ECDC feels the pinch as contractors fall short

FAILING small building contractors are “biting” the Eastern Cape Development Corporation’s pocket – so much so that 60% of its construction industry loans had to be written off in the past financial year.
Speaking at the parastatal’s Integrated Emerging Contractor Development Model graduation ceremony, ECDC chief executive Mxolisi Matshamba warned that because of the high failure rate their loan requirements would become stricter in the future.
The development model, designed for the ECDC by the Centre for Science and Industrial Research, aims to mentor emerging contractors on financial and project management skills so they can attain “emerged” status.
“Every project that fails bites our pockets,” Matshamba said. “We have picked up that this is because of a lack of financial planning, tendering with incorrect prices or the fact that contractors deliberately underquote out of desperation to win.”
He said another reason for their failure was that, instead of executing their projects, some contractors bought themselves Mercedes “ML-Class” vehicles once they clinched a contract.
“After that, your profit is already gone and you are already using up your capital,” he said.
Matshamba said the ECDC was completing its financial reports for scrutiny by the Auditor General and included the financial year that ended in March.
Development model project manager, Eugene Mfaka said 54 small contractors from the Port Elizabeth, Queenstown, East London, Mthatha and Kokstad regions graduated from the 24-month programme.
After completing the programme, some contractors moved up three notches in the official Construction Industry Development Board register, he said.
“We want to invite other organisations and the government to join the programme. We have a budget for mentors that we can increase to help ensure more contractors are developed,” Mfaka said.
He said the ECDC used the services of 13 mentors throughout the programmes. They include retired construction professionals, established contractors and consultants.
“This is the first programme of its kind in South Africa. We have talent in the Eastern Cape and you find that many contractors doing work in other provinces are from here. We also need to retain our skills,” he said.
ECDC Enterprise Development manager Belinda Vabaza said the training programme was based on a holistic model that comprised theoretical and practical skills training. “We wanted a development programme that would take emerging contractors through the entire development cycle. In the end, a vast pool of construction experience and knowledge was developed.”
Vabaza said because the development model produced measurable quantified data, the development principles that had been established were generic in nature and could be transported to other economic sectors, such as agriculture, trade and industry and manufacturing.

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