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Panel discusses how discounted professional fees threaten consultants’ sustainability

Home Infrastructure Construction & Civils Panel discusses how discounted professional fees threaten consultants’ sustainability

AT the first official event involving stakeholders in 2023, Consulting Engineers South Africa (CESA) hosted a ‘Protecting Lives and Livelihoods’ dialogue with speakers discussing professional fees in infrastructure procurement.

The first speaker, CESA board member and Pink Africa Consulting Engineers director, Naomi Naidoo, presented the impact of discounting on service delivery and economic development. Naidoo explained that the main factor affecting 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,” she said.

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 emphasised the need for organisations, when addressing clients’ needs, to take into consideration the community’s expectations and to comply with regulatory requirements.

According to Dr Patrick Okonkwo, excessive discounts compromise the quality of service because the price point at which that service is delivered impacts on the allocation of adequate resources and time for the delivery of a good enough service. He pointed this out in his presentation on the impact of discounted/reduced professional fees on the risk exposure of civil contractors in South Africa’s private sector. “Excessive discounts as a business practice borders on unethical practices. When dealing with private clients, consultants are usually pressured to reduce costs, and in the public sector, it is usually the procurement regulations where tender evaluations are taken into consideration”. Dr Okonkwo concluded that a third component is the inability of the consulting engineering industry to adequately communicate the value of their service to clients in terms of risk and return on investment.

Representing government in the dialogue was the Department of Public Works and Infrastructure’s chief engineer for structural, Trevor Mathabatha, who discussed the consultant’s fee – a guideline for public works professionals. He mentioned his department’s fees were somehow similar to the Engineering Council of South Africa’s (ECSA) fees.

However, if one had to dig deeper into the scope of the services’ deliverables, one would notice the fundamental differences in what the department requires at a certain stage versus what the ECSA fees state. “In 2013, ECSA took a decision to amend the format of determining fees by adopting a format that provided for negotiated fees,” stated Mathabatha.

Vice-chairperson of the CESA Young Professionals Forum, Uzair Osman, delivered a presentation on the impact of reasonable engineering fees on the skills pipeline. “There is the issue pertaining to the leak in the skills pipeline, where there are a lot of individuals going out and not enough coming in. It is important to maintain the pipeline, and discounted fees in the profession result in companies not having sufficient resources to invest in young professionals, which ultimately affects the clients if quality is compromised,” stated Osman.

The panel discussion included the guest speakers and CESA CEO, Chris Campbell. “We must be mindful of the fact that CESA, as an industry organisation cannot be intimately and directly involved with how the scales are published. We remain committed to assisting our members’ clients to increase their knowledge and better understand the costs related to professional services,” said Campbell.

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