Report reveals construction industry in South Africa losing millions of dollars

Report reveals construction industry in South Africa losing billions

millions of Dollars are being lost in the construction industry in South Africa due to poor performance on the part of contractors, a report from Auditor-General of South Africa (AGSA) reveals.

According to the Auditor-General corporate executive Alice Muller, a number of AGSA reports found that the poor performance among contractors was also caused by aptitude deficit due to employment instability and vacancies in key positions.

Lack of performance appraisal on the part of management teams also contributed to poor audit outcomes.

Muller pointed out that the AGSA’s national and provincial audit report for the year 2013/14 published in November 2014, found that an irregular expenditure of R31.9billion had been incurred by the national and provincial government.

With regards to an investigation of tenders during the 2013/14 period, the above mentioned amount did not  include R30.8-billion irregular expenditure disclosed by the Department of Public Works.

This amount did not include R30.8-billion irregular expenditure disclosed by the Department of Public Works following an investigation of tenders including but not limited to the 2013/14 period.

She noted that during this period, municipalities, through municipal infrastructure grants, had been allocated R15.5-billion, but only R13.6-billion was spent, summing up irregular expenditure by local government municipalities to R11.4-billion.

“What was concerning about this was that only about 46% of the projects, amounting to about R6.2-billion, resulted in the targets being achieved. Less than half the money spent resulted in dealing with service delivery issues,” she said.

The AGSA’s report found irregular expenditure to the tune of about R33-billion for infrastructure projects relating to health and education facilities, as well as human settlement projects.

Based on the report, Muller said that additional costs had been incurred in botched projects, delays in project delivery and faults in new infrastructure, as customs and standards had not been adhered to.

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