Engineering confidence up

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IOL economy arrows Filomena Scalise

Cape Town - Confidence in the engineering sector was up in the second half of last year as conditions continued to surprise firms, according to a survey released by Consulting Engineers SA (Cesa) on Friday.

Cesa's bi-annual economic and capacity survey showed that the confidence index for July to December last year was revised from an expected level of 85.0 to 98.1.

The more upbeat sentiment was maintained for the next 12 months, averaging 98.3 for the first half of this year and 98.5 for the last half.

Cesa said the revised confidence level was at its highest since 2008/09.

Investment by private businesses showed a modest improvement but was offset by lower growth in public corporations and general government.

Cesa expected investment growth to continue to surpass Gross Domestic Product (GDP) growth, projected to increase by between four and five percent over the next two years.

Although expectations were that fee earnings would show a flat growth or no change, there was a nominal increase of nine percent in the last six months of last year.

Of concern was that 23 percent of fee earnings were outstanding for longer than 90 days, translating to an estimated R5 billion.

Employment in the sector was up by 26 percent, or 5122 staff, compared to the same period in 2012.

The appointment of black executive staff, which included black, Asian, and coloured individuals, increased to 35.8 percent from 35.5 percent, 30.1 percent, and 28.1 percent in the past three surveys.

“This shows real significant progress in terms of industry transformation,” the organisation said.

Cesa raised a few concerns about problems in the industry.

Members were concerned by unrealistic tendering fees and the time it took to finalise a proposal, which affected profitability.

Fraud and corruption was also a reality.

Cesa had created a R1 million anti-corruption fund to pro-actively prevent tendering irregularities experienced by its members.

The standard and performance of the industry continued to be threatened by the involvement of non-Cesa members, the organisation claimed.

“Firms from across South African borders are tendering at rates that are not competitive for local firms. Complaints have been received of some of these firms not producing proper drawings and not attending site visits,” it said.

While contracts were awarded to “unscrupulous firms” in mostly smaller rural areas, clients should remain vigilant.

Firms had noticed a decrease in the quality of technical personnel, which also threatened the built environment sector.

Cesa said service delivery at municipal level remained a “critical burning issue” and was threatened by incapacitated local and provincial governments.

“Public sector and these two tiers of government in particular, as major clients to the consulting engineering industry, are called upon to become more effective, more proactive in identifying needs and priorities, and more efficient in project implementation and management.”

Cesa believed procurement procedures should be standard for the country or at least for the specific tier of government.

Cesa has a membership of over 500 consulting engineering firms. - Sapa



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