Page 12 - index

Regulation and Procurement Biggest

Issues facing Consulting Engineers

CESA’s latest Bi-Annual Economic and Capacity Larger firms were unanimous in their views that the
Survey (BECS), January to June 2014, just outlook for business conditions is satisfactory over
released, indicates that regulation issues, including the next 12 months, compared with 82,5 percent of
the procurement of consulting engineering the medium size firms.
services, remain one of the biggest challenges
faced by the industry. The relationship between confidence levels of
engineers and civil contractors deteriorated from
Procurement is currently based on price and 2009 onwards, as the business environment in
broad-based black economic empowerment terms of consulting engineering did not seem to
(BBBEE) points, with functionality or quality deteriorate at the same pace as that experienced by
having a minimum threshold, thus being largely the civil construction industry. Opinions expressed
price driven. This is affecting tender prices, as by civil contractors, as measured by the FNB/BER
firms sometimes tender below cost in view of the indices, were more depressed in the first three
diminished availability of projects. quarters of 2014, moderating from a nett satisfaction
rate of 66 percent in the last quarter of 2013, to
The way that the service of consulting engineers 55, 44 and 48 percent in the first three quarters.
is procured is a sore point and leaves a lot to be The FNB/BER Building Industry confidence index,
desired. Even our President, Abe Thela, cautioned declined to a nett satisfaction rate of 45 percent in
about this practice that relegates our noble the 3rd quarter of 2014, from 52 percent in the first
profession as if they are procuring commodity quarter. Thus at a contracting level, conditions in
goods, says CESA CEO Lefadi Makibinyane. both the building and civil industries are still very
much depressed.
Unrealistic tendering fees remain a concern for
members, while the extended time it takes in which Confidence in the consulting engineering sector
to finalize a proposal is affecting profitability in generally lags business sentiment. Business
the industry. The quality of technical personnel is sentiment slumped back to a level of 41 in the
argued by some firms to have deteriorated, putting 1st and 2nd quarters of 2014, but showed some
greater risk on the built environment sector. Skills improvement to a level of 46 in the 3rd quarter.
shortage is regarded as one the most significant Business confidence is still negatively impacted
institutional challenges faced by the private and by the industrial strike action in the first half of
the public sector. CESA has offered our services the year, poor economic growth, rising inflation
to Government to procure and implement projects and the expectation of further monetary policy
and advocates a speedy review of the PPPFA tightening. Confidence levels have deteriorated
(Preferential Procurement Policy Framework Act). since 2007 (when it was at a level of 69) and until it
This will not only harmonize the Procurement recovers back to a level of at least 60, the outlook
modalities of the Professional Services (which for increased private sector investment will remain
includes Consulting Engineering) but will bring subdued.
accelerated implementation of the National
Infrastructure Development Plan. Fraud and corruption is affecting the ethos of
our society, with a lot of talk and little action
After a more optimistic 2013, conditions in the first accompanying the growing evidence of corruption.
six months of 2014 appeared to have been less CESA is aware that members are under pressure
satisfactory. The confidence index for the first six from contractors and corrupt officials, to certify
months was revised downward from an expected payment for work not completed. This is regarded
level of 98.3 to 87.7, suggesting weaker than as an extremely serious matter for CESA and as
expected conditions. In spite of the slower than such will be relentless in holding those in power
expected start to the year, firms are more optimistic accountable.
with regard to business conditions for the next 12
months, averaging 96.6 for the last six months of Unlocking greater private sector participation is
2014 and 96.2 percent for the first six months of 2015. seen as a critical element to fast track delivery

12