‘SA economy situation increases pressure on engineering firms’

01 December 2016

South Africa’s struggling economy has increased the pressure on engineering firms to underbid on larger projects, says Arup Southern Africa leader Poya Rasekhi. This, however, often leads to poor design and staff burn-out, which almost inevitably ensures that the final price tag ends up being much higher than the bid price, he notes.

“There are opportunities for government and the private sector to spend money on infrastructure projects to stimulate the economy, support existing and new businesses and develop new talent. Countries like Australia and Ethiopian have turned around their economies during the recession by advocating strong collaboration between public and private sector for a common goal.” 

The report notes a number of projects where poor design increased costs significantly, such as South Africa’s 2010 FIFA World Cup stadia, which saw 34% cost overruns and significant delays due to design flaws. A review by the Tanzania National Roads Agency highlighted inadequate design as a core reason for substantial cost and time overruns in almost all of the agency’s projects. 

The Arup report dissects 258 global transport infrastructure projects, noting that nine out of ten projects experience cost overruns, with the cost escalation higher in developing countries. The report shows that design spend at around 4% to 6% of project costs, as seen in the UK, for example, ensures that cost overruns owing to design are at about the same level – 6% of project costs. 

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