South Africa underwent significant change over the past 20 years. The societal transformation has had great effect on sectors like construction where the democratic dispensation has birthed professionals, construction companies owned and managed by historically disadvantaged individuals (Martin & Root, 2010: 64). The construction sector is thus seen as an important contributor to the development of the country’s economy (Othman, 2014: 3). Further structural change in the country’s construction industry has been accredited to the increase of contracting activities funded by both private and public divisions of the economy (Emuze & Smallwood, 2014: 296). The industry is not without its issues. The Construction Industry Development Board (CIDB) (2011, cited by English & Hay, 2015: 151) identified several critical issues affecting the construction industry, which include: • Structural issues that are evident in transient nature of work and the resulting temporary
organisations.
• Sensitivity of the industry to the economic environment.
Windapo and Cattell (2012: 66-70) elaborates on these issues (listed below) and further links these to the challenges said to influence the performance, growth and development in the industry:
• Public – sector capacity – lack of capacity has led to inefficient process of funding construction projects by government;
• Mismatches between available skills and required skills – the skills supplied to the market through higher education institution were in many cases not appropriate to the needs of
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the construction industry thus creating a gap in skills and decline in the capacity of the professional sector in the industry;
• Globalisation and critical global issues – aside from impact of globalisation on the construction trade and activity, the current global economic recession and its effects on world economies pose a challenge to the performance of the construction industry in South Africa, ;
• Procurement practices and the capacity for sustainable empowerment – the existence of preferential procurement practices that encourage historically disadvantaged professional to establish their own firms rather than join established companies reduces the depth and breadth of expertise that can be consolidated into more established companies ;
• Access to affordable mortgages, credit and interest rates – since 2007 banks have become very stern in their lending criteria requiring purchasers/developers to put down equity of up to 50% which very few people can afford. Mortgage rates fluctuate between 13% and 24% making it difficult for households to afford higher interest payments resulting in failure to pay their mortgage bonds;
• Poverty – as one of the Millennium Development Goals (MDGs) poverty has the ability to destabilise the world economy and lead to global unrest. In some countries, the funding of infrastructure development is linked to the achievement of socio-economic goals; • Technology – although South Africa has access to the latest technology, the prevailing
levels of technology in the country and the international construction community tend to limit the scope of the project that can be undertaken at any one time. Government policies thus favour the employment of labourers to boost the economy and alleviate poverty thus limiting the amount of technology applied to a project ;
• Availability of suitable land for construction – while there is an extensive supply of public land, private land is not readily available. Moreover, development of land is limited by factors such as topography and soil conditions, land claim issues, zoning issues and heritage sites;
• Availability of infrastructure – the South African government spends a considerable amount on improving old and depreciated infrastructure. However, the supply of electricity and water are diminishing thus harboring the progress of construction work and requiring contractors to provide these infrastructure facilities for themselves;
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• High rate of enterprises failure/ delivery capacity and performance – the failure rate of South African construction companies are considerably high resulting in high levels of non-completion, poor management and low productivity;
• Increases in the costs of building materials – South Africa produces its own strategic materials and relies on imported equipment. With the exponential increase of building material, contractors face the challenge to deliver affordable housing, high tender valuations and poor construction industry performance;
• Statues and regulations – the passage of more than 1000 pieces of legislation post 1994 have spawned numerous regulations. These laws have affected tender and procurement procedures, employment and labour practices, Black Economic Empowerment (BEE), planning permissions and control, skills development and training and business practices. Over and above these challenges, Emuze and Smallwood (2014: 295) bring to the fore a challenge that South African construction industry shares with the rest of the international construction community, that of fragmentation and specialisation as response to the growth as well as free-entrants to the field.
4.2.1. Collaboration in South African construction
While CP is not an emergent concept in construction, in the South African construction industry, researchers have only recently explored this concept as a means to improve project performance and other related issues by promoting the application of SCM through collaboration (Emuze & Smallwood, 2014: 304). Due to the fact that a supply chain works as one team for the project duration, collaboration ensures that no unnecessary risk is passed on from one member to the next (Shakantu et al., 2007: 108). Collaboration is further seen as a problem solving or win-win means to avoid and or reduce risk for the client and members of the SC (ibid).
Contractors are seen as the enablers of productivity on construction sites (Towey, 2012: 6). They therefore oversee the coordination and collaboration of the SC. A study conducted by Emuze and Smallwood (2014: 301) affirmed the participation of contractors in collaborative arrangements in the South African construction industry within the last ten years. Contractors in South Africa however face numerous challenges that hinder their abilities to ensure effective collaboration. These challenges include (CIDB, 2011: 7):
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• A lack of skills on the part of contractors – many contractors lack the business and financial management skills, project management and technical skills specific to construction.
• Financial constraints and limited access to funding, trade credit, guarantees and performance bonds and high interests when these are available.
• Late payments by clients impacts on contractor cash flows and causes delays in the completion of the project, erodes profit margins, ties up working capital and encourages corruption.
• High turnover among skilled workers owing to uncertainties in job opportunities.
• The fragmentation of the construction process has an adverse effect on the overall performance of the industry.
• Short term nature of the work which makes it hard to develop and implement long-term strategies and growth plans.
• Bureaucratic, overly complicated contract award and contract administration procedures. • Intense competition, especially in the lower scales of construction enterprises, and
difficulty in competing with larger construction firms.
• Insufficient resources to provide a safe and decent working environment such as protection equipment and attire.
• Lack of professional advisors and consultants, and where these are available the reluctance to use them to perceived fees, lack of finance or awareness.
• Lack of capital equipment such as vehicles, heavy machinery and scaffolding.
• Uncertainties in supplies and prices of materials, allied with generally non-existent or poor relationships with suppliers.
Emuze and Smallwood (2014: 302) proffer the following collaborative-working related recommendations to mitigate these and other challenges surrounding short-term objectives, strict and inflexible forms of contract, unfair allocation of construction projects risks and fragmentation:
• Ensure early involvement of key project team members who have expert knowledge so that an appropriate level of client satisfaction and value can be defined;
• Establish stable subcontractor and supplier relationships by selecting teams based on value rather that lowest price;
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• Work together as a team to agree mutual goals and devise dispute resolution mechanisms; • Develop and monitor continuous improvement programmes;
• Develop and implement sound risk management processes;
• Deal with risks and rewards equally by using modern commercial arrangements such as collaborative contract forms, target cost and open book accounting;
• Use non-adversarial forms of contract and ensure that contractual relationships are appropriate for expected project objectives;
• Mobilise and develop people to ensure employee satisfaction through integrated teams; and
• Embrace the Latham (1994)/Egan (1998) collaborative working principles.