The Committee convened in a virtual meeting to review the strategic and annual performance plans of the Construction Industry Development Board, Council for the Built Environment, Independent Development Trust and Agrément SA for the 2021/22 financial year. The issue which first took form during the meeting was that of sexual harassment within the SACAP. It was mentioned that upon investigations there was an unsatisfactory response by SACAP to the Department and the matter had been referred to the CBE. Members were displeased at the rate at which the issue was being handled, mentioning that the gender base violence has become a second pandemic in the country and that females in the construction industry should be protected.
The CIDB elaborated on the developmental programmes which targeted Women’s Development the B.U.I.L.D. programme which is being implemented to introduce development into the industry. Representation of the entity was shown to be in all provinces, with various interventions and programmes implemented in each province. However, there were concerns around how the CIDB grades contractors, as SMME’s and subcontractors were often at a disadvantage. Members mentioned that although there were several planned interventions by the CIDB, they were theoretical and did not address the issues at ground level.
There were, however, improvements within the IDT as the entity was under restructuring. The Department mentioned that there was a process underway, to appoint new board members which Cabinet has already granted approval of. Steps to acquire registration certificates and finalise the appointments were being implemented as the mandate by Cabinet was to repurpose the IDT so that it contributes to the built environment. This was not an easy task, as was mentioned, since the entity needed to consider resolving payments of debt and pending cases which have been brought before the CCMA.
On the CBE, the Committee said urgent attention needed to be paid to consistent corporative leadership of the Boards of each council to ensure that they quorate throughout their terms in office. The lack of consistent corporate governance by boards of the BEPCs led to instability of professional councils over a number of years. This caused key matters related to transformation of the administrations of the councils to remain outstanding in the regulatory and training regimes of the councils. The Committee urged the CIDB to provide timelines along which the review of the grading of contractors on the CIDB Contractor Register would take place.
Agrément gave a brief explanation on the work being done, highlighting that it was primarily responsible for all approvals and certifications of unconventional building systems and technologies. For proper execution of its mandate, there are a variety of tests that need to be performed to validate a product. It was mentioned that the entity was facing many challenges and had started a number of projects in the background, mainly in the form of desktop studies in order to assist in the assimilation and diffusion of technologies into the broader industry. The presentation was received well by the Members, with comments that showed approval and praise and suggestions put forth that the entity should pace up its marketing strategies so that products offered are broadly known and used for the benefit of the country.
The Committee said ASA should find a way of getting its certified products popularised in departments such as Human Settlements so that social infrastructure development projects can benefit from the work that the entity does. It said the employment creation and empowerment of designated groups required attention.
The Chairperson welcomed Members and further stated that the meeting formed part of a gruesome period the Committee is currently undergoing, given that it is also holding phase three of its public hearings on the Expropriation Bill.
She said the Committee must perform its oversight duties while also driving the legislative process by ensuring that there is public comment on the Expropriation Bill of 2020 and that, as Members, they have not forgotten their responsibilities towards the Department and its entities.
She added that they were concerned about matters that have been reported on through media channels, and individual Members have raised these concerns with the Minister. One such matter is the sexual harassment case that occurred in one of the councils of the CBE. She mentioned that the Committee was also against the IDT terminating the contracts of six employees. The Committee fought against the closure of the entity because it foresaw that people would lose their jobs during this difficult time, as such, Members were concerned to hear that the board which they fought to maintain was retrenching people and all parties involved can expect retaliation by the Committee on the matter.
The Chairperson indicated that she would have to leave the meeting early due to an urgent personal matter, with Ms L Mjobo (ANC) taking over as Acting Chairperson.
There were apologies from Mr M Nxumalo (IFP), Mr P Van Staden (FF+), and Mr W Thring (ACDP).
Opening remarks by the Deputy Minister
Ms Noxolo Kiviet, Deputy Minister Public Works and Infrastructure (DPWI), indicated that the Minister was attending SCOPA (Standing Committee on Public Accounts) and NCCC (National Coronavirus Command Council) meetings.
She stated that the parliamentary programme for the week was a bit harsh to the Department, however, they were not complaining but appreciated that the oversight bodies were paying an interest in ensuring that the Department accounts and attends to issues that would contribute to good governance.
The mandates of the entities present in the meeting stems from the Constitution, especially its preamble, which states that the purpose of the Constitution is to improve the quality of life of all citizens and allow every citizen to unlock their full potential. All of the Department’s entities have been entrusted by the Constitution to facilitate this, especially in the built environment. These entities also contribute to the transformation of South Africa into a country that is non-racial and non-sexist.
She introduced those present from each entity and stated that the presentations sought to reflect the entities’ work towards transforming and advancing the country through regulations, as well as improving the already struggling economy during the COVID-19 pandemic.
She addressed the issue of sexual harassment in SACAP (South African Council for the Architectural Profession), which is a council registered with the CBE. When the Department received the complaint, they requested SACAP to respond, and this was duly done. However, upon examining the response, the Department realised that any internal investigation would be tantamount to them ordering SACAP to investigate itself. Following this unsatisfactory response by SACAP, the Department trusted its officials to work with the CBE on this matter and hopes that the CBE will provide an update when it presents. She said that they acknowledge that the Department must act in response to allegations of sexual harassment in the workplace, given that gender-based violence was declared by the President to be the second pandemic. She added that because South Africa is a democracy, it is of importance that there is no bias when dealing with this issue. While following the necessary procedures, they will remain focused on the matter and ensure that people account for their actions.
Regarding the issues around IDT, considering the term of the previous board coming to an end, the Department is in the process of appointing new board members and Cabinet has already granted its approval of these members. The Department is now interacting with the Master of the High Court to acquire the registration certificates and finalise the appointments. The Department was given a mandate by Cabinet to repurpose the IDT so that this entity contributes to the built environment. The new board will drive forward this repurposing.
Mr Adam Mthombeni, Acting Deputy Director-General: intergovernmental Relations (IGR), DPWI, outlined the content of the presentations and stated areas of the presentations to be highlighted.
Ms Mjobo indicated that discussions would take place once all the presentations had been given, but following the presentation by the CIDB, she stated that Members would rather have separate discussions after each presentation.
CIDB Strategic Plan 2020-25 and Annual Performance Plan 2021/22
Mr Cyril Gamede, Chief Executive Officer, CIDB, stated that the CIDB would be presenting its strategic plan for 2020-25 and its APP (annual performance plan) for the 2021/22 financial year.
Dr Natalie Skeepers, Chairperson: CIDB, introduced the CIDB’s delegation, Mr Gamede and Ms Zama Adegboyega then took the Committee through the presentation.
APP – Updated situation analysis
Transformation: Black-Owned Contractor Enterprises in Grades 7 to 9; 51%+
- There was very minimal progress in transforming the higher grades (7-9).
- When looking at the higher grades, one can see that there are fewer companies owned (either 51% or 90%) by Black people.
Transformation: Women-Owned Contractor Enterprises in Grades 2 to 9; 51%+
- The trend is similar to the Black-Owned Contractor Enterprises.
- There are fewer companies in this area.
Transformation: Youth-Owned Contractor Enterprises across all Grades; 51%+
- There are very few Youth-Owned Contractor Enterprises.
- The CIDB must discover ways of encouraging the youth to enter this area.
- The trend is also the same as Black- and Women-Owned Contractor Enterprises.
- Develop a system to expand and align the Register of Contractors to the Register of Projects.
- CIDB systems upgrade for integration with Central Supplier Database.
- Implementation of industry best practises (CIDB B.U.I.L.D. Programme).
Public Sector Compliance
Mr Gamede highlighted that compliance was far from ideal and requires Committee assistance.
CIDB Governance and Performance
- Align Internal Audit Plan with Auditor- General (AG) focus area to identify area prior to AG audit.
- Key positions to be filled.
- Report to the Audit Committee progress on addressing audit findings for oversight including root causes.
CIDB B.U.I.L.D. Programme
Mr Gamede highlighted that there are two standards and guidelines that are pillars of the programme:
1 - Skills Development
2 - Indirect Targeting for Enterprise Development
(View the presentation for further detail)
Mr Gamede stated that in terms of the major developmental approach, the B.U.I.L.D. programme is being implemented to introduce development into the industry. Regarding footprint, the CIDB is represented in every province, and there are various interventions and programmes implemented in each province.
Dr Skeepers clarified that under the developmental programme the CIDB started a Women’s Development Programme which is now in its second year. Plans set in place are to embed this programme to ensure that women are understood and offered opportunities in the market.
She said that the CIDB also thanks the Department for the funds which it donated and further explained that the funds were used to start a coaching programme that is well underway. The programme will be extended in the current year so that more women are included in the developmental side of the construction industry.
Ms S Graham (DA) was concerned that Infrastructure South Africa (ISA) was not presenting its APP despite being an entity of the DPWI and asked why this was the case. She inquired if the entity had its own budget and when this would be presented before the Committee and if this was not so, she called for a justification.
She was pleased to see the number of interventions that the CIDB had planned, however, she was concerned about what was happening on the ground as many of the interventions were theoretical. She added that there was insufficient transformation because of a lack of understanding in terms of what is actually happening at ground level.
Regarding the issue of grading, she said the problem was that it was based purely on a financial perspective, in terms of how much money the projects of the contractors are worth. She highlighted that this was a quantitative amount as opposed to a qualitative amount and that the CIDB must look at other areas in which contractors perform when being graded. These should consider the level of quality of work, the achievements in relation to the allocated budget and whether or not costs remained within the budget, whether or not timeframes had been met, whether or not there was proper treatment of staff or a high turnover of staff and whether or not there was any development of subcontractors and SMMEs (small, medium and micro-enterprises). She said that contractors must be rewarded for doing good work instead of reserving the higher gradings for those who meet a certain financial standard.
Referring to subcontractors, she said that when they have been awarded a job on a construction site it is on a percentage basis and they are given a portion of the 30% that is allocated to SMMEs and emerging contractors. When these subcontractors quote, they quote on prices for materials that are based on their purchasing power. She highlighted that a big contractor would pay substantially less for the required material than a subcontractor who is buying much smaller amounts because materials are bought in bulk. She said that the CIDB must examine ways of addressing the purchasing power of the SMMEs and emerging contractors to make it financially viable for them to work on projects. The other option would be for SMMEs and emerging contractors to contract on a labour-only methodology but the problem with this methodology is that the SMMEs and emerging contractors are not able to meet the operational requirements to reach a higher level of grading. She said that it was a big concern that the CIDB is focused only on the procurement of client departments and not on the SMMEs.
She added that another issue with SMMEs was that, when an SMME works on a project, it is paid on a square metre basis, for example, the amount per square metre of brickwork completed. However, workers are paid on a daily rate which is irrespective of their output while the SMMEs are paid respective to their per square metre output. She said that this was a management issue on the part of the SMMEs, but it is occurring across the board with all SMMEs because labourers demand a daily rate and are not prepared to be paid on a square metre rate. As a result, labourers underperform and SMMEs get paid far less than the cost of undertaking projects. She highlighted that SMMEs were set up for failure by the CIDB failing to standardise how payments are made to the SMMEs and its labour.
Another problem is that an SMME must pay for the medicals of all its labourers, but this could all be for nothing because another SMME might join the project and offer a higher rate for the work being done. The labourers of the lower rate SMME will then transfer to the higher rate SMME. This higher rate SMME would then not have to pay for the medicals of these labourers, while the lower rate SMME must find new labourers and pay for their medicals as well. She mentioned that there must be a contract in place prohibiting the interchange of labour between SMMEs on a site.
A further problem with SMMEs being paid on a square metre basis is that the cost of snagging is not covered. The SMME must then dip into its retention to fix any problems that might be present on site and because they are not paid for snagging, they do not have any mechanism to get money.
She mentioned that there was also a difference between what is happening with the 30% SMMEs and the 70% SMMEs. When a contractor appoints an SMME on the 30% basis, there is a certain standardised methodology for interacting with it. However, contractors will often appoint other SMMEs on the 70% basis which comes with a different set of SOPs (standard operating procedure). She added that the impact of this on SMMEs going forward must be examined.
Regarding the construction mafia, she asked on how the CIDB was to address the issue and if they were looking into cases of SMMEs or emerging contractors demanding payment and refusing to work, holding contractors hostage, or striking unnecessarily.
She asked contractors that do not perform and are behaving in this manner were being blacklisted, in conjunction with the R100 000 fine that can be imposed.
Regarding public sector compliance, she asked on what compliance was being referred to.
Ms M Hicklin (DA) stated that the SACAP issue falls within the mandate of the CIDB to ensure that the different councils abide by the rules. Instances of sexual harassment and harassment of female employees are alleged within various councils in the built environment, and it takes several months before an investigation is led into these allegations, irrespective of the race of the counsellors.
She stated that, as a woman, she finds it incredibly difficult to comprehend that women feel unsafe in their workplaces to the point that they are unable to work. Women must feel safe and protected by the councils for whom they work for. She added that the CIDB is the umbrella body that is meant to protect women.
She asked for clarity on the gaps in the National Contractor Development Programme gaps on slide 19.
Referring to the sluggish spend and B.U.I.L.D. skills programme on slide 20, she said that the CIDB must ensure that everyone is able to access the programme and that it is equitable across all industries and departments involved.
She said the R100 000 fine was massively susceptible to fraud and this was particularly the case for a major construction company where R100 000 is not even a slap on the wrist. She highlighted that compliance with the CIDB Act must be enforced and asked on what was being done to encourage and facilitate the uptake of compliance. She stated that, unless compliance was adopted across the board, corruption would never be addressed, together with the frequent supply chain irregularities in the Department which are closely linked to the anti-bribery management system.
She asked on the success of the uptake of compliance across the board, the enterprises more willing to comply and the measures set in place to ensure that those who do not comply are penalised.
She said that the issue of the construction mafia was a real problem. While Ms Graham is aware of instances in the Eastern Cape, Ms Hicklin is aware of instances in Gauteng and in both provinces the problem is insidious. She reiterated that the CIDB is the umbrella body that should be able to protect people in this regard and urged the CIDB to address this mafia problem as quickly as possible.
She stated that there is a leadership deficit across the construction industry and DPWI as a whole and that this should be addressed urgently, mentioning that the longer priority positions were being left vacant, the longer there was a skills deficit and a lack of empowerment which is a major inhibiter of transformation.
Ms Siwisa (EFF) was concerned that the SACAP sexual harassment case is still ongoing despite being raised in December. She asked the Deputy Minister to inform the Committee on whether the alleged perpetrators were working or were at home, whether they were actively on duty and whether there was a possibility of further intimidation against the victims.
She mentioned that there was still a high percentage of people in the lower grades, which has been the case for years, and there does not seem to be any progress in this regard.
She was concerned that BEE assistance does not necessarily translate to black ownership and asked on how this would affect the process of ensuring that black contractors, especially women and the youth, are not neglected in terms of being recognised and assisted to move to a higher grade given the financial requirements.
She asked on when the necessary CIDB Act changes were going to be finalised so that contractors in the lower grades are promoted.
She asked on the measures set in place to improve audit outcomes, the initiation time, and the timeframes for completion.
Referring to the detailed performance targets on slide 35, she asked on the criteria used or to be used to select the type of people mentioned.
On slide 42, she asked on the criteria to be used to select the 1000 contractors that will receive developmental support per year.
She inquired if it were a possibility that the registration fees would increase and whether the stated amount was a reality or a target.
She was concerned that contractors who were not complying with the CIDB Act were preventing prospective contractors to enter the construction industry. She said that those that do not comply should be deregistered instead of fined because the fine is not a sufficient deterrence, and the non-complying contractors are inevitably given additional contracts because they meet the financial requirements.
Ms S Van Schalkwyk (ANC) welcomed the statements by the Chairperson of the CIDB regarding the increase in opportunities for women in the construction industry and stated that it was heart-warming to see transformation in favour of women in a male-dominated industry.
She was unsure of whether the presentation sent to the Committee was the same as the one presented and further asked on the topic of transformation of the industry. She wanted to know the set timeframes for the review of the registration criteria and reiterated that without any timeframes it would be difficult for the Committee to monitor any progress.
Regarding the capacitation of clients to drive transformation, including awareness of procurement, it was indicated that the target had been revised due to COVID-19. Some capacitation sessions had been cancelled but online capacitation had been initiated in response. She appreciated the effort made by the CIDB to adapt to the ‘new normal’ imposed by COVID-19 but was concerned that poorer citizens, who were marginalised and previously disadvantaged, were unable to be capacitated through virtual sessions due to a lack of technology. She requested that the CIDB arrange contact capacitation sessions, particularly in the rural areas, to benefit those without access to technology.
She said that the extremely low public sector compliance was quite embarrassing to see and asked if the CIDB critically analysed the situation to determine what the reasons for this non-compliance were.
She requested that, in relation to awareness campaigns in different areas, all the different entities involved should present their strategies and campaigns. Past strategies employed did not achieve the desired results and as such entities need to re-strategize and look at other options so that people can be capacitated through the awareness campaigns. She mentioned that community radio stations, for example, would be an ideal method of capacitate people through awareness campaigns.
She highlighted that the presentation was silent on the issue of vacancy rates and the incorporation of designated groups and only spoke on the filling of key positions. She said that this was insufficient when attempting to address the issue of unemployment in the country and that the filling of all vacant funded posts should be made a priority and be reported on in the quarterly report.
She asked on the criteria used to determine the selection of applicants for the learning opportunities on offer as presented in slide 35. In addition, she said that the target of 150 learners was very low and preference is usually given to people in the urban areas which is to the disadvantage of those in the rural areas. She said the target should be increased if possible and if not, the CIDB must rotate its target areas so that every region can benefit from this great initiative. She added that the same approach should be applied to the contractor development programme.
Mr T Mashele (ANC) asked on the transformation in the context and understanding of the CIDB, on the barriers preventing the advancement of transformation, particularly with regards to the youth and women and the plans set to respond to the mentioned issues.
He stated that, in the legislative mandate, there is talk of promoting the uniform application of policy throughout all spheres of government but no mention of this being done in the private sector. He asked if the CIDB was implying that it only wants to regulate the government, how it viewed the private sector and the plans it has regarding this sector.
He asked on the criteria that informs the target of 150 learners and imposed the same question on point 1.14 in slide 35.
Mr E Mathebula (ANC) said that sexual harassment is problematic in the country and he was especially concerned that it was taking place in entities within the Department. He added that responding to these kinds of matters takes time because the issue is twofold, it is both a criminal act and a misconduct. The Committee expected that action would have been taken by now if the alleged sexual harassment were found to be true, both within the Department and with the police in the form of criminal charges. He mentioned that in the next meeting with the Department, the Committee expects a report detailing that the matter had been taken care of.
He remarked that the economy is still ruled by white males and with this in mind, there have been numerous complaints from black-owned companies who applied to have their grading upgraded but have had to endure a process that either takes a very long time or does not happen at all. At the same time, big companies that easily meet the financial requirements continue to move up in the grades while leaving no room for emerging companies to enter the construction industry. He asked on what the CIDB was doing to deal with this matter.
He expressed his concern because of the lack of training of young people since the youth is the backbone and future of any nation. Failing to train the youth in a manner where they can grow will have a negative impact on the future of the country. He added that the CIDB must ensure that this matter was dealt with.
He said that the policy which states that 30% of a company’s work must remain with the local communities is continually being ignored and companies are doing this with impunity. He asked if the CIDB was aware of this anomaly, and if so, what was being done in response.
Responses from the CIDB
Mr Gamede highlighted that the CIDB understood what was happening at ground level, however, there are limited frameworks and many instances of disagreements between stakeholders.
In terms of grading, the CIDB looks at a company’s revenue as well as its most expensive project. He said the CIDB was reviewing its grading criteria, with the quality of work a factor that is being considered. The challenge with this was that clients were sometimes responsible for disputes regarding the quality of work. Contractors suggested that quality be measured both in terms of the contractors and the clients. A typical example of a quality dispute would be where a contractor relies on an inaccurate drawing given to it by its client and then the parties would argue on who should bear the cost of rectifying the mistake.
He mentioned that the CIDB was fully aware of the many challenges on the ground relating to subcontracting, whether in terms of the 30% or general subcontracting. The biggest problem in contracting was that big contractors often squeeze the subcontractors out of existence. As Ms Graham had mentioned the price of materials, he emphasised that there are bigger issues that come into consideration. For instance, a subcontractor can arrive on site after the main contractor has already priced and secured the work, an approach which is problematic for two reasons. Firstly, the main contractor would want to give the subcontractor work with a very small profit margin which results in many subcontractors filing for bankruptcy. Secondly, when the main contractor subcontracts it reduces the pricing of the work to unsustainable levels. If this predominant issue is not dealt with, it would not matter if the CIDB solved the issue around the pricing of materials. A possible solution would be to make it an obligation that when a contractor priced work at a certain margin, this margin should be transferred to the subcontractor. However, the enforcement of this solution is far from finalised.
Mr Richard Raphiri, Manager: Procurement and Delivery Management, CIDB, stated that the CIDB had already discussed whether the grading criteria was developmental. It was mentioned by the Deputy Minister in previous sessions that the grading criteria must be re-evaluated so that developmental aspects can be addressed. He added that the CIDB was consulting with the industry as part of its mandate to create grading criteria that is developmental and addresses issues such as BBBEE elements that were not properly incorporated. The CIDB is also trying to align itself with what the construction sector has agreed to in terms of councils.
Most public sector clients have been struggling following the implementation of the 30% subcontracting criteria in the 2017 regulations. These regulations have been put aside slightly but must still be compiled with. He said the CIDB was guiding public sector clients on how to comply with these subcontracting regulations as well as to manage those areas during the procurement process. It had been discovered that many clients relied on contractors to comply with the 30% but fail to ensure that the 30% is derived from the actual value of the contract. Fixing this problem will ensure that contactors are unable to impose different pricing criteria on subcontractors.
He mentioned that the CIDB has been participating in different industry forums with bodies such as the MBSA (Master Builders South Africa) and Department of Transport to deal with the construction mafia. During its assessment, 14 established business forums were identified across the country and discussions are already underway. At the same time, the CIDB held meetings with its public sector bodies so that clients are aware of the project steering committees which they must deploy during their projects to ensure that the projects are not hijacked by the so-called mafia. With this being done, the CIDB will be able to get rid of the construction mafia in the future.
The 150 targeted learners were based on what the Minister gazetted in terms of the B.U.I.L.D. programme as the best practise project assessment fee. There are several standards which fall under these best practise schemes and only two standards have been approved by the Minister. The other standards are under development and will be introduced in the future. One of the approved standards is the skills standard that was introduced on 1 April 2021. It states that when a department plans a project, the project will be based on this standard as well as the well as the threshold contained within. There are four methods of evaluating the standard. Firstly, by examining one’s low-level skills such as bricklaying. Secondly, by evaluating one’s training and qualification. Thirdly, by examining one’s tertiary education and fourthly, by examining whether one is already trained to work and requires participation in an experiential project to qualify as a professional.
He admitted that the CIDB has been struggling with public sector compliance and this was mainly due to the International Relations Act which prevents the CIDB from issuing fines to a public sector or body that is part of the same government. The CIDB is also ensuring that the private sector complies. Adding further, he said that there are elements framed within the CIDB prescripts such as the register of projects, which enables the CIDB to view the number of projects planned by different departments and the number of projects awarded by the departments and private sector. However, there have been instances of non-compliance in the private sector where any project that is worth more than R10 million must be registered.
The CIDB included in its amendments to the CIDB Act, the requirement that all participants in the construction industry must be registered with the CIDB whether those participants are working on private sector projects or public sector projects.
The CIDB also clarified in August 2019 how retention should be introduced into contracts so that retention is not misused. There are three different methods of introducing retention, which allows for retention to be used as an instrument for development. A public sector client such as the DPWI will be able to secure 10% of a R70 million contract project from a contractor without a contractor having the cash flow to do this. Retention can be taken off a certain percentage and over a certain period so that the cash flow of the contractor is not actually affected.
On virtual capacitation, he mentioned that the CIDB was aware of the challenges that the poorer citizens may face. In response, there are contact sessions taking place in every province, subject to the COVID-19 regulations.
Referring to the question on the gaps in contractor development, he stated that the CIDB helps clients by ensuring that there is a contractor development framework and assists with various programmes in different provinces and departments. For example, the Department of Transport in KwaZulu-Natal needed contractors to develop roads and related areas. This is usually accompanied by various projects and targets.
In terms of how contractor development programmes ran, it was picked up that these programmes had not been budgeted for but only the first year had been considered and as a result the programme would fail in the second year. Therefore, a gap that is highlighted when programmes are developed with partners is that the project must be budgeted for across its entire lifespan. Another gap highlighted was that there might not be enough people to drive these programmes forward if, for instance, a project manager is transferred to another department. The CIDB ensures that selection for participation in these projects is equitable, but most of the time it is the clients and the departments who then oversee this selection process directly. The CIDB also ensures that non-compliance is dealt with in terms of fines or reporting to the Auditor-General (AG) depending on the type of non-compliance.
He said the deregistering non-complying contractors was an option, but a last resort. An equitable process must be followed whereby the code of conduct is applied. The person who fails to comply will be fined, and if they are found to be guilty, they will have an opportunity to present mitigating factors. The sanction imposed on this person must also be equitable.
Mr Ebrahim Moola, Director: Business Improvement, CIDB, stated that the review of the CIDB Act was led by the DPWI’s policy and legal unit. There have been two years of intense work, with the Department currently engaged in the drafting process of the Act. He mentioned that the Act was on the roll in terms of the legislative framework for the current financial year, with the Department busy with the review process where one or two issues are being further interrogated. The Act, once amended, will assist in dealing with many of the issues that had been raised. He highlighted the client recognition scheme, in terms of which the delivery capability of client departments is improved, and a number of clients are capacitated and added that the amendments to the Act will also allow for a more effective application of the actual legislation.
The CIDB implemented the anti-bribery management system following consultations done across the country and in all provinces as the plan was to improve the registration criteria in the future. There are certain grading levels for the anti-bribery management system, starting at grade nine. He said that it would be a requirement for large contractors to implement this system as part of the registration process.
Mr Gamede stated that all targets were monitored quarterly and will be reported on accordingly.
Mentioning the issue around access, specifically online access to rural communities, he said that the physical offices were still available to visit, and citizens were still able to raise their issues in these offices.
He explained that the CIDB is more expensive to operate than the budget allows, therefore there is prioritisation when it comes to the filling of vacant posts so that positions are funded and are affordable.
He directed Members to the presentation slides points 1.1 where it states, “Increased Black-Ownership and Participation”, 1.2 “Increased Women-Ownership and Participation” and 1.3 “Developed Contractors”. He explained that these points constitute the basis of the CIDB’s definition of transformation and that the biggest barrier to transformation is the people who have funds as they themselves as an entity only supports transformation but do not implement projects. He said the client departments were the responsible bodies to ensure that transformation takes place because they implement capital projects. He emphasised that client departments must implement a criterion that will facilitate transformation and afford equal opportunities to black contractors. He said that funded bodies must be evaluated to determine whether the funds have been spent in a transformational manner and in a manner that supports the youth.
He reiterated that the CIDB does not only focus on government in terms of its legislative mandate but the Act itself is designed in such a way that there is a different criteria for the private and public sectors, respectively. He added that a change to this design was a fundamental amendment that must be made to the Act.
Referring to the complaints from black contractors on the slow upgrading process, he said that the CIDB was trying to make the process faster, however, contractors must ensure that they submit all the correct documentation and meet the requirements for an upgrade.
He said that the CIDB provides the framework for youth training but the responsibility of ensuring that youth development takes place falls on the client departments. He highlighted that client departments should also use funds in the right areas and ensure that young people are afforded opportunities to take on projects.
Responses from the Department and Deputy Minister
Mr Mthombeni stated that the Department agrees with what the CIDB presented regarding the progress of the Amendment Bill. The Department placed this Bill under its deliverables for the current financial year, in its APP, and through its policy branch. He said that there was a finalised Bill, and the Department is currently in consultation with legal drafters so that a finalised document can be commented on by the public. In the coming week, the Draft Bill will be sent to the Office of the Chief State Law Advisor for precertification. Upon obtaining this certificate, the Department will be able to consult with the various stakeholders.
Referring to the lack of an APP for ISA, he said that it remains an entity in transition and that the Department was still working on transitional arrangements to ensure that ISA can be properly located. He explained that when an entity transitions, it must consult with Cabinet, National Treasury and the DPSA (Department of Public Service and Administration) which must determine what kind of entity ISA is. He mentioned that the Minister, together with the Head of ISA and the IDC (Industrial Development Corporation of South Africa) as well as the DPWI’s own cooperative services department and CFO (Chief Financial Officer) were working on together to ensure that ISA is optimally positioned in the current financial year.
He mentioned that ISA was an entity trying to fulfil the role of the PICC (Presidential Infrastructure Coordinating Commission) and pronounced that it would join the DPWI. He said that the transition should be dealt with to ensure that the staff component was processed. Once completed, the Department would be able to promote the imperatives of the Infrastructure Development Act and ISA would function as the single point of entry for infrastructure coordination and assist the DPWI in all infrastructure-related matters. He highlighted that the Department should also use an integrated approach when planning to ensure that deliverables are assigned to every entity. In the APP, some outcomes required ISA’s assistance, particularly those relating to productive assets and dignified client experiences.
The Deputy Minister indicated that the Department worked closely with Cabinet to develop the social facilitation policy in response to the construction mafia. This policy went through the economic cluster and will be considered by the full Cabinet the following day. The policy, she explained, speaks to the facilitation of understanding in communities regarding what citizens should do when the Department installs infrastructure. It also ensures ownership of projects by communities and attempts to minimise mafia interference.
She said that there were multiple entities responsible when looking at the SACAP issue and that the CBE, as the umbrella entity under which SACAP functions, bears a lot of the responsibility. She mentioned that are two matters which arise from the SACAP issue, the first being the physical act of sexual harassment and how to best respond to it. She hoped that Mr Mthombeni would address this matter because one of the reasons she allows entities and departmental officials to respond to Committee questions first was because these entities and officials are to indicate the directions given by political leaders in the Department. She mentioned that this was what the CIDB correctly did when it detailed the attitude of the political leadership of the Department towards aspects of the CIDB’s mandate. The leadership of the Department fought with its departmental officials because they did not act with the urgency that is required when dealing with matters of this nature and the officials involved received stern warnings. She added that due to the nature of the relationship between the political leadership of a department, and departmental entities, the leadership is unable to discipline entity employees directly. This responsibility to act in a manner that is responsive to the laws of the country falls on the CBE which had been already engaged by the Department and needed to provide an update.
She said that the CBE was also slow to take the initial step of the investigation which demonstrated a lack of agility and urgency. This was disappointing because gender-based violence, including sexual harassment, is a secondary pandemic in South Africa.
She confirmed that the Department is currently overseeing the recruitment process for a number of senior positions with a few names having already been shortlisted. The current Head of ISA was in the process of working with the Department to migrate the work done by the Office of the Presidency and the DTIC (Department of Trade, Industry and Competition), as such the entity does not have a fully-fledged APP.
CBE Strategic Plan and Annual Performance Plan 2021/2022 Financial Year
Dr Sitsabo Dlamini, Chairperson: CBE board, gave a more detailed overview of the presentation and mentioned the key targets and challenges faced.
Ms Priscilla Mdalose, Chief Executive Officer: CBE, stated that the CBE does not condone the sexual harassment allegations and is working closely with the DPWI to investigate the matter. The report given to the Department by SACAP had been found to be unsatisfactory and the CBE decided to try and expedite the investigation. She added that the Department would then be able to implement the recommendations as per the investigation report.
She then took the Committee through the presentation, with Ms Lindy Jansen van Vuuren, Chief Financial Officer: CBE, taking the Committee through the budget.
During the presentation, Ms Van Schalkwyk requested that the focus of the presentation shift to the challenges faced by the CBE and not its vision and mission.
- There is a demand for the upskilling of BEPs to keep up with the ever-changing modern technology – CBE, CBEP, VAs and tertiary institutions partnership are critical.
Situational Analysis – External Environment
- The construction industry experienced an annual decrease of 45 000 (-7.4%) in total employment in March 2020 compared to March 2019.
- The impact could result in a year-on-year contraction of 18%, which represents 4% of GDP. Potentially, this could mean the loss of up to 140 000 formal jobs.
- The official unemployment rate increased by 1.7 percentage points to 32.5% in the last quarter of 2020.
Key Achievements of the Past Financial Year
- Engagements with the Competition Commission (Facilitation by Minister and Deputy Minister).
- Registration conducted remotely to lessen the burden on the applicants.
- Review of Recognition of Prior Learning by the Councils.
(View the presentation for further detail)
Ms Graham was concerned that the Committee’s level of oversight on the actions of councils under the CBE was an ongoing problem. She mentioned that she received a large number of complaints regarding the SACPCMP (South African Council for the Project and Construction Management Professions). For instance, she was told that 1138 people were waiting to write exams while 2243 were in the process of registering. She highlighted that the issue of exams was pertinent because some people applied for SACPCMP registration over two years ago with nothing having been done regarding their registration. As a result, people are losing their jobs because they are not registered professionals.
She agreed that COVID-19 was an issue in 2020, however, this was not the case in 2019. She added that SACPCMP’s inability to adapt and function in a COVID-19 environment after a year was deeply concerning highlighting that the opened examination portal remains inefficient. For example, a person who had applied and had been granted an opportunity to write an exam but did not receive a notification of this instruction, subsequently missed the exam date due to the non-payment of a requisite fee.
She said that there were no allowances being made for people who have lost their jobs as a result of COVID-19 and those who are now unable to pay the annual fees given their lack of income. As a result, these individuals are no longer members in good standing, which prohibits them from applying for positions or tendering for jobs. Such people must be assisted by allowing them to apply for work and pay fees at a later stage.
She added that there have been allegations that the board of the SACPCMP is comprised of members of voluntary associations, which are made up of people who work in the industry. The allegations claim that these members prevent others from being registered because the members would be in direct competition with these people. She said that these allegations must be examined because while some people are being prejudiced, others, with connections to members, are being favoured. She added that there is also evidence in the form of WhatsApp messages to this effect.
Another concern regarding the SACPCMP was its online profession development programme. She pointed out that there were videos that people were required to purchase for R1500 to remain as members in good standing. She asked who the makers of the videos were and those who decided on the fee, and who would directly benefit from the sales.
She highlighted that four of the 14 previously mentioned voluntary organisations were actually the same organisation but operated in different regions, namely, Master Builder. Such organisations are at an advantage when voting on boards, for example. She said that it was concerning that voluntary organisations were likely packing their members onto boards, which precludes the smaller organisations from participating on these boards.
She asked several questions relating to the statement issued by the Engineering Council of South Africa (ECSA) on the appointment of Cuban engineers, that anyone registered with the ECSA is able to work in South Africa. She asked on what was being done to ensure that individuals were registered, whether this regulation was being enforced and why the CBE was not fighting for local engineers to be appointed instead of allowing foreign engineers, that are not registered according to the regulations, to take work from South Africans.
She asked for the stipulated timeframe with regards to the appeals which are supposed to take 60 days. She mentioned that a number of issues have been raised because of the extraordinarily long wait that some people have experienced after lodging an appeal on a decision.
Ms Hicklin was not satisfied with the Deputy Minister’s response to the SACAP issue. She mentioned that the Deputy Minister claimed that her powers were limited, but in terms of the Architectural Professions Act, she is in fact allowed to take responsibility herself if the necessary actions have not been taken. She requested that the Deputy Minister allows the Committee to have faith in her ability to act on governance issues, in particular, the sexual harassment issues in SACAP. She added that as a woman, she should be working to protect the counsellors in SACAP, especially black females. She said the Committee should not be asking the councils to investigate themselves, particularly when the perpetrators of these alleged offences occupy senior positions within the councils. The Committee must ensure that the overarching body takes responsibility for addressing these matters once and for all.
She asked if there was a breakdown on the uptake of black women within the construction industry and this, she added, included doing what was necessary to make a significant difference in the built environment. She probed as to whether these women were secure in knowing that their interests were being taken care of and if the CBE protects and encourages women to participate in systems aimed at empowering them. She asked on what the CBE was doing to incentivise women to enter the built environment.
She stated that the DPWI and CBE must protect women in the industry because nobody else is going to.
Mr Mathebula asked, in relation to the budget cuts, how these would impact on the CBE’s functionality and administration and how oversight was performed to address fraud and corruption.
Responses from the CBE
Ms Mdalose stated that the CBE was aware of the issues around the SACPCMP because some had been referred back to the CBE. Meetings were held with the SACPCMP where the entity stated that it had a challenge with its registration system. However, the registrar indicated that this challenge was resolved but there could still be a backlog.
She said that the CBE must ensure that the SACPCMP registers as many people as it can and to her understanding, SACPCMP was given a waiver in terms of paying levies to the CBE and a similar waiver was supposed to be given to professionals so that they can remain registered. She added that there will be an investigation on cases where professionals are being deregistered.
She linked the issue regarding the statement made by ECSA to the issues around the Competition Commission. There was an impasse between the CBE and Competition Commission because the Commission did not want the CBE to regulate the identification of work and allowed people to continue practising in this space. As a result, because the CBE was able to gazette the identification of work, councils will also be able to gazette their regulations. This will enable the enforcement of the regulations that require engineers to be registered with ECSA and only those who have been registered will be able to work. She added that It was crucial that the CBE linked the identification of work with the regulation of the sector.
Mr Mokgema Mongane, Chief Operations Officer: CBE, said that the issue of the 60-day timeframe is dealt with in section 21 of the CBE Act. This provision states that the appeal committee must decide on an appeal within 60 days from the date an appeal was lodged. He confirmed that all the appeals that are lodged are addressed within days. The process involves a discussion between the person who lodged the complaint and the council to which the complaint has been lodged and if the outcome of this discussion is unsatisfactory, the matter is then taken to the CBE.
Referring to the composition of the SACPCMP board and the issue of gatekeeping, he mentioned that the CBE acknowledged that gatekeeping is a major issue and has been for many years. In response, one of the initiatives taken is the inclusion of academics and retired professionals on the interviewing panel so that conflicts of interest are limited.
When looking at professional programmes on offer, he stated that there was a need for continuous professional development for every professional across the various councils as this ensures that professionals are always up to date with developments in their field. He emphasised that these programmes were therefore essential. In many cases, the councils themselves offer the programmes and the monies made from the sales of the programmes go to the respective councils. A large portion of the money is then used to further develop and update programmes.
He confirmed that there were supposed to be waivers given to professionals by councils to maintain their registration in the current COVID-19 environment. However, because of the financial models of councils and the fact that they operate solely on generated income, they therefore rely on the various registration and annual fees paid to them by professions in order to make a profit and continue operating. Without any governmental grant, councils will find it difficult to operate while waiving registration fees. He added that the CBE will try to strike a balance between these opposing interests.
Ms Jansen van Vuuren stated that there is zero tolerance for fraud and corruption within the CBE, and there has not been a single case of corruption within the previous three years. The CBE implemented a fraud and corruption hotline, mandatory quarterly fraud workshops and training, and a fraud prevention plan. It also reviews its practises against the fraud prevention plan and the recent Cabinet-approved a whistleblowing policy.
Regarding budget cuts, the CBE looks at various aspects of its expenditure to determine where costs can be cut. For instance, a few interns were appointed to assist with the demanding workload, which allows managers to do more of the work that was planned to be done by service providers and money is saved. In addition, the CBE is evaluating its rental agreement which is nearing its end and is looking at ways to save on rental space, such as storage.
Ms Mdalose stated that the transformation collaborative committee is a committee which aims to address issues of women empowerment and gender equality. The CBE concedes that, in the past, it did not deliver regarding the implementation of its transformation resolutions. However, ensuring that women are participating in the industry and are being protected are now top priorities of the CBE.
The CBE has undertaken a survey to establish a database of women who own private practises in the built environment. This database facilitates continuous engagement with these women and allows the CBE to understand their issues and hear what solutions they might have. Oftentimes the solutions are within the boundaries of the industry.
She mentioned that the CBE deliberated with the DPWI with regards to the issue of the Cuban engineers but is yet to engage with the Department of Water and Sanitation.
She added that it was not easy for the CBE, as a public entity, to write a media statement criticising another governmental department. Instead, the CBE deliberates with the Minister to highlight and resolve the critical issues that are raised by the industry.
Dr Dlamini explained that, when looking at the mentioned it has to be considered that there is a longstanding issue of the different spheres of government and governmental departments working in isolation. However, now that infrastructure is centralised under the DPWI, the CBE was able to establish a central database for the entire capacity of professional capabilities that the industry has. He mentioned that before any department sources capacity from another country, it can use the database to make sure that there is no local capacity. At the beginning of the current financial year, the CBE allowed Eskom to access the database because it planned to pull engineers out of retirement instead of employing a number of the many under-utilised engineers in the country.
Responses from the Department
Mr Mthombeni said he preferred to use the term ‘Cuban technical assistance programme’ instead of simply ‘Cuban engineers’. He explained that the DPWI’s approach to this matter, as a public sector, involves the assessment of technical skills required across the field such as engineers and architects. The sector produced a concise analysis of the approach whereby technical assistance would be sourced through Cuba and this protocol agreement has since come to an end. He added that the CBE would play a crucial role in assisting during the registration process if these Cuban professionals are sourced. The provinces would also be required to indicate if there was a lack of ability in a respective province. He mentioned that when capacity is sourced, it must be sourced as a sector and not a department.
He said that ECSA contributes to discussion that take place before capacity is sourced from Cuba.
He said the DPWI was made aware of the SACPCMP complaints through its executive authority. The Minister and Deputy Minister discussed on these together with the SACPCMP and a feedback document to the DPWI and SACPCMP confirmed internal processing weaknesses. However, the SACPCMP assured that the issue of registration backlogs was being addressed through the implementation of a new policy.
IDT Annual Performance Plan 2020/21
Mr Michael Sutcliffe, Acting Chief Executive Office: IDT, introduced the IDT’s representatives and elaborated on some of the appointments made to the board of the IDT. He explained that his own appointment was recently made by the Master of the Court.
Mr Sydney Machete, Acting Mpumalanga Regional General Manager, IDT, and Mr Christopher Mulaudzi, Head of Strategy, IDT, then took the Committee through the presentation.
- The Independent Development Trust is a Schedule 2 (in terms of the Public Finance Management Act) management and implementation agency of the Department of Public Works and Infrastructure.
- In recent years, the entity has experienced a number of challenges, which have had an adverse impact on the IDT’s revenue generation and its ability to fund its operating costs.
The IDT Operational Context
- Uncertainty with regard to the future form and status of the entity.
- Efforts towards entity transformation were put on hold.
- The entity is operating with obsolete enabling technology (ICT) to support turnaround activities.
Status of the IDT Strategic Plan and Annual Performance Plans
- The Executive Authority appointed a new IDT board in September/October 2020.
- The IDT board instructed management to develop an action plan, which was approved in December 2020.
- On the advice of the Department, the IDT revised its 2020/21 targets, reducing the number of APP targets from 36 to 13 core targets against which to report until the end of the financial year, while discussions on its new form are underway.
- Certainty of mandate and long-term sustainability – The IDT retains its mandate and status as a programme implementing agent and an entity of the government.
- Business portfolio – The IDT will attract sufficient value of business portfolio year on year. Execution on secured programme portfolio will enable the entity to financially break even and ultimately generate operating surplus.
- Delivery capacity – The IDT will have (source) sufficient capacity and resources (people and finances) to deliver on its mandate.
- Enabling technology – The IDT will timeously resource itself with appropriate enabling technology to deliver on its mandate efficiently.
(View the presentation for further detail.)
Ms Siwisa praised the work that was done to ensure that the IDT did not close down. She asked if the new board had been appointed in October 2020 as per the presentation or must still be appointed. She inquired on whether the strategic plan to be presented at a later stage, would be developed by the new board or by the DPWI. She stated that whoever bears the responsibility must ensure that the IDT does not find itself in the same situation that it was previously in.
She was concerned with the issue of job losses if the entity were to close, mentioning that remaining operational, workers were told that their contracts would be terminated, and they would have to find alternate means of employment.
She inquired as to why targets for 2020/21 were only shown on slide 9.
Ms Graham was also pleased to see that the IDT was still functioning, and she attributed this achievement to the pressure put on the Minister by the Committee. On the other hand, she mentioned that the Minister may have realised that only the IDT board was able to disestablish the IDT trust and any decision taken by an Executive Authority would have been ineffective.
She said the Committee was under the impression that IDT did not have a fully-fledged board in the previous year.
Ms Graham stated that she had asked the Minister a parliamentary question on the status of the IDT. She was advised that there was a temporary board established until the end of March, with interviews and application requests being held in January. This resulted in the appointment of Mr Sutcliffe and others. She highlighted that she was well aware of Mr Sutcliffe’s work.
She was concerned that throughout the presentation, only one slide mentioned social infrastructure while the rest alluded to infrastructure. She asked if the IDT was going to diversify and work on additional forms of infrastructure or it would only work on social infrastructure.
She asked if the IDT was going to be in direct competition with ISA and whether these entities would be able to function in the same market. She inquired as to whether there was any conflict between the IDT and ISA and if ISA would utilise the services of IDT for social infrastructure builds. She mentioned that the Committee must find ways of making the IDT functional and viable and that without the support of the Department, this would be a very difficult task.
She said that the IDT started branching out into facilities management and has since faced direct competition from entities such as the DBSA (Development Bank of Southern Africa). She asked if the entity would consider making facilities management part of its core offering and if it would consider other areas where it can provide a niche offering within the social infrastructure field.
She made mention that there were issues around whether the Non-State Sector (NSS) EPWP (Expanded Public Works Programme) would remain with the IDT. She asked if these issues had been discussed and whether the 2021 programme had been implemented. If this were not the case, she asked on when it would be implemented seeing that this should have been done by the 1st of April 2021 and inquired whether the programme would continue in the new financial year.
She asked on the mechanisms the board would implement to ensure payment by client departments and added that non-payment was one of the reasons why the IDT performed poorly. In addition, she inquired whether the entity was considering ways of addressing the lack of payment over the last few years and recovering some of this bad debt.
In response to another parliamentary question, the Minister stated that for the current financial year the Department would give R155 million to IDT. She highlighted that the figure did not reflect in the presentation and asked if the amount had been amended to a higher amount or stayed the same.
Ms Hicklin welcomed the fact that the IDT was still in existence and was proud that the Committee was instrumental in ensuring this. She stated that the instability of the IDT must be terribly unsettling for the people involved and hoped that it would become a stable entity once more.
She was concerned that when the IDT was instructed by the Minister to extend the contracts of the existing staff, this was not done, and six staff members were terminated. These people then went to the CCMA for assistance. She inquired on whether it was the previous or new board which did not adhere to the instructions from the Minister and further mentioned that this demonstrated the inadequate technical capacity of the IDT which stems from the high vacancy rate. She added that the high vacancy rate was prevalent throughout the entire DPWI and that there was also a leadership crisis across all areas of the Department.
She emphasised that the DPWI should ensure that every entity is capacitated, particularly the IDT, because it undertakes social infrastructure projects such as schools and water sanitation. These projects transform the environment to make South Africa a more capable state and therefore cannot be ignored.
She asked where the R155 million was and why it could not be seen in the budget.
Ms Van Schalkwyk hoped that the IDT would commit to its new vision and mission and not revert to its old problematic habits. She was most concerned with the poor adherence to debt payments by governmental departments and the huge amount of debt that must still be paid as a result. She asked on the plans which have been implemented to ensure that the outstanding debt is recovered, and the non-payment of debt is mitigated.
She asked on the reasons behind the big jump in EPWP work opportunities created between 2021/22 and 2022/23, as shown in slide 21.
Mr Mashele asked whether the IDT believed that changing its vision would change its fortunes as it had failed to be the preferred service provider of client departments. He asked on the improvements to be made so that the entity becomes a preferred service provider.
He added that there was a lack in human resources to carry out tasks or mandate and asked on how this would be improved.
Highlighting the 42% of projects completed timeously, he asked how the IDT was able to approach the Committee and state that it plans to fail and why the mentioned target percentage was low.
He asked on how output indicators would be defined and achieved when looking at the issue of the youth and women.
He asked if the IDT believed that it inspires confidence in client departments.
He inquired on why litigation had been given the third highest budget allocation and where funds for such would come from.
He asked the extent to which the IDT planned on implementing future social infrastructure projects and whether it would stick to implementing such projects or branch out to other infrastructure projects. He also wanted to know where funds would be sourced from.
He mentioned that Members of the Committee came from different constituencies. If an entity presents using solely percentages, Members would not be able to tell how the presented plans affect their constituencies. He said that this did not speak to the core of parliamentary process and asked on where the mentioned projects were going to be implemented.
Responses from the IDT
Mr Sutcliffe stated that there were issues around the governance of the IDT’s board and its relationship to the Minister and the Executing authority. He highlighted that this was an urgent problem that needed to be addressed.
He said that the IDT must deal with its relationship with other governmental departments where everyone wants to enter the infrastructure space. He emphasised that unless each department cares about what every other department is trying to do, government as a whole would be wasting its time and these entities would be behaving as private sector entities given how they would compete with each other.
Regarding issues around finances and targets, he agreed with Mr Mashele that the targets were shocking and said that, subject to external circumstances, implementation must be the focus of the agency. He said one of the first things the board must engage with is the issue of instability between staff members. This issue will be raised in the board’s first meeting and with the Executing Authority. A follow-up meeting with the Committee will be organised following these deliberations.
Mr Sutcliffe also stated that he would be pestering many DGs regarding funds.
Further issue from the Committee and IDT response
Mr Mashele stated that it was inappropriate for Mr Sutcliffe to reveal the date of his appointment to the IDT board and added that this kind of disclosure should not become a norm. He said that when the Committee convenes, it does not accept any excuses and any person in its presence must be able to account.
Mr Sutcliffe apologised if he gave that impression. His understanding was that the Acting CEO had to respond to Committee questions and account. He said he was simply stating to Mr Mashele that it was his first time reading some of the documents and therefore was unable to immediately address some of the problems. He reassured the Committee that Issues which could not be addressed would be deliberated on by the board as soon as possible.
Responses from the Department
Mr Mthombeni explained that the newly appointed board did not have locus standi and that it needed to be returned and re-implemented and is still pending finalisation.
He confirmed that the Department had allocated R155 million to support the IDT, however, there was a lot of oversight in relation to this budget and the DPWI had consulted with National Treasury in order to better understand how to utilise it. He said that the full amount could not simply be given to the IDT but had to be given in portions on a necessity basis.
He stated that it did not appear on the budget because the DPWI was still interacting with National Treasury to obtain the necessary motivation. This motivation outlines the operational and financial needs of the IDT and once finalised, the issue of staffing, for example, could be addressed.
Responses from the IDT
Mr Machete and Mr Mulaudzi responded to the remaining Committee questions.
The previous board which had been appointed in September/October 2020 reached its term in March 2021 which was extended until the end of April 2021 and a board had been appointed, with all members registered by the Master of the Court.
The IDT will continue to focus on social infrastructure such as schools, clinics, and sanitation, however, regarding a niche offering, plans are to move into the infrastructure maintenance space following the realisation that a large amount of central government infrastructure is ruined due to a lack of maintenance. The IDT also plans to undertake a number of projects with municipalities but at present, the main work is with national and provincial departments.
IDT keeps track of debts owed by client departments and consistently reminds them, but departments struggle to pay the amounts owed.
Vacancy openings currently sit around 60% and this inhibits efficient performance as a single worker would be required to deliver the output of multiple workers. Following the lifting of the IDT’s moratorium, the entity has become an attractive destination for qualified and experienced people to seek work.
The new vision of the IDT signals intent by the entity to become more self-sustainable and less reliant on the DPWI. The IDT understands that a number of its clients fail to pay but negotiations will be held with clients in order to reach a compromise.
The management fee charged by the IDT was approved by Treasury in 2013 and this fee has not been revised since. The fee is significantly cheaper than the fees charged by project managers despite the IDT doing more work in return as it procures consultants and project managers before even initiating the billing process.
The IDT introduced a new method of claiming fees whereby it does not have to wait for a contractor to arrive on site to claim fees. This introduction ensures that the entity can claim management fees for the work it performs during the preliminary stages of a project. The IDT is also trying to solve the issue around it being unable to charge its disbursements.
Most of the IDT projects are multi projects, therefore, 42% indicates that the percentage of projects undertaken will be completed by the next financial year.
The IDT will become the implementing agent of choice because it plans to concentrate on the needs of clients, particularly in terms of time, cost and quality. Performing well in this regard will automatically lead to clients being inclined to choose the IDT over other implementing agents or service providers.
The IDT intends to capacitate its social facilitation unit to ensure that local communities are empowered whenever projects are undertaken. However, before a project is started, staff members visit the area to evaluate the needs of a particular community, including skills development or supply of materials. These needs would be sourced locally and included in the IDT’s bid documents so that service providers know what is required of them following a successful bid for a certain project.
With the transformation of women and the youth, the IDT intends to develop projects that will be targeted towards these groups. The target groups will then be invited to bid on projects and the CIDB does allow this form of targeting. Going out on an open tender will result in projects going to big and experienced white male-owned companies.
The issue of litigation is big in IDT as in some instances it is instigated by the entity itself, but most of the time it is by service providers that were not paid due to non-payments to IDT by the client departments. Going forward, the IDT inserted a clause in its service-level agreements relating to any litigation stemming from the non-payment of a service provider by a client. The cost owed to the service provider would be absorbed by the client department themselves, and not by the IDT. Previously, the IDT contracted directly with service provides as the employers.
The issue of employment contracts that were not extended currently with the CCMA, and the IDT is awaiting a directive. It is possible that by the time the IDT received the letter by the Minister, the contracts had already expired. A response in writing to this issue could be given to the Committee at a later stage.
Agrément SA Strategic 2020-2024 & Annual Performance Plan 2021-2022
Dr Jeffrey Mahachi, Acting Chairperson: Agrément SA (ASA), introduced himself, the team, and gave a brief outline of the presentation. He stated that Agrément SA is a very technical organisation, and as such, a lot of time is spent testing in laboratories or in the field and lockdown would be a massive inconvenience for this reason.
He said Agrément is responsible for all approvals and certifications of unconventional building systems and technologies. In order for it to properly execute its mandate, it must perform a variety of tests such as throwing a product in a fire.
The entity has been facing many challenges and started a number of projects in the background, mainly in the form of desktop studies in order to assist in the assimilation and diffusion of technologies into the broader industry.
Mr Mahachi and Mr Richard Somanje, Chief Financial Officer: ASA, took the Committee through the presentation.
Business Continuity Strategy due to COVID-19
ASA has developed protocols for the return of staff members to the office, which includes:
- Screening of staff upon entry to the premises
- The requirement for staff to wear masks all the time
- The preference of online meetings
Strategies responding to the External Environment
In the next Medium-Term Strategic Framework period, ASA will continue to focus on the following areas:
- Issuing, amending, suspending, reinstating, withdrawing or renewing ASA certificates.
- Awareness programmes on non-standardised construction related products or systems certified by ASA.
- Monitoring and evaluating the quality management systems of a certified construction related product or system.
- Green Rating Tool for Public Buildings
- Strategic Links with members of bodies such as the CIDB and CBE
(View the presentation for further detail.)
Ms Hicklin expressed her praise for Agrément and labelled herself as the organisation’s biggest fan.
She stated that ASA’s marketing structure must be improved so that its visibility in the construction industry is increased. ASA’s products should be used by every construction organisation in the country as they have already been certified and can revolutionise South Africa. She said that somewhere along the line there should be a hand holding exercise between the DPWI and the Department of Human Settlement as ASA’s products should be placed on the market quicker so that the products are accepted, and knowledge of them is spread. She added that currently, Agrément was the best kept secret in South Africa as nobody has heard of it.
Following the Committee’s oversight visit with ASA at the Eric Molobi Hub, she mentioned that she went straight to the City of Johannesburg to present her documentation regarding ASA and said that several ASA solutions could have been deployed to mitigate the housing shortage in the area.
On the implementation of quality products across a broader geographic footprint, she asked why can the DPWI not utilise ASA products to revamp the parliamentary villages in Cape Town as it would even be endorsed in the process.
She said she understood that ASA is the overarching body and products are submitted to it, but the entity has the Innovation Hub which nobody knows about. She emphasized that ASA products should be placed on the market to address the incredible housing and building shortages in South Africa.
Ms Graham stated that ASA is probably the easiest entity for the Committee to interrogate because there is very little to find fault with as it is an outstanding and well-managed. However, she repeated with emphasis the problems raised by Ms Hicklin regarding ASA’s marketing.
She said that no one in the private sector or those working on government projects have heard of ASA besides a select group of people and added that there must be a better mechanism for getting products into the marketplace.
Ms Van Schalkwyk appreciated the great manner in which ASA is being run, especially its adherence to sound financial principles and great audit outcomes.
She asked, with regards to the business continuity strategy due to COVID-19, if it was bearing the necessary outcomes or revising the strategy from time to time to ensure that it remains effective.
She echoed the concerns raised by Ms Hicklin and Ms Graham regarding the branding and marketing of ASA and mentioned that the products would truly go a long way in solving the housing and building issues prevalent in the country.
She asked on the strategies being employed by ASA to ensure the creation of employment opportunities, especially in relation to the designated groups.
Responses from Agrément
Mr Mahachi thanked the Committee for its comments and advice. He acknowledged that an action plan must be implemented which would improve the visibility of ASA. He said that a marketing strategy has been developed but must still be implemented. He mentioned that ASA must develop partnerships with other organisations and entities because these organisations already generate a lot of awareness and visibility through social media and other platforms. ASA hopes that it would be much more visible by the next time it accounts to the Committee. He added that the marketing strategy covers any issues relating to the branding of the organisation to ensure increased visibility.
Regarding employment creation, ASA is in the process of establishing initiatives and partnerships with institutions such as universities and other state entities. These partnerships will facilitate engagement with interns which will contribute to the meeting of key outcomes such as product inspection.
He said that Agrément does not have the capacity to conduct inspections in every province but if it is able to engage with the youth, it would simultaneously be able to perform these inspections while allowing young people to participate in the area of quality assurance of innovative building technologies.
He said that ASA has learnt a lot from the pandemic and some of the strategies that have been implemented are showing results. They have also been able to test products that could not be tested during the early stages of the pandemic.
Response and closing remarks from the Deputy Minister
The Deputy Minister emphasised the importance of the questions raised by Mr Mashele regarding the IDT. These questions spoke to the root of the problems which placed the entity in the position that it found itself.
It is a fact that the Department was instructed by Cabinet to repair the IDT, which is a difficult task and the solutions to the root causes have not yet been implemented. On a positive note, the new IDT board will have a clean slate on which to build upon. In addition, the team established to reorganise the IDT is working on a plan to advance the IDT.
Regarding the CBE, as much as this entity coordinates other entities, it tends to focus on itself while neglecting the other councils. As a result, the shortfalls of the other councils undermine the good work done by the CBE. A method of directing CBE focus must be developed.
She stated that the issue of ASA marketing has persisted for many years and the time has come for the marketing strategy to be shared. Suggestions such as the utilisation of community radio stations must be incorporated into this marketing strategy.
She mentioned that the DPWI strives to ensure that all its entities operate within the law.
Referring to the issue of the IDT employees that had their contracts terminated and subsequently approached the CCMA, she said that the Department is in consultation with the Minister to figure out the next steps to take. The fact that the CCMA was approached does not mean that the matter is out of the Department’s hands and they will be able to negotiate with the aggrieved employees.
The Department pledged that no workers would lose their jobs and has kept its word.
She added that they gave the IDT the necessary support in terms of funding and that the board has been disingenuous in this regard. Despite extending the contracts of 90 employees, it claimed that it was unable to extend the contracts of a further six employees because of funding having been received late. If this was the case, the board would not have been able to extend the contracts of the 90 employees.
She thanked the Committee for its time and its input.
The Acting Chairperson thanked Members and the Department and confirmed with the Committee Secretary the time when the Committee will reconvene.
The meeting was adjourned.
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