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SANRAL DELIVERING

TOWARDS ECONOMIC

GROWTH IN SOUTH AFRICA

Presenter : Zandile Nene

Project Manager : Design & Construction

SANRAL : Eastern Region

CONTENTS

1. SANRAL background

2. SANRAL current network

3. SANRAL funding

4. SANRAL current projects

5. Procurement

6. Stakeholder engagement

7. Conclusion

The South African National Roads Agency SOC Limited (SANRAL) is:

• an independent, statutory company registered in terms of the Companies Act;

• represented by the Minister of Transport, is the sole shareholder and owner of

SANRAL;

• operates in terms of its founding legislation - The South African National

Roads Agency Limited and National Roads Act (Act No. 7,1998);

• governed by a Board of eight people, six of whom are appointed by the

Minister of Transport; the Chief Executive Officer, who is appointed by the

Board; and a representative of the Minister of Finance.

WHO IS SANRAL?

SANRAL’s mandate is to:

• finance,

• improve,

• manage and

• maintain

the national road network - the “economic arteries” of South Africa.

WHAT DOES SANRAL DO?

Operate & Maintain:

• Routine road maintenance

• Line marking

• Toll operations

• Periodic maintenance

Design & Construction:

• New facilities

• Community development

projects

• Rehabilitation

• Strengthening

ENGINEERING

Every 10 - 14years

Every 20 - 30 years

WHAT DOES SANRAL DO?

SANRAL’S NETWORK

THE ROAD NETWORK

Length of South Africa’s road network = 750 000km

• Length of SANRAL’s road network = 21 451km

(2.8% of South Africa’s road network)

• SANRAL’s Non Toll Portfolio = 18 331km

• SANRAL’s Toll portfolio = 3 120km

(14.5% of SANRAL’s total road network)

1 288km of the Toll portfolio is managed by Concession Contracts

SANRAL operates in two very distinct business areas, being toll and non-toll

operations as required by our Act.

• Non-toll is funded through government grant,

• Toll is funded through, mainly, the capital market and receives income

through toll fees.

FUNDING

PROCUREMENT

Legislation:

• The Constitution,

“217 (1) When an organ of state contracts for goods and services, it must do so in

accordance with a system which is fair, equitable, transparent, competitive and cost

effective.

• Public Finance Management Act (PFMA),

contracting for goods and services, must be done in a fair, equitable, transparent,

competitive and cost-effective system that is consistent with the PPPFA.

• National Treasury practice notes,

Specifies the supply chain management (SCM) norms and standards.

PROCUREMENT

Legislation continued:

• The Preferential Procurement Policy Framework Act (PPPFA),

stipulates that when government assesses contracts, it must take into account a

preference point system which prescribes functionality, price and BEE

• Broad Based Black Economic Empowerment Act (BBBEE)

Economic transformation will be promoted through preferential procurement in order

to promote meaningful participation of black people in the economy.

PROCUREMENT

• 80/20 system is for tenders with a Rand value of up to R1 000 000

(all applicable taxes included); and

• The 90/10 system is for tenders with a Rand value above R1 000

000 (all applicable taxes included).

The preference point system is split as follows: (Price/Preference)

Note: Draft proposals - 2016:-

• 80/20 preference point system from R1m to between R10m ,

• 90/10 preference point system from R1m to above R50m ,

• A new proposed category, the 50/50 preference point system will be applicable

to tenders with a projected value of less than R10m.

PROCUREMENT - CONSULTING ENGINEERS

Two-envelope system

• open only the technical proposal of valid tenders in the presence of

tenderers’ agents who choose to attend at the time and place stated in the

tender data and announce the name of each tenderer whose technical

proposal is opened

• Evaluate the quality of the technical proposals offered by tenderers, then

advise tenderers who remain in contention for the award of the contract of

the time and place when the financial proposals will be opened.


Two-envelope system continued:

• Open only the financial proposals of tenderers, who score in the quality

evaluation equal to or more than the minimum number of points for quality

stated in the tender data, and announce the total price and any preferences

claimed.

• Return unopened financial proposals to tenderers whose technical

proposals failed to achieve the minimum number of points for quality.


POINTS AWARDED FOR PRICE: THE 80/20 OR 90/10 PREFERENCE

POINT SYSTEMS


Allocation of BEE points


Targeted Enterprise

A registered consulting engineering firm contracted (either by Joint Venture,

partnership or sub-contracting) by the Service Provider to perform a specified

percentage (min. 20%) of work.


Challenges:

• Prices are pegged very low and companies battle to make a profit as a

result,

• Negative mark ups tendered to win tenders,

• Inexperienced personnel are being used which do not give the standard

required,

• More time spent on training the inexperienced personnel during the

supervision stage.

PROCUREMENT - CONTRACTORS

One-envelope system

• Evaluated only on price and preference.

Contract Participation Goals (CPG) targets:

• Labour target for the contract is 6% of the tendered sum,

30% is to be contributed by women and

30% to be contributed by youth (under 35 years).

• Black Enterprise (BE) utilisation is 12% of the tendered sum,

10% is to be contributed to women owned companies.

PROCUREMENT - Challenges

• The lowest tender is not always the right contractor to carry out the

project – lack of experience and financial difficulties,

• Cyclic industry – dependant on public investment and spending,

• Prices can be pegged very low and contractors are battling to make a profit as a

result,

• Cheapest sub-contractors are being used which do not give the standard

required,

• Tendering high and low rates - Imbalanced rates,

• Contractors not willing to undertake additional work at tendered rates when too

low,

• Leads to claims - Time consuming in evaluating the claims - Can lead to

breakdown in relationships,


• Costs to parties,

• Dispute Adjudication Boards (DAB),

• Quality of personnel and plant lacking,

• Seems to be a lack of effort to complete works within time,

• Production rates,

• Failure to adhere to the programme of works,

• Coordination between contractor and sub-contractor,

• Quality of equipment being used on site - affects rate of production.

N002-270-2009/1: IMPROVEMENTS TO BALLITO I/C (KM 6.66) ON NATIONAL ROUTE 2 SECTION 27


http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjN4--m_ZbMAhUKcRQKHWcUDIsQjRwIBw&url=http://media.ngage.co.za/many-challenges-overcome-at-successful-ballito-interchange-upgrade&psig=AFQjCNGwZ2Wr029zpcpNZLCy6bBsOevvMg&ust=1461027385801682

• The original contractor, KNS Construction (Pty) Ltd,

• appointed in November 2010,

• commenced work in February 2011,

• Liquidated on 11 January 2012, after completing approximately 25% of the work.

N002-270-2009/1: IMPROVEMENTS TO BALLITO I/C (KM 6.66) ON NATIONAL ROUTE 2 SECTION 27


STAKEHOLDER ENGAGEMENT

Typical stakeholders on a project:

• Government departments,

• Land owners,

• Service owners,

• Service providers,

• Communities.

N001-170-2014/3: THE UPGRADING OF NATIONAL ROUTE 1, SECTION 17

BETWEEN HOLFONTEIN (KM 24.0) AND KROONSTAD (KM 45)

SANRAL awarded the consulting engineering services in July 2012; construction

for the project started in February 2015 and is due for completion in February

2018.

Intervention:

The existing carriageway will be upgraded and rehabilitated to form the northbound

carriageway of the new dual carriageway freeway, and a new southbound

carriageway to the east of the existing road will be constructed.



BETWEEN HOLFONTEIN (KM 24.0) AND KROONSTAD (KM 45)


STAKEHOLDER ENGAGEMENT - Challenges

ENVIRONMENTAL APPROVALS

• Delays in approvals,

• Poor communication,

• Water Use License Application (WULA).

SERVICE RELOCATIONS

• Cooperation of service owners,

• Wayleaves,

• Service Relocation.

STAKEHOLDER ENGAGEMENT - Challenges

LAND ACQUISITION

• Delays in willing seller,

• Finalising expropriation with estates,

• Landowners withdrawing PTO’s once contractors on site.

COMMUNITY RELATED ISSUES

• Identification of graves,

• Relocation of graves,

• Compensation of families.


FROM UMDLOTI I/C (KM 11.0) TO TONGAAT TOLLPLAZA (KM 21.0)

SANRAL awarded the consulting engineering services in October 2009;

construction for the project started in October 2011 and was completed in August

2016.

Intervention:

The capacity improvement entails the addition of one or two lanes over the project

length, mainly in the median. This will result in there being 4 lanes in both

directions on the N2 between the start of the project and the new KSIA Interchange

and 3 lanes in both directions from there to the Toll Plaza.


Labour:

• Illegal strike on site,

• 225 local labour were dismissed,

• Three offices were damaged, 2 completely and 1 partially,

• Contractor obtained an urgent interdict from the Labour Court,

• Contractor had to employ armed security on site for protection of their core staff,

• Strong pressure to re-employ those that had been dismissed by other

stakeholders,

• Recruitment had to start all over again – through the Department of Labour.

STAKEHOLDER ENGAGEMENT - CHALLENGES



Lighting contract

• Nominated sub-contractor,

• Requirements by the South African Civil Aviation Authority (SACAA),

• Suppliers.

Health & Safety issues

• Accident during the stressing of the cable at the Umdloti River Bridge,

• Dept. of Labour stopped work to conduct their investigations,





• Labour intimidated by Union workers who were on strike



Quality of Contractor’s staff:

• Inexperienced staff,

• Moving of staff off site.

Emphasise:

Contracts Manager – registered with the SACPCMP,

tendered supervisory staff to be available for the duration of construction.

CONTRACTOR’S SITE STAFF

LESSONS LEARNT

• No work may start unless ROD has been received.

Do not go out to tender without all the required Environmental Approvals.

• Insolvency of Contractor - Warning signs:

Low tender amount

Rates imbalanced

Rates below cost

Do a financial due diligence

LESSONS LEARNT

LESSONS LEARNT

Labour:

• Appointment of labour.

• Training.

• Illegal strikes.

Data base of labour available to be compiled before award of tender.

Labour steering committee to be formed and trained before award of tender

SUCCESS STORIES –

AWARD WINNING PROJECTS

Umgeni Interchange

Chota Motala

Interchange

SUCCESS STORIES –


Blackburn Pedestrian Bridge

SUCCESS STORIES –


Tshelimnyama Pedestrian

Bridge

SUCCESS STORIES –


KwaMashu Interchange

SUCCESS STORIES –


SANRAL’S FRAUD HOTLINE/TIP OFFS ANONYMOUS

TOLL-FREE PHONE NO. 0800 204 558

TOLL-FREE FAX NO. 0800 007 788

E-MAIL [email protected]

THANK YOU

mailto:[email protected]



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