Building a capable construction sector requires a uniform approach

Competitive countries, economies and industries are shaped by policies that enable entrepreneurial leadership. Alastair Currie speaks to Bongani Dladla, CEO, Construction Industry Development Board (cidb), about the organisation’s role in transforming and revitalising the South African construction sector.

What are some of the key milestones since the formation of the cidb?

BD From the onset of the cidb’s formation in 2001, the primary mandate as a construction industry regulator has logically evolved to include our allied role as a developmental agent.

More specially, our mandate includes efficient and effective infrastructure delivery, construction industry performance improvement, and uniformity in construction procurement. The ultimate objective is the professionalisation of the industry and its sustainability as a major contributor to GDP and employment.

This was the rationale for the establishment of the cidb Register of Contractors (RoC) and the 1 to 9 cidb grading system. At present, we have a standard set of criteria that every South Africa-based contractor must adhere to – foreign or domestic. So, it levels the playing field and weeds out non-compliant or ineligible contractors.

Having successfully established the framework, we need to ramp up the process by focusing on contractor development, especially in the lower grades and building up the top tier. Simply put, untransformed industries are not sustainable. We must provide the platform and through cidb business intelligence tools –like our annual Compliance Monitor, and the Small and Medium-sized Enterprises Business Conditions Survey – we keep a finger on the pulse of the industry.

What are the priority objectives?

Ultimately, we need world-class players with long-term commitment and vision so that we can ensure a robust construction sector that supports South Africa’s Economic Reconstruction and Recovery Plan (ERRP). Moreover, we need more black-owned toptier construction companies that are ‘export ready’ for the opportunities presented by the African Continental Free Trade Area (AfCFTA) agreement.

In the meantime, we continue to refine the RoC, both the regulatory framework and process. Our regulatory framework will need to continue providing risk mitigation while still being developmental in nature.

To create an enabling business environment for stakeholders in the sector, the cidb must continue to modernise, using advances in digitalisation to simplify online contractor administration. Information will be automatically verified based on ID numbers, company registration details and tax details. This will be a huge game changer, also helping to speed up the submission of tenders.

Has there been meaningful progress in terms of facilitating transformation and skills development?

The mechanisms are in place, and strong gains have been made, but we need to move at a much faster pace. However, that is interdependent on the level of construction activity in the market.

Many aspiring small, medium and micro enterprises see opportunity in the construction sector and the first step is a cidb Grade 1 registration, where there are no qualifying criteria. However, from Grade 2 up to 9, there are financial and other qualification requirements to register.

Progressing to Grade 2 is a substantial jump, where contractors may tender for work on projects less than or equal to R1 million. In turn, the threshold for Grade 3 is R3 million. So, we need to ensure that Grade 1s – and there are a substantial number registered – have adequate support to ensure that they have a meaningful chance of succeeding.

That includes exposure to mentorship programmes, skills training (technical, project management, financial, HR and legal), and applicable 4IR technologies like building information modelling (BIM).

Are private and public sector stakeholders fully supportive of the BUILD programme?

The BUILD programme – which stands for Best Practice, Unity, Implementation, Leadership and Development – came into law in April 2021 and has been well accepted by industry. BUILD will comprise performance standards, the first two having been gazetted by the Minister Patricia de Lille of the Department of Public Works and Infrastructure (DPWI) in September 2020 (Government Gazette 43726), with a scheduled timeline for public sector implementation.

The initial two standards comprise the Standard for Indirect Targeting for Enterprise Development through Construction Works, and the Standard for Developing Skills through Infrastructure Contracts.

The Standard for Indirect Targeting focuses on the development of emerging contractors on public sector projects through collaboration on projects between infrastructure clients and larger contractors.

There is a formal responsibility on clients to provide budgets on infrastructure projects for the development of emerging contractors through subcontracting and joint ventures, and for cidb grades 7, 8 and 9 to implement action plans for the advancement of lower-graded construction companies (1 to 6).

In turn, the Standard for Developing Skills focuses on nurturing greater professional competency via the mentorship input of registered built environment practitioners and tradespeople. The objective is to increase the pool of qualified young professionals. A similar provision is made for learners from TVET colleges in terms of their experiential training.

What is BUILD’s project value threshold and how is it managed?

The BUILD programme targets infrastructure projects valued at R60 million and above, placing joint responsibility for its execution on public and private sector clients and contractors. For each project, public clients are required to provide a financial contribution based on a 0.2% fee and capped at a maximum of R2 million.

The programme management control mechanism is the cidb’s Register of Projects (RoP) online platform, which monitors all construction projects above a certain value nationally, namely R200 000 for public and R10 million for private projects. cidb clients and contractors are required to report their contributions to the BUILD fund via the RoP portal.

To optimise the process of registering and reporting, the cidb has a dedicated BUILD unit, which is responsible for managing the day-today administration of the programme. This includes the cidb Skills Development Agency (SDA), which employs an electronic registration system to connect learners with employers in terms of the Standard for Developing Skills. Among other services, the SDA also assists government clients and contractors in preparing training plans for registered learners.

During the 2021/22 period, the cidb sent out BUILD invoices totalling around R43.4 million of which R12.3 million was collected. However, we are confident that collections will improve significantly as the new programme gains traction.

So far, BUILD is shaping up well. From a compliance perspective, we need to ensure that public and private sector clients are actively and accurately reporting progress as this data is essential to track successful outcomes. Any evidence of non-compliance should be flagged by the Auditor-General’s office.

How have the BUILD funds been allocated to date?

So far, we have allocated approximately R20 million for woman-owned construction companies, with a key focus on the implementation of quality management systems. We have also set aside funding for developmental-finance-type initiatives.

What is the envisaged timeline for the activation of the cidb Register of Professional Service Providers?

As the market will know, there have been numerous consultations on the envisaged shape and form of this register. In the final round, we had envisaged completing the draft regulations during 2022. However, this was delayed, as we needed to embark on further stakeholder consultation on the rationale for the register, which initially focuses on professional firms like consulting engineers and quantity surveyors.

The latter have a major and positive influence on the long-term sustainability of infrastructure projects and are also instrumental in upskilling public sector entities across the three tiers of government. We are optimistic that we will finalise the regulations during 2023. From there, the Minster will initiate the process of having it signed into law.

Like the RoC, it provides an industry standard, as well as a statistical database of the size, health and capabilities of this sector, which is vital for policy, planning and support programmes.

What are the implications/benefits of the proposed new revisions to the cidb Act?

This is an important development for the market and the cidb has engaged extensively with the DPWI in its revision, with one of the key aims being to bring private sector clients into the regulatory space. The Act is expected to be signed into law during 2023. The objective is to essentially create one construction industry, as opposed to the current scenario where we distinguish a split between public and private.

The Act will enable a uniform approach to our developmental objectives, as well as create a platform for innovation, knowledge exchange and best-fit solutions, rather than focusing purely on lowest cost. Privately funded investments typically place major emphasis on a quality result using the best construction tools available. We want the same principles and practices to apply in the public domain.

The revised Act will also make it easier and faster for the cidb to deal with noncompliance and enforcement issues in cleaning up the industry. An example would be a case where someone has submitted fraudulent documents to apply for a specific grade to tender on project values above their capabilities. In these instances, the revised Act will enable the cidb to directly impose scheduled fines for transgressions without having to approach the courts, as is the case with the current Act.

What is the outlook for the infrastructure sector during 2023?

The urgent need to mobilise infrastructure projects is receiving the highest attention at all levels of government. In this respect, the cidb is committed to playing an enabling role in support of the DPWI’s Construction Industry Recovery Plan, alongside the broader ERRP initiatives.