Consulting Engineering Activities in South Africa
Engineering Consulting: The hidden gem in many a great infrastructure
The Status of Consulting Engineering in South Africa
The WOW Consulting Engineering Activities in South Africa – July 2022 report reflects on how the sector has fallen victim to the slow economic growth in South Africa.
A picture speaks louder than 1,000 words. The diagram below illustrates on the left, the fee income earned by the consulting engineering sector in the last 10 years to 2021. On the right, we flipped the chart to show what the fee income progression really had to look like in a healthy economy with policy intervention and execution measures that work to improve a battling industry.
The Value of Consulting Engineering to an Economy
The Consulting engineering is a high-value-adding sector in the economy. This means that professionals in the sector are remunerated more than the average wage income and their income supports more affluent households and enhances consumption as well as savings in the economy. The output of the sector leads to innovations and productivity enhancements in industrial activities not only in the obvious construction industry but in many other industries such as energy generation, oil refining, mining, innovative technologies in recycling, water treatment technologies, electronics design, wireless transmissions and so forth.
The construction industry, however, offers the largest chunk of work opportunities for consulting engineering. The government has always been the largest provider of construction contracts in the South African economy, especially in larger construction projects where the input of consulting engineers is much more required. In the last 5 years, the flow of construction work from the government has been unpredictable and has seen a sharp decline as illustrated in the graph on consulting engineering fee income above.
Consulting Engineering’s shift to the private sector and the implications
Companies in the Consulting Engineering sector, like many others that are reliant on government business had to face a painful adjustment over several years. The WOW report highlights that more and more consulting engineers have moved into activities found mainly in the private sector sphere such as the mining sector and alternative energy. This was due to lower volumes of public sector contracts which also led to the skewing of pricing and unhealthy competition. The unhealthy situation in the public sector is tainted by corruption on the one hand and unfair competition from international companies on the other. The multinational with a strong home base and deep pockets can tender for local projects at rates local firms cannot match. It also seems that non-CESA members do not adhere to the same principles and standards as members according to the WOW report.
Skills and employment opportunities
The fewer employment opportunities and investment in engineering qualifications also have a negative impact on the sector – whereby, in the long run, when an uptake in contracts in the public sector starts to increase for the economy to progress, the industry can experience a shortage of qualified and experienced engineers to carry out the work. The education cycle is long and not always in sync with the construction industry activity.
The presidential 100 billion infrastructure fund announced in 2019, requires a follow-through with efficient execution and investment in project preparation to enable private sector participation for a steady and predictable flow of public sector projects for the industry. The cost implications of cancelling and re-issuing large tenders consume significant resources and generally lead to pricing adjustment decisions by private sector companies which add to the cost of large infrastructure projects.
Importance of Government Policy support
As of now, South Africa still has a sufficient pool of qualified engineers. The recruitment at great cost of Cuban engineers by the government attracted a lot of criticism, raising the issue of adherence to standards. In the context of the overall South African budget, some people may argue that the amount is not all that big to negatively affect the budgetary process. However, the accumulation of such sub-optimal decisions can derail the government’s budget.
With insufficient funds available for social redistribution which has become inevitable to maintain some social stability it is important for the private and public sectors to explore creative ways to stimulate economic activity through infrastructural investment to support growth and economic development with a special focus on timely execution of national and regional projects that could kick-start the economy and take the activities up one gear.
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