model and the CEO is responsible for the finances. The key difference they make to ordinary citizens is in the innovative products that are used in SA airports for landing.

The Chairperson commented that the Committee saw what ASA is doing in Soshanguve because there are fire and storm resistant buildings there. He wanted to know if there are municipalities and construction companies that have approached ASA regarding material to be used during tornadoes and shack fires.

Dr J Mahachi, Board Member of ASA, explained a lot has been happening in the sphere of infrastructure and housing. Lots of construction products are not approved by SABS. The law states that buildings must not collapse, they must be fire resistant, and people have to be evacuated from the buildings within 30 minutes during emergency. The very same law states you can use any innovative material you want to use for construction, but that material has to meet legal requirements and the product has to be certified by ASA. Some of these products include Jojo tanks, solar power systems, etc. It is important to look at the development costs and life cycle of these innovative products.

Ms Majake expressed satisfaction about the mention of Jojo tanks and solar power panels because that demonstrates the impact ASA has on the lives of ordinary people.

Ms Adams wanted to find out why ASA has not said anything about the risk management unit within its structure.

Mr Odhiambo indicated ASA has a risk management division and they also make use of CSIR services.

The Chairperson wanted to establish the number of applications for products and non-standardised products to be assessed that have been received so far.

Mr Odhiambo said he could not provide the exact number of certificates because they run into hundreds. The exact figure would be forwarded to the Committee.

IDT Presentation

Ms Adams asked if the research on the fraud prevention plan has been successful.

Mr Pakade explained there are inherent risks of running the programmes and to compare that with the incidents of fraud. There has been lots of incidents, especially with the non-governmental sector. The IDT has started roadshows to conscientise its clients and internal staff about the fraud prevention plan. The SCM processes have been reviewed and audit processes are in place to ensure things are done properly.

Ms K Masehela (ANC) asked what percentage of infrastructure spend is going to be used to capacitate women and how this is going to be done.

Mr Pakade explained that the social infrastructure programme spend on women is going to be 20% and there is another programme that would allocate 65%. All these efforts involve up-skilling and training them.

The Chairperson asked if monies were owed to the IDT. He also remarked that workmanship on schools that are being renovated and built is not up to standard, and asked if the IDT works with CIDB and other entities. He exemplified about fantastic buildings built in Mpumalanga saying that proved that collaboration between parties in the construction industry produces good work.

Mr Pakade, about poor workmanship, pointed out that the rate of failed projects is not alarming. The IDT has processes in place to warn contractors when problems have been picked up and about termination of contracts. The focus has been on the appointment of an expert in the Built Environment to look at compliance with standards.

Mr Ayanda Wakaba, Chief Operating Officer: IDT, added that poor workmanship remains a challenge that does not surprise them but it is managed through project management and monitoring. Up to now, they have not seen any project abandoned because they continue to find solutions and work closely with the CIDB. On monies owed to IDT, they have not received payment from the Department of Arts and Culture, Departments of Basic Education in the Eastern Cape and KwaZulu-Natal, and Department of Health in KwaZulu-Natal. Most departments did not pay at the end of the year and it is only the Department of Justice and Constitutional Development that paid very late in the new year of 2017.

The Chairperson asked which provinces the IDT is doing work on and where the bulk of the work is.

Mr Wakaba indicated the IDT has a footprint in all provinces. The NGOs operating in the provinces always receive requests for bids to participate. The bulk of work has been in the Eastern Cape, Limpopo and Mpumalanga, but these projects are in all provinces. The NPOs are mostly in rural areas.

The Chairperson enquired why the Department of Public Works did not allocate the IDT budget.

Mr Wakaba explained that between 2011 and 2013 the IDT had engagements with National Treasury and Department of Public Works about the transformation of IDT to be an independent agency. Unfortunately, the Business Case did not get concluded and this hampered the transition process. For the IDT to move from where it is, many things had to be reviewed. Discussions are still on track with National Treasury and Department of Public Works on the transition process so that funds could be allocated because National Treasury has pointed out it needs to understand how the funding model of the Business Case is going to look like, including its mandate.

The Chairperson remarked the IDT has been identified to fix the dilapidated rural schools and act as the agency of the Department of Public Works. The longer the Business Case takes time to be finalised, the longer the service delivery would take place.

An official from the Department stated there are discussions between the Department and National Treasury to finalise the Business Case. The draft has been done and there are five proposals that need to be considered and incorporated into the draft before it is presented to the Minister to prove that the IDT could sustain itself.

Ms Adams asked if late payments to sub-contractors and to IDT by client departments are caused by lack of capacity or not, because it appears they continue every year.

Mr Pakade said they interact directly with government departments but the problem is when the departments fail to give them their monies in time. This is being addressed through the CFOs Forum.

The Chairperson added this could be pursued through the DGs Forums. The DG of the Department has to put pressure on the DG of the department that owes IDT money.

An official from the Department indicated they had tried to improve the systems and the Department is aware of the serious impact. But the PFMA has processes that must be followed before making a payment to a service provider so that you do not pay for work not done.

The Chairperson pointed out that Members had seen the beautiful work the IDT has done during its oversight visit. But if sub-contractors are not paid in time, that means they would close shops and go hungry and service delivery would not happen. It is not acceptable that a national department is holding an entity into ransom. Late payments have a snowballing effect because once the sub-contractor gets paid very late, that contractor would not want to take on further work and the word around about IDT would be bad, but not for Public Works.

CIDB Presentation

Ms Adams, first, wanted to know how the CIDB is going to facilitate accessibility to credit for contractors. Second, she asked how the entity is planning to achieve skills development. Third, she enquired how its plans are going to enhance job creation. Fourth, she wanted to establish how the entity is planning to deal with collusion in the construction industry.

Mr Gwazube, on access to credit, stated that the forms of contracts they work with are going to inform the kind of access to credit. Transformation could be reformist and improve what is already there or could be revolutionary and throw things that are already there away. The contracts are onerous and have terms and conditions. People have to honour the guaranteed obligations. Transformation in the construction industry is governed by the codes of the Construction Industry Transformation Charter. There are mechanisms the entity is exploring regarding access to credit.  They are looking for the kind of transformation defined in the Construction Charter and what the sector has agreed on and signed. The challenge is in the kind of transformation that the CIDB has to follow, whether it is going to be reformist or revolutionary. Concerning skills development, he elaborated that the Skills Pipeline was developed in 2009 based on empirical research. The Skills Pipeline focused on pre-tertiary, tertiary and post tertiary including registration. There is no programme that provides candidates with experiential training after qualifying. There is also a strategy set up to determine the number of people that have graduated from the engineering and artisan fields. For every project awarded by the public sector, a certain percentage would be given to the CIDB for up-skilling and training of individuals and this is done in partnership with CBE. Regarding job enhancement creation, if role players manage to get the construction sector to the desirable maturity level, the clients would get the budget and start thinking about projects without thinking properly about the planning process. The planning cycle has to start 3 years before the actual construction. So, it is better to plan so that you know how many people are going to be employed and the duration of their employment because the CIDB is trying to do away with job casualisation. About collusion, maintaining relationships with partners is critical. The CIDB has strengthened ties with the Competition Commission.

Lindelwa Myataza, CIDB Board Member, added they have realised they were not as active as they were supposed to be in collusion matters because screws were not tightened and that they wanted to work alone. That resulted in the entity not being able to play its meaningful role. That is why now it has to work with the other partners. Now it plans to define what its role would be if 30% of the work has to go to smaller contractors so that all smaller contractors could be what the government wants them to be: to graduate from Grade 1 to the upper grades. The CIDB is trying to ensure all its strategic interventions and standards subscribe to socio-economic development; and the entity has taken a position to take part in the development of contractors and not only develop guidelines.

The Chairperson commented that contractors have to be graded and when they are in Grade 9 they need to have R3 million already. Most of the companies were crying and experiencing problems in the past. He also noted there has been a shortage of construction personnel in the Western Cape whereas it used to be the university of construction. He wanted to know how these challenges are going to be addressed.

Mr Gwazube explained they want to employ a strategy of not only pushing upward mobility while people are leaving the other classes. This has to be horizontal so as to create more markets at the horizontal level. The CIDB wants to promote the up-skilling of them in electrical and other related fields of construction so that they do not lose or miss out on the value chain because when you look at the upper grades, you find that there is no work for the lower grades. The CIDB has relationships with TVET Colleges and would like to continue with that partnership. There are barriers to market entry in the construction industry and a minimum of bricklaying, painting or trade competency is needed in order to be a participant. A certain portion of CIDB income comes from the Grade 1s and that is why the entity has decided to re-invest that money for the development of the Grade 1s in a form of a service from CIDB. The plan is to have at least one partnership with one technical college in all provinces. The CIDB also wants to introduce business management skills to complement the trade skills of the Grade 1s so that when they get registered, the clients could have confidence in the know-how of the people they are employing.

Mr Chris Jiyane, CIDB Board Member, enlightened the Committee that when they joined the Board, the Act was very limiting. They put a task team to review it. People who participated in the Act were the usual suspects. There was no input from black contractors. It was discovered the fine was R100 000 for business transgressions. But when the CIDB and other role players proposed blacklisting, the usual suspects came back to them for negotiations because the CIDB saw something they were not seeing. He further noted the Board has reviewed the macro-structure of the CIDB to ensure they had the right people for each and every available position.

Ms Myataza added that the document presented to the Committee is an on-going work that has taken into account the work and strategies developed before. She pointed out when the strategy or document was developed, the executive consulted with the previous Board Members, internal and external stakeholders, and research was carried out.

CBE Presentation

Ms Masehela wanted to establish what the status quo is regarding gate-keeping in the industry because in the past when young professionals entered the field, they started as interns. She also wanted to know what the entity is doing to encourage learners to like maths and science. Further, she wanted to find out if the 60 days for solving appeals is achievable; and asked for clarity on the CBE Structured Workplace Training Framework.

Ms Mdlalose, with regard to gate-keeping, explained the CBE has partnered with universities of technology and allowed interns to make application directly to the CBE. Now there are 4 universities of technology on board and they target 100 internships. Since last year, they have been able to work with 200 interns and they get stipends from the CBE to support their employers so that they aid CBE in this programme. The new graduates go through the internship though the CIDB cannot support them financially. Those that are still studying do internship for experience. The CBE is working with government departments that have candidates in their midst and help them with the registration of those graduates. Concerning maths and science, they have tried to work solo on this initiative. They advertised for service providers to implement maths and science programmes in schools. Then they realised that when learners come out of the programme, they are not ready. Now the entity is in partnership with service providers who have been in the maths and science programme for a long time because they have the expertise and know-how. On the 60 days for processing appeals, she indicated they have been able to record success in that area and they are making use of service providers to chair the appeals. Pertaining to the CBE Training Framework, the Framework is there to support government and companies to train their candidates and for registration, and to take the candidates through the desired learning outcomes and get access to the workplace environment to see if the candidates would fit in that culture. This programme is used as a standard for the development of candidates so that they could register as professionals.

Ms Adams enquired why most programmes are scheduled to be finalised by 31 March 2018. She also asked if the benchmarking study on Transformation has been benchmarked against a study locally or internationally.

Ms Mdlalose, on the 31 March 2018 deadline, stated they had breakdowns of their targets per quarter, but everything should be finalised before 31 March 2018 arrives. Concerning benchmarking, South Africa has good case studies on transformation e.g. the accounting sector, legal sector, etc. They would be looking at both national and international case studies.

The Chairperson said he was happy to see the role CBE played during a career exhibition in his constituency. It changed the learners' way of thinking. They saw other life's avenues instead of thinking of becoming a lawyer or doctor.
The meeting was adjourned.
 

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