Sanral adjudicates R6.43 billion in tenders, boosting construction industry

South Africa’s beleaguered construction industry has been given a significant festive season boost by the SA National Roads Agency (Sanral).

Sanral CEO Reginald Demana said on Wednesday the road agency has started adjudicating R6.43 billion worth of tenders, which will be awarded early in 2024 and provide a welcome bonanza for the construction industry.

Demana said 1 040 bids were received for the 77 tenders, illustrating the significance of Sanral projects in the construction industry.

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“We are encouraged and, at the same time, humbled by this overwhelming response.

“It also tells us that the numerous engagements we had with interested and affected parties across the country has paved the way for more effective collaboration with all our stakeholders in the industry,” he said.

The official shutdown period for the construction sector commenced on 14 December 2023, and the industry will resume work on 9 January 2024.

Cancelled Sanral tenders

These tenders were among those cancelled because of a high court legal challenge by several construction companies to Sanral’s new preferential procurement policy (PPP) scoring system, which it had adopted in May 2023 and was to be used to adjudicate these tenders.

The challenge to the legality of the new scoring system led to Sanral withdrawing the scoring system on 24 October 2023, cancelling all existing advertised tenders that have not yet closed and embarking on a public participation consultation process with interested and affected parties on a proposed interim PPP.

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This resulted in Sanral readvertising 86 road construction tenders, collectively valued at R7.2 billion, at the end of November 2023 and indicating its stated aim is to fast-track the adjudication of these tenders to get these projects back on track as speedily as possible.

Comment was requested from Sanral about what is happening with the nine tenders that were advertised but which will not be adjudicated over the festive season. A response has not yet been received.

77 tenders

Demana said on Wednesday the 77 tenders for various road construction projects officially closed on 14 December 2023 after they were advertised at the end of November 2023 under the roads agency’s interim PPP.

“Sanral is currently adjudicating 77 tenders, which will give the construction industry a shot in the arm and get it off to a good start in the new year, helping to create thousands of jobs and inject billions of rands into the economy,” he said.

“While the rest of South Africa is winding down for the festive season, Sanral is working hard to get South Africa’s construction industry off to a flying start in the new year.

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“The fact that our officials are working through the holidays to adjudicate these tenders is an indication of our commitment to fulfilling the promises we made to the South African public, and it shows that we are getting back to business as soon as possible.

“We understand the role that construction and infrastructure development plays in the construction industry and we are determined to overcome the disruptions which resulted from court challenges to our PPP adopted in May 2023.

“We are squarely focused on developing, maintaining and improving the national road network in line with our mandate from government,” he said.

Playing catch up

Demana added that Sanral is making every effort to catch up on the time the industry had lost by putting out 86 of the less complex consulting and construction tenders that were cancelled and subsequently readvertised at the end of November.

The breakdown of the 1 040 bids is:

• 124 bids for national contracts with an estimated value of R350 million;
• 279 bids received for the Northern Region, comprising Gauteng, Limpopo, Mpumalanga and the North West, with an estimated value of R548 million;
• 247 bids received for the Eastern Region, comprising Free State and KwaZulu-Natal, with an estimated value of R2.1 billion;
• 240 bids received for the Southern Region, which comprises the Eastern Cape, with an estimated value of R2.83 billion; and
• 150 bids for the Western Region (Northern Cape and Western Cape) with an estimated value of R600 million.

Progress welcomed

Master Builders South Africa (MBSA) executive director Roy Mnisi on Wednesday welcomed Sanral’s announcement about the adjudication of these tenders as “a positive step” because the construction industry would want to see these projects happening.

Mnisi said that taking into account the size of the contracts that Sanral issues from time to time, which involve quite a lot of money, main contractors and subcontractors are appointed, and it helps the industry if there are projects like this coming from the likes of Sanral, Eskom and other state-owned enterprises.

“We look forward to this, and hopefully, Sanral will be able to finalise the adjudication process and get the ball rolling as soon as the year begins,” he said.

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Mnisi also welcomed the speed at which Sanral finalised its interim procurement policy. However, he said the only aspect missing from the policy relates to the cancellation of certain tenders.

Mnisi said the policy makes provisions for instances where tenders can be cancelled, adding that tenders for road construction are extremely expensive to prepare and involve “a huge cost to contractors” for those tenders that, for one or other reason, are withdrawn.

“Usually, you will find a clause in the policy that caters for those that have put professionals together to prepare those tenders,” he said.

‘Hammered’ by lack of work

SA Forum of Civil Engineering Contractors (Safcec) CEO Webster Mfebe, at the end of November, welcomed the fact that Sanral tenders were back on track when Sanral announced it was to readvertise 86 tenders.

Mfebe said this work “is the daily bread of contractors” across the industry, and road construction is key to the economy because it is where goods, services and people are transported and “a key cog in the recovery of economic activities in the country”.

ALSO READ: Sanral to readvertise R7.2bn road construction tenders

However, a construction company executive who attended one of Sanral’s PPP public participation roadshow sessions but did not want to be named said the construction industry has been “hammered” by a lack of work, and it will now be problematic for the industry from a capacity perspective to price so much work in such a short period of time.

“This is now a huge concern because you are likely to get a bunch of contractors maybe chasing one or two nice jobs, which might receive quite a few prices [bids], but Sanral might only get one or two prices, if any, on other jobs.

“It’s unfortunately symptomatic of them not understanding the [construction] industry,” he said.

This article was republished from Moneyweb. Read the original here