KZN Department of Transport takes action: Multiple road contracts at risk of cancellation
The KwaZulu-Natal Department of Transport has cancelled two contracts, one of which was valued at over R80 million, and is on the verge of cancelling several other contracts due to poor contractor performance.
These contractors could also face penalties and recoveries for failed projects, the department warned. The department said 30 contracts are at risk of cancellation due to the poor performance of the awarded contractors.
Transport MEC Siboniso Duma warned that the cancellation of contracts is just the beginning for contractors who fail to deliver. The department declined to comment on how much the contractors were paid for the two contracts which have been cancelled. It said it will first need to assess how much work has been done.
“We have projects that are underway, valued at R5 billion. What we want is value for money from those projects,” Duma stated. Duma confirmed the termination of a contract for the construction of road P577-02, which links Cowie’s Hill and New Germany to the M13 and M19. The R87.8 million contract was awarded to a contractor on 9 June 2023, with work beginning on 2 August 2023. The project was due to be completed by 24 May 2024.
However, more than 14 months later, Duma said the contractor had failed to make adequate progress.
In his recent budget presentation, the MEC disclosed that over R3.8 billion would be allocated for constructing new infrastructure projects, while over R4.3 billion would be dedicated to maintaining the road network. Duma emphasised the importance of instituting recoveries against companies that fail to deliver.
“The failure is not just disruptive to service delivery; it is very costly to the department. If the contractor fails, we have to start the process of awarding all over again, which is time-consuming and expensive. That’s why we must impose penalties and institute recoveries.”
The department stated that the backlog in road infrastructure necessitates a strict approach towards contractors who do not complete projects on time. It believes that naming and shaming these contractors will serve as a deterrent for future contractors.
Currently, the department has a total of 39 active construction projects and 44 rehabilitation/resealing projects. “There are 30 contractors from the Construction Industry Development Board (CIDB) grade 6 to grade 9 who are failing to complete capital projects on time across the province. Some projects have stalled, while others have been abandoned, with instances where site establishment has not even commenced.
“Engagements with these contractors have revealed that many face resource challenges, particularly cash flow issues. Other cited challenges include scope creep, which tends to increase once contractors are established on-site. Surprisingly, even long-established contractors with years of experience are among those failing to deliver,” the MEC stated.
Duma added that these established contractors often take on too many projects simultaneously, which negatively impacts all their ongoing projects. When cash flow problems arise in one project, it affects other projects they are managing for the department.
“Contractors who fail to adhere to the new timelines will be terminated. The department has already identified contractors who are unlikely to complete their projects in the foreseeable future, necessitating their termination.
“Furthermore, the department will follow the necessary legal procedures to blacklist these contractors from future work with the department, which could last up to ten years. In addition, the department will take steps to recover funds due to the failures of these service providers. The MEC has directed that the supply chain management process be strengthened, including thorough vetting of contractors before hiring to ensure they have the requisite capacity. In some cases, contractors lack essential equipment, such as fleet (plant equipment),”Duma concluded.
Professor Pundy Pillay of the Wits School of Governance stated that the government was justified in terminating contracts of individuals who are not performing.
“You can’t have a situation where people are paid when they have not done the work. Everyone will take the money and not do the work,” he remarked. He added that the government complicates matters by not paying contractors on time. There should be a structured arrangement for payments, and these payments should be linked to the progress that has been made.
Pillay expressed concerns about the recoveries threatened by the province, suggesting they are unlikely to yield results. “That money spent on contractors is taxpayer money down the drain,” he concluded.
Riona Gokool, the DA KZN spokesperson on Transport, raised concerns that the department has not been paying contractors on time, which has contributed to their negative performance.
She said the department’s failure to honour contractor payments has a devastating impact not only on small businesses and emerging contractors but also on job creation and community development, which are key pillars of its mandate.
Mncedisi Maphisa, the chairperson of the Transport Portfolio Committee, said that the actions of the MEC have the committee’s full support.
“Our job is to ensure service delivery, not to please service providers. If the MEC has done all he can to capacitate the contractor and that contractor still fails, we support the termination of such contracts. That must not only end in this field; all service providers in the department that are not performing should be dealt with,” he stated.