Towards a new dawn: draft code in construction

The construction industry’s draft sector code for black economic empowerment has been launched.

Invited guests gathered at the Protea Hotel Midrand last week at the launch of the construction industry’s draft sector code for Black Economic Empowerment (BEE) may have wondered whether it was appropriate for the Construction Sector Charter Council (CSCC) - the industry executive authority for empowerment and transformation in the sector - to announce the draft sector code for BEE when this has yet to be gazetted.

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After all, isn’t a draft sector code a transition towards the final sector code in terms of the BBBEE Amendment Act administered by the Department of Trade and Industry (the dti)?

In the normal course of things, the above would certainly be the case. Except that given the current prevailing circumstances in the construction industry, occasioned by the February repeal of the 2009 construction sector code by the Minister of Trade and Industry, a different approach to the normal rules was necessary.

With the widespread industry uncertainty over the future existence of the construction sector code - permeated by the repeal - it became more than necessary and imperative that a launch and unveiling of the intended new measurement framework, representing a public statement of commitment and intention, outlining the approach and process undertaken, needed to be held for government, the industry and all interested stakeholders to witness.

It was against this background that, after many months of protracted alignment negotiations among industry representatives, the CSCC revealed the summarised contents of the revised draft construction sector codes that are not only aligned to the dti Generic Codes of Good Practice, but also seek to radically facilitate economic transformation of the industry throughout its value chain. Once gazetted by the dti through a prescribed national gazette notice, the draft construction sector code will then be open to public scrutiny and comments. A process that lasts for 60 days. Throughout this period, the CSCC and the dti will be engaging interested groups with the view to solicit comprehensive submissions.

But why the construction sector code in the first place?

While the need for an industry construction sector code has long (as early as 2003) been established, the recent conclusion of the draft sector code represents a groundbreaking shift in the trajectory for economic transformation of intended designated beneficiaries. Occurring on the heels of the Competition Commission’s finalisation of the investigation into collusion in relation to the construction of 2010 world cup stadia by some industry leading players, the gazette of the sector’s empowerment measurement framework provides a window of opportunity for the industry to self-correct and commit to voluntary rebuilding initiatives.

Sector codes must generally address industry specific empowerment challenges and peculiarities. As a norm, they must first be products of industry wide consultation among major commercial entities in the sector.

At best, they must enhance what already exists between them and the generic Codes of Good Practice managed by the dti. Where the sector code deviates from the generic BEE codes, it must do so based on sound economic interests and evidence. The revised draft construction sector code unveiled last week seek to achieve exactly that.

What makes the construction sector code so different?

Transitional period - When the 2009 Construction Sector Code were gazetted, a 12-month transitional period for phasing in and implementation was provided for. This revised construction sector code makes no provision for a transitional period. It is envisaged that, following the public commentary period, the sector code should be finally gazetted and implemented by October.

Scope of application - Compared with the old 2009 construction sector code and the generic codes, the revised draft Construction Sector Code now properly defines the scope of application and includes the three segments of the value chain, namely the built environmental professionals, the contractors (general build), and the manufacturers and suppliers of building materials, plant hire and ­equipment.

National Priority Imperatives - Unlike the old sector code, the revised construction sector code has taken into account and incorporated principles and objectives that are embedded in various policy instruments and interventions in the country, namely the National Development Plan; Skills Development Plan; the creation of sustainable and decent jobs; meaningful, accelerated change in construction economy; and procurement transformation and standardised industry methods.

In particular, the revised codes seek to herald the dawn of the new measurement emphasis that focuses on the following areas of economic transformation;

* Black Ownership - which is set at 35 percent after four years of the codes being promulgated. This is 9 percent above the target set out in the generic dti codes.

* Accelerated levels of black management recognition in all the echelons of construction companies and firms by black women appointees.

* Increased contractor and supplier development of emerging small contractors through decisive procurement transformation.

* And more importantly, facilitation of an increased pipeline of professional expertise through skills development enhancement.

Evidently, no provision is made for the controversial and hugely disliked principle of “once empowered, always empowered” commonly found in the mining and financial services sector. The exit and termination of black ownership in construction companies will, as proposed by the draft sector code, be handled in accordance with the terms of the recognition of ownership retention after the sale or exit as outlined in the generic codes of good practice.

With all said and done, the real work of measuring the true impact of the construction sector empowerment framework begins once the gazette has been completed. Should we fail, then history stands to judge us harshly. The construction industry and the country should therefore look forward to the dawn of the new measurement industry.

* Thabo Masombuka is the chief executive of the Construction Sector Charter Council.

** The views expressed here do not necessarily reflect those of Independent Media.

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