Overview

There are 4 kinds of construction projects: buildings, commercial, heavy civil, and industrial. In South Africa, the problems confronting the construction industry are complex. Aside from the on/off employment situation from lack of projects there is also a definitive slant toward urban development which means construction workers in rural areas have less income. In addition the government has a shifting policy towards the construction industry which makes it difficult for companies to plan ahead.

The Reconstruction and Development Programme (RDP)

The RDP is a program under the South African government and the African National Congress. It was introduced during the time of President Nelson Mandela in 1994. The mission of RDP is to alleviate poverty after the Apartheid period in particular, the social services and its infrastructure. Unfortunately, in many ways, the RDP has become enormously corrupt, and certain officials treat social housing as a private inventory of flats for sale.

Last year an assessment was made on the RDP by a group composed of the World Bank Institute, the National Treasury office of South Africa, local government groups and the University of Cape Town. They came to the conclusion that the ambitious RDP continues to struggle to provide housing in places close to employment opportunities. In addition, the government and private construction companies and related industries like supplies and hardware would need assistance in financial options in order speed up the projects.

The Public Vs Private Construction Work Projects

Most of the current construction projects are under the private sector. The government has majority over the civil engineering works. The national standards for the country in procurement in construction are ISO/FDIS 10845-2, ISO/DIS 10845-4, and ISO/FDID 10845-3.

Under President Jacob Zuma, the construction industry development has shifted slightly to a more global perspective. In order to attract foreign investments, the standards have been raised to satisfy the needs of potential investors while staying true to the country’s environment responsibilities.

The government has issued new building regulations to address the need to be more energy-efficient. At the same time, it hopes to encourage more young South Africans to consider a career related to the green revolution while hoping to reduce the problem of employment and low income jobs.

In 2012, private companies awarded contracts to build low income houses worth R 35 million and middle to high income houses worth R 70 million to several construction companies. For non-residential projects, the total contracts awarded by the private sector were worth R 2.26 billion which was an increase of R 33million from the previous year.

The government also issues construction contracts for residences worth R 139.1 million with the bulk of the funds directed towards low-income housing.

The last State of the Union speech by President Zuma included an announcement for 3 new infrastructure projects. These will be in Waterburg and Steelpoort (mining-related), Durban Free State (road, highway, rail and port network), and in Eastern Cape (agriculture and industrial). He also mentioned about more electricity infrastructure for a total infrastructure budget of R 372 billion

Last November 2012, Industry Insight published its own findings on the state of the construction industry in the country. Based on their findings, investments in residential buildings went down by 2.2% while social housing improved by 15%. However, over 41% of the low income housing projects were postponed. The problems cited for the slow performance especially with low income housing were the lack of financial mortgage options and the higher cost of constructing houses.