PARTNERING FOR
GROWTH
Working together towards a sustainable
future
Northwest Province 23 June 2011
CONTENTS
1.INTRODUCTION
2. 2010 OVERVIEW
a.
The Construction Economy
b.
CESA: Consulting Engineers South Africa
c.
Industry Issues and Events
d.
Non-events
3. THE WAY FORWARD: 2011 & BEYOND
a.
Global Trends
b.
Economic Growth Path
c.
Service Delivery Framework
INTRODUCTION
 Spotlight on Infrastructure/service delivery challenges
 T Manual : “Fail to deliver services despite adequate funding”
CESA
 2009 : Talk
2010 : Walk
2011 : Work
 Focus on participating to grow SA

 “PARTNERING FOR GROWTH”
2010 Construction Economy
2010 Construction Economy
Industry Confidence
Source: CESA BECS, BER
Fee income earned by Sub-disciplines: % Share
December 2010
Question:
What type of work did your company engage in during the past 6 months?
Tow n planning
Structural
Quantity Surveying
Project Management
Mining
Mechanical
Marine
Information Systems / Technology
Hydraulics
GIS
Industrial Process / Chemical
Geotechnical
Facilities
Environmental
Electrical / Electronic
Civil
Mechanical building Services
Architecture
Agricultural
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Source: CESA BECS
Fee earnings by sector: Market Share
Dominated by transport and commercial sector
Other
Agriculture / Forestry / Fishing
Commercial
Housing
Tourism/Leisure
DEC10
JUN10
Health
DEC09
DEC08
Education
DEC07
Mining / Quarrying
Energy
Transportation
Water
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Provincial Market Share: December 2010
Vs change in market share from December 2009
40.00
6
35.00
4
30.00
2
% Share (bar)
25.00
20.00
0
15.00
-2
10.00
-4
5.00
0.00
E-Cape
W-Cape
N-Cape
F State
N-W
Lim
Gaut
Mpu
Kwaz
Africa
Int'l
% Share
7.90
16.10
2.50
4.90
2.50
2.30
34.70
3.70
12.20
10.90
2.30
Change last 12 months
-2.50
-0.90
1.70
1.90
0.20
-0.90
4.70
0.80
-5.10
0.20
-0.10
% Share
Change last 12 months
-6
GAIN
market share
Income distribution per province
Fee income earned by type of client
% Share
Local (SA) Income distribution per fee paying client type, during the past 6 months
Jun-08
60
Dec-08
Jun-09
50
Dec-09
Jun-10
% Share
40
Dec-10
30
20
10
0
Central
Provincial
Local
Parastatals
Private
Jun-08
9.7
15.8
21
12.8
40.7
Dec-08
7
17.7
27.9
10.4
37
Jun-09
6.4
10.7
23
9.8
50.2
Dec-09
15.7
9.9
27.4
12.8
34.2
Jun-10
16.4
13.9
20.4
12.7
36.6
Dec-10
14.8
12
18.1
11.7
43.3
Competition in tendering
During July – December 2010 competition for work was (Tick selection)
100%
% Respondents
80%
60%
40%
20%
0%
Very Low
Low
Keen
Very Keen
Fierce
Dec-07
0.00%
3.01%
17.55%
55.57%
23.86%
Jun-08
0.00%
1.40%
20.80%
48.70%
29.10%
Dec-08
0.00%
0.00%
21.42%
42.28%
36.29%
Jun-09
0.22%
0.51%
62.73%
28.36%
8.18%
Dec-09
0.00%
0.10%
21.80%
33.50%
44.70%
Jun-10
0.00%
8.67%
3.28%
14.79%
73.26%
Dec-10
0.00%
0.20%
10.00%
62.10%
27.80%
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Dec-96
Bursaries
% of Salary / Wage bill
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
Dec-10
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
Dec-02
Dec-01
Dec-00
Dec-99
Dec-98
Dec-97
%
Training (Direct costs)
% of Payroll
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
0.00
Net % Change
Utilisation
Dec-10
Jun-10
Dec-09
Jun-09
Dec-08
Jun-08
Dec-07
Jun-07
Dec-06
Jun-06
Dec-05
Jun-05
Dec-04
Jun-04
Dec-03
Jun-03
Dec-02
Jun-02
Dec-01
Jun-01
Dec-00
Jun-00
Dec-99
Jun-99
Jan-99
Jun-98
Utilisation
1.00
0.70
40
0.60
0.50
20
0.40
0.30
0
0.20
-20
0.10
-40
Net % change expecting increase
Industry Capacity Utilisation
Of existing technical staff
80
0.90
0.80
60
Fee income outstanding for more than 90 days
(including foreign fee income earnings)
Fee income outstanding for more than 90 days as % of
total annualized fee income
R mill, current
prices
Jul - Dec
2008
%
Jan - Jun
2009
%
Jul - Dec
2009
%
Jan - Jun
2010
%
Jul - Dec
2010
%
3.9%
7.3%
5.6%
11.6%
2.6%
R43
4.3%
3.8% 27.2% 14.4%
8.8%
R126
6.9%
13.2% 16.2% 16.4%
7.8%
R192
7.7%
1.4%
5.5%
R76
R543
Foreign (all EXRSA)
11.0% 11.9% 15.2% 65.9% 9.6%
104.2
27.0% 13.0%
46.5% 47.7%
%
Total
12.0%
Central
government
Provincial
government
Local
government
State owned
enterprises
Private Sector
9.7%
49.7%
9.5% 18.5% 23.4% 15.5%
R1 439
R2 418
Quality Management System
120.0%
100.0%
%
80.0%
60.0%
40.0%
20.0%
0.0%
Large
Medium
Small
Micro
Total
Jun-08
100.0%
72.7%
94.4%
75.0%
84.0%
Dec-08
100.0%
93.0%
100.0%
75.0%
84.0%
Jun-09
100.0%
93.3%
100.0%
75.0%
93.0%
Dec-09
100.0%
100.0%
100.0%
100.0%
100.0%
Dec-10
100.0%
93.0%
100.0%
100.0%
97.4%
ISO 9001:2000 Certificate
100.0%
80.0%
%
60.0%
40.0%
20.0%
0.0%
Large
Medium
Small
Micro
Total
Jun-08
81.8%
36.0%
11.0%
0.0%
30.1%
Dec-08
87.5%
46.7%
20.0%
0.0%
42.0%
Jun-09
90.0%
20.0%
20.0%
12.5%
34.8%
Dec-09
90.9%
42.1%
14.3%
16.7%
45.2%
Dec-10
92.3%
25.0%
0.0%
20.0%
45.0%
2010 Construction Economy
 Competition
 Tender prices
 Explore alternative markets
 R809 billion 3 year budget ??
N
 Public sector technical capacity
 Consulting Engineering Reserve Capacity
CESA OVERVIEW
Small/New firms joining CESA
 78 new since 2009 Ave size = 12 members
Transformation
 2009 - 38% ; 2010 - 42% : 2011 to date - 55%
 YPF
 SABTACO
Mergers and Acquisitions amongst Firms
Globalisation of SA Firms
Young Professionals Forum
CESA OVERVIEW
Infrastructure Research
Water: Supply & Quality
Prof Grant Cawthorn: “most imminent challenge”
Energy
(Cost ?)
Transportation
CESA OVERVIEW
Procurement-Procurement-Procurement-Procurem..
Procurement Road Show : Successful
600 Reports from members
Bring back Quality ! !
CESA acting as CIDB agent : MOU signed
CESA OVERVIEW
 Conference on Alternative Delivery Mechanisms
 Business Integrity
 Talking talking ..... but walking ?
 CESA code of conduct
 Integrity pact : Commit to good Governance (Busa + CIDB)
 Sustainability guidelines
 Small Company Workshop
CESA OVERVIEW
 School of Consulting Engineering
124 courses
2 000+ delegates
Candidate Academy for Mentors & Mentees
Certificate in Consulting Engineering Management
 Client Liaison & Access to Decision Makers
 Panels of Expert Members
 Media Coverage
(R5 million)
CESA the one stop shop for infrastructure industry
matters
2010 Industry Events/Issues
Soccer World Cup
Engineering Excellence
Legacies & Lessons
Co-operation/Partnerships
Strategic and capital project planning
 National Planning Commission
CESA keen to participate
2010 Industry Events/Issues
The Green Wave
83% of SA emissions from energy sector
30 Facilities contribute 95% of all SA emissions
SA carbon intensity > China, India
SA contributes 0,98% globally
2010 Industry Events/Issues
The Green Wave (cont)
Climate Change Conferences : Cancun
(2010),
Durban
Green house gas emissions : (Cop 15)
Carbon credits : 18 CDM (Clean Dev. Mechanisms) Projects
Carbon taxes on vehicles
(Right reasons?)
Green Building Council
Green Infrastructure body ?
(2011)
2010 Industry Events/Issues
BRIC + S
Population : 3,5 / 6,9 Billion ( 51%)
40% of World economy
C =2; B=7; I=10; R=11; SA=28th biggest globally
Commodity driven
2010 Non - events
 Construction Industry Charter
 Municipal Systems Amendment Bill (in the “Z” file)
 Service Delivery
Protests
Unspent budgets: Job losses ..... R12.4 bn
Turn around interventions
Professional Technical Leadership 5 100
1 800
2010 Non - events
 Register of Built Environment Professionals (CIDB)
 Identification of Work (ECSA/CBE)
 CETA Governance /Value
?
2011: The Way Forward
According to Thomas Malthus
“ World is fast heading for a food
crisis leading to mass starvation. ”
Circa 1750
Oxfam International Report
“Who will feed the World?”
5 May 2011
2011: The Way Forward
Global Trends
West
East (G7
E7)
Examples visible
Future alliance partners
Global Competition in SA
Africa
Increased world focus on Africa
Strong growth
Corridor developments
2011: The Way Forward
South Africa
 Acc to Int’l Fin Corp: “Doing business”: 34th /183
 SA Economic Growth Rate below average
 Skills
 Municipal Elections : delays

 Corruption is out of hand
2011: The Way Forward
New Growth Path
Infrastructure is cornerstone
Jobs during Construction : 7 jobs per R1 million
Jobs to operate and maintain over lifespan
Improves Productivity
Attracts investment : more jobs
Unease about kicking the goals
2011: The Way Forward
 30 000 engineering graduates 2014 ?
28
23
18
13
Civil Engineering graduations - UCT
1995
1992
1986
1983
1977
1972
1967
1963
1959
1956
1953
1950
8
GFCF as a % of GDP
33
90
80
70
60
50
40
30
20
10
0
1945
Number of graduates
 2010 : 2 500 engineering graduates pa
 Enhance Quality of Educators
 Private sector will respond
South Africa’s GFCF as a % of GDP
2011: The Way Forward
Service Delivery Framework : 5 frames
1. Professionalise Public Service
 Deployment
 Technical professionals for technical positions
 5 Year Contracts
2011: The Way Forward
2. Infrastructure planning/programming
 1.Too few South Africans work
 2.The quality of school education for most black people is
sub-standard
 3.Poorly located and inadequate infrastructure limits
social inclusion and faster economic growth
 4.Spatial challenges continue to marginalise the poor
2011: The Way Forward
 5.South Africa’s growth path is highly resource-intensive
and hence unsustainable
 6.The ailing public health system confronts a massive
disease burden
 7.The performance of the public service is uneven
 8.Corruption undermines state legitimacy and service
delivery
 9.South Africa remains a divided society
2011: The Way Forward
3. Innovative Planning by Government
120%
Planning
Detail Design
I mplementation
100%
80%
Ability to innovate & influence outcome
60%
40%
Effort/Cost required to influence outcome
20%
0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
Percentage Project Completion
80%
85%
90%
95% 100%
2011: The Way Forward
4. Appropriate construction procurement models
2011: The Way Forward
4. Appropriate construction procurement
models (cont)
 PPP’s
 Framework Agreements
(CIDB Procurement Note 15 of 2008/10)
 Target Cost Contracting
 International Experience
 S A Experience


Reduce Client Management Resource Needs
Meet social objectives
2011: The Way Forward
5. Cultivate a mutually trusting relationship
between Private and Public Sector
?????????????????????????????????????????????
Can we
Succeed?
?????????????????????????????????????????????
?????????????????????????????????????????????
If she can,
we can!
Bit by Bit
?????????????????????????????????????????????
‘PARTNERING FOR GROWTH’
THANKS
CONCLUSION
 Outlook improving after World Cup Paralyses
 Shortage of Technical leadership
 CESA Members employ 21 200 experienced
infrastructure design and management experts
 CESA is keen to partner with its clients to grow South
Africa
Let’s WORK TOGETHER
‘KOM ONS WERK SAAM’
33
23
18
13
1995
1992
1986
1983
1977
1972
1967
1963
1959
1956
1953
1950
8
GFCF as a % of GDP
28
1945
Number of graduates
90
80
70
60
50
40
30
20
10
0
Number of graduates
Civil Engineering graduations - UCT
South Africa’s GFCF as a % of GDP
Lessons from abroad
Lessons from abroad
Lessons from abroad
Sbu Ndebele’s infrastructure R1 trillion
Ministers of finance Africa
DBSA loans Zambia annual investment R1 billion
Cabinet discussing AMD
S’hamba Sonka Walking together?
Masibambisane” Let’s work together
Thomas Malthus 1700’s : Food catastrophy
Cees Bruggema 2007: Paradigm shift Stelth
bomber infrastructure spend to 2015 ?
Way Forward ?
To forecast is always dangerous especially
into the future
PPP’s
2011: The Way Forward
3. Innovation
Planning &
Program
development
Design &
engineering
Implementation
Impact on
performance
& costs
Innovative solutions
Tech n ical in novation Process innovation
Project phases