Government’s Lack Of Payment Sparks Project Failure

Job creation, broad based black economic empowerment, support for SMMEs; all promises made by Government to bring about a better South Africa for all. The Government’s commitment to make payment to all suppliers within 30 days is entrenched in legislation, reflected in the Public Finance Management Act.

Yet despite these promises and legal requirements, the construction industry is in disarray with many companies being forced to liquidate – this as a direct result of Government not making payment to its suppliers for construction work done. Regardless of the fact that President Zuma’s New Growth Plan specifically lists job creation and improved service delivery as key priorities in South Africa, non-payment by Government itself is stifling the ability for improved infrastructure in South Africa.

One example of how devastating the effects of Government’s non-payment is that of the proudly BEE company, VillaCon, which was contracted to construct the Community Stadium in the Free State. Solomon Moletsane of VillaCon is horrified at Government’s treatment of this project. As a result of the failure to pay, he has been unable to make payment to his suppliers, causing delays in construction. These delays mean that the project has fallen behind, supplier costs have sky-rocketed due to extended timelines and it has been impossible to stay within budget.

Having already sunk so much capital into the project, what choice does Moletsane have but to complete the project and hope that Government will eventually pay? Yet the lack of payment in itself has made completion of this project virtually impossible – the project is failing; the Government is merely sitting back watching it go up in flames. As a result, Moletsane contracted the WHP Group, consisting of W.H. Pieters Engineers (Pty) Ltd situated in South Africa and GABO situated in Germany, to assist VillaCon in successfully bringing this project to completion. As the WHP Group has been contracted on various occasions to rescue failing projects in South Africa and throughout Europe, Moletsane felt it was the best option in saving the construction project.

The group makes use of a mature project management model, which is based on the International Project Management Association’s (IPMA) project management competence framework. It aims to assist in decreasing both the cost and duration of the project. “We are passionate about turning failing projects around. It is a sad state of affairs that companies who have won a tender and are awarded a budget have to struggle to bring the project to completion due to non-payment, and that Government does nothing to assist these companies,” states Wessel Pieters of the WHP Group.

While Moletsane is grateful for the invaluable assistance received from the group, he cannot understand why Government would simply allow businesses to go under because its payment systems do not work. “Non-payment from Government is a very big problem – not only in the construction industry, but across the board. It seems that no matter where you look, or what level of Government is considered, non-payment is rife and an incalculable amount of companies, no matter their size, are being negatively affected,” concludes Moletsane.