The Civil Engineering Contractor September 2018 | Page 37

THOUGHT LEADERS
Bridging the gap in essential
infrastructure
“Data from Statistics South Africa shows that fixed capital
productivity has declined over the past five years, meaning
that the economic benefit is likely to be lower than this.”
the right infrastructure and having
the desired catalytic or enabling
effect on the selected economic
sector(s) and spatial areas. This
requires
effective
planning,
coordination, and foresight. Data
from Statistics South Africa shows
that fixed capital productivity has
declined over the past five years,
meaning that the economic benefit
is likely to be lower than this.
The Codes
Gazetting of the Construction Code
in December 2017 brought some
certainty to the process, with limited
changes from the version tabled
for public comment in 2016. The
construction industry and public
sector investment in infrastructure
creates significant opportunities
for black-owned SMEs. However,
shareholders of smaller construction
businesses may not have the appetite
or capacity to raise the required
bonds and guarantees to deliver
major infrastructure projects and
fund working capital. This poses a
potential challenge for delivering
large-scale projects, where there
may be multiple work packages
delivered by smaller firms but no
large EPC contractor available at
the centre to provide the overall
management, integration and risk
management or mitigation.
Infrastructure backlog
The City of Johannesburg as an
example, has stated that they
have an infrastructure backlog of
R170-billion, while Tshwane and
Ekurhuleni would show backlogs of
similar orders of magnitude. Private
investors perceive risks associated
with political instability, policy
uncertainty, land expropriation
without compensation, unionised
labour demands, accountability,
transparency, and bureaucratic
obstacles. For example, when
dealing with construction permits,
South Africa is ranked 94th out of
190 countries by the World Bank.
Clearer intent on sector development
and reforms would guide the
private sector to opportunities for
investment and expansion given a
better understanding of the ‘rules of
the game’. Public entities and SOEs
should also provide robust and
realistic planning at the asset class
or sector level. Bottlenecks created
by procurement and contracting
functions must be resolved. nn
Greg Ker-Fox is a project portfolio
risk management specialist within the
Capital Projects and Infrastructure
practice of PwC’s Advisory business.
He holds a bachelor’s degree in civil
engineering, master’s degree in
technology management, and doctorate
in project risk and reliability. Ker-Fox
has been actively engaged in project
and portfolio risk management for 20
years, working for Murray & Roberts
and then PwC as an associate director.
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