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South African Association for Consulting Engineers Management Information Survey July – December 2004

South African Association for Consulting Engineers Management Information Survey July – December 2004. 2005, the year of transformation. Macroeconomic projections. Source: Treasury. Consulting Engineering Confidence Index.

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South African Association for Consulting Engineers Management Information Survey July – December 2004

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  1. South African Association for Consulting EngineersManagement Information Survey July – December 2004 2005, the year of transformation

  2. Macroeconomic projections Source: Treasury

  3. Consulting Engineering Confidence Index December 2004 confidence index dropped marginally from an expected 87.1 to 86.3, but buoyant outlook exists for the next 12 months, with close to 100% of respondents satisfied with the expected conditions in the industry

  4. Consulting Engineering Confidence IndexAnnual Change Business mood improved by 34% y/y in December 2004 and is expected to increase by 25% in the first six months of 2005, softening to an annual increase of 10% in the last six months.

  5. Consulting Engineering Confidence Indexby firm size

  6. Business mood indicatorsSACOB vs SAACE Overall business mood in the economy as measured by SACOB, rose strongly during 2003, following a flat period during 2002, brought about by higher interest rates. The SAACE confidence index somewhat lags the overall business mood as government expenditure kicked off to a slow start.

  7. Consulting Engineering IndustryReal Fee income (CPI deflated) vs confidence Fee income will probably increase at a faster rate during the next 12 months based on strong performance in the confidence index

  8. Consulting Engineering IndustryReal Fee income (LCI deflated) vs confidence ….however, using the SAACE labour cost indicator as a deflator real fee income may fall to record lows of less than R3 bn in 2000 prices…

  9. SAACE Labour cost indicator Based on responses received of total employment and salaries and wages paid, the average cost of labour increased by 35% in June 2004 and 23% in December 2004. The average increase for 2004 is therefore 29%, compared with 10% in 2003, well above the general inflation rate currently used to deflate nominal fee income…

  10. Consulting Engineering IndustryNominal Fee income vs confidence There is a clear correlation between nominal fee income earned and confidence. Nominal fees may reach R5 bn by December 2005.

  11. Consulting Engineering IndustryEmployment vs REAL fee income (CPI / LCI Deflated) Comparing employment trends with the methods of deflating nominal fee income, there seems to be a closer relationship when the fee income deflated using the SAACE Labour cost indicator.

  12. Consulting Engineering IndustryEmployment vs Salary / Wage bill Pressures related to salaries and wages is clear from the growing gap between employment numbers and salaries and wages paid. While employment numbers fell by some 2000 during the last eight years, salaries and wages remained constant, with an even more aggressive increase during the last 12 months.

  13. Consulting Engineering IndustryReal Fee income (CPI deflated), 2000 prices: Annual Change

  14. Consulting Engineering IndustryFee income earned by Sub-disciplines: % ShareDecember 2003 – December 2004

  15. Consulting Engineering IndustryFee income earned by Sub-disciplines: % ShareJuly – December 2004

  16. Consulting Engineering IndustryFee income earned by Sub-disciplines: % ShareChange in the last 12 months

  17. Consulting Engineering IndustryFee income earned by Top five disciplines: R mill 2000 pricesAnnual average: 2000 - 2004 Civil

  18. Provincial Market Share: December 2004 Vs change in market share from December 2003 GAIN market share LOST market share

  19. Provincial Market Share 2002 - 2004

  20. Fee income earned by province (larger provincial economies) – Annualised smoothed

  21. Fee income earned : RSA vs EX-RSA R mill, 2000 prices (Annualised, smoothed) Cross border activity weakens mainly due to the strengthening of the currency, while the recovery in the South African market, cushioned the negative financial impact of the loss of foreign income

  22. Fee income earned in Africa and across borders R mill, 2000 prices (Annualised, smoothed) Earnings in Africa softened from a peak of R600 million in 2002, to R300 million in 2004, as the stronger currency reduced foreign income earned

  23. Fee income earned by type of client % Share

  24. Fee income earned by type of client R mill 2000 prices (Annualised, smoothed - avg over 2 survey periods) The local authorities are becoming increasingly prominent in fee income earned by the profession…

  25. Competition in tendering Competition in tendering remains fierce, according to 97,5% of the respondents, but has nonetheless improved marginally from the latter part of 2002 and 2003.

  26. % of Firms wanting to increase staff More than 60% of the firms expect to increase engineering and technical staff, with a higher 13% also looking at expanding their support staff…

  27. % of Firms wanting to increase staff The industry has identified the need to expand several years ago, but difficulties in finding qualified staff has rather led to a slowdown in employment as opposed to an increase in job creation

  28. Recruitment problems While it is still as difficult to find appropriate PDI professionals today as it was four years ago, the employment dilemma is further exacerbated by an overall shortage of engineers, irrespective of race or gender…

  29. Bursaries % of Salary / Wage bill Bursaries averaged 0,5% of the total salary and wage bill…..

  30. Bursaries R mill 2000 prices (Annualised) …average spending on bursaries equates to between R10 and R13 million per year

  31. Training: % of Payroll As at December 2003 external and in-house training included Training increased to an average of 1,8% of the salary and wage bill in the last six months of 2004

  32. Training As at December 2003 external and in-house training included Expenditure on training increased to R44 million (annualised), the highest value since June 2000

  33. Industry Capacity Utilisation

  34. Fee income outstanding for longer than 90 days as percentage of total potential fee income By type of client (excluding foreign clients)

  35. Fees outstanding for more than 90 days R mill, annualised, nominal prices Approximately R762million (annualised) in nominal terms, have been outstanding for longer than 90 days as at December 2004 (including non-payments by foreign clients)

  36. Total fee income outstanding for longer than 90 days R mill, (annualised), current prices

  37. Total fee income outstanding for longer than 90 days % of total fee income earned Survey amended to include foreign clients

  38. Total fee income outstanding, by client July - December 2004: Exceeding 90 days

  39. Total fee income outstanding For longer than 90 days Client: Central Government

  40. Total fee income outstanding For longer than 90 days Client: Provincial Government

  41. Total fee income outstanding For longer than 90 days Client: Local Government

  42. Total fee income outstanding For longer than 90 days Client: Private sector

  43. Comparison of total fees outstanding 90 Days or more As percentage of total potential fee income (excluding 0 – 60 days account and non-payments by foreign clients)

  44. Escalation trends Year-on-Year % Change Based on headline consumer inflation (CPI) Forecasts provided by ABSA Bank Source: ABSA

  45. Consulting Engineering Profession Labour unit cost indicator Year-on-Year % Change (Smoothed)

  46. Consulting Engineering Profession Labour unit cost indicator Annual Average: Year-on-Year % Change

  47. Employment BreakdownWorkforce AnalysisJuly – December 2004

  48. Employment BreakdownWorkforce AnalysisJuly – December 2003

  49. Employment Breakdown, by raceJuly – December 2003 vs July – December 2004

  50. Employment profile: Black representation of total employment% Share of total

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