EXPERTS DISCUSS THE PITFALLS OF DISCOUNTED FEES IN INFRASTRUCTURE PROCUREMENT

27 January 2023: As the first official event involving stakeholders in 2023, Consulting Engineers South Africa (CESA) on Thursday, 26 January, hosted the Protecting Lives and Livelihoods dialogue with speakers discussing professional fees in infrastructure procurement. 
 
The first speaker in the discussion was Naomi Naidoo, CESA board member and Pink Africa Consulting Engineers director, presenting on the impact of discounting on service delivery and economic development. Naidoo explained the biggest factors that affect businesses is sustainability.  “If consultants tender at rates lower than the cost to undertake the work, it will affect business operations. Often, we witness staff being required to work longer hours or being paid salaries at lower than market value, which is not sustainable and will result in the business being eventually forced to close.”
 
Professor Jan Wium, from Stellenbosch University’s Department of Civil Engineering, provided his insights on the impact of discounted professional fees on the risk exposure to civil and structural engineering services consultants in South Africa’s public sector. He highlighted two levels concerning professional fees – organisational impact and project impact. “Apart from the technical solutions that we actually need to provide, there is a host of other items that go hand in hand with it. This includes finding sustainable solutions, implementing construction projects safely, and for the long-term operation of the facilities, we need to provide value for money to the client,” said Prof Wium. He also emphasized the need for organisations in answering to client’s needs to take into consideration the community’s expectations and complying with regulatory requirements.