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Fongoqa states emphatically that, “It
is our intention to go beyond communicating with only ourselves,
other built environment professionals, contractors, and client
bodies. We intend to push the boundaries and communicate with
the society we serve, the opinion leaders, the legislators
as well as the policy makers. Not only will this help us to
claim back our rightful place in society, but this will ensure
that the vast majority of intelligent youngsters will aspire
to be engineers and that the majority of those who choose to
join this profession will be drawn into the consulting engineering
He believes that Consulting Engineers are living in exciting times with their industry at the forefront of an expanding economy that is being underpinned by the most intense amount of infrastructure development to be seen in this country in the last 30 years. He cautions that we are all well aware sustainable growth is not without its challenges. The skills shortage is the single biggest issue facing the industry that may lead to a crisis affecting our ability to refurbish, maintain and develop infrastructure. He notes that the shortage of professional skills is an international problem, affecting not only South Africa.
SAACE fully supports the Government’s ASGISA and JIPSA initiatives and will continue to pursue them with the relevant authorities to ensure that the activities of members are informed by and comply with their strategy. The Association also continues to believe that, apart from specialist skills, that South Africa has the human capital available in our country and that we must allow our citizens to derive the benefit of increased job opportunities that are developing.
SAACE member firms continue to strive to build skills as can be seen in the results of the bi-annual SAACE Management Information Survey. The results of the most recent survey indicates that significant investment in bursaries and training has continued with more emphasis on bursaries to ensure long term growth in capacity. Annualized contributions to bursaries and training from member firms amounted to an annualized spend of some R96 million as a collective response from our 470 member firms. Capacity utilization is once again running close to 100% and cannot continue to increase exponentially without an increase in resources. SAACE member firms are having to focus considerable attention on the supply side in obtaining the necessary skills and have experienced difficulties in sourcing skills in all categories including engineers, technologists and technicians, whether in the previously disadvantaged category of not. According to Allyson Lawless in her book, ‘Numbers and Needs’ which addresses the imbalance in the Civil Engineering profession, between 3000 and 4000 additional civil engineering professionals are required in South Africa at the present time with most retirees having already been attracted back into the industry.
With this in mind the SAACE School of Consulting Engineering has undergone a radical restructuring process during the past year and the 2008 CPD accredited Training Programme will provide cost effective training designed to build a resource of holistic engineers and consulting engineers. As we are all aware the Construction Industry SETA (CETA) is not addressing Built Environmental Professional needs at a critical time. SAACE is in constant contact with the CETA in order to ensure that Built Environment Professions (BEP) funding is more effectively used to grow professional learnerships, bursaries and subvention for continual professional development.
Another initiative in the pipeline from the Construction Industry Development Board (CIDB) is the creation of a national Register of Professional Service Providers including consulting engineers. Public sector bodies will, once the register is gazetted, have to select a consultant from this register. This, in conjunction with the Engineering Council of South Africa’s move towards compulsory registration of professionals will ensure that only properly qualified engineers will be able to do engineering work. This will make it increasingly difficult for disreputable service providers to prey on uninformed clients.
In addition to this the CIDB has created a standardized approach to procurement systems and documentation. Client bodies at this point have not yet fully embraced these. Once these systems are implemented they will result in considerable time and cost savings for Consulting Engineers who currently have to spend many valuable hours adjusting their documentation to suit the many varied requirements of projects and clients. The construction boom worldwide has forced clients to accept new delivery mechanisms particularly what is termed ‘Relationship Contracting’ also known as ‘Alliancing’ or Partnering’. “Alliancing can also be considered, ‘Partnering for Profit” and has become the method of choice in Australia and while it requires a better understanding of the risk/reward relationship, it represents a more flexible vehicle overcoming the negatives of purely price based competition and in dealing with an uninformed client base.
Fongoqa believes that consulting engineering procurement methodologies should be embedded in our country’s overall strategic innovation system and that brain drain is partly as a consequence of the incorrect approach where solutions are chosen based purely on price. Best practice procurement methodologies recognizing VALUE enhance country competitiveness and eliminate the tendency towards brain drain. The Malaysian methodology relating to the selection and appointment of consultants is very impressive and it is considered as no coincidence that Malaysia is No. 2 in the world rankings of competitiveness relating to government Procurement of Advanced Technology Products and Services. In short it was demonstrated that there is a definite link between the use of QBS, a strong consulting industry and a productive and competitive economy.
Despite the significant increase in workload, competition in tendering remains keen with many firms resorting to discounting of fees to obtain work which is damaging to long term business sustainability. In order to address this issue, the Association convened a Procurement Indaba on 12 February 2008 to critically examine the Consulting Engineers’ procurement model with a view to producing a set of guidelines for members and clients. This focused on the quality/value aspects of solutions provided to clients on the basis that innovation supersedes price as the main focus.
SAACE has created a Section 21 Special Purpose Vehicle named the Project Development and Facilitation Alliance (PDFA) to assist with support to the Department of Provincial and Local Government and the Department of Water Affairs. SAACE is involved in a number of initiatives currently being implemented in an effort to assist local and provincial governments to enhance service delivery. The main challenge that the industry faces is dealing with an uninformed client, particularly at local authority level as well as facilitating accelerated service delivery. Disaster management assistance to government in regard to flood damage in the Western Cape, fire damage in the Eastern Cape and tidal damage in KwaZulu Natal are other examples of projects undertaken.
SAACE is not only concerned with the development of South Africa alone but also in the development of the African continent. The International Business Development Section of the Association is currently in the process of being converted to a Section 21 Export Council embodying the Built Environment Professionals through the South African Association of Architects and the Association of South African Quantity Surveyors, who are both currently on board. The purpose of this Special Purpose Vehicle is that we get added support from the Department of Trade and Industry plus a 50% subvention in regard to operating costs which will allow them to service members more effectively increasing capacity with increased foreign missions and lobbying and liaison with government both locally and abroad.
The Construction Sector has deliberated and finally agreed a sector specific Charter, a process that has taken four years, Fongoqa believes that the industry has made great strides in terms of transformation but that it is important to maintain continuity. The Construction Industry Charter gives measurable outcomes with targets ensuring greater certainty and it is hoped that it will be gazetted in the first quarter of 2008.
The International Federation
of Consulting Engineers or FIDIC to which SAACE belongs, has
produced a number of toolkits including their Business Integrity
Management System (BIMS) and the Government Procurement Integrity
Management System (GPIMS) which was launched late last year
at the bi-annual meeting of multilateral development banks
in Washington. This system is part of the industry response
to world wide concerns of corruption. Fongoqa states
that the adoption of this system which is an addendum to ISO
9001:2000 Quality Management System illustrates that firms
are serious about eradicating corruption. FIDIC reports
a particularly positive response from South African firms towards
the adoption of the BIMS.
Fongoqa contends that as an Association they fully embrace ISO 9001:2000 with 2008 being the crunch year for members of SAACE. By December of 2007 all SAACE members must have adopted, implemented and maintained a Quality Management System in order to remain a member of the Association. This is an essential component of Risk Management which is so critical when the industry is working close to 100% capacity. Members cannot afford the negatives associated with project failure. SAACE recently published a Risk Management Implementation Guide to assist in this process.In conclusion Fongoqa stated that the Association through its member firms continues to build a strong and sustainable Consulting Engineering industry serving the interests and needs of society in an expanding economy. In saying this he notes that SAACE is not an island and continues to work closely with their partners in the Built Environment Professionals grouping governed by a Memorandum of Understanding to ensure a common approach to issues affecting the broader industry. Signatories of this MOU include bodies representing Architects; Quantity Surveyors; Project Managers; SABTACO and SAACE.
Working Smarter To Address Supply Side Challenges and Eliminate Bottlenecks in the Construction Economy
Felix Fongoqa gave the opening address at our Professional Services Procurement Indaba that was held in February and well attended by our members. The theme for the Indaba was “Working Smarter to Address Supply Side Challenges and Eliminate Bottlenecks in the Construction Economy”.
A number of key speakers gave presentations at the Indaba during the first part of the day, this was followed by various brainstorming workshop sessions and ended with a feedback and question and answer session. The debate continued at our council meeting the following day where a number of decisions based on the outcome of the Indaba were taken.
Felix stated that the industry as a whole was suffering from supply side demands and that in spite of this we needed to focus on Quality Based Selection (QBS) in line with the World Bank and the International Federation of Consulting Engineers (FIDIC). The industry is currently suffering as quality is taking a secondary role to price in the procurement process.
Felix believes that consulting engineering procurement methodologies should be embedded in our country’s overall strategic innovation system and that brain drain is partly as a consequence of the incorrect approach where solutions are chosen based purely on price.
He stated that we need to work towards a progressive knowledge economy but we are having to deal with a weak institutional framework but that it was essential that we grow the industry in a sustainable manner.
He hailed the CIDB’s standard approach to procurement in that it will result in time and cost savings for consultants. This together with its national Register of Service Providers in addition to ECSA’s move towards compulsory registration of professionals will ensure that only engineering will be carried out by registered engineers. He concluded that the industry needs to focus on quality and value aspects in order to build a sustainable industry.
Pierre Blaauw, Economist at SAFCEC, followed with a presentation “The Construction Economy and the Consulting Engineer’ in which he stated that even if Eskom does not put any more capacity in place the economy will still be able to grow at 2,5%. Blaauw believes that we are operating in exciting times with the increased funding from government and this equates to a challenge for the industry to keep up. In all of this the government continues to play a crucial role as it is the main client and the main driver in the process and it is important that they drive the process from an efficiency point of view. He stated that we are going to need large quantities of infrastructure investment in order to maintain GDP growth of up to 6%. But in all this he notes that the 2010 Soccer World Cup is only 5% of the government’s R568billion infrastructure development programme but that it is an important psychological milestone. He cautioned that as a nation we are consuming assets and not focusing enough on replenishing and maintaining them.
As Session Chairperson I then had the opportunity to give a brief overview of the Association’s Management Information Survey (MIS). It must be noted that of the 470 SAACE member firms 43,9% have a fee income in the range of R1,5million to R11,5million with 42% over R11,5million. The bulk of our firms operate in the civil, structural, project management, electrical and mechanical, followed by transportation, commercial and water followed by housing. Gauteng has the bulk of the work followed by the Western Cape; Eastern Cape and Kwazulu Natal with off shore work still continuing. 60% of fee income is derived from the public sector with 40% coming from the private sector. The engineering skills shortage has reached the critical stage even though more money is being channelled into bursaries and training. Capacity utilization is dangerously close to 100% leading to a higher risk environment and companies need to manage quality in relation to risk.
Arthur Taute, Chairman of SAACE’s Supply Chain Management Committee presented a paper in which he stated, “We are in the skills industry, and we need to provide the skills otherwise nothing will happen”. He warned that as a country we do not have a real policy on the development of engineers. Arthur believes that we need to implement best practices in the interests of the country and the people to improve quality of life for all. He stated that we need to be aware that it costs more to build in a crisis. A very important factor is that we need visionary and knowledgeable clients as a basis for sustainable development. He cautioned that we need to guard against crazy low tender prices which do not support investment and growth in human capital.
Francois Swart gave a presentation on the Construction Industry Charter and its effect on the procurement process. Current BEE legislation measures how we have transformed and who we procure from. He noted that the system needed to be fair, transparent, competitive, cost effective and equitable. Unfortunately the gazetting of our industry charter has been delayed by political uncertainty.
Ronnie Khoza, CEO of the CIDB gave a presentation on “CIDB – Understanding the requirements for Professional Service Providers” in which he asserted that the government was not making speedy progress in coming up with the new PPPFA regulations and that currently the BBBEE Act regulations do not specifically recognize PSPs. There is a lack of clear legislative environment that is an impediment to the industry. He stated that there is a skills shortage in all fields and that we are competing for the same people. He also noted that corruption hampers progress. He strongly believes that quality must take centre stage, price a lesser role and that this must be factored into competitive selection. We need to bring logic, uniformity and predictability into the procurement process. He is eager for the implementation of the Consultant’s Register as one single register for the country which will lower the cost of doing business. He feels that we need to consider service delivery before looking at politics.
Henry Malinga from the National Treasury gave a presentation in which he put into perspective the context of the legislation and the direction in which we are heading in relation to procurement. He reported that the PPPFA Act was currently still with the state law advisors for legal refinement and that the legislative process was to start soon. He suggested that a prequalification list based on quality be created of approved service providers and that following that the consultant from this list with the lowest acceptable price could be appointed in a period of as little as 4 days.
Shamalan Soobiah, Partner at Accenture followed this with a presentation titled, ‘The Management Consultants Business Model - the path to high performance’. He stated that image building was very important followed by a focus on the business and clients. Work force capabilities needed to be accelerated and that key talent needs to be managed focusing on growth and retention. Processes for managing change needed to be implemented and lastly the practice needed to be managed by focusing on project and performance management as well as increasing billable hours. He stated that consultants needed to differentiate on VALUE by starting strategic conversations with client entities. It is all in the execution and that we needed to start partnering and sharing knowledge. Risks also needed to be continually evaluated. Richard Vries, Chairperson for the session summed it up by stating that, “Success lies in the execution”.
Dr Gustav Rohde gave the final presentation of the day in which he discussed, ‘Commercially Viable Procurement Models for Consulting Engineers’. Gustav believes that price balances the forces of supply and demand. He also contends that there is a direct relationship between price and quality/effort in that you get what you pay for and that there is always a trade-off between quality and cost. He contends that the impact on life cycle costs is crucial in procuring engineering skills and ensuring value for money selection. He believes that we need to define how we compete and that there must be a preference for South African companies working on local projects in order to retain our skills base.
The presentations were followed by a workshop session in which delegates were split into 3 group’s dependant on their particular interest in order to brainstorm:
A feedback session from each group followed the results of which are available on request.
Dempsey Naidoo concluded the day’s proceedings with a summary of the day’s events. There was overwhelming support for doing away with fee scales and to let market forces prevail in setting prices. Consultants needed to learn how to price and package the quality element. The fact is that competition and price are here to stay and the task remains as to how to influence the process to ensure that we receive properly scoped bids.
The task for Council was later to decide as to what extent and how to possibly dismantle fee scales. This included creating a time frame in which fee scales might become vaguer over time until they were possibly removed altogether in the best interests of member firms and their clients. There was also a need to educate both members and clients on procurement principles. The Association needed to develop a Best Practice Guideline as well as a framework for the Scope and Definition of Services. The Association would be partnering with the CIDB and needed to create a Task Team and Reference Group for this process. The new Best Practice Guideline for Procurement needed to be developed and then taken on a road show to the branches where interaction with clients would be encouraged.
The School of Consulting Engineering held its first two courses for the year namely the Project Management Foundation Course and the Accounts Assistant Course at its offices in Bryanston during March.
The Project Management Foundation Course was presented by Sandro Quattrocchi, PMP from SQ Data & Consulting. The course was of a very high standard and the delegates did exceptionally well. What follows are a few of the comments about the course by some of the delegates:
‘The course is a fantastic introduction into the world of Project Management. Definitely a start to more’ - Petra van Zanten, SSI
‘The course is fruitful and it widens the understanding of project processes and the proper way of doing it’ – Ladislaus Kiwanga, Bank of Tanzania
‘Very informative and will play a meaningful role in my daily work situation’ - Sthabiso Mtshali, Mtshali Khuzwayo & Zimu Engineers cc.
The next Project Management Foundation Courses will be held as follows:
The Accounts Assistant is the first administration course that the School of Consulting Engineering has run, as previous courses were targeted purely at Consulting Engineers. Great support was shown and the course was fully booked almost immediately. This clearly indicates that there is a great demand in the industry for administration and secretarial courses. As a result, the School will shortly be running the following courses:
What follows are a few of the comments about the Accounts Assistant course from some of the delegates
‘Excellent and learnt a lot” – Ellen
Tshenye, BKS (Pty) Ltd
The School also has a comprehensive range of Consulting
Engineering CPD accredited courses listed on its website
The end of 2007 saw Peter Viljoen take over as Chairman of the KZN Branch from Clive Swaisland who was praised by the incoming chairman for his sterling work as Chairman of the Branch over the past few years and for agreeing to stay on as Treasurer.
Peter states that the Association is a business organization dedicated to pursuing issues of common interest to member firms. It differs from the learned societies such as SAICE which is dedicated to the advancement of the profession at an individual level and, there has in his opinion in the past, been some blurring of the roles between the two bodies.
During his term as chairman, Peter intends to focus on the core issues facing SAACE members and leave items of technical interest, such as project feedback and site visits, to SAICE and the other learned societies.
Key focus areas for the 2008 Branch Committee will include the following :-
Client Liaison Committees
The Consulting Engineering industry (and its Clients) are still coming to grips with the reality of tendering for work and the Association, both at local and national level, has had a major influence on getting clients to focus on quality rather than on price alone. Much still needs to be done and Peter believes that the Client Liaison Committees are on integral part of this process.
Historically active committees include those with SANRAL and the eThekwini Municipality while the Umgeni Water Committee has recently been successfully revived. Combined meetings (with the Architects and Quantity Surveyors) have also been held with the KZN DoW’s with some success, while a key focus area for 2008 will be the revival of talks with the KZN Department of Transport.
In addition, the Branch Committee also has occasional meetings with SAFCEC and SABTACO to discuss issues of mutual interest.
Image and Transformation
Peter is pleased to point out that the current committee comprises an equal number of black and white members and even contains our first woman! Two members of the committee are also members of SABTACO. Peter hopes that this will change the Association’s image and allow us to engage with a wider spectrum of clients and also help to build on the relationship with SABTACO something that Peter believes, is essential to building credibility in the industry.
Peter believes that the Association, at national level, does a huge amount of work, a lot of which the average member is not aware. One of his aims as Branch Chairman is to bridge this gap and keep the KZN members informed of these developments (for example, how many members are aware that the SAACE intends to change its name to avoid being confused with SAICE?).
The SAACE Council meets four times a year and Peter intends to time his branch meetings to provide feedback from these Council meetings. This will also provide a forum for members to provide the Branch Committee with local feedback to take back to Council.
Michele Kruger, Gauteng North YPF Chairperson and Kieren Brown, Gauteng South YPF Chairperson have been congratulated by Felix Fongoqa and Graham Pirie for the amount of effort that they are currently putting into the Young People’s Forum (YPF) of the Association. Upcoming plans for their region include:
Michele and Kieren would like to
thank the following companies for sponsoring the YPF:
MENTOR OF THE YEAR AWARD
SAACE is excited to present a new
category at the SAACE Glenrand MIB Engineering Excellence Awards
this year – Mentor of the