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Consulting engineers call for more work

SPECIALITY SKILLS
There are speciality skills, which the local consulting engineering sector needs that are available from multinational, such as rail

Cesa president Abe Thela discusses the state of the consulting engineering sector.

SPECIALITY SKILLS There are speciality skills, which the local consulting engineering sector needs that are available from multinational, such as rail

Photo by Duane Daws

1st August 2014

By: David Oliveira

Creamer Media Staff Writer

  

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The consulting engineering sector currently works at about 90% capacity, which results in consulting engineering firms seeking more involvement in government-led projects, particularly the 18 Strategic Integrated Projects, member organisation Consulting Engineers South Africa (Cesa) president Abe Thela tells Engineering News.

“However, these opportunities depend on the roll-out of these projects and we would like to see them rolled out as soon as possible. We are seeing activity, but not enough to meet the National Development Plan (NDP) objectives and sustain the consulting engineering sector,” he adds.

Thela notes that there are also concerns about the NDP, particularly around investment. “We understand that the economy is not growing as fast as it must and, as a result, government is unable to spend sufficient money on infrastructure.”

He highlights that, while there are issues surrounding the delivery of the NDP, it is a good plan, which Cesa supports.

“Government must be commended for coming up with such a plan, but it needs to make an effort to spend more money on infrastructure for a simple reason: infrastructure sustains the economy. Without infrastructure, the economy cannot grow because industries, such as manufacturing and agriculture, depend on infrastructure in the form of electricity and water, to name a few,” he points out.

Thela concedes that this a complex problem, as there is not enough money for treasury to invest in all the infrastructure it would prefer, owing to the country’s competing needs.

“Government must create an environment for the private sector so that it can play a much bigger role in infrastructure delivery. Many infrastructure projects can be carried out by the private sector through public– private partnerships but, obviously, there are issues of mistrust, corruption and policy uncertainty that must be dealt with to improve private-sector participation in infrastructure delivery so that the objectives of the NDP can be met.

“Tension between government and the unions can easily create uncertainty, which contributes to the private sector being unwilling to invest money in infrastructure development,” Thela stresses.

He points out that the recent platinum sector strike, which lasted five months, made companies increasingly cautious about investing in major projects.

“The private sector, regardless of industry, wants a return on its investment,” he argues.

Thela notes that government initiatives, such as the Presidential Infrastructure Task Team, offer a positive vehicle through which to resolve challenges and the issues of mistrust, as government and business can debate the issues that hinder cooperation between the public and private sectors, which is needed to best serve the interests of South Africa.

Challenges
He highlights that the consulting engineering sector faces several institutional and regulatory challenges.

Regulation issues include the procurement of consulting engineering services, which Thela believes is the biggest challenge currently facing the sector.

“Currently, procurement is based on price and broad-based black economic-empowerment (BBBEE) points, with functionality or quality having a minimum threshold. This makes the procurement process largely price driven. If you look at points allocated to price in the 90/10 and 80/20 scoring systems, you have 90% and 80% respectively being assigned to price, with the remainder being assigned to BBBEE.

“As a result, and because of [fewer] infrastructure projects being available, we are seeing low tender prices from consulting engineering firms to stay afloat. In some instances, these companies tender below costs, threatening their sustainability and the sector as a whole,” Thela warns, adding that a strong South African engineering sector is vital for socioeconomic growth and the realisation of the NDP objectives.

He highlights the skills shortage as one the most significant institutional challenges faced by the private and public sectors.

Thela says that the private sector’s high workload is an indication that general engineering skills are available; however, “there are certain speciality skills which the sector needs to supplement that are available from multinational firms who have been developing infrastructure in South Africa, such as rail and power stations”.

The major concern – one which is shared by the public sector – is the level of skills, particularly in engineering, available to the public sector, he notes, adding that an informed or engineering-based public-sector client is needed to effectively procure consulting engineering services and effectively monitor the implementation of infrastructure projects.

He adds that Cesa is offering its services to government since it can help with project planning. “We are promoting this as an interim measure for government to successfully procure and implement projects. Many of our member firms are willing to work with government and support it with training in project planning.”

Trends
Thela advances that globalisation has resulted in international consulting engineering firms regarding Africa as a potential destination for large projects, owing to the significant need for infrastructure development on the continent.

This has led to many major consulting engineering firms in South Africa merging or being taken over by international firms, which Thela maintains is the most significant change to the local sector.

“Everything has positive and negative aspects. This is good in that these mergers and acquisitions afford South Africa international experience, now a telephone call away, although it is an expensive telephone call to make!” he quips.

The challenge is that more resources are available to large multinational companies than to smaller local consulting engineering firms.

“Bigger firms are able to participate in large- and small-scale projects, while smaller firms are able to participate only in small-scale projects. Because projects are getting bigger, companies at the bottom end of the sector are now struggling to get work,” Thela says.

He notes that Cesa is considering strategies that will include smaller firms, which represent about 80% of its members. “We believe that small firms have a role to play, particularly in transformation. Several small firms employ a significant number of young black engineers and black engineers run many of these companies.

“We are also encouraging the procurement system to include smaller consulting engineering firms, as well as encouraging our large members to form joint ventures with small firms. We suggest that an allocation is set aside within individual projects to ensure participation by emerging small to medium-sized consulting engineering firms in big projects,” he concludes.

Edited by Megan van Wyngaardt
Creamer Media Contributing Editor Online

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