Are SMEs ready for SA’s economic rebound?

The Covid-19 pandemic and the resulting global recession handed a severe blow to South African Small to Medium Businesses (SMEs). According to a Mckinsey SME Financial Pulse survey published in July, 70% of SMEs were already cutting back on expenditure and retrenching staff. By the end of the second quarter, StatsSA reported 2.2 million job losses.

Trevor Gosling, Co-founder and CEO of Lulalend, says that within the SME sector a number of key industries were severely hit by the national lockdown, mainly; travel, hospitality, offline (non-essential) retail, consumer goods manufacturing and construction.

Gosling points out that SMEs saw a significant drop in sales revenue across all sectors. “Based on our SME survey data collected in July, 94% of businesses had suffered more than a 50% drop in monthly turnover, with 75% of our clients indicating that they had seen more than a  75% drop in revenue.”

In addition, during the peak of the lockdown, approximately 90% of Lulalend’s customers indicated that they only had a one-month cash runway.

“Most SMEs don’t have large reserves of funding to see them through extended periods of low turnover and cash flow. Without the necessary funds, many businesses have struggled to meet their payment obligations, including staff payroll, rent, essential support services, as well as inventory and supply chain payments,” Gosling adds.

At the onset of the pandemic, the government launched a number of relief funds with the intention to support SMEs with access to capital during the period when economic activity was negatively affected by Covid-19. But with more applications for relief than funding available, or slow approvals of applications, many businesses have been left in a precarious financial position.

Gosling explains that low or paused trading and limited access to funding over the lockdown period had a compounding effect on many businesses. In addition, many SMEs are now gearing up for the peak summer trading period. “Now more than ever, this is the time when a healthy cash flow is vital to be in a strong position to grow. Significantly reduced liquidity impacts SMEs’ ability to service existing debts and plan for growth.”

 In a report published by Deloitte on the impact of Covid-19 in SA, it noted that despite the negative impact on small business, there has been an increase in social cohesion and support for local businesses emerging from the shutdown.

This is something that Lulalend has seen across its customer base. Gosling says that the easing of lockdown regulations has contributed to a significant increase in SME confidence and business health, particularly in the retail and manufacturing sectors.

As the economy starts to recover and consumer demand starts to increase ahead of the holidays, Gosling explains that it is important for business owners to understand what their cash flow looks like over the next three to six months, and take action to strengthen it.

“Does your business have enough working capital to meet a backlog of orders or a surge in demand during the peak trading season? Understanding this and creating some predictability in cash flow allows an SME to plan ahead and invest more accurately for the future,” he adds.

Gosling says that having a healthy cash flow is critical for SMEs to take advantage of growth opportunities during this time. “A business needs to be able to make those upfront payments for inventory, fund marketing campaigns or invest in developing e-commerce capabilities’’.

An acceleration in tech development and changing customer behaviour has led to more businesses’ models shifting online. “The boom in e-commerce and online shopping that occurred during the pandemic is here to stay for the long-term. With businesses responding to this change, we have seen a 20% increase in the number of applications coming from online retailers,” Gosling points out.

There is tremendous value for businesses in going online. Across almost all sectors, SMEs who integrate digital technology into their operating models are more likely to grow, reach new audiences, increase sales and increase efficiencies.

While many businesses would normally go the traditional lending route to access working capital, Gosling says that digital lending platforms have been able to adapt quickly to the changing landscape, and respond to the urgent need to get funding in the hands of cash strapped SMEs.

“Fintech companies, like Lulalend, have developed advanced digital systems that are able to assess the true creditworthiness of borrowers and provide the appropriate loan instruments a lot faster and more accurately than the large banks, who have not amended their lending policies to enable more SMEs to access funding,” he explains.

“With the uncertainty of the long-term impact of the pandemic and recession, business owners need to be cautious and have contingencies in place, including building up their cash reserves to improve their liquidity,” Gosling says.

Recognising the importance to SMEs of access to cash during this period, Lulalend is providing its customers with a payment holiday that would allow them to access vital working capital at no cost over the peak season. Any business that takes out funding before the end of November will only have to start repaying from 11th January 2021.

 

Empowering SMMEs in construction is a win-win situation

Small, medium and micro enterprises (SMMEs) are the lifeblood of South Africa’s economy. They make up 98 percent of businesses and employ between 50 and 60 percent of the country’s workforce according to a post-covid report by McKinsey & Company dated July 2020.

Liphu January, site agent for GVK-Siya Zama says that in the construction sector, SMMEs face specific challenges which is why it is vital that they get the necessary experience, exposure and assistance from the bigger construction companies in order for their businesses to grow. “There is a great opportunity for this when bigger construction companies are building within a community and can therefore also help build up the community in the area.”

This was the case with one GVK-Siya Zama’s recently completed construction projects, Abram Hlophe Primary School, in Katlehong. January, who has a BSc Honours in Construction Studies, was a site agent who was responsible for the smooth operation of the project.

Upskilling SMMEs in construction and in business

Relationships with community SMMEs are not always simple at the start of a project. SMMEs may have had bad encounters of poor management or a lack of opportunities when previous projects were built in their area. This sometimes causes friction and apprehension at the outset of a project. January has learnt that setting up a well-represented Project Steering Committee at the outset of a project is vital for the successful integration of community SMMEs into the various trades.

“At Abram Hlophe we all agreed that it was essential to meet deadlines and deliver quality work in order to produce the best results for our client and for the SMMEs that we were working with,” said January. “We also outlined the financial standing of the project which assisted the SMMEs to ascertain where and how they would make money and how much they expected to earn.”

This resulted in relevant training that the business owners could use in their companies in future, January added. “For example, we pointed out details such as how the quantity surveyor worked out how many squares of paving must be laid per day in order to make a profit.”

“Once the SMMEs knew what their targets were, they were able to calculate how many hours they would need to work to reach their targets, and in true entrepreneurial spirit could be found working extra hours and over weekends.”

Assisting SMMEs to navigate a tough landscape

Late payments have impacted SMMEs for many years, not to mention the strain of not being able to work during the national lockdown had on their cash flows, says January. “Most of the SMMEs that we worked with operated close to the margins and could not survive slow or irregular payments.”

As such, GVK-Siya Zama has through the years of collaborating with local SMMEs, established the practice of fortnightly payments, regardless of its own payment schedule on a project, to assist SMMEs financially.

Entrepreneurs making a difference

This year’s Global Entrepreneurship Monitor reports that South Africa has one of the highest percentages of SMMEs whose motivations are to make a difference in the world. “This was reflected in the SMMEs that we worked with on site,” said January.

Although the creation of jobs and transfer of skills were the primary goals, the entrepreneurs portrayed a sense of pride that they were building something of value in their community that would be beneficial to the people living there. Abram Hlophe Primary School became a feature and everyone who worked on it wanted their children or grandchildren to attend it. She recalls one of the workers saying: “I will tell my granddaughter that I laid that brick when she comes to school here.”

Pherdy le Roux, Managing Director of GVK-Siya Zama’s Gauteng business says he is proud of how January has grown at GVK-Siya Zama over the past two years and of the work she has put in to improve and uplift local SMMEs as a site manager for projects such as these.

“It is a time when just knowing how to build is not good enough, as contractors we need to understand how tough the industry is for smaller companies to survive,” he adds. “We need the ability to understand the strengths, frustrations and limitations of the communities where we work and show a true desire for community development and upliftment. Liphu has this ability, she represents the future of the construction industry, she is a new age contractor and the type of person we need in this industry.”

January concludes by encouraging big businesses in South Africa to be cognisant of the benefits that come with working with SMMEs when they are assisted to grow and participate in the economy. “Local SMMEs really have a willingness to go the extra mile and can add immeasurably to the success of a project. In the end we win, the SMMEs win and the community is of course the biggest winner.”

 

Update to Extension of NEMA and EIA Timeframes, plus Late Payment Survey

On 27 March, the WCPDF informed members that Minister Anton Bredell – Western Cape Provincial Minister of Local Government, Environmental Affairs and Development Planning – issued his decision to extend all timeframes regarding NEMA and EIA regulations, for actions and processes affected by the 21-day lockdown, by two months effective from 27 March to 26 May 2020.

Please note that this decision has been withdrawn in light of a new directive issued by the Minister of Forestry, Fisheries and Environment in terms of Regulation 10(8) of the Regulations governing the Disaster Management Act. The new national directive, which has been gazetted, extends the timeframe indefinitely until the end of the lockdown, and makes provision to include any extensions of the lockdown that may occur. To see Min Bredell’s withdrawal notice, also containing contact information, please click here.  To see the new national directive as gazetted, please click here.

In addition, the WCPDF encourages all members to participate in an industry-wide survey aimed at establishing whether late payment of professionals by government departments, implementing agents and municipalities is a problem in South Africa and if so, how big of a problem it actually is.

To find out more and participate in the survey, please click on the applicable link below before 15 April 2020:

  • For Built Environment Professionals, click here.
  • For Contractors, click here.
We thank The Association of South African Quantity Surveyors (ASAQS) for driving this initiative and we look forward to sharing the results with you once they are made available to us.

SMME Contractors Step Up As Big Construction Companies Collapse

SMME Contractors Step Up As Big Construction Companies Collapse

By Janine Espin, Managing Director at Economic Development Solutions

The ground has shifted significantly under big construction players as market dynamics change and small and medium-sized (SMME) contractors step up to contribute more to the sector. These SMMEs represent the future of the industry. As sector interests converge, interesting new SMME development models are emerging.

SMME development in the construction sector is vital, not just to ensure Broad-Based Black Economic Empowerment (B-BBEE) requirements are met, but to help grow the construction industry. As large contractors continue to restructure, retrenched workers are looking for alternatives and so are construction clients. While the opportunities for SMME contractors are growing, their lack of business and management skills confound their ability to grow.

To help develop these companies and create a solid base of skills in the market to grow the sector, a deeper understanding of SMMEs shortcomings—and how they can be addressed—is required.

Challenges for SMMEs

Construction sector SMMEs typically specialise in focussing on civils, electrical or concrete work, steelwork or glazing, for example. Their turnovers can reach up to R50 million and they may employ anything from 100-200 people. With a strong appetite for work, these companies are more flexible in their approach to pricing, scope of work and willingness to employ local workers.

These characteristics make them attractive to contract winners looking to subcontract key aspects of a build, especially where local input quotas are required. However, to qualify for these opportunities, SMMEs must be able to demonstrate accountability—be able to deliver on time and budget, prove they have the skills and qualifications to complete the project, and comply with labour laws and other legislation. Many SMMEs with grassroots origins are not yet able to operate at this level.

With Preferential Procurement and Supplier Development making up 34 of the total 123 B-BBEE points for large enterprises (as per the Amended Construction Sector Code) it is imperative that SMME development strategies be put in place. But to be successful these investments need to be accurately targeted.

From the SMME’s perspective, some of the biggest challenges are knowing where and how to find work, how to bid, how to negotiate contracts, how to comply (with HR and labour laws, B-BBEE requirements, financial reporting), and how to plan and manage projects to meet deadlines and avoid penalties.

Innovative SMME development solutions

One client, a large roadworks company is running a 12-month construction incubator in collaboration with the Department of Roads. EDS worked with the Department of Roads and Transport to identify 36 SMME companies to receive technical road building training from the Department of Roads. The training ensures standards are met in roadworks projects. The construction company sponsors this training. Over the 12-month incubation period, the SMMEs also receive training in basic business skills from the Department of Trade and Industry (DTI’s) Small Enterprise Development Agency (Seda). EDS monitors and reports on all these efforts against the company’s B-BBEE requirements.

The benefits for all players are significant—the country’s skills pool grows, the SMMEs gain skills and jobs, and the sponsoring company can access a pool of trained and certified skills to deliver on its contracts.

In another project, EDS is working with the DTI and a client company. The DTI has committed to match the funding of the client company to ensure a sustainable training model is established.

These are just two of a cluster of SMME projects that EDS is involved in. For our clients in the renewable energy sector, we are working on a number of SMME development projects in rural areas. In addition to Seda business coaching, we provide ongoing mentorship, engaging with SMMEs on a regular basis to help them get set up on government databases, identify projects in their areas, and help them maximise their potential.

Start now – collaborate

As public, private and industry needs to converge, it is becoming easier to create innovative SMME development solutions. The winners will be those companies that band together to drive progress and change.

Big opportunities for young entrepreneurs in construction

Big opportunities for young entrepreneurs in construction

Despite current challenges, there is still plenty of opportunity for dynamic young people in the construction industry.

One might be forgiven for thinking that young people would be well advised to steer clear of construction when choosing a career. But with Youth Month still fresh in our minds, it’s worth reminding ourselves that, despite the real challenges it faces, construction still offers young people a potentially lucrative career, says Rob Newberry, an industry veteran who is currently working with the Master Builders Association North on initiatives designed to nurture small and medium enterprises (SMEs).

While it’s unfortunate that the bigger players are falling by the wayside, their ill fortune is definitely creating huge opportunities for SMEs in both the public and private sectors,” Newberry says. “Make no mistake, it’s a tough industry but, with hard work, it’s still possible to make excellent returns.”

He explains that people consistently misunderstand the financial realities of construction. For example, a R3 million job would typically require 10% capital (R300 000) and could be expected to yield a profit of around 5% (R150 000). Too often, people write this off as insufficient because they see the profit in terms of the contract price. In reality, though, the R150 000 profits represents a 50% yield on the working capital of R300 000.

A well-run contractor typically achieves a return on funds employed of about 50%, and the same holds good for the smaller guys – provided they keep a tight grip on the project,” he says. “That’s a good return in anybody’s book. Government now realises this, it will look for ways to use the Extended Public Works Programme (EPWP) to incubate such small construction businesses, which will in time be able to grow into the space left by the former big guns.”

Thando Nkosi is just one of the entrepreneurial types identified by Newberry as best suited to take advantage of the opportunities afforded by a disrupted construction sector. She inherited the entrepreneurial bug from her dad, who has his own construction business and she branched out on her own a year ago. She is a certified plumber, so her company focuses on plumbing and construction.

Her company, Khepheph Trading Project, currently employs five people and uses a network of sub-contractors.

I wanted to be independent – to make my own decisions and build up my own company. I didn’t just want to earn a salary,” she says. “It’s a bit scary, but luckily my dad is a great mentor.”

Working in construction should also be seen as a way to participate in creating the infrastructure without which the rest of the economy simply cannot function. It’s also one of the industries capable of creating the large numbers of jobs our nation needs, so in many respects this is a career that offers the opportunity also to engage in nation building.

Construction’s role as a foundation of the economy is also evident in the wide variety of companies that make up the extended value chain. Precious Lechesa, MD of Mmidi Occupational Health Services is another black, female entrepreneur who has seen the opportunities that construction offers. Mmidi offers SMEs a complete occupational health service at its clinic, allowing them to start working onsite with the minimal of hassle, but with the peace of mind that their employees are safe and they are not at risk on non-compliance.

Construction remains a big part of our market, but we are also branching out to service other sectors – the big companies closing their doors did definitely affect us,” Lechesa says. “We recently took advantage of the opportunity to exhibit at the Construction Industry Expo at a reduced rate, thanks to our membership of MBA North, so we are hopeful we made some new connections with the up-and-coming construction companies.”

Both women are clear about one thing: it takes determination and drive to make it in the construction industry. Nkosi points out that the opportunities exist for entrepreneurs, with conventional jobs hard to come by. “Do your homework and find your niche – if you concentrate on that and work hard, you will succeed,” she says.

Lechesa concurs. “You need to have a passion for what you are doing and that passion will make you rise above the rest. There are always opportunities in any field – all you need to do is come up with innovative ideas on how to solve the challenges facing your market,” she says.

And, of course, following Newberry’s logic, a 50% percent margin is a prize worth grasping.

Building sector confidence falls further in 1Q2019

Building sector confidence falls further in 1Q2019

Confidence in South Africa’s building sector fell in the first quarter of 2019, with the building confidence index sponsored and compiled by First National Bank and the Bureau for Economic Research (FNB/BER) losing seven points to an almost eight-year low of 25.

The current level of the index indicated that 75 percent of respondents were dissatisfied with prevailing business conditions, FNB and the BER said.

Building activity growth has been contracting for the past few quarters, so such a sharp decline – on top of that seen in previous quarters – was really detrimental for confidence,” FNB property economist Siphamandla Mkhwanazi said.

After staying above 40 during the second half of 2018, the confidence of manufacturers of building materials fell by 24 points to 19 in the first three months of this year, marking the single biggest decline in four years.

The only positive from this quarter’s survey results was an uptick in confidence among architects to 36, from 26 in Q4 2018.

“Overall, the building pipeline suggests that building activity growth will continue to be under pressure in the short to medium term,” Mkhwanazi said.

The FNB/BER building confidence index can vary between zero, indicating an extreme lack of confidence and 100, indicating extreme confidence.

It reveals the percentage of respondents that are satisfied with prevailing business conditions in ix sectors, namely architects, quantity surveyors, main contractors, sub-contractors (plumbers, electricians, carpenters and shop fitters), manufacturers of building materials (cement, bricks and glass) and retailers of building material and hardware.

It covers the whole pipeline from planning to the actual erection of buildings by main contractors and sub-contractors. The fieldwork for the first quarter survey was conducted between January 28 and March 4.

Source: African News Agency (ANA)

In addition:

A broad-based weakening in activity pushes confidence down to worrying lows

The RMB/BER Business Confidence Index (BCI) declined by a further three points to 28 in the first quarter of 2019. This is the lowest level since the 27 index points recorded in the second quarter of 2017, and before that, the deep recession of 2009.

Relative to the fourth quarter, sentiment deteriorated in four of the five sectors covered by the RMB/BER BCI. The nine-point declines in the building and retail trade sectors were the largest.

Building confidence dropped from 32 to 23, the lowest level in eight years. This fall

can primarily be attributed to an across-the-board dearth of new work.

After rallying from 23 to 33 in the fourth quarter, retail confidence reset to 24 in the

first quarter.

These readings are the lowest levels since the onset of the present business cycle downswing in December 2013. The low confidence stems mainly from the persistent underperformance of the largest component, non-durable goods (mainly food and beverages). Similar to 2018, the surprisingly strong performance of furniture sales remained the only bright spark.

Although wholesale confidence declined by a relatively modest four points from 44

to 40, this conceals a massive deterioration in sales.

After hovering around 34 in the first half of 2018, manufacturing confidence

slumped to 26 in the third quarter before recovering to 30 in the fourth quarter. It

relapsed to 25 in the first quarter, as an abrupt drop in export sales hit

manufacturers on top of a faster deterioration in domestic sales.

The new vehicle trade is the only sector that registered an improvement in

confidence. Following the drop from 37 to 15 in the fourth quarter, motor confidence

rebounded partially to a still low 26. Car sales remained dismal.

Bottom line

South Africa will not be able to shift to a lasting higher growth and prosperity path withoutmore short-term pain”, said Ettienne le Roux, chief economist at RMB. This time around, the country cannot rely on the global economy to counterbalance such internal adjustment costs as global growth itself is now shifting to a lower gear.

Building a Sustainable Construction Company

Building a Sustainable Construction Company

Sherwyn Esbend, owner of Sbenz Construction

Over the past two years Sbenz Construction, a member of KwaZulu-Natal Master Builders Association, has matured into a vibrant construction business which specialises in the repair of properties on behalf of insurance companies.

In 2017, Sherwyn Esbend’s office in North Coast Road was an empty space. Today, it has been subdivided into separate offices and a smart reception area and he has just taken delivery of two brand new bakkies.

But it has been a challenging journey and one where his business philosophy of delivering quality results and ensuring top notch service have stood him in good stead.

“I tell people who want to go into business that the more they grow, the bigger the challenges they will face and the larger the potential problems will be. In the school of life, before you go to the next grade, you have to pass the test. So, don’t keep going around the same mountain like the Israelites. Keep your eye on that next level.”

Esbend was born and grew up in Pietermaritzburg into a family of entrepreneurs. Both his grandfather and his father, who passed away when he was just 12, were in the construction industry and he admits that following them seemed the natural thing to do.

After completing his matric, however, he headed to the United States for a year and a half where he helped his sister who ran a laundromat and a construction business.

Back in South Africa, he joined Waltons Stationery and then moved to the Road Traffic Inspectorate. Five years later, when his second son was born, he decided that the dangers and shift work weren’t worth it and moved to eThekwini Municipality where he worked in the signage and advertising department.

On the side, he was doing a few small construction jobs. “I wasn’t satisfied. I knew I wanted to go into business and, specifically, into construction. I’d been trying to do some small jobs but things didn’t always work out. I bumped my head and lost a lot of money but I persevered,” he recalls.

The Sbenz Construction team

Three to four years ago, Esbend remembers being so broke that he couldn’t scrape together enough money to buy a loaf of bread. His wife Karen, who he says has been by his side throughout, dipped into her salary to help pay workers. Without a car, he relied on public transport and hired a bakkie to do jobs.

Having his wife by his side has been one of his biggest assets, though. “If we face a hurdle, we only give ourselves one day to mope. After that, we look for solutions and pick ourselves up,” he says.

He resigned in November 2016, using his pension payout to set up Sbenz Construction. Now that “everything was on the line”, he no longer had the option of failing.

Because he believes that a good business needs to have a professional image, he invested in branding his company and building a professional image to give his business credibility. Quotes and invoices were delivered on smart letterheads. He registered a domain name rather than resort to a Gmail address.

Whilst subcontracting for one particular construction company, Esbend realised that the future of his company lay in the insurance sector. Repairs in response to insurance claims provided a significant and steady volume of work with reliable payments.

But being accepted onto the service provider panels of large insurance companies and financial institutions proved difficult. Companies were looking for a track record and references from others in the sector.

He says the turning point came when he joined the Sekela Development Programme (Sekela), which develops and supports small enterprises through workshops and mentorship.

This, in turn, resulted in Sbenz Construction being accepted on to the SA Home Loans (SAHL) panel of contractors who are called in to effect repairs in response to insurance claims.
“SAHL opened the door for me. Without being included on the SAHL panel, I would not have been able to get on to other panels. They have given us references. Now we are doing work for other major insurance brands and big banks and can grow our business,” he says.

Another game changer was the massive flash flood that hit Durban. As insurance companies scrambled to do the repairs, more contractors were needed and companies waiting in the wings were called in to assist with the excessive backlog of repairs that needed to be done.
“Through that storm, we made it on to one of our biggest clients panels, we had been requesting for some time but had been rejected,” he recalls.

Sbenz Construction completed about 200 jobs and has only just finished all their storm related work. Money earned was ploughed back into the business. This enabled Esbend to move to his much larger current office and employ another 20 people. With more big clients in the pipeline, he expects to grow his staff even more.

His association with SAHL also influenced his decision to study further. Following a Sekela advisory board session with SAHL which covered self-development, he registered with MANCOSA for a Bachelor of Business Administration. He has on-the-ground experience of much of the study material but believes this qualification will give him a far broader overview of business and increase his credibility with clients.

He is also focusing on improving his company’s Construction Industry Development Board (CIDB) grading which will open doors to other opportunities in the far broader construction business. “When we joined Sekela, we were on CIDB Grade 1, now we are in the process of applying for Grade 5. This is not something I even dreamed of. I thought if I could get to Grade 3, I would be fine!” he says.

At present, 95 percent of his work is for the insurance industry and this remains his primary focus.

Esbend’s long term plans include pitching for work from the petroleum industry and, in the medium term, he plans to partner with larger construction companies on major contracts as part of their Enterprise Development Programmes.

Steven Motha: a success story of note

Steven Motha: a success story of note

By Tasveera Singh, Marketing and Membership Assistant, Master Builders KwaZulu-Natal

Steven Motha accepting the award for Commercial Buildings (under R50m) in 2018 alongside his mother, father and the Association’s President, Joyce Dolly Tembe

Rising from humble beginnings, Steven Siyabonga Motha was born and raised in Madadeni, a township in Newcastle. After attending Phendukani High School and matriculating in 2004, Steven went on to complete his certificate in Construction Management and then later completed a certificate in Project Management through the National Home Builders Registration Council (NHBRC).

Inspired by his father, who is also a contractor, Steven founded Sonqoba Motha’s Building Construction CC in 2015. He then joined Master Builders KwaZulu-Natal as a member and saw 2016 as life-changing when he was accepted into the Master Builders KwaZulu-Natal Emerging Contractor Programme.

The Master Builders KwaZulu-Natal Emerging Contractor Programme provides a platform for new business owners to learn and achieve their business goals.

Steven was one of 25 participants in the programme who completed the training aspect. He was allocated to a mentor, Mohammed Khan from ESE & Projects for six months in 2017. During this time, Mohammed Khan and Steven Motha discussed business goals and put a structured programme in place to achieve those goals.

When his journey with his mentor concluded, Steven entered the last phase of the programme which is “adopt-a-company”. This phase entails participants being linked to larger companies with projects underway where they gain practical exposure to on-site operations and relevant experience. This assists participants exiting the programme as they are more likely to conform to industry standards and best practice. Steven was ‘adopted’ by ESE & Projects for six months where he gained valuable industry experience.

Project ‘Pre-Eminence Studio’ for which Steven Motha won the Excellence in Construction Award in the Commercial Buildings (under R50m) category

The Emerging Contractor Programme has since inception enrolled 192 delegates – 23% female and 21% youth – from across KZN including both urban and rural beneficiaries. Of the 106 delegates who have since graduated, 33% were from women-owned companies while 23,5% were youth.

Steven won the Excellence in Construction Award in the Emerging Contractor category at the Master Builders KwaZulu-Natal Annual Awards in 2016 for his single storey building constructed on a strip foundation “64 Nagtagal Street”, as well as the Excellence in Construction Award in the Emerging Contractor category in 2017 for his project “No. 18 Olympic Street”. Steven proudly graduated from the Emerging Contractor Programme in 2018.

Proof that hard work and determination builds a road to success, Steven’s combined skills and education led him to construct the stunning “Pre-Eminence Studio” for which he won the Excellence in Construction Award in the Commercial Buildings (under R50m) category at the Master Builders KwaZulu-Natal Annual Awards in 2018.

Steven’s progression in the construction industry is a success story of note, a story which Master Builders KwaZulu-Natal believes is still being written.

CIDB mulls end-to-end driving of Contractor Development Programme

CIDB mulls end-to-end driving of Contractor Development Programme

German Mphahlele, Acting Programme Manager: Provincial Offices and Contractor Development (PCD)

In December South African Builder spoke to Mr German Mphahlele, Acting Programme Manager: Provincial Offices and Contractor Development (PCD) of the Construction Industry Development Board (CIDB) about the current role of the CIDB in the support and development of Emerging Contractors – and the Board’s vision for future development of contractors.

Presently the role of the CIDB in Contractor Development is that of providing leadership, guidance and direction in the development of emerging contractors. “Our objective is to make contractor development more sustainable – to the point where these Emerging Contractors progress and enhance their capabilities and competencies which will ultimately enable them to improve their performance,” said Mphahlele.

He explained that, whilst the CIDB can boast significant success in creating an enabling framework that promotes contractor development, the inconsistent implementation and the slow uptake of best practice contractor development principles is of great concern.
“The current CIDB Contractor Development Programme (CDP) has to date been focused primarily on public sector infrastructure clients such as departments of public works municipalities and state-owned enterprises (SOEs).” continued Mphahlele. “As there is a need to embrace both the public and private sectors to the full – to same level of Contractor Development – we have analysed different contractor development models in the construction sector and have developed guidelines for a uniform, coordinated and over-arching Contractor Development Programme complete with set Standards and Best Practice procedures.”

The Future of CPD
It is against this background that, with the contractor support framework and grading system firmly in place following extensive development over recent years, the CIDB is now poised to broaden that framework. “We are ready to move beyond the supporting role to the actual driving of Contractor Development to the full,” explains Mphahlele. “And we are exploring ways and means of playing a leading role in taking contractor development to the next level.”

To this end a CIDB think tank is working actively on setting standards for contractor development, the CIDB has published the CIDB Competence Standard for Contractors. The standard establishes the competencies of a contracting enterprise which need to reside with the owner and/or key nominated representative of the contractor. It is a requirement of the CIDB contractor development framework that, to graduate out of a development programme, a contractor must meet the requirement of the CIDB Competence Standard for Contractors.
These standards have changed perspectives on contractor development and will enable and encourage construction entities to engage with and employ registered sub-contractors. It follows therefore that a Register of all contractors will be a crucial requirement, i.e. including sub-contractors.

Going forward the CIDB development support strategy will be enhanced by providing development support through the proposed CIDB Best Practice Fee.

Such a support will incorporate a coordinated mentoring of contractors, assessment and top-up training in line with the CIDB competence standard for contractors, implementation of Construction Management Systems coupled with CIDB financial support.

In addition, close collaboration and partnerships with industry bodies and stakeholders such as Master Builders South Africa (MBSA), Black Business Caucus in the Built Environment (BBCBE) the South African Forum of Civil Engineering Contractors (SAFCEC), the Association of Architectural Aluminium Manufacturers of South Africa (AAAMSA), the Association of South African Quantity Surveyors (ASAQS) and others, is essential.

“It is hoped that a full definition will be achieved by mid-2019 with implementation set to be initiated by year end,” concluded Mphahlele.

Emerging contractors set to benefit from SANRAL-Wirtgen MoU

Emerging contractors set to benefit from SANRAL-Wirtgen MoU

The South African National Roads Agency (SANRAL) and Wirtgen Group South Africa have signed a Memorandum of Understanding (MoU) that will give small enterprises better access to the road construction machinery they need to execute major SANRAL-owned projects.

The agreement will afford small to medium construction contractors full access to the Wirtgen Group’s full suite of leading equipment brands, as well as financing, training and logistics. “This is an important step in the broader national aim to transform the construction and engineering sectors and enable emerging black contractors, including enterprises owned by women and the youth, to participate more fully in major projects,” says Louw Kannemeyer, Engineering Executive at SANRAL.

Infrastructure development will be a major contributor to the efforts to attract investment to the country and was singled out at the recent Job Summit for its ability to create employment and stimulate economic activity.

We are delighted that a global leader in construction such as Wirtgen is stepping up to fill major gaps in the industry that constrain the growth of smaller contractors and impose barriers on their ability to tender for major work packages,” said Kannemeyer.

Equipment is one of the major success factors for contractors in the execution of their projects. If contractors are not well equipped, the country also faces the danger of sub-standard road infrastructure. The agreement will afford emerging contractors greater access to all Wirtgen Group equipment brands, namely Wirtgen, Vögele, Hamm, Kleemann, Benninghoven and Ciber,” says Waylon Kukard, National Sales Manager at Wirtgen South Africa.

The agreement with Wirtgen is part of a process introduced by SANRAL to open up the engineering and construction industries through its tender and enterprise development initiatives. It will greatly benefit smaller contractors who will now have access to the company’s range of equipment.

Through its leading brands, Wirtgen offers a wide range of equipment, all the way from rollers, bitumen spreaders, sweepers, milling machines, recyclers, slipform pavers, modular asphalt pavers, to mobile asphalt plants and crushers and screens.

Emerging contractors will be able to purchase or lease the sophisticated machinery required to meet the high standards that are in place within the South African road construction environment.

This move will open new doors for Wirtgen to collaborate with small contractors by offering them access to finance, technical assistance, mentoring and logistical support. SANRAL and Wirtgen will also collaborate on issues such as training, supply chains and access to information about tendering processes.

We are confident that this MoU will increase the number of participants across the value chain of the road construction sector and contribute to fair competition,” says Kannemeyer. яндекс