The limitations of the South African procurement policies and practices in relation to contractor selection criteria: the importance of technical qualifications and experience of established construction companies

Abstract

In the 2017 budget, the South African government indicated plans to invest over R940 billion in public infrastructure as part of the medium-term strategic framework. This investment indicates future growth in the construction industry. The construction industry also plays a significant role in the creation of employment and in economic growth. To achieve this, the government will most likely be reliant on contractors for the implementation of its plan. In addition, Small, Medium and Micro Enterprises (SMMEs) currently contribute 70 to 80% of employment. Given that another goal of the government is to develop emerging contractors, SMME civil engineering and building contractors will most likely play a significant role in this projected growth. Studies on the skills profiles of CIDB grades 1 to 6 contractors in South Africa, however, have shown that these emerging contractors lack the necessary skills to competently complete infrastructure projects. In developing this theme further, the primary objective of this study was to show that the required skills or competencies include technical qualifications and construction related experience, and that these needs are often neglected when contractors are evaluated as part of the pre-appointment or procurement processes. Furthermore, this thesis proposed that technical skills may be the distinguishing factors between the SMMEs and the larger enterprises. This thesis also argues that competency assessment should form a vital part of procurement practices, especially in relation to the selection of contractors. To demonstrate this, the thesis provided evidence from previous studies of the qualifications and experience of grades 1 to 6 contractors. Empirical data was used to compare these results with the technical competencies of grades 7 to 9 local contractors as well as their international equivalents. Evidence of procurement and contractor selection practices was also collected on these groups of contractors through the analysis of tender documents. This research found that clients generally do not expect grades 1 to 6 contractors to have technical qualifications, and as such, do not evaluate them against these criteria during the selection process. Government agencies procuring grades 7 to 9 contractors, who generally have technical skills, however, seem to hold them to a higher standard. This non-uniformity in the procurement strategies, as this study found, is because construction regulations and policies place the onus of defining contractor selection criteria on the client. This study, therefore recommended that construction related technical competencies be at the forefront of contractor selection criteria, and that policy should take these factors into consideration. Additionally, contractor development programmes should focus on developing these skills in order to reduce SMME contractor failure, and as a result, contribute to the reduction of unemployment in South Africa.