Construction Industry Development Board 2008/9 Budget

Meeting report

Construction Industry Development Board (CIDB) Strategic Plan and budget 2008/9
Mr Ronnie Khoza, CEO, Construction Industry Development Board, presented the Board’s business plan and budget for 2008/2009. Mr Khoza described the CIDB as an enabler and developer and also a regulator and enforcer, which was a new role. Mr Khoza said that at that time there were more than 65 000 registrations with CIBD, of which 50 000 were active. This was compared to the 27 500 that were active in 2006. Mr Khoza also mentioned that 2 500 contractors were upgraded, of whom 87% were black. 

Mr Khoza highlighted that four Construction Contact Centres (CCCs) were established in partnership with Provincial Departments of Public Works. These were in Gauteng, Western Cape, Eastern Cape and Kwa-Zulu Natal. Khoza said that the remaining five CCCs would be established in the other provinces in that financial year. Mr Khoza further mentioned that CIDB was dealing with fraud cases and that a fraud hotline was put into place.
 
Mr Khoza informed the Committee that CIDB had simplified the registration process for contractors. For Grade 1 contractors, some changes were effective from January 2008 and included the fact that there would be over the counter registration with no certificate; no annual upgrades in the second and third years; no annual fees; and all of these would be linked to development. For Grade 2 to 9 contractors the following had been published for public comments up to 30 May: that certificates were to be removed; bank ratings were to be removed; and upper tender limits were to be adjusted.

Mr Khoza mentioned that a code of conduct developed by the CIDB was already incorporated into the UCT curriculum for Construction Management and was to be expanded into other academic institutions. There was also a Standard for Uniformity (SfU) that was incorporated into UCT libraries and was also to be expanded to other academic institutions.

 memorandum of understanding had been signed between the board and First National Bank so that the bank would treat contractors differently as they had special needs in certain banking matters.

Mr Khoza then tabled a number of statistics showing the increase in registrations, the classes of works, reports drawn, indicators for the industry, and a comparison of public sector contracts, competition, black owned business works and upgrades over previous years.

He reported that work was progressing well on best practice contractor recognition, and Best Project Accreditation scheme. A new strategy was due to be launched by the Minister shortly.

In relation to internal governance, there had been a new audit committee from the middle of 2007, a new Board was appointed in December 2007 and induction for both had just been completed.

The challenges included the current boom in the industry, leading to skills shortages, the volume of registered contractors, unemployment and shifting priorities in the country. There was still a need to align the register with the Construction Charter which had not yet been gazetted as a Section 9 Code. The long term sustainability and functionality needed to be addressed. The Board would have to work on continuous improvement of contractor registration processes and develop consultative revenue models. It must continue with public sector reform and delivery improvement, continue to develop contractors and work on outstanding governmental projects.

Mr Khoza gave some details of the Stakeholder Forum that was held and noted that there would be nominations for new members later in 2008, to cover the next two years.

The budget was then tabled. The total expenditure over the previous and next three years, and the anticipated expenditure broken down across functions, was tabled (see attached presentation)

Discussion
 Mr L Maduma (ANC) noted that there was only one regional office in each of four provinces in which the Construction Industry Development Board had offices. He asked if the CIDB was not considering satellite centres because he personally would have thought they would need to cover more areas.

Mr Gerard Naidoo, Programme Manager, CIDB replied that there was a partnership between the CIDB and the provinces. The responsibility of the CIDB was to form one head office and the provincial department would have to resource the setting up of satellite offices.

Mr Maduma asked if the CIDB was involved in any international projects, and, if so, if they were NEPAD driven. He said that perhaps the work that was done by the CIDB in the DRC could be done in other African countries.

Mr Khoza said that CIDB had participated in African projects, but that in order to do so they would have to be invited by the relevant Minister or President. Whatever NEPAD intervention was taking place was by invitation. 

Mr Maduma asked how the CIDB was dealing with the issue of contractors not getting projects and thus not gaining points.

Mr Khoza responded that CIDB only developed contractors when there was a project. The CIDB would recommend its registered members to clients.

Mr Maduma said that the CIDB had acknowledged that there was a boom in the construction industry, but asked when the CIDB was going to develop companies such as those owned by women. He felt that CIDB could do more concerning development.

Mr Khoza responded that more and more women were getting involved in the construction industry. However, it should be noted that a political issue was also being dealt with, such as conditions on the construction site, including the language used by the workers. Mr Khoza believed that it would not be good to force the situation, as this could lead to corruption, such as male contractors putting the names of women on the applications whereas there would be no women involved in the company.

Mr B Radebe (ANC) noted that CIDB had most of its processes online, including the ability for a client to verify information on a contractor. He asked if there were any precautions taken as internet facilities could easily be hacked.

Mr Peter Mongwenyana, Chief Financial Officer, CIBD, replied that a security audit was carried out occasionally and the system was tested against hacking and other internet threats.

Ms C Ramotsamai (ANC), said that the last time the CIDB had visited the Committee, there had been controversy around the issue of Construction Contact Centres(CCC), and she asked if the issue had been resolved.

Mr Naidoo responded that the issue had been resolved. The provincial department in Gauteng took up the responsibility of setting up the centres.

Ms Ramotsamai further asked if the CIDB offered any support to applicants before rejecting an application.

Mr Khoza, responded that CIDB did not reject applications, but offered advice to applicants when there was a problem. At times they could put an applicant on a lower grade until the applicant had sorted the problem that had hindered the success of his or her application.

A Member of the Committee asked how the CIDB was supporting youth whose parents could not afford to take them to university and whether there were any development projects in place for the youth.

Mr Khoza explained that CIDB were limited in their ability to do this. However, they were employing many young people and they had partnerships with organisations such as the Workforce Group to assist in youth employment. They were unable to offer bursaries at the time.

Another Member asked what led to CIDB registered contractors getting suspended.

Mr Mongwenyana replied that people were suspended for various reasons, such as failure to have their licences, failure to register annually and the like. Once the issues were sorted out their membership status would be restored.

The meeting was adjourned.