Drastic measures introduced to address infrastructure project delays

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15-11-2024
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Moneyweb
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Including a ‘straightforward’ blacklisting policy and recordings of decisions made in the awarding of contracts.

The Department of Public Works and Infrastructure (DPWI) is implementing several drastic measures to overhaul the way it manages, executes and oversees projects to address infrastructure project delays that have cost the country almost R3 billion in the past few years.

Minister of Public Works and Infrastructure Dean Macpherson told parliament on Thursday that out of the current 206 infrastructure projects overseen by the DPWI in this financial year alone, 164 are experiencing delays for a number of reasons.

Macpherson said this represents an alarming 79% delay rate across its portfolio for this financial year.

He said these projects are critical to many communities across the country and these delays impact essential services, public safety and community well-being – from homes and police stations to correctional facilities and hospitals.

“The financial toll alone is substantial, with an estimated R1.3 billion already invested in projects in this financial year that are yet to reach completion.

“Over several financial years, the number jumps to R2.9 billion in delayed construction projects.

“These incomplete projects don’t just stand as unfinished structures, they are monuments to inefficient management, corruption, lost opportunities, deferred dignity, and unfulfilled promises to the public.”

Macpherson said measures being implemented include:

• The establishment of strict consequence management protocols for contractors who fail to deliver, with those who do not meet their obligations on time and within budget facing immediate repercussions, including blacklisting;
• Ensuring through the Construction Industry Development Board (CIDB) that only contractors of the appropriate size and an adequate level of expertise are awarded large construction projects;
• Enforcing new regulations for tender evaluation to ensure transparency and accountability;
• Empowering the Council for the Built Environment (CBE) to set mandatory standards across the sector to address the lack of enforceable oversight within the regulatory framework, a key contributor to delays;
• Drafting legislation that will require registration for all practitioners in the built environment to ensure that only qualified, accountable professionals are entrusted with the country’s infrastructure projects; and
• The creation of a Contract Management Unit within the DPWI that will be responsible for actively managing all contracts by monitoring contractor performance to ensure projects adhere to budgetary and time constraints.

Blacklisting

Macpherson added that the blacklisting of businesses would extend to the individuals themselves “who belong in jail not on construction sites”.

“Our blacklisting policy is straightforward: contractors who underperform or engage in non-compliant practices will no longer have the privilege of working on public projects.

“This decisive action ensures that only competent, reliable contractors participate in our national infrastructure initiatives.”

Macpherson said by adopting a public-facing system that records the tender process, the DPWI is committing to openness in contractor selection.

“Moving forward, audio and video recordings will provide a transparent view of how decisions are made which will prevent any bias or irregularity in the awarding of contracts.

“This step, modelled after the successful approach in KZN’s Public Works Department, will help us restore trust and ensure that contractors are chosen based on merit and capacity to deliver,” he said.

Macpherson said the DPWI is also developing a preapproved panel of contractors who have demonstrated their capacity to complete projects on time and within budget.

This panel of contractors will also serve as an intervention unit to finish incomplete projects

In addition, it will allow the DPWI to select contractors with proven track records, reducing the risk of project delays and budget overruns, he said.

Onus

Macpherson highlighted that the challenge of infrastructure delays does not rest solely with contractors and client departments often contribute to these delays by withholding payments to contractors, which disrupts project timelines.

“We are addressing this by establishing payment protocols to ensure client departments meet their financial obligations promptly,” he said.

“Moreover, the R14 billion owed to us by user departments must be paid, or else we will be forced to start treating government departments as debtors and apply debtor policies, which may include debt collection and eviction.

“Delayed payments have been a major source of frustration, resulting in project stoppages and, ultimately, increased costs.

“By holding client departments accountable, we are addressing a key bottleneck, ensuring that project funding flows efficiently from start to finish.”

Macpherson also made a call for experienced engineers, project managers, and construction specialists to rejoin the DPWI.

He said that similar to Eskom’s approach, they are reaching out to seasoned professionals with the skills needed to oversee complex projects and help the DPWI deliver results.

SAPS headquarters

Macpherson said one of the most striking examples of the infrastructure delays is the Telkom Towers project in Tshwane, where approximately R1 billion was spent on upgrades over 10 years with little to show for it.

He said the complex was intended to become the South African Police Service (SAPS) headquarters but still has the Telkom sign in front of the building and instead of serving the public, the project has become a financial burden costing the state millions each year for security alone.

“To avoid further waste of public finances, we are now exploring options to either repurpose this asset or remove it from our portfolio altogether, with an independent investigation underway.

“This project, among many others, highlights a pattern of stalled and mismanaged construction projects that we are determined to address.”

What about other government departments?

Consulting Engineers South Africa (CESA) CEO Chris Campbell welcomed the measures announced by Macpherson but stressed not all types of infrastructure is driven by the DPWI, with human settlements, water and sanitation and roads, for instance, managed by their own line departments.

Campbell said all these departments need to collaborate, adding the country does not have the time for DPWI to learn lessons from how they address problems before measures are introduced in other departments.

“You need to break down these silos because if I look at crime and criminality, the construction mafia is cross-cutting for all of them. Procurement is [also] cross-cutting,” he said.

Campbell agreed there is a need for “a presidential approach to encourage such real time coordination” between departments.

He said the competencies required by people in the DPWI to deliver on the desired outcomes do not apply only to directors or officials but people involved in bid evaluation committees who may not be appropriately skilled to be making these decisions.

‘Decisive, brave’

Master Builders South Africa (MBSA) executive director Roy Mnisi also welcomed the announcement, stressing that delayed infrastructure projects have been one of the major concerns for the construction sector.

Mnisi said there are many reasons projects are delayed, including a lack of capacity in all spheres of government to roll out infrastructure projects, and MBSA is glad the DPWI will be embarking on a capacitation drive.

Mnisi urged Macpherson to work with all industry role players, such as contractors and professionals, to achieve this.

Mnisi described Macpherson’s drive to address construction site stoppages as “a decisive and brave move”, adding the sector cannot have a situation where contractors are expected to complete projects that pose a danger to their and their employees’ lives.

He said contractors also cannot be expected to remain on projects that are not profitable because of these site stoppages and extortion.

“The state must provide an enabling environment for the business to operate without fear of intimidation, assault and being harassed,” he said.

Mnisi added that dealing with delayed and non-payment of contractors is one of the long-awaited reforms by the sector because of its devastating effect on contractors, particularly emerging contactors.