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South African Journal of Economic and Management Sciences

versão On-line ISSN 2222-3436
versão impressa ISSN 1015-8812

S. Afr. j. econ. manag. sci. vol.20 no.1 Pretoria  2017

http://dx.doi.org/10.4102/sajems.v20i1.1522 

ORIGINAL RESEARCH

 

The role of quantity surveyors in public-private partnerships in South Africa

 

 

Hoffie Cruywagen; Josephine Llale

Department of Construction Economics, University of Pretoria, South Africa

Correspondence

 

 


ABSTRACT

BACKGROUND: Quantity surveyors play an important role in providing cost and contractual advice in the built environment. This article seeks to investigate the current extent of their involvement in public-private partnerships (PPPs) in South Africa.
AIM: The study intends to establish factors that influence quantity surveyors' participation in PPPs.
METHODOLOGY: A mixed-methods research approach was followed by firstly conducting a survey amongst South African quantity surveyors in order to determine their level of participation in PPPs. For triangulation purposes, a case study was also conducted.
RESULTS: The results of the research show that, although quantity surveyors have the corresponding skills and competencies required in a PPP project, their current involvement in PPPs in South Africa is limited and that there is a greater role they can play in future.
CONCLUSION: Quantity surveyors are uniquely positioned to play a bigger role in the implementation of PPPs in South Africa.


 

 

Introduction

The quantity surveying profession is often regarded as an obscure profession. Many people often confuse it with land surveying (Ajalekoko 2004). In spite of its obscurity, the profession has been in existence for many centuries. Its value to society is immeasurable. The following is stated in the Bible, in the gospel of Luke 14:28, 'Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has money to complete it?' (Bible 2009).

The term 'quantity surveying' was first used in the United Kingdom (UK) in 1859 and is still widely used in many other commonwealth countries (Association of South African Quantity Surveyors [ASAQS] 2014). Other countries use different titles such as 'construction economists', 'value engineers' or 'cost engineers' (Drake 1995). As the quantity surveying profession in South Africa has its roots in the UK, it is important to compare factors that have influenced its survival and evolution over the years in both countries to establish how the profession can position itself to continue to add value to the society in future.

 

Research questions

In order to determine quantity surveyors' current and future possible role in public-private partnerships (PPPs), a survey and a case study were conducted. The aim of the research instruments was multi-pronged and sought to determine:

By quantity, how many quantity surveyors are currently involved in PPPs?

How familiar are quantity surveyors with PPPs?

What are the factors that influence quantity surveyors to participate in PPPs?

What perceptions have quantity surveyors regarding their education and training and how their education or perception thereof determines their participation in PPPs?

What is the value of further education in the non-traditional role of quantity surveyors?

What are the current role players', such as property developers and government officials, views regarding the services provided by quantity surveyors in PPPs?

 

Literature survey

PPP is one of the catalysts to the evolution of the quantity surveying profession in the UK (Cartlidge 2006). Quantity surveyors in the UK have been able to transfer their skills and competencies to PPP projects. In South Africa, the profession of quantity surveying, as that of their British counterparts, has come a long way since the arrival of the first quantity surveyors in South Africa in 1896 (ASAQS 2009). Currently, South African quantity surveyors play an important role in the local built environment industry and most of the private quantity surveying firms in South Africa focus on the traditional functions of quantity surveying such as estimating and cost advice, advice on tendering and contractual arrangements, financial control over contracts, project close-out and dispute resolution (ASAQS 2014). The above-mentioned functions can be executed in either the commercial or in civil, mining and infrastructure projects.

PPPs in South Africa are still in their infancy (as discussed later in the article) and currently the Department of Public Works (DPW) (1997) is the custodian of public infrastructure in South Africa. Quantity surveyors are regarded as cost-and-contract specialists in the built environment and their role in the provision of infrastructural projects cannot be overlooked. It is, therefore, important to investigate their role in PPPs, and hence the research questions that were stated in the section 'Research questions'.

The theories that underpin PPPs fall broadly into three main categories (Mouraviev & Kakabadse 2012):

a partnership as a policy tool

a PPP as an organisational and financial arrangement

PPP performance, risk allocation and critical success factors.

There is no universal definition of a PPP (Mouraviev & Kakabadse 2012). Grimsley and Lewis (in Mouraviev & Kakabadse 2012) define a PPP as:

an agreement where the public sector enters into a long-term contractual agreement with private sector entities for the construction or management of public sector infrastructure facilities by the private sector entity, or the provision of services (using infrastructure facilities) by the private sector entity to the community - on behalf of a public sector entity.

PPPs are often confused with privatisation. In a PPP contract, the government would continue to provide core services, while the private sector would provide the infrastructure and other non-core services. The core services include services such as health, education, welfare and suchlike. Non-core services include maintenance, cleaning, security and other services associated with the infrastructure. There is also a difference between PPPs and the traditional procurement method. According to Infrastructure Australia (2008), in the traditional method of procurement, the private sector knowledge and expertise are limited to the construction period, whereas in a PPP the private party's knowledge and expertise can extend to 20 years or more. Furthermore, the private party's risks are limited to defects during a liability period in a traditional procurement method, whereas in a PPP the private party's risks are wide-ranging and long-term.

The factors that may influence governments to enter into a PPP project include increased efficiency in public service delivery and national economic development plans (Kelman 2007). In a developing country such as South Africa, which has a severe backlog in physical infrastructure, PPPs can be an alternative in meeting the demand for infrastructure (Kelman 2007). Abedian (2012) estimates the monetary value of the infrastructure backlog to be at R3.5 trillion.

The National Development Plan (NDP) was adopted in 2010 by the South African government as its 20-year economic growth plan aimed at eradicating poverty and reducing inequality (KPMG South Africa 2014). The South African government identified the provision of infrastructure as one of the major economic drivers and, in line with the vision and objectives of the NDP, adopted the Infrastructure Plan in 2012 (Presidential Infrastructure Coordinating Commission [PICC] 2012). According to KPMG South Africa (2013), R11.8 trillion is required to reach NDP's target by 2030.

The South African government recognises the need to partner with the private sector in order to meet the infrastructural needs of the country. Trevor Manual, the former South African finance minister, argues that:

the diverse interests of different sectors can, in fact, be harnessed for the collective good. This is what PPPs are about. The public gets better, more cost-effective services; while the private sector gets new business opportunities. Both are in the interests of the nation. (South African National Treasury Public Private Partnerships Unit 2004)

In 2000, the South African National Treasury established the PPP Unit in its ministry in order to regulate PPPs in South Africa (South African National Treasury Public Private Partnerships Unit 2004). PPPs in South Africa are governed by Treasury Regulation 16 of the Public Finance Management Act, 1999, which defines a PPP as:

a contract between a public sector and a private party, in which the private party assumes substantial financial, technical and operational risk in design, financing, building and operation of a project.

As of June, 2014, there were 69 PPP projects in preparation and registered, according to Regulation 16 of the National Treasury in South Africa (National Treasury PPP Unit 2004). This number is a drop in the ocean as compared to the number of PPPs completed in the UK. According to the House of Commons (2011), over 700 Public Finance Initiatives (PFIs) worth over £60 billion (at 2010 prices) had been contracted (2011). PFIs are 'a type of PPP used to fund major capital investments' (House of Commons 2008).

The South African PPP market is still in its infancy or stage 1. According to the United Nations (United Nations Economic Commission for Europe 2008), stage 1 is where there are a few PPP projects in the market. Given the South African government's commitment to infrastructure development in the country, the market for PPP is set to grow. South African quantity surveyors, therefore, need to take their rightful place in the PPP market in South Africa.

 

Research design

The research philosophy adopted for this study was based on the following research question: What is the current and future possible role of quantity surveyors in PPPs in South Africa? The research strategies engaged were a questionnaire survey and a case study. Surveys are classified under the positivist philosophy, while case studies may fall under positivism or interpretivism (Saunders, Lewis & Thornhill 2009).

The major deciding factors in the use of both survey and case study strategies were guided by the research question. According to Saunders et al. (2009), surveys are ideal in answering 'what', 'how much' and 'how many' questions. In order to answer the aforementioned research question, a survey using a self-administered questionnaire was used to determine the number of quantity surveyors involved in PPPs and the extent of their involvement in the PPPs. The case study, on the other hand, was mainly chosen for triangulation purposes. Together with the literature review, the case study provided important insights into what PPPs are in the real-life context in South Africa.

The data collection techniques chosen for the study were guided by the research objectives. As PPPs are still in their infancy in South Africa, there is no database that captures the number of quantity surveyors in South Africa who have participated in PPPs. Given the lack of such database, the best way to determine the number of quantity surveyors involved in PPPs was to collect this information via a questionnaire, and therefore quantitative data collection.

For the case study, personal and telephonic interviews were conducted, mainly to gain insight into what PPPs are in South Africa and how they are implemented. This is a qualitative data collection method. From the above, it is therefore clear that, for this study, a mixed-method research approach was used.

Online survey

The survey population for the online survey was made up of quantity surveyors in South Africa. As of 31 December 2014, there were 3813 quantity surveyors listed on the database of the South African Council for the Quantity Surveying Profession (SACQSP 2015). After obtaining approval from the Research Ethics Committee of the Faculty of Engineering, Built Environment and Information Technology, University of Pretoria, the survey was posted on the website of the ASAQS. There were 10 900 subscribers to the ASAQS newsletter, with a link to their website, as of 23 October 2014.

In addition to the online survey posted on ASAQS website, the researcher sent 887 emails containing a link to the survey to potential participants (all quantity surveyors) to increase the number of potential respondents. This can be considered a purposive sample based on information from the ASASQ's centenary publication, the researcher's personal database as well as the Internet. The survey was created by the author through a survey software program called 'Survey Monkey', which is user-friendly and allows participants to respond anonymously. 'Survey Monkey' was also used to capture and analyse the data. Data coding is performed automatically by the software, but the data were also double-checked by using Microsoft Excel. After the data had been verified by a statistician, the results were presented in bar charts to give theoretical meaning to the results.

From a total of 80 survey respondents, 71 were used for data analysis. Some responses were incomplete, while the information provided on others was incorrect. The 71 respondents, therefore, constituted the sample that was used to determine the level of participation of quantity surveyors in PPPs in South Africa.

A general rule of thumb for selecting a sample size is that the bigger the sample size, the more accurate the prediction (Kumar 2014). However, Flick (2011) is of the view that a smaller sample is acceptable only if it avoids gross generalisation. A sample of 70 was therefore considered sufficient for the purposes of the research.

The online survey questionnaire was divided into five sections. Section 1 solicited background information from the respondents, that is, size of the firm, the geographic location, the economic sector of the firm and the career experience of the respondents, in order to determine whether all quantity surveying firms participate in a PPP or whether it is only the big, private firms in the more economically developed provinces.

Section 2 of the questionnaire focused on the respondents' level of knowledge regarding PPPs and participation in PPPs. The respondents who had participated in PPPs were required to provide further information regarding the party they were providing services for, quantity surveying services they provided, phases of PPP they worked in and the distinctive quantity surveying skills they applied in the project. The main objective of Section 2 was to determine the quantity surveyors' current role and future possible role.

Section 3 of the questionnaire was intended to determine the extent of quantity surveyors' involvement in non-traditional roles to establish whether most quantity surveyors prefer their traditional roles over their other non-traditional roles.

Section 4 solicited perceptions regarding the education and competency of a quantity surveyor by using the Likert scale. According to Nkado (2000), there is a link between knowledge and competency. The main objective of Section 4 was to determine whether quantity surveyors' education and training has provided them with the skills and competencies that can be transferred to non-traditional roles.

Section 5 of the questionnaire solicited information regarding respondents' additional education to their initial training. The aim of Section 5 was to determine whether further education determined if quantity surveyors who had further training in non-traditional role were likely to undertake work in their non-traditional roles functions.

Case study design

As stated previously, a case study design was also used to determine the extent of the quantity surveyors' participation in PPPs in South Africa. The greatest advantage of a case study is that it verifies its findings from multiple sources of evidence (Blumberg, Cooper & Schindler 2008).