:

NATIONAL CONTRACTOR DEVELOPMENT PROGRAMME

Progress Update

PARLIAMENTARY PUBLIC WORKS PORTFOLIO COMMITTEE

18 AUGUST 2015

Presentation Outline

Purpose of the report

Background

NCDP Objectives and evolution

Statistics / Successes / Progress

Challenges & CIDB interventions

Recommendations

Slide 1

Purpose of the report

The purpose of this submission is to appraise PPC on progress regarding the NCDP i.e:

– progress to incorporate local government into uptake of the NCDP

– the implementation of the National Contractor Development Programme (NCDP), within Public Works Stable

– Successes and Challenges – cidb Pipeline initiatives / Strategy

Slide 2

Background: Why Contractor Development ? • The Construction industry as a Vehicle for Development and

Transformation- Sustained growth of contractors- Meeting socio-economic objectives- Transforming the industry

Slide 3

Leadership Role of Public Works inContractor Development Mandate

– DPW being custodian of asset maintanance and with a huge infrastrcuture budget recognised the need to ensure meeting of socio-economic objectives, and transformation of the industry, whilst spending on project and maintance projects…

– …promote sustainable growth of the construction industry and the participation of the emerging sector… (CIDB Act 38 of 2000)

– The 2008 DPW-CIDB MINMEC mandate to the CIDB was to design and drive the implementation of a Contractor Development Framework that must uniformly apply throughout South Africa in respect of registered contractors

– NDPW Chairs the NCDP Steering Committee and oversee the NCDP implementation

Slide 4

21 September 2012 : DPW Political MiNMEC endorsed NCDP

06 December 2012 : Minister Nxesi launches NCDP at KZN MinMECExtract from National DPW DG letter to cidb CEO: (03 October 2012):

6

Slide 5

Leadership Role of Public Works inContractor Development Mandate

Incorporation of local government

(COGTA, SALGA and municipal interactions)…

DPW and CIDB have heeded the DPW MinMEC request for ‘incorporation of

local government’ on the NCDP and for ‘collaboration with SALGA and COGTA’.

DPW MinMEC – March 2015 : Asked for further municipal interactions via MISA engagements

Slide 6

DPW and CIDB have heeded the DPW MinMEC request for ‘incorporation of local government’ on the NCDP and for ‘collaboration with SALGA and COGTA’.

2. Incorporation of local government

(COGTA, SALGA and municipal interactions)…

Present Date Purpose Resolution

N.DPW-IGR & Policy, CIDB, SALGA, COGTA, & MISA

08 November 2012 NCDP introduction To be presented to DG.

N.DPW Policy and CIDB & DG Department of COG

03 December 2012 Presentation of NCDP to DG COG for buy-in for taking to MiNMEC

To be placed on future MinMEC agenda

N.DPW Policy and CIDB, COGTA DG’s, HoD’s, SALGA, officials

11 February 2013 NCDP framework and guidelines COGTA political MinMEC noting and support – to be taken to Political COGTA MinMEC of 16 August 2013

SALGA - CIDB 08 May 2013 Way forward on SALGA and COGTA support and municipal roll-out

To present to SALGA NEC of July-first engage & participate with provincial working group structures of May/ June

SALGA Local Economic Development and Infra planning Working Groups (Councillors and officials), CIDB

16 May – 6 June 2013 Support from Provincial SALGA structures

Capacitation and discussions with unanimous NCDP support for taking to SALGA NEC

SALGA National Working Group - CIDB

24 June 2013 Support from WG and proposal for NEC adoption

SUPPORTED for NEC approval

SALGA National Working Group - CIDB

27 June 2013 Support from WG and proposal for NEC adoption

SUPPORTED for NEC approval

SALGA NEC 05 August 2013 Endorsement as Policy for municipal promotion/ rollout

APPROVED

COGTA Political MinMEC 26 September2013 Endorsement as Policy for municipal promotion/ rollout

APPROVED

Slide 7

PROVINCE – MISA/ CIDB CAPACITATION DATE

1. Gauteng / HO 19-June-15

2. Limpopo 23-June-15

3. North-West 29-June-15

4. Free State 3-July-15

5. Northern Cape 7-July-15

6. Mpumalanga 9-July-15

7. Kwazulu-Natal 21-July-15

8. Western Cape 24-July-15

9. Eastern Cape 27-July-15

• The N.DPW MinMEC of March 2015 resolved: CIDB was to further now engage with the Municipal Infrastructure Support Agency - MISA to further support Municipal NCDP awareness and rollout:

• The CIDB Executive and MISA CEO and Executive met and agreed on a strategy to forge cidb and NCDP collaborations. Between June and July 2015 all MISA Technical Consultants were capacitated on CIDB including the NCDP. Contractor Development policy assistance, and reporting will now form part of the input to municipalities receiving MISA support

Slide 8

Uptake and implementation at Local Government is a challenge

NCDP: OBJECTIVES

• Improve contractor grading status

• Increase black /women-owned companies in targeted categories

• Promote sustainable contracting• Improved delivery and

performance on infrastructure projects

Slide 9

NCDP definition of Contractor Development…

CD is a deliberate and managed process to achieve targeted developmental outcomes that improves contractor:

LEARNERSHIPSGrades 1 to 2

ENTERPRISE /CONTRACTOR

DEVELOPMENTGrades 2 to 6

PERFORMANCEIMPROVEMENT

Grades 4 to 7

Components of Development:

Slide 10

Methods of delivering Contractor Development

a. Direct (incubator)

NCDP: Contractor Development Generic model (Incubator)

TARGETS, ENTRY AND

EXIT CRITERIA

WORK OPPORTUNITIES

SCM

SKILLS, PERFORMANCE,

EVALUATION,GRADUATION

CONTRACTOR DEVELOPMENT PROGRAMME

TRAINING,MENTORING,

ENABLING ENVIRONMENT

b. Indirect targeting (using procurement)

Slide 12

Contractor Development

Direct Targeting Indirect targeting

• Delivery• Empowerment, transformation• Sustainable emergence

Contractor Development

•Incubator Programmes•CDPS

•Structured JVs•Subcontracting•Construction Management• Unbundling

Slide 11

a. Direct / incubator Guidelines:

Guidelines for implementation of

CDP’s(published September 2011 and also

available at www.cidb.org.za)

Slide 13

b. In-Direct targeting (use of procurement/ packaging)Guidelines + cidb practice notes:

Procurement methods in support of CD

1. Unbundling

2. Using Potentially Emerging Status

3. Using Joint Ventures

4. Using subcontracts

5. Bundling and Targeting – CIDB Practice Note 1

6. Term Contracts – CIDB Practice Note 1

Issuing of practice notes to support clients and consultants

prac

tice

note

s 1-

33Slide 14

Guidelines….

Tips and Practice Note #29…Clarity on ‘set-asides / ringfencing’

FACILITATING IMPLEMENTATION...

- Constitutionality: Section 217 a + b- Alignment to NT 2 Pract note of 2006- Client capacitation support- Practice note- Tip Brochure

Slide 15

NCDP: Evolution

STATUS QUO REPORT (2009)

BASELINE / M&E(2011)NCDP FRAMEWORK

(2011)

CDP GUIDELINES2011

Towards SustainableContractors Workshops

(2000 & 2005)

NCDP FRAMEWORKS (2008 and 2010)

DPW MiNMEC (2008)

Slide 16

Transformation (Jan 2015)

Slide 17

Supply; Black Ownership

Of concern is that, overall, black ownership representation has not increased significantly over the past three years.

Slide 18

Supply; Black Ownership

Slide 19

Black Owned by Grading - All Provinces – All grades

as at: August 2015 versus March 2011

Designation Total Black Owned

% of Total

1 68 665 66 109 96

2 3 707 3 468 93

3 1 409 1 286 91

4 1 866 1 543 82

5 1 284 1 004 78

6 1 408 1 026 72

7 740 484 65

8 283 134 47

9 115 22 19

Slide 20

2015 2011Designation Total Black

Owned% of Total

2 4292 3951 92

3 1370 1187 87

4 2111 1641 78

5 1834 1287 70

6 1394 956 69

7 554 284 51

8 190 62 33

9 126 10 8

What the stats are telling us (Summary)

• Clients were neutral or dissatisfied with the performance of contractors on 16% of the projects surveyed in 2014

• From the stats it can be seen that around 95% of cidb registered Grade 2 to 4 General Building(GB) and Civil Engineering (CE) contractors are black-owned.

• Furthermore, around an average of 86% of all Grade 5 and 6 General Building (GB) and Civil Engineering (CE) contractors are black-owned, while

• around 70% of all Grade 7 and 8 General Building (GB) and Civil Engineering (CE) contractors are black owned.

• Black-ownership of Grade 9 contractors is significantly lower – around 25% to 30% .

• Of concern is that, overall, black ownership representation has not increased significantly over the past three years

Slide 21

10-Year View; SA: GB & CE(backward looking)

 Contractor Upgrades (1 or more);

2005Q3 to 2015Q2; SA  GB CEMaximum

Grade Number % Number %

9 32 42% 66 56%7 & 8 548 75% 665 77%5 & 6 1 591 60% 1 705 59%

Total 2 171 62% 2 436 63%

About 80% of Grade 2-4 contractors have upgraded by at least 1 grade

Slide 22

Incorporation of local government onto NCDP

We conducted a Review and Assessed the Status Quo of CDPs within District and Metropolitan Municipalities and their State of Implementation Readiness. The analysis sought to establish:

– Number of existing CDPs at municipality level within each province and their current state of adoption and implementation, and

– Degree of alignment of the existing programs with the NCDP Framework and Guidelines

Slide 23

Findings of the review/assessment

The degree of conformance to the NCDP Framework and

Guidelines varies from municipality to municipality, but in

general is low and needs addressing with the help of the

cidb. In the next reporting cycle the CIDB has already

scheduled sessions to continue client capacitation and

alignment of CDPs to the NCDP Framework and guidelines

Slide 24

Province CDP Number ofContractors

Eastern Cape

Incubator 96 COEGA (IDZ) 31 Chris Hani DM (Vuk’uphile) 22 Mainstream 11 Outreach 14 Masakhesonke 35 SCI – Mainstream 5 SCI - Outreach 34

Free State Contractor Development Programme

(CDP) 163

Gauteng eKurhuleni (Vuk’uphile) 121 Seda Construction Incubator (SCI) 31

KwaZulu-Natal Vukuphile 22 Dept. of Transport (Vukuzakhe) 464

Limpopo Contractor Develoment Programme 10Mpumalanga IDT (Sakabakhi) 40

Northern Cape Prov. Roads and Transport (Upington

Hospital) 5

North West

Construction Incubator Programme (CIP) 11 Vukuphile 9 Vukuphile (CIP) 65 Vukuphile 15

Western Cape Department of Transport & Public Works

(Senyuka) 14

Slide 25Analysing and Drawing some lessons…

Registrations; CDPs: GB & CE

Slide 26

CDP Upgrades; 3 years; GB(forward looking) - Baseline

One or more Contractor Upgrades;2012Q3 to 2015Q2

Initial Grade Number %GB

7 & 8 0%5 & 6 27%2 to 4 48%

1 28%Total 35%

Baseline

Slide 27

CDP Upgrades; 3 years; CE(forward looking) - Baseline

One or more Contractor Upgrades;2012Q3 to 2015Q2

Initial Grade %CE

7 & 8 0%5 & 6 46%2 to 4 50%

1 46%Total 48%

Baseline

Slide 28

Current Status of DPW’s CD & CDPs

Refer to report Annexure 1 for CDPs/ statistics

Progress/ Initiatives:• + 1500 DPW incubated contractors DPW SCM• POLICY• N.DPW CFO’s & SCM FORUM CAPACITATION• SCM CIRCULAR• CIP UPDATE/ APPROVAL• N.DPW CHAIRING NCDP STEERING

COMMITTEE• FOSAD (DG to DG’s)• NATIONAL CD FORUM

Slide 29

Contractor Development

• Improvements in:– targeted equity ownership– grading status– performance and quality of work

Slide 30

Performance of the contractorClients were neutral or dissatisfied with the performance of contractors on 16% of the projects surveyed in 2014 – which reflects a slight but noticeable decrease compared to the 2013 survey results.

Contractors were neutral or dissatisfied with the performance of clients on 20% of the projects surveyed.

Contractors were neutral or dissatisfied with the quality of tender documents and specifications obtained from clients on around 22% of the projects surveyed.

(CIDB CII - 2014)

Slide 31

Quality of Completed Work

Slide 32

CIDB QUALITY/ PERFORMANCE INTERVENTIONS

cidb Contractor Recognition Scheme

• cidb Standard for Contractor Performance Reports• cidb Competence Standard for contractors

Slide 33

Challenges / Risks

The primary challenges faced in the implementation of the NCDP are:

 • Slow pace of uptake into SCM policies and Performance Plans/

IDP’s of Contractor Development best practices, frameworks, standards and guidelines.

In this regard the cidb interventions include:– Client awareness and capacitation of officials on NCDP,

Guidelines, best practices, standards and Practice Notes– Reporting to HOD’s, MEC’s and MiNMEC– Assessment of SCM and Contractor Development policies– Proposals on Policy refinements

Slide 34

• Inadequate institutional capacity in the public sector, and the inability to allocate, target and spend budgets.

The cidb interventions include:– Approval and rollout of CDP guidelines eg. targeting and

budgeting strategies– Inform cidb Practice Notes– Client awareness and capacitation of officials

• Lack of proper monitoring and evaluation systems

The cidb interventions include:– Guidelines aligned to manual checklists and reporting templates– Final stages of development of an electronic CDP M&E system

Risks / Challenges …cont/2Slide 35

Risks/ Challenges …cont/3 Slide 36

• Delayed payments to contractors has had a crippling effect on growth of the emerging sector

The cidb interventions include:– Prompt Payment Regulations for payment within 30 days gazetted

for public comment– Inform cidb Practice Notes issued to guide prompt payment

 • Collusion cartels / Corruption has had a detrimental impact on the SA

construction industry

The cidb interventions include:– Code of Conduct– Anonymous Fraud reporting hotline– Forensic Investigations, hearings - sanctions issued to guilty parties– Transparency initiatives being rolled out for Contractors and Clients

• Contractor Development is not mandatory and is at the ‘will’ of clients.

The cidb interventions include:– Client awareness and capacitation of officials on NCDP and CD– Support to clients in crafting policies, SCM circulars and policy

directives to entrench CD– Inform cidb Practice Notes– Adoption of Standards eg. Standard for Indirect Targeting for

Enterprise Development – Role in incorporating into future reviewing of the cidb Act and

upcoming Public Works Act

Risks / Challenges …cont/4Slide 37

CIDB CONTRACTOR DEVELOPMENT STRATEGY

CIDB CD STRATEGYFOCUS AREAS

1.1. Access to work eg. IDIP, Procurement1.2. Access to financial support/ finance1.3. Prompt payment1.4. Improved registration process1.5. Amendments to reg’s

2.1. Standard for assessment/ recog of contractors2.2. Standard for developing skills through contracts2.3. SDA 2.4. World skills2.5. Youth in construction

3.1. Guidelines3.2. M&E3.3. Exploring legislating

4.1. Best practice contractor compet recog eg. Standard for indirect targeting for ED4.2. Construction Mgt Systems4.3. Contractor Perf reports

5.1. Balancing Delivery and Devt5.2. Standard for indirect targeting for ED

6.1. Revenue stream6.2. Direct training6.2. Compliance6.4. Skills devt

7.1. Industry Devt eg. ¼ ly monitor, Bus cond survey, CII’s7.2. CDP’s

8.1. NSF8.2. PSLM’s8.3. PCDF’s8.4. CPO’s8.5. Events/ material

Slide 38

CIDB 5 YEAR REVIEW

Recommendations

It is recommended:– the Portfolio Committee note and endorse the continued and

accelerated promotion and championing of the NCDP Framework and its related guidelines (Guidelines for Implementing Contractor Development Programmes) as a government-wide Contractor Development Policy, and its reporting upon in terms of the NDPW SCM and cidb CDP monitoring processes.

– the Portfolio Committee continue to provide support in the implementation of the NCDP and entrenching as Policy directive across DPW and infrastructure departments, municipalities and instilling into the PICC- SIPPS and other major infrastructure platforms.

Slide 39

THANK YOU

Gerard NaidooGerman Mphahlele

Web-site: http://www.cidb.org.za

Slide 40

NCDP: communicating …

STAKEHOLDER

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