The Construction Conference 2005

Transcription

1 The Construction Conference 2005

2 The Construction Conference 2005 A vision for the construction industry. How can we make the charter work for us? Presented by: Carl Grim, Chief Executive, Aveng Limited 10 October 2005

3 A vision for the construction industry and how we can make the charter work for us The role of construction in the economy

4 Construction industry vision To be an industry that responsibly fulfills its role in society

5 Two questions arise What is our role in society? How do we fulfill this role responsibly?

6 Question 1 What is our role in society?

7 Gross fixed capital formation trend 200,000 Gross Fixed Capital Formation Nominal 180, , , ,000 million 100,000 80,000 60,000 40,000 20, Total Other Construction EX SARB

8 EX SARB Construction Works Contribution to Gross Fixed Capital Formation 35% 30% 25% 20% 15% 10% 5% 0%

9 Gross Fixed Capital Formation as percentage of GDP 35% 30% 25% Assumption: GDP Growth of 4% and GFCF/GDP of 25% in 2014 The construction sector will double in size in the next ten years 20% 15% 10% 5% 0% EX SARB and LHA

10 Total investment in construction works Rand million Long term Growth 2% pa Free State Goldfields Large Dams Sishen-Saldanha Richards Bay Mines Roads Sasol II & III Eskom Power Stations Safari Mossgas Telkom Coega Soccer G Train Eskom Dams Roads EX SARB, MFA DATABASE; Constant 2005 prices

11 Investment in total non-residential building Long term Growth 2,3% pa Rand million EX SARB, MFA Database; Constant 2005 prices

12 Investment in total housing Long term Growth 1.9% pa Rand million EX SARB, MFA Database; Constant 2005 prices

13 Low income and affordable housing requirements to eliminate backlog by 2014 million m Affordable housing (Government) Low income housing (Financial Services Charter) 7 Housing area SARB Aveng Forecast EX SARB, AVENG

14 EX SARB, Constant 2005 prices Construction works forecast Rand Billion

15 Role 1 To effectively deliver and maintain the economic infrastructure for long term sustainable growth

16 Infrastructure lagging economic growth 4 3 GDP/Fixed Capital Asset Base 5 year moving average Percentage Points Years EX SARB

17 Road infrastructure lagging vehicle growth 500 Paved national and provincial roads, passenger vehicles, and commercial vehicles for transport of goods 400 Index (1970 = 100) Paved roads Passenger vehicles Goods vehicles EX Peter Perkins

18 Additional electricity generation capacity urgently required Greenfield PS (Fast Track) - Earliest 2013 Greenfield PF (Fast Track) - Earliest 2013 Pumped Storage Braamhoek - Earliest 2011 Greenfield FBC Fast Track - Earliest 2011 Greenfield CCGT Generic - Earliest 2010 Capacity (MW) CCGT 1 - Earliest 2009 Brow nfield PF- Earliest 2009 Komati - Earliest 2010 Open Cycle GT - Earliest 2008 Grootvlei Earliest Camden Years Total Existing System (Including Decommissioning) Total Imports (MW)Cahora Bassa Hydro firm RTS Simunye Plants Build Pumped Storage Plants (Peaking) Build Open Cycle Gas Turbine plants (Peaking) Build Base Load Plants Forecast peak Demand before DSM Peak Demand after DSM Required Capacity (Approximately 12% RM) Required Capacity at 15% RM EX Eskom, Lead time ref 2004

19 Role 2 To proactively assist government to redress the country s social infrastructure backlog brought about by rapid population growth and decades of neglect

20 Social infrastructure lagging population growth 2 Growth in population vs Stock of Social infrastructure Percentage Point Year EX SARB and ASSA

21 The role of construction Category Type of Investment Impact on Society/Economy Social infrastructure Economic infrastructure Housing Schools Hospitals Water and Sanitation Telecommunications Electricity Roads, rail, ports, airports Pipelines Manufacturing & Mining Health Education Welfare Productivity Human Dignity Economic growth National competitiveness Job creation Tax generation Foreign direct investment

22 Question 2 How do we fulfill this role responsibly? Transforming our industry

23 Black contracting participation 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% emerging (%of Value) emerging (% of Number) 5 qrt ma (%value) EX SAFCEC Percentage of Total on Database

24 Current status of transformation in the contracting industry Ownership 10%-14% Senior management All 6% Women - 0% Middle management All -15% Women 1% Junior Management All 56% Women - 2% EX IMC

25 Construction Management Graduations 75 Universities Technikons White Black White Black Male Female Male Female EX Allyson Lawless

26 Civil Engineering Engineers & Technologists Black White Age Number per age group June 2004 EX Allyson Lawless, June 2004

27 Business/Enterprise Development Number of companies per size category EX Allyson Lawless

28 Business/Enterprise Development Demographic distribution and size of companies in the construction sector 90,000 Staff in Total of Black Companies Staff in Total of 8412 White Companies 60,000 Number of staff 30, Size category Ex Allyson Lawless

29 Question 2 How do we fulfill this role responsibly? Transforming our industry Building skills

30 Civil engineering employment 140,000 Number of Employees 120, ,000 80,000 60,000 40, Years EX SAFCEC

31 Dramatic drop in artisan registrations Artisans Registered Building Industry Artisans Registered EX Allyson Lawless

32 Civil engineering graduates down Number of graduates Civil spending (Rbillion) Year Civil engineering graduations Civil spending EX Allyson Lawless, Inflation adjusted base 2000

33 Training and Education 70,000 Extra Engineers & Employees needed to cater for anticipated growth 6,000 Employees 60,000 50,000 40,000 30,000 20,000 10,000 5,000 4,000 3,000 2,000 1,000 Civil Engineers EX SAFCEC

34 Question 2 How do we fulfill this role responsibly? Transforming our industry Building skills Creating jobs

35 Workload GDP and Construction Growth GDP growth Construction growth Percentage (%) Year EX SARB

36 Nominal & Inflation adjusted interest rate Percentage (%) Nom Infl Adj Year EX SARB

37 EPWP Support Programme EPWP s goal is to create 1 million short-term work opportunities for unskilled, marginalised, unemployed people over the next 5 years EPWP will provide poverty and income relief through temporary work to carry out socially useful activities EPWP will seek to equip these people, with a modicum of training and work experience, which should enhance their ability to earn a living in the future The focus is on four sectors

38 Targets for first five years of EPWP Sector Work opportunities (average duration) Person-years Infrastructure (four months) Environmental and cultural Social (excluding home-based care) (one year) (two years) Economic venture learnerships (18 months) employees Total 1 million plus plus

39 Question 2 How do we fulfill this role responsibly? Transforming our industry Building skills Creating jobs Assist in building institutional capacity

40 Building public sector institutional capacity Civil/Roads/Transport 24% Infrastructure maintenance 19% Low cost housing 13% Building 24% Residential services 13% Provincial infrastructure 7% Government infrastructure spending to 2008 R167 billion

41 Building institutional capacity for Soccer World Cup Award of 2010 World Cup Establishment of L.O.C Initial delivery Adjusted delayed delivery Unchanged delivery Government enabling legislation 2010 Audit of provinces & stadia Design, build and upgrade stadia SAFA infrastructure completion FIFA final inspection Gautrain award Gautrain Airports Roads & stadium precincts Hotels & private developments CAF VP Soccer Tournament Soccer World Cup

42 Private/Public sector institutional capacity The institutional complexities in the sector are reflected by: Great number of public sector clients 6 National departments 9 Provincial departments: transport, roads, works 240 Local authorities a number of public corporations Myriad of private sector clients 13 Private sector bodies representing service providers

43 Question 2 How do we fulfill this role responsibly? Transforming our industry Building skills Creating jobs Assist in building institutional capacity Assist in streamlining the regulatory environment

44 Streamlining regulatory environments In excess of 120 pieces of legislation are impacting on the Construction Sector Confusion around and lack of consistency with regard procurement rule applications, PPPFA CIDB register PLUS local registers PLUS Professional Council registrations: duplications Regulatory Impact Assessments needed Cost of compliance and lack of consistency in the application of the legislation Inhibiting impact of legislation on company development and growth etc

45 How do we make the charter work for us?

46 How do we make the charter work for us? Targets for Change Training Costs Learnerships Bursaries CSI Status Quo Targets Percentage EX Charter Draft 4 & IMC

47 How do we make the charter work for us? Targets for Change Ownership Status Quo Targets Control: Board Control: Exec Man 40 6 Senior Management 40 6 Middle Management Junior Management Procurement Percentage EX Charter Draft4 & IMC

48 Challenges Adopt a growth mentality Development of people and enterprises Development of technical and administrative capacity of the state at all levels to execute the works Investment in infrastructure to be planned to reduce the cyclical nature of the industry to underpin more consistent employment growth Streamlined and consistent application of the regulatory framework Construction Sector to develop co-ordinated approach for all role players

49 Thank you Questions