State’s infrastructure programme criticised for lacking details



14/08/2020
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Moneyweb
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The government’s announcement about the first 50 out of 276 strategic infrastructure projects (SIPs) worth R360 billion has been criticised for lacking critical details and any meaningful background to encourage private sector support.

Construction market intelligence firm Industry Insight said in its latest Construction Industry Monitor that many of these projects have also been in the pipeline for years and may not be as “bankable” and ready for implementation as government claims.

“We will have to wait and see, but we remain skeptical for the time being,” said Industry Insight CEO Elsie Snyman.

Industry Insight added that all projects will be assessed in terms of how they will advance the National Development Plan (NDP) despite the fact that none of the infrastructural targets outlined in the NDP has been achieved “and in fact had regressed over the last decade”.

Minister of Public Works and Infrastructure Chairperson of the Presidential Infrastructure Coordinating Commission Council (PICC) secretariat Patricia De Lille gazetted the projects on July 24 2020 as the next step in the implementation of South Africa’s infrastructure investment plan.

This followed the Sustainable Infrastructure Development Symposium (SIDSSA) held on Jun 23 2020.

The gazetted projects include:

– R106 billion for water and sanitation projects, including phase 2A of the Mokolo Crocodile water augmentation project in Limpopo.

– Three energy projects valued at R58 billion, including the development, installation and operation of 2 000 megawatts of new generation capacity from Independent Power Producers (IPP’s)

– R47 billion for 15 transport projects.

– R138 billion for human settlement projects, including Mooikloof Mega Residential City Project, one of four projects listed from the private sector.

– R4 billion for projects in the digital sector

– R7 billion for two projects in the agriculture and agro-processing sector.

Fragmentation in delivery

Industry Insight said three important issues raised at the SIDSSA were the need for a credible, bankable infrastructure project pipeline, a focused infrastructure plan and to address fragmentation in delivery.

It highlighted the government was reconfigured in May last year to include Infrastructure as part of the Department of Public Works.

“This is an attempt to deal with the fragmentation in infrastructure delivery. The 50 identified projects are already in the system of several local and provincial departments of government and municipalities, and are apparently ready for implementation.

“These projects form part of the larger infrastructure drive estimated at R2.3 trillion over the next decade, and have been fast tracked.

“Government, as stated many times over the past few decades, cannot do this alone, and continues to be reliant on private sector support and collaboration. Government is now seeking financial support from development finance institutions, multilateral institutions, and the highly controversial private pension funds,” it said.

How ready is shovel ready?

SA Forum of Civil Engineering Contractors ( Safcec) CEO Webster Mfebe said he is “cautiously optimistic” about the government’s infrastructure development programme and will be very circumspect in aligning himself to criticism about the projects until these projects have been put out to tender.

However, Mfebe agreed the government could have provided more detail about these projects, particularly details about the extent to which the 50 projects are “shovel ready”.

Mfebe said these details are important because contractors need to prepare to take a decision on whether or not they are going to bid for these projects.

He stressed that contractors are the critical element in the construction value chain because they bid for and built the infrastructure but are left out of the early planning stages of a project.

Mfebe said early contractor engagement did not involve contractors who will bid for projects but engagements with contractor associations about the packaging and broad guidelines of every project so they are implemented within budget, on time and within the quality standards that are expected.

Time to talk to the contractors

He said it is a mistake not to have these discussion with contractors because it results in scope variations and therefore cost escalations, particularly when projects are poorly designed.

Mfebe suspects the marginalisation of contractors and what prevents them being welcome at the table in the conceptualisation and planning stages of projects are fueled by the narrative that the construction industry is the most corrupt.

“Corruption, if it does happen, is not unique to the construction industry. We know now with Covid-19 that politicians, officials and some companies are involved in the looting of state resources.

“The issue of corruption between the public and private sector must not be regarded as a beauty contest between who is more corrupt than the other. All of us collectively must deal with corruption wherever it arises,” he said.

Mfebe agreed that many of the projects have been in the pipeline for many years but stressed that if old projects are being regurgitated and recycled and have taken many years to get off the ground, contractors need to understand “the magic wand that will make them implementable and shovel ready now”.

Sustainable infrastructure gets its moment

He applauded the new approach to sustainable infrastructure development involving the repackaging of projects but stressed the contractor is the missing link in the efficient and effective delivery of infrastructure in South Africa.

“Until and unless they [government] realises the critical role of a contractor in what I call early contractor involvement, these things will never go away,” he said.

BMI-Building Research Strategy Consulting Unit principal consultant Llewellyn Lewis said infrastructure development created a huge opportunity to kick-start the economy but stressed the need for the government to look at infrastructure development holistically.

“To me, the big thing is that it must start with housing. If you are going to build houses, you have to have roads, water, stormwater, sewerage, electricity. So they all go together.

“It’s a cure for all the problems we have – population growth, inequality, poverty and unemployment,” he said.

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