South Africa The Construction Industry is on the brink of extinction unless Government injects some incentive into the sector to plug the leaking hull of their ship. Yet the South African Council of Construction and Project Management Professionals seems to have lost sight of this crisis.
The SACPCMP recently invited their Voluntary Associations to comment on proposed Scope of services (IDOW Rules) and “guideline” fees that should be charged by CHS professionals.
The document replicates the IDOW Rules for Project Managers which were rejected by the Competition Commission as unlawful in 2014 and said that the publication of the fee guidelines by the professional councils amount to indirect price-fixing in contravention of section 4(1)(b)(i) of the Act.
The Commission concluded that persons offering their services within the built environment will make use of the fee guidelines as benchmark when negotiate their fees with consumers. This reduces price competition and could also result in prices within the built environment being set above the competitive level to the detriment of consumers.
In December 2011 the SACPCMP published guideline fees for Pr.CPM and Pr.CM’s. In their brilliance, a construction project of R40 million will be subject to the Project management fee of R2 245 000.
Now they want to add an additional R1.166 000 for a Pr.CHSA.
A R40 million project will thus increase in cost with R3 411 000 (8.53%) just to accommodate their registered persons.
The publication of fee guidelines that cannot be associated with professional rate x time is totally useless. There is enough competition in the PM marketspace to drive rates down. And while there may be a shortage in Pr.CHSA supply, clients know from experience that a project manager, architect or engineer is in a higher price bracket than a H&S practitioner with a Pr.CHSA designation.
The Competition Commission may need to dust off their records and look into this once more, as the SACPCMP still have not received their exemption in terms of Schedule 1 from the provisions of Chapter 2 of the Competition Act, No. 89 of 1998, as amended (the Act).
The commission also found that international best practice revealed that the building industry in other jurisdictions are moving away from the practice of publishing the fee guidelines. This is an attempt by building industries in those countries to increase price competition in the market.
Yet the SACPCMP seems to ignore this fact based on their own Act allowing them to publish guidelines. Clearly their Act (48 of 2000) is misaligned with other Acts.
Voluntary associations like Saiosh had until today to submit their comments on these guidelines fees and it would be interesting to see if they find these ridiculous fees justifiable given the poor state of CHS training in SA and the fact that CHS Agents are seldom involved in upstream project stages.