Aveng Limited · JSE:AEG
Aveng — The Construction Conference 2005
49 slides from Aveng's conference presentation, Oct 10, 2005
Slide 1: The Construction Conference 2005
The Construction Conference 2005
Slide 2: The Construction Conference 2005
The Construction Conference 2005 A vision for the construction industry. How can we make the charter work for us? Presented by: Carl Grim, Chief Executive, Aveng Limited 10 October 2005
Slide 3: A vision for the construction industry and how we can make the charter work for us
A vision for the construction industry and how we can make the charter work for us • The role of construction in the economy
Slide 4: Construction industry vision
Construction industry vision “To be an industry that responsibly fulfills its role in society”
Slide 5: Two questions arise
Two questions arise • What is our “role” in society? • How do we fulfill this role “responsibly”?
Slide 6: Question 1: What is our role in society?
Question 1 What is our “role” in society?
Slide 7: Gross fixed capital formation trend
Gross fixed capital formation trend Gross Fixed Capital Formation 200,000 Nominal 180,000 160,000 140,000 120,000 million 100,000 80,000 60,000 40,000 20,000 - 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Total Other Construction EX SARB
Slide 8: Construction Works Contribution to Gross Fixed Capital Formation
Construction Works Contribution to Gross Fixed Capital Formation 35% 30% 25% 20% 15% 10% 5% 0% 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 EX SARB
Slide 9: Gross Fixed Capital Formation as percentage of GDP
Gross Fixed Capital Formation as percentage of GDP 35% •Assumption: GDP Growth of 4% and GFCF/GDP of 25% 30% in 2014 •The construction sector will double in size 25% in the next ten years 20% 15% 10% 5% 0% 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014
Slide 10: Total investment in construction works
Total investment in construction works 90000 Long term Sishen-Saldanha Mossgas Soccer Richards Bay Sasol II & III G Train 80000 Growth Eskom Mines Eskom 2% pa Roads Telkom Dams 70000 Power Roads Stations Coega Safari 60000 Free State Large Goldfields Dams Rand million 50000 40000 30000 20000 10000 0
Slide 11: Investment in total non-residential building
Investment in total non-residential building 45000 40000 Long term Growth 35000 2,3% pa 30000 Rand million 25000 20000 15000 10000 5000 0 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 EX SARB, MFA Database; Constant 2005 prices
Slide 12: Investment in total housing
Investment in total housing 45000 Long term 40000 Growth 35000 1.9% pa 30000 Rand million 25000 20000 15000 10000 5000 0 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 EX SARB, MFA Database; Constant 2005 prices
Slide 13: Housing area
Low income and affordable housing requirements to eliminate backlog by 2014 million m2 10 Affordable housing (Government) 9 Low income housing (Financial 8 Services Charter) 7 6 Housing area 5 4 3 2 1 SARB Aveng Forecast - 2001 2002 2003 2004 2005 2006 2007 2008 EX SARB, AVENG
Slide 14: Construction works forecast
Construction works forecast 70 60 50 Rand Billion 40 30 20 10 60 65 70 75 80 85 90 95 00 05 10 15 EX SARB, Constant 2005 prices
Slide 15: Role
Role 1 • To effectively deliver and maintain the economic infrastructure for long term sustainable growth
Slide 16: Infrastructure lagging economic growth
Infrastructure lagging economic growth GDP/Fixed Capital Asset Base 4 5 year moving average 3 Percentage Points 2 1 0 -1 -2 -3 60 65 70 75 80 85 90 95 20 Years EX SARB
Slide 17: Road infrastructure lagging vehicle growth
Road infrastructure lagging vehicle growth Paved national and provincial roads, passenger vehicles, and commercial vehicles for transport of goods 500 400 Index (1970 = 100) 300 200 100 0 1940 1950 1960 1970 1980 1990 2000 Paved roads Passenger vehicles Goods vehicles EX Peter Perkins
Slide 18: Additional electricity generation capacity urgently required
Additional electricity generation capacity urgently required Greenfield PS (Fast Track) - Earliest 2013 65 000 Greenfield PF (Fast Track) - Earliest 2013 Pumped Storage Braamhoek - Earliest 2011 60 000 Greenfield FBC Fast Track - Earliest 2011 Greenfield CCGT Generic - Earliest 2010 55 000 CCGT 1 -
Slide 19: Role
Role 2 • To proactively assist government to redress the country’s social infrastructure backlog brought about by rapid population growth and decades of neglect
Slide 20: Social infrastructure lagging population growth
Social infrastructure lagging population growth Growth in population vs Stock of Social infrastructure 2 Percentage Point 1 0 -1 -2 -3 -4 1985 1990 1995 2000 Year EX SARB and ASSA
Slide 21: The role of construction
The role of construction Impact on Category Type of Investment Society/Economy •Health •Housing •Education Social •Schools •Welfare infrastructure •Hospitals •Productivity •Human Dignity •Water and Sanitation •Telecommunications •Economic growth •Electricity •National competitiveness Economic •Roads
Slide 22: Question 2: How do we fulfill this role responsibly?
Question 2 How do we fulfill this role “responsibly”? • Transforming our industry
Slide 23: Black contracting participation
Black contracting participation 70.00% 60.00% Percentage of Total on Database 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 1990 1990 1992 1993 1993 1994 1996 1997 1998 1999 2001 2002 1991 1995 1996 1999 2000 emerging (%of Value) emerging (% of Number) 5 qrt ma (%value) EX SAFCEC
Slide 24: Current status of transformation in the contracting industry
Current status of transformation in the contracting industry Ownership 10%-14% All – 6% Senior management Women - 0% All -15% Middle management Women – 1% Junior All – 56% Management Women - 2% EX IMC
Slide 25: Construction Management Graduations
Construction Management Graduations Universities Technikons 75 300 50 200 25 100 0 0 1998 2002 1986 1990 1992 1994 1996 1998 2000 2000 1988 2002 1996 1986 1988 1990 1992 1994 White Black White Black 75 300 50 200 25 100 0 0 1994 1996 2000 2002 1998 1986 1988 1990 1992 1994 1996 2002 1998 2000 1990 1
Slide 26: Civil Engineering – Engineers & Technologists
Civil Engineering – Engineers & Technologists 69 Black 64 White 59 54 49 Age 44 39 June 2004 34 29 24 0 50 100 150 200 250 300 Number per age group EX Allyson Lawless, June 2004
Slide 27: Business/Enterprise Development
Business/Enterprise Development Number of companies per size category 1-5 6-10 11-20 21-30 31-50 51-75 76-100 101-250 251-500 501-1000 1000+ EX Allyson Lawless
Slide 28: Business/Enterprise Development
Business/Enterprise Development Demographic distribution and size of companies in the construction sector 90,000 Staff in Total of 11441 Black Companies Staff in Total of 8412 White Companies 60,000 Number of staff 30,000 - 1-5 6-10 11-20 21-30 31-50 51-75 76-100 101- 251- 501- 1000+ 250 500 1000 Si
Slide 29: Question 2: Building skills
Question 2 How do we fulfill this role “responsibly”? • Transforming our industry • Building skills
Slide 30: Civil engineering employment
Civil engineering employment 140,000 Number of Employees 120,000 100,000 80,000 60,000 40,000 73 78 83 88 93 98 03 Years EX SAFCEC
Slide 31: Dramatic drop in artisan registrations
Dramatic drop in artisan registrations 2000 Artisans Registered 1500 1000 500 0 76 80 84 88 92 96 64 68 72 00 Building Industry Artisans Registered EX Allyson Lawless
Slide 32: Civil engineering graduates down
Civil engineering graduates down 500 40 Number of graduates Civil spending (R- 400 35 30 billion) 300 25 200 20 15 100 10 0 5 1960 1965 1970 1975 1980 1985 1990 1995 2000 Year Civil engineering graduations Civil spending EX Allyson Lawless, Inflation adjusted base 2000
Slide 33: Training and Education
Training and Education Extra Engineers & Employees needed to cater for anticipated growth 70,000 6,000 60,000 5,000 Civil Engineers 50,000 Employees 4,000 40,000 3,000 30,000 2,000 20,000 10,000 1,000 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EX SAFCEC
Slide 34: Question 2: Creating jobs
Question 2 How do we fulfill this role “responsibly”? • Transforming our industry • Building skills • Creating jobs
Slide 35: Workload: GDP and Construction Growth
Workload GDP and Construction Growth 20 GDP growth Construction growth 15 10 Percentage (%) 5 0 -5 -10 -15 60 65 70 75 80 85 90 95 00 Year EX SARB
Slide 36: Nominal & Inflation adjusted interest rate
Nominal & Inflation adjusted interest rate 30 25 20 Percentage (%) 15 10 5 0 -5 Nom Infl Adj -10 80 82 84 86 89 91 93 95 97 99 01 03 05 Year EX SARB
Slide 37: EPWP Support Programme
EPWP Support Programme • EPWP’s goal is to create 1 million short-term work opportunities for unskilled, marginalised, unemployed people over the next 5 years • EPWP will provide poverty and income relief through temporary work to carry out socially useful activities • EPWP will seek to equip these
Slide 38: Targets for first five years of EPWP
Targets for first five years of EPWP Work opportunities Sector Person-years (average duration) Infrastructure 900 000 (four months) 300 000 Environmental and 200 000 (one year) 200 000 cultural Social (excluding 20 000 (two years) 40 000 home-based care) 3 000 venture learnerships Economic (18 month
Slide 39: Question 2: Assist in building institutional capacity
Question 2 How do we fulfill this role “responsibly”? • Transforming our industry • Building skills • Creating jobs • Assist in building institutional capacity
Slide 40: Building public sector institutional capacity
Building public sector institutional capacity Infrastructure maintenance Civil/Roads/Transport 19% 24% Low cost housing 13% Provincial Building infrastructure 24% Residential services 7% 13% Government infrastructure spending - 2005 to 2008 R167 billion
Slide 41: Building institutional capacity for Soccer World Cup
Building institutional capacity for Soccer World Cup 2004 2005 Initial delivery Adjusted delayed delivery Award of 2010 World Cup 2006 2007 Unchanged delivery Establishment of L.O.C 2008 2009 Government enabling legislation 2010 Audit of provinces & stadia Design, build and upgrade stadia SAFA infra
Slide 42: Private/Public sector institutional capacity
Private/Public sector institutional capacity The institutional complexities in the sector are reflected by: • Great number of public sector clients – 6 National departments – 9 Provincial departments: transport, roads, works – 240 Local authorities – a number of public corporations • Myriad of priva
Slide 43: Question 2: Assist in streamlining the regulatory environment
Question 2 How do we fulfill this role “responsibly”? • Transforming our industry • Building skills • Creating jobs • Assist in building institutional capacity • Assist in streamlining the regulatory environment
Slide 44: Streamlining regulatory environments
Streamlining regulatory environments • In excess of 120 pieces of legislation are impacting on the Construction Sector • Confusion around and lack of consistency with regard procurement rule applications, PPPFA • CIDB register PLUS local registers PLUS … • Professional Council registrations: duplica
Slide 45: How do we make the charter work for us?
How do we make the charter work for us?
Slide 46: How do we make the charter work for us?
How do we make the charter work for us? Targets for Change 1.5 Training Costs 1.0 2.5 Learnerships 1.0 0.3 Bursaries 0.2 0.25 CSI Status Quo Targets 0.0 0 0.5 1 1.5 2 2.5 3 Percentage EX Charter Draft 4 & IMC
Slide 47: How do we make the charter work for us?
How do we make the charter work for us? Targets for Change 30 Status Quo Targets Ownership 14 Control: Board 40 26 40 Control: Exec Man 6 Senior Management 40 6 40 Middle Management 15 65 Junior Management 56 70 Procurement 12 0 10 20 30 40 50 60 70 80 Percentage EX Charter Draft4 & IMC
Slide 48: Challenges
Challenges • Adopt a growth mentality • Development of people and enterprises • Development of technical and administrative capacity of the state at all levels to execute the works • Investment in infrastructure to be planned to reduce the cyclical nature of the industry to underpin more consistent
Slide 49: Thank you
Thank you Questions www.aveng.co.za