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.

OHS Seminar in Midrand on 21 August 2019 

OHS Seminar in Midrand on 21 August 2019

Master Builders Association North (MBA North) in collaboration with The Institute for Work at Height (IWH)The South African Forum of Civil Engineering Contractors (SAFCEC) and Black Business Council in the Built Environment (BBCBE) are hosting a special OHS Seminar in Midrand on 21 August 2019 to address these burning issues.

To register for the Seminar, kindly contact Ms. Mbuya Ramabulana mbuya@mbanorth.co.za / 011 805 6611. 

Rural Flavour Infuses MBA North Regional Safety Awards 2019

Rural Flavour Infuses MBA North Regional Safety Awards 2019

Stimela Crossing under construction by Belo & Kies Construction in Barberton, Mpumalanga

The broad geographic footprint of Master Builders Association North (MBA North), which incorporates not only Gauteng, but Mpumalanga, Limpopo, and North-West provinces, has for the first time attracted interesting and innovative entries for the Association’s Regional Safety Awards from outlying country areas and towns such as Vryburg, Barberton and Ermelo. Other towns visited included Rustenburg and Polokwane.

The event, which was staged in Midrand in July, was well attended by members of the Association, competition participants, MBA North office bearers, Past Presidents, VIPs from various industry bodies and sponsors.

In his welcoming address, Executive Director of MBA North, Mohau Mphomela acknowledged and welcomed all present, with a special welcome to MBA North President Musa Shangase, Past Presidents Eunice Forbes, Neil Duncan, Pieter Rüde, Lea Smith, Tony Riley and Jason Wilmot, as well as members of the Executive Committee.

He noted the enthusiasm projected by all participants throughout the duration of the Competition and congratulated all who had submitted entries and participated in the Regional Safety awards. “It is this level of professionalism and dedication to Health and Safety that makes this Award ceremony so important to the industry and to the South African construction sector as a whole,” he said.

MBA North Construction Health and Safety Manager, Gerhard Roets said in his address: “It has been most encouraging for us to welcome the new entries from outlying areas and we see this as an important permanent feature of our Regional Safety Awards.”

Gerhard Roets, MBA North Construction Health and Safety Manager

Roets elaborated on the Awards statistics and structure, noting that 66 entries had been received and 56 audits were successfully completed between 9 May and 27 June 2019.

The Lead Audit team was composed of MBA North Construction Health and Safety officers: Gerhard Roets, Michelle Kok and Manie Van As.

In announcing the winners in the various categories Roets named the winner of the Federated Employers Mutual (FEM) trophy in Category I for projects of over R750 million as WBHO Construction (Pty) Ltd for its River Creek Deloitte project. He noted that the project stood out with a zero disabling injury frequency rate: “For a project of this magnitude, this is quite impressive,” he said. “The contractor and sub-contractors all have a strong health and safety culture – from the top all the way down.” (For the full list of winners see Page 12).

Winners of the Federated Employers Mutual (FEM) trophy in Category I for projects of over R750 million: WBHO Construction (Pty) Ltd for its River Creek Deloitte project

Special Awards were also presented to the following:

  • Best Performing Client Agent of the Year: Danie Jansen van Vuuren from Cairnmead Industrial Consultants

  • Best Performing Construction Manager of the Year: Christiaan Fourie from WTJV

  • Best Performing Construction Supervisor of the Year: Jean Le Roux from WBHO Construction

  • Best Performing Health & Safety Manager of the Year: Mark John from WBHO Construction

  • Best Performing Health & Safety Officer of the year: Jacques Steyn from Belo & Kies Construction

  • Best Performing Health & Safety Representative of the Year: Siyanda Mathebula from WBHO

Keynote speaker, Chief Executive Officer of the Federated Employers Mutual Assurance Company (FEM), Ndivhuwo Manyonga, began her address by pointing out that in global terms some 2.8 million people died every year in work related accidents, of which the construction industry represented the highest rate of deaths.

Keynote speaker Chief Executive Officer of the Federated Employers Mutual Assurance Company, Ndivhuwo Manyonga, addresses participants, winners and guests

In South Africa” she said “we have 8 000 accidents annually in our sector. In 2018 63 of these were fatal motor accidents. In one instance alone 17 employees died on the spot in a head-on collision.” Manyonga noted that the average age of employees claim payouts by FEM is 30 years of age.

In closing, Musa Shangase, President of MBA North, gave thanks to all present for their attendance, especially competition participants and winners and to Ndivhuwo Manyonga, CEO of FEM) for her enlightening address, He also thanked the range of loyal MBA North sponsors who made the event possible, the MBA North Staff for hosting the Regional Safety Awards Ceremony and Ferdi Snyman for being the Master of Ceremonies.

River Creek Deloitte project currently under construction by WBHO – winner of Category I for projects of over R750 million

 

MBA North Winners by Category of the 2019 Regional Safety Competition

Category

Company 2019

A: Plant & Storage Yards

Probuild Construction (Pty) Ltd

B1: Allied Trades

PERI Formwork Scaffolding Engineering (Pty) Ltd Polokwane Branch

B2: Manufacturers

ER Signs & Safety Springs Workshop

C:

N/A

Category Range

Company : Project

D: R15m to R40m

Belo & Kies Construction (Pty) Ltd : Toyota Vryburg

E: R40m to R100m

Belo & Kies Construction (Pty) Ltd : Toyota Polokwane

F: R100m to R250m

WBHO Construction (Pty) Ltd : Steyn City High School Phase 2

G: R250m to R450m

WBHO Construction (Pty) Ltd : Pretoria Head & Neck

H: R450m to R750m

WBHO Construction (PTY) Ltd : Trilogy Collection

I: R750 plus

WBHO Construction (Pty) Ltd : River Creek Deloitte

Best Sub Contractor with Site Establishment

Malinga Scaffolding (Pty) Ltd : Safeways Mall

Best Sub Contractor without Site Establishment

MFS (Pty) Ltd : 144 Oxford Road

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.

Master Builders Association North – celebrates 115 years of service to the construction industry

Master Builders Association North – celebrates 115 years of service to the construction industry

 

 

 

 

 

 

The Pretoria Master Builders Association was founded in 1903 and the Johannesburg Master Builders Association was founded in 1894 and was formally constituted in 1904. These organisations merged in January 1996 to form the Gauteng Master Builders Association (GMBA). In 2012, the association underwent a name change and is now known as the Master Builders Association North (MBA North) – incorporating the following four regions: Gauteng, North West, Mpumalanga and Limpopo.

The Association is located at Construction Park, No. 1, 2nd Road, Halfway House, Midrand and is an employers organisation serving the interests of its members in the building and allied trade industries, registered in the Building Industry.

Since its inception the Association and its members boast a rich legacy of construction of countless iconic landmarks across the region and has pioneered important construction training courses, developed contractual agreements and brought construction health and safety into sharp focus – amongst numerous other services for its members.

The Union Buildings: On the 26th November 1910 the cornerstone of the Union Building was laid by the Duke of Connaught after General Jan Smuts had given the go-ahead for the planning.

Two firms of contractors were appointed on the Building. Meischke, a Hollander to build the two blocks, and Messrs Prentice and Mackie for the central Amphitheatre Block.

Hoisting of the Atlas statue at the Union Buildings

115 Years On – Building On The Decades Of A Strong Legacy

115 Years On – Building On The Decades Of A Strong Legacy

It is for us as the Master Builders Association North team – comprising our professional services staff, office bearers and Executive Committee – indeed a great honour and privilege to uphold and continue with the excellent work begun by the industry stalwarts of the late19th and 20th centuries,” said Mohau Mphomela – Executive Director of Master Builders Association North.

A significant portion of our membership base has been with us for over 50 years and many are also smaller family owned businesses, such as HJ Wolfwinkel , who have been members of MBA North for over 70 years, Each still plays a very active role in the association, particularly in the ExCo and mentorship roles..

Such companies, to name but a few, include HJ Wolfwinkel (1947); Derek Smith & Sons (1926); Giuricich Bros Construction (1946); Barrow Construction (1905); Ohlhorst Africa (1963); Concor Construction (1936); Edilcon Construction (1968); and Corobrik (1963).

Mohau Mphomela – Executive Director of Master Builders Association North

Furthermore, it is these legendary stalwarts of old that have ultimately made the MBA Norththe strong member-orientated organisation it is today: in particular with regard to training and skills development, preparation of standard contracts and manuals, and most importantly, the great strides made in the management and operation of Construction Health and Safety

Looking to the future

Musa Shangase, President of Master Builders Association North

As 35% of overall business comes from Government projects it remains one of our key objective to continue with direct and robust engagement with Government at every level on behalf of our members,” said Musa Shangase, President of MBA North.

In this way we will assist where there are gaps and will have a dedicated team interacting directly with Ministers to promote the National Development Plan (NDP).

In the same vein, as much project investment funding is derived from the private sector, we will maintain and escalate our engagement with these companies and individuals.”

Mphomela notes that: “We envisage expansion and growth into different provinces, thus creating much more awareness. In addition we re now holding more events and workshops in the various northern provinces.”

Mission

The following are the Strategic Pillars of Delivery of MBA North:

  • Providing quality services that matter to our members

  • Facilitating best practice within our MBA and within the building industry

  • Building teams and network platforms that make a difference

  • Enabling exceptional quality through sustainable transformation.

Code of ethics

The Association expects its members to maintain a high standard of conduct and efficiency and has accordingly drawn up the following code of ethics to which all members are required to adhere.

A member shall conduct their business in a just and honourable manner and shall, in their dealings with clients, with members of the professions, other contractors and subcontractors, suppliers and employees, maintain at all times the high standard of business integrity required by the Association.

MBA North Executive Committee Members

The general management of the Association is overseen by the Executive Committee (EXCO). Members of the EXCO are elected from the ranks of the general membership.

There are currently twenty elected members on the Committee and one co-opted member. The EXCO meets at least once a quarter and follows a structured Agenda which covers governance, membership, financial, commercial, administrative and strategic matters.

 

 

2019 Office Bearers: Front row, from left to right:Sello Mokawane – Jnr Vice President, Musa Shangase – President, Wayne Albertyn – Vice President. Back row, from left to right:Mohau Mphomela – Executive Director, Jason Wilmot – Immediate Past President, Mandla Danisa – Honorary Treasurer.

SIDEBAR

MBA North markets the association to all relevant target markets, from architectural professionals and developers to homeowners.

MBA North provides services that support the continuous development of our members through educating, informing networking and strategic partnerships. By becoming a member you will instantly be part of a professionally diverse network of over 500 members. Our regional and provincial events and online resources provide our members with unprecedented networking and business opportunities with fellow MBA North members, access to employers, vital industry advice, continued learning and high quality speakers.

This puts them in a mutually beneficial networking space that creates business opportunities between members.

Barrow and MBA North enjoy a long and fruitful relationship

Barrow and MBA North enjoy a long and fruitful relationship

Barrow Construction (Pty) Limited is the oldest construction company in South Africa. SA Builder speaks to John Barrow, Managing and Contract Director, about the company’s 122 years of existence and its long-standing ties to what is now the Master Builders Association North (MBA North).

Barrow Group Directors. L to R: Shaneel Singh, Neil Barrow, Paul Barrow, Colin Barrow, Donald Barrow, John Barrow and Michael Makhudu

What is the backstory of Barrow and its association with MBA North?

I am John number five out of a line of John Barrows that have worked for the company. My great grandfather was one of the first Presidents of the MBA as it was known then. Subsequently, my grandfather, my father and myself have been Presidents ̶ I was President in 1997 and our relationship has evolved over the last 20 years.

We had our 120th company celebrations two years ago, and the firm really started off as a joinery shop in Doornfontein in 1897, when Johannesburg was a tiny mining village. My great grandfather was a friend and colleague of the famous architect, Herbert Baker, and many of the early Johannesburg buildings were done in collaboration; for example, some of the well-known houses on the Parktown Ridge, the Medical Research Centre and Saint John’s College (Baker designed the new Houghton school buildings).

We have grown up with the history of early Johannesburg and I have had the privilege of learning from my father, his brothers and our grandfather before them.

What was Barrow’s first project?

This was the Dutch Reformed Church, known as Paarls Hoop (Langlaagte) and was built in 1899. The architect was Hermann Kallenbach, who was a Lithuania- born Jewish South African architect. Kallenbach was one of the foremost friends and associates of Mahatma Gandhi, and was introduced to the young Gandhi while they were both working in South Africa. After a series of discussions, they developed a long-lasting friendship.

What is your view of the state of the SA construction industry in general and what are the projects Barrow is currently undertaking?

The industry has become fragmented and the need for a “Builders’ Club” has declined because the world has opened up. As we’ve grown, our needs for services has diminished, unlike the days when there was a Building Industry Council and we were heavily involved in wage negotiations.

Training in the industry has also fragmented and the fact that companies don’t employ massive numbers of people anymore, due to the tough economic environment, has also factored into the changes. We still employ a fairly large labour force, however.

We are engaged in major construction activities in Sandton, Rosebank and Waterfall and we’re in joint venture with Attacq with the Waterfall project, which is on the west side of the Mall of Africa; we’re busy with an office block and a hotel on a super basement. We also have a project at Menlyn on Maine but most of our work is in Rosebank.

Oxford and Glenhove building at night

Our major focus is now property development ̶ this new focus has been beneficial as it has been counter-cyclical to industry downturns. Our property development side has buoyed us when our construction business has lagged, and in that way we’ve been able to keep our construction teams busy.

MBA North outlines opportunities for building contractors in Mpumalanga

MBA North outlines opportunities for building contractors in Mpumalanga

In the face of tough economic conditions, the Master Builders’ Association (MBA) North, NHBRC and CETA are helping contractors in Mpumalanga make the most of available opportunities.

MBA North, the construction sector industry association for Gauteng, North West, Mpumalanga and Limpopo, partnered with the Construction Education and Training Authority (CETA) and the National Home Builders Registration Council (NHBRC) to present a workshop session aimed at helping Mpumalanga building contractors to find and optimise opportunities in the region.

2019 is proving to be yet another challenging year for the industry, with even large contractors battling with cash flow, shrinking margins and labour issues. For smaller contractors, securing sub-contracting engagements and accurately costing jobs in an increasingly competitive market, are also challenges. To help contractors, the annual Mpumalanga Contractor Opportunities Breakfast is held to help contractors overcome current challenges in the market, and successfully seize opportunities that exist,” says MBA North Marketing & Business Development Manager, Boitumelo Thipe.

The event outlined industry trends, what key contractor opportunities currently exist in the region, and give advice on finding work, best practice in applying for tenders and how to price bill of quantities.

A major trend developing in the construction sector is the emergence of scores of informal and SMME construction companies across the country, says Robert Semenya, CEO at CETA. “While we have been very active in terms of skills development across the construction sector, we have concluded that we have focused primarily on technical skills in the past, and one area we need to focus more on is enterprise development,” he says. “At our recent CETA SMME Summit, we announced plans to focus more on supporting SMME development through practical business skills development to take the informal sector beyond ‘hand to mouth’ operations.”

With around 1.4 million people in formal employment in the construction sector, Semenya estimates that there could be hundreds of thousands working informally in the sector. CETA is currently conducting research into the scale and needs of these informal construction companies, and is set to launch a new SMME strategy around June this year. CETA plans to offer business training tailored to their unique circumstances, helping them to grow into more formal, sustainable companies that in turn become employers. At the Mpumalanga Contractor Opportunities Breakfast, he outlined CETA’s plans and highlighted opportunities on offer via CETA.

Effective and accurate pricing is a significant challenge facing many smaller construction firms – particularly at a time when margins are tight, says Kabelo Sentsomedi, Senior Technical Consultant at Construction Computer Software (CCS). “While emerging contractors may be very skilled at the technical aspects of the work, they often lack the experience to price quotes competitively and accurately,” he says. In a constrained market, some contractors will quote at break-even point, just to stay in business and with low or no margins at play, pricing too low or overlooking allowables could be disastrous.

At the Mpumalanga Contractor Opportunities Breakfast, Sentsomedi outlined best practice in project pricing and management and demonstrated CCS’s Candy estimating, planning and project control, which enables contractors to accurately estimate and cost projects, from quantity take-off, first estimate right through to final account.

Knowing where to find opportunities and how to get the work – with a reasonable margin – are key to survival in these tough times,” says Thipe. “MBA North and partners therefore present an ongoing series of breakfast workshops for contractors, to help them stay in business and hopefully even thrive, despite the challenging market.”

Hastings Moeng, Marketing Officer at NHBRC Mpumalanga, says: “The NHBRC is a regulatory body of the Department of Human Settlements mandated to protect the interests of the housing consumer whilst regulating the home building industry. In light of this, we were delighted about this opportunity and platform to engage both emerging and established builders. We unpacked the mandate of the NHBRC comprehensively whilst offering more information on our processes. Our goal is to continue to assist and protect housing consumers by educating and empowering the home builders with the correct information and practical solutions, thus minimising any prevalence of contractors who deliver housing units of substandard design, workmanship and poor quality materials.”

For further information, contact MBA North on 011 805 6611 or mail sheilla@mbanorth.co.za

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.

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.”