Johannesburg - Conditions in the first six months of 2013 were not as bad as expected, considering the better than expected increase in earnings, alongside a healthy increase in employment, according to the latest Economic and Capacity Survey (Becs) issued by Consulting Engineers SA (Cesa) The survey shows that the industry continues to have to adapt to a low growth environment. The outlook for infrastructure spending continues to be hampered by poor economic growth, lower than expected revenue by government, international economic instability, price volatility and low private sector confidence. “The way that infrastructure projects are planned and packaged requires a concerted effort by the government and the inclusion of consulting engineering firms at this initial planning stage need to be emphasized,” said Cesa CEO Lefadi Makibinyane. Industry confidence The latest surcey shows that confidence levels in the industry improved by 20% to a level of 84 and is expected to be relatively stable in the next 12 months, with a slightly better outlook for the industry in the first six months of 2014. The confidence index increased to an expected level of 94 for June 2014. It just didn’t materialize into the expected earnings. The relationship between confidence levels of consulting engineers and civil contractors deteriorated from 2009 onwards. Consulting engineers seem to remain busy, while work opportunities for civil construction deteriorated. That trend between confidence levels amongst consulting engineers and contractors has, however, shown some improvement, as contractors are slightly more optimistic. Confidence in the consulting engineering sector generally lags business sentiment. "Business sentiment recovered to a level of 50 (neutral), but is unlikely to be sustained or even improve considering the expected negative impact of strike action during the month of August on the economy," according to the survey. Fee income Cesa member firms’ fee income earned accelerated at a faster pace than expected in the first six months of 2013, after slowing down in the last half of 2012. Real annual fee earnings are lower on the back of higher inflation. Approximately 9.9% of fee earnings were outstanding for longer than 90 days, compared to 8.3% in the December 2012 survey and 24% in December 2011. This translates to an estimated R2bn outstanding in fee earnings. Human resources There was a notable increase in employment during the first six months of 2013. Employment increased by 22% to an estimated 24 356 as at June 2013 translating into a positive outlook for the recruitment of engineers. The employment of black, colored and Asian professional engineers increased by 14% in the first six months compared to the December 2012 survey. The appointment of unregistered engineers in these groups, however, fell by 8%. "Trying to conform to BBBEE requirements, means demand for black engineers will continue to put pressure on firms, as there are simply not enough black engineers available to fill those positions," according to the survey. Industry Equity Black (including Asian and Colored) equity, including executive directors, non-executive directors, members and partners, increased to 35,5percent from 30, 1 percent and 28, 1 percent in the previous two surveys. This shows real significant progress in terms of industry transformation. Women (including all races) represented 8,3percent of total equity, compared to 7 percent in the June 2012 survey. Industry challenges Cesa established an R1m anti-corruption fund in order to take to take legal action against municipalities and private companies that it suspects of having acted illegally in awarding or securing of contracts. In July, Cesa took steps to lodge its first case with the regional office of the Public Protector, which involves a district council. "Service delivery, especially at municipal level remains a critical burning issue. The consulting engineering industry is threatened by incapacitated local and provincial governments," according to the survey. "As major clients to the industry, it is important that these institutions become more effective, more proactive in identifying needs and priorities and more efficient in project implementation and management." A further challenge to the industry is to find a way to standardise the procurement procedures applied by the different government departments. The involvement of non-CESA members in government tenders and procurement continues to threaten the standard and performance of the industry. Lack of attention to maintain infrastructure poses a serious problem for the industry. The cost of resurfacing a road after seven years at current prices, is estimated at R175 000/km compared to R3m/km to rebuild. "In many cases, infrastructure is left to deteriorate to such a state, that maintenance becomes almost impossible," according to the surcey. "In addition to this the quality of technical personnel is argued by some firms to have deteriorated, putting greater risk on the built environment sector." - Fin24
Posted on: Mon, 23 Sep 2013 04:09:32 +0000
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