Presentation to
Select Committee on Finance
on the PPPF Act
September 2003
Presentation by
Peter Silbernagl
Immediate Past President
South African Association of Consulting
Engineers
Greetings and apologies
SAACE President
Dempsey Naidoo
President Elect
Craig Clarke
Vice-President
Althea Povey
Vice-President Elect
Webster Ndodana
Executive Director
Graham Pirie
What is this presentation
about?
• Background to SAACE and Civil
Engineering
• Brief comment on PPPFA
• Procurement of Professional Services
South African Association of
Consulting Engineers
(SAACE)
51 years old
 420 firms are members
 employing over 11 000 staff
 Gross fees earned > R4.0 billion/year
SAACE
•
Provide intellectual technology-based
services in built, natural & human
environment to clients for a fee
•
“We are not builders or contractors”
•
“We plan, design, advise, study and
report, supervise and train, mainly in the
construction and building industry”
Some historical perspectives
• Gross fixed Capital formation
• Employment trends
Gross Fixed Capital Formation
as % of GDP
35
25
%
20
15
10
5
Year
2005
2000
1995
1990
1985
1980
1975
1970
1965
0
1960
Percentage (%)
30
Employment by Consulting Engineers
Approx. no. of employees of
member firms
30000
25000
20000
15000
10000
5000
0
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 01 02
Year
• Black representation in Civil
Engineering and Consulting
Engineering
• Registrations with ECSA (Engineering
Council of South Africa), a statutory
body formed in terms of the
Engineering Professions Act (Act 46
of 2000)
ECSA registrations 1 April 2003
(Civil Engineering)
PrEng Eng-in-T PrTech Tech-in-T
%
%
%
%
Black male
& female
2.8
23.8
9.4
62,1
White male
& female
97,2
76,2
90,6
37,9
Total (no.)
5987
676
393
169
Professional Engineers as registered with
ECSA in the civil engineering discipline
Total number of engineers
HDI
7000
252 of 6824
163 of 6625
266 of 6575
6500
265 of 6447
277 of 5987
5500
5000
Dec-02
Jun-02
Dec-01
Jun-01
Dec-00
Jun-00
Dec-99
Jun-99
Dec-98
Jun-98
Dec-97
4000
Jun-97
4500
Dec-96
Number
6000
New registrations: Professional Engineers
(Civil)
N ew R eg i st r at i o ns: N ew P r o f essi o nal E ng i neer s ( C i vi l )
400
350
300
No.
250
200
150
100
50
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Year
Total number of Registrations
PDI
HDI
New registrations: Candidate Engineers
(Civil)
N ew R eg i st r at i o ns: C and i d at e Eng i neer s
120
100
Number
80
60
40
20
0
1993
1994
1995
1996
1997
1998
Year
Total number of registrations
1999
2000
PDI
2001
2002
HDI
Civil engineering graduates at all universities, 2001
(compiled by DoE)
DOE 2 0 0 1
1 74 T T L
A fr-f
4%
C o l-f
1%
In d -f
2%
W h i-f
10%
A fr-m
15%
W h i-m
57%
C o l-m
3%
In d -m
8%
Response by
Consulting Engineers
SAACE Management Information
Survey - Dec 2002
Partner/
Director
Associate
PrEng/
Tech
Black
12%
12%
5%
White
88%
88%
95%
Total (no.)
1156
612
521
Education and training efforts by
Consulting Engineers
•
R35 million p.a. on training & education
•
700 bursaries to Black students
•
Ongoing social responsibility
programmes, e.g. assistance at schools
That was the background
Brief comments on PPPF Act
Detailed comments provided in
written submissions
•
SAACE (South African Association of
Consulting Engineers)
per Mr Len Dekker
•
SAICE (South African Institution of Civil
Engineering)
per Mr Alain Jacquet
•
CIDB (Construction Industry
Development Board)
per Mr Malcolm Rautz
Four aspects need detailed
comment
• Procurement by tender only
• Tariff-based fees
• Promotion of gender
• Promotion of Black professionals
Brief comment
• “In general, good piece of legislation”
• “Serves as a good framework, needs
refinement
- harmonize regulations with Act
- harmonize Act with Constitution”
Brief comment
•
Framework interpreted loosely by organs
of state, esp. local authorities
•
Current procurement systems outside the
PPPFA and also Constitution e.g. set
asides
•
Current procurement systems lead to
fronting and destruction of capacity and
expertise
Brief comment
•
PPPF Act recognises need to encourage
participation by black people and women
in procurement: very much needed in
construction and consulting engineering
•
PPPF Act can be tailored to promote
participation by black professionals in
professional practices
 need to tighten up Act and regulations
Procurement by tender only
•
Constitution and PPPF Act “fair , equitable,
transparent, competitive and cost-effective”
•
No requirement for tenders
•
Lowest price  “cost effective”
•
“Competitive”: e.g. proposal with social benefits or
least environmental damage could be most
competitive

Tenders are an option, but not obligatory or always
desirable
Green Paper on Public Sector Reform, 1997
(from Ministries of Finance & Public Works)
“The calling for open tenders under all
circumstances, even for routine assignments, is
neither in an organ of State’s, nor the consultant’s
interests. Apart from an organ of State’s costs in
preparing and adjudicating such tenders and and
consultant’s costs in submitting tenders, such
practices will favour the established large
consultancies who have greater capacity to absorb
the costs.
“Medium and small companies and, in
particular, emerging consultants, are at a
distinct disadvantage. Elaborate and complex
adjudication systems are required for the
satisfactory adjudication of tenders for
consulting services.
“A major problem with competitive tendering
relates to the definition of the scope of
services to be performed. Consultants cannot
price their services if these are ill defined. In
research and development, policy
formulation, human resource development,
community-based developments and the like,
the scope of services can seldom be well
defined prior to the commencement of the
project or commission.
“For engineering and construction projects,
life cycle costs are most critical and are
largely dependent on design quality. Any
potential saving in the design fee would form
only a miniscule portion of the life cost of the
project and should not be allowed to
jeopardise the best value for money option on
the project as a whole.”
USA: Brook’s Act
Federal Government and 44 of 50 states:
-
illegal to procure professional services by
means of tender
-
essentially quality-based
Tenders appropriate
•
Well defined brief and scope; quality
major criterion
•
Larger projects
•
Client capacity to manage
•
Routine work
Always use quality as major criterion
Tariff-based appointments
•
PPPFA regulation: provision for “predetermined tariff-based professional
appointments”
•
Engineering Professions Act: “Public
health and safety and the general public
interest”
Tariff-based appointments
•
Small projects
•
Difficult to define
•
Client capacity
•
Complex or specialist
•
Client protection and guide
Quality based criteria
Procurement in the Construction
Industry, esp. Consulting Engineering
•
CIDB: Formed to develop and transform
construction industry in South Africa
•
SAACE: “Guidelines for the Engagement
of Consulting Engineers”
•
FIDIC: International Federation of
Consulting Engineers (67 member
countries)
•
World Bank: Procurement guidelines
Procurement in the Construction
Industry, esp. Consulting Engineering
•
CIDB suite: e.g. Practice Guide 12:
“Preferential Procurement in the
Construction Industry”
- Practice Guide B2: “Methods and
procedures for implementing preferential
procurement policies”
- Standard Rules for Public Procurement
Way forward
•
Engage further with recognised
institutions (SAACE and others) and
statutory bodies (ECSA and CIDB)
•
Harmonize PPPF Act and regulations with
Constitution and BEE strategy
Thank you for
your attention