Construction industry associations have expressed serious doubts about the ability of a proposed state-owned construction company to eradicate the country’s infrastructure backlog. This follows a debate in the National Council of Provinces (NCOP) last week on the “Creation of provincial and municipal owned-construction companies to eradicate infrastructure backlog and abolish tenders”. 

Consulting Engineers South Africa (CESA) CEO Chris Campbell believes it is probably more important for the public sector to look at facilitating the delivery of infrastructure and to use the capacity in the private sector. Campbell said assuming that a state-owned construction company can do all the things required to deliver infrastructure “is likely going to lead nowhere”. 

He stressed that the criticism about the cost of infrastructure is mostly symptomatic of the inability to ensure that in appointing those service providers or contractors the state entity has considered the risk and the likely variability “through variation orders that may arise by simply gravitating towards the least cost”. “So, to assume it’s going to cost any less from within begs the question of where that capacity is going to come from? At the moment it hardly exists,” he said. 

Campbell said there is no way the government would be able to replicate the capacity and skills required for a state-owned construction company and should instead be looking at a better way of procuring these services. He said municipalities, many of which are dysfunctional and failing to provide basic services, should be concentrating on “getting the basics right”. 

“That means getting at least a level of competent capacity in place to manage the affairs of those entities. 

“To be looking at all the other aspects around the delivery of these projects is likely a bridge too far and it ignores the fact that you have a huge industry that you could use constructively,” he said. 

Campbell said the context of infrastructure development costs is important because, if for example the amount and type of rock a road contractor would encounter on a project is underestimated, it “blows costs out of the water”. 

“The biggest problem is that people think that everything around infrastructure projects is something that you can just pull off the shelf, buy it and it’s ready-made. 

“You are never buying anything that is completely ready-made. There are always aspects of risk that you may encounter,” he said. 

Read the full article written by Roy Cockayne and originally published in Moneyweb, republished in SA Finance News: https://www.safinancenews.com/news/renewed-calls-for-the-establishment-of-state-owned-construction-companies/