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Inaccurate, incomplete invoicing to blame for late payments – Vadi

Gauteng Roads and Transport MEC Dr Ismail Vadi

Gauteng Roads and Transport MEC Dr Ismail Vadi

Photo by Duane Daws

10th September 2013

By: Natalie Greve

Creamer Media Contributing Editor Online

  

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Gauteng Roads and Transport MEC Dr Ismail Vadi on Tuesday acknowledged that the provincial department was “not succeeding” in achieving the full payment of contractors within the mandated 30-day period, stating that, on average, only 60% of invoices were paid within a month of being issued.

While attributing this partly to governance and administrative inefficiencies within departmental accounting systems, he ascribed the prevalence of late payments largely to incomplete, inaccurate or inconsistent invoicing by the contractors themselves.

“Often the contractors won’t issue the invoice within 30 days, so we can’t pay within 30 days. In addition, they often issue incomplete invoices, which the [provincial] Treasury can’t process. We appeal to contractors to invoice us correctly,” he said.

Vadi noted that the department’s annual report for 2013 revealed an accrual of money owed for the year of some R250-million, but stressed that the accumulation of late payments had been reduced in recent years.

“When I joined the department in 2010, for example, accruals of late payments were over the R500-million mark,” he commented, emphasising that a critical focus of the department in the coming financial year would be to continue improving internal processes to expedite the payment of invoices.

Meanwhile, Vadi said the department had observed a growing trend by smaller subcontractors to underestimate the expenditure required to complete roads projects in the province, resulting in poor project delivery.

“Smaller firms will submit the lowest tender application so they can be awarded the contract, often undervaluing their work. This often results in them running out of money and being unable to finish the project,” he explained.

Vadi believed that a culture of “sloppy work and bad budgeting” had emerged among smaller contractors in the road construction industry and said that all contracts awarded by the department had been reviewed as a result.

“Some of these guys are taking chances,” he commented.

As the provincial Treasury dictated that a tender must be awarded to the lowest bidder, Vadi said it was difficult to prevent such market behaviour.

“We have to adhere to Treasury regulation, but it is not always in the public interest,” he noted.

Fiscal Performance

Despite the challenges, Vadi was “pleased” with the overall performance of the department in the 2013 fiscal year.

The Gautrain Management Agency achieved a clean audit, with no material findings, while both the department and its vehicle leasing entity G-Fleet received unqualified audits with reduced “matters of concern” identified by the auditor-general.

“Compared to the previous financial year, our infrastructure spending has increased exponentially, with most projects, if not all, being delivered on time and within budget. In terms of revenue generation, the department collected net revenues of R2.4-billion in the last financial year, making it the single largest contributor to the provincial Treasury,” he said.

Operational Performance

In addition, he noted that, ridership on the Gautrain had improved by 2.5% year-on-year, with 152 000 commuters currently using the rail service on a daily basis.

“This is particularly important as we provide a ridership guarantee to the Bombela Concession [Company],” he said.

Ridership on Gautrain buses had also improved, with 350 000 people a month currently using the service.

Further, Vadi said “good progress” had been made on several major road construction projects in Gauteng over the period.

This included the upgrading of the R55 Voortrekker road to a dual carriageway; the upgrade of Cayman road from gravel to an all-weather surfaced road; the rehabilitation of the R25 from Bapsfontein to Bronkhorstspruit; the rehabilitation of the Ben Schoeman highway, in Pretoria; and the upgrading of the M1, in Johannesburg.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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