Construction industry urged to recommit to Code of Good Practice to solve current challenges

Construction industry urged to recommit to Code of Good Practice to solve current challenges

A group of construction industry stakeholders has urged the industry to return to basics in order to overcome its current challenges successfully. The call was made at a stakeholder meeting initiated by Master Builders Association North, as mandated by a recent sub-contractors’ committee meeting.

 

The stakeholder meeting consisted of Master Builders South Africa, represented by Mr Roy Mnisi, MBA North, represented by Mr Mohau Mphomela, the South African Property Owners Association (SAPOA), represented by Mr Neil Gopal, and the Association of South African Quantity Surveyors (ASAQS), represented by Mr Yunus Bayat.

“It’s no secret that the construction industry is in crisis, with several of the leading companies either liquidated or in business rescue – clearly there is a need for a period of self-examination,” says Mohau Mphomela, MBA North Executive Director. “It’s essential we overcome our challenges not only for our own sakes, but also for the sake of the country: construction remains one of the biggest potential creators of jobs. According to Statistics SA’s recent Quarterly Labour Force Survey, the sector still accounted for 24 000 jobs and contributed to the modest growth in the number of employed people.”

One of the key issues identified at the meeting is the established practice of making unauthorised amendments to Joint Building Contracts Committee (JBCC) and Master Builders South Africa contract documents. These standard documents are designed to simplify the administration of construction contracts, implement best practices and industry standards, and spread risk equitably across the construction value chain. They represent the consensus view of all industry stakeholders, and build on the accumulated experience and wisdom of these bodies, which are co-signatories of the contracts.

Mr Mphomela says that the practice of amending JBCC and other Built environment contracts to, for example, insert conditions such as “pay-when-paid” puts all players in the value chain at risk. Such practices contribute greatly to the industry’s malaise.

“JBCC and Master Builders contracts are designed to create a fair and standardised business environment, and to ensure that all parties are protected. Amending them is not only bad business practice in the long run, it is illegal,” he notes. “We are seeing the results around us. Unauthorised amendments to these documents, especially payment clauses, should be immediately flagged and reported to the Master Builder Regional Associations, ASAQS and SAPOA.”

Adopting the “pay-when-paid” principle often means, for example, that smaller contractors get paid late or not at all. Most cannot deal with unpredictable cash flows and are forced to shed staff or even go out of business.

Tender procedures were also identified as cause for concern. Although public tenders are by law required to be transparent, this is not enforced. The meeting called for all public tenders to be open to ensure transparency. Conversely, there is no regulation regarding the transparency of private tenders, and therefore no requirement for reporting on why contracts are awarded to particular contractors. In an open market system, contractors are advised to be careful of entering into contracts that expose their companies to low or no margins.

“The various professional and industry organisations all have codes of good practice that spell out the standards expected of their members. If the industry recommits to following these codes and acting ethically, many of these challenges will be reduced,” Mr Mphomela concludes.

GBCSA, ASAQS and UP launch the 2019 edition of Green Building in South Africa: Guide to Costs & Trends

GBCSA, ASAQS and UP launch the 2019 edition of Green Building in South Africa: Guide to Costs & Trends

The Green Building Council of South Africa (GBCSA), the Association of South African Quantity Surveyors (ASAQS), and the University of Pretoria’s (UP) Faculty of Engineering, Built Environment and Information Technology recently launched the 2019 edition of Green Building in South Africa: Guide to Costs & Trends. It is the second publication following the 1st edition that was issued in 2016. The document provides interesting trends and valuable insights about the influence of green design and construction on both capital and operational costs.

The guide is available in electronic format and it will be of great benefit to the built environment. The thorough, peer-reviewed research and presentation of the results make it a one-of-a-kind publication on an international level,” says Karl Trusler, Edutech Director at ASAQS.

Challenging the notion of the ‘green cost premium’

With increased awareness and education in the built environment regarding the green building movement, a perception that green building attracts a significant cost premium when compared to conventional construction emerged. To address this concern, The Cost of Green Building Study Committee was established in 2014. The 2019 edition includes the Committee’s convincing results regarding the business case for green building.

The green cost premium appears to be progressively diminishing over time, largely because of growing maturity in the industry,” says Danie Hoffman, Senior Lecturer at the University of Pretoria’s Department of Construction Economics who is the lead researcher on the project.

Size and location matters

The report also confirmed the 2016 finding of a strong negative correlation between green cost premium and construction size. The larger projects managed to achieve a Green Star certification at a much lower average green cost premium when compared to smaller projects.

The data however also confirmed that the cost premium for buildings smaller than 5 000 m2 has reduced significantly from 9,3% (2009/14 data) to 4,6% (2015/18 data).

Office buildings that were developed for single corporate tenants had initially attracted much higher green cost premiums compared to buildings developed for a multi-tenant mix. Since 2015, this gap has been closed,” says Hoffman.

He adds that the business case for a comprehensive investment decision should include both the cost premium of constructing the building and the financial performance of the building in operation.

MSCI data confirmed that Green Star certified prime and A-grade offices produced a total return of 11,6% in 2017 versus 8,0% for non-green certified prime and A-grade offices. Better work environments and a lower impact on the environment have led many developers to achieve a significant return on their green building investments. “We hope the report will help guide future real estate decision making towards more sustainable, future-ready buildings in South Africa,” concludes Hoffman.

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.

The third annual ASAQS Conference promotes agility and adaptability

The third annual ASAQS Conference promotes agility and adaptability

The Association of South African Quantity Surveyors (ASAQS) Conference took place 2 August at Gallagher Convention Centre in Midrand. The Conference inspired quantity surveyors from across the country.

Meritorious Service Award winner Prof Kathy Mitchell and Larry Feinberg, Executive Director ASAQS

Academic excellence and outstanding professional achievement was rewarded at the ASAQS Gala dinner. Prof. Kathy Mitchell received the prestigious Meritorious Service Award for her contribution to the profession and built environment. Quantity surveying university students from across the country also competed for the Future Leaders Award, Candidate Achievers Award and the Gold Medal Award. The awards are not only aimed to reward and congratulate students for academic excellence, but also to inspire them to take over the reins as future leaders in the quantity surveying profession.

The theme of the Conference, Agility, Swift and Strong aimed to embrace the winds of change to better decide whether you should build walls or windmills. All the speakers said changes in the technological, economic and political landscape need to be embraced by the Quantity Surveying profession.

Gold award nominees: Those that have exhibited traits during their studies that give us great hope for the future of our profession. Winner: Alain Alexander (middle) Charnike Coetzee (left) and Jhon Thatcher (right)

Larry Feinberg, Executive Director of the ASAQS said over the past three years they have been incrementally growing the value proposition of the ASAQS annual flagship Conference. “Certainly not in the last 3 decades has it been more important for practising quantity surveyors to understand and embrace the ever changing technological and political landscape and become adaptable and agile in using these new powerful tools to their own advantage,” he said. At the ASAQS annual flagship Conference numerous tools were discussed.

Uwe Putlitz from JBCC discussed Life is too short to deal with avoidable (building) disputes. Another highlight at the Conference was the presentation by Craig Howie from AECOM on Building Information Management (BIM) and how this new technology is creating new potential opportunities. “In the near future clients and other practising professionals within the built environment will most likely increasingly require the professional team to employ BIM and pass on the savings that this platform can generate when used on large construction projects,” Feinberg said.

Rudolf Pienaar spoke on Growthpoint’s sustainable journey and how the industry can bring about change through green building. “Green building and sustainability are no longer just catch phrases for the privileged few that strive to reduce carbon emissions. The word sustainability in the public domain is fast becoming synonymous with cost and energy savings and I am by no means alone when I say that I can see a much larger role for QS’s to play in advising their clients of potential long term savings,” Feinberg said.

Dr. Ron Watermeyer discussed government’s Standard for an Infrastructure Delivery Management system (SIPDM), how the processes work, how target contracts can be utilized and how this has benefited projects he’s been involved with.

The ASAQS thanked the over 230 delegates for their contribution and reiterated that the QS profession is going from strength to strength.

Gold Award Nominees should have obtained an average mark exceeding 75% for all years of study, made up of an average mark exceeding 75% for the first three years of study combined, plus an average mark exceeding 75% for the fourth and final year of study. Other assessment criteria, includes extramural activities, contribution to community, social responsibility, personality and leadership qualities.

Debunking the rate per square metre cost myth

Debunking the rate per square metre cost myth

A “cost per square metre rate” is a method of expressing building cost that should be used with extreme caution by both clients and contractors involved in the cost comparison and cost planning process.

So says former Association of South African Quantity Surveyor (ASAQS) President, Bert van den Heever.

Image: JobmailSA

There are a number of design variables which can adversely influence square metre rates, thereby giving a false impression of the cost of a building project and this can lead to serious problems for both clients and contractors. “You will not compare a Porsche to a Volkswagen on the basis of their cost per square metre, so why try and do it with buildings?” asks Van den Heever.

As a client, a generic cost per square metre rate doesn’t give you the detailed information that you need regarding finishes, fittings, services, site development costs and so on. There is a wide range of other building elements that also have an impact on costs and therefore quantity surveyors normally do elemental estimates to derive the square meter cost of a project. “An elemental estimate provides cost build-ups for elements such as the substructure, ground floor, external façade, roofs and enables the quantity surveyor to advise the client on aspects of cost at a very early stage” says Van den Heever.

It is important to note that less than 40% of a building’s cost is the structure itself, so the project is far from completed once the foundation has been laid, the walls have been built and the roof constructed. Smaller contractors who tender on a cost per square metre basis puts both themselves and their clients at risk.” says Van den Heever. We have, on numerous occasions, been approached by clients or their attorneys when building contracts turn sour, only to find that because there was no detailed breakdown of the costs, the project had run into trouble or come to a standstill due to overpayments on the structural elements,” says Van den Heever.

Why and how design variables play a role

A square metre rate is calculated by dividing the net cost of the building (excluding aspects such as site works and cost of land) by the gross square metres of the building or Gross Floor Area (GFA). Typically GFA can be defined as the total floor area inside the building envelope, including the external walls and excluding the roof.

As a general rule, the simpler the shape of a building, the lower the unit cost will be, but even this can be misleading as a square building of 10×10 m and a rectangular building of 25x4m have the same floor area but the rectangular building requires 45% more walling to enclose it. More intricate designs generally result in higher perimeter/floor area ratios – increasing excavation costs, drainage costs and a number of other construction related costs significantly,” explains Van den Heever.

Hiring a Quantity Surveyor early in the project, preferably not later than when sketch plans are being prepared by the architect, will put a client in the best possible position to achieve the look, finishes and final touches they require and still remain within their budget.

Both the client and the architect need to be fully aware of any additional costs or savings that may arise from shape, size, circulation space and a number of other variables in the design of a building. The services of a registered Quantity Surveyor can help them adopt an approach that will assist the client in achieving a suitable balance between cost, aesthetics and functional aspects,” concludes Van den Heever.