MORE SMME DEVELOPMENT NEEDED TO SUPPORT CONSTRUCTION IN SOUTH AFRICA

The ground is shifting under big
construction players as market dynamics change and small- and medium-sized
(SMME) contractors step up to contribute more to the sector. These SMMEs represent
the future of the industry, says Janine Espin, MD of Economic Development
Solutions (EDS).  

SMME development in
the construction sector is vital, not just to ensure broad-based black economic
empowerment (B-BBEE) requirements are met, but to help grow the construction
industry. As large contractors restructure, retrenched workers are looking for
alternatives – as are construction clients.

While the
opportunities for SMME contractors are growing, their lack of business and
management skills confound their ability to grow.

Challenges for SMMEs

Construction sector SMMEs typically
specialise in civils, electrical or concrete work, steelwork or glazing. Their
turnovers can reach up to R50m and they may employ from 100-200 people. With a
strong appetite for work, these companies are more flexible in their pricing,
scope of work and willingness to employ local workers.

These characteristics make them attractive to contract winners looking to
subcontract key aspects of a build, especially where local input quotas are
required. However, to qualify for these opportunities, SMMEs must be able to
demonstrate accountability, be able to deliver on time and budget, prove they
have the skills and qualifications to complete the project, and comply with
labour laws and other legislation.

With preferential
procurement and supplier development making up 34 of the total 123 B-BBEE points
for large enterprises (as per the Amended Construction Sector Code), it is
imperative that SMME development strategies be established.

Some of the biggest
challenges facing SMMEs are knowing where and how to find work, how to bid, how
to negotiate contracts, how to comply with HR and labour laws, B-BBEE
requirements, financial reporting, and how to plan and manage projects to meet
deadlines and avoid penalties. 

As the needs of different sectors begin to converge, new solutions to SMME
development are emerging. EDS is working on an SMME development project that
provides an excellent example.

Our client, a large
roadworks company, is running a 12-month construction incubator in
collaboration with the Department of Roads. EDS worked with the Department of
Roads and Transport to identify 36 SMME companies to receive technical road
building training from the Department of Roads. The training ensures standards
are met in roadworks projects. The construction company sponsors this training.
Over the 12-month incubation period, the SMMEs also receive training in basic
business skills from the Department of Trade and Industry’s (DTI’s) Small
Enterprise Development Agency (Seda). EDS monitors and reports on all these
efforts against the company’s B-BBEE requirements.

The benefits for all players are significant – the country’s skills pool grows,
the SMMEs gain skills and jobs, and the sponsoring company can access a pool of
trained and certified skills to deliver on its contracts.

As public, private and industry needs converge, it is becoming easier to create innovative SMME development solutions. The winners will be those companies that band together to drive progress and change.https://www.bizcommunity.com/Article/196/494/193295.html