Slow rollout of infrastructure spend due to ‘mistrust of construction industry’

19 August 2014

The slow roll-out of government’s infrastructure spend is partly due to mistrust of the construction industry, Murray& Roberts (M&R) CEO Henry Laas told journalists.

He believes government perceptions about the impact of collusion on the cost of construction projects, are inflated. It was more about managing limited industry capacity to deliver on a number of major projects, especially before the 2010 Fifa Soccer World Cup, Laas said.

Laas said M&R traded “in the lower single digits” in the last few years, as did its peers. “Where did the perceived benefit occur?” he asked.

He said the Local Organising Committee first approached the industry about available capacity to build the stadiums. The “fatal flaw” was that the industry did not apply to the Competition Commission for exemption from the Competition Act on the grounds of the need to manage capacity.

He said government sits with the perception that it was defrauded by “hundreds and thousands of millions and billions of rands”, which is not the case.

The impact of collusion on the industry’s image and trustworthiness was “catastrophic”, but the financial impact was, in Laas’ opinion, overstated.

Only about 1% of all contracts over a ten-year period were affected by collusion and even in those tenders there was still competition, since not all tendering parties colluded, Laas said.

Industry leaders through SAFCEC have met with government twice in an effort to rebuild the relationship. 
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