NCDP: Status of Contractor D evelopment Programme

1. NCDP:Status of Contractor Development Programme SEDiC '11: Gallagher Estate, 26 – 27 July, German Mphahlele

2. Presentation Outline • Status Quo assessment of CDPs • What is CD • Typologies of CDPs • Aims of the Assessment • Assessment and findings • CIDB – Responses • Establishing an enabling environment • Strengthening CDPs • Procurement driven developmental outcomes • Lessons and way-forward • Concluding comments.

3. What is CD? • Definition 1 • A deliberate and managed process to achieve targeted developmental • outcomes that improves contractor’s: • Grading status • Performance and quality • Equity and targeted ownership Definition 2 The application of management and economic principles to remove the constraints affecting the development and performance of construction firms

4. How?

5. Typologies CDPs that aim to improve the overall performance of contractors in an economy Programmes that aim to improve the ability of local industry to compete with international construction firms Programmes based on the need to provide opportunities for and to grow small contracting enterprises Programmes that aim to improve the performance of rural contractors Programmes aimed at promoting and improving the use of efficient labour intensive methods Programmes aimed at increasing the participation of a targeted group

6. Background Modest success Diverse and uncoordinated of approaches Ineffective monitoring tools and systems Insufficient progress towards sustainable ED Insufficient involvement of larger contractors

7. Aim • The aim of this assessment is to: • enrich the National Contractor Development Framework (NCDF); • identify challenges faced by Contractor Development Programmes with the aim of informing practitioners on issues that require attention; • go beyond “challenges faced by CDP” and make implementable recommendation for improvement;

8. Key Assessment Elements • The following main elements of CDP’s were identified for the assessment: • Programme Specific Objectives (PSO) • Departmental Capacity & Business Process Model (DCB) • Contractor Development Model (CDM) • Demand Side Support Practices (DSP) • Supply Side Support Initiatives (SSI)

9. CDP ‘causal relationships’ • Determinants: • Enablers: PSO DCB CDM SSI DSP

10. CDP Causal relationships • From the causal relationship diagram above the following interpretations can be made: • The key driver of any Contractor Development Programme (CDP) is the programme objectives • The key enabler for any CDP is the supply side initiatives. • The departmental capacity and demand side practices play a facilitating role in improving the success of the programme.

11. Findings: PSO • The majority of CD initiatives do not align their PSO, goals and targets to the department’s service delivery objectives and their annual budget. • As a result budgeting for these programmes are reactive. • The PSO are thus not aligned to public sector construction demand. Instead CDP are allocated budgets and projects as a compromise from departments

12. Findings: Department Capacity & Business Process Model • The majority of CDP functions and business processes are not well defined. • CD objectives are imposed on the infrastructure delivery processes after planning has been completed. • CD practitioners are not involved in the planning

13. Findings: Contractor Development Model • Generally CDP do not set tangible goals; and targets are unrealistic. • CDP targets and goals are not linked to a contractor performance monitoring framework or business maturity indicators. • Generally CDP do not set comprehensive inclusion criteria for contractors. • Most CDP do not align their graduation criteria with SAQA accreditation or a contractor performance monitoring framework.

14. Findings: Contractor Development Model • Generally contractor development programmes do not have adequate monitoring and evaluation systems. • Contractor development programmes exit strategies are not aligned to any systematic and measurable mechanisms for improvement and graduation..

15. Challenges: Demand Side Support Practices • Generally contractor development programmes cannot provide adequate sustainable sources of work • High concentration of contractors on the supply side at the lower CIDB grading level. • Delayed payments and not so clear payment dispute resolution mechanisms and invoicing procedures. • Most departments do not have a standard form of construction contract particularly for ‘emerging’ contractors.

16. Findings: Demand Side Support Practices • Generally departments to do not fully comprehend the benefits of joint venturing and subcontracting. • Departments are apprehensive and reluctant to provide for these ventures because of the difficulty in managing such ventures and the negative perceptions of possible exploitation of the smaller contracting enterprise. • Departments also do not have the technical competencies on how to structure a joint venture or subcontracting venture to the benefit of contractor development. • Joint venturing and subcontracting are viable vehicles for contractor development..

17. Challenges: Supply Side Support Initiatives • Most CDPs do not align the training offered as part of the contractor development programme with the competencies required to complete project specific deliverables. • Some contractor development programmes do not align their training with the NQF and SAQA accredited training and certification. . • CDP do not provide contractors with the environment for business linkages and relationships between other contractors, financial institutions, material suppliers and other stakeholders.

18. Responses - Comprehensive Three-Pronged Approach Objective: The objective of the NCDP is to promote equity ownership across the different contracting categories and grades, as well as improving skills and performance in the delivery and maintenance of capital works across the public sector. Strategic Thrusts Creating an enabling environment for CD Strengthening CDPs Promoting Procurement driven developmental outcomes

19. Responses - Various initiatives undertaken Procurement Driven dev outcome Enabling Environment CDPs • the development of contractors through procurement models with targeted development outcomes (indirect targeting), in which skills transfer and development support is provided by a main contractor to a cidb registered sub-contractor • Information on capacity linked to demand and existing supply, • guidelines for targeting strategies; • developed guidelines which CDPs need to comply with as being part of the NCDP, covering • developed and piloting Best Practice Contractor Recognition Scheme which set the basis for standards for which CDPs should develop contractors to. • Establish and operate Construction Contact Centres (CCC’s) in the provinces; • Facilitating access to finance for contractors; • Facilitating prompt payment of contractors; • Provision of appropriate contracting conditions which will support contractor development; • Facilitating mechanisms that promote skills development • Client reporting to cidb on Contractor Development initiatives and their various contributions • Establishing PCDF

20. Lessons and Way-forward • Government should abandon the position of an implementer and become a facilitator • Private sector to play a more active part in CD • CD misappropriated to gain support for a specific development strategy, agenda or argument • Need to Improve/better our understanding of the emerging contractors including their characteristics and dynamics

21. Concluding Comments • The success of contractor development may be disappointing, but there are important signs of hope. • Lessons are being learned from the past failures • The policy framework is improving • Government is reaching out to the private sector • Numerous companies continue to be created every day – entrepreneurial spirit is not lacking • Relatively consensus on what is to be done “The future is literally in our hands to mould as we like. But we cannot wait until tomorrow. Tomorrow is now.” Eleanor Roosevelt

22. THANK YOU German Mphahlele Manager: Enterprise Development Email: germanm@cidb.org.za Cell: +27 (0) 833269479 Tel: +27 (0) 124827231