Construction World July 2018

of 5,5 percent y-y, the biggest y-y contraction since the financial crisis in 2009/2010. GFCF as a percentage of GDP averaged at 9,5 percent in 2017 overall and was 9,3 percent in the 4 th quarter. The National Development Plan (NDP) has, what may seem to be a somewhat unachievable target of 30 percent contribu- tion of GFCF to GDP by 2030. All economic indicators currently suggest that investment in relation to GDP is likely to slow over the medium term, due to slower government spending, financial constraints experienced by SOE’s and continued weak private sector confidence. Industry challenges Campbell cautions that regulation issues, including the procurement of consulting engineering services, remain one of the biggest challenges faced by the industry. Procurement is currently based on price and broad-based black economic empowerment (BBBEE) points, with functionality or quality having a minimum threshold, thus being largely price driven. This is affecting tender prices, as firms sometimes tender below cost in view of the diminished availability of projects. A further challenge to the industry is to find a way to standardise the procurement procedures applied by the different govern- ment departments. “Unlocking greater private sector partic- ipation is seen as a critical element to fast track delivery which will support engineering

fees and as such engineering development in the industry.” Service delivery, especially at municipal level remains a critical burning issue. The consulting engineering industry is threatened by incapacitated local and pro- vincial governments. As major clients to the industry, it is import- ant that these institutions become more effective, more proactive in identifying needs and priorities and more efficient in project implementation and – management. Fee earnings In the last six months of 2017 fee earnings increased by 2 percent compared to the first six months of 2017, which was relative- ly unchanged compared to the same period in 2016. The increase was better than the expected 0,4 percent increase as reported by firms in the previous survey with regards to the outlook for the last six months of 2017. Larger firms reported an increase of 4 percent, while earnings for medium-size firms was 27 percent lower. Smaller firms saw the biggest increase of 17 percent, but micro firms saw a decrease of 4,1 percent. Earnings are expected to decrease in the first half of 2018, with all size firms expect- ing a decrease of some sort. Outstanding payments This remains a serious issue, having a broad-based effect on firms operating in the industry. After having shown some improve- ment in the December 2015 survey, the per-

centage of fees outstanding for longer than 90 days as a percentage of total estimated income (including late payments) deteriorat- ed to an average of 25 percent in the last six months of 2017. It is estimated that around R6,6-billion in earnings is currently outstand- ing after the 90-day period. Industry transformation The appointment of Black executive staff measured by the contribution of Black executive directors, non-executive directors, members and partners as a percentage of total executive staff, increased slightly to 41,5 percent from 37,4 percent and 45,7 percent in the previous two surveys. The appointment of women at an executive level deteriorated to 11,9 percent from 12,8 percent but is still below the 13,6 percent in the June 2016 survey. Of the total women employed in the consulting engineering industry, 2,5 percent were reported at an executive level up from 1,6 percent in the June 2017 survey. Human resources Employment decreased by an average of 12 percent in the last six months of 2017 to an estimated 21, 369 employees in the industry, compared to the first six months of 2017, following the 4 percent increase reported in the previous survey. This is one of the biggest declines since the inception of the survey. This represents a decrease of 8,5 percent compared to the same period in 2016. 

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CONSTRUCTION WORLD JULY 2018