NDP action long overdue

NDP action long overdue

A lack of progress on National Development Plan implementation is killing off SA’s construction sector and hampering economic growth, says Master Builders’ Association North.

Musa Shangase, President, MBA North

The news that Group Five has filed for bankruptcy protection has come as yet another blow for South Africa’s construction sector, following shortly after a disappointing 2019 budget speech that offered little hope of significant infrastructure investment in the foreseeable future, says the President of the Master Builders’ Association (MBA) North, Musa Shangase.

MBA North, which represents members in Gauteng, North West, Mpumalanga and Limpopo, says the construction sector has suffered several consecutive quarters of slow – and even negative – growth, creating a ‘state of emergency’ for large and small construction firms alike.

While we understand the predicament the new Finance Minister is in, we believe the budget was not a visionary one. It cut spending on education, infrastructure and housing – all areas that could have boosted the ailing construction sector,” says Shangase. “And it must be noted that infrastructure development is the cornerstone of the economic growth of this country. If we want to achieve the growth goals set out in the National Development Plan, we need to fast track the execution of the plan and start investing in infrastructure development, which would boost investor confidence and catalyse an economic turnaround.”

Shangase says indications are that the same key stumbling blocks that emerged in recent years will continue to hamper growth in the construction sector. “The government is awarding fewer projects and has been slow to pay, which is crippling stakeholders,” he said. “We’re seeing even large contractors facing business rescue and liquidation as a result, while for sub-contractors with no cash flow, the wait of 180 days or longer for government payment is devastating.” Another challenge, he says, is local business forums demanding a 30% procurement allocation on every construction project, usually leading to delays, costly training and a risk to project quality.

Shangase says: “The Group Five news underscores the fact that the continued slow release of infrastructure projects and payments will impact the sector, with more major construction industries going into collapse if these problems are not given workable solutions.”

Shangase says 2018 was a challenging year for the MBAs, for the construction industry as a whole and for the economic growth of the country.

The Construction Industry Development Board (CIDB) small and medium-sized enterprises (SME) business conditions survey has shown that civil contractor confidence fell by six index points to an historic low of 27 during the third quarter. Weakness in all the underlying indicators, especially construction activity, contributed to the drop in confidence. Meanwhile, general building confidence has been trending downwards since early 2017.

In light of the infrastructure budget again being compromised and funds reallocated elsewhere, our concern is that we have fallen behind in terms of the NDP goals. If we want to achieve the growth goals envisaged in the NDP, we need to invest in infrastructure development now. But unfortunately, the NDP has been on the shelf since 2013. At this stage, the only positive note is the fact that we have a plan, but unless it is executed, our industry will die and South Africa’s economic growth goals will not be realised,” he says.

Safcec calls on government to halt ‘construction mafia’ 

Safcec calls on government to halt ‘construction mafia’ 

By Roy Cokayne, IOL Business Report

Safcec has sent an SOS to government and demanded urgent intervention to halt the so-called “construction mafia”.

The SA Forum of Civil Engineering Contractors of South Africa (Safcec) has sent a SOS to government and demanded urgent intervention at the highest government level to halt a series of attacks on construction projects by AK-47 wielding thugs who are part of the so-called “construction mafia”.

Webster Mfebe, the chief executive of Safcec, an industry body representing JSE listed, non-listed and emerging contractors, said today (wed) these gangs had to date disrupted and halted at least 78 projects worth a minimum of R25.5 billion.

Mfebe said the industry was gravely concerned about this situation and the harm it caused to investor confidence in South Africa’s economy.

He said these disruptions had already resulted in at least 110 engineers and other highly skilled technical personnel leaving the country largely, with many others on the verge of leaving, due to these incidents because of the personal risk to their lives and the lack of work because of projects being disrupted at gunpoint.

Mfebe provided a list of the names and skills of 110 engineers and skilled technical people who had already left the country.

Image: IOL

He said the loss to the country of these key skills would create a serious capacity problem for the construction industry in South Africa.

Safcec has sent letters containing an urgent plea for government intervention to President Cyril Ramaphosa and finance minister Tito Mboweni that were also copied to public works minister Thulas Nxesi, economic development minister Ebrahim Patel, planning, monitoring and evaluation minister Nkosazana Dlamini-Zuma, energy minister Jeff Radebe, police minister Bheki Cele and transport minister Blade Nzimande.

The letters follow the latest incident a week ago when armed gangs attacked the R2.4bn German oil storage investment project being built by WBHO Construction in Saldanha in Western Cape and demanded to be part of the project.

Mfebe said the attack resulted in the site “resembling a war zone and the project being halted because of property and plant being set alight and burnt down.

Mfebe said police arrived quickly on the scene but said there was nothing they could do as only the public order police from Paarl could handle the situation and it took them three hours to arrive while local police and contractors watched on as property was burnt to ashes.

Contractors, including female engineers and staff, had to run for their lives into the veld,” he said.

Mfebe was aghast that such an incident could take place in South Africa, which made the project site look like a war zone in Afghanistan or Iran, without any comment from the South African government.

He said this incident followed the termination by the Aveng and European-based Strabag International joint venture of the R1.5bn SA National Roads Agency (Sanral) Mtentu Bridge Project in the Eastern Cape due to site disruptions by armed gangs demanding to be part of the project.

Despite reporting it to the police and interdicts obtained, the disruptors were released after being arrested and continued disrupting the sites unabated with AK 47 rifles,” he said.

Mfebe also cited an incident that took place in KwaZulu-Natal in 2016 when the black owner of a construction company was accosted at gunpoint by the disruptors demanding a stake in the project he had been awarded.

When he refused, he was killed in cold blood. The KZN police are aware of the incident.

Despite the perpetrators being known to the police, to date no arrests have been made,” he said.

Mfebe said this incident was indicative of the fact that contractors of all sizes were adversely affected by “this gruesome phenomenon”.

He added that despite contractors being faced with this situation, which was beyond their control, and having laid charges at police stations and in most cases obtaining court interdicts against the disruptors, public sector client departments, such as Sanral, like “continue to mete out heavy penalties against contractors for standing time.

Mfebe said this was driving these companies to the brink of bankruptcy, adding some had already entered business rescue and were shedding more jobs.

We hereby humbly request an urgent Cabinet pronouncement and action on these matters as the Rule of Law needs to be maintained at all times in order not to scare off investors in the sector.

We further request an urgent meeting with captains of construction industry to discuss this emergency, including lack of work and non-payment of contractors (for completed and certified work) by public sector client departments, which issues go against the President’s statement [on September 21 2018] that: ‘The stimulus and recovery plan prioritises infrastructure spending as a critical driver of economic activity’.”

Construction mafia derailing projects causes engineers to flee

Construction mafia derailing projects causes engineers to flee

On Wednesday, 13 March 2019, a R2.4bn German oil storage investment project that is being constructed by WBHO in Saldanha, Western Cape, was halted after armed gangs arrived on site.
Image: biznews.com

Widespread concern has spread like wildfire across the built environment due to the construction mafia and gang-related activities on project sites. Yunus Bayat from the Association of South African Quantity Surveyors (ASAQS) says that a major intervention is needed to protect infrastructure projects, investor confidence, and the safety of professionals in the built environment who are working on project sites.

The Delangokubona Business Forum continues to intimidate foremen, project managers and construction bosses by going onto project sites and demanding a stake in their projects. As professionals working on these projects, we cannot protect ourselves from this type of violent intimidation and we are no match for the AK-47 automatic weapons that they bring with them,” says Bayat.

Construction projects worth R25,5bn+ are being violently disrupted and halted

On 18 March 2019, the South African Forum of Civil Engineering Contractors (SAFCEC) issued an urgent plea for action from the Minister of Finance, Tito Mboweni. In the letter, the SAFCEC said that it is gravely concerned that construction projects worth a minimum of R25,5bn are being violently disrupted and halted in South Africa.

Armed gangs demanded to be part of the R1,65bn SANRAL Bridge Project in the Eastern Cape. These illegal site disruptions caused AVENG and the European-based Strabag International to pull out of the project, which forms part of the N2 Wild Coast Road Construction project,” continues Bayat.

While the gang activities were reported to the police and interdicts were obtained, the disruptors were released shortly thereafter. On Wednesday, 13 March 2019, a R2.4bn German oil storage investment project that is being constructed by WBHO in Saldanha, Western Cape, was halted after armed gangs arrived on site.

The project site pictures look like a war zone”

The gangs demanded to be part of the project and burned the properties to the ground. The pictures of the scene look like footage from a war zone. Again, police were called, but they only arrived hours later and said that the issue had to be handed over to the Paarl police station. Contractors, female engineers, and other staff had to run for their lives into the veld. The response from the South African Police Force simply isn’t good enough anymore,” says Bayat.

On Monday, 18 February, the Black Business Council in the Built Environment (BBCBE) issued a letter to Minister General Bheki Cele from the Ministry of Police to request an appointment to discuss the illegal stoppages of construction projects across the country. In the letter, the BBCBE says that their members who are engaged in construction activity are subjected to victimization and work stoppages on a daily basis due to local business forums demanding participation in projects.

The ASAQS is calling on the National Prosecuting Authority and local police services to address the situation. A strong and solid intervention is needed, and it should be seen as a top priority for everyone in the built environment and government,” concludes Bayat.

UNITY AND FREEDOM

UNITY AND FREEDOM

When one considers the age of the various Master Builder South Africa (MBSA) member associations in South Africa (the oldest being Master Builders Association – Western Cape which clocked up 128 this year) we can be justifiably proud of an institution that has survived major economic and political fluctuations and remained the solid core of one of our country’s most vital industries.

John Matthews, President, Master Builders South Africa

MBSA’s nine members and three affiliates are autonomous, but all are united in their loyalty to the national body that flies the flag for the entire country’s construction community.

This year, our colleagues in the north will place yet another major milestone in the annals of our industry when they celebrate the 115th anniversary of what over the years, has become a conglomerate of four regions, now known as Master Builders Association North (MBA North).

MBA North resulted from a merger in 1996 of the Pretoria Master Builders Association (founded in 1903) and the Johannesburg Master Builders (formally constituted in 1904). It was called the Gauteng Master Builders Association (GMBA) until 2012, when it was given its current name incorporating four regions – Gauteng, North West, Mpumalanga and Limpopo.

The unification of MBA North could be seen as a broad analogy for an ideal civil society, where like-minded groups are drawn together because of their commonality of purpose, and then consolidate their alliance for mutual benefit. It is a model collaboration – a constructive interaction for shared advantage, and a system that could broadly be applied across South Africa, to create the greater security and social union that we all need.

But, while all South Africans have doubts and apprehensions, we are no more unsure of the future than millions of our global compatriots. On a massive scale, whole nations are in complete ruin and others rock on the edge of disaster, held hostage by political battles for supremacy. The common thread in all this chaos is disunity. Even peace summits and ceasefires are characterised by threats and demands that have little to do with harmony but rather more with domination.

On May 8, we South Africans will again be faced with the decision about who should lead our country. For many the decision is easy – some traditionalists will stick with what they have come to think of as the only option, while others will have no trouble voting against what they may consider a failed leadership. Those whose concern is with unity may be more challenged for options.

But as a nation that advocates freedom, we are fortunate to still have a choice. The choice to cherish, protect and uphold, at all cost.

John

Master Builders calls for urgent government intervention to save the Construction industry

Master Builders calls for urgent government intervention to save the Construction industry

Master Builders South Africa is calling for urgent government intervention to prevent further destruction of the construction industry in the country. The call follows Group Five’s filing for bankruptcy protection last week, the fifth major construction company to do so in less than a year. Roy Mnisi, Executive Director of Master Builders expressed deep concern on the matter. “This is the fifth large firm to succumb in less than a year. In 2018 alone, NMC Construction went into voluntary liquidation while Basil Read, Esor Construction and Liviero Group applied for business rescue. We still have many other small-medium sized firms facing financial difficulties and yet, there has not been any government-industry engagement to develop a plan to halt the trend.”

Roy Mnisi, Executive Director: Master Builders South Africa

According to Mnisi, the industry has continually engaged government on the adverse impact of late/non-payment of contractors for work completed but the matter remains unresolved. “The decline has reached a very concerning level, so much that it is no longer a sectoral problem but a national crisis. We appeal to the government to open up to the industry and urgently find concomitant solutions to save it from a total collapse”.

He however, acknowledged that there were other factors instrumental to the demise of the industry. These include a sluggish economy, reduction in ‘actual’ infrastructure spending by the government, as well as illegal and often violent work-stoppages at construction sites by various illegal forums.

The adverse impact of these company closures were severe, he noted. “The short-term effect is that direct employees of these collapsed companies lose their jobs. When you consider that the construction industry employs more than 11% of the workforce in South Africa, the negative impact on the economy as a whole is dire. There is also a knock-on effect across the industry because subcontractors, suppliers and service providers are equally affected.”

“In the long-term, we will lose our capacity to develop infrastructure and will have to depend on foreign companies in the future. That is why we are appealing to the government for engagement” Mnisi concluded.

Master Builders South Africa (MBSA) is a Federation of registered employer Associations representing contractors and employers in the construction industry, and is regulated in terms of Section 107 of the Labour Relations Act 66 of 1995. The Federation’s nine Master Builders Associations, and three Affiliate Associations represent more than 4000 contractors and employers in the industry.

Remaining Resilient During Turbulent Times

Remaining Resilient During Turbulent Times

Master Builders Association North (MBA North) re-elected its current office bearers for a second term at its Annual General Meeting held in Midrand in February: Musa Shangase – President; Wayne Albertyn – Vice President; Sello Mokawane – Second Vice President and Mandla Danisa – Treasurer. Jason Wilmot was retained as Immediate Past President.

The AGM was well attended by members, past office bearers and industry guests. MBA North Executive Director Mohau Mphomela acknowledged and welcomed Past Presidents and Honorary Life Members: Geoff Irons, Nico Maas, Neil Duncan, and Peter Buchel – as well as Past Presidents Hennie Bester, Manie Bosch and Peter Rϋde – and extended a special welcome to Webster Mfebe, Chief Executive Officer of the South African Forum of Civil Engineering Contractors (SAFCEC) and Herman Enoch, Marketing Manager of the Federated Employers Mutual (FEM).

MBA North Executive Director Mohau Mphomela

Honorary Treasurer of MBA North, Mandla Danisa detailed the Association’s financial statement which reflected a positive situation in all, with special reference to the continued

success of reducing the need for drawdowns from investment, resulting in a favourable financial situation. He also gave special thanks to FEM for their grants of R2.6 and R2.8 million, for which MBA North is very grateful.

We have come through a year filled with challenges, both from our Association (MBA North), the Construction Industry and lack of economic growth in our country,” said Musa Shangase in his Presidential Address.

The MBA North AGM was well attended by members, past office bearers and industry guests

He noted that the Association had met its strategic goals for the period, namely to continue to build a team that will become a coherent group with well-developed goals; to reduce drawdowns to ensure that the MBA north is financially sustainable and to increase service delivery to the members.

I am proud to say that the Association is on the correct path and is really coming out of its shell and is starting to engage more on industry matters important to its members and take the lead on matters affecting its members,” continued Shangase.

Musa Shangase, President, MBA North

On the construction industry front, demand for new construction work remained a constraint and activity growth is likely to remain under pressure in the near future. From CIDB grades perspective, confidence fell to historic lows of 25 and 15 for Grades 5 and 6, and Grades 7 and 8, respectively.

The Construction Industry Development Boards (CIDB’s) small and medium-sized enterprise (SME) business conditions survey has shown that civil contractor confidence fell by six index points to a historic low of 27 during the third quarter. Weakness in all the underlying indicators, especially construction activity, contributed to the drop in confidence.

Meanwhile, general building confidence has been trending downwards since early 2017. During the third quarter, business confidence shed three index points to 30.

On the Macro Economy, Shangase referred to the recent medium-term budget policy statement by Finance minister Tito Mboweni in his first major policy statement since returning to the cabinet, in which he halved the Treasury’s growth forecast and predicted a slower and later normalisation of the country’s debt profile, sparking a sell-off in the rand and causing bond markets to worry about the reaction of ratings agencies.

MBA North office bearers 2019: Back row: Executive Director – Mohau Mphomela; Jason Wilmot – Immediate Past President – Mandla Danisa – Treasurer.Seated: Sello Mokawane – Second Vice President; Musa Shangase – President; Wayne Albertyn – Vice President.

The budget in a nutshell

  • Economic growth revised downwards from 1.5% to 0.7% for 2018.

  • Consolidated budget deficit for 2018-2019 revised to 4% of GDP (from 3.6 %)

  • After rising to 4.2%GDP in 2019-20, it is expected to stabilise at 4% in outer years.

  • Gross debt to stabilise at 59.6% of GDP in 2023-24(February budget projection was 56.2% of GDP in 2021-22).

  • Tax revenue for 2018-19 projected to fall R27.4 billion short of February estimate due to VAT refund backlog, underestimation of refund and slower corporate income tax collections.

  • Expenditure ceiling to be maintained and set to grow at 1.5% in 2021-22.

The construction sector contributed negatively to the GDP with -2.7% in the third quarter of 2018, a trend that has prevailed since 2013 when the industry was in the headlines for all wrong reasons.

Shangase concluded by saying: “Trust is knowing that when a team member does push you, they are doing it because they care about team”

Dr Andrew Dittberner, Chief Investment Officer, Old Mutual

Guest speaker for the event was Dr Andrew Dittberner, Chief Investment Officer, Old Mutual, entitled Remaining Resilient During Turbulent Times. This dynamic presentation on an all too familiar topic had the audience riveted to their seats.

His array of powerful slides included a “Smartie Box” of investments; a “Wall of Worry” and a reveal of “Who has the Money”.

The future is uncertain – but brighter”

Who then does government turn to for investment – seeing their coffers are empty?” said Dr Dittberner. “To the South African Corporate sector – which is quietly sitting on large stockpiles of investment funds, and is essentially the primary future investors for our economy.”

Building confidence slightly more positive

Building confidence slightly more positive

Caption: David Metelerkamp, senior economist, Industry Insight

Marginal growth in the building sector is anticipated to continue as this is not driven by the public sector, but by the private sector. Yet infrastructure spending seems to be stabilising, but the construction sector remains in dire straits as the demise of the big contractor continues.

This is the view of Industry Insight senior economist David Metelerkamp who, in his address to delegates at the AfriSam 2019 National Budget Breakfast in Sandton id February following Finance Minister Tito Mboweni’s first budget speech, painted a sombre picture for most segments of the construction sector.

The event was well attended by a diverse audience of more than 200 people from the construction sector.

Metelerkamp noted that water infrastructure would see an 8% increase in public spending, but investment in power facilities was only slightly raised due to the Medupi and Kusile projects approaching completion. The renewable energy sector would bring some relief to contractors, as its role in power generation could grow as these technologies showed evidence of reducing the cost of generating electricity.

The building industry looked better than civils, he said, especially the residential segment. This was mainly in demand for flats and townhouses, where square metres completed grew considerably in 2018. Demand for ‘luxury homes’ was down. The future held promise for large mixed-use developments, of which over 30 were on the table, said Metelerkamp. Ten of these were expected to launch in this financial year, and 14 more in 2020/21. He noted that the shopping centre ‘boom’ was over and that an oversupply now existed.

Economist Dr Azar Jammine

Economist Dr Azar Jammine noted that Mboweni’s has raised hopes for a “major recovery” in the South African economy, but he warned it was unlikely to happen before 2021. “Planned government investment in infrastructure, for instance, is expected to rise only 4%, spelling a continued slump for civil engineering,” said Dr Jammine.

He said one of the key drivers of recovery would be restoring the tax-collecting capacity of the South African Revenue Services, which had fallen about R40 billion short of target in the last financial year. He also hoped that government expenditure would be made more effective if the challenges at the State Owned Enterprises (SOEs) were addressed and the more-than-34% of the tax revenue being spent on the civil service was reduced significantly.

Referring to the oversupply in the cement sector, AfriSam sales and marketing executive Richard Tomes, said AfriSam was now in a better position to cope with current market conditions after a period of right-sizing its business.

Political analyst, Aubrey Matshiqi

Closing off the speaker line-up, the colourfully eloquent political analyst, Aubrey Matshiqi, said despite the right words in Minister Mboweni’s budget address, certain ratings agencies had lost confidence in the ANC government’s ability to implement its stated plans. Matshiqi argued that “only limited change” would be achieved by this year’s election, and there was a “paucity of thought leadership” among the country’s leaders.

Tomes added that despite the impact of the lack of infrastructure spend on the construction sector, he remains confident that some level of stability will return to the industry once the 2019 national elections have taken place and the newly elected government will have been mandated with a new 5-year term to address issues around policy uncertainty and fix the state-owned entities.

Tomes concluded by saying that in order to strengthen the construction industry and the country, we must all the heed the president’s call of ‘Thuma Mina’ made during his inaugural state of the nation address – a call for all South Africans to ‘lend a hand’ and be of service to the nation.

Welcome to the 4th Industrial Revolution

Welcome to the 4th Industrial Revolution

Here two business persons are developing a project using virtual reality goggles. the concept of technologies of the future

At the Master Builders South Africa Congress held in Port Elizabeth in September 2018, delegates devoted considerable time and energy discussing the advent of the Fourth Industrial Revolution and our preparedness (or otherwise) as custodians of the South African Construction Sector to train and stay abreast of this immense technological curve.

This technology applies across all industries – and all sectors. Let’s be prepared.

Here follows food for thought, as presented by Christian Pedersen, IFS Chief Product Officer:

Christian Pedersen, IFS Chief Product Officer

Artificial Intelligence (AI) and the Internet of Things (IoT) present new perspectives, panoramas and possibilities for the construction sector. Digital twins, AI-driven automation and blockchain1 will all change how companies see themselves.

AI will combine with new-generation sensors to create a new kind of business automation. Digital twins will help companies see their businesses anew, with shared simulations that offer security in investment and product development. And blockchain will shed its negative perceptions, emerging as an enabler, not a disruptor. This year will be all about new perceptions and possibilities.

AI and IoT will begin merging to produce a new kind of automation

They’re everywhere, but they’re changing. The fact is that sensors are embedded into every part of our daily and working lives. Recording and regulating our fast, often fraught world, whether we’re in the office or out in the field. But they’re changing. Sensors don’t just gather data one-way anymore—they can now receive instructions and action them.

We’re about to see sensor-enabled IoT technology begin to merge with AI-driven technology to produce a new wave of autonomous business processes. And the most advanced, competitive businesses will start actively exploring new ways to enable their physical devices, whether in their own systems or their customers’, to be powered by AI-driven autonomous capabilities, prompting a permanent, escalating trend.

AI and IoT: A new kind of automation is coming

Together, AI and IoT will create fluent, proactive, automated functions. If you think ‘robots’ when you think automation, think again. This kind of automation will be swift, responsive, way faster and more agile than rigid-programming automation. Take autonomous vehicles. They’re already in full-speed development with many major car manufacturers. The speed, safety and fluency of the automated driving experience is beyond ‘robotic’. Acting algorithmically on real-time weather and GPS data, connecting onboard sensors, cameras and the cloud, these ‘next-generation’ vehicles merge AI and IoT into a beautiful ballet of autonomous action. No wonder Gartner predicts that by 2021, 10% of new vehicles will have autonomous driving capabilities, compared with less than 1% in 2018.

First AI-driven autonomous business processes will begin to appear

Today, AI stops at the point where actions need to be taken. It gathers data, compares them to historic data, and suggests a change of course. Soon we’ll start to see the first AI enterprise engines clearing that final hurdle to drive enormous improvements in efficiency. In much the same way autonomous vehicles have contributed to a decrease in automotive accidents and deaths.

The opportunities for improved efficiency and savings in time and money will drive forward AI/IoT-automated business decisions.

Gartner predicts that by 2022, at least 40% of new application development projects will have artificial intelligence co-developers on the team”

I believe we’ll soon see the first real-life, high-impact examples of AI/IoT automation. Particularly in the enterprise asset management (EAM) and field service management (FSM) space, where we will see the kinds of sophisticated AI currently in use in financial services start to appear.

Automated business and operational processes will cut decision times and make business processes more complex and fast-moving. The questions we should be asking are how will companies be able to stay in control of such speed and complexity? How will they be able to simulate complex, accurate business models? How will they know what their actual business reality is—in a world where many of their processes and decisions may not even be made by humans?

Digital twins will open new panoramas and perspectives, helping many companies see their whole business for the first time

In an AI/IoT-automated world, how can you be sure that your business is really doing what you think it’s doing? How can you know exactly how it is performing, in every market, unit and link of its supply chain?

Digital twins are digital simulations of processes, machines, components or entire businesses. They’re already being developed by the likes of GE, Siemens and Philips, to design and simulate everything from large-scale energy grids to e-cars to medical conditions and diagnoses. Globally, many industries and businesses can be sure that if they don’t implement digital twins, their competitors will. I see digital twins developing in two stages.

Stage 1: The A-ha moment

Imagine actually seeing, for the first time, what your business looks like. Every last feature and detail rendered with hyper-real digital precision. Digital twins reveal exhilarating new panoramas, possibilities and perspectives for businesses. For many they reveal the discrepancy between how their business actually works, and how they think it works. They also deliver insights into how it will work over time.

Stage 2: Simulation = action

For CFOs and CTOs, digital twins reduce risk significantly through watertight simulations that can fool-proof new investments and product development. It will come as no surprise that Gartner predicts that by 2021, half of all large industrial companies will use digital twins, resulting in a 10% improvement in effectiveness. I believe we’ll see asset-intensive industries like energy and utilities and fast-moving industries like logistics and supply chain all increase their use of digital twins.

Current enterprise applications like Enterprise Operational Intelligence enable digital twinning to a highly sophisticated extent with powerful capabilities for mapping, monitoring and managing the business. Later this year, we’ll see more concrete applications and cases implemented.

But in an industrial scenario, where simulations proliferate, often across companies, continents and systems, how will businesses definitively know the whole truth, status and history of a system or component? Well, that brings us to blockchain.

Popular perception of blockchain will change significantly as more companies realise it is not a disrupter but an essential enabler

Think back to 20 years ago. Which companies back then would have believed it if you’d told them that one day they would be storing and accessing all their financial and customer information in the cloud, on the same servers as their competitors?

Or, take the Internet itself. Its first seeds appeared in the early 60’s with the birth of packet switching. A first prototype was already operating in the late 60’s funded by the US Defence Department. It is often the case that the most transformative technologies creep up on us slowly from the periphery. And then suddenly they’re there, changing everything. So it is with blockchain.

Technologically, blockchain is already proven. In fact, it’s been with us a long time. But more cases will come into operation as we see the perception of blockchain changing. Because it is primarily perception that is currently holding blockchain up.

Blockchain: It’s as real as it gets

Blockchain has already been adopted far more than many give it credit for. Businesses write it off at their peril. It is already being used extensively in the finance and banking sector, accounting for 30% of all current operating blockchain. Last year saw many large banks trying out decentralized technology and blockchain.

Other sectors are also implementing blockchain, including aviation. But less well-known sectors like food and beverage manufacturing have long seen the improved food traceability blockchain can deliver. In December 2017, IBM, Walmart and Chinese super retailer JD.com began a Blockchain Food Safety Alliance to boost food tracking and safety in China. In September 2018, Walmart announced that all suppliers of leafy green vegetables for its Sam’s and Walmart stores need to upload their data to its new food safety blockchain solution by September 2019.

In supply chain businesses in particular, blockchain promises to be huge, with many cases already rolled out, including strong competitive players in China and applications built on proven technology that’s been doing successful business since 2013. The number of successful blockchain cases are on the increase. Although I believe widespread uptake will happen around 2020 to 2021, this year will be the pivotal year when the broader business community will comprehend the true nature of blockchain.

As we move towards technologies and scenarios like the two above (AI/IoT automation and digital twin), blockchain will emerge not as a disruptor. But as an essential enabler. Blockchain will start to free itself from its associations with deregulated, dodgy cryptocurrencies. Increasingly, people will see blockchain for what it really is: a rock-solid, 100% trustworthy tool for product verification. In an ever-shifting market of automated processes and simulated models, blockchain will deliver real, inarguable value.

1 A blockchain, originally block chain, is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. By design, a blockchain is resistant to modification of the data. Wikipedia

Ideal – and essential: Introduction to Concrete

Ideal – and essential: Introduction to Concrete

The Concrete Institute’s School of Concrete Technology will this year again present a basic – but “absolutely essential” – training course in concrete technology for diverse operational levels in the construction sector.

John Roxburgh, senior lecturer at the School of Concrete Technology in Midrand, says the aptly-named two-day Introduction to Concrete course is suitable not only for emerging and new building contractors, small or medium-sized enterprises, but also for any newcomer to concrete-related work responsibilities.

John Roxburgh, senior lecturer at the School of Concrete Technology

For a start, sales and laboratory staff as well as site employees will greatly benefit from the SCT 10 Introduction to Concrete course. The training – augmented by laboratory sessions with hands-on experience – deals with essential elements of concrete operations such as getting the basics right and knowing why certain procedures and practices are required. This is essential background knowledge for anyone planning careers in concrete and concrete-related industries,” Roxburgh states. “In fact, even the most junior staff in companies in the cement and concrete sectors should be armed with the knowledge this course offers.”

He says the increasing number of emerging building contractors now entering the construction industry will also greatly benefit from the Introduction to Concrete training. “Concrete plays a major role on any construction site and needs to be placed and finished off correctly for any contract to be successful and a new company’s reputation to be established. Unfortunately, many newcomers to the construction industry tend to think that making suitable concrete is merely a matter of mixing some sand, stone and water with a bag of cement. There is far more to producing sustainable concrete than such basic knowledge.”

Roxburgh says the Introduction to Concrete course will give emerging contractors and other key players in the construction industry important information to edge out competition. “It is a course that covers all essential aspects such as the basics of materials for concrete, batching and mixing of concrete, and the necessary requirements for transporting, placing, compacting, and protecting as well as curing of concrete.”

Also included in the course are topics such as:

  • Properties of concrete;

  • Receiving and storing materials;

  • Testing of concrete;

  • Finishing and surface preparation;

  • Formwork and reinforcement;

  • Sand-cement mixes; and

  • Durability of concrete.

    The correct method of curing concrete forms part of the training in the School of Concrete Technology’s Introduction to Concrete course

For emerging contractors, an additional benefit is that one of the School of Concrete Technology’s experienced lecturers, Matthews Magwaza, can explain concrete concepts in five South African languages,” Roxburgh adds. “Our total offering for all levels of competency explains why the School has for many decades been the most respected provider of concrete technology education in South Africa.”

More details on the SCT10 course and other more advanced training from the School of Concrete Technology planned for Midrand, Cape Town and Durban this year are contained in the SCT 2019 Education Programme which can be obtained by phoning 011 315 0300 or email sct@theconcreteinstitute.org.za or visiting www.theconcreteinstitute.org.za.

Construction Foundations fail…so do Claims!

Construction Foundations fail…so do Claims!

By Stefan Müller

Stefan Müller

Structural failures such as Morandi Bridge in Genoa, Italy or the mining dam in the state of Minas Gerais, Brazil, or even more recently the walkway collapse at the Driehoek High School in Vanderbijlpark here in South Africa result in intensive and extensive investigations with different opinions for the resulting failures. These investigations in the various failures show that small events that have been overlooked or even small changes that have been made could have caused the failures much the same as is experienced in contract administration.
The investigations are without any doubt necessary as they contribute to improving the safety of not only future build structures but also lead to existing structures being inspected for similar potential failures.

Foundations or support structures that fail over time can in general be attributable to some variance in material acting or reacting differently to local conditions, or being exposed to unexpected extreme external factors, here the New York Twin Towers collapse comes to mind.

These failures will result in a difference of opinion between the various affected parties. Much the same is experienced in the evaluation of construction and infrastructure claims. Hindsight, as they say is an exact science. There are similarities that can be drawn between the general experiences gathered from some of the failures and the success and or failures in the successful realization of claim entitlements.

Gather detail according to contract

The walkway collapse at the Driehoek High School in Vanderbijlpark

Contract administration entails not only the careful and accurate gathering of information and details related to compensable events but also a requirement to accurately follow the word of the contract conditions. This must be strictly adhered to in order to receive any just entitlements. Failure to do so will result in either a partial or even a full collapse in arguments and entitlements with any submitted claims for either time and or financial compensation. This despite any justified reason as result of events.

The contract administrator does play a pivotal role in achieving entitlements for events where provision has been made for in the contract conditions and even in certain instances where the contract is silent for a specific event but the procedures to be followed will determine any entitlement.

Develop and train
Employers, be it the client or contractor, will employ contract administrators based on their experiences and qualifications. Contract administrators are the first line of defence and if done accurately will not require the second line of defence, being the involvement of the legal fraternity. In some instances, however, this is unavoidable and does add considerable expense to the claims and may not necessarily result in a positive conclusion.

Therefore, it makes more sense to employ experienced contract administrators and to introduce a mentorship program in order to develop and train the younger inexperienced contract administrators. It is also important for any development program to include the experienced contract administrators. The developments in the changes of contract conditions in the various contract forms, FIDIC 2017, NEC 2013, JBCC 2014 and GCC 2015 are all still building up on case studies, papers and workshops. The information gathered via the various channels can only have a direct positive impact on the way any potential claims are considered and naturally in the preparation thereof to the latest industry standards and methods.

Qualify

An aerial view shows the area of a collapsed dam in Brumadinho, Brazil

In recent times qualifications have tended to become more formal in nature with certain employers requiring formal legal qualifications for their contract administrators. However, as with recently qualified engineers with a lot of theory experience, the implications of achieving practical solutions may only be achieved through engaging in additional time and resources this based on more practical experience gained over time. Sometimes it only takes a friendly negotiation and not a fully detailed and legal brief to achieve an amicable agreement. It should, however, be remembered that there is a legitimate basis for such a claim. It is also important that any investment in the contract administration team should also make allowance for all contract administrators to join recognised organisations such as the Institute of Construction Claims Practitioners (ICCP), The Dispute Resolution Board Foundation (DRBF) and the Chartered Institute of Arbitrators (CiArb).

Attendance by the contract administrators to the workshops and courses offered by these and other similar organisations is important in order to keep abreast of new developments and maintaining a certain professionalism within the contract administration team and their community.

Return on investment
The employer that strongly supports the development of the contract administrator and invests in his contract administrators will receive a return on the investment in the form of a better return on the outcome of the claims submitted. This would also apply to the evaluation and possible defence against claims received from other contracting parties.

Often claim values are exaggerated to correct losses on projects with no chance of success and the contract administrator is obliged to follow instructions to prepare such claims. A more professional approach will result in accurately assessed claims and realistic expectation on the outcome thereof. In addition, an important factor overlooked is the identification of chances where either party could earn additional income or even incur savings when identified by the contract administrator.

The theories that apply to the avoidance of structural failures also applies to any justified entitlements. Where events occur that justify any entitlement, arguments for such must be based on both sound contractual and detailed foundations in order to receive full entitlement. Should a justified entitlement be overloaded with either a cost or time entitlement the claim could either be rejected or reduced to a much lower entitlement. The same would apply to incorrect contractual arguments or procedures being followed resulting in claims then being completely rejected.

Conclusion
Structures, if they are going to fail, may take many years to do so. In contrast claims can be lost very early on in negotiations or alternatively may take many years to resolve, but the work of the contract administrator remains the foundation on which any entitlement is built. The claims with a better prepared and stronger foundation will achieve positive results with less chance of an embarrassing collapse when details and arguments are tested.

According to the Global Construction Disputes Report 2018 of Arcadis poor contract administration remains the number one cause of construction disputes.