Address by the Deputy Minister of Public Works and Infrastructure, Sihle Zikalala at the NCOP, 09 September 2024; on progress in confronting the challenges facing the delivery of Public Infrastructure in communities.

Honourable Chairperson;
Honourable Members;

1. Introduction

We wish to thank the NCOP for the gracious invitation extended to us as the Department of Public Works and Infrastructure, to account and give progress on the work we are doing in confronting the challenges facing the delivery of Public Infrastructure in communities.

The chosen theme for this discussion is more apt and opportune because in our view, infrastructure is the foundation on which the future of our country is constructed. 
 
There is consensus that the bedrock and cornerstone of any country’s competitiveness, prosperity and social well-being is infrastructure. In order for our country to realize economic success, and the improved quality of life for all citizens, we must pay attention to the issues of infrastructure planning, execution and investment. 

Infrastructure development transcends mere construction; it builds bridges that connect people to markets, opportunities, and each other. 

This connectivity is the lifeline of business, fuelling the flow of goods, services, and ideas that drive innovation and growth.
The role of infrastructure in facilitating market access is crucial. For black industrialists in rural and township areas, robust infrastructure means broader market reach, integration into global value chains, and enhanced competitiveness. 
By enhancing connectivity, ensuring reliable access to electricity, and bridging the digital divide, we set the foundation upon which the engines of our industries can thrive. 

Targeted infrastructure development in rural areas and townships, marked by apartheid's legacy, have a potential to ignite a renaissance of industrial and entrepreneurial activity.

In the years since democracy dawned upon our land, South Africa has embarked on a transformative quest to redress the imbalances of the past and forge a pathway towards economic empowerment for all its people. The strides we have made are commendable. Through targeted initiatives and steadfast policy interventions, we have witnessed the burgeoning of black entrepreneurship and industrialism across sectors—from manufacturing and agribusiness to technology and renewable energy. 
These pioneers are reshaping our economy, driving innovation, creating jobs, and opening new markets. However, our journey is far from complete. We confront challenges such as barriers to access, financing constraints, stalled projects, crime, and gaps in infrastructure that can hinder even the most promising ventures.

In South Africa, the Department of Public Works and Infrastructure is also the custodian of the state’s immovable assets, responsible for the construction, refurbishment and maintenance of these public assets from which all government services are rendered.  The immovable asset portfolio under the custodianship of the DPWI comprises of approximately 30 000 land parcels on which some 90 000 facilities are located. 

Through Infrastructure South Africa (ISA) we have a special purpose vehicle that leads infrastructure investment, assist with technical support to project sponsors to plan better, prepare and package their proposals such that they attract funding and generally within the public sector space to progressively build the capacity and capability to develop credible infrastructure project pipelines.

Honourable Chairperson, we are the first to admit that a significant number of infrastructure investments and projects are currently not moving at the pace or speed that is required.  This is something we can ill-afford in an environment of slow economic growth.  This to us is a major obstacle and a hindrance in our drive to achieving an inclusive economic growth and create jobs through strategic priorities and consequently reduce poverty as per the priorities of the 7th administration.

As the 7th administration, we are introducing and fostering new approaches to get the projects finished on time, within budget and to expected quality and performance according to specifications.

We will now turn into the empirical findings we have identified since our arrival in the Department of Public Works and Infrastructure that delay the implementation of infrastructure projects, I will also cover the progress we have made, and some of the innovative approaches we are introducing highlighting best practices and remedies.

At the outset, we wish to state that there are internal and external factors that are associated with project delays and failures and not all of them are beyond our control as the state if we work collaboratively and with determination.

2. Challenges confronting the delivery of projects
Honourable Chairperson, before we delve into details it is important to share with the Honorable Members that public infrastructure is usually delivered using two main models:
The first being:
The consultant and contractor procurement by client. This is a traditional and well-known model with procurement at the planning and construction stages of projects. Projects are designed to the client requirements and this provides for the ability to select the designer and contractor independently.

Design and build model
In this approach, procurement of a single source for the design and implementation is preferred.  This allows for the fast tracking of some deliverables as construction can commence early. The design and building firm controls contingencies.

3. Honourable Chairperson, the infrastructure project execution phase is often hampered by various challenges, which include:

3.1.    Funding and budget constraints
These relate to limited resources which have been found to hinder the planning and execution of projects, leading to delays and incomplete works. This is largely due to the diminishing fiscus and reduced budget allocations, with clients either not allocating requisite budgets or delaying in authorising budget requirements.

In terms of the projects within our portfolio, we have encountered a situation where projects cannot proceed beyond planning because of the lack of funding to commence with construction.  This is a major risk, which at times can lead to wasteful expenditure, especially where consultants have been employed to commence designs and planning.  In some instances, payments cannot proceed due to the unavailability of adequate funds especially from client departments.

Another major factor related to this point is what is called the scope creep, which often leads to cost overruns.  There are many instances where projects have delayed because of adjustments to the initial scope by client departments without making budget provisions for the new variations. The to-ing and fro-ing affect project delivery timelines and is a serious cost risk factor due to the underestimation of costs and inaccurate bills of quantities.  This is always difficult to deal with when the project has commenced.  We have put measures to ensure that the project scope are properly defined to avoid incurring scope changes and design changes during implementation.

3.2.    Poor Contract Management
One of the major root causes and a key contributing factor to project delays is poor contract management. Weak project governance practices is often the underlying cause of poor delivery.  

3.3.    Defaulting Contractors
Honourable Chairperson, the defaulting by contractors is one of the major challenges we are confronted with, while it is not a unique South African problem but an international built environment generally, to us it has major development implications.  We are fiercely driving a campaign to weed out shoddy and corrupt contractors within our system.  

Contractors default at time due to delays in payments by various government departments, change of scope, weather conditions as well as high cost and failure to manage the project by officials assigned the responsibilities.

Another elephant in the room is that there are many contractors who win contracts in government by simply underbidding with the hope that they would rake in huge amounts through variations. There are instances where contractors have found ways to delay the projects themselves, and then charge government for it.  Corruption in government contracts is a huge problem and it is sophisticated.

In our space of Public Works and Infrastructure, issues of budget controlled by user departments is adding to the existing problems. Also, budget cuts and inexperienced project managers in certain instances. The cost of construction in government can three times more than in private sector, a project that is scheduled for three years can go up to 7 years or more, with different contractors. It is has become a norm that out of ten projects, three projects will have defaulting contractors.

3.4. We are introducing the following interventions to deal with this problem:
A panel of contractors is being put in place to ensure that once a contractor defaults, within a month another contractor can continue on the project.
The use of ⁠implementing agents. 
The turnkey to projects is being explored.
Collaboration with contractors to ensure all projects are completed on time, within budget.

3.5. Construction Site disruptions
Disruptions and extortions leading to stoppages on project sites has been one of the major challenges and threats that we are dealing with in the sector. We have seen unbecoming behavior where criminals disrupt construction sites with demands for project funds from the regulated local content and SMME development initiatives enshrined in certain pieces of legislation aimed at transforming the industry. This has given a bad image for the entire construction industry which require investments to address the infrastructure backlog. We have been persistently working with the law enforcement agencies to deal with organized crime in the construction industry. We have warmly welcome the reinvigorated efforts and prioritization to eliminate this crime by the law enforcement agencies.  I shall to return to this point later on.

3.6.  Regulatory and Permitting Issues
Another challenge relate to the navigation of complex regulatory frameworks which have been found to be cumbersome and slowing down project approvals and impacting costs. In some instances, projects are delayed due to decisions not being made in time for project sponsors to achieve their targets. Most of these challenges are experienced at the Municipal level where certain decisions related to authorisations, licenses and approvals such as for example, Municipal By-law confirmations, Section 6 and 7 Water Services Act, Rezoning and building plans are delayed due to capacity constraints or delayed governance processes within municipalities. 

In this regard, ISA, has appointed Provincial Infrastructure Coordinators to follow up on the progress of the required decisions within municipalities and to assist in the unblocking processes. COGTA is also invited to the Strategic Integrated Project Steering Committee meetings where updates are provided and where they provide the relevant support in unlocking some of the decisions from Municipalities.

3.7. Stakeholder Engagements

The requirement to balance the interest of various stakeholders, local communities, business forums and private investors complicate decision making leading to cost overruns, disruptions of works, extortions and the hijacking of construction sites.
The Department is implementing community facilitations with a view of providing accurate information about construction projects taking place in communities and how local enterprises and communities can benefit. These facilitations are an effort in managing community expectations and getting by in from all stakeholders to eliminate conflict and disruptions. 

3.8. Project Management and coordination
Effective management of diverse teams and contractors is crucial effective project delivery to mitigate the risks of poor quality of works, cost overruns and poor quality of works.

3.9. Technical Challenges and Environmental Concerns
The complexity of designs and availability of resources (technical, financial and materials)  impact timely delivery while the project may also face opposition due to its perceived environmental impacts necessitating additional assessments.

3.10. Supply Chain Management 
The global supply chain disruptions and legislation can lead to delays in obtaining necessary materials and equipment required for project delivery. Port congestion, for instance, has had a negative impact in the timely delivery of supply, pushing costs up in an environment of high inflation.

4.  Interventions to deal with the challenges
Honourable Chairperson, we have been seized with the task of accelerating infrastructure delivery on the ground for the benefit of our citizens and the economy.

4.5.  Exercising strong political oversight
Both the Minister and I, have been proactively visiting various projects on the ground and ensuring constant and robust monitoring and oversight.   We have intensified our operation Siyahlola visits where we make unannounced visits and trouble shoot on problems.  We can no longer tolerate disappointing outcomes and eventually disappointment to communities and delays in the growth prospect of our economy as a country. Siyahlola provides a layer of project oversight to effectively improve project governance practices. The programme is implemented through site visits that involve stakeholders, bringing the District Development Model to life, in order to resolve bottlenecks that cause project delays. The intervention has seen visits to projects that are delayed such as:
–    Department of Employment and Labour office in Durban
–    Stanger Home Affairs

Through Siyahlola and stakeholder engagement processes, the department has been able to commence with construction works at Vuwani Police Station, which had been blocked by various issues that include unhappy local stakeholders. 
This intervention brings all spheres of government together to find solutions, and has led to a completion of a number of projects such as:
–    Port Shepstone Magistrates Court
–    Polokwane magistrates Court

4.6.  Accountability and Unblocking blocked projects
Honourable Chairperson, We are ensuring accountability over projects and enforcing consequence management of poorly performing project managers within our system and poorly performing service providers. The Department has a Restriction Committee and Authority (RCAA).  The Committee’s role is to consider all cases that are presented to it for restricting of service providers who have abused the supply chain system or failed to perform on contracts.  The departmental procedure requires that Branches who experience challenges with performance of appointed contractors or consultants submit a motivation for restriction to the Committee who then considers the merits of the matter. When there is a contravention of procurement regulations, the department is required to  only recommend restriction to the National Treasury who will consider the matter and implement restriction or not. 

The periods for which a service provider can be restricted from doing business with government is up to a maximum of 10 years. There are a number of un-finalized cases that are being dealt with by the Restriction Committee. We are adamant that service providers short changing the government should be barred from doing business with government.  Earlier in 2023 the department terminated contracts with companies involved in unfinished projects such as Parys correctional facility, Park Road Police station and legal battles are ongoing with those involved in the Mamelodi  Magistrate Court.

4.7. Social Facilitation and Law Enforcement to deal with extortion and project site disruptions
Organised crime in the construction sector has been associated with a number of business forums or what the media came to term as “construction mafias”.

The ANC-led government remains steadfast in prioritising support for previously disadvantaged groups, including black women and the youth.  We insist that this must be done within the framework of the law.

The 2023 Global Organised Crime Index reports that 83% of the world’s population lives in conditions of high criminality. Despite our challenges, the Index reveals that South Africa is still one of the preferred infrastructure investment destination on the continent.

To respond to the challenge of extortion, work stoppages, and intimidation at construction sites, government has established specialized units within the Directorate of Priority Crimes dedicated to combating organized crime in the construction sector. 
Through the Infrastructure Built Anti-Corruption Forum (IBACF), we work with stakeholders to fight crime and corruption. We are also strengthening our capacity for social facilitation to manage community expectations and avert criminality in the construction sector. 
In our numerous engagements with stakeholders, we have persuaded contractors not to give in to intimidation or blackmail.
The CIDB is also in the process of establishing an Ombudsman Office for the construction industry that will focus on resolving disputes in the sector.

We applaud the new determination that we have seen recently from law enforcement in addressing the rising crime of construction. It is a crime that in provinces like the Eastern Cape has moved to affect even small business owners like salons, doctors, shop owners from criminals who demand protection fees. Even churches are targeted.

Despite the violence and intimidation, communities are beginning to reclaim their lives and blowing the whistle on these dangerous criminals. We support the work of the Ministry of Police and the steps taken recently by the National Commissioner to take the fight back to the criminals.

5. Conclusion
Honourable Chairperson, we have adopted a war room like approach in resolving and delivering projects in communities. We receive constant progress reports and conduct regular onsite visits. We do this because we fully comprehend the indispensable role of infrastructure delivery in growing our country’s economy. While the infrastructure space is complex and involve different actors such as clients, consulting professionals, contractors, designs, suppliers etc., it is important for our future and we have no choice but to ensure it is delivered and working for communities. The roadmap that we have put forward to all our partners is that we must account for all our planned projects.  Projects that are in progress must be fully delivered. Those experiencing challenges, will get our immediate and utmost attention as a matter of priority to remove all the blockages.  We are strengthening our early warning systems which will help us to immediately respond to project delays and non-delivery.  Infrastructure is our critical vehicle to restore the dignity of our communities, grow an inclusive economy and create jobs. We are not only identifying and defining the problems, we have put in place firm solution. The changes we are ushering in will surely turn South Africa into a construction site.
South Africa Works because of Public Works!!

I thank you