CASE STUDY
4.9 Conclusion
Today, construction activity is so technologically advanced that no construction firm can, or even wishes to, conduct the building process alone. As the technology continues to advance so does the necessity of subcontracting specialist work and trades to those who can manage them better at lower cost, in less time and at better levels of quality and value. Indeed, most projects today will have up to 90 percent of their work delivered by subcontractors with the main contractor only playing a management role.
Causes of increased levels of sUbcontracting are: technological progress leading to greater specialisation; promotion of an enterprise-based culture centred on individual initiative and drive towards self-employment and specialisation.
Effective management of subcontractors is absolutely essential for project success especially where PDls are engaged. The main criteria for successful subcontract management include:
• Keeping control over subcontractors by selecting subcontractors that can show they are financially and technically competent to do the job.
• A better understanding of the main contractor-subcontractor relationship.
• Managing the subcontractor relationship.
• Measuring subcontractor performance against prescribed key performance indicators and flagging non-compliance.
It is necessary that the project designer and main contractor work as a team in producing and distributing individual subcontractor packages and in selection of successful bidders.
The Eskom Regional Office Building stretched the requirement for effective subcontract management sUbstantially. The project required the services of over 17 subcontractors, most of which were ABEs and PDls. The scale of the management problem was significant. To achieve their project goals of time, cost and quality, the Public Private Partnership client
followed the Reconstruction and Development Programme (RDP) targeted procurement protocol. In brief, this protocol gives directives regarding how to conduct targeting of affirmable business enterprises. The project team set a series of pre-qualification milestones, which the subcontractors had to achieve. The following were also assessed: proven track record, specialist construction experience on similar works, appropriate management skills, necessary quality and quantity of resources and adequate financial ability. Considering that some ABEs and PDls could not meet these criteria, the project encouraged joint ventures between established contractors and ABEs or PDls. A management consultant (Barrow Projects) was appointed to take care of the contract participation goals, contract compliance, records and reporting.
The contract was completed approximately one calendar month in advance showing that the management of the project, and subcontractors in particular, was quite effective. Particularly innovative in the whole project management system was the way in which the partnering ethos was driven down the entire project supply chain. The entire design and construction worked as joint ventures, consortiums or associations.
In addition to the achievement of the formal project objectives, a number of other positive results were identified:
• Achievement of a collaborative spirit throughout the project team. No matters were declared as disputes, despite the inevitable difficulties. It should be noted that a fundamental tenet of partnering through the NEC system is that the parties act in accordance with a spirit of mutual trust and co-operation. This and other contractual requirements of partnering promote the achievement of collaboration for the benefit of the project
• Success in the application of the project management methodologies tailored to this project, which addressed both technical aspects as well as "soft" issues.
• Successful first use in the South African building industry of the ECC Option F:
Management Contract was achieved especially engaging SMMEs in the spirit of trust and mutual project objectives.
• All re-occurring problems identified could be ascertained and dealt with prior to causing contractual conflict and project failure. Transfer of blame could not be envisaged as the team was willing to share the risks and the outcome of trust was instilled in all parties involved with the project in order to achieve project success. The responsibility was placed not only on Barrow Projects but all the stakeholders participated in preventive rather than reactive dispute resolution measures.
• Parties were able to exchange innovative strategies, which supported some systems and opposed others that were not cost effective, through the use of partnering workshop and other value management exercises that were put in place.
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• The selection of partners, teams and stakeholders proved significant and resulted in successes at the end of the project.
• Enhanced communication, trust and fair and just relationships during the project were reinforced through the spirit of co-operation and mutual goals established during the project appraisal and throughout the life of the project.
4.9.1 Discussion of findings
The concept of empowerment employed at EROBB follows developments on the equitable distribution of wealth promoted by the South African government. The equity aspect is about offering POls opportunities to own and manage enterprises. The problem of capacity building is indirectly addressed by encouraging enterprises that lack certain technical skills to enter into joint ventures with enterprises that possess the requisite experience. In addition, the participating enterprises must report on the training opportunities that they intend to provide to their employees. Thus, the transfer of skills occurs within the joint venture set-ups.
The targeted empowerment approach applies to various economic activities at the EROBB.
Therefore, the principles of empowerment and human resource development stated in the framework apply to the following:
• Appointment of consultants and professional service providers;
• Procurement of contractors and subcontractors;
• Procurement of all goods (FF&E, OS&E);
• Employment opportunities in the running of the office;
• Outsourcing of business opportunities associated with the operations of the office;
• Allocation of concession opportunities;
• Purchasing policy directed at the Target Groups;
• Human resources development and job creation associated with commercial opportunities on the site.
4.9.2 Pointers for future projects
In issuing the ECC's management contract option, great care must be taken in drafting the works information in order to cover both the employer's requirements for the works as well as the management processes to be adopted. The management contractors' attributes should be carefully evaluated by the employer to ensure that he is able to manage the process of design and construction in this multi-procurement mode, and has the ability required by the management contractor.
The development of POI firms requires commensurate emphasis on training and mentorship.
For this training and mentorship to succeed within a joint venture structure, specific facilitation of the creation of appropriate attitudes amongst the participants must be undertaken.
Depending on the degree of development to be achieved through on-the-job training of critical path activities, time allowances need to be made. All parties need to be made aware from inception that no compromise will be allowed. Use of partnering in the South African building industry must be accompanied by adequate training of all parties, together with a positive commitment to a well-disciplined project management-based system. Given such training and commitment, the use of the Partnering-NEC system and Empowerment can add significantly to both project success and to the upliftment of previously disadvantaged individuals, especially small, micro and medium enterprises.
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