2019 Budget Speech - promoting 'Value for Money' Procurement!



While CESA supports the provisions of Minister Tito Mboweni’s 2019 Budget presented in his speech on the 20th February 2019, as an organization we believe that Government needs to urgently revise its Procurement Practices for Consulting Engineering Services related to the development of Infrastructure making sure that the citizens of South Africa get ‘Value for Money’ infrastructure that is safe and designed to stand the test of time.

Chris Campbell, CEO of CESA stated, “We would like Government to focus on ‘Value for Money’ when procuring the services of consulting engineering firms.  We know we have less money available for infrastructure and we now need to make sure we get “more bang for our buck” in the long term. The problem often lies between two parties, the Client, who provides poor scope definition and seeks out the least cost professional service providers and the Professional Service Providers, aggressively underpricing their services simply to secure the project and compromising their ability to manage the design and construction supervision diligently enough to provide quality services which provide lasting infrastructure solutions whilst  managing the construction process to minimise cost overruns and time delays. Open tendering for such professional services as well as the expectation from public sector clients for fees to be discounted exacerbates this problem and is counter-intuitive to ensuring that public sector entities ensure optimised total cost of ownership in such infrastructure investment. Consulting contributes 3% to the costs of developing an infrastructure asset over say 3 years, Construction contributes up to 30% of these costs over say another 3 years, then the asset owner is left to manage operations and maintenance for the remaining say 25 years with a potential cost of 67% of the asset cost of ownership. A Consulting Engineering company providing quality professional services at 3% of these costs will be able to assist in reducing cost in the downstream phases whilst ensuring sustainability of the infrastructure. The assumption of course is that the Client will maintain a rigorous process of maintenance that ensure ongoing performance of such infrastructure. Although CESA is in full support of competitive service provisioning, they believe that firms should not take on work for which they are not able to deliver quality professional services as this compromises the integrity of the industry and places the public at large at risk.

In order for Government to ensure that South Africans receive ‘Value for Money’ the personnel procuring professional services need to be technically competent to do so. “Following on from the State of the Nation address it is heartening that technical competence in Government will be increased and that infrastructure promotion will be driven further through the Infrastructure Fund.  These are positive steps that CESA supports and is willing to become active participants in,” stated Neresh Pather, CESA President. 

CESA’s theme for 2019 includes Delivering Purpose and Engagement - Establishing Trust and there is a strong focus within CESA on working with and supporting Government, with increased collaboration with National Treasury on Procurement, the Auditor General’s office on compliance support, together with partnering agreements with Client Bodies like SANRAL, Transnet and COGTA allowing CESA to contribute positively in terms of support that includes capacity building, skills development, compliance and good governance.















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