Call for presidential committee to ensure ‘value for money’ procurement
13 March 2019 | Web Article Number: ME201913883
THE current practice of lowest cost procurement of professional consulting engineering services is clearly not working, as evidenced by the debacles at Eskom and other state-owned entities, where the total cost of ownership that includes maintenance over the lifecycle of an infrastructure project that should last upwards of 50 years had not been taken into account.
That’s according to Neresh Pather, President of Consulting Engineers South Africa (CESA), keynote speaker at the 8th Annual CESA Infrastructure Indaba, held at the Durban International Convention Centre recently.
Pather called on government to set up a Presidential Advisory Committee of Infrastructure and Built Environment Experts to ensure ‘value for money’ procurement. He also applauded President Cyril Ramaphosa’s commitment to dialogue and working together with the private sector.
“We all need to take ownership and accountability for the future focusing on ‘Doing what is Right’ through effective, ethical leadership,” Pather said.
The indaba saw a wide variety of presentations from industry stakeholders.The first session facilitated by Cesa Deputy President, Sugen Pillay focused on Infrastructure Investment. David Metelerkamp, Senior Economist from Industry Insight, in his presentation ‘Drive for Infrastructure Investment’ stated that the South African economy has been dealing with a lost decade, only managing growth of 1,8% per annum between 2008 and 2018, with the construction sector consistently under-performing.
“Reforming our state-owned entities is crucial for the transformation of the construction sector, noting that the restructuring of Eskom is a step in the right direction,” Metelerkamp said.
Talking about the newly created Infrastructure Fund, he said: “Treasury wants to ‘step up’ their infrastructure build programme – partnering with the private sector, development banks, development financing institutions to create this fund but legislation still needs to be passed to facilitate the process, added to which Treasury is very short on specifics regarding this infrastructure fund.”
Where there were some signs of private sector activity, Metelerkamp said, there was no big turnaround expected anytime soon in the construction sector, thanks to the public sector decline in spending. There had been a 50% decline in the value of tenders awarded in the past two years.
The second session focusing on Risk Analysis - Capital Intensive Infrastructure Projects, started with a presentation from Ricardo Pillay, Director at LNP Attorneys entitled ‘Understanding the value for money proposition to alleviate procurement risks’.
Pillay said that the process for maintaining or enhancing value for money through procurement requires a strategic approach optimizing whole-of-life value for money using an approved procurement procedure while allocating and managing risk appropriately and proactively managing contract delivery as well as monitoring performance.
Chris Campbell, CESA CEO focused on The Unintended Consequences of Tendering for Consulting Engineering Services’, asking whether the industry should consider a different procurement mechanism for the various components of infrastructure development.
“Quality Based Selection is global best practice best practice for the appointment of consulting engineers. The open tender process unfortunately creates opportunities for abuse through the appointment of companies without a track record who are unable to deliver and creates opportunity for ‘tenderpreneurship’ and corruption,” Campbell said.
“We are unapologetic in our belief that the South African public deserve the best and most competent professional service providers and anyone wanting to play in this space must fit this profile and be committed to growing a respected and sustainable industry,”
In his presentation ‘How Mature is Your Political Risk Management?’, Dr Steven C.Y. Kuo from the University of Pretoria’s Gordon Institute of Business said, “African governments are the owners of the projects and China is the main funder and contractor”.
He said political successful risk analysis and management lay not in political connections, having lots of contacts across Africa or speaking different local languages, but rather an organization’s preparedness for doing business in Africa.
The third session for the day, focused on Water and Energy Security facilitated by Elekanyani Ndlovu from Aurecon, discussed ‘The role of consulting engineers in securing SA’s energy needs.
Msizi Cele from Umgeni Water discussed the role of engineers in addressing water sustainability, followed by Sibu Mvana from Aurecon focusing on the role of technology in infrastructure development and Dr Thulani Dlamini from the CSIR discussing the role of engineers in global climate action.
The fourth and final session dealt with the ‘Transformation Journey - Beyond the Scorecard’, facilitated by Professor Willie Chinyamurindi from the University of Fort Hare who also gave a presentation on ‘Working towards a rainbow sector’.
Clint Koopman President of the South African Black Technical and Allied Careers Organisation in his presentation asked the audience ‘Transformation: Are we there yet?’, while Shamiso Kumbirai, the CESA 2018 Young Engineer of the Year, rounded off the session by focusing on ‘Enterprise development in consulting engineering’.