1. Department of Public Transport, Roads and Works Labour intensity Strategy and Framework for the Implementation of Infrastructure Projects in Gauteng Road Pavements Forum Presented by: Jack van der Merwe Pr. Eng Date: 25.11.2003

2. Department of Public Transport, Roads and Works Gauteng Premier - Jun 2003 Our Vision –“Labour Intensive Construction method will be a way of life for all infrastructure projects in Gauteng.” –“Of course not all projects will yield the same labour intensity, so targets will be set by project type by category with some projects which lend themselves to labour intensive methods going as high as 50% and some as low as 20% labour intensity.”

3. Department of Public Transport, Roads and Works Gauteng Premier - Jun 2003 What are the key success factors? –Political will - you have that from the Gauteng Executive Council, the Growth and Development Summit commitment and the ANC –Paradigm shift by all stakeholders - this meeting today is part of the process to get this shift happen and more will be done –Long term capacity building plan - the blocks are in place, we need to all set and work towards these goals –Long term incremental approach with departments’ resource allocated accordingly - you have the commitment from the Gauteng government that we shall re-orientate our budgets towards infrastructure development using labour intensive construction methods.

4. Department of Public Transport, Roads and Works Gauteng Premier - Jun 2003 Conclusion –“In conclusion, ladies and gentlemen, I want to reiterate that the success of this programme is very dependent upon effective partnerships amongst all stakeholders - government departments, local authorities, trade unions, professional bodies, learning institutions, construction industry players, civil servants and communities. Without your active participation and belief that this can be done, it will be difficult for us to achieve our objectives. –In addition to commitment, we are going to need all the inputs and participation we can get from all stakeholders to develop the capacity we need to make this programme a success. Labour Based Project management skills, supervisory as well as labour based construction management skills need to be developed at an accelerated pace for us to reach the kind of levels we are targeting.”

5. Department of Public Transport, Roads and Works Aim of the Strategy and Framework Approach followed Historical and current perspective Current status Potential Implementation implications Practical guidelines Aim of the Strategy and Framework Approach followed Historical and current perspective Current status Potential Implementation implications Practical guidelines Presentation outline

6. Department of Public Transport, Roads and Works Aim of the strategy and framework To report on the implications of a total labour approach To indicate the potential for improved labour content To illustrate the impact of total labour concept To achieve balanced solution for private sector participation To recommend where private sector can contribute to job creation To report on the implications of a total labour approach To indicate the potential for improved labour content To illustrate the impact of total labour concept To achieve balanced solution for private sector participation To recommend where private sector can contribute to job creation

7. Department of Public Transport, Roads and Works Poverty alleviation, job creation and Public Works projects. A move from contemporary technology to “total labour” concept “Total labour” is the optimal mix between people and equipment Assessment of potential socio-economic impacts Analysis of labour intensity potential and intervention options Poverty alleviation, job creation and Public Works projects. A move from contemporary technology to “total labour” concept “Total labour” is the optimal mix between people and equipment Assessment of potential socio-economic impacts Analysis of labour intensity potential and intervention options Approach followed Philosophies and actions adopted

8. Department of Public Transport, Roads and Works Historical and current perspective “total labour” To maximize job opportunities, the focus should be on appropriate mix of people and equipment. Historical perspective Current perspective Great Wall of China Egyptian Pyramids Roman roads Labour content = 70-90% Optimal balance – choice in the planning stage Devise implementation tools

9. Department of Public Transport, Roads and Works Provincial Capital Expenditure Budget

10. Department of Public Transport, Roads and Works Status Quo  Levels of labour intensity Low level (Conventional)= 6% Second level (LABMAX)= 36% Highest level (Labour Intensive)= 50%  DoH, DPLG are mainly conventional with high potential  Labour content of certain projects has great potential  Labour Intensive (LI) projects reached 37% labour content  Levels of labour intensity Low level (Conventional)= 6% Second level (LABMAX)= 36% Highest level (Labour Intensive)= 50%  DoH, DPLG are mainly conventional with high potential  Labour content of certain projects has great potential  Labour Intensive (LI) projects reached 37% labour content Analysis of the labour intensity in the current CapEx Budget

11. Department of Public Transport, Roads and Works Factors with Financial Implications Time to deliver Scope of work Continuity of work Quality Appropriate technology Terrain and environment Training Risk assessment Research and development Time to deliver Scope of work Continuity of work Quality Appropriate technology Terrain and environment Training Risk assessment Research and development Compared with conventional construction techniques, the following factors have implications on labour-based projects Compared with conventional construction techniques, the following factors have implications on labour-based projects

12. Department of Public Transport, Roads and Works For contractors, labour-based construction is fraught with much greater risks than capital-intensive construction For contractors, labour-based construction is fraught with much greater risks than capital-intensive construction Contractor risks Cost of training Effectiveness of training Greater supervision is required Labour strikes HIV/Aids Inefficient labourers Difficulty in dismissing labour Cost of training Effectiveness of training Greater supervision is required Labour strikes HIV/Aids Inefficient labourers Difficulty in dismissing labour

13. Department of Public Transport, Roads and Works E x I c /T c = E x [L max + M v + E min + OC v ] / T c Where: E=Escalation factor that keeps up with inflation rate and maintains the investment level in sustainable manner I c =Investment cost (capital) T c =Time constant (duration of any one financial year) L max =Labour cost to reach maximum rational levels M v =Material costs; variable; this covers availability and sourcing of material from the closest source to sites E min =Equipment costs to reach minimum rational levels OC v =Other costs, i.e. professional fees, land, VAT, etc. P and G’s are applicable to land, material and equipment. Where: E=Escalation factor that keeps up with inflation rate and maintains the investment level in sustainable manner I c =Investment cost (capital) T c =Time constant (duration of any one financial year) L max =Labour cost to reach maximum rational levels M v =Material costs; variable; this covers availability and sourcing of material from the closest source to sites E min =Equipment costs to reach minimum rational levels OC v =Other costs, i.e. professional fees, land, VAT, etc. P and G’s are applicable to land, material and equipment. Balancing of investments

14. Department of Public Transport, Roads and Works New alternative construction technologies can lead to improved labour content of projects without jeopardising the cost and quality New alternative construction technologies can lead to improved labour content of projects without jeopardising the cost and quality Alternative technologies i.e. Excavation of all service trenches with backfilling by hand Leveling of sites by hand Mixing mass concrete and mortar by hand Excavation of all foundations by hand Manufacturing of trusses and paving bricks on site Construction of road pavement by hand Use hand methods in programmable maintenance Building surface drainage systems by hand i.e. Excavation of all service trenches with backfilling by hand Leveling of sites by hand Mixing mass concrete and mortar by hand Excavation of all foundations by hand Manufacturing of trusses and paving bricks on site Construction of road pavement by hand Use hand methods in programmable maintenance Building surface drainage systems by hand

15. Department of Public Transport, Roads and Works Potential analysis – Labour content Current % Strategic objective % Roads14-2626-40 Education29-3641-44 Health24-3437-44 Social Services33-3441-44 DACEL34-4341-55 Public Works29-3641-44 Sports and Recreation29-3641-55 Development Planning 8-1725-55 Housing 9-3625-55 Local Government 9-3625-55 TOTAL 25 42 Departments

16. Department of Public Transport, Roads and Works All Departments and Implementing agents will follow the same norms and standards in measuring and reporting on labour intensity Norms and standards J = [{(N*(1-d/100) – A – M – P)/1.14}/L]*110 J = Number of jobs N = Total project cost, including, 14% VAT, professional fees, profit and escalation. D = Professional fees (e.g. 12%) A = Total value of land, administration and legal cost M = Total value of materials P = Total value of plant and machinery (P will tend towards 0 with an increase in labour content) L = Labour cost per unit per day. L1 = Daily wage (e.g. R55.00) L2 = Supervision costs, administration pertaining to labour, UIF contribution, etc. (e.g. between 12% and 40 % of L1 depending on the labour technology, i.e. LABMAX, LI applied). L3 = Training and skills development cost (e.g. 8% of L1) L = L1 + L2 + L3

17. Department of Public Transport, Roads and Works Implementation implications  Legal framework Alignment of Procurement Policy : Technical / Tender documents and criteria of award  Measuring contractors performance  Capacity to implement  Dormant capacity  Capacity exist in Professional fraternity Building industry contractors National departments Tertiary education institutions  Delivery mechanisms  Paradigm shift : contract options  Opportunities for BEE and SMME’s  Legal framework Alignment of Procurement Policy : Technical / Tender documents and criteria of award  Measuring contractors performance  Capacity to implement  Dormant capacity  Capacity exist in Professional fraternity Building industry contractors National departments Tertiary education institutions  Delivery mechanisms  Paradigm shift : contract options  Opportunities for BEE and SMME’s

18. Department of Public Transport, Roads and Works Impacts Social impacts Employment, income and better nutrition Poverty alleviation Reduced crime Increased self-esteem Economic impacts Employment growth of 14.2% per annum 49 200 new jobs in 3 years Increase in local economic multiplier effects Transport and energy savings Capacity building, economic empowerment Greater cost recovery for infrastructure services Total project costs Decrease in cost effectiveness Increase in labour costs and decrease in capital cost Social impacts Employment, income and better nutrition Poverty alleviation Reduced crime Increased self-esteem Economic impacts Employment growth of 14.2% per annum 49 200 new jobs in 3 years Increase in local economic multiplier effects Transport and energy savings Capacity building, economic empowerment Greater cost recovery for infrastructure services Total project costs Decrease in cost effectiveness Increase in labour costs and decrease in capital cost

19. Department of Public Transport, Roads and Works Considerations for Implementation Long-term programme Secure long-term support All departments Involve private sector Involve organised labour Redesign of projects Re-orientate budget Continuous capacity building Skills development programme Communication strategy Long-term programme Secure long-term support All departments Involve private sector Involve organised labour Redesign of projects Re-orientate budget Continuous capacity building Skills development programme Communication strategy

20. Department of Public Transport, Roads and Works Practical guidelines (1) Political committee - Chaired by MEC of PTRW, Health, Education, DPLG, Housing and Agriculture - carries political mandate to oversee programme and act as communications channel Stakeholder committee - Chaired by DDG (PW and management services) – to channel information and communication Labour intensity monitoring committee - Chaired by Chief Director Professional Services – to monitor programme results and impact of strategy Political committee - Chaired by MEC of PTRW, Health, Education, DPLG, Housing and Agriculture - carries political mandate to oversee programme and act as communications channel Stakeholder committee - Chaired by DDG (PW and management services) – to channel information and communication Labour intensity monitoring committee - Chaired by Chief Director Professional Services – to monitor programme results and impact of strategy Committee system to oversee monitoring

21. Department of Public Transport, Roads and Works Practical guidelines (2)  Reorientation of public expenditure on infrastructure at provincial level  Obtaining cost effective high standard buildings with maximum appropriate mix of people and machines  Implementing provincial infrastructure projects based on defined output measures indicators of Time Cost Quality Number of jobs Labour content  Reorientation of public expenditure on infrastructure at provincial level  Obtaining cost effective high standard buildings with maximum appropriate mix of people and machines  Implementing provincial infrastructure projects based on defined output measures indicators of Time Cost Quality Number of jobs Labour content Long term programme goals, are

22. Department of Public Transport, Roads and Works Practical guidelines (3)  Bulk excavations  Excavations in service trenches  Carpentry  Short production run joinery  Hand mixing of mass concrete and mortar  Road pavement maintenance  Road ancillary works  Bulk excavations  Excavations in service trenches  Carpentry  Short production run joinery  Hand mixing of mass concrete and mortar  Road pavement maintenance  Road ancillary works Critical areas of intervention

23. Department of Public Transport, Roads and Works Practical guidelines (4) Project Planning and Implementation Planning the project Design the project concept Project Business Plan Technical documentation Contract documentation Tendering and procurement Project and programme monitoring Capacity building and support Planning the project Design the project concept Project Business Plan Technical documentation Contract documentation Tendering and procurement Project and programme monitoring Capacity building and support

24. Department of Public Transport, Roads and Works Thank you