A vision for the construction industry' How can we make the charter work for us

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A vision for the construction industry.How can
we make the charter work for us?
The Construction Conference 2005

• Presented by
• Carl Grim, Chief Executive, Aveng Limited

10 October 2005
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A vision for the construction industry and how we
can make the charter work for us

• The role of construction in the economy

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Construction industry vision

• To be an industry that responsibly fulfills its
  role in society

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Two questions arise

• What is our role in society?
• How do we fulfill this role responsibly?

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Question 1
What is our role in society?
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Gross fixed capital formation trend
Nominal
EX SARB
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Construction Works Contribution to Gross Fixed
Capital Formation
EX SARB
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Gross Fixed Capital Formation as percentage of GDP

• AssumptionGDP Growth of 4 and GFCF/GDP of 25
  in 2014
• The construction sector will double in size in
  the next ten years

EX SARB and LHA
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Total investment in construction works
EX SARB, MFA DATABASE Constant 2005 prices
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Investment in total non-residential building
45000
Long term
40000
Growth
2,3 pa
35000
30000
25000
Rand million
20000
15000
10000
5000
0
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50
52
54
56
58
60
62
64
66
68
70
72
74
76
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80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
10
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EX SARB, MFA Database Constant 2005 prices
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Investment in total housing
EX SARB, MFA Database Constant 2005 prices
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Low income and affordable housing requirements to
eliminate backlog by 2014
million m2
EX SARB, AVENG
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Construction works forecast
EX SARB, Constant 2005 prices
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Role 1

• To effectively deliver and maintain the economic
  infrastructure for long term sustainable growth

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Infrastructure lagging economic growth
EX SARB
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Road infrastructure lagging vehicle growth
EX Peter Perkins
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Additional electricity generation capacity
urgently required
EX Eskom, Lead time ref 2004
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Role 2

• To proactively assist government to redress the
  countrys social infrastructure backlog brought
  about by rapid population growth and decades of
  neglect

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Social infrastructure lagging population growth
EX SARB and ASSA
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The role of construction
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Question 2
How do we fulfill this role responsibly?

• Transforming our industry

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Black contracting participation
Percentage of Total on Database

EX SAFCEC
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Current status of transformation in the
contracting industry
EX IMC
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Construction Management Graduations
Universities
Technikons
EX Allyson Lawless
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Civil Engineering Engineers Technologists
June 2004
EX Allyson Lawless, June 2004
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Business/Enterprise Development
Number of companies per size category
EX Allyson Lawless
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Business/Enterprise Development
Demographic distribution and size of companies in
the construction sector
Ex Allyson Lawless
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Question 2
How do we fulfill this role responsibly?

• Transforming our industry
• Building skills

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Civil engineering employment
EX SAFCEC
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Dramatic drop in artisan registrations
EX Allyson Lawless
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Civil engineering graduates down
EX Allyson Lawless, Inflation adjusted base 2000
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Training and Education
EX SAFCEC
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Question 2
How do we fulfill this role responsibly?

• Transforming our industry
• Building skills
• Creating jobs

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Workload
EX SARB
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Nominal Inflation adjusted interest rate
EX SARB
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EPWP Support Programme

• EPWPs goal is to create 1 million short-term
  work opportunities for unskilled, marginalised,
  unemployed people over the next 5 years
• EPWP will provide poverty and income relief
  through temporary work to carry out socially
  useful activities
• EPWP will seek to equip these people, with a
  modicum of training and work experience, which
  should enhance their ability to earn a living in
  the future
• The focus is on four sectors

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Targets for first five years of EPWP
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Question 2
How do we fulfill this role responsibly?

• Transforming our industry
• Building skills
• Creating jobs
• Assist in building institutional capacity

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Building public sector institutional capacity
Government infrastructure spending - 2005 to
2008 R167 billion
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Building institutional capacityfor Soccer World
Cup
Initial delivery
Adjusted delayed delivery
Unchanged delivery
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Private/Public sector institutional capacity

• The institutional complexities in the sector are
  reflected by
• Great number of public sector clients
• 6 National departments
• 9 Provincial departments transport, roads, works
• 240 Local authorities
• a number of public corporations
• Myriad of private sector clients
• 13 Private sector bodies representing service
  providers

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Question 2
How do we fulfill this role responsibly?

• Transforming our industry
• Building skills
• Creating jobs
• Assist in building institutional capacity
• Assist in streamlining the regulatory environment

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Streamlining regulatory environments

• In excess of 120 pieces of legislation are
  impacting on the Construction Sector
• Confusion around and lack of consistency with
  regard procurement rule applications, PPPFA
• CIDB register PLUS local registers PLUS
• Professional Council registrations duplications
• Regulatory Impact Assessments needed
• Cost of compliance and lack of consistency in the
  application of the legislation
• Inhibiting impact of legislation on company
  development and growth
• etc

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How do we make the charter work for us?
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How do we make the charter work for us?
EX Charter Draft 4 IMC
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How do we make the charter work for us?
EX Charter Draft4 IMC
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Challenges

• Adopt a growth mentality
• Development of people and enterprises
• Development of technical and administrative
  capacity of the state at all levels to execute
  the works
• Investment in infrastructure to be planned to
  reduce the cyclical nature of the industry to
  underpin more consistent employment growth
• Streamlined and consistent application of the
  regulatory framework
• Construction Sector to develop co-ordinated
  approach for all role players

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Thank you

• Questions

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