Construction code paves the way for real change

THE RELEASE on December 1, 2017, of the Amended Construction Sector Code (CSC) was widely welcomed by industry analysts and commentators as “the most progressive intervention towards meaningful transformation in the construction sector”, and the most advanced of all the sector codes. It being the third biggest sector contributing towards the gross domestic product and employing just more than 1 million South Africans, the adoption and gazetting of the aligned Revised Construction Sector Codes represents a compelling transformation contribution.

Drafters of the new empowerment sector codes were mindful of the fact that not everyone in the country would welcome this significant intervention. Some have labelled the new sector code as “last-minute afterthoughts”, and as being “naively too radical” and “bad for business”.

The latest of these sentiments are contained in a Business Report Opinion article by one Deon Oberholzer, the chief executive of Gestalt Growth Strategies, a BEE Verification Agency doing work in the construction sector.

While Oberholzer and others, who seem to be unhappy with certain parts of the new sector code, have the right to comment on certain issues that they feel have shortcomings in the new codes, it is worrisome that they do so a year after the public commentary period closed on the draft version of these codes. The facts are as follows:

Wide industry consultation

The agreement between “established” and “emerging” business, consisting of 14 industry bodies, state and unions, on every issue contained in the codes, was only reached after three years, and more than 100 alignment meetings. All role-players accepted that non-agreement in the first six months would result in the repeal of the old codes. This had a dire effect on all companies suddenly measured on the generic codes, but stakeholders maintained that rushed and ill-advised codes would not do justice to a proud industry who were the first to publish sector-specific codes in 2009.

Each of the Charter Council membership organisations had representation in the alignment negotiation team who presented mandates from their industry organisation during negotiations, and final drafts were signed and approved by the Construction Sector Charter Council (CSCC) prior to tabling at the Department of Trade and Industry.

An extensive industry consultation with major commercial stakeholders, unions and affected government departments was carried out prior to and after the first draft was published for public comment for 60 days in October to December 2016. This was done to provide every member of the public with an opportunity to raise objections and inputs.

Advancements in construction

Black Ownership targets are significantly increased from 32.5 percent to 35 percent over a period of five years – a fundamental increase on 25 percent in the generic codes for BBBEE. It also expands the scope of application to include construction-related industry (material suppliers and manufacturers) that were previously excluded.

Procurement spend from “designated empowerment groups” (black people with disability, rural spend, unemployed and youth) is included with additional bonus points for spend on black women-owned companies over 51 percent.

While other sectors require training spend only for small white-owned companies and all large companies, the construction codes accept that the national skills shortage makes it an imperative that every size company invest in skills development or risk discounting.

There are no parts of the sector codes, including the provisions relating to the ownership restrictions of the Built Environmental Professional (BEPs) firms regarding the requirements for South African professional registration requirements, that were an “afterthought”.

The ownership targets in respect of the BEPs formed part of a concerted effort to create an enabling environment to promote the advancement of professional skills and retention of relevant professional capacity in the South African-built environmental space. The sensationalist comparisons made between the construction codes and the troubled mining sector codes are, therefore, considered to be ill-informed and disingenuous.

Thabo Masombuka is the chief executive of the CSCC, an executive authority responsible for the ACSC oversight and monitoring.