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Aug 17, 2012

Game changers?

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Eskom|Flow|Public Enterprises|Transnet|Flow|Harman On Time Radio|The FIFA World Cup
eskom|flow-company|public-enterprises|transnet|flow-industry-term|harman-on-time-radio|the-fifa-world-cup
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It was interesting to learn recently that the Department of Public Enterprises is moving to collect and disseminate ‘best practices’ relating to the management of the complex procurement and implementation processes associated with megaprojects being pursued by State-owned companies such as Eskom and Transnet.

A dedicated office is being set up to conduct the monitoring and to provide strategic support for the roll-out of the R850-billion-plus infrastructure programme.

The aim is to foster on-time and on-budget delivery, while more fully exploiting the developmental impacts associated with a project pipeline government hopes will stimulate growth, job creation and industrialisation at a time when the economy is facing serious headwinds.

Such benchmarking could become significant if it is indeed used to reverse the current tendency of price escalation, poor project management and schedule slippage.

As importantly, though, it implies that government is gearing up for a megaproject investment cycle that is more continuous, and less stop/start in nature.

The idea, it seems, is to create certainty in demand – certainty that has been absent ever since the conclusion of the FIFA World Cup projects. Sadly, that earlier project-economy momentum was all but lost, leaving the construction sector in deep trouble and causing infrastructure-linked businesses to think twice about building further capacity.

There is little question that without this demand certainty, government will be unable to transform the megaproject pipeline into what is being termed an economic ‘game changer’.

If the private sector is to truly believe that the programme is credible this time round, plans and pronouncements need to be matched closely with implementation. Announcements will also need to be backed by comprehensive and realistic funding plans – something that was absent when Eskom first embarked on its big expenditure initiatives.

Even further credibility will be built if key State-owned companies begin investing in line with yearly budgets, which means that these budgets need to be strongly aligned with the internal capacity to deliver.

To be sure, unless these components are in place, the credibility of the infrastructure programme will continually be brought into question.

But there is also an additional component that has to be deployed, and deployed with ruthless efficiency for the sake of credibility: procurement processes need to be entirely corruption free.

Currently, the morale of South Africans is being undermined daily by the seemingly relentless flow of revelations of maladministration, mismanagement and corruption. The country needs visible proof that these much-needed projects can be delivered on time, within budget and in the absence of influence pedlars, money-grubbing bureaucrats and colluding contractors.

If these large projects also fail the integrity test, they will also fail to live up to their promise of being game changing catalysts for growth and development.

Edited by: Terence Creamer
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