City of Cape Town procurement process hobbling construction sector - industry body
The Western Cape Property Development Forum says slow tender and procurement processes at the City of Cape Town are further crippling property development and the construction sector in the city, and has called for a detailed investigation by the City into these processes.
According to Deon van Zyl, chair of the forum, the latest example is the City of Cape Town unilaterally cancelling its Request for Proposals (RFP) process for an inclusionary housing project planned in the suburbs of Woodstock and Salt River.
"This came more than two years after the City's initial call for proposals for the project closed in February 2017. This was an innovative project where the City called for private sector input," van Zyl told Fin24.
"There were about 14 submissions for the five available sites. A lot of time and money went into preparing the proposals," van Zyl said. The forum believes housing is a very "important topic" and must be dealt with in "realistic, commercial" terms.
According to van Zyl, the City claims the reason for cancelling the RFP is that it must fulfil procurement requirements. "Why were these not in place when the City put out the request for proposals? They caused wasteful expenditure to the private sector," says van Zyl.
The City of Cape Town, however, has told Fin24 that affordable housing opportunities in areas like the Woodstock and Salt River precincts remain a priority.
The City’s Supply Chain Management Bid Adjudication Committee cancelled the RFP for the Woodstock Hospital site, the public open space next to Woodstock Hospital, Fruit and Veg in Roeland Street, New Market Street and the Pickwick Street social housing site on July 29, 2019.
According to the City, this is so that it can follow a different process for the disposal of these sites that are earmarked for social housing opportunities, and to ensure that it complies with legislation.
"Each of these sites has its own complexities and will trigger different land use application processes and therefore it is vital that due processes are followed," said the City.
Furthermore, the City said the affordable social housing opportunities planned for the Salt River Market site and the Pine Road site are still on track and are making progress. The Pickwick Street Transitional housing site was completed in May 2019.
"We will continue to assess City-owned land, including in and near the Cape Town CBD, to determine whether some of these properties could be developed for housing opportunities," said the City.
"In addition, the development and availability of affordable rental accommodation in central areas of the city must play a key role in the future development of Cape Town."
The property development forum claims that, based on anecdotal evidence, some consultants tendering for the City's building projects give up to 80% discounts. "One must keep in mind that legislation stipulates tenders must look at fair and competitive prices. It does not say it must be the lowest price," said Van Zyl.
"Infrastructure must stand for 30 years at least. So, one must understand that a fair price would be to guarantee the best quality work. The lowest price does not guarantee the best quality work," he said.
A recent survey by the forum found that among 104 built-environment professionals indicated that delays and cancellations around procurement and tendering at the City were further crippling an already disintegrating property development and construction sector and resulting in huge job losses.
A number of property development companies even had to close their doors over the past year, according to the forum.
Among the highest levels of dissatisfaction expressed in the survey was the lack of clarity around the information supplied in tenders by the City. About 84% of respondents said that, in order to be competitive, it was expected by the City that submissions reflect prices far below what was considered to be fair and reasonable within the industry.
The consumer activist body Reclaim the City told Fin24 that its members are angry and frustrated. The organisation said there is a profound housing crisis in the city and poor and working-class people are being evicted or displaced "every week".
"Why were these projects cancelled? Why didn't the City communicate this to residents?" the organisation asked.