National Construction Industry Policy - January 2010

THE REPUBLIC OF UGANDA

MINISTRY OF WORKS AND TRANSPORT

Policy for Development and Strengthening the National Construction Industry

January 2010

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FOREWORD

The National Construction Industry (NCI), comprising both the building and civil

engineering sectors, performs an indispensable role in the economy of Uganda and in

the region as a whole. It delivers the physical infrastructure that is central to the

countrys economic development. Its activities create business to suppliers,

manufacturers and offer employment to professionals, skilled and unskilled labour. It

transforms private and public plans for capital formation and renewals from paper to

reality.

Over the years Government has increasingly realized that the management of the

countrys physical infrastructure requires collaboration of the public and private

sector. Government is also increasingly divesting itself of direct service delivery in

order to improve the efficiency and effectiveness of public services. It is, therefore, a

duty and an imperative of Government to ensure that there is a well-developed NCI

to implement physical infrastructure projects.

However, the NCI is generally fragmented and unsupported due to lack of both a

definitive Government policy and a strong institutional framework. Without a strong

NCI the development and maintenance of physical infrastructure will remain a

nightmare. The growth and development of the economy will be retarded.

Initiatives have been taken in the past to train local contractors and also create an

enabling environment, especially in the road sector, to ensure increased participation

of the local firms in physical infrastructure development and management. Although

tremendous achievements have been realised, the past initiatives to develop local

firms were not backed by appropriate Government policies and strategies to sustain

the continued growth of the construction industry.

In order to complement other Government policies for public sector reform,

privatisation, decentralisation and capacity building, my Ministry has found it

imperative to evolve a deliberate national construction industry policy. The new

Policy and Strategy aim to improve coordination, regulation and development of the

construction industry. The Policy and Strategy further aim to put in place an effective

institutional framework to address the current weaknesses in the construction

industry so that the private sector can efficiently and effectively participate and

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perform its crucial role in development and maintenance of the physical

infrastructure.

This Policy has the full support of Government and therefore I urge all those in

positions of responsibility, both in the public and private sectors, to embrace and

implement the recommendations contained in this Policy for the continued social and

economic development of our country. Successful implementation of the policies,

strategies and action plan will undoubtedly go a long way in fulfilling Governments

obligation towards the development of the national construction industry.

Preparation of this Policy was based on a comprehensive analytical and consultative

process involving a number of stakeholders in the public and private sectors. I

therefore wish to commend efforts of the representatives of the various Government

Lead Agencies, consultants and contractors who were involved in numerous

consultative meetings and workshops and for guiding the process.

I wish to thank our Development Partners particularly Danish International

Development Agency (Danida) for their financial support to the preparation of this

Policy.

My thanks further go to the Consultants for their in-depth study, analysis and

preparation of the documents that culminated into this Policy Statement.

I wish to thank my Permanent Secretary and his Staff for the invaluable time they

spent in preparation of this Policy document.

Hon. Eng. John M. Nasasira

MINISTER OF WORKS AND TRANSPORT

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TABLE OF CONTENTS

Page FOREWORD ................................................................................................................................................................. i TABLE OF CONTENTS ......................................................................................................................................... iii ABBREVIATIONS AND ACRONYMS .............................................................................................................. vi

GLOSSARY ............................................................................................................................................................... viii EXECUTIVE SUMMARY ........................................................................................................................................ ix PREAMBLE ................................................................................................................................................................ xiii

1.0 INTRODUCTION ....................................................................................................................... 1

1.1 Background ........................................................................................................... 1 1.2 The Vision for the National Construction Industry ............................................... 2 1.3 Policy Context and Justification ............................................................................ 2 1.4 Policy Development Process.................................................................................. 3

2.0 RELATED POLICIES, PROGRAMMES AND PAST INITIATIVES ............... 6

2.1 Related Policies and Programmes ......................................................................... 6 2.1.1 Poverty Eradication Action Plan ................................................................................... 6 2.1.2 Public Service Reform Programme ............................................................................... 7 2.1.3 Privatisation.............................................................................................................. 7 2.1.4 Decentralization ........................................................................................................ 7 2.1.5 Plan for Modernisation of Agriculture (PMA) ................................................................. 8 2.1.6 Road Sector Development Programme ......................................................................... 8 2.1.7 Universal Primary Education and Universal Secondary Education .................................... 9 2.1.8 District Health Services Project (DHSP) ........................................................................ 9 2.1.9 Water Sector Reform Programme ................................................................................ 9

2.2 Past Initiatives ..................................................................................................... 10 2.2.1 National Roads Development and Maintenance ............................................................ 10 2.2.2 Establishment of Fixed Unit Rates .............................................................................. 11 2.2.3 Proposed Establishment of a Plant Hire Pool ................................................................ 11 2.2.4 Contractor Capacity Building under District Roads ........................................................ 12 2.2.5 Uganda National Association of Building and Civil Engineering Contractors ...................... 13 2.2.6 Housing Sector ........................................................................................................ 13

3.0 INSTITUTIONAL FRAMEWORK ................................................................................... 14

3.1 Government Ministries, Authorities and Agencies ............................................... 14 3.1.1 Government Ministries .............................................................................................. 14 3.1.2 Public Procurement and Disposal of Public Assets Authority ........................................... 15 3.1.3 Uganda National Roads Authority ............................................................................... 16 3.1.4 Other Agencies ........................................................................................................ 16

3.2 Business Development Organisations .................................................................. 16 3.2.1 Uganda Association of Consulting Engineers ................................................................ 16 3.2.2 Federation of Uganda Consultants .............................................................................. 17 3.2.3 Uganda National Association of Building and Civil Engineering Contractors ...................... 17

3.3 Professional Bodies .............................................................................................. 18 3.3.1 Uganda Institution of Professional Engineers ............................................................... 18 3.3.2 Uganda Society of Architects (USA) ............................................................................ 18 3.3.3 Institution of Surveyors of Uganda (ISU) .................................................................... 19 3.3.4 Uganda Institute of Physical Planners (UIPP) ............................................................... 19

3.4 Regulatory Bodies ................................................................................................ 19 3.4.1 Engineers Registration Board ..................................................................................... 19 3.4.2 The Architects Registration Board .............................................................................. 19

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3.4.3 The Surveyors Registration Board .............................................................................. 20

3.5 Universities and Technical Colleges ..................................................................... 20

4.0 KEY ISSUES IN THE NATIONAL CONSTRUCTION INDUSTRY .............. 21

4.1 Contracting Issues ............................................................................................... 21 4.1.1 Limited Capacity ...................................................................................................... 21 4.1.2 Limited Access to Credit ............................................................................................ 22 4.1.3 Limited Work Continuity ............................................................................................ 22

4.2 Consulting Issues ................................................................................................. 22 4.2.1 Informal Sector Practices .......................................................................................... 22 4.2.2 Constrictions in Capacity Development........................................................................ 23

4.3 Institutional and Human Resource Development Issues ..................................... 23 4.3.1 Need for Institutional Capacity ................................................................................... 23 4.3.2 Need for Human Resource Development ..................................................................... 23

4.4 Registration and Procurement Issues .................................................................. 24 4.4.1 Registration and Classification Scheme ....................................................................... 24 4.4.2 Tendering ............................................................................................................... 24

5.0 POLICY STATEMENTS ........................................................................................................ 26

5.1 Harmonise Roles and Responsibilities of the Public and Private Sector .............. 26 5.1.1 Training and Capacity Building ................................................................................... 26 5.1.2 Strengthening Public Institutions ................................................................................ 27 5.1.3 Improving Service Delivery by Private Sector ............................................................... 27

5.2 Regulate and Coordinate the National Construction Industry ............................. 27 5.2.1 Establishment of a Uganda Construction Industry Commission ...................................... 27 5.2.2 Strengthening and Supporting the Regulatory and Professional Bodies ........................... 28

5.3 Develop and Strengthen Local Capacity for Effective Participation..................... 28 5.3.1 Supporting UNABCEC ................................................................................................ 29 5.3.2 Supporting UACE ...................................................................................................... 29 5.3.3 Supporting other Business Associations....................................................................... 29

5.4 Increase Access to Equipment, Credit and Work ................................................. 29 5.4.1 Facilitating Establishment of a Plant Hire Pool .............................................................. 29 5.4.2 Reviewing of Tender Conditions ................................................................................. 29 5.4.3 Establishing a Construction Guarantee Fund ................................................................ 30 5.4.4 Contracting Work to Local Firms ................................................................................ 30 5.4.5 Ensuring Mandatory Sub-contracting .......................................................................... 30

5.5 Promote Use of New and Appropriate Technology .............................................. 30 5.5.1 Promoting use of Labour-based Technology ................................................................ 31 5.5.4 Undertaking Research in New Technologies................................................................. 31

5.6 Remove Restrictive Practices to Participation of Marginalised Groups ............... 31 5.6.1 Integrating Issues of the Marginalised Groups ............................................................. 31 5.6.2 Incorporating Needs of the Marginalised Groups in Design and Execution of Works ......... 31

5.7 Promote Sustainable Economic and Social Development .................................... 32 5.7.1 Protecting the Environment ....................................................................................... 32 5.7.2 Promoting Occupational Health and Safety at Work ...................................................... 32 5.7.3 Providing Security to Service Providers in Insecure Areas .............................................. 32

6.0 PLAN OF ACTION ................................................................................................................... 33

6.1 Strengthening of Public and Private Sector ......................................................... 33 6.1.1 Training and Capacity Building of Government Staff ..................................................... 33

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6.1.2 Supporting Training Centres and Institutions of Higher Learning .................................... 34 6.1.3 Improving Implementation of Works and Service Delivery Mechanisms .......................... 35

6.2 Regulation of the Construction Industry ............................................................. 35 6.2.1 Regulating the Construction Industry .......................................................................... 35 6.2.2 Supporting the Regulatory and Professional Bodies ...................................................... 36

6.3 Strengthening Participation of the Local Entities ................................................ 37 6.3.1 Strengthening the Contractors Association (UNABCEC) ................................................ 37 6.3.2 Supporting the UACE ............................................................................................... 38 6.3.3 Supporting Other Business Associations ..................................................................... 38

6.4 Facilitating Access to Equipment, Credit and Work ............................................. 39 6.4.1 Establishment of a Plant Hire Pool ............................................................................. 39 6.4.2 Reviewing of Tender Conditions ................................................................................ 39 6.4.3 Establishing a Construction Guarantee Fund ................................................................ 40 6.4.4 Increasingly Contract out Work to Local Firms ............................................................. 40 6.4.5 Mandatory Sub-contracting ....................................................................................... 40

6.5 Application of Labour-Based and New Technologies ........................................... 41 6.5.1 Application of labour-based Technology ...................................................................... 41 6.5.2 Application of Research in new Technologies ............................................................... 42

6.6 Increasing Participation of Marginalised Groups ................................................. 42 6.6.1 Integration of Concerns of Marginalised Groups in Policies and Plans ............................. 42 6.6.2 Integrating Needs of Marginalised Groups in Design and Execution of Works .................. 43

6.7 Supporting Sustainable Economic and Social Development ................................ 43 6.7.1 Protecting the Environment ....................................................................................... 43 6.7.2 Promoting Occupational Health and Safety at Work ...................................................... 44 6.7.3 Providing Security to Service Providers in Insecure Areas .............................................. 44

7.0 IMPLEMENTATION STRATEGY AND FINANCIAL SUPPORT ................... 45

7.1 Implementation Strategy ..................................................................................... 45 7.2 Financing Plan ...................................................................................................... 46 7.2.1 Review of Government Policies and Implementation of Strategies .................................. 47 7.2.2 Training of Client Organisations ................................................................................. 47 7.2.3 Establishment and Operationalisation of UCICO ........................................................... 48 7.2.4 Support to Secretariats of Regulatory Bodies ............................................................... 48 7.2.5 Strengthening of UNABCEC, UACE and other Organisations ........................................... 48 7.2.6 Facilitate establishment of a Construction Levy ............................................................ 49 7.2.7 Strengthen and facilitate Mt. Elgon Labour-based Training Centre .................................. 49 7.2.8 Facilitate research and development ........................................................................... 49 7.2.9 Provide training and sensitisation of stakeholders on cross-cutting issues ....................... 49

7.3 Sources of Funding ............................................................................................... 49 7.3.1 Inputs from the Government ..................................................................................... 49 7.3.2 Inputs from other Sources ......................................................................................... 50

8.0 CONCLUSION ........................................................................................................................... 51

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ABBREVIATIONS AND ACRONYMS

ADB - African Development Bank

ARB - Architects Registration Board Contractors

DANIDA - Danish International Development Agency

DFID - Department for International Development (UK)

DUR - District and Urban Roads

ERB - Engineers Registration Board

EURMP - Eastern Uganda Road Maintenance Programme

FEACO - Federation of African Consultants

FIDIC - International Federation of Consulting Engineers

GAMA - Group of Africa Member Associations (of FIDIC)

GDP - Gross Domestic Product

GTZ - Deutsche Gesellschaft Tenchnische Zusammenarbeit

IFAD - International Fund for Agricultural Development

ILO - International Labour Organisation

ISU - Institution of Surveyors of Uganda

JICA - Japanese International Co-operation Agency

LAPPCOM - Labour-Based Policy Promotion Committee

LCV - Local Council Five (District Council)

MELTC - Mount Elgon Labour Based Training Centre

MoWT - Ministry of Works and Transport

NCI - National Construction Industry

OHSE - Occupational Health, Safety and Environment

PPDA - Public Procurement and Disposal of Public Assets Act

PWTC - Public Works Training Centre

SRB - Surveyors Registration Board

SWURMP - South Western Uganda Road Maintenance Programme

THP - Third Highway Project

TRP - Transport Rehabilitation Project

UACE - Uganda Association of Consulting Engineers

UCICO - Uganda Construction Industry Commission

UIPE - Uganda Institution of Professional Engineers

UMI - Uganda Management Institute

UNABCEC - Uganda National Association of Building and Civil Engineering

UNCFD - United Nations Capital Development Fund

UNDP - United Nations Development Programme

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UPK - Uganda Polytechnic Kyambogo

USA - Uganda Society of Architects

UTRP - Uganda Transport Rehabilitation Project

VAT - Value Added Tax

WTO-GATS - World Trade Organisation- General Agreement on Trade and Services

WURMCBP - Western Uganda Road Maintenance Capacity Building Project

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GLOSSARY

Appropriate Technology: Technology that is most suitable for the environment

and culture it is intended to support.

Construction Industry: An industry that builds physical infrastructure and

comprises the regulators, professionals, contractors, consultants, manufacturers and

suppliers.

Construction: The act of building/constructing something.

Consultant: Any firm, or individual, joint venture or team of firms and/or individuals

engaged to give professional advice or service at a fee, but not as an employee of

the party that engages it, him or her.

Contractor: Any person(s) or firm or entity named in a contract agreement to

execute the works.

Physical infrastructure: A countrys fundamental system of transportation (roads,

rails, water, etc), communication and other aspects of its physical capabilities.

Labour-based Technology: Is defined as the economically efficient employment of

as great a proportion of labour as is technically feasible, to produce as high a

standard of the physical infrastructure as demanded by the specification and allowed

by the funding available.

Policy: Course of action that has been officially chosen and agreed upon by

Government or an organisation.

Strategy: A planned series of actions for achieving something.

Sub-Contractor: Any person(s) or firm or entity named in a contract agreement to

execute part of the works.

Technology: Is knowledge about scientific or industrial methods and their

application, including machinery and equipment developed as a result of this

knowledge.

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EXECUTIVE SUMMARY

Background

The National Construction Industry (NCI), comprising both the building and civil

engineering sectors, performs an indispensable role in the economy of Uganda and in

the region as a whole. It delivers the physical infrastructure that is central to the

countrys economic development. Its activities create business to suppliers,

manufacturers and offer employment to professionals, skilled and unskilled labour. It

transforms private and public plans for capital formation and renewals from paper to

reality.

Over the years Government has increasingly realized that the management of the

countrys physical infrastructure requires collaboration of the public and private

sector. Government is also increasingly divesting itself of direct service delivery in

order to improve the efficiency and effectiveness of public services. It is, therefore, a

duty and an imperative of Government to ensure that there is a well-developed NCI

to implement physical infrastructure projects.

Government evolved this deliberate Policy aimed at restructuring development and

strengthening the NCI. In preparing the Policy, consultations were made locally and

with corresponding government institutions in the United Republic of Tanzania,

Republic of South Africa and the Republic of Sri-Lanka.

Government will promote open dialogue amongst stakeholders in the NCI to ensure

that issues affecting the industry, identified in this Policy, are discussed and resolved.

Purpose of the Policy

The Policy aims to improve coordination, regulation and development of the

construction industry. It further aims to put in place an effective institutional

framework to address the current weaknesses in the construction industry so that

the private sector can efficiently and effectively participate and perform its crucial

role in development and maintenance of the physical infrastructure.

Policy Objectives and Strategies

The goal of the NCI Policy is to enhance delivery, stability, improved performance,

and growth of the local businesses and professions within an organised and

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continuously improving institutional framework. The Governments strategic objective

is that 80% of all services, in monetary terms, in the national construction industry

are provided by the private sector by June 2015.

In order to effectively address the constraints and deficiencies in the development of

the NCI the policy objectives and strategies are as follows:

a) Harmonising roles and responsibilities of the public and private sectors for

effective management of the national construction industry. Strategies include:

training staff in Government departments to improve performance in their roles;

strengthening public institutions to manage their roles; and improving service

delivery and implementation of works using the private sector.

b) Regulating and coordinating the national construction industry. Strategies include:

Establishing a Uganda Construction Industry Commission (UCICO) to regulate and

coordinate the construction industry; establishing a stable and secure regulatory

framework; and supporting the development and operations of the professional

stakeholders in the national construction industry.

c) Developing and strengthening capacity of local firms for effective participation in

the construction industry. Strategies include: Supporting and strengthening the

contractors and consultants associations and establishing a Construction Levy

managed by UCICO. The Commission will raise and manage funds to support

training centres, institutions and research initiatives in the construction industry.

d) Facilitating local firms in the construction industry to access equipment, credit and

work. Strategies include: reviewing Clauses in the tender documents related to

Advance Payment and Performance Guarantees to make them less stringent and

enable local firms to access up-front financing of projects; contracting of physical

infrastructure maintenance works funded by Government to local firms; and

formulating a Reservation Scheme in line with Procurement and Disposal of Public

Assets Act (PPDA) for physical infrastructure development works and consultancy

services funded by both Government and Development Partners.

e) Promoting new and appropriate types of technologies in construction and

maintenance of physical infrastructure facilities. The number and type of

employment opportunities to be generated will influence the choice of technology

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to be applied. Strategies include: Promoting labour-based technology as the

technology of first choice in construction of roads; and undertaking further

research in the use of new and appropriate technologies for construction and

maintenance of physical infrastructure facilities.

f) Removing restrictive practices to participation of marginalised groups in the

construction industry. Strategies include: ensuring that concerns of the

marginalised groups are explicit and verifiable in the policies, plans, and budgets

of key stakeholders in the construction industry; and concerns of marginalised

groups are adequately addressed in execution of physical infrastructure projects.

g) Ensuring that the national construction industry supports sustainable economic

and social development of the country. Strategies include: ensuring that

environment is protected in the process of planning, design, development and

maintenance of physical infrastructure facilities; ensuring that contractors and

consultants promote occupational health and safety of workers in provision and

maintenance of physical infrastructure facilities; and ensuring that the

construction industry promotes safety and security of the constructed physical

infrastructure and the providers.

Operationalisation of the Policy

It is estimated that establishment of a functioning construction industry will require

US$ 4.0 million (Ushs 8.0 billion) over a five-year period with effect from FY 2010/11.

The key action areas to be supported in implementing the policy include: reviewing

Government policies and strategies aimed at developing and strengthening the NCI;

facilitating training functions of client organisations, supporting Secretariats of

Regulatory Bodies and Business Associations, strengthening research and

development and increasing awareness training in cross-cutting issues.

The source of funding will be by both Government and Development Partners.

Government will seek support from Development Partners for financing programmes

and projects arising out of implementation of this Policy. The World Bank, EU, DFID

and Danida have already indicated willingness to finance the component of Capacity

Building of Professional Associations, Business Associations, and MOWT staff.

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Key Benefits of Implementing the Policy

The benefits accruing from implementation of the Policy include: improved regulation

and coordination of stakeholders in the construction industry; improved efficiency in

planning and management of physical infrastructure projects by the Central and

Local Governments; and easy access to finance, construction equipment and work by

the local firms. The other benefits are: increased turnover by local contractors and

consultants resulting into better value-for-money and more retention of profits in the

country; lower cost of works and increased savings on the part of employees

accruing from increased local participation; resulting job multiplier effect on the

medium and long term economic performance; and better quality and safe physical

infrastructure in the country.

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PREAMBLE Recognising the need to have in place a clear, well-focused and people centred

National Construction Industry Policy;

Appreciating the important role the construction industry plays in the socio-

economic development of Uganda; and

Bearing in mind the commitment of the Government to economic and public sector

reforms for the countrys development;

Now therefore, the Government of Uganda has formulated this National

Construction Industry Policy to support the emergence and establishment of an

effective and sustainable national construction industry. The NCI Policy intends to

promote the growth and development of the construction industry in which both the

public and private sector are informed, conscious and actively involved in decision-

making on matters that affect them. The Policy is in line with the Constitution,

National Vision 2035, PEAP, and the National Development Policy.

___________________________________________________________________________________________________ Development and Strengthening the National Construction Industry

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1.0 INTRODUCTION

Uganda has registered high achievements in all sectors of the economy since 1986,

with a consistent growth of GDP greater than 5% per annum. The economic success

has been achieved through deliberate reforms implemented by the Government, with

the support of international financing institutions and donor agencies. This

performance has resulted into the expansion of the countrys physical infrastructure

in all sectors i.e. transport and communications; housing and buildings; water and

sanitation; energy; health; education; and agriculture.

1.1 Background

The construction industry which comprises which comprises the building, civil

engineering water, sewerage, power, telecommunications and other physical

infrastructure works, plays a significant role in the socio-economic development of

the nation. It directly offers employment to many households. With easy access to

the markets and the farms assured through the provision of the transport physical

infrastructure, agricultural production is stimulated leading to improved welfare of

the population. Through employment offered by new work, rehabilitation and

maintenance, the industry contributes significantly towards the countrys GDP.

In the global context, construction is one of the industries that are of most common

socio-economic and political significance. Its role cuts across the different resource

endowments, social policies and existing levels of development. Its wide range of

outputs often sets the nations political agenda and provides the basis for social and

economic development as well. However, in Uganda it has remained weak, largely

undeveloped and in need of a policy, strategies and actions to promote its

sustainable growth. Development of a strong construction industry will yield the

following main benefits for the country:

a) A skilled work force together with a strengthened public sector for contract

planning, financing, procurement, monitoring and evaluation;

b) Improved quality and efficiency leading to better value for money in private and

public sector construction projects;


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c) Reduced incidence of insolvency and failure to complete work by contractors,

leading to reduced costs to clients;

d) Improved prospects for a greater share of national construction work being

undertaken by local contractors and consultants;

e) Improved work continuity leading to greater employment security;

f) Greater retention of construction profits in the country; and

g) Better quality and safety of physical infrastructure.

1.2 The Vision for the National Construction Industry

Uganda has developed a national strategic vision (Vision 2035) as a basis for national

development over a thirty-five year horizon. Vision 2035 embodies strategic actions

to guide Government policies for both the public and private sector. Based on the

strategic framework of Vision 2035, Government has developed this National

Construction Industry Policy aimed at the investment into, and management of, the

physical infrastructure for sustainable development.

Government of Uganda is increasingly investing into the emergence, establishment,

growth and development of an effective and sustainable national construction

industry, in line with the provisions of the Constitution of Uganda (1995), Vision

2035, Poverty Eradication Action Plan (PEAP), National Development Policy and

Divesture Policy, with the aim of achieving the full and effective participation of the

private sector for the sustainable development of the countrys physical

infrastructure.

The Vision for the National Construction Industry is to have an effective, efficient and

sustainable construction industry in which both the public and private sector are

informed, conscious and actively involved in decision-making on matters that affect

them.

1.3 Policy Context and Justification

The Government is obliged by the Constitution to institute focused macro-economic

policies, strategies and programmes to provide a conducive environment for

investment into the various sectors of the economy, including the construction

industry, and thus promote national development. For the national construction

industry there ought to be adequate numbers of professionals, semi-professionals


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and artisans to execute construction and maintenance work. Measures have to be

taken by Government to ensure that there is adequate construction and maintenance

work for contractors and consultants besides enabling the growth of private

contracting and consulting firms. Finally, Government must put in place a regulatory

framework to monitor and direct the practices of the sector investors, contractors

and consultants.

It is estimated that 50% of non-farm employment is directly or indirectly provided by

the construction industry. It provides the physical infrastructure that is central to the

countrys economic development and its activities create business to suppliers,

manufacturers and offer employment to professionals, semi-skilled and non-skilled

labour. However, the national construction industry is currently affected by problems

including, but not limited to:

a) Lack of work continuity due to inadequate affirmative public policies;

b) Difficulty in accessing finance and credit;

c) Difficulty in accessing bid securities, performance bonds and advance payment

guarantees;

d) Underdeveloped human resource in the public and private sector;

e) Unfavourable conditionality for accessing donor credit;

f) Lack of a database of performance indicators in the industry and

g) Construction of substandard / weak physical structures that later collapse and

cause loss of life and property.

The main objective of this Policy aims at improving regulation and development of

the construction industry thereby addressing the above constraints.

1.4 Policy Development Process

Under the Ten-Year Road Sector Development Programme (RSDP) a Study and

Technical Assistance for the Development of the LCI was identified. Accordingly, in

September 1999, Danida supported a preliminary study on development of the local

construction. The study established the necessary measures and made

recommendations to Government on how to strengthen the domestic construction

industry.


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Following the recommendations of the study, a Task Force, comprising senior officers

in the Ministry of Works and Transport was established in October 2000 to prepare a

Policy Framework, Strategies and a comprehensive Action Plan aimed at the

development and strengthening of the LCI.

As a matter of procedure, Government must widely consult the people during policy

formulation process. The Task Force therefore, carried out consultations locally with

key stakeholders which included contractors, consultants, academia, professional

bodies, and line ministries, among others. The Task Force submitted a first draft

Policy document in June 2001 which was discussed internally in the Ministry of Works

and Transport.

As a means of enriching the document, a team of selected members of the Ministry

of Works and Transport and representatives of Uganda National Association of

Building and Civil Engineering Contractors (UNABCEC), Uganda Association of

Consulting Engineers (UACE) and Uganda Institution of Professional Engineers (UIPE)

visited the Republic of South Africa, Tanzania in August 2001 and Sri Lanka in 2003

to share experiences. The three countries were selected for the study tours on

account of their having strong and well-established Construction Industries that were

developed in the past through affirmative and enabling Government policies and

strategies.

A second draft Policy document was prepared and presented at the first national

consultative workshop of key stakeholders held in Kampala on 17 February, 2005. A

Consultant (M/S MBW Consulting Engineers) was engaged to harmonise the report of

the Task Force with other related studies, incorporate comments of the workshop

and come up with a Draft Policy Framework, Strategies and a comprehensive Action

Plan detailing the Technical, Financial, Administrative and Human resource

requirements to support the development and strengthening of the local construction

industry.

The third draft Policy document was prepared and presented at a second

stakeholders workshop held in Kampala on 30 August, 2007. The Task Force

accordingly incorporated comments of the workshop and prepared a final Policy

document which was subsequently submitted for approval in September 2009.


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During consultations, the stakeholders advised Government to:

a) Develop a policy that covers the entire construction industry and not to limit it to

a few sections, groups or disciplines;

b) Harmonise the roles of the public and private sectors in the construction industry;

c) Establish a Commission to regulate the construction industry;

d) Institute mechanisms for timely payments to providers for work done and

services rendered;

e) Facilitate local firms to access credit, secure adequate work and increase

equipment holding; and

f) Set minimum thresholds for work to be sub-contracted to local contractors and

consultants by foreign firms as a means of increasing gainful participation of local

firms in the work that takes place in the construction industry.

Strategies and a plan of action have been incorporated in this Policy after wide and

in-depth consultations with the stakeholders. The persistent demand for a policy by

the stakeholders particularly the associations of contractors and consultants has

resulted into urgency for the Policy.


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2.0 RELATED POLICIES, PROGRAMMES AND PAST INITIATIVES

Most public works, in the past, used to be executed by Government direct labour

units (force account) situated in districts. Over the years this method proved

inefficient and wasteful, resulting in extensive deterioration of physical infrastructure.

Government has consequently adopted a policy of divesting itself from direct labour

units to increasing use of the private sector with the objective of improving the

effectiveness, efficiency and sustainability of service delivery. The policies,

programmes and past initiatives aimed at growth of the construction industry are

discussed in this chapter.

2.1 Related Policies and Programmes

2.1.1 Poverty Eradication Action Plan

Eradication of poverty is top priority on Governments agenda for national

development. All Government policies are geared towards eradication of poverty and

improvement of the livelihood of its population. The Government Poverty Eradication

Action Plan (PEAP) is the overall planning and budgeting framework which guides

public action in eradicating poverty defined as, low incomes; limited human

development; and powerlessness. PEAP provides the guidance in the identification of

priorities, allocation of resources, as well as the assessment of progress and impacts

of Government development programmes, with respect to poverty reduction.

PEAP is premised on four pillars and priority areas namely: Economic management;

Production, competitiveness and incomes; Security, conflict-resolution and disaster-

management; Good governance; and Human development. The core challenges

therefore, that are identified by PEAP include, enhancing income, reducing inequality,

removal of constraints to agricultural sector, ending insecurity and improvement of

quality of lives of the poor, among others.

Under the Highly Indebted Poor Countries Initiative, the Development Partners have

supported PEAP by writing off substantial interest accruing on loans that Government

has acquired over the years. The funds thus realised are being invested by the


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Government in the districts and urban authorities through a modality known as

Poverty Action Fund (PAF) for physical infrastructure development and maintenance.

2.1.2 Public Service Reform Programme

The mission of the Uganda Public Service Reform Programme is: to develop a Public

Service which delivers timely, high quality and appropriate services at the least cost

to the nation, supports national development and facilitates the growth of a wealth

creating private sector. This mission thus clarifies the direction and provides

performance indicators of the Programme. It also spells out the relationship between

the Public Service and the private sector. The Public Service is obliged to provide a

conducive environment in which the private sector creates wealth for the nation

albeit without compromising efficiency and effectiveness in service delivery.

The role of Public Service is therefore limited to providing only those services which

cannot be performed timely or to an acceptable standard by the private sector such

as strategic planning, setting standards, regulation and monitoring.

2.1.3 Privatisation

In view of the Public Service Reform Programme elaborated above, Privatisation is a

key Government policy since Government has divested itself from non-core activities.

Key activities that Government has retained include policy formulation, strategic

planning, setting standards, regulation, monitoring and evaluation. In the

construction industry design, procurement of goods and services, project

management, construction and maintenance are increasingly being contracted to the

private sector. Construction units in Government institutions have been targeted for

phasing out, leaving all public sector construction work to be undertaken by the

private sector.

2.1.4 Decentralization

The Constitution of the Republic of Uganda of 1995 provides for a decentralisation

policy for service delivery. The Local Governments Act 1997 (amended in 2001)

created the various corporate Governments with their own rights, roles and

responsibilities, and can sue or be sued. They are:


8

a) Central or National

b) District Local Council (LC V)

c) Municipal Local Council (LCIV)

d) Sub county or Town Council or Division of a City (LC III)

Lower local governments are encouraged to pursue policies and strategies that are

crucial to the fulfilment of national goals. The decentralisation policy favours growth

of local contractors in all parts of the country.

2.1.5 Plan for Modernisation of Agriculture (PMA)

The Plan for Modernisation of Agriculture (PMA) is a policy framework for

operationalising PEAP Pillar 2- enhancing production, competitiveness and incomes.

It aims at eradicating poverty by transforming the livelihoods of subsistence farmers

through seven pillars, among them is supporting physical infrastructure. The

programme was launched for national implementation in mid 2000.

The physical infrastructure development and maintenance leading to improved

accessibility to farmers necessitates the construction industry to take a lead

consistent with the PMA objectives.

2.1.6 Road Sector Development Programme

The Road Sector Development Programme (RSDP) was initially formulated for only

National Roads and agreed with Development Partners in 1996 for the period

covering 1996/97 2005/06 at an estimated cost of US$ 1.5 billion dollars. This

programme was subsequently revised in 2002 to include District, Urban and

Community Access roads and placed on a rolling framework. The RSDP (2001/02

2010/11) has been estimated to cost USD 2.3 billion and will be updated on a rolling

framework every 5 years. The major objectives of this programme are to:

a) provide an efficient, safe and sustainable road network in support of market

integration and poverty reduction;

b) improve the managerial and operational efficiency of road administration; and

c) develop the national construction industry.


9

The Programme also addresses environmental protection, HIV/AIDS prevention,

gender mainstreaming, road safety, occupational health and safety as well as

mainstreaming concerns of persons with disabilities (PWD) in road management.

2.1.7 Universal Primary Education and Universal Secondary Education

The Government introduced the Universal Primary Education (UPE) programme in

1996 when the number of children of primary school going age then was about 2

million. This number almost doubled a year later and in 1998 the Government

produced the Education Strategic Investment Plan (ESIP) that elaborates policy and

strategies for development of the sector. One of ESIPs priorities is the achievement

of quality UPE by 2005 while the Medium Term Budget Framework (Feb 1999)

estimated that to accommodate the countrys 6 million primary school pupils, over

28,000 new classrooms needed to be built and another 12,000 classrooms needed to

be completed. At the same time ESIP targets provision of water supply systems and

construction of sanitation facilities for all schools.

2.1.8 District Health Services Project (DHSP)

DHSP has enabled Government to deliver health services to the communities through

improved access provided at the new sub-district health centres and at the

rehabilitated Government hospitals. Physical construction works characterised this

project with the participation of a sizeable number of local contractors.

2.1.9 Water Sector Reform Programme

The objective for the rural water and sanitation sector reform has been spelt out by

Government as:

To ensure that services are provided and managed with increased performance and

cost-effectiveness and to decrease the Governments burden while maintaining the

Governments commitment to equitable and sustainable domestic water provision

and sanitation services in the rural areas.

In 1999 Government launched the Water Sector Reform Programme to identify and

address barriers to the delivery of water and sanitation facilities in the rural and

urban settings on target dates agreed in past international fora. The outcome was an


10

investment plan for each of the rural districts and rural growth centres; and the

urban and peri-urban areas respectively. The investment plan, to be implemented in

a 15 year horizon effective from FY 2000/2001 complete with the financial and

physical resources required together with the proposed institutional and human

resource development plans, is being supported by the Development Partners.

Foreign contractors are involved in the construction of boreholes and pump

installation, construction of sanitary facilities in public institutions, water pipeline

network laying and bulk storage construction. The local contactors are mainly

engaged in construction of water point sources, production of sanplats and as sub

contractors and suppliers.

2.2 Past Initiatives

2.2.1 National Roads Development and Maintenance

Since 1988 to-date Government, supported by the World Bank, German Government,

British Government and European Union, DANIDA, African Development Bank, JICA,

IFAD and ILO has undertaken a number of projects on the national roads that has

had sub-components specifically targeting the local contractors in the road sector.

Implementation of the road projects has contributed to achievements in development

of the national construction industry.

However, because the NCI was so much retarded in the 1980s and early 1990s the

impact has so far been limited and only felt in the following areas:

a) Training of Contractors through both class room and on-the-job programmes;

b) Availing of contract jobs albeit on an irregular basis;

c) Introduction of relatively quicker payment mechanisms;

d) Promotion of labour based contracting;

e) Equipping of contractors through more manageable plant hire arrangements by

the public sector;

f) Great improvement to the supervision capacity of contracted works by the

Ministrys supervision staff;

g) Emerging of over 50 (fifty) committed contractors; and

h) Increased recognition of, and interest in, the national construction industry by the

financing institutions and insurance companies.


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2.2.2 Establishment of Fixed Unit Rates

In 1994, Government adopted a strategy to phase out force account operations for

maintenance of national roads, in favour of contracting. However, at the time the

few contractors that existed were ill equipped and lacked the capacity to

competitively obtain jobs. The Government therefore came up with the Fixed Unit

Rates (FUR) contracting Programme that became effective from that year. The

programme had the following attributes:

a) Government assumed greater responsibility for contract administration and

project management rather than contract implementation;

b) Eligible contractors were registered in four different classes A, B, C and D

according to their capacity to perform;

c) The Ministry determined the ruling market unit rates of the different road

maintenance activities (e.g. grading, drainage repairs etc);

d) Selected contractors from the register were trained and offered work at the fixed

unit rates;

e) As an affirmative action, Government allowed contractors to hire idle equipment

from MOWT and district councils; and

f) Contractor training under the Western Uganda Road Maintenance Capacity

Building Programme in the districts of Bundibugyo, Kabarole, Mubende, Hoima,

and Masindi.

2.2.3 Proposed Establishment of a Plant Hire Pool

One of the biggest issues within the industry in general and in the road sector in

particular is the lack of access to equipment. In 1994 Government commissioned a

study to determine the feasibility of establishing a Plant Hire Pool as a way of

supporting the industry initially starting with road construction and maintenance and

later to support the entire industry. The main target as a source of equipment was

the numerous pieces of Government road equipment, which were already in the

country but evidently under-utilised for various reasons. The study concluded that a

Plant Hire Pool run on commercial principles was viable.


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2.2.4 Contractor Capacity Building under District Roads

Both contracting and direct labour operations have been used in rehabilitation and

maintenance of district, urban and community access roads. All routine maintenance

activities are now executed through small-scale contractors and petty labour-based

contractors. Rehabilitation and periodic maintenance activities have largely been

carried out under heavy equipment and direct labour operations because of

inadequate labour and machine-based contracting capacity in the districts. Labour-

based petty and small-scale contractors have carried out routine maintenance

operations on district roads.

Since 1990, Government has carried out a number of training programmes both on-

the-job and at training institutions. The training delivered on-site benefited a number

of selected contractors especially the petty contractors in the area of labour based

methods of road maintenance. The formal training has been conducted at the Public

Works Training Centre, Kyambogo, Mt. Elgon Labour-Based Training Centre (MELTC)

in Mbale, Makerere University, Uganda Polytechnic Kyambogo (UPK), Uganda

Management Institute (UMI), Bugembe Mechanical Workshop, Kisii Training Centre

(Kenya) and overseas institutions. The trainees have consisted of headquarter staff

and district personnel, politicians and lower cadre district staff. Skills and awareness

have been imparted resulting in improvements in the implementation of the

maintenance programmes. Training was provided by the following projects:

a) UNDP/UNCDF/ILO in Mbarara, Masaka, Rakai, Bushenyi, Rukungiri and Kabale

districts;

b) GTZ, targeting the districts of Kabarole, Bundibugyo, Kasese and Hoima;

c) JICA I-III in the districts of Jinja, Iganga and Kamuli;

d) DANIDA Road Sector Programme Support (1998-2002) in the districts of Lira,

Apac, Kitgum, Gulu, Moroto and Kotido;

e) IFAD/Belgian Survival Fund Project in the districts of Hoima and Kibaale;

f) DANIDA support to Labour-Based Policy Promotion (LAPPCOM) Initiatives; and

g) ADB Rural Feeder Roads Project covering 27 districts.


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2.2.5 Uganda National Association of Building and Civil Engineering Contractors

In the early 1990s prominent contractors at the time were invited for a series of

discussions which resulted into the revival of the Uganda National Association of

Building and Civil Engineering Contractors (UNABCEC) which had ceased to function

in 1973. All contractors were encouraged to join and subscribe through membership

fees, periodic and annual general meetings. To-date the Associations is slowly

increasing its membership due to shortage of operational resources.

2.2.6 Housing Sector

In the past 30 to 40 years, the country has undergone very sharp fluctuations in the

housing construction sector. The period was characterised by a vibrant economy in

1960s at attaining independence, followed by a sharp decline during the military rule

in the early 1970s. When peace was restored in 1986, marginal attention was initially

accorded to construction generally including housing, in favour of resettling displaced

communities. Global inflation caused agriculture to take priority so as to stimulate

production. Alongside other essential services i.e. health and security, the road

sector was also given prominence to enable access to the farmers and the marketing

of agricultural produce. The result was that the housing sector continued to be

distressed for some time before it started to recover at a slow pace. In 1990, the

Government recognised the need to support and guide the development of the

housing sector starting with establishing the size of the sector, assessing needs for

stimulating the growth of the sector, undertaking an inventory of all active

contractors, and identifying their capabilities.


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3.0 INSTITUTIONAL FRAMEWORK Physical infrastructures such as roads, railways, the built environment, water sources

and supply systems, dams, power transmission lines, and telecommunications that

are constructed and maintained by the construction industry play a crucial role in the

social and economic development of the country. They facilitate the movement of

passengers and goods, communication between distant places, provide shelter and

accommodation at work places, homes and manufacturing facilities among others.

The key stakeholders in the national construction industry are the Government,

Donors, private investors, consultants and contractors. The core support

organisations form the tripartite arrangement comprising client, contractor and

consultant. In addition there are other organisations that support the industry to

develop and improve productivity. They include the learned professional societies,

regulatory bodies, business development organisations, commercial banks, insurance

companies, universities, trade unions, education & training organisations and

equipment & materials suppliers.

3.1 Government Ministries, Authorities and Agencies

3.1.1 Government Ministries

The Government ministries that play a central role in the national construction

industry include:

a) Ministry of Works and Transport;

b) Ministry of Finance, Planning and Economic Development;

c) Ministry of Water and Environment;

d) Ministry of Lands, Housing and Urban Development;

e) Ministry of Health;

f) Ministry of Education and Sports;

g) Ministry of Local Government;

h) Ministry of Defence;

i) Ministry of Energy and Mineral Development;

j) Ministry of Agriculture, Animal Industry and Fisheries;

k) Ministry of Tourism, Trade and Industry;


15

l) Ministry of Gender, Labour and Social Development;

m) Ministry of Internal Affairs; and

n) Ministry of Justice and Constitutional affairs

The key role of the above Ministries in relation to the construction industry is policy

formulation, strategic planning, setting standards, monitoring and evaluation.

Physical infrastructure development and maintenance works is executed by

contractors and supervised by consultants. Contractors and service providers are

procured by the respective ministries on a competitive basis to undertake the works.

Justice, law and order plays a central role in the construction industry by ensuring

safety of the constructed physical infrastructure and security of people who construct

the works and those that use them particularly those in the conflict infested areas of

the country. The rights of the people, peace, law and order during construction of

works are ensured by the sector.

The conflicts between parties that arise in the construction industry are handled

through arbitration or appropriate courts of law which restore thereby improving

contract management in the construction industry.

3.1.2 Public Procurement and Disposal of Public Assets Authority

The Public Procurement and Disposal of Public Assets Act, 2003 established the

Public Procurement and Disposal of Public Assets Authority. The Authority formulates

policies and regulates practices in respect of public procurement and disposal

activities and other connected matters.

The objectives of the authority are to:

a) ensure the application of fair, competitive, transparent, non-discriminatory and

value for money procurement and disposal standards and practices;

b) harmonise the procurement and disposal policies, systems and practices of

Central Government, Local Governments and statutory bodies;

c) set standards for the public procurement and disposal systems in the country;

d) monitor compliance of procuring and disposing entities; and

e) build procurement and disposal capacity in the country.


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3.1.3 Uganda National Roads Authority

The Act which established the Uganda National Road Authority (UNRA) became

effective in January, 2007. The core function of UNRA is management of the

national roads i.e. both maintenance and development. UNRA is expected to improve

efficiency and effectiveness in management of national roads. It will also provide

technical advice and assistance to Central Government and Local Governments.

3.1.4 Other Agencies

The Agencies and other institutions include National Housing and Construction

Corporation, Uganda Clays Ltd, Housing Finance Company of Uganda, National Social

Security Fund and National Water and Sewerage Corporation, UNRA, NEMA, CAA.

3.2 Business Development Organisations

Currently there are only three business development organisations among the

professions in the construction industry: Uganda Association of Consulting Engineers

(UACE), Federation of Uganda Consultants (FUCO), and Uganda National Association

of Building and Civil Engineering Contractors (UNABCEC). These organisations are

further described below.

3.2.1 Uganda Association of Consulting Engineers

UACE was set up in 1994 by a steering committee of seven consulting companies

and was subsequently officially recognised by Government as the sole organisation

responsible for the promotion of interests of consulting engineers in the country. It is

affiliated to the International Federation of Consulting Engineers (FIDIC). Its

membership stands at 20 out of about 50 albeit small size consulting firms,

companies and individuals. The most likely reason that the majority are not members

is the relatively high annual membership fees of US$800 for small firms and US$1200

for large firms.

The organisation runs seminars and lunchtime meetings with guest speakers

covering topics of interest to its members; networks with other national associations


17

of consulting engineers in Africa and worldwide; and lobbies Government,

international lending agencies, donors, FIDIC, and the private sector on matters

affecting them. While these approaches are laudable, it is necessary to develop the

consulting profession in Uganda. It is therefore the obligation of Government to put

in place policies and strategies aimed at supporting smaller consulting firms in order

that they can grow to become members and receive support from UACE.

3.2.2 Federation of Uganda Consultants

FUCO is an umbrella organisation of consultants and consulting organisations in

Uganda. It is registered as a limited company and operates through an executive

committee. It was set up to lobby the International Lending /Financing Institutions,

and the public and private sector on behalf of the members.

3.2.3 Uganda National Association of Building and Civil Engineering Contractors

UNABCEC is a voluntary association of companies bound by a constitution and

directives authorised by the National Executive Committee. It was revived in 1993 to

identify, promote and safeguard the interests of building and civil engineering

contractors. The organisation has a wide range of services that it wishes to provide

but a shortage of operational resources is a barrier with many potential member

companies operating outside the association.

To-date the Association has attracted only a small proportion of contractors. Its

membership of only 300 against an estimated 800 contractors in the country implies

it needs strengthening. Relatively high annual membership subscription charges and

a lack of direct tangible benefits may have discouraged potential members from

joining. Secondly, stiff competition for the few available contracts at a given time

makes the Association ineffective as the sector is perceived as too insecure and

many contractors find themselves falling out of business. The organisation therefore

needs support in order to attract more contractors to the membership.

As one of its major functions UNABCEC lobbies Government on policy issues

impacting the national construction industry and advocates for capacity building

support from Development Partners and the Government. NORAD support, with the

assistance of Government, has enabled UNABCEC to successfully organise

occupational health and safety training for contractors and manufacturing firms.


18

3.3 Professional Bodies

Professional bodies also known as Learned Societies, take a more regional and global

view of the industry with the aim of advancing knowledge and dissemination of

information in the industry. They typically examine and enrol Engineers, Architects

and Surveyors. They aim to maintain standards, ethics and a high professional

competence among their membership. They also promote interaction with other

bodies in the region

3.3.1 Uganda Institution of Professional Engineers

Uganda Institution of Professional Engineers (UIPE) is the learned society for

engineers, technologists and technicians. It sets membership criteria, mentors, and

elects engineers, technologists and technicians to various professional classes:

student member, graduate member, technician member, technologist member,

honorary member, member, and fellow. UIPE membership stands at nearly 1,000.

UIPE as a professional engineering institution has been the subject of a DFID funded

study by the Institution of Civil Engineers (UK) aimed at increasing its capacity and

raising the professional standards in the country in line with the national goal of

poverty eradication, the issues of globalisation, and the dictates of the World Trade

Organisation (WTO). Globalisation and the need to remove national barriers to

professional services as required under WTOs Global Agreement on Trade and

Services (GATS 2000) will only be successfully addressed by the local professionals

purging themselves of incompetence and inefficiency in their professional outlook

and practices, and meeting internationally agreed standards of competence in order

for them to practice across national boundaries. UIPE shall implement systems and

procedures to meet the requirements of global issues and the consequent domestic

challenges. In order to effectively do so, UIPE will need strengthening.

3.3.2 Uganda Society of Architects (USA)

The Uganda Society of Architects enrols architects according to their professional

competencies following set criteria. USA sets guidelines for enrolment, mentors and


19

sets examinations. Members are classified as Fellows, Professional Associates,

Technicians and Student members.

3.3.3 Institution of Surveyors of Uganda (ISU)

The Institute of Surveyors of Uganda enrols surveyors very much on the similar

procedures as USA. It classifies practising Surveyors as Fellows, Professional

Associates, Technicians and Student members.

3.3.4 Uganda Institute of Physical Planners (UIPP)

The Uganda Institute of Physical Planners, like the ISU enrols physical planners in

this country for purposes of ensuring that they practise under, and follow, a Code of

Ethics.

3.4 Regulatory Bodies

3.4.1 Engineers Registration Board

The Engineers Registration Act, 1969 (amended 1977) established the Engineers

Registration Board (ERB) to regulate and control Engineers and their activities and

advise Government in relation thereto. The Act requires all practising engineers to be

registered with the ERB.

To-date ERB has only 390 registered engineers yet the total number of practising

engineers in the country is estimated to be 2500. There is clearly a gap in

implementation of the law that enables more than 2000 non-registered engineers to

practice. This undermines the authority, responsibility and functions of both UIPE

and ERB in the engineering profession and reduces the two organisations financial

revenue and the services rendered.

3.4.2 The Architects Registration Board

The Architects Registration Board is responsible for registering qualified members

and disciplining offending members.


20

3.4.3 The Surveyors Registration Board

The Surveyors Registration Board acts independently of ISU to register qualified

members and to discipline offending members.

3.5 Universities and Technical Colleges

Education and training is provided by various organisations. Makerere University,

Kyambogo University and Nkozi University are the highest-level institutions that offer

courses for engineers leading to enrolment with the UIPE, USA, ISU and professional

accreditation by the statutory registration boards for technical professionals,

architects and surveyors i.e. ERB, ARB and SRB respectively. The following

institutions offer a range of courses to deliver vocational, construction and business

management skills necessary to run a construction business:

a) Uganda Technical Colleges;

b) Public Works Training Centre, Kyambogo;

c) Mt. Elgon Labour-Based Training Centre, Mbale;

d) Uganda Management Institute; and

e) Management Training and Advisory Centre.

Training of construction personnel at all levels from engineers and construction

managers to artisans is one of the primary functions of the support framework. While

all education and training institutions associated with the construction industry

provide education and training in the technical skills of design and construction

techniques there is need to formally incorporate into the curriculum the delivery of

the soft-ware skills of communication, socio-economic issues, contract law, and

entrepreneurship for business creation, and business management.

Universities in the country are in a position to undertake research and development

(R&D) for improved efficiency and productivity in the industry, if they are given the

necessary resources. This R&D is a long term goal as it would require support from

both the Government and the industry itself by way of sponsorship from private firms

in construction.


21

4.0 KEY ISSUES IN THE NATIONAL CONSTRUCTION INDUSTRY

The NCI generally remains fragmented, unsupported due, in part, to lack of both a

definitive Government policy and a strong institutional framework. This has

increasingly encouraged the informal sector mentality approach to business in the

industry with no long term view on work continuity on the part of local contractors

and consultants. The full potential of employment generation and the accompanying

multiplier effect based on local capacity have thus not been exploited. Consequently,

the national construction industry tends to heavily rely on the services of foreign

contractors and consultants, even for repair and maintenance works that could

otherwise be more economically handled by local players. The implications on the

economy resulting from the capital flight emanating from this arrangement are

considerable.

The development of the construction industry is in line with Government policy of

local capacity building and privatisation. In order to ensure sustainability in service

delivery, Government will continue to strengthen and facilitate local contractors and

consultants up to a point when they can handle work currently being executed by

multi-national firms. However, previous studies and seminars aimed at promoting

NCI growth have identified the core problems discussed in this Chapter.

4.1 Contracting Issues

The following issues and constraints affecting development of the NCI have been

identified during recent studies in Uganda.

4.1.1 Limited Capacity

The majority of big constructions are being executed solely by a few international

firms. Only a small percentage of the local firms are able to compete against, or work

in joint-venture with international firms. Consequently, small firms are unable to

develop their capacity and expand their market share to develop into medium-size or

large-scale companies. The small firms are confined, due to their limited size and


22

resources, to undertaking only small building and occasionally minor civil engineering

works.

Limited management capacity and business acumen within the contracting sector is

exacerbated by the vicious circle of: no experience no job no experience

Restricted access to equipment leads to poor performance and yet equipment

enhances performance and is one of the criteria for registration and classification of

contractors.

4.1.2 Limited Access to Credit

Limited access to credit and loan facilities for short term bridging finance required for

project implementation, and long term capital to cover the cost of business

establishment and growth is a serious barrier to the development of the capacity of

private firms.

4.1.3 Limited Work Continuity

Limited work continuity due to absence of adequate workload offered by the public

sector wipes out any gains the NCI may have registered from occasional contracts.

To ensure increasing effective participation of local entities in the construction

industry, which will facilitate their growth, measures need to be put in place to

continuously generate work for the contractors.

4.2 Consulting Issues

4.2.1 Informal Sector Practices

The number of registered consulting firms or consultants is quite small. The

inference is that there exists in the consultancy industry an informal sector to cope

with the net demand for design and supervision of construction projects. This may

be attributed to practical difficulties faced by the respective registration boards in

enforcing their mandate.


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4.2.2 Constrictions in Capacity Development

The consultants, like the contractors, are faced with the vicious circle of:

Cant get work cant get experience cant get registered cant get work.

4.3 Institutional and Human Resource Development Issues

4.3.1 Need for Institutional Capacity

The role of Government and local councils in project planning and management,

contract procurement and administration is increasingly becoming more crucial in line

with the increasing departure from force account in favour of private sector

participation at the appropriate technology levels. Therefore, there is need for a well-

developed institutional capacity within each individual service provider in the public

service domain.

4.3.2 Need for Human Resource Development

The human resource skill in the public sector is not well developed in tandem with

the changing public service delivery culture. Project planning and management, and

contract administration skills need to be developed in order to ensure value for

money.

In addition the number of technical professionals in the country is still low. Other

than the Ministries of Works and Transport and that of Water and Environment which

have good numbers of technical professionals other Ministries which are involved in

supervision construction work lack them.

Most training institutions are unwilling to develop tailor-made courses unless there is

effective demand from both public and private sector although they are equipped

with general management skills.


24

4.4 Registration and Procurement Issues

4.4.1 Registration and Classification Scheme

The classification of contractors and consultants under the current registration

system in Government departments lacks a legal basis. The scheme does not also

differentiate between foreign and local firms to avoid unfair competition for jobs.

Government departments carryout registration and classification of firms using

differing criteria. In addition the criteria are not stringent enough to bar ill-equipped

and inexperienced firms. Even the review periods are different.

4.4.2 Tendering

a) Lowest price the criteria for award of tenders based on lowest price is

associated with the following problems:

i) under-pricing and failure to execute the work;

ii) leads to too many claims, which are often cumbersome to evaluate and

agree upon;

iii) does not allow growth of providers, often leading to insolvency and

bankruptcy; and

iv) PPDA Regulations do not explicitly state how to avoid under-priced bids.

b) Competition - PPDA Regulations emphasize competition as a principal objective of

public procurement. However, there are cases where there are few providers e.g

construction and maintenance of bitumen roads. This often encourages formation

of cartels among bidders, resulting in high prices. The use of competition is not

practical in emergency situations.

c) Joint Ventures and Mandatory Sub-Contracting - Most of the construction works,

particularly in the road and water sectors, are funded by development partners.

None of our local providers are able to compete in an International Competitive

Bidding and win a bid on their own. The PPDA Regulations needs a section which

compels foreign companies to form joint ventures or associate with local firms or


25

sub-contract a defined percentage of the work or services, for purposes of

improving the participation and development of our local firms.

d) Cost Variations

i) No cost variations are allowed on maintenance contracts and yet the cost of

some inputs like fuel is erratic.

ii) The fairest method of assessing cost variation is the use of a Price

Adjustment Formula based on Consumer Price Indices. Capacity to develop

and regularly update these indices is required in UBOS to ensure readily

available and reliable data.

e) Conditionalities for Guarantees

i) Bid Security and Advance Payment Guarantee too harsh for most providers

due to the current requirement of Bank Guarantees.

ii) Performance Guarantees Both Bank G

National Construction Industry Policy - January 2010

Documents

Transcript of National Construction Industry Policy - January 2010