CESA welcomes Gauteng budget but calls for tendering processes to be tightened up

2022-03-30T06:24:38+00:00March 30th, 2022|News|

Commenting on the announcement of the Gauteng provincial budget, the CEO of Consulting Engineers South Africa (CESA), Chris Campbell, said he welcomed the budget’s focus on critical infrastructure spend, but called on the Gauteng Government to pay urgent attention to addressing issues within the tender processes. Otherwise, many important projects would not be delivered on time and to specification, he warned.

Chris Campbell . Credit by: CESA

Chris Campbell . Credit by: CESA

“CESA, which is an engineering industry association consisting of 580 companies, is delighted that the provincial budget placed such an emphasis on social development and critical infrastructure spend over the next three years to the tune of some R36-billion. We do, however, urge the government to work at addressing important challenges inherent in the current tender processes, or efforts and funds are likely to be wasted.

“According to the recent CESA Bi-annual Economic and Capacity Survey [BECS], there is a 20% cancellation rate of tenders, which is way too high and ultimately represents a considerable waste of resources and effort, and in some cases can even impact the sustainability of those companies that deliver on projects.”

Campbell pointed out that while there is considerable expertise within Gauteng Government, there are many capacity challenges within its procurement departments – project and technical procurement requiring an elevated level of specific expertise that is currently often lacking. This results in numerous complex problems with the tendering process itself and some major bottlenecks in awarding technical tenders as well as in the effective execution of projects.

“One consequence of this deficiency in capacity, is that many engineering projects are not scoped and they lack the necessary definition. This can result in a complete range of problems, as engineering firms are not always sure how to develop an appropriate tender and may not be clear on what is exactly required to undertake the project. Poor scoping can also make it tricky for adjudicators to identify the best supplier to execute the project.”

“Some of the complexities in this area are also around how long it takes for these tenders to be adjudicated, and sometimes the validity dates for the project expire after continuous extensions and potentially result in cancellation as well.”

“In addition, these challenges may also in some cases be compounded by a lack of necessary skills among those officials who must adjudicate these highly technical tenders. This can result in all kinds of problems, including the selection of the most appropriate supplier and even in the correct and best execution of a particular project.”

According to the CESA BECS Survey, notwithstanding Treasury Regulations, late payments also often continue to be an issue for the sector. Campbell said the Gauteng Provincial Government is quite often guilty of late payments to the suppliers of infrastructure. This can have dire consequences for the sustainability of some of those suppliers and needs to be urgently addressed, he added.

Asked how capacity challenges could be addressed, Campbell said: “Procurement staff directly involved with infrastructure related procurement within government, should have an engineering background and an elevated level of technical knowledge. This should go a long way to addressing problems with scoping and the adjudication process that will follow. It is imperative to have sufficient experience and knowledge to know what professional services should cost so that you can be assured of the requisite quality of services. The notion that least cost will be equal to high quality of professional services is counterintuitive if you hope to be offered the optimal solution to what are often complex infrastructure problems.”

“So, the basics are in place, but the procurement system requires careful refining. There are also too many current unknowns; for example, the case with the illusive Public Procurement Bill, which has been in development since 2013, raised its head in 2020 again, but has since disappeared from the public radar screen. This legislation was meant to distinguish between procurement of general goods and services, regarded as commodities, from that of infrastructure related services, both professional and construction related. What is desperately needed now is certainty and clarity on the procurement regime.

“I should note that the landscape for implementation is not only difficult for the private sector, but also for the officials within government who have the exceedingly challenging task of ensuring that fruitless and wasteful expenditure can be eliminated from the system. Such knowledgeable persons should be both accountable and empowered to be able to make decisions that are in total, consistent with the Constitution. Currently the ‘cost effective’ component in Section 217, subsection 1 is misinterpreted to mean ‘least cost’.”

“The Gauteng Government has produced a magnificent infrastructure budget and spend, but there are a lot of complex elements that are going to make it difficult to effectively execute some of the projects. Nevertheless, we are confident that these challenges can be overcome with a united effort between government and the construction sector,” he concluded.