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�� " " " "����^���^�������������SANRAL/CESA/SAFCEC LIAISON COMMITTEE MEETING
HELD ON 19 NOVEMBER 2008 AT 10:00 AT THE SANRAL OFFICES, PIETERMARITZBURG

MINUTES OF MEETING


PRESENT:

Messrs	S Wilson	-	CESA
	P Viljoen 	-	CESA
	M Uken 	-	CESA
	C Raman	-	CESA
	K Kuhn 	-	SAFCEC
	G Shimwell	-	SAFCEC
	E Tate 	-	SAFCEC
	W Klopper 	-	SAFCEC
	S Pretorius	-	SAFCEC
	S Wilson 	-	SANRAL
	C Roux 	-	SANRAL
	L Sewnarain	-	SANRAL
	P Katide	-	SABTACO
	
1.	WELCOME

	S Wilson chaired the meeting and welcomed all present.

2.	APOLOGIES FOR ABSENCE

	Messrs		R Harrison	-	SAFCEC
			C Scott	-	CESA

3.	ACCEPTANCE OF PREVIOUS MINUTES

The minutes of the meeting held on 20 May 2008 were accepted.

4.	MATTERS ARISING

	Matters arising will be minuted under the relevant section headings.

5.	CLIENT PROGRAMME, PROJECTS AND BUDGET

Because of rising prices, SANRAL have had to reshuffle their budgets resulting in a number of projects needing to be postponed.

Engineering appointments that will be advertised before the end of 2009 will include :

Vaalpensspruit to Winburg 
Newcastle bypass (N11)
Epworth / Athlone (N3)  
Singisi Cutting 
North Coast CTROM 
R30 Tabong Interchange (near Welkom)
Market Road Interchange (N3)
N11 Esakeni (possibly) 
Kokstad T-junction (possibly) 
Reseal Mkuze 
Capacity improvements EB Cloete Interchange 
Plus 5 community development projects.

Construction awards envisaged:

Springfontein N1 � 38 km
Winburgh N5
Parys � Reddersburg N6
Bergville � Ladysmith N11
Newcastle � Ngcogo N11
Moss Kolnik I/C N2
Kwambonambi I/C N2
Church Street/Greytown I/C
Wembezi Overpass N3
Glenlion Toll Plaza R30

Most of the above projects are CIDB 9CE.

5.4	SANRAL is currently not planning to take over additional Provincial Roads from KZN DOT.

5.5	SANRAL has been advised by Treasury that there may be a budget cut next year.

5.6	RRM projects are regarded as �Term Contracts� in terms of CIDB regulations.

5.7	SW noted that construction prices appear to be stabilizing and that Engineer�s estimates have got a lot better lately.

SWJ reported on several toll roads that were still in the pipeline :

N2 Wild Coast - draft EIA report was tabled for comment last week - unlikely to proceed before 2010.
N30 Brandfort proceeding.
N2 and N3 � feasibility studies ongoing.
KSIA Interchange.

6.	GENERAL CONDITIONS OF CONTRACT

6.1	CPAF and Indices

A special meeting was held between SANRAL and SAFCEC on 28 October 2008 to discuss abnormal price increases of steel reinforcing:

During 2008 the cumulative increase was 88.4% which peaked in August, but has subsequently dropped to 67.2%.
SANRAL acknowledged this was possibly an unforeseeable event but strongly object to the use of �Rise and Fall� method.
SAFCEC proposed the SARCEA formula, for SANRAL to consider.

It has become difficult to engage with STATSSA.  A proposal submitted by SAFCEC to STATSSA in 2006 is now irrelevant and will have to be reviewed.

SANRAL: Particular Conditions of Contract

SAFCEC submitted two letters to SANRAL expressing concern about amendments made to the standard FIDIC Contractor claims provisions:

Contractors Claims � subclause 20.1
Settlement of disputes � subclauses 20.2 to 20.8.

SAFCEC contends that these amendments change the intended use of the standard FIDIC conditions, and recommend that SANRAL review same as a matter of urgency.

SAFCEC has obtained a professional opinion from MDA Consulting, which supports SAFCEC concerns.  KK to forward a copy to SANRAL.	KK

7.	CONSULTANT�S APPOINTMENTS AND AGREEMENTS 

PV reiterated that Consultants would prefer to tender a percentage fee for a project rather than try and bid on a first principles, resource based, fixed cost basis.  The main reason for this was that, despite clear documentation by SANRAL, it was often difficult to properly determine the scope and magnitude of the work when tendering.  This is borne out by the wide range of tender prices submitted by Consultants for SANRAL work.  

	The advantages of going this route are as follows:

All are tendering on a package of work with the same assumed construction value.
Flexibility in the design process is ensured as fees are automatically adjusted as the scope goes up or down.
Consultants are used to pricing this way and experience with other clients is that a far smaller price variance results.

Noted that certain clients e.g. Umgeni Water and eThekwini Municipality are now limiting permissible discounts to between 5 � 10% of ECSA fees.

PV noted that CESA members were happy with the way that SANRAL dealt with the quality aspects of the tender.

He noted however, that tendering a fixed rate for site staff continued to be problematic for two reasons :

the recent CESA salary survey had indicated up to 50% increases in the median pay of certain categories of Engineers over the past year, making it very difficult to provide a realistic price for a resource that may only be required some time in the future. 
 The CPI related escalation provided in SANRAL�s documentation did not come near to covering this and, because of the number of staff involved, the site staff component tended to dominate the price, making the contribution of the design element (supposedly the most important component) pricing insignificant.

It was CESA�s view that a better approach would be to provide a Provisional Sum for the site staff and then ask Consultants to tender a percentage markup on this.  This would still maintain the competitive element to the tender process whilst ensuring that between them, SANRAL and the Consultant, could agree on and appoint the best site staff available at the time.

While acknowledging that it was not uncommon practice elsewhere in the world, CESA where not generally in favour of SW�s suggestion that the appointment for design and construction supervision stages be split. Concerns raised included :

Proper interpretation of the design and hence liability.
OHS implications.

Agreed that the above issues could not be resolved at a Regional level.  SW suggested that CESA either send a letter to SANRAL�S CEO (or Koos Smit) and / or take this up to National Liaison Level.  PV undertook to do so.	PV

PV to provide SW with median earnings of relevant categories of Engineers from the recent CESA Salary Survey.  Stressed that this information was for information only and should be treated as confidential.	PV

SW noted that changes in the Construction Regulations were being promulgated and would be effective 1 January 2009.  SANRAL would be looking to Consultants to take in-house responsibility for OHS obligations.

SW said that SANRAL was adopting the Construction Charter in its BEE preferencing of tenders.  Consultants would in future have to have the Form certified by an accredited agency or, in the absence thereof, their auditors.

SW noted that errors were still being picked up on consultants� fee claims and that in the case of repeat offenders, these were being sent back for correction.  CESA supported the approach.

CIDB Register of Professional Service Providers was still due to be in place by April 2010.

SW said that SANRAL still wanted to host a training workshop on SANRAL procedures for Consultants.  PV offered the assistance of CESA�s School of Consulting Engineering in organizing this.  He would get Brenda Lacy-Smith to contact SW in this regard. 
		PV
CR querying whether the word �Specialist� in the Consultant�s Tender Returns was being used in the right context.  SW would consider.	SW

SW noted that in a recent tender, a Consultant�s tender had been disqualified due to perceived misrepresentation in the tender.  He did not want to mention names in the meeting but would pass details onto PV in confidence.  PV would, in turn, refer this to Graham Pirie at CESA.	SW/PV



8.	TRAINING

	SANRAL are concerned that Provisional Sums, allowed for training in their tenders was not utilised correctly.  SANRAL request that SAFCEC find solutions to measure the effectiveness of SANRAL funded training.
	SAFCEC noted that members were spending �millions� on training in each region.  Training providers have a close relationship with the SAFCEC Training and Branch managers, who submit their records for analysis.

	Industry organisations have suspended all participation with CETA and resigned from the CETA Council.  Industry has appealed to the Minister of Labour to intervene by placing CETA under the department�s administration.

9.	CIDB

The regulations were amended on 18 April 2008.

10.	CONSTRUCTION CHARTER AND SCOREBARD

	The Charter �Code of Good Practice� in terms of Section 9 of the BBEEE Act was officially submitted to the DTi on Thursday 28 August 2008, and has been signed by the Minister.  The Charter is expected to be gazetted shortly.

	The new draft PFM Bill has been repealed the PPPF Act and will be aligned with BEE. 

11.	SAFETY HEALTH & ENVIRONMENT

The new Construction Regulations are expected to come into operation by the 2nd or 3rd quarter of 2009.

12.	GENERAL

PV noted that SAACE have rebranded their organisation and are now known as CESA.
 
SAFCEC recently spent a fortune on producing a career DVD for the Industry which has been circulated to tertiary institutions and high schools on a National basis.  SANRAL requested a copy.	KK

13.	DATE OF NEXT MEETING

	The next meeting is scheduled for 25 March 2009 at 10:00.

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<ds:datastoreItem ds:itemID="{A415AC21-0398-4F36-8C75-0D7418F652A2}" xmlns:ds="http://schemas.openxmlformats.org/officeDocument/2006/customXml"/><?mso-contentType?><FormTemplates xmlns="http://schemas.microsoft.com/sharepoint/v3/contenttype/forms"><Display>DocumentLibraryForm</Display><Edit>DocumentLibraryForm</Edit><New>DocumentLibraryForm</New></FormTemplates><?xml version="1.0" encoding="UTF-8" standalone="no"?>
<ds:datastoreItem ds:itemID="{F65029C6-B503-43A3-AB10-3CAC723FEC50}" xmlns:ds="http://schemas.openxmlformats.org/officeDocument/2006/customXml"/>