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Procurement processes for huge infrastructure projects should be overhauled, say property developers

The Forest Village housing development in Eerste River. Picture: Henk Kruger/African News Agency (ANA)

The Forest Village housing development in Eerste River. Picture: Henk Kruger/African News Agency (ANA)

Published Nov 24, 2020


PUBLIC sector procurement processes need an urgent overhaul if South Africa is “serious” about kick-starting the economy through infrastructure development, a seminar heard.

Visiting adjunct-professor at the School of Construction Economics and Management at Wits University, Dr Ron Watermeyer told a seminar organised by the Western Cape Property Development Forum (WCPDF) that delivery outcomes were “poor”.

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Waternmeyer said current public sector procurement systems were “over bureaucratised” with emphasis on box-ticking which made them costly, ineffective and prone to fraud.

They were also an “impeder” to infrastructure delivery, he added.

The Forest Village housing development in Eerste River. Picture: Henk Kruger/African News Agency (ANA)

Following the Inaugural Sustainable Infrastructure Development Symposium (Sidssa) held in June, Public Works and Infrastructure Minister Patricia de Lille announced 276 projects aimed to fast track a “robust infrastructure pipeline” to set South Africa’s economy back on track.

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Watermeyer said government spheres were only focused  on  “compliance” with regulations and getting clean audits rather than looking at strategic outcomes such as the quality.of the infrastructure projects.

“A one-size-fits-all approach to procurement is not the way to go. Procurement of general goods and services for internal consumption is totally different to infrastructure required to support the business of the organisation,” said Watermeyer.

A report by the Human Sciences Research Council in 2019 found that there was widespread confusion  even among senior infrastructure procurement officials over what the law expected of them due to a plethora of legal prescripts.

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Watermeyer said there were currently more than 20 pieces of primary legislation dealing with public procurement  in a direct way in addition to subordinate legislation bringing the total of regulations to around 85.

Poor procurement practices, poor management of outsourced functions and the exclusion of the built environment in procurement processes were also cited as reasons for poor performance.

Professor Geo Quinot, from the Department of Public Law at Stellenbosch University, also called for “more complex methods” to be used when dealing with procurement for complex  infrastructure projects.

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The current system was “largely rules-based” and there was no urgency in some departments with regulatory problems, he added, noting that the Draft Procurement Bill was only expected to come into effect at the end of 2022.

“We should move away from rules to outcomes,” said Quinot.

Chairperson of WCPDF, Deon van Zyl, believed that to a large extent, the public sector had tied up the industry in red tape and legislation for years and this had led to the critical situation of the sector.

He said the organisation was concerned with procurement − which included tendering − as well as planning and building approval processes.

He said it remained to be seen whether the Draft Public Procurement Bill would lead to a “culture change” in  local municipal levels, where the biggest problems “lie in”.

A huge frustration in terms of government projects was the withdrawal of tenders resulting in no awards being made at all, the seminar also heard.

Van Zyl adds that, with government’s own inability to get its projects to market, the construction industry is desperate for private sector projects to hit the ground.

“Yet applications by the private sector are also severely hindered by government red tape and ineffective bureaucracies, with statutory approvals required just being too slow for projects to remain economically viable,” he said.

He added that private projects stagnated due to rising costs even before a shovel hit the ground, and “thousands of planned jobs for construction workers in the most vulnerable of communities never materialise“.

Van Zyl believed that trying to do work for government is becoming too costly for the private property industry and the process too risky, leading often expenditure on the part of the tenderer that will never be recouped.

“The very process of the government trying to limit its own exposure to frivolous and wasteful expenditure, is causing the private sector to incur frivolous and wasteful expenditure on its part.

“It may be fair to procure the lowest prices on consumables. But to consider only the lowest prices on tenders aimed at building fixed capital assets, which are meant to serve the country for decades to come, should carry a strong weighting towards being ‘fit for purpose’ rather than just about price,” he added.

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