Unlocking the potential of South Africa’s infrastructure development - GIC

Unlocking the potential of South Africa’s infrastructure development
February 23, 2024

South Africa’s core infrastructure is in a period of substantial growth. Driven by government’s increased focus on public-project spend with a particular focus on public housing and economic infrastructure, the medium-term expenditure framework in 2023 is an estimated R903 billion.

But, as noted by President Ramaphosa in his State of the Nation Address earlier this year, unlocking the full potential of infrastructure investment in South Africa has been hindered by a substantial scarcity of technical expertise and effective project management countrywide. To overcome this hurdle, the government has granted R600 million to project preparation in underserved rural regions and areas lacking adequate resources.

But effectively executing the planning, construction, maintenance, and operation of essential public infrastructure involves a level of complexity that the government cannot always navigate seamlessly on its own. Public-private partnerships (PPPs) exist to lessen this burden, as well as to maximise the impact of infrastructure funding and development, and execute projects with a high level of expertise.

Put simply, PPPs are collaborations between public and private entities that aim to successfully deliver, execute and manage projects such as transport networks, complementing each other’s strengths to achieve the highest possible project standards.

The Gap Infrastructure Corporation has worked closely with the public and private sectors over the years to substantially improve service delivery, strengthen the country’s infrastructure, improve lives on an individual level, and train the next generation of construction workers, project managers, and engineers through highly beneficial PPPs.

The ongoing success of this collaboration is strongly dependent on the simple fact that both the public and private sectors benefit from improved infrastructure to meet their individual goals. However, to make PPPs a success, the public sector must fulfil a delivery management role, whereas the private sector’s project management expertise is particularly crucial to ensuring infrastructure is delivered on time and within budget, limiting time and expense creep.

Government’s key role in project delivery management

Delivery management lies at the heart of any successful infrastructure project. It is a key leadership role often undertaken by a well-informed client with expertise in infrastructure development with the aim to specify, procure, and deliver infrastructure projects efficiently and effectively. Within the context of public infrastructure development and widely beneficial partnerships with professional private developers, it is often the government’s responsibility to assume this critical role.

Ultimately, the government’s objective is to foster social and economic growth by investing in infrastructure. To accomplish this, it has implemented the Infrastructure Delivery Management System (IDMS), a comprehensive government system that encompasses planning, budgeting, procurement, delivery, maintenance, operation, monitoring, and evaluation of infrastructure projects. The IDMS consists of various integrated systems, such as an infrastructure planning system, an infrastructure gateway system, a construction procurement system, a programme and project management system, and an operations and maintenance system.

Furthermore, the government’s dedication to infrastructure development is evident in its significant construction budget allocation this year. But the government also serves a greater role beyond funding major projects. It is also responsible for creating a cooperative environment conducive to collaboration and effective communication between public and private stakeholders, and acts as a facilitator for the regulatory frameworks under which their private partners function.

By assuming the delivery management role, the government aims to ensure the successful implementation of infrastructure initiatives that align with its service delivery goals and responsibilities.

The role of project management to meet government’s service delivery goals

Project management is the reverse side of the infrastructure development coin, as private project management firms play a pivotal role in meeting government’s service delivery goals.

In a PPP, the private partner takes on a majority of the project’s risks, including technical, financial, and operational risks, which are often successfully managed by professional project managers.

Largely as a result of this project and risk management function, the adoption of PPPs in South Africa has been shown to accelerate infrastructure development progress, ensuring faster completion, improved project outcomes, increased cost savings and transparency, and a marked decrease in life-cycle maintenance cost as compared to traditional methods.

But the advantages of PPPs extend beyond efficiency. They offer value for money, efficient time and budget management, better risk distribution, innovation, adequate facility pricing, and are the most optimal solution for budget constraints.

Synergising public and private strengths

One of the primary drivers behind the widespread adoption of PPPs is the inherent strengths that each sector brings to the table. By synergising their efforts, the public and private sectors can leverage each other’s unique capabilities, leading to more successful and efficient infrastructure development.

One of the key benefits is the transfer of skills from private businesses to the government. While the public sector is generally rich in human resources, it often lacks specialised expertise required for complex infrastructure projects.

On the other hand, the private sector possesses a wealth of experience, technical expertise, and tend to take an innovative approach to complex challenges, which can significantly improve deliverables. Through PPPs, the private sector can likewise actively contribute its expertise, provide invaluable insights, and implement and leverage a wide range of best industry practices and cutting-edge technologies.

Successfully achieving synergy within PPPs requires more than just recognising and utilising these respective strengths. It necessitates the establishment of effective communication channels, mutual trust, and a shared vision for project success.

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Roelof van den Berg
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