A review of South African and international practices for the procurement and remuneration of consulting engineering services

Davies, Bram (2006-03)

Stellenbosch University. Faculty of Economic and Management Sciences. Graduate School of Business

Thesis (MBA)--Stellenbosch University, 2006.

Thesis

ENGLISH ABSTRACT: This mini-study project is a review of South African and International practices for the procurement and remuneration of consulting engineering services. The manner in which engineering services have been procured from professionals in the built environment over the last decade in South Africa has varied considerably within the public sector. Historically government and professional associations published time based and percentage fee based scales. In 1997 the government published a Green Paper on Procurement Reform. This paper called for the uniformity of procurement policies throughout all industries. In 2000, a statutory body, the Construction Industry Development Board (CIDB) was established. The CIDB has developed procurement regulations based on the government guidelines for the construction industry. Compliance with these regulations became mandatory as of 14 November 2005 for organs of state who solicit tender offers such as national, provincial and local government institutes. Within the private sector, services have been procured on an ever increasing basis based on a negotiated fee with an agreed scope of works and involvement. The importance of this study is that no single procurement system has been proven worldwide to be optimal. The CIDB have set the rules and now it is up to the construction industry to develop a framework of practice that is sustainable and competitive. The study is a systematic investigation to establish the facts about the new government procurement policies and regulations for the South African construction industry. The guidelines and proposals of associations such as the South African Association of Consulting Engineers SAACE), the International Federation of Consulting Engineers (FIDIC) and The World Bank are reviewed. Personal interviews are conducted with South African consulting engineers to investigate opinions on the latest reforms and practices. Procurement and remuneration practices in various other developed and developing countries are also reviewed. From the review it was found that the pertinent measures for the procurement and remuneration of consultants were project categorisation, consultant selection criteria., procurement processes, procurement procedures, cost based procurement approaches, the use of professional fee scales and the cost weighting of consultant remuneration. Trends that emerged from the study were the move in international practices away from the use of professional fee scales. Although the Quality Cost Based Selection (QCBS) approach is still used widely internationally, there is an increase in emphasis and move towards a Quality Based Selection (QBS) approach. Internationally there has been a trend to simplify the process and criteria for the selection of consultants. An important debate identified was whether the use of professional fee scales in South Africa should be eliminated and the determination of professional fees be left to market forces. The review found that although the CIDB had done immense work in the formulation of the new regulations to meet government reform policies, there were certain short comings that needed to be addressed. These included implementation, education of public officials in consultant evaluation, dealing with the tremendous shortage of public officials to do consultant evaluation and the simplification of processes. The study produces a comprehensive comparative table of institutional and practitioners inputs with respect to the identified consultant procurement and remuneration measures. The significance of this table is that it can be used to formulate or adjust existing frameworks. It is proposed that such revised frameworks be monitored and studied to optimise the objective of sustainability and competitiveness in the procurement and remuneration of consulting services in South Africa.

AFRIKAANSE OPSOMMING: Hierdie mini navorsingsprojek bied 'n oorsig van die Suid-Afrikaanse en lntemasionale praktyke vir die werwing en vergoeding van raadgewende ingenieurs. Die manier waarop ingenieursdienste gewerf word van professionele persone in die konstruksiebedryf oor die laaste dekade in Suid-Afrika het aansienlik verskil binne die openbare sektor. In die verlede het die staatsdiens en professionele instansies tydgebasseerde en persentasievergoedingskale gepubliseer. In 1997 het die Regering 'n "Groenpapier" oor werwing en hervorming gepubliseer. In hierdie dokument word 'n oproep tot uniformiteit van werwingsbeleid deur alle deelnemers gedoen. In 2000 is 'n statutere liggaam, die "Construction Industry Development Board (CIDB)", gestig. Die CIDB het werwingsregulasies ontwikkel wat gebasseer is op die regering se riglyne vir die konstruksiebedryf. Hierdie regulasies het sedert 14 November 2005 vir tenders aan staatsliggame soos nasionale, provinsiale en plaaslike regerings verpligtend geword. Binne die privaatsektor word dienste op 'n toenemende basis op 'n onderhandelde basis vergoed. Daar is gevind dat daar geen enkel werwingsisteem wereldwyd is wat as optimaal bewys is nie. Die CIDB het die reels neergele en dit is nou die verantwoordelikheid van die konstruksiebedryf am 'n praktykgerigte raamwerk te ontwikkel wat beide volhoubaar en kompeterend is. Die navorsing is 'n stelselmatige ondersoek om vas te stel wat die regering se werwingsbeleid en regulasies vir die Suid-Afrikaanse konstruksiebedryf is. Die riglyne en voorstellings van instansies soos die van die Suid-Afrikaanse Assosiasie vir Raadgewende Ingenieurs (SAACE), die "International Federation of Consulting Engineers (FIDIC)" en Die Wereldbank is ondersoek en vergelyk. Persoonlike onderhoude is gevoer met Suid-Afrikaanse raadgewende ingenieurs om 'n ondersoek na opinies te doen oor die onlangse hervorming van praktyke. Werwings- en vergoedingspraktyke in verskeie ander lande is ook ondersoek. Hierdie ondersoek het uitgewys dat die pertinente metings vir die werwing en vergoeding van raadgewende ingenieurs projek kategorie, wenvingsprosesse, werwingsprosedures, koste gebaseerde benaderings, die gebruik van professionele vergoedingskale en die koste van vergoeding, is. Tendense wat na vore kom vanuit die navorsing, is die intemasionale praktyk om weg te beweeg van professionele vergoedingskale. Alhoewel die Kwaliteit Koste Gebasseerde Seleksie benadering nog steeds wyd gebruik word intemasionaal, is daar 'n toename in die beklemtoning en beweging na die Kwaliteit Gebasseerde Seleksie benadering. Daar is die neiging intemasionaal om die proses en kriteria vir die seleksie van konsultante te vereenvoudig. 'n Belangrike debat wat geidentifiseer is, is of die gebruik van professionele vergoedingskale in Suid-Afrika geelimineer moet word en of die vasstelling van professionele vergoeding deur markkragte bepaal moet word. Die navorsing het bevind dat alhoewel die CIDB heelwat werk gedoen het in die formulering van nuwe regulasies om te voldoen aan regerings hervormingsbeleid, dat daar sekere tekortkominge is wat aangespreek moet word. Hierdie sluit in: implementering, die opleiding van openbare amptenare in konsultant evaluering. die hantering van die geweldige tekort aan openbare amptenare om die konsultant evaluerings te doen en die vereenvoudiging van prosesse. Die navorsing produseer 'n omvattende vergelykende tabel van institutionele en die praktykvoerder se insette ten opsigte van die geidentifiseerde konsultant werwings - en vergoedingsmeetmiddels. Die belangrikheid van hierdie tabel is dat dit gebruik kan word om te formuleer of om aanpassings te maak aan bestaande raamwerke. Dit word voorgestel dat sulke hersiende raamwerke gemonitor en bestudeer word om sodoende die doelwit van onderhoudbaarheid en kompeterendheid in die werwing en vergoeding van konsulterende dienste in Suid-Afrika te optimaliseer.

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