Corporate Member Panel Discussion: Factors Impacting on The KZN Construction Industry

Master Builders KwaZulu-Natal hosted its annual Corporate Member Breakfast on 19 April 2018. The highlight of the event was a panel discussion on ‘Factors impacting on the construction Industry in KwaZulu-Natal’ which was exceedingly well received by all who attended.

Panellists included Peter Dixon - Programme Manager with the Coega Development Corporation, Dr. Stanley Gichia - Chief Professional: Professional Services at the KwaZulu-Natal Department of Public Works and Ross Stembridge, Building Services Manager for Master Builders KwaZulu-Natal. The facilitator for the discussion was Vikashnee Harbhajan - Executive Director: Master Builders Kwazulu-Natal.

A key discussion point centred around matters of non-payment for work performed on behalf of the Department of Education. It was noted that implementation agents Coega and IDT had both experienced delayed payments for several months and that the cash-flow issues that ensued as a result of it, posed a serious threat to the sustainability of the contracting firms who had been awarded the tenders.

It was noted that Master Builders KwaZulu-Natal assisted its Members by enaging with implementing agents, as well as Treasury, relating to matters of non-payment.

The Department of Education had in the week preceding the meeting, released funds for outstanding payments on contracts. Coega had since effected all outstanding payments on Department of Education projects. The only exceptions were in cases where there were unsettled disputes.

The following observations were noted:

• Funds should be ring-fenced for the delivery of new schools and other projects.

• Government departments should take cognisance of contractual procedures with relation to variation orders, retentions and the ability of the Principle Agent to manage the contract.

• Numerous contractors do not have the legal resources to effectively manage their contracts in terms of their obligations as per the contract documents. For example, many compromise themselves by not submitting their notices timeously.

Key issues which emanated were:

(i) Default interest is payable by Government on late payments and that contracting firms should claim it in terms of the contract.

(ii) Plans are underway for Government infrastructure to be handled by Department of Public Works. Implementing agents will fall under Public Works line function.

Panellists concurred that the building industry was particularly susceptible to a downward economy, and that the recent state of the economy had a major impact on the industry throughout the country. It was usually the first sector to feel the effects of a downward turn and the last sector to recover from it.

Skills shortage was also a contributing factor. The lack of qualified professionals in the built environment was becoming increasingly alarming. The viewpoint expressed was that school-leavers wishing to persue a tertiary education generally do not select a construction discipline as a career of choice.

The panel was also in agreement that the site invasions experienced in the province was having an extremely negative impact. It was noted that criminal activity could not be condoned, however the sector was still lacking transformation and that the industry should involve local participation at the inception of projects.