Multi-billion rand upgrade programme planned KZN N2 and N3 interchanges
ECONOMY / 13 AUGUST 2019, 7:00PM / DHIVANA RAJGOPAUL
DURBAN - President Cyril Ramaphosa has announced that tenders to the value of R8.3bn for construction work in KwaZulu-Natal will be issued within the current financial year.
These tenders include seven major tenders on the N3 which will go out in the next three months once regulatory approvals have been received and land acquisition finalised.
The massive project which take eight to ten years to complete is set to increase road safety, ease traffic flows as well as access to and from industrial areas between these two major cities in KwaZulu-Natal.
It is part of a R40 billion two to three-year investment programme by the roads agency announced last week.
Some of the N2 interchanges that will be upgraded include Kingsway, Adams Road, The Higginson, Edwin Swales and Sibaya while the N3 interchanges that will upgraded include EB CLoete, Spine Road, Hammarsdale, Cato Ridge amongst others.
The upgrade programme has been designed with the needs of road users in mind. The upgrades will make use of geometric design to optimise efficiency and safety.
A total of 12 projects is expected for the N3 and N2 upgrades which will create around 23 500 direct job opportunities.
Direct job opportunities are actual individuals per ID number on site based on SANRAL averages over time of 262 jobs per R100m project value. In the case of community projects, of which two (consisting of multiple packages) are planned in the province, 290 jobs on average.
"This excludes SANRAL’s continuous routine road maintenance as part of our robust preventative maintenance strategy aimed at taking care of the road assets we have," said Dumisani Nkabinde, SANRAL’s Eastern Region manager.
Treasury has allocated about R21.5 billion per year for the maintenance and improvement of SANRAL’s 19 262km non-toll network, including the national road network in KwaZulu-Natal.
A growing share of contracts will be allocated to black-owned construction companies and enterprises owned by women, the youth and the disabled.
SANRAL has committed itself to the transformation of the construction and engineering sectors through the allocation of tenders to new entrants in these sectors.
Over the past six months SANRAL has brokered memorandums of understanding between emerging companies and major suppliers of construction equipment and machinery to give black-owned companies greater access to financing, expertise and the sophisticated equipment required to tender for larger contracts.
Dumisani Nkabinde, Regional Manager of SANRAL Eastern region, said: “The upgrades are part of Government’s rollout of Strategic Infrastructure Projects in line with the National Development Plan, specifically the Strategic Integrated Projects, of which the N2 and N3 upgrades are within the SIP2 program.
"The N2 and N3 are not just roads - they are the epitome of empowerment and are essentially South Africa’s lifelines for the transportation of freight from Durban to Gauteng, the economic hub of the country," he added.
According to SANRAL, the upgrade programme will have a traffic management plan that will protect construction workers and road users by safely conducting traffic around or through the areas where the construction will be taking place.
Three contracts have been awarded and work is under way for the engineering of the former Tembec lands development in Cranbrook.
“It is good to see we are moving forward with the plans for the development of this industrial land,” said City of Cranbrook Mayor Lee Pratt. “With the interest we are receiving regarding availability of these lands, it is important that we get moving on it. There have already been 40 new jobs created in the two leases that we have entered with the existing buildings that were on site and sitting dormant for many years. I am looking forward to more great opportunities which will present themselves to this project.”
The first contract is for environmental engineering which was awarded to SNC Lavalin to undertake a Stage 1 Preliminary Site Investigation update, update previous tables and drawings, and then complete a data gap assessment and work plan to move forward to address environmental issues which will need to be completed for the proposed development to occur.
The second contract (civil and transportation engineering) was awarded to Urban Systems Ltd. This contract includes the transportation network study and conceptual design, survey work, civil design and cost estimates, and contract administration and field inspections when construction occurs. The transportation plan will be complete in the fall of 2019 and the final civil design being complete in the fall of 2020. Deep civil utilities (water, sewer and storm) could be installed in the summer of 2020 and road construction and shallow utilities constructed in 2021 at the earliest.
The third contract was awarded to VAST Resource Solutions Inc. for geotechnical engineering to complete a geotechnical and hydrological assessment to evaluate and reduce the area currently under restrictive covenant (no build/no disturb zone) regarding potential geotechnical and drainage hazards to future development and to provide geotechnical/drainage recommendations for subdivision road construction and utility services. The geotechnical study will be complete the summer of 2019.
Staff continues to work on the concept and the strategy for the former Tembec lands specifically around marketing and branding of the property.
The city is planning to launch a new economic development micro- site in the fall of 2019 within the city current corporate website – www.cranbrook.ca, with the Tembec lands as a central point and driver to garner interest from investors and other business interests.
Lead image: Tembec lands proposed layout option 06.11.19. City of Cranbrook
M. Cahit Turhan, Minister of Transport and Infrastructure, will open the TEM junction of the North Marmara Motorway at the end of this week, said: "This road will be especially important for industrialists in this region." He said.
Ikitelli Organized Industrial Zone industrialists and business people Turhan Minister met with, here in his speech, Prime Minister Recep Tayyip Erdogan's leadership launched in Turkey last 17 years touched on the important services and projects.
important projects in all areas of Turkey Turhan stated that implemented, "Is it enough? That will not do. We need to continue to invest and we will continue to invest for our country. ”
Turhan, Turkey, noting that in recent years noticed everyone to changes in the transport field, can be reached every corner of Turkey, has become accessible, almost all cities divided highways, and large cities noted that connects with the highway.
Turhan said that they are now connecting the cities with high-speed trains and added: sahip It is very important for our industrialist to bring raw material and deliver the product it produces to the market. If we did not make the roads, our roads would not have the chance to carry the current traffic. Our industrialists' chances of competition would be minimized. With this infrastructure, we have pioneered the growth of our industrialists and the spread of the industry across the country. At the moment, the investments we have made underlie the establishment of organized industrial zones all over our country. ”
“Kanal Istanbul will accelerate the development in the region”
Minister Turhan said that the country's exports exceeded the bar of 170 billion dollars and that the export figures increased every year and that the ratio of exports to imports came to 90 percent.
Stating that the industrialists succeeded, Turhan said:
“What we did at this point was to meet your infrastructure needs and we did it. We will continue to do so. At the end of this week, we will open the TEM junction of the Northern Marmara Motorway. The opening of this road will be especially important for our industrialists in this region. The construction of Channel Istanbul will also accelerate the development in the region. At this point, in order to meet the capacity to be formed in the region, we will implement a project that will connect the Basaksehir junction to the Hasdal junction under Cebeci Neighborhood and then to the North Marmara Motorway. ”
Uz We continue to work for our country ”
Minister of Transport and Infrastructure Turhan said that there has been significant changes in the course of world trade recently and that the axis of global trade has shifted to the east more and more every day.
Stating that there are substantial alternatives to western-based global institutional structures in the east, as in the Belt and Road Initiative project, Turhan said:
Ürün Currently, the product coming from China reaches the European market in 45 days to 2 months. When our high speed and YHT projects are completed, the train from China will reach Europe in 17 day. We have completed more than 2 kilometers of 500 thousand kilometers of this project in our country. The high-speed train project over the Yavuz Sultan Selim Bridge continues. also Halkalı- We also started the Kapıkule railway project. These will enable our industrialists and farmers to reach their international markets in the shortest time and at the lowest cost. As we have seen, we continue to work for our country. Yes, there are those who put obstacles in front of us, there are those who open a trench, but we will continue on our way no matter what. ”
Enhancing value for money in public procurement of Northern Ireland construction projects
29 May 2019
Gary McArdle and Gerard Gunning evaluate public procurement in Northern Ireland - specifically, the achievement of value for money in public construction projects; they also assess other factors detrimental to creating value, such as sub-economic tendering and the potential impact of Brexit
A new road, water main or sewer may need to be constructed to a required specification; there is less impetus for innovation, whereas the construction of a new hospital or school may be considered complex and more open to radical innovation.
The purpose of this article was to evaluate public procurement in Northern Ireland (NI) – more specifically, the achievement of value for money (VfM) in public construction projects. Other areas assessed were factors detrimental to creating VfM; sub-economic tendering; and the potential impact of Brexit in NI.
The methodology included primary and secondary data collection. The qualitative research involved six semi-structured interviews to collate the data and use of Decision Explorer to analyse it. Quantitative research was in the form of 81 questionnaire responses, analysed using SPSS.
The findings highlight influences which create VfM in public procurement, along with barriers to achieving VfM. Direct and indirect factors which contribute to public value are also established. Additionally, the potential impact of Brexit on VfM was ascertained.
The article identifies clear implications for practice, with a view of increasing VfM through public procurement procedures. An insight is provided into public procurement in NI from the perspective of both vendor (public bodies) and purchaser (contractors) – an area which appears to be under-represented in current literature.
Procurement is the acquisition of resources required for the realisation of a project. These resources include contractors, consultants, subcontractors, suppliers and the client’s own resources.
Public procurement must be based on VfM, which is defined as ‘the best mix of quality and effectiveness for the least outlay over the period of use of the goods or services bought’.
This should be achieved through competition. Public procurement is subject to a legal framework which encourages free and open competition and VfM, in line with international and national agreed obligations and regulations.
There are sufficient strategic plans provided by NI public bodies on the delivery of infrastructure projects in an efficient manner while also providing VfM. There are a number of ways in which the procurement activities of public bodies can achieve VfM.
However, there appears to be a level of uncertainty as to the most suitable procurement approach. Additionally, there are factors inhibiting the creation of VfM such as lack of funding and long-term perspective; sub-economic tendering; and a claims culture.
The study used a mixed methods research approach by collecting primary and secondary data, utilising both qualitative and quantitative methods to collect, collate and analyse data. Figure 1 demonstrates the research process.
Figure 1 Research methodology
The qualitative research involved six face-to-face, semi-structured interviews with senior individuals currently working in the construction industry.
Four of the individuals work for public sector organisations, providing a range of perspectives from different specialisms.
Two of the individuals are senior managers within contracting companies currently involved in public sector projects in NI – one civil engineer and one quantity surveyor.
It should be noted that the interviewees appeared cautious with their responses due to the sensitive nature of the subject. Details of the interviews are illustrated in Table 1.
The analysis of the interviews also identified areas where further research would be required within the topic.
This was used to aid the development of a questionnaire which formed the basis of the quantitative research.
Table 1 Interview details
A total of 81 individuals working across various sectors of the construction industry completed the questionnaire.
This section identifies the main outcomes of the research and provides reasoning to the main themes established. Contradictions between different aspects of research in addition are also discussed. The main themes identified include:
1. Creating public value Public sector organisations not only create public value through the services they provide; they also create value by their approach to the provision of services including: • Creating employment; • Supporting the local economy; • Helping socially deprived areas; • Support of SMEs; and • Consideration and protection of the environment.
The main areas requiring improvement in NI include: • Improvements to the road network; • Greater employment opportunities; • Improvements to the health facilities; and • Improvements to the water and sewerage services.
Although it did appear that VfM was being achieved, the concept of measuring public value would provide a more appropriate assessment of the delivery of public procurement policies.
2. Factors which result in less VfM and have a damaging effect on NI’s construction industry There are various factors and practices which are detrimental to the objective of achieving VfM through public procurement.
The ‘vicious circle’ in figure 2, illustrates the main causes which are damaging the construction industry in NI. It should be noted that this is more relevant for less complex projects.
Water and roads projects are less complex projects, whereas education and health are more concerned with large complex projects. The rationale is that a new road, water main or sewer may need to be constructed to a required specification; there is less impetus for innovation, whereas the construction of a new hospital or school may be considered complex and more open to radical innovation.
Figure 2 The vicious circle damaging the construction industry in NI
The three main causes of sub-economic tendering in NI are: a.)The client’s aim to gain VfM places increased pressure on contractors to reduce costs; b.)The attitude of contractors. Some contractors submit low tenders simply to win the work and offset losses by drawing on more profitable sections of the business. Additionally, legal challenges prior to contract award from unsuccessful tenderers are time consuming, costly and lead to delays in the contract start date. c.)Lack of work in NI.
During the construction phase, contractors seek claims as an approach to increase income. The increase in claims is forcing the client to ‘fight back’ and apply the contract in a more stringent manner regardless of the contractor or tender price.
Therefore, contractors are not making enough profit or possibly losing money leading to a breakdown in relationships. There is no process improvement on defining the key aspects of the tender evaluation by the client, as contractors will continue to submit sub-economic tenders to win work – resulting in the cycle starting again.
This vicious circle is proving to have a damaging impact on the construction industry in NI for both contractors and clients. The competitive industry, lack of construction contracts and unsustainable rates are proving to be a dis-incentive to larger contractors who are focusing on expanding their geographical spread to gain profitable work.
In an attempt to break this cycle, a starting point would be to obligate public-sector clients to reassess their interpretation of VfM. It is apparent that they can confuse VfM with lowest price and their current approach to place more emphasis on cost is resulting in a ‘race to the bottom’ in relation to tendered rates. Clients must realise that the lowest price will not necessarily mean the lowest outturn cost.
Current regulations have a procedure in place to assess sub-economic tenders. However, clients are happy to receive reassurance rather than exclude them to avoid potential legal challenges.
As demonstrated in the case of DRD v BBMC (2016), BBMC were awarded damages because of DRD excluding them from the tender process based on their abnormally low tender (ALT). A potential change in regulations would give clients more authority to deal with ALTs without risking the backlash of a legal challenge.
Additionally, a reduction in funding provided by the government for capital works projects is resulting in greater operational and maintenance cost. Factors such as restrictions on expenditure along with a reluctance to incur higher capital costs are resulting in greater maintenance cost, suggesting a lack of long-term perspective by public bodies. This is providing a major problem to sustainable construction procurement.
3. Factors which create VfM and proposals for improvement Figure 3 summarises what creates VfM, based on the qualitative and quantitative research.
Figure 3 Elements that create VfM in NI public procurement
There are certain differences within the findings of the research, particularly in relation to contract strategy for large complex projects. Health and education sectors have adopted a traditional approach for the large complex works such as the new critical care unit at Royal Victoria Hospital (RVH) or the relocation of Ulster University, Jordanstown (UUJ). In each case, the design and construction stages are completed and procured separately.
However, one question in the questionnaire focused on this area for large complex projects. Two-thirds of the responses indicated that design and build would provide the best opportunity to create VfM for the client. Possible reasons for this difference in results include: • The details provided by health and education sector representatives divulge the procurement approaches for both the consultants who complete the design and specification and the contractors. The procurement of the consultants focuses more on quality with less emphasis on price. Design competitions and ‘narrow average approaches to the cost assessments avoid low cost tenders and ensure that the best consultant is awarded the contract. • In contrast, contractors are ultimately procured on lowest price. Following a most economically advantageous tender (MEAT) process to determine suitable contractors, the client is confident that the contract is so well defined with necessary risk allocation, that they can accept the lowest bid.
There were several suggestions for improving procurement procedures within the public sector in NI including: • It is apparent that there is greater emphasis towards price in the price/quality (PQ) combination with an almost default position of 60/40 or 80/20 PQ ratio. However, the client is not aligning projects with adequate PQ combinations. An improved balance in the assessment between cost and non-cost criteria at tender stage is required, depending on project complexity, risks, contractor availability and client’s objectives. • Proposed changes to the current PQQ process. Figure 4 illustrates possible suggestions for improvement in the current process.
Figure 4 Suggested improvements to the PQQ process
• It is recognised that quality responses are generic. However, clients are not willing to put emphasis on quality since it is more subjective in nature compared to cost. Ultimately, this will result in a ‘race to the bottom’ in terms of cost. • Frameworks are accepted as an approach to gain VfM as well as reducing the adverse nature of construction procurement, but they are not utilised enough. Frameworks lend themselves to greater specialism and better workmanship, further enhancing the VfM initiative. Additionally, they provide an opportunity to save on tendering costs; form long-term trusting relationships; and improved design and delivery. Benefits to the contractor include a greater security of work through long-term programmes. However, it is acknowledged that frameworks may not be beneficial to SMEs. • Greater leadership and planning are required to ensure procurement approaches are fair and reasonable and to reduce procurement turnaround times.
4. Brexit Following the June 2016 referendum and triggering of Article 50, Brexit and its potential impacts is a very current topic. One of the most significant concepts is that Brexit will have a detrimental impact on public works in NI.
This includes fewer foreign contractors coming to NI for work following Brexit. Most of those who responded to the questionnaire were concerned about the potential impact of Brexit on their current work.
To support this, the main outcome from the research was ‘great uncertainty’ over future budgets a result of Brexit. NI already receives a low level of funding from the government. This is not likely to improve following Brexit.
Contrary to this, health sector personnel believe that they could potentially receive more funding in the future. However, they could not make this claim with any certainty.
Public bodies receive a certain level of funding for capital works projects and this is likely to continue following Brexit. However, current funding provided for by the EU for projects involving both NI and ROI is not likely to continue.
Another potential project at risk is the proposed York Street interchange project. The £165 million project is part of a Euroroute E01. A substantial EU contribution of up to 40 per cent could now jeopardise the project.
The consensus is that procurement policies will not change apart from how work is advertised. If it does change, the principles of competition and transparency will remain since the WTO principles would apply.
Depending on the new agreement on how the UK will operate within the EU market, a forum to advertise public works may still be required following Brexit. It is noted that the current approach to advertising in OJEU can be time consuming for little benefit.
It is recommended that the threshold levels for public works are reviewed. In several cases, the values are deemed too low. Although certain works are advertised in the EU market, ultimately it will result in local contractors only tendering for the work.
5. Future funding recommendations along with proposals for year-end flexibility The current process for funding provided by the government is an annual budget. To create better VfM along with greater security to companies, a better foresight of budget is called for. This would allow companies to improve measures such as more permanent staff and improved training.
Year-end flexibility would be a benefit to clients and contractors. The current process of an annual budget is putting the client under pressure to spend money, particularly towards the end of the financial year.
A lack of planning on the client’s behalf is ultimately putting increased pressure on the contractor to complete the work in tighter time frames.
The study undertaken has potential applications to industrial practice. An insight was gained into the area of public procurement in NI.
The outcomes should be considered by the public sector to enhance VfM from the services that they deliver, in a clear and transparent process.
Due to the sensitive nature of the subject and the cautious responses received through the interviews. Further study could include Freedom of Information Requests for more objective data on relevant public bodies and projects.
The impact of Brexit on public procurement in NI and the wider United Kingdom could be further examined as the current process is based on the EU directive on public procurement.
Public bodies must realise that in order to enhance VfM, more rational thinking at an early stage into aspects such as their objectives, project complexities, project briefs, and budget forecasts, will be required.
Greater leadership and planning by the government and public sector organisations would remove pressures which lead to unsustainable tendering and would help maximise VfM for clients.
In addition to this, it would encourage more cost-effective working practices, greater innovation, better supply chain engagement and improved security to contractors.
Authors: Gary McArdle, BSc MSc, MCIWEM, CWEM MIEI, senior design engineer, Atkins Ireland Ltd; Joseph Gerard Gunning BSc, MSc, PhD, FICE, FCIOB, FIEI, FCQI, honorary senior lecturer, Department of Natural and Built Environment, Queen’s University, Belfast
Abstract The purpose of this article was to evaluate public procurement in Northern Ireland (NI) - more specifically, the achievement of value for money (VfM) in public construction projects. Other areas assessed were factors detrimental to creating VfM; sub-economic tendering; and the potential impact of Brexit in NI. The methodology included...