development through partnership IMPROVING INFRASTRUCTURE DELIVERY THE CIDB APPROACH Ms Inba Thumbiran Programme Manager: Procurement and Delivery 1

Minister Pravin Gordhan – 2010 Budget Speech A major site of both wastage and inefficiency is in our procurement system. Through a combination of corrupt practices, inefficient procurement, poor planning and, in some instances, collusion by the private sector, we are not getting the kind of value from our purchases that our people deserve. Corruption is an ever present threat to our ambitions. All South Africans must constantly and consciously work to root out this cancer. If we are to address this scourge, we need improved management capability, governance, enforcement, and oversight in government, and in the business sector. Greater transparency and accountability in procurement systems will therefore be a key focus of reform in the period ahead. 2

Procurement reform: National Treasury / CIDB NT Legislation enforcing procurement reform –PFMA / MFMA (link requirements of the Constitution) PPPFA (Procurement Models – 80/20 and 90/10) SCM Regulations (reference to CIDB Standard) CIDB: Construction Procurement Standards –Primary objective Good governance - Application of a system that is fair, equitable, transparent, competitive and cost effective –Secondary objective Use of procurement as an instrument of social and economic policy - social considerations for growth & development (BBBEE) »Contractor Development »Skills development »Prevention of HIV Aids in construction » Job creation »Women in Construction 3

CIDB Mandate: Act 38 of 2000 Promote sustainable growth of the construction industry and the sustainable participation of the emerging sector in the industry Promote improved performance and best practice of public and private sector clients, contractors and other participants Promote procurement and delivery management, the uniform application of policy throughout all spheres of government, uniform and ethical standards including a Code of Conduct Establish Registers as a tool to systematically regulate and monitor the performance of the industry and its stakeholders

CIDB prescripts issued in terms of the CIDB Act of 2000: –CIDB Code of Conduct for the Parties engaged in Construction Procurement –CIDB Standard for Uniformity (SFU) in Construction Procurement. Applicable to public and private sector MANDATORY for public sector (departments, municipalities and state owned enterprises) CIDB Regulation Requirements 5

CIDB Regulations: Part IV Toolbox of options for Clients CIDB Standard for Uniformity in Construction Procurement establishes minimum requirements for: –the solicitation/advertising of tender offers; –the manner in which quality is to be incorporated in procurement documents; –the formatting and compilation of procurement documents; and –the application of the Register of Contractors (RoC) to public sector contracts. 6

Procurement Risks Lack of proper planning –Lack of clarity of the expected outcomes –Inadequate briefs, ill-conceived briefs or an absence of a brief. –No incentives for containing cost Lack of integrity in the procurement process –Exclusion of qualified tenderers from competing for tenders –Unfair and inequitable treatment of tenderers –Subjective and biased scoring of evaluation criteria Lack of transparency in the procurement process –Allow corrupt and irregular practices to continue –Procurement objectives / goals cannot be easily verified / measured Failure to achieve secondary objectives Inefficient procurement system –Corrupt practices / fraudulent practice; –No control of costs fruitless and wasteful expenditure; overspending / under expenditure unauthorised expenditure / irregular expenditure 7

Status quo…… Public sector infrastructure projects in South Africa are currently delivered using a traditional pre-planned approach to construction Design and specifications must be adequately developed and approved by clients before tenders are invited. Enables the design to meet the client’s requirements closely and the contract when awarded can proceed without major change, delay or disruption. This model works best when: –the public authority has adequate in house capabilities and capacity to either undertake the design or to brief consultants and to oversee the design process; and –there is adequate time to complete the design and associated documentation before tenders for construction are invited. 8

Problem with the status quo…. Public authorities are today under pressure to deliver projects, on time, on budget, within shorter time frames. (No technical skills study undertaken by Allison Lawless) Led to the “fast tracking” of the traditional pre-planned approach to construction by the streamlining of procedures to minimise delays between activities and to permit activities to be undertaken out of sequence. This has resulted in tenders for construction works being awarded where the works are not fully or precisely scoped. In many instances, this has led to very disappointing outcomes e.g. the final cost of the construction works for the 2010 world cup stadia 9

CIDB TURN-AROUND STRATEGY 10

Dr Martin Barnes “Stupidity is doing the same thing over and over again, and each time wishing for a different outcome” Change in the UK Construction Industry was fuelled by “strong dissatisfaction with the traditional procurement and management approaches”!!! UK – Office for Govt Commerce (OGC) –outlawed traditional, non integrated procurement options on 1 June 2000 –Common Minimum Standards issued in June 2006

LATHAM REPORT (1994) Clients are at the core of project delivery process Clients are the driving force behind any agenda for change 12

Sectoral Procurement Strategies Stop the generic nonsense! Not a “one size fits all” environment…. its about “horses for courses”…what is best suited for your project specific challenges! Better planning requires clients to be “more” informed Informed decision making = smart decisions Better choice of permutations in the CIDB SFU –– options must be tailored to your environment (Have u studied the regulations? Have u engaged the CIDB? Is your team CIDB accredited?) Think “out of the box” eg. Limpopo Schools Project Outcome could surprise u = simpler / better / faster……….delivery! 13

14 CIDB GATEWAY PROCESS Infrastructure planning and implementation processes and controls in many organs of state have remained unchanged over the last few decades, despite the outsourcing of most of the implementation to the private sector. At the same time, tighter controls are required to align infrastructure investment to the social and economic development agenda of government and to ensure value for money. This practice note: outlines planning and implementation phases which integrate with the range of construction procurement practices promoted by the cidb; provides a gateway process to improve project outcomes and to manage project risk.

Standard for Uniformity Legislative Framework The Constitution PFMA / MFMA PPPFA BBBEE CIDB Act + Regulations Other relevant Act’s Client Procurement Policy Procurement directives Standard Operating Procedures CIDB CODE OF CONDUCT!!! CIDB Best Practice Guidelines CIDB Framework for public sector procurement CIDB inform Practice Notes 15 CIDB Standard Bid Packages CIDB GATEWAY!!!!

GATEWAY REVIEW PROCESS 16

CIDB Performance based Procurement Framework Goal (end objectives) Planning: Procurement system fair, equitable, transparent, competitive and cost effective and promote additional objectives to the procurement itself Qualitative requirements Decisions: Procurement Strategy + Contracting Strategy + Pricing Strategy + Form of contract = achievement of primary and secondary objectives Quantitative requirements Choices: Rule based system established in cidb Standard for Uniformity - criteria to achieve the qualitative requirements, set parameters / indices for measurement Evaluation Application: Control points in the process that the rules have been applied Level 1 Level 2 Level 3 Level 4 17 CIDB inform Practice Notes

Goal (end objectives) Qualitative requirements Quantitative requirements Evaluation Level 1 Level 2 Level 3 Level 4 4-level performance-based procurement framework Integrity Management Managing the risk that objectives are breached 18

Few things are harder to put up with, than the annoyance of a good example ……..…Mark Twain 19

eThekwini Water and Sanitation Project Level 1 Level 2 Level 3 Level 4 PRIMARY: REPLACEMENT OF THE CITY’S ASBESTOS CEMENT WATER MAINS. SECONDARY: CONTRACTOR DEVELOPMENT / EPWP NEC 3 ECC(TARGET COST - CAPPED BUDGET) PACKAGED ORDERS BASED ON PERFORMANCE CIDB SFU NEC CONTRACT SYSTEM ETHEKWINI SCM CONTROL COMMITTEES CIDB GATEWAY PROCESS 20

CIDB Monitoring and Compliance: Part V CIDB SFU Allows for auditing to take place at any stage in the procurement process (especially after the award of a contract) Risk related to corrupt activities is better managed Identification of irregular and unauthorised expenditure early in the process Overspending managed and controlled CIDB Code of Conduct Conduct investigations Sanction offenders Suspend offenders from the CIDB RoC Issues fines to Employers up to R Intergovernmental Relations Framework Act –Treasury –Public Protector –Auditor General 21

W-I-P Designing, developing and promoting the appropriate delivery models to improve the rate at which the public sector delivers infrastructure projects CIDB Delivery Management Toolkit, major upgrade to ensure content is relevant to the turnaround in infrastructure delivery in the public sector Implementation in partnership with SPAID and IDIP (National Treasury / DBSA / NDPW / CIDB) 22

23 CHANGE MANAGEMENT??

THANK YOU – THE END 24 development through partnership