2010 opening for foreign builders
9 March 2007
South Africa could look to foreign construction companies to compete for tenders with local players in an effort to bring down the price tag of building and upgrading stadiums for the 2010 Fifa World cup.
Addressing parliamentarians in Cape Town on Wednesday, the head of the National Treasury's 2010 unit, Malcolm Simpson, said there was also concern over the shortage of skills needed to implement key infrastructure projects in the country, including the stadium projects.
Simpson, who is also a member of the government's technical coordinating committee on 2010, said the potential impact on the country's current account deficit of importing material and skills was not that significant when weighed against the additional infrastructure that would be delivered as a result.
Of particular concern to the National Treasury, he said, was the shortage of technical and project management skills.
Simpson also told members of parliament that with "only six or seven large contractors" dominating the South African construction sector, bringing in foreign competition could also be beneficial.
Referring to the National Treasury's containment of stadium costs, which at one point escalated substantially beyond the R8.4-billion set aside by the government, Simpson said they had, in their analysis of the tender documents, noticed a high proportion of "provisional costs".
Provisional costs inflate prices
Provisional costs - a result of contractors not knowing what their client actually requires - in some cases made up as much as 60% of total project costs, Simpson said. Given incomplete job specifications, contractors had included risk elements in their pricing, leading to a possible inflation of prices.
"Our analysis of this is that the professional teams [hired to produce the specifications for the bids] probably did not do appropriate work to finalise the tender documents so that the contractors could do a reasonable cost analysis of the project."
The Treasury advised the nine host cities in December to negotiate with the contractors to reduce the stadium costs while ensuring that the designs remained compliant with Fifa specifications.
As a result, the cost of the 10 stadiums had been reduced by approximately R2-billion. "If National Treasury had not taken these steps we may well have been, at the end of the day, sitting with cost overruns of R4-billion," Simpson said.
He said the R8.4-billion budgeted for the stadiums was therefore justified, and that South Africa would have Fifa-compliant stadiums for the 2010 Fifa World Cup.
Source: BuaNews
