Important Document Tanzanian Experience 31312a

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contents

CONTENTS Page Preface……………………………………………………………………………………...

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CRB Annual Consultative Meetings 2003 Programme………………………………….

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Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – Eng. B. C. Muhegi………...…………………………………………………….……… 1 Performance of Contractors During 2002 – Eng. J. K. Malongo……………………......

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Towards the Establishment of a Framework for Contractor Performance Measurement – Eng. A. Uriyo………...………………………………………………………………...... 38 Contractors Assistance Fund: Lessons Learnt & Challenges Ahead – Mrs. D. R. Kagaruki ………………………………………………………………………………….. 51 CRB’s Corporate Strategic Plan 2004 - 2008 – Eng. B. C. Muhegi…………………...

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Contractors Perspective on the Role of CRB & Contractors in Regulation & Development of the Contracting Industry - CATA.. ……………………………………. 66 Contractors Perspective on the Role of CRB & Contractors in Regulation & Development of the Contracting Industry - TACECA……..……………………………. 73 NSSF’s Perspective on the Role of CRB in Regulation & Development of Contractors – NSSF ….………………………………………………………………………..…………. 82 A Perspective on Current Trends in Contracting – R. Seng’enge ……………………… 89 Contractors Challenges in Tanzania: The Way Forward – Eng. M. Bairi……………… 94 A Sustainable Solution to the Resource- Challenges facing Contractors – M. S. Rweyemamu…………………………………………………………………………….… 106 Challenges on Occupational Health & Safety in Construction Sites – Mrs F. K. Mwombeki………………………………………………………...…………………….… 115 Challenges faced in Occupational Health & Safety in Construction Sites – Y. M. Kishashu & J. M. Matiko………………………………………...…………………….… 126

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" NSSF´s Perspective on the Role of CRB in Regulation & Development of Contractors – NSSF

NSSF’S Perspective on the Role of CRB in Regulation & Development of Contractors

National Social Security Fund (NSSF) 1.0

INTRODUCTION 1.1

The National Social Security Fund is a Social Security institution which was established by the National Social Security Act No.2 of 1997. It began operations in July 1998 after the dissolution of its predecessor, the National Provident Fund.

1.2

Its main objective is to provide Social Security through collecting contributions from both employers and its , investing the funds in high yielding investments and pay benefits to of the FUND.

1.3

That the FUND invests collected funds in various investment areas. Among them, is real estates The proportion of investments in real estates is about 24% of the total investment portfolio annually. Investment in real estates is prefered by the FUND due to its major advantage to appreciate with time [i.e. It acts as a tool in hedging the FUND against possible future fluctuations in the currency]. This is the area where the FUND interacts with the Contractors Registration Board [CRB] on various operational issues. It is on the basis of this relationship that the FUND is giving its perspective on CRB’s role in regulation and development of contractors.

2.0

NSSF’S INVOLVEMENT IN CONSTRUCTION ACTIVITIES 2.1

The FUND began to actively involve itself in the construction industry in early eighties when it began construction of buildings for its own use and for leasing. Construction activities gained tempo in early ninenties when large Real Estates projects such as the 252 Apartments project at Dodoma were undertaken.

2.2

The FUND is currently engaged in Construction of Commercial buildings and is undertaking a pilot project on Low Cost Housing at Kinyerezi area in Dar Es Salaam City. The later project involves Construction of 104 low cost units which will be sold to Public. In case it performs well, more low cost units will be constructed in other parts of Dar Es Salaam City and in the regions. The FUND currently has 300 residential units and about 15,000 square metres of office space for letting country wide.

2.3

The FUND, in future considers diversification of its construction projects by undertaking Civil Engineering projects such as construction of bridges under 82

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" NSSF´s Perspective on the Role of CRB in Regulation & Development of Contractors – NSSF

the BOT [Build Operate, Transfer] system. Another area shall be Construction of houses for outright sell to the public. 3.0

TYPES OF CONSTRUCTION PROJECTS 3.1

The types of Construction projects undertaken by the FUND are either new construction or rehabilitation projects. They differ in size from small, medium up to large projects. Some projects are simple while others are complex. They are mainly meant for either own use or for investment purposes and are either residential or commercial.

In most cases, projects undertaken are fully financed by the FUND and in very rare cases, projects are tly financed with other investors. 4.0

PROJECTS IMPLEMENTATION METHODOLOGY 4.1

The FUND employs different methods to execute its projects depending on the size and complexity of the project at hand. The main methods employed are:4.1.1

Direct Labour Method Under this method, designs, specifications and schedule of materials are done in-house. Construction is however done by engaging directly skilled and unskilled labour to execute the works under the supervision of the FUND’s technical staff. This method is used for very small works involving minor alterations/modifications and repairs to our various properties which are emergence in nature.

4.1.2

Execution by Contractors Under this method, the FUND´s technical department prepares designs, specifications and associated bills of quantities for small to medium projects which are simple in nature. A Contractor to execute the works is then appointed following guidelines provided in the Public Procurement Act of 2001( PPA – 2001). The technical department supervises the implementation of the projects up to completion.

4.1.3

Execution by Contractor under Supervision of Consultants. Under this method, a Consultant is appointed to design and supervise construction by a contractor of a project. The procedure followed for appointment of both the Consultant[s] and contractor are as provided by the Public Procurement Act of 2001. This method is used for medium to big projects and for complex ones and is the most widely used of the three methods.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" NSSF´s Perspective on the Role of CRB in Regulation & Development of Contractors – NSSF

5.0

NSSF’S EXPERIENCE CONTRACTORS 5.1

ON

PERFORMANCE

OF

BOTH

CRB

AND

During the period in which the FUND has been involved in construction activities, it has gathered some experience on the performance of both CRB and Contractors. 5.1.1

Experience on performance of contractor. The Fund’s experience on performance of contractors is in the areas of technical, Financial and Managerial mainly . In these areas, our experience has shown that most local contractors have following strengths and weaknesses. 5.1.1.1

Strengths [Local Contractors] Are used to the local environment, hence can readily execute projects in any place and under different environment within Tanzania; Are easy to mix with labourers socially on of having same culture . Pay labourers better wages when compared to most foreign contractors.

5.1.1.2

Weaknesses [Local Contractors] Are not technically competent in areas such as tendering techniques, contract interpretation, raising claims; Lack business skills; Are ill-equiped in of construction plant and equipment; Lack a sound capital to run their companies; Have limited access to credit facilities due to lack of collateral and tough conditions posed by lending institutions; Lack general and contract management skills ; Are either extravagant or do not plan and allocate resources properly. The situation for foreign contractors is quite the opposite in most cases.

5.1.2

Experience on performance of CRB The FUNDs experience following areas. 5.1.2.1

on CRB’s performance is mainly in the

Registration CRB s contractors in the categories of building, Civil, Electrical, Mechanical and all other specialized categories which ensure that projects are performed by firms possessing the desired technical know-how which ensures quality work. 84

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" NSSF´s Perspective on the Role of CRB in Regulation & Development of Contractors – NSSF

Registration conditions have also been formulated to ensure that only firms with the desired qualifications are ed. This is agreat achievement worthy recognition. 5.1.2.2

Regulating A number of regulations pertaining to issues such as safety at site and other areas have been ed by the Board. The Board enforces the various regulations through physical inspections at construction sites and other means. This ensures that construction projects are executed within required safety standards and that contractors conduct their business in strict observance of prevailing code of conduct. This move ensures that accidents at construction sites are minimized.

5.1.2.3

Local Capacity building The Board conducts training in different areas of the construction industry to contractors. This move helps a lot at building capacity for local contractors in their area of business and hence results in an overall improvement on their performance.

5.1.2.4

Relations with other stakeholders The Board, from time to time organizes workshops, conferences and other forums whereby stakeholders in the construction industry participate. Through this endeavors, the Board is able to get contributions and from the stakeholders which assists the Board to improve its activities on areas of weaknesses.

6.0

CHALLENGES 6.1

CRB is facing a number of challenges within the construction industry. The success of its operations and that of the construction industry at large depends, to a great extent on how it can tackle these challenges. Some of the challenges are as follows:6.1.1

Infancy of the Construction industry The Local Construction Industry is still at infancy stage. Most local Contractors lack capital to operate their business, construction equipment and plant, managerial, Contract istration and tendering skills The declining trend of Construction per capital also contributes towards the low growth rate of the industry. The Board, has a big role to play at developing local contractors so that they can ultimately be able to improve on their performance and compete with foreign Contractors.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" NSSF´s Perspective on the Role of CRB in Regulation & Development of Contractors – NSSF

6.1.2

National Construction Policy There is a need to have National Construction Policy, train all stakeholders and regulate it to avoid haphazard and uncontrolled construction activities. The current situation allows sub-standard projects, which have shorter lifespan and are costly to rectify . CRB should play a leading role at ensuring that a Construction Policy is in place to regulate construction practice in the country.

6.1.3

Unfair Competition Local contractors, in view of their various weaknesses, experience an unfair competition from foreign based contractors who have a sound capacity in many aspects. Preferential treatment to local contractors for a certain category of locally available projects and foreign funded projects ought to be considered. CRB should therefore focus to balance the existing opportunities without compromising professionalism . Review of PPA-2001 shall be of paramount importance if this is to be achieved.

6.1.4

Lack of business opportunities Most investors prefer capable contractors with good record on performance and overal istration of the projects and some private investors, do not engage Contractors to execute their projects. Its high time the Board should take deliberate efforts to ensure that local and foreign investors engage services of the required professionals for the interest of the contractors, developers and nation at large. Contractors should also assist at reversing this trend individually or collectively through their associations.

6.1.5

Enforcement of Registration Standards Most contractors fulfil registration conditions on temporary basis [i.e. when they want to be ed]. Their status changes immediately after being ed . If random checks can be conducted to ed contractors, most of them can be found to have lost their qualifications for being ed in classes they are. The Board should derive a mechanism to ensure that ed contractors maintain and even improve qualifications for being ed throughout. Checks should be conducted regularly and revisions done as appropriate. The Board should not base on the Criteria for non-payment of annual fees alone to de- contractors.

6.1.6

Information technology CRB should strive to open a website so that various stakeholders can easily access information on various ed contractors with ease. This shall help to improve the performance of the construction industry. 86

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" NSSF´s Perspective on the Role of CRB in Regulation & Development of Contractors – NSSF

7.0

CRB’s ROLE FOR SUSTAINABLE DEVELOPMENT OF THE CONSTRUCTION INDUSTRY 7.1

The Construction industry is facing a number of problems which threatens its development. The problems include the following, among others:Lack of a National Construction Industry Policy; Lack of business opportunities to contractors; Non-availability of construction materials meeting the required standards locally; Incompetent artisans in various trades because of insufficient exposure; Inadequate capital to local contractors ; Lack of credit facilities to contractors where and when needed; and Inadequate development and training programmes for contractors. CRB, being entrusted with the registration and regulation of contractors, has a role to play at ensuring the sustainable development of the industry. In collaboration with other stakeholders, the Board should play the following roles for the sustainable development of the construction industry:7.1.1

Contractors Registration The Board should review from time to time set registration conditions to keep pace with changes in the construction industry.

7.1.2

Development of Contractors The Board should prepare a sound development programme with a view to improve performance of Contractors. The programmes can be made mandatory in a way so that all contractors should take part. Plant hire/purchase companies can be established to enable contractors acquire necessary plant & equipment for their operations.

7.1.3

Credit Facilities The Board should assist at establishing credit facilities institutions meant for the contractors in order to ensure that they can both tender and/or execute any project falling in their class limit.

7.1.4

Training CRB should enhance provision of courses on various areas of the construction field so that contractors can acquire and enhance their skills in various areas and hence improve their performance. Apprenticeship arrangements should be availed to students pursuing training in various trades and engineering fields so as to build the capacity for technical personnel. Developers should be invited to attend some of the sessions.

7.1.5

Increase business opportunities CRB should, in Collaboration with other stakeholders regulations/laws requiring all construction projects above a certain monetary limit and/or above a certain size, whether executed in Phases or continuously to be executed by ed contractors. This will ensure quality projects and availability of business opportunities to contractors. Local contractors should also be given 87

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" NSSF´s Perspective on the Role of CRB in Regulation & Development of Contractors – NSSF

preference to projects which are locally financed in a view of building local capacity. 7.1.6

National Construction Industry Policy The Board in collaboration with other stakeholders should take initiatives and fully participate at formulating and regulating a National Construction Industry Policy.

7.1.7

Information Dissemination The Board should assist at ensuring that contractors have access to various information in the construction industry. Such information include tender notices, price of building materials, training opportunities. Other stakeholders such as the Government, Consultants, Clients, Financial institutions, Insurance firms, Business people/traders of building materials, the Tanzania Bureau of Standards, the Engineers Registration Board, [ERB] the Architects and Quantity Surveyors Registration Board [AQRB] have a role to play at ensuring sustainability of the construction industry. CRB should also build close relationship with developers and proffessional institutions especially public institutions for mutual benefit. It will help CRB to obtain and work on correct information hence improving its performance.

8.0

CONCLUSION 8.1

The Board, since its inception has done a commendable job at developing the construction industry through enforcement of regulations, Conducting of training to contractors and reviewing registration standards.

8.2

The FUND in particular expects that the Board shall maintain and improve on areas highlighted in the report.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" A Perspective on Current Trends in Contracting – R. Seng´enge

A Perspective on Current Trends in Contracting

Ray ywa Seng’enge Assistant Advisor, Consultants and Contractors Involvement Component of the Road Sector Programme, ITECO Consult Tanzania Ltd.

INTRODUCTION The construction industry is central in any economy due to the fact that it has as its customers, virtually every industry, public or private sector organizations and even households; if not for new constructions then for repair and maintenance either through the formal or the informal sector. It creates employment for almost all levels in the society and typically contributes over 50% of Gross National Capital Formation. Another important measure of the construction services sector, “is its ability to stimulate growth of other sectors of the economy by consuming products from those sectors in the construction process” (Tewelde, October 2000). Globalisation of products and services has brought about new trends, practices and challenges in the global construction industry. This paper attempts to bring to the attention of the workshop participants some trends, practices and challenges worth considering in our efforts to build a modern, vibrant and internationally responsive construction services industry. Information is power. THE WORLD MARKET PLACE Information and Communication Technology has made the world a global village, thus accelerating the pace of globalisation and multinational trade. After World War II, the developed world saw a need for the “third world” to get development with a good intention of improving the quality of life. In the process, the making of institutions like UN, IMF, WB, and GATT etc. was initiated. This trend was followed by creation of more financial institutions at country and regional levels like Asian Development Bank, JICA, and ODA etc. etc. The main objective was improved living standards through human resource development and technology transfer, improved quality and construction standard, improved environment and poverty alleviation. Despite good intention the net results over the past 3 or 4 decades clearly indicate the following; Overall living standards in the third world has come down More people are poorer today than 40 years ago Debt repayment by the highly indebted countries has become virtually impossible Annual growth rates have gone down “Despite clearly defined and well meaning objectives of the International Financial Institutions, the actual procurement guidelines go totally against the local service providers especially, in the construction sector” (Sabir P Chohan, 2000). The situation is made worse if procurement policies for locally funded projects in developing economies do not take into consideration capacity building realities.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" A Perspective on Current Trends in Contracting – R. Seng´enge

According to a survey by “Engineering News Record (Nov. 30th – Dec. 6th 1998 edition)” the World spending on engineering and construction sub-sector was in excess of 3.2 Trillion USD. Construction firms have come to realize that large size and financial strength are two important factors for improving competitiveness in the global market place. According to some industry sources only a few large international players with diversified business will be able to globally balance out the ups and downs of national and regional construction markets. GLOBAL TRENDS Strategic Alliances Yehio Soubra writing on new approaches to science and technology cooperation and capacity building examines the fact that, as the world becomes smaller, private sector businesses grow fast in way of strategic alliances, cross border acquisitions and stake purchases across national borders. These include moves towards mergers and acquisitions, particularly in Europe, to take advantage of the single European market. In addition, technology-based strategies, together with corporate practices that combine finance with technical services, are shaping the conduct of international business in this sector. Most contractors for roads work in consortiums. Contractors who built the Dar-Mlandizi road project and the ongoing Chalinze- Melela road project are large international contractors who could have built the roads alone. But they formed t ventures to enhance their competitiveness and their chances of winning the contracts. Specialization “A new trend has emerged over the last decades where firms have concentrated on their core competencies and have externalised a wide range of functions that were formerly carried out in-house. The old pattern of large integrated business organizations has given way to networks of collaborating companies and chains of buyers and suppliers” (Soubra, 2000). Management Contracting International companies, especially from the USA, have given increased attention to construction management services and less to construction implementation services, which are either sub-contracted to other foreign firms or provided in cooperation with local companies. The new US Embassy buildings in Dar and Nairobi were built by a US based construction firm, but in fact the American firm provided Construction management services and sub contracted most of the work to a local construction firm (based in Kenya) and to US based sub contractors for specialised tasks. Local companies need a bit of marketing and capacity to take advantage of such opportunities. If the local capacities allow, the trend is the increasing recognition among International firms of the advantages of localization, which enables them to do business in foreign markets through subsidiaries or t ventures. This is already happening in consultancy contracts and we should not discount it to happen in the contracting industry in the near future. Information and Communication Technology (ICT) The market place will continue to get more and more sophisticated with more and more use of ICT because of the vast amounts of information needed to traverse the world in of information on new projects, procurement of projects and management. The World Bank was already contemplating a pilot e-Procurement project in year 2000 (Talero, 2000). Info-revolution is shaping the future. Contractors who will continue to use the old manual methods to prepare their bids, use old methods to track down different activities during implementation and who will not access information in the world wide web will definitely be left behind by their counterparts who are computer literate and who have computerized their systems, to cope with the changing dynamics of the modern market 90

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" A Perspective on Current Trends in Contracting – R. Seng´enge

place. Bid preparation using computer based tools is quicker and more accurate and hence more competitive; and computer based management tools such as Microsoft Project increases tremendously the management efficiency in of planning and controlling of different project processes. Change in Project Procurement Practises The industry will see in the coming years more emphasis to practises which ensure more efficiency in of quality and cost of products with less control of the service providers by the client and his agents. Clients will move towards more “turn-key” projects! That means employing consortiums to accomplish their project goals, and ensure good quality, optimal cost and time of delivery. Since implementation agencies will continue to be smaller and smaller, maintenance activities of facilities be it buildings, other public structures or roads will be given out for long term maintenance contracts. Maintenance contracting is very fast becoming the household practice in developed countries, e.g. in the USA some contracting firms are already having 30 years long road maintenance contracts. It is proving to be more cost effective to the client as he can shift quite a considerable amount of risk to the contractor. The growing practice of giving out concessions for public facilities in form of Build Operate and Transfer (BOT) schemes, BOOT and the like is another trend worth following up. The concessionaire will practically own the scheme for a period of thirty years or even more. As a private business entity expecting to get return on the investment he will most likely adopt procurement practises which will ensure he gets value for money and this is not necessarily achieved through what is defined as fair competition in the current practices but competitiveness in real ! The requirements will base more on financial credibility, composition of the firm in of share holding and firms’ experience. In all these circumstances the strength of our future contractors will be in their ability to network with each other internally and internationally. We can no longer count in our traditional small, family based practises to face the challenge ahead of us. This is not a matter of engineering or politics; it is a matter of fact. If anyone has eyes to look around! Who is doing all the work which matter in our country? Where do we expect to dream and get the experience required to access work even in our own local industry? If we can not defeat them it may not be all that foolish to them. THE ROLE OF THE GOVERNMENT The role of the Government in this effort is to create an environment conducive for growth. At national level, our efforts should target reducing capital flight by providing more opportunities to our people through capacity building. The government should not shy away from employing affirmative procurement policies and mandatory local participation clauses especially for locally funded projects e.g. the special roads project. For sustainability purposes, it is not prudent to place all that investment in the hands of foreigners whatever the reason. THE ROLE OF TRADE ORGANIZATIONS (a) Advocacy for domestic policy instruments and strategies aimed at building domestic capacities in construction services. Given the importance of the construction sector in the economy, Associations should lobby the government. • To the development of a strong domestic construction sector through sectoral policy interventions, macro economic policies, human resource development and establishment of a taxation regime that is conducive. • To services export promotion 91

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" A Perspective on Current Trends in Contracting – R. Seng´enge

• •

To address issues that impede the ability of local firms to compete in local markets, such as tied aid, discriminatory qualification requirements and other anti-competitive practices. To effectively make use of performance requirements, which are GATS – consisted; these include the use of local content requirements in services delivery as well as requirements for associations and t ventures.

(b) Spear head efforts to create International level service providers. Most of our companies are too small to have any practical significance in efforts to increase the market share of the local industry; they are ill managed and most of them family businesses. In 1988 New Zealand had only 2 large firms, which won 1.6% share of the 250 top world contractors. Local contractors should come together and form larger firms. (c) Spearhead efforts to form meaningful alliances with foreign firms. This will help our local players address issues of capacity constraints, low productivity, low quality and low technological base. Regional alliances will be most preferred as they will lead to increased share in the local industries within the region but also International alliances should be encouraged. (d) Professional Associations should make efforts to increase their lobby! Weak Associations will normally get less recognition in spheres of influence. Characteristics of a strong Association include, number of active , financial standing, credibility of leadership and the impact to national development, of the agenda they advocate. THE ROLE OF CRB The law mandates CRB to players in the industry, regulate the game and develop our team to international competences. The first five years we have seen some progress in the areas of registration and de-registration, and regulation. The second five year period should be characterised by a definite growth in competence and market share. The best milestone will be to reach a targeted market share by the year 2007. The said year is of great significance in of globalisation. Strategies should be set by CRB and the players to ensure achievement of the goals. THE CONTRACTOR OF TOMORROW The contractor of tomorrow will essentially be a Project Manager who employs a number of sub cons of varying expertise and combines the team with his project management prowess to realise the objectives of the said project at the best possible quality within budget and time. In our context I see a group of contractors forming an independent entity to manage them while combining their resources to bid for a single project which neither of them could do singularly. We may need a completely different outlook at the challenge facing our industry.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" A Perspective on Current Trends in Contracting – R. Seng´enge

REFERENCES: Engineering News Record, Nov 30th –Dec 7th 1998 edition Msita K.M.I.M., Regional and International Trade Regimes: Challenges of the Local Construction Industry and the way forward, CI Forum, April 2001, Dar es Salaam Sabir P Chohan, Presentation at UNCTAD experts meeting, October 2000, Geneva Seng’enge R., Construction Industry Development Initiatives (SADC); CIB Report, Publication 229, Sept 1998, Arusha Seng’enge R., Globalisation of the Construction Industry: Policy Consideration, TACECA Annual Workshop, 2002, Dar es Salaam Seng’enge R., Contract Maintenance: The Concept, TACECA Annual workshop, March 2003, Dar es Salaam Talero Eduardo, Electronic Procurement in the Public Sector, WB document, 2000, Washington Tewelde Simeon, Presentation at UNCTAD experts meeting, October 2000, Geneva UNCTAD, Outcome of the Experts Meeting, National Experiences with Regulation and Liberalization: Examples in the Construction Services Sector and its Contribution to the Development of Developing Countries, October 2000, Geneva

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Challenges in Tanzania: The Way Forward – M. Bairi

Contractors Challenges in Tanzania: The Way Forward

Eng. Magesa Bairi Assistant Registrar- Registration Services Department, CRB ABSTRACT In the past 10 years there has been a tremendous increase in the number of construction firms carrying construction business in Tanzania. This could be attributed to number factors including positive economic growth rate, trade liberalization, globalization, privatization of public institutions, poor performance of manufacturing sector etc. However, the sad thing is that many of these construction firms enter into business with little knowledge or appropriate data on the challenges facing the practicing contractors in Tanzania. Consequently, most of these construction firms remain stagnant without growth and eventually end up either exiting out of business or being deleted for failure to meet registration criteria of the Contractors Registration Board. This paper aims at discussing a number of challenges currently facing contractors in Tanzania and finally proposes the way out. The challenges discussed include construction productivity, plant and equipment ownership, quality of construction works, safety and occupational health condition, management of construction materials, customer satisfaction etc. 1.0

INTRODUCTION In the past 10 years there has been a tremendous increase in the number of construction firms to undertake construction business in Tanzania. This could be attributed to favorable economic growth, trade liberalization policy, globalization, massive redundancies, as result of privatization of public institutions, poor performance of the manufacturing sector, etc. Consequently, firms and individual people saw carrying out construction business as an alternative and only viable option. Unfortunately, those who venture into construction business do not acquire sufficient data or information to enable them prepare good business plans. As a result the rate of growth of these firms have been very low, and, the number of contractors who exit out of the construction business shortly after being ed are high. Undertaking construction business in Tanzania is nowadays becoming very difficult as a result of stiff competition resulting from low volume of construction works compared to the number of ed contractors, presence of well established international construction firms, etc. This implies that, if a construction firm wants to remain in the construction business it must ensure that it is well equipped to face the challenges facing contractors in Tanzania. This require such a contractor to conduct construction business in such a manner that, there is reasonable profit margin, credible reputation to gain market share, builds up competitive edge, etc. To achieve this a firm must ensure that it has high productivity that leads to more competitive edge, more satisfied customers, high turn over and increased profit. Furthermore, the contractor shall be required to deliver quality works in time and within the budget. 94

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Challenges in Tanzania: The Way Forward – M. Bairi

The above-cited challenges that face contractors require such construction firms to engage and retain competent and skilled staff, invest in construction equipment, prepare strategic business plans, improve quality of works, meet client’s satisfaction etc. In simple words if a contractor wants to remain in the construction business she or he must properly and adequately equip to face the current challenges facing contractors in Tanzania. Otherwise, such a construction firm will not have a chance to get contracts, to grow, to deliver quality works, etc. It is therefore important to look at the challenges that face contractors in Tanzania and also on the possible solutions that if carefully adopted would enable such construction firms to stand and survive. 2.0

CHALLENGES TO CONTRACTORS

2.1

Improving Construction Productivity In simple words Productivity means how much is produced per unit. It is the ratio of output to input. In construction works input include labor, material, equipment, tools, and design in a construction system. Productivity parameters, which mainly need to be controlled in construction project, are labor productivity, equipment productivity and material productivity. The purpose of productivity control is to ensure efficient utilization of the input resources of men, material and equipment. Annual Returns received from major clients to contractors i.e. District Executive Directors, TanRoads, Tanesco, Municipal Councils, Tanzania Harbors Authority etc. indicate that, local contractors productivity is low. Main reasons cited for this state of affair include: • Lack of qualified and skilled technical staff • Lack of appropriate plant and equipment • Low financial capacity of contractors especially during mobilization and provision of securities • Poor istration and management of contracts • Lack of seriousness of local contractors While there is no comprehensive recent study and performance benchmark in construction productivity for construction works in Tanzania to authenticate the above causes of low productivity, there are still valid indicators to make one accept this observation. Looking at the mechanical condition of plant and equipment used and the level of skills and experience of technical staff employed by the majority of local contractors, low technology used, high construction wastage, accident – prone environment one would conclude of low productivity. Poor mechanical condition of, non availability of appropriate plant and equipment, inadequate experience and poor skills of technical staffs and supervisors and poor management of construction materials would greatly affect general productivity in execution of any project. To a contractor, low productivity leads to less competitive edge, dissatisfied customer, low turnover and decreased profit etc. It therefore becomes not only imperative but also an issue of life and death for a contractor to ensure that high level of productivity is attained in any construction works. Furthermore, low levels of labor productivity in most of construction firms could be attributed to usage of unskilled, inexperienced, poorly remunerated, incompetent supervisors, poor planning and coordination of construction activities etc. However, 95

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Challenges in Tanzania: The Way Forward – M. Bairi

poor maintenance and mechanical condition of equipment, usage of inappropriate equipment and incompetent operators etc. has also led to low equipment productivity. Low level of material productivity could be attributed to a number of factors including theft and pilferage, poor storage facilities, poor quality of materials, wastage of materials etc. The challenge to contractors is to ensure that there is proper coordination, planning and scheduling of materials, personnel and equipment to attain high productivity in construction activities. 2.2

Acquisition, operation and Maintenance Management of Plant and Equipment The rate of progress, quality of works and profit margin of a contractor highly depend on the condition and serviceability of Plant and Equipment used. Observation has shown that, while there is lack of appropriate construction equipment, the mechanical condition of those available is poor as a result of poor maintenance, use of inexperienced and poorly paid operators, use of inexperienced plant mechanics for repair to such plants and inappropriate use of such plant and equipment. The current situation of contractors in Tanzania on plant and construction equipment could be summarized as follows: • • • •

Contractors do not own construction equipment, No adequate construction equipment to hire ors not capable to purchase heavy construction equipment Mechanical condition of construction equipment available in the market very poor.

The issue of plant and construction equipment not available for hire and high prices of acquiring such equipment do make majority of local contractors unable to complete their projects in time and sometimes in poor quality. There seems to exist a vicious cycle as shown below. Fig. 1 Contractors Vicious Cycle No Equipment

No growth

No Contracts

No Business

Contractors must break this vicious cycle or else they have to exit out of the construction business. The challenges is for contractors to acquire equipment of their own and those having Equipment to practice proper maintenance and replacement systems.

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2.3

Building Financial Capacity In order for a contractor to remain in the construction business and be able to be awarded construction projects and implement them successfully, sound financial condition is a prerequisite condition. Sound financial condition is reflected in working capital levels, cash balances, capital reserve, the presence and status of depreciation s, debit levels, trends in transit costs as compared to available revenues. Sound financial condition means that the contractor can pay her current costs from existing revenues sound financial condition is what improves financial capability. This requires: Proper audited financial s to give correct picture on Annual Turnover • Good cash flows • Controlled project costs. • Proper Tender pricing contractors may face financial problems when he has • commitment to multiple projects at the same time. Experience with Contractors Registration Board when assessing the financial capacity of contractors for review and upgrading has shown that, there is a big problem on financial transactions or record keeping of finance by contractors. This is reflected in absence of annual audited s of so many years, lack of cash flow statements during implementation of projects, inadequate bank balance etc. There are cases when casual laborers are paid without proper records and many times the expenses of the directors of the company go unrecorded. Even the contractor cannot easily access records of procurement of goods for construction materials. In the light of weaknesses shown by company management in financial transactions, drivers, operators, suppliers of same contractors take advantage to play around with contractors fuel, cement, usage of vehicles, cash etc.

2.4

The challenge is therefore for contractors to have a proper financial ing system, which should reflect the actual company revenue and expenditure and eventually show company financial capacity. . Improving Quality of Works Quality, which was defined by Juran as fitness for use has broadly been stated to encom five elements: Quality for design, Quality for Conformance, Availability, Safety and Field use (1) In the current competitive construction market offers a viable focus for developing and maintaining a sustainable competitive advantage in the market places. The chances that a contractor succeeds in getting a repeat contract will depend on the quality of previous works delivered. Unfortunately, there has been a tendency in Tanzania for people to incorporate and establish construction firms simply to take advantage of opportunities but without full commitment to quality and meeting clients satisfaction. The motive behind has usually been to make super profit and diversify to other business. Consequently, there are no deliberate efforts done by contractors to improve Quality of works. Such a strategy is no more working today. Today, clients in addition to technical capability, financial capacity, trust, etc. when selecting a contractor, critically look at the quality element. And, that, probably goes to explain why new entrants to the market find it difficult to get works while those who have been in the market for so long, and have proved to be committed to quality continues getting works.

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Factors causing some contractors in Tanzania to deliver works below specified quality standards include: Use of unskilled staff • Use of poor qualities Materials • Lack of proper Plant and Equipment • Lack of proper supervision • Uncommitted management leadership • However, good quality works by a contractor lead to improved customer satisfaction, increased customer confidence, improved market reputation and improved market share in the construction industry. It therefore, becomes crucial for contractors to have quality improvement plans or programs. It is said that customers are attracted to organizations for four reasons, in the following order as shown in Table 1 below. Similarly, companies could lose customers as shown in the same table. It can be observed from the table, that, factors that cause companies to win customers differ from those that cause them to loose customers. Table: 1 S/N 1 2 3 4

Win customer Capabilities Trust Price Quality

Lose customers Trust Quality Capabilities Price

Source: H. James S. Harrington, Total Improvement Management, Handbook, 1995, pp.55 The trend today in other countries both developed and developing is that, construction companies are ed and certified under ISO 9000 standards. The contractors in Tanzania should understand that with globalization, the global requirement of being ed under ISO series of standards is a matter of time and that, they might find it difficult in case they wish to export construction services to other countries outside at international competition. The challenge is therefore for contractors in Tanzania to understand that in the current global competitive market the issue of improving quality of works is paramount for sustainability. 2.5

Improving Safety and Occupational Health in Tanzania The construction Industry in Tanzania has a poor record on safety and Occupational Health in construction sites. A baseline study on safety and health conditions in construction sites in Tanzania conducted by Contractors Registration Board revealed poor condition of safety and health in construction sites. The result on provision of Personal Protective Equipment to skilled workers indicated that: Helmets: 47.6%; Safety Boots: 22%; Gloves: 9.8%; Dust masks; 11%; Ear protectors: 8.5%. The above figures alone show poor safety concern in construction sites. Improving safety and occupational Healthy condition in the construction sites is not only for the benefit of the general public, but also for that particular firm with regards to personnel. Safety in construction sites aims at reducing the level of accidents, improving Industry’s productivity and reducing cost time. 98

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There have been very lame excuses often given by contractors that some workers usually do not prefer to put on safety gears even if provided with the same. Other contractors say that, there is no provision in the BOQ to procure safety gears. Furthermore, some contractors put the blame on unfavorable weather condition for non-compliance to safety requirement. There should be no excuses. The cost of ignorance to safety gear and occupational health in construction sites is becoming tremendously expensive in the light of aggressive measures taken by the Contractors registration Board and other related Institutions to address the situation. It is therefore high time that the contractors took the challenge to address the situation. The challenge to contractors is to ensure that workers in construction sites are provided with and put on appropriate safety gear when working in construction sites. 2.6

Adaptation to Construction Technology The construction technology is changing very fast. This means that contractors are required to invest in human capacity so that they move with the changing technology. For example: Fire resistance of concrete – Filled Steel columns • Blistering in SBS polymer modified Bituminous roofs • Thermoplastic Polyolefin Roofing membranes • Effective use of Bonding agents in concrete repairs • Road maintenance using bonding materials • Sealing cracks in Asphalt concrete Pavements. • Contractors are hereby challenged to ensure that they learn new construction technologies and that such technologies should not be left to just few individuals.

2.7

Improving Business Skills In the current competitive domestic and global market, contractors like any other businessman must focus towards meeting customer satisfaction. Knowing what your client wants best is the first step in developing a good business plan and achieving the ultimate business results that has been experienced by winners in the business cycle. In simple words, the contractor’s management must see and accept what the customer sees, thinks, believes and want at a given time. It is very unfortunate that majority of people in Tanzania venture into the construction business without first learning the basics of business skills. This has been reflected in the way tender documents and company profiles are prepared, contractors offices are arranged, communications are made, contractors presentations, etc. Furthermore, contractors do not strive to build up their own organization culture, beliefs and business philosophy. Surprisingly, if you happened to ask a director or manager in a construction firm, what their company mission, objectives and strategies in their business are, the chances are that, you will completely be disappointed by the answers that you will get. Peter Drucker(2) argues that, when the concept of an organization’s business is not thought through and spelled out clearly, the enterprise lacks solid foundation for establishing realistic objectives, strategies and business plans.

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The challenge is for contractors to acquire necessary business skills that will enable them to build a competitive advantage, be trusted by clients and enable them to conduct their construction business more professionally. 2.8

Management of Construction Materials Management of construction materials includes procuring materials with right specifications, quality and quantity. It further means keeping materials in the proper storage facilities and reducing wastage of materials. Excessive wastage of materials during utilization stage affects productivity and results in extra costs. Excessive wastage of material could be caused by a number sources including theft and pilferage, shortage in delivery, inferior quality, deterioration etc. It is very important for the contractor to properly manage construction materials. The challenge to contractors is that, contractors should ensure that they procure construction materials according to specification, store them in the right place and required condition, have proper management of the material, avoid wastage etc.

3.0

PROPOSED SOLUTIONS TO CONTRACTORS SUSTAINABLE FUTURE

3.1

Improving construction productivity The issue of contractors improving productivity in their construction activities in Tanzania is prominently very crucial if they have to remain in the construction business and also see some commendable growth in their capacity building. It therefore implies that contractors must come up with strategies that will ensure that they improve labor productivity, equipment productivity and material productivity. Some of the strategies that could help them to improve their construction productivity are hereby cited: a) Recruit the right people to do the job or provide training to improve workers’ ability and skill. b) Adopt motivation or personnel management measures to boost workers’ morale. c) Use project-scheduling techniques such as computer-aided construction project management (M) to optimize the times of related activities and make sure that works, tools, and materials allow continuous task performance so as to reduce the idleness of the labor force to a minimum. d) Maintain simple and efficient the communication among employees as well as with related parties. e) Make the employees know that they are important to the organization and involve them in the making of decisions affecting their jobs such as method improvements. f) Conduct productivity/performance study at the activity/operation level to produce benchmarks and to develop scientific models as part of the study to describe the detailed tasks performed for an activity/operation by individual or group in order to find out problem areas and propose ways to improve.

3.2

Investment in Human Resource It is very unfortunate that some of the contractors do not value the very important resource they have – people. In construction business, the quality of technical staff and supervisors play a very crucial role for a construction firm. The quality of works done, rate of productivity, profit margin retained, customer satisfaction, contract award, sustainability of the firm etc. all depend on the quality of people owned by that respective construction. 100

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The type of people working in a construction firm could give a reflection of the total quality of the total organization, reliability of its services and its capability to deliver such services. Quality here implies the experience, academic qualification, attitude, behaviors, and business skills etc. possessed by individuals employed in that construction firm. To quote from a speech made by a Vice- President of one the construction companies in Nova Scotia on the value attached to workers, he says: “It all starts by hiring the right people. We look for people that have the skills that we require or at least we can see that they have the ability to learn them. People who have good attitudes, who we believe will be hard workers, and who we think will interact well with other employees. We also look for some competitiveness in their attitude. The attitude of an employee affects their performance and the performance of the people around them. Rideus has a good mix of experience and youth. We hire a fair amount of young people directly from school and invest the necessary time and financial commitment to allow them to develop into valuable employees” (3) In order for construction firm to have people of the above-mentioned caliber, it must invest in employment and training of staff of the required quality. Contractors should therefore set aside adequate budget out of the profit margin for training purposes. These would make their staff to be exposed to the current global, business skills, changing construction technologies etc. Eventually this is likely to enable such a firm to build up the required competitive advantage. The construction firms should have both short term and long term planning on investment in human resources. The other area should be to ensure that employed staffs are well enumerated. 3.3

Plant and Equipment The issue of equipment ownership by contractors is very crucial if such contractors have to be competitive and remain in construction business. It is true that the cost of buying new heavy construction equipment and plant could not be affordable by the majority of contractors in the medium and small classes. However, the contractors could take the following initiatives to reduce the problem of equipment: • Purchasing of light equipment such as plate/pedestrian Rollers, Concrete Mixers, Compressors, Water Pumps, Porker Vibrators, Generator Set, Welding and Concrete Vibrators. • Merging of small companies into big and strong companies. This will make pulling together available resources to buy new equipment. • To be credit worth by having necessary collaterals needed by the Banks. • Have Equipment and Plant replacement policy The Contractors Registration Board is in process of carrying out a study on plant and equipment all over the country. This is intended to give a clear picture on the actual mechanical condition of plant and equipment owned by contractors and also would determine the actual demand of construction equipment. This will eventually help potential investor to invest in appropriate type of plant and equipment.

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3.4

Financial Capacity For a sustainable future of a construction firm, strong and sound financial condition is a prerequisite condition. Poor financial condition is usually attributed to poor tender pricing, poor cost control, poor project management, lack or poor business plans, lack of audited reports, incompetent company management, etc. It is therefore important to address the above issues. This require that construction firms do the following:

• •

Establish proper organizational management system with clear line of responsibilities and authority. Ensure that Audited s are carried annually.

3.5

Management for Continuous Improvement. The challenge that faces contractors today put such firms in a situation whereby improvement for change is inevitable. There definitely would be no development in the construction industry if contractors and other stakeholders in the industry were not committed to continuous improvement. The extent of a contractor’s commitment to continuous improvement can be gauged from: • • • • • •

3.6

A business plan including goals with measurable outcomes, understood by all employees and target to meet client needs; Recognition of the importance of data collection and the use of statistical analysis; A corporate plan for development and implantation of bench-marking; A commitment to customer and supplier surveys and a policy for responding to the findings of these surveys; A corporate policy on research and development, including the encouragement of improved design and /or construction processes or products; and Evidence of a willingness to explore and pursue opportunities for the greater use of information technology.

Safety and Occupational Health Safety Regulation and Occupational Health condition require that contractors provide and ensure use of appropriate safe gears to people engaged in construction works. It is the responsibility of the contractor to ensure provision is provide to the contract to procure safe gears during implementation of any project. The contractor should therefore: • • •

Include in the BOQ directly or indirectly the cost element for procurement of safety gear and provision of conducive working environment including supply of clean drinking water, toilets, etc. Plan and implement safety program to all technical staff. As a long-term strategy, the contractor should invest in safety program including attending safety-training seminars, procurement of necessary safety gears, etc.

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3.7

Quality Improvement Both domestic and global competitive market in the construction Industry is making quality a critical component for the survival of construction firms. This therefore, implies that, construction firms (building, civil works, mechanical, electrical and specialist contractors) must inevitably come up with quality improvement planning for their survival in the construction business. Quality improvement initiative starts by management of the construction firm assessing their current quality level. Deming, Juran and Crosby those gurus in Total Quality Management (TQM) viewed the match toward quality as a never ending journey (4) .The author feels that application of Crosby’s 14 steps for quality improvement which seeks to improve product quality by changing the corporate culture would be effective. These 14 steps are: “Management commitment; Quality improvement team; Quality measurement; Cost of quality evaluation; Quality awareness; Corrective action; Zero defects planning; Employee education; Zero defects day; Goal setting; Error cause removal; Recognition; Quality council; Do it over again”

4.0

THE FUTURE OF CONTRACTORS It is not easy to predict the future of contractors in Tanzania with certainty as whatever future will be there is likely to be changed through influence of a number of inevitable factors. However, assuming all other factors equal, the growth, sustainability and performance of contractors will depend on the following factors:•

Economic Growth The growth of any construction industry has been a reflection of the health condition of the economic condition of that particular country. The ongoing economic reforms in Tanzania which have brought macro economic stability with the current GDP growth rate at 4.5 and the inflation rate at around 7 per cent, and also with the flow of funds as a result of HIPIC initiative, poverty reduction strategies, increase of road maintenance fund, special Project etc. is likely to increase construction activities. Furthermore, direct investment fund is likely to increase a result of good investment policy and taxation regime, consequently an increase in private investment and hence increase in construction activities.

•

Implementation of Construction Industry Policy Amongst main objectives of the Construction Industry Policy is to improve the capacity and competitiveness of the local construction enterprises (contractors, consultants and informal sector) through deliberate preferential treatments. Strategies to build the capacity of local contractors as stipulated in the policy include: promoting application of best practice Standards on productivity; quality management and appropriate state-of the art delivery arrangement; the establishment of financing facilities for the construction sector enterprises to access working capital; establishing sustainable arrangements for provision of construction equipment; promote meaningful t venture arrangements; ensuring that no public funded works shall be carried out within the country without the involvement of the local players. 103

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It is therefore imperative for the Government and other stakeholders in the construction industry to ensure that the adopted Construction Industry Policy becomes effective and that the objectives and goals are achieved. •

Effective and Efficient Regulatory Bodies The regulatory Bodies apart from ing and regulating construction activities have a duty to have long term planning in developing local contractors. However, it is to be ed that the quality of contractors ed by CRB will depend on financial and equipment capacity, but more importantly on people employed. This therefore implies that, Quantity Surveyors, Architect and Engineers ed by other professional Institutions closely adhere to professional ethics Furthermore, technicians and artisans produced from institutions such as VETA, DIT, other technical colleges are not only qualified but should be competent to be used in the industry.

•

Strong Contractors Association. (CATA) Development and growth of ors in other developing countries such as Korea, Malaysia, Singapore, etc. have been possible as a result of the presence strong Contractors Association. This also has been the case in developed countries like United States of America, Australia, South Africa, china etc. These Associations not only made the Government Machinery listen to their demands, but also ensures that contractors adhere to construction and business ethics. Those contractors who are not willing to cooperate with established Contractors Associations have no chance to successfully conduct construction business in these countries. For example it is possible for contractors to eradicate corruption in the industry if strongly united. It is therefore very important that, if contractors in Tanzania want to see achievable growth in the constructing industry, they should ensure that they are united under the Contractors Association Of Tanzania. In fact, their future lies on the bond formed through their unity.

•

Adaptation of Business Skills In the current competitive global market construction business requires high degree of professionalism. Therefore, contractors who want to survive the moving wind of globalization must acquire appropriate business skills so as to build a competitive advantage against competitors.

5.0

CONCLUSION The paper has elaborately discussed a number of challenges facing contractors in Tanzania and also highlighted on some causes and effects as far sustainability of contractors in construction business is concerned. Furthermore, a number of proposed solutions have also been succinctly mentioned. Finally, factors on which the contractor’s future hinge has also been highlighted. All in all, the fall and success of contractors in Tanzania depends much on how contractors themselves take the challenges and workout strategic plans to create sustainable environment for their future. 104

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True as it might sound, the Contractors Registration Board in collaboration with other regulatory bodies and other stakeholders in the contracting industry will do whatever is best to ensure that contractors build up their capacity. But, this alone will not guarantee a sustainable future of contractors unless and until contractors themselves take the leading role to their capacity building.

REFERENCES 1. Artemis march, “ A Note on Quality: The views of Deming, Juran and Crosby” in Readings in Total Quality Management, ed. By Harry Costin (New York: Harcourt Brace, 1994) pp 143 2. Drucker, Peter F, Management: Tasks, Responsibilities, and Practices. New York: Harper & Row, 1974, chapts. 2,4,30,31,51 3. Gordon DiGiacomo: Healthy Workplace Programs at Rideau Construction Bedford, Nova Scotia, Case Study, March, 2002 4. Melnyk Denzler, Operations management Handbook, A Value Driven Approach, Irwin/McGraw- Hill, 1995, pp. 315-318 5. Construction Industry Policy and Strategies Document, 2002

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A Sustainable Solution to the Resource Challenges facing Contractors

M.S. Rweyemamu Director General, Plant and Equipment Hire Co. Ltd. (PEHCOL) Abstract Foreign contractors dominate contracting industry in Tanzania. They reflect this domination in the financial volume of contracts that they perform in relation to those performed by local contractors. It is believed that over 70% the money spent on construction go to foreign contractors. Unfortunately under the current environment of global open economy it is not easy to shut out foreign contractors particularly when a good portion of the budget spent on construction is funded by donors. This paper looks at contracting from a business point of view whereby investments made in the industry are expected to pay back. It is very important to understand contractors like in any other business can only sustain their business and remain in it only if they make profit. The paper discusses various ways in which various stakeholders can play part in developing a sustainable contracting industry and recommends some short term measures that could help the contractor take care of the resources already acquired. Specifically the paper ventures into some basic aspect of resources management, namely personnel, finance and equipment. 1.

INTRODUCTION Tanzania construction industry is relatively very young. Most of the contractors practicing today started the business not earlier than the 80’s and majority of them, particularly those involved in the road sub-sector, ed the industry in the 90’s. Any attempt to address problems facing contractors will need to look at contracting as any other business whereby investments are made, primarily with the purpose of getting returns. Meaningful investments will only be channeled into contracting only when investors are guaranteed acceptable return on their investment. This paper looks at various resources challenges facing contractors of all sectors and classes. The paper will attempt to analyze causes of the problems, and finally will suggest possible solutions to those challenges.

2.

SCOPE OF THE PROBLEM Problems of Tanzanian contractors can be summarized in chart 1 below. It is a vicious circle. Small contractor can only get out of it through deliberate efforts from the Central Government, sector ministries, various regulatory boards (CRB), contractors associations and more importantly contractors themselves and all other stakeholders.

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Unfortunately under current environment of global open economy, small contractors will be subjected to more stringent credit conditions and very stiff competition from foreign contractors operating as “local contractors”. Chart 1.

CONTRACTORS´ VICIOUS CIRCLE

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In order to address challenges facing contractors it is important to analyze contracting as part of a bigger national economy. Any suggestion to be sustainable it will need to address issues pertaining to:

• Participation in preparation of construction policies • Level of financing •Tax issues affecting Contracting industry

Stake holders Involvement

Adequate & Stable Funding

• Management of funds • Flow of funds • Disbursement on time

• ability and transparency •Simplified tendering procedures. •Effective supervision and Professionalism in contract Management • Timely payments

Clearly Defined Responsibilities

• Efficiency • good planning • Financial discipline

Sound Business Practices

I believe addressing problems in these four inter-dependent blocks will, in the long term, sustain ably turn contracting business into an attractive sector for investors. This will eventually: • • • • •

Attract private capital (local & foreign) into contracting business. Attract confidence of financial institution to lend to contractors. Those in contracting business will thrive, make money and remain in the business. With contracting industry thriving the county’s infrastructure will greatly improve. Improved infrastructure, hopefully, will improve the country economy that in turn will improve financing of various sectors. The bottom line is that all the efforts; resources and investment being made will be sustained.

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1. STAKE HOLDERS ENVOLVEMENT Institutional reforms that started taking place in the early 90’s and those being implemented today brought about changes in the way the Government conducts construction and maintenance activities. The most notable reforms have taken place in the roads sector. The Government has stopped using force methods in construction and maintenance activities. Instead, almost all construction and maintenance activities are being awarded to contractors. The Government, through various agencies, has retained the role of supervision and contract management. Considering the amount of funds that the Government is spending on development of infrastructure, say roads, the above policy change provides a unique opportunity to contractors, and the contracting industry as a whole, to take part in an industry with an annual turnover of over 100 billion Tanzanian shillings. However, for the contractors to benefit from the above reforms they have to be organized in a manner that will facilitate representation of their interest at various forums of policy formulation and decision making. It is very encouraging to note the good experience we have seen is in the road sub sector whereby private sector participation has been arranged. A separate fund dedicated for maintenance of roads was established. The responsibility of managing this fund is vested in the Road Fund Board. Private sector and other stakeholders are represented on this Board. Representatives of contracting industry in various forums like the Road Fund Board; their Associations, etc. are expected to: • • • •

Take part in formulations of policies affecting their business. Take part in determination various tax tariffs affecting their business. Recommend changes in different by –laws that have negative impact on their business. Recommend changes in various construction contracts clauses and that have negative impact on their performance.

The most important questions to ask ourselves are: • • • • •

How organized are various stakeholders of the industry? Are various stakeholders of contracting industry represented? Are they adequately represented? Are they effectively represented? If not adequately or effectively represented whose mistake is it? Is it because the Government has not provided the forum?

2. ADEQUATE & STABLE FUNDING. Contracting is a very serious and expensive undertaking. It involves purchasing of very expensive equipment. Very easily simple equipment like a motor grader for maintenance of a gravel road will cost around 200,000 US $. Obviously, nobody will spend this kind of money on several pieces of equipment unless he/she is assured of adequate return on the money. Due to the level of financing required, development and maintenance of infrastructure is and for long time will remain to be primarily, the responsibility of the central Government. 109

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Various concepts that are being discussed whereby the private sector shall be allowed to Build, Own and Operate (BOT) roads are yet to be experienced in Tanzania. However, because this concept shifts the risks entirely to the contractor the price of such undertakings are likely to very high. This could have negative impact to the entire economy and the contracting industry at large. Stakeholders of local contracting industry may wish to venture, analyze and see how they will benefit from BOT arrangements. Although construction and maintenance of roads and other infrastructure is the responsibility of the Central Government, all other stakeholders have a secondary responsibility to advise, influence decision through the provided forums so that the positive trend of increased financing for various sectors continue to go up. Adequate and stable funding will: • • • •

Attract private capital into contracting industry. Attract confidence of financial institution to lend to contractors. Good and able contractors will remain in contracting business. Enable timely maintenance of infrastructure (Roads), reduce cost of transport, and reduce cost of repair. This will in turn improve the economy.

Other efforts that are being made NCC, CRB, TECECA , and other contractors associations to establish contractors development and equipment-leasing funds should be acknowledged and encouraged. 3. CLEARLY DEFINED RESPONSIBILITES. Tanzania is relatively a big country estimated to cover an area of about 945,000 sg. Km. Management of an infrastructure of the country of this size is extremely a big challenge. For this reason responsibility for management of roads and other infrastructure has been divided among several institutions. For example in the case of roads: • • •

Trunk and selected Regional Roads are under the Ministry of Works through the newly established road –agency (Tan-Roads). Other regional, district, urban and feeder roads are under the Ministry of Regional istration and Local Government through the districts & city councils. Other infrastructure sectors such as electricity, water, airports and buildings, etc. are under various sector ministries through various agencies or parastatal companies.

Under these circumstances, for the contracting industry to operate smoothly, it is important that the responsibilities of each institution are very clearly defined. It is important to note that due to the diverse and spread nature the problem of defining responsibilities is more pronounced within the road sector. The ultimate objective of defining responsibilities should be to achieve: • • • • •

High level of professionalism within each institution. Increased ability High level of transparency, Simplified and efficient tendering procedures. Eradication of corruption.

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Contractors through their associations and their representatives in their respective boards and forums have and should be able influence on performance of institutions managing various infrastructures in their area of business. Case study: Most of small to medium sized contracts in the regions are awarded after very stiff competition among many local contractors. In most cases more than ten contractors will compete for a very small contract. Award for such simple contracts will normally be based on the bid price and the “ENGINEER’S ESTIMATE “. Although this estimate is considered confidential, In my opinion all stakeholders should be interested to know the criteria used to reach that estimate. Is it the same formulas that were used during the “force system” that are being used today? Contractors through their associations, boards etc. should influence that this “engineer’s estimate” should allow a reasonable profit margin for the contractor. 4. SOUND BUSINESS PRACTICES. The most important ingredient in sustenance of contracting industry is sound business practice among contractors. This can be achieved through: • •

Self-discipline & commitment from the contractor. Training through: classrooms, on site, attachment and sub-contracting arrangements with big contractors etc.

This is one area were the contractors are a hundred percent responsible and in control. Since the contractors themselves are in this business, they are better placed to judge which decisions and acts constitute “sound business practice”. Nevertheless, since in the contracting industry it is widely accepted that equipment related resources for more than 50% of construction costs, I will share with you some of the important basic aspects of equipment management. 4.1 SOME IMPORTANT BASICS OF EQUIPMENT MANAGEMENT. 4.1.1 Acquisition/procurement of equipment There are several methods through which a contractor can acquire equipment for the intended project or operation. These include: • • •

Direct purchase Lease Hire

Although most contractors prefer direct purchase this method of acquisition is only profitable when equipment is guaranteed of high annual utilization. My advice to contractors: “if you are not guaranteed of high annual utilization don’t purchase the equipment”. Consider hiring or leasing. Buying should come as the last option. 4.1.2

Equipment specification & selection

Very often than not contractors “over specify” their equipment requirement. For instance, a contractor will specify a requirement for a D6 when actually what is required is a D4. OR a 111

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contractor will specify a 15 cubic meter tipping trucks when he has a 1.5 cubic meters wheel loader at site. It is important to have a balanced fleet on site in order to achieve maximum efficiency and productivity Some attachments to the equipment will determine its productivity. For instance a motor grader with a scarifies or a bull dozer with a ripper, depending on application, could improve productivity by more than 30% Contractor should not ignore others, seemingly small, items that could affect performance of the equipment. E.g. tires specifications, type of buckets, cutting edges. These need to he of the right specifications for the application. 4.1.3

Availability of qualified personell

For many years Tanzania had neglected the need for training of technician and other artisans for the contracting industry. Understandably, this trend was due to the fact that only the Government did the business of managing the infrastructure (i.e. construction and maintenance). The private sector was simply shut out. Under the above circumstances very few were trained as plant mechanics, plant operators, civil (road) technicians electrical technicians etc. In fact the best plant operators and plant mechanics available today are only those left over by foreign contractors after big construction works. Such operators are very few and they lack any formal training. Without qualified personal, particularly plant operators and plant mechanics contractor’s resources will be drained substantially through excessive cost escalation due to: • •

Poorly done jobs that will need to be repeated at contractor’s cost. Cost of repair of equipment and breakdown time will increase.

Contractors need to work together, through their associations and other stakeholders, to develop training programs for their operators & mechanics. I understand that the Technology Transfer Center (UDSM) in collaboration with the Ministry of Works Institute (Morogoro) were ready to assist in arranging such training 4.1.4

Selection of right spare parts from the market.

When we talk about open market and globalization not many people will understand what it means or entails. Spare parts trading has been caught up in this mess. The spareparts world market is full of all types of spare parts with no guarantee for quality. Types and quality of spare parts available today on Tanzania market are very varying in price and quality. Considering the amount of money being spent on spare parts by contractors, a wise, informed decision made before purchasing is extremely important as it could save the contractor lots of money. Spare parts on the market can be grouped as follows: •

“GENUINE PARTS”

These are those manufactured for the equipment manufacturer using his specifications. Only dealers normally sell such parts. Genuine parts carry warranty of the equipment manufacturer and such warranty extend to other components of the equipment.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" A Sustainable Solution to the Resource Challenges facing Contractors – M. S. Rweyemamu

•

OEM PARTS (Original Equipment Manufacturer)

Manufacturer who also manufactures for the equipment manufacturer makes these. They are the same quality & specs as those given to the equipment manufacturer but do not carry his part number. They are not sold in the equipment manufacturer box. These are items like Lucas, Bosch, Phillips gaskets, etc. The price for such parts will normally be slightly cheaper than the genuine parts. •

NON – GENUINE and FAKE PARTS

These are those made by dubious manufacturers. They pretend that they are made with specification of the equipment manufacturer. They are sold in boxes with labels and part numbers similar to genuine parts. Such parts will normally be sold at a price slightly cheaper than the genuine parts. Traders sell them through various outlets. They don’t carry any warranty. •

“MADE TO FIT”

These are parts made by legitimate manufacturers. They disclose their specification and are made to fit certain models of equipment. They are sold under the trade and part number of the manufacturer. Sometimes manufacturers of such parts are willing to guarantee their parts but such warranty will not extend to other components of the equipment. •

RECONDITIONED PARTS.

Some parts of equipment can be easily reconditioned, sand blasted, painted and sold as new. Items like shafts, gears, housings, springs, bearings, turbo chargers can easily be reconditioned and put back into the market and sold as and at the price of new. Contractors need to be at total alert when purchasing spare part for their equipment. Decision as from were to purchase, what to purchase, at what price, of what quality has to be analyzed in of cost benefit. 4.1.5

Effective preventive maintenance for contractor’s equipment

In order for the contractor to have full benefit of the money invested in purchasing the equipment it is extremely important that the equipment lasts its economic life, and that it lasts that life with minimum breakdowns. All moving parts of the equipment need to be checked, adjusted, cleaned, lubricated and greased at certain intervals. Some components in the equipment need to be replaced regularly for the equipment to function properly. The basic principle of an effective “preventive maintenance system” is to develop a check list of activity to be performed on each individual equipment: • • • •

On daily basis After every 50 hours (weekly) After every 250 hours (monthly) After every 1000 hours. (yearly)

Almost all equipment manufacturers do publish maintenance manuals whereby they indicate components to be checked, adjusted, cleaned, lubricated at every above stage. Most 113

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" A Sustainable Solution to the Resource Challenges facing Contractors – M. S. Rweyemamu

important they also give the list of recommended quality and types of lubricants that can be used on their equipment. Once the above check list is developed the contractor should make sure that it is being implemented through surprise checks. 4.2

PROTECTION OF EMPLOYEES AGAINST AIDS

Employees are the most valuable resource the contract can not afford loose. Because most of the time these employees spend most of their life away from their family on site, they are subjected to very risky sex life. Contractors are advised to educate them about the dangers of AIDS and provide them with protection gears such as condoms. 4.3

FINANCIAL MANAGEMENT FOR CONTRACTORS

Very few contractors have any basic training in financial management. This, on many occasions is believed to be one of the sources of poor performance among local contractors. It should not be difficult to arrange for such training through contractors associations or the Board. Such training will help contractor mange their financial resources better.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Challenges faced in Occupational Health & Safety in Construction Sites – F. K. Mwombeki

Challenges on Occupational Health & Safety in Construction Sites

Mrs.F.K. Mwombeki Assistant Registrar – Enforcement Department, CRB ABSTRACT The construction industry business in Tanzania like in other countries cannot be tackled effectively without harnessing of the Occupational Health and Safety (OHS), to safeguard the health of the workers and the entire community. Unfortunately in this Industry, assessment on the impacts of such developments to the workers, surrounding environment and the community are rarely considered. Outdated Labor legislations should be reviewed to cater for the current needs and realities in the construction Industry. Law enforcement from the relevant Government Institutions both at central and local level including Personal Protective Equipment (PPE) Programs in construction sites should be strengthened. This paper concentrates on the status of safety and health for the workers at construction sites, efforts so far being done by the Government Institutions in shaping construction industry and challenges to be faced to meet the required standards It is expected that this will open a fruitful discussion to a way forward. 1.0.

INTRODUCTION Naturally, the effect of construction on safety, occupational Health and the surrounding environment would vary from particular operations starting with extraction of building materials from quarries and methods by which the extraction is occurring, transportation, preparation of building materials at site and construction of works processes. In the Civil and building construction works which involve excavation, and/or demolition, concrete work, painting, roofing, operation of machines, plant and equipment, use of hand tools and many other operations call for attention from relevant authorities, regulatory bodies, societies, scientists, professionals and businessmen to establish safety and health management programs and laws governing construction works activities. Unfortunately, there have been little efforts put into practice to ensure safety and health of workers and the entire community. Inspection of the construction sites for the past five years and Base line study carried by CRB on conditions of Safety and Health in Tanzania revealed that amongst other short falls noted, the situation of provision and use of safety gear during construction works was appalling. Further, key players that include clients, consultants and contractors ignore inclusion of safety provision during inception stage through out tendering, in which all elements connected to safety measures are disregarded on the grounds of cutting cost. In the process of carrying out its regulatory functions, the Board has learnt that majority of local and few foreign contractors are not taking the issue of providing PPE seriously. For instance, inspection of construction sites by CRB during year 2001 and 2002 (table 3) revealed that, out of 83 sites inspected year 2001, 54 (66%) did not provide safety gear, while out of 308 sites inspected year 2002,193 (63 %) sites did not provide safety gear to the workers. Either, the 3% range between the two years shows that despite the Board’s efforts to enforce the provision and use of PPE, the 115

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Challenges faced in Occupational Health & Safety in Construction Sites – F. K. Mwombeki

problem is still serious. The snag is, even in some cases where contractors provide safety gear especially the helmets, not all workers do use them. Not only that, the study conducted by CRB in collaboration with OSHA in 2001 revealed that at least about 50% of the company directors interviewed have knowledge of PPE in construction, while site supervisors, skilled, semi and unskilled workers have little knowledge and consider PPE issue less important. This situation creates vacuum for the company directors to disregard the safety issue to workers all together, where by in some cases it has gone sour to the extent of not putting in place measures to prevent accidents, or report to relevant authorities in case of occurrence of fatal accidents. It should be realized that implementation of safety and occupational health in construction works is not only for compliance purposes. Provision of PPE programs such as workers welfare arrangements, clear and agreeable compensation plans, good working tools, conducive working environment and use of safety gear, has positive result in the productivity for the company, hence increase profit. Long-term indicators have it that, lack of PPE programs not only will affect the company dividend but the worker, family and the community. 2.0.

OCCUPATIONAL HEALTH AND SAFETY IN CONSTRUCTION SITES.

2.1.

Occupational Health and Safety Occupational Health is the promotion and maintenance of the higher degree of physical, mental and social well being of workers in all occupations. In the construction workplaces the workers are exposed to hazards of occupational diseases and injuries and the adverse effects of excessively long hours of work. Machines, plants and other sophisticated construction equipment posse danger to the operators, who in most cases do not have prior skills for operating such machines or plants. Occupational health services should be concerning with the preventive measures laid down to guide the employers the workers and their representatives on the requirements for a safe healthy working environment. A worker should be assigned duties in relation to his physical and mental health and skills. Further, employers should have complete control over their employees and therefore ensure adherence to safety practices. The company must comply with all provisions of safety and health regulations that pertain to the construction works itself. Construction can be safe occupation when workers are aware of the hazards, and an effective safety and health program is used.

2.2.

Occupational Health and Safety Programs Safety program on a project is set by the prime contractor’s project manager who maps out a program of safety measures commensurate with the size of the project and the conditions and hazards peculiar to it. Programs for construction safety include: 1. Adequate first aid facilities and trained personnel. 2. Safety committee comprising of key personnel –supervisors, safety personnel and company doctor. 116

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Challenges faced in Occupational Health & Safety in Construction Sites – F. K. Mwombeki

3. Disaster control programs, which should be maintained by in-charge who is a qualified personnel. 4. Crew leaders who hold brief meetings with workers under their supervisor at least once a week to discuss the safety operation of their crew and workers, and specific problems (held after the safety committee meeting) 5. Safety instructions given to all new workers as part their introduction 6. Special mass safety meetings called by the project engineer (all workers attend this meeting) 7. Safety devices designed to prevent injury and accidents during building and road construction works. 8. Management and supervisors visit the workers and inspect the works and participate in the safety programs periodically. 9. Evaluation and review of programs as required by changing conditions to address new problems that may arise. 2.3.

Accident Reporting and Investigations Reporting/records: On day-to-day works procedures, an accident book should be kept at the site, in which all types of minor injury such as bruises, to major accidents like imputing disability and fatal should be recorded. Death, or dangerous occurrences must be reported by quickest possible means (normally telephone) and confirmed in writing as soon as possible with the “responsible person”. Reporting include; date and time, full name and occupation of injured person and the nature of the injuries or condition, place where it occurred and brief description of the circumstances as shown in table1 Injuries: A report must be made on any injury, arising from or in connection with work, which result in, death, a specified major injuries or condition, incapacity for work and subsequent death. Any specified type of dangerous occurrence whether causing injury or not must be reported through as shown in table 4 Diseases: A disease need to be reported only when a written diagnosis of a scheduled disease is received from a doctor and where the person suffering currently has a job in which that disease is known as a risk for instance Lung cancer as a result of working with asbestos, poisons from cutting, burning, welding and respiratory complications from painting and sprays, demolition etc.

2.3.

Accident Investigation An accident is an unplanned and unexpected occurrence, which upsets a planned sequence of work, resulting on loss of production, injury to personnel and/or damage to plant and equipment. The rationale for investigating accidents is to determine the cause(s) with a view to preventing a recurrence, gather information for use in any criminal or civil proceedings, to enable confirm or refuse a claim or industrial injuries benefit and prepare notification to be made to enforcing agency. During investigation of an accident the following questions should get answers; what caused the accident, who was involved, when did it occur, whether the person involved had put on safety gear, how could it have been prevented and how could recurrence be prevented.

3.0.

STATUTORY REQUIREMENTS GOVERNING OHS IN CONSTRUCTION SITES IN TANZANIA. There are several statutory requirements governing Safety & Occupational Health in Tanzania, which are implemented by various bodies as follows:117

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Challenges faced in Occupational Health & Safety in Construction Sites – F. K. Mwombeki

3.1.

The Contractors Registration Act No. 17 of 1997 Section 4 (m) of the Contractors Registration Act empowers the Board to: Ensure that all construction sites are hoarded and labour laws occupational health and safety regulations in the construction industry are adhered to.

3.2.

The Contractors Registration By-laws 1999 These By-laws istered by Contractors Registration Board govern the conduct of contractors as follows:By law 14 (I): every contractor is required to maintain and provide to every person at site appropriate PPE’s as indicated in Table 5 Section 20 (3) a Contractor shall maintain at every construction site a in which all accidents and causes there from are recorded and such accidents shall include all major and minor injuries sustained on the construction site, as shown in table 1 Section 20 (4) Non compliance of the provision of paragraph (3), shall be punishable by fine of 0.1% of the contract sum or one hundred thousand shillings, whichever is higher; table 2 Section 20 (9) All Building construction sites shall be hoarded and failure to do so constitutes an offence punishable by fine equal to 0.5% of the contract sum or two hundred thousand shillings, whichever is higher. Section 20 (11): every contractor shall provide every person on site with the appropriate PPE’s and failure to do so shall constitute an offence punishable by a fine of twenty thousand shillings per person. Section 20 (12): every contractor shall ensure that there is fire-fighting equipment and hygienic facilities on site, and failure to do so shall constitute an offence punishable by a fine of fifty thousand shillings. TABLE: 1 ACCIDENT BOOK S/N

Full Name

Occupation

Nature of injury/condition

Place of occurrence

Date and time

Brief description of circumstances

Action taken

TABLE: 2 SUMMARY OF SPECIFIED OFFENCES AND PENALTIES RELATED TO PPE’S (The Contractors Registration By- laws 1999; made under section 35. The Contractors Registration Act No. 17/1997) S/N Rule 20(3)(4) Rule 20 (9) Rule 20 (11) Rule 20(12)

3.3.

NATURE OF OFFENCE Failure to maintain an accident book at site Failure to provide hoarding at site Failure to provide appropriate PPE’s Failure to provide fire fighting equipment and hygienic facilities such as washroom, WC, clean eating-place, drinking water.

PENALTY 0.1% of contract sum or Tsh. 100,000/ 0.5% of contract sum or Tsh. 200,000/= Tsh 20,000/= per person Tsh. 50,000/=

The Factories Ordinance Cap. 297 (1950) The Factories Ordinance, 1950, which makes provisions for the safety, health and welfare of persons at work in factories and other places of work; and for matter incidental thereto and connected therewith. This instrument is now outdated and the process of repealing it is ready. It will come out as Occupational Health and Safety Act with a broader scope of application in order to provide protection to more workers and address more hazards 118

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Challenges faced in Occupational Health & Safety in Construction Sites – F. K. Mwombeki

3.4.

The Factories (Building Operations and works of Engineering Construction) Rules 1985 The Factories Ordinance is the main legislation making provision for safety, health and welfare of person employed in factories and other places and for matters incidental to, and connected with it. The Ordinance was enacted after the government recognized the need to provide safe working conditions for workers in the construction industry. These rules give safety provision on: Excavation, shafts & tunnels Cofferdams and caissons Operations and works on/or adjacent to water. Road works Scaffolding and other working places Lifting operations Demolition Additional Safety Measures

3.5.

Security of Employment Act Security of Employment Act, 1964, makes provisions to restrict the powers of employers to dismiss employee summarily or otherwise in payment of additional compensation on the occasion of termination of employment except in specific circumstances to amend the law relating to employment and severance allowance and for matters connected therewith and incidental hereto. In the ongoing reform of labour laws, this legislation is also going to be reviewed in order to match with the labour market changes happening today.

3.6.

The Workmen’s Compensation Ordinance Workmen’s Compensation Ordinance, 1949 makes provisions for compensation or benefits due to injuries or diseases or death arising in the course of employment. This instrument is also one of the outdated labour laws, which are currently under reform. The updating of this piece of legislation has a vital role to play in the workplace accident mitigation. The updated legislation is expected to make provision for a compensation system that encourage prevention of accidents as opposed to the current situation where compensation is cheaper than prevention, and as a result most employers do not bother to prevent accidents. The social security system in Tanzania is also fragmented in that there are several institutions that provide social security in the country. As a result of that, compensation system is also not functioning well. The repeal of Workmen’s Compensation Ordinance is intended to address a number of shortfalls in the current legislation.

3.7

Accidents and Occupational Diseases (Notification) ordinance 1953.

4.0.

COMPLIANCE STATUS ON OHS IN CONSTRUCTION SITES The working conditions for most workers in construction sites are generally poor. The study conducted by OSHA in year 2001, shows that out of 63 sites of building works visited, 3 accidents were fatal. The survey result shows that cut by sharp edges, nails puncture, hits by hammer, bruises and other small accidents have highest rate (33 site), while fall of objects, tools, piece of work like a wall ranked second (27 sites) and handling of tools and equipment the third (23 sites) Since establishment of the Enforcement Department year 2001, the Board has been making regular site inspection to monitor and assess compliance to the Contractors Registration Act No. 17,1997 and its By-laws 1999. Safety and Health status among other shortfalls ranks highest. From the two illustrations below (table 3 and figure 1) it is obvious that safety issue need be addressed seriously. In both two years, lack of safety is above 50% of total 119

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Challenges faced in Occupational Health & Safety in Construction Sites – F. K. Mwombeki

sites inspected, indicating the seriousness of the problem. Further, the range between year 2001 and 2002 is very small showing that there is almost no improvement from year 2001 to 2002. Apart from lack of provision of PPE it was noted during site inspection that many local and some foreign contractors do not provide and /or keep accident book, safe drinking water, washing place and Toilet, proper eating-place, general site cleanliness and shed in case of bad weather. TABLE: 3:

SHORT FALLS NOTED (CRB SITE INSPECTION REPORTS YEAR 2001 & 2002)

S/N

Description

1. 2. 3. 4. 5.

No ed contractors No signboard at site No safety gear (PPE) workmen No hoarding at site Abuse of business name

6. 7.

Working above class limit Obstruction of Board staff

to

2001 Sites inspected 83 No. %ge 21 26 24 29 54 66

2002 Sites inspected 308 No. %ge 65 21 82 26 193 63

11 2

13 2.4

14 16

5 5

1 3

1.2 4

3 0

0.9 -

Variance 5 3 3 8 -2.6 (problem on increased) 0.3 Problem not experienced 2002

FIGURE 1:COMPARISON BETWEEN SHORT FALLS FOR YEAR 2001 AND 2002.

70% 60%

% of Occurence

50% 40% 30% 20% 10% 0% No No ed signboard contractors at site

No safety No hoarding gear to at site workmen

Abuse of business name

Working above class limit

Shortfall

2001

120

Obstruction of Board staff

2002

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Challenges faced in Occupational Health & Safety in Construction Sites – F. K. Mwombeki

5.0

CRB STRATEGIES TO IMPROVE SAFETY In order to address the appalling situation on safety the Board has initiated a number of strategies aimed at ensuring compliance to Occupational Heath & safety on Construction Sites.

5.1.

Establishment of Enforcement Department and Zonal Offices The establishment of the department and its zonal offices was to bring services near to the stakeholders efficiently and timely. The department comprises of three Zonal Offices; Eastern Zone which covers Dar Es Salaam, Coast, Morogoro, Dodoma, Mtwara, Lindi, Manyara, Arusha, Kilimanjaro and Tanga Regions, with its office at the CRB Head Office. Northern Zone which include Mwanza, Kagera, Mara, Shinyanga, Tabora, Singida and Kigoma with its Zonal Offices in Mwanza. Southern Zone covering Mbeya, Iringa, Rukwa and Ruvuma with its Zonal Offices in (Mbeya). The department implements the following activities:

5.2.

Site inspection to establish status of occupation Health and Safety at Construction site. Site inspection is carried out randomly and in most cases without prior notification. During inspection we establish whether the contractors carrying out the works are ed by CRB (main, and sub contractors for specialized works). The client, the consultants, compliance to safety and health measures, erection of signboards and class limits are established. In case of short falls, a show cause notice is issued or fined on the spot or both depending on the magnitude of the shortfalls or offences. Further, key staff supervising the works is noted as well as equipment and plants being used for the on going works.

5.3.

Awareness campaigns. The Board has several programs aimed at educating the contractors, workers, clients and general public through workshops, short courses, TV and Radio Programs and News papers on safety observation, to prevent occurrence of diseases and accidents, and to make sure all people on construction sites visitors and -by are protected.

5.4.

Research on Occupation Health and Safety. The Board is carrying out studies to find out the weaknesses in the implementation of OHS in construction industry in Tanzania. The study carried out recently by OSHA revealed that:-The majority of injuries are due to simple causes; for instance, falling, stepping on objects, being stuck against or trapped by objects, poor handling of hand tools etc. For many years now, there have been almost no studies addressing safety and health problems in construction sites in Tanzania. The study was carried out to quantify, recommend and come up with strategies on measures to be carried out to improve this situation.

5.5.

Monitoring of construction works The Contractors Registration Board has been and will continue to make follow up by inspecting construction sites regularly to check inter-alia provision PPE and Occupational Health programs.

5.6.

Review of ed contractors Currently the Board is preparing a crack down program where by the ed contractors will be reviewed from time to time by inspecting the sites followed by visiting the offices to ascertain on the staff employed, plants and equipment and maintenance of office premises since registration. The Board has learn that some ed contractors after registration they do not keep key staff and others do not even maintain their offices, plant and equipment as it is required. 121

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6.0.

CONCLUSIVE REMARK The investment in safety and occupational health programs is a sound business strategy, for any company regardless of size, and will lead to having a positive impact on the financial bottom line. This should not be regarded only as a requirement under the law, but should become and remain a core business strategy. Solid safety and health management plans with senior management commitment will improve productivity and employees moral hence should be encouraged.

7.0.

RECOMMENDATIONS ed contractors have the obligations to develop and maintain Occupational Health and Safety Management programs. The baseline study carried out by CRB in collaboration with OSHA has shown that most contractors have no safety and health programs despite the fact that, the majority claim to understand its importance. Therefore contractors should do the following:

1. Planning for accident prevention and occupation health should be in a way to fit needs of the concerned construction site or particular on-going works. ‘ 2. Contractors should make provision for safety and health when preparing bids. The provision for safety and health must be made competitive with the aim to compete with other bidders and to avoid a monetary loss. 3. Workers should be assigned to work with plants after being trained to acquire necessary skills. Most accidents happen because jobs requiring the use of plants are assigned to workers with insufficient skills to operate them. 4. Inspection of plants and scaffolding at least once a week should be carried out. 5. Site supervisors should be conversant with OHS and should share that knowledge with co-workers. 6. Contractors should keep accident s at sites, and make record of all kind of accidents from minor bruises to major and fatal accidents, and submit reports to relevant Authorities; failure to report is an offence. 7. Contractors should ensure that work environment is improved and work places should be kept well for employee’s comfort and convenience. Accommodation in case of bad weather, safe drinking water, washing facilities including toilets and accommodation for meals should be provided and properly maintained. 8

Plans related to cases of death or serious injury of the Works to be transparent to workers, thus any occurrence of either of the two should be taken as violation and the employee could be prosecuted under criminal laws if found deliberately exposed him/her self to injury and vice versa.

9

Costs for PPE’s measures should be explored. Cost sharing between the contractor and client, or the contractor and workers should be worked out.

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8.0.

CHALLENGE Since establishment of CRB 5 year ago, none adherence to safety and occupational health in construction sites has been very high. The challenge during the next 5 years to Contractors and workers and CRB is to put into practice the abovementioned recommendations, while CRB’s is monitoring the processes thus, the 63% rate of failure to provide PPE to workers is reduced to zero %.

REFERENCES 1. 2. 3. 4. 5.

6.

CRB Sustainable structured training program 2003: Constructions safety and occupational health CRB baseline study on occupational health and safety in construction industry by OSHA 2001. American society of safety Engineers (ELCOSH); White Paper – The return of investment for safety health and environment management programs. (Online source) Santa Monica (Green Building Program (Conserve to day, prevent tomorrow) (Online source) TANROADS, Roads rehabilitation/upgrading Project, Environmental impact analysis (EIA) Of the proposed rehabilitation of eight Regional roads with emphasis on Environmental Management Monitoring Plan (EMP) and compensation plan, United Republic of Tanzania, November, 2002 Zmark Shalizi (1994) Roads and the Environment: A handbook, The Word Bank, Washington, DC, USA.

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TABLE: 4 ACCIDENT RECORDING FORMAT Particulars of employer: (Business name and address)

2

9

Agency of accident/serious harm: Machinery or (mainly) fixed plant Mobile plant or transport Powered equipment, tools or appliances Non-powered hand tools, appliances and equipment Chemical or chemical products Material or substance Environmental agency Animal, human or biological agency (not bacteria or virus) Bacterial or virus

Location of place of work:

Shop, shed, unit no, floor, building; Street no and name; Locality / suburb 3

Personal data of injured person:

Name

10 Body part:

Residential address

Head Upper limb

Neck Lower limbs

Trunk Multiple locations

Systemic (internal organs) Date of birth

Sex (M/F) 11 Nature of injury or disease: (specify all)

4

5

Occupation or job title of injured person:

Period of employment of injured person: st 1 week 6 months-1year non-employee

6

st 1 month 1-5 years

1-6 months

Sprain or strain

Damage to artificial aid

Over 5 years

Head injury Internal injury of trunk Amputation, incl. eye Open wound

Disease, nervous system Disease, musculoskeletal Disease, skin Disease, digestive system

First-aid

Doctor (not hospitalized)

Treatment of injury: Nil

Superficial injury

Hospitalised 7

Fatal Puncture wound Poisoning and toxic effects Multiple injuries

Fracture of spine Other fractures Dislocation

Bruising or crushing Foreign body Burns

Time and date of accident/serious harm:

Time

am/pm

Disease, infectious or parasitic Disease, respiratory system Disease, circulatory system Tumor (malignant or benign)

Nerves or spinal cord Occupational hearing loss

Mental disorder

Date 12 Shift

Day

Afternoon

Night

Where and how did the accident/harm happen?

If not enough room, attach separate sheet or sheets

Hours worked since arrival at work 8

Mechanism of accident/serious harm: Fall, trip or slip Sound or pressure Body stressing Biological factors

Hitting objects with part of the body Being hit by moving objects Heat, radiation or energy Chemicals or other substances

Mental stress

13

Has an investigation been carried out? Was a significant hazard involved?

yes/no yes/no

Completed by: Employer or employer’s representative (delete which is not applicable) Name and position

Signature

Date

These investigations should not be influenced with obsession to blame somebody. Accidents should be investigated as quickly as possible, the longer the days; the less likely it is that true facts will be ascertained.

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TABLE: 5 SUMMARY OF PERSONAL PROTECTIVE EQUIPMENT (PPE’S)

1

Earth works of all types. Base course applications Asphalt paving Drainage works Bridge const. Works ♦ Steel fixing ♦ Concrete works ♦ Carpentry works (vi) Crusher & quarry works (vii) Flag people

3

√ √ √ √

√ √ √ √

√

√ √

Air Compressor

Welding Shield

Safety Harness

Goggles

Gloves

Ear Muffs

Respiration/ Dust Mask

Helmets

Gum Boots

√ √ √ √ √

√

√

√ √ √

√ √ √ √ √ √ √ √ √

√

(i) (ii)

Excavations works Steel fixing works

(iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi)

Concrete works Block works Carpentry works Scaffolding works Electrical works Plumbing works Painting works Roofing works Demolition works

√ √ √

√ √

√ √ √ √

√ √

√ √

√

√ √ √ √ √

√ √

√ √ √

√ √ √ √ √

√ √ √ √

√ √

√ √ √

√ √ √

All types of welding/Also √ Electrical √ (ii) All grinding works √ (iii) Greasing works √ (iv) Spray painting Auxiliary Activities Depending on Nature of Works

√ √ √

√ √ √

√ √ √ √ √ √ √

√

√ √ √

√

√

√ √ √

√

Electrical Installation Works Erection of poles Mounting of grid lines Overall installation works

√

√ √ √

√

Mechanical Works (i)

5

√ √ √

Building Construction Works.

(i) (ii) (iii) 4

Safety Shoes

Road Construction Works (i) (ii) (iii) (iv) (v)

2

Reflective Jacket

Operation

Overall

Item

PERSONAL PROTECTIVE EQUIPMENT (PPE)

Overcoat

TYPE OF WORKS

(i) (ii) (iii) (iv) (v)

Mining works below ground level Works in sewerage systems below ground level Works in acidic environment Works in muddy environment Works in dusty environment

√

√

√ √

√

√ √

√

√

125

√

√

√

√

√

√

√

√ √

√

√

√ √

√

√ √ √ √

√

√

√

√

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Challenges faced in Occupational Health & Safety in Construction Sites – Y. M. Kishashu & J. M. Matiko

Challenges faced in Occupational Health & Safety in Construction Sites

Y. M. Kishashu Senior Occupational Health Practitioner, Occupational Health & Safety Authority (OSHA) J. M. Matiko Occupational Safety Specialist, Occupational Health & Safety Authority (OSHA) 1.0

INTRODUCTION

Construction is a major employer of labour in all parts of the world. At the same time, it is the most hazardous occupational settings in both developed and developing countries. The construction sector includes activities such as road works, building construction, repair and demolition of buildings and other structures that can either take place above the ground or underground or underwater. In the recent years, there has been a considerable growth and expansion in of activities and workers employed. The growth in construction operations is unfortunately happening while disregarding health and safety of those working in the sector as well as the general public. The statistics show that the rate of accidents is relatively high in the construction sector and hence a closer look at the problem is therefore warranted. Addressing health and safety problems in construction sites is not only important for legal reasons, but gives contractors the opportunity to maximise profits in their businesses, as it contributes to speedy completion of their contracts. Ignoring health and safety in the construction sites can result in high rates of accidents and diseases that will not only eat the profits, but also go to the extent of crippling the industry and the nation as a whole. The promotion of health and safety in construction industry should be considered as a means to achieve sustainable development in the industry. This paper attempts to deliberate on our experiences as occupational health and safety practitioners on the challenges facing contractors ahead and particularly, the state of occupational health and safety in construction sites, current developments in enforcing occupational health and safety in construction sites and strategies to enhance compliance in the industry. 2.0

THE STATE OF OCCUPATIONAL HEALTH AND SAFETY IN THE CONSTRUCTION INDUSTRY

In Tanzania, occupational health and safety in the construction sites is specifically regulated by a subsidiary legislation known as the Factories (Building Operations and Works of Engineering Construction) Rules of 1985. This legislation makes provisions for safety, health and welfare of persons engaged in building operations and works of engineering construction undertaken by way of trade or business or for the purpose of any industrial or commercial undertaking; and to building operations and works of

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Challenges faced in Occupational Health & Safety in Construction Sites – Y. M. Kishashu & J. M. Matiko

engineering construction undertaken by or on behalf of the Government, a local authority or a public body. Although the instrument was adopted almost two decades ago, there is still very little awareness of the same among the stakeholders and the possible reasons could be weak enforcement by the competent authorities. While experts in the field of occupational health and safety appreciate that workers’ knowledge of occupational hazards inherent in the construction sites can have great impact towards accidents and diseases prevention, in our country it is only less than 10% of workers in the construction sites have knowledge of hazards inherent in their work [1]. In the construction industry, accidents and occupational diseases are often due to inadequate consideration of health and safety requirements. Lack of site boundaries, transport routes, maintenance of lifting equipment and sound electrical supply, proper material storage and handling, poor housekeeping, lack of health surveillance programmes are some of anomalies observed in the construction sites due to inadequate knowledge of health and safety requirements. While the provision of personal protective equipment (PPE) is considered to be the last option where other options like reducing or eliminating the hazards at the source or on the way are not applicable, most contractors are against this principle. Efforts are obviously needed to educate the contractors and workers on the need to ensure the provision and use of appropriate personal protective equipment where the hazards are not adequately controlled. In construction sites there are many hazards such as falling objects from high levels, nails, sharp edges, dusts, noise, solvents and other chemicals all of which need to be controlled. For example, in building operations, employees are easily exposed to hazardous substances such as paints, thinners, glues, varnish, and other toxic agents all of which require protection if not prevention from exposure. The national legislation requires the contractors to provide their employees a place of employment that is free from recognized hazards that can cause or are likely to cause ill health or serious physical harm. Accidents in the construction site range from unreported bruises to the collapse of buildings or part of it. In Tanzania the industry is responsible for about 10.1% of total occupational accidents, 9.6% of fatalities, 12.2% of partial disabilities and about 7.4% of temporary disability. It is among the most hazardous occupational settings with an injury rate of 9.9 per 1000 workers; this is second from mining/quarrying, with an injury rate of 17 per 1000 workers [2]. Most construction sites use scaffolds that are not of sound construction materials and adequately maintained. They do not have rail guards on platforms, and in some cases wrong type of coupling is used. All these anomalies can be responsible for accident causation and are mostly due to lack of understanding of the fundamental principles of safe scaffold construction and use. Others are due to unsound structures erected in order to save time and money, despite the fact that people are expected to work at high levels and that when something goes wrong with the scaffold the consequence can be a tragedy. Safe use of scaffolds is predominantly observed in the sites where foreign contractors are involved; this is due to the fact that most of foreign firms use safety and health manuals from their countries of origin. Use of ladder is still unavoidable in many cases in construction industry. It has been observed that less than 20% of all ladder-related accidents are attributed to defective ladders, but 80% are due to errors and ignorance of s [3]. It is still impossible to completely avoid the use of ladders in construction operations.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Challenges faced in Occupational Health & Safety in Construction Sites – Y. M. Kishashu & J. M. Matiko

Welfare facilities are necessary for prevention of conditions/diseases such as dermatitis or eczema caused by hazardous chemical substances used in construction operations. To ascertain whether contractors comply with legislation requirements on welfare facilities in construction sites, the emphasis should be on accommodation in case of bad weather, drinking water, washing facilities, sanitary conveniences, and accommodation for meals and first aid. The legislation places a general duty to the contractor to ensure that there are adequate and appropriate first aid supplies for their employees. They are also supposed to provide adequate and appropriate number of ‘suitable persons’ to render first aid to ill or injured employees at work. A suitable person is a person with training and qualification as the Chief Inspector may approve. In most construction sites, First Aid is considered to be optional, and most of construction sites do not have First Aid facilities. Some have First Aid but do not have suitable person to render the services. Improvement in safety and health does not happen by chance, there must be commitment from management and all workers. In order for safety and health programme in the workplaces to work out effectively, there must be a policy and construction industry is no exception in this respect. One good practice of contractors with health and safety policy is the ‘tool box meetings’ that are very effective in health and safety education programmes as witnessed with one of class one foreign contractors where safety awareness is reasonably high as a result of such meetings. While our society is committed to total involvement in combating HIV/AIDS at all levels and economic sectors, the situation in construction industry is different. The survey conducted in 63 construction sites revealed that only 12.7% of the visited construction sites had programmes to educate workers on HIV/AIDS. Seven sites out of 63 had distributed condoms, conducted counselling services, and displayed posters about HIV/AIDS as measures to safeguard employees against HIV/AID. Although contractors are legally bound to take workmen’s compensation insurance covers for their workers, most workers do not know whether they are insured or not as there is no transparency on insurance matters. There are three types of insurance policy that are common in the construction industry: Contractors All Risk (CAR); Third Party Liability (TPL); and Workmen’s Compensation (WC). Construction works adjacent to water are not frequent in our country, but when undertaken falling into water and being drowned or carried away by currents are the likely hazards. 3.0

CHALLENGES FACED IN IMPLEMENTING OCCUPATIONAL HEALTH AND SAFETY PROGRAMMES

In our country, it has been found that the large construction companies are generally managing their occupational health and safety responsibilities well. However, the small and medium size contractors still have high levels of non-compliance. This is particularly the case for local contractors. Most contractors are not involved in occupational health and safety, and instead they expect that inspectors from competent authorities will during their routine site inspections identify hazards and provide them with options for managing them. In other words, they think it is the role of Government to manage health and safety of their work sites. Unfortunately, there is also lack of willingness to incorporate health and safety in contractors’ business plans. This to a great extent is denying the industry the opportunity to gain the real benefits of occupational health and safety. 128

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Challenges faced in Occupational Health & Safety in Construction Sites – Y. M. Kishashu & J. M. Matiko

The key role of competent authorities and other relevant stakeholders is to ensure that acceptable standards of health and safety in construction sites are achieved and maintained. Furthermore, the competent authorities are also supposed to ensure that improvements in health and safety in construction sites are achieved by enforcing compliance with the national legislation. Assistance in the form of technical advice, training and seminars in occupational health and safety should be availed to the contractors. It is important to emphasise that, those ors who choose to ignore health and safety in their activities should be subjected to deterrent legal actions. The biggest challenge faced by the competent authorities and other stakeholders is to inculcate the health and safety culture among the actors in the construction industry, so as to give occupational health and safety the consideration that it deserves and hence realise the benefits. The following challenges also need to be addressed: most contractors regard occupational health and safety programmes as cost rather than investment and this is really a misconception; workers, both permanent and temporary are not made aware of potential hazards in their occupations; workers are not always given the care and attention they deserve when accidents or occupational diseases happen, particularly the matters related to compensation and rehabilitation of the victims of occupational injuries and diseases; there are no health surveillance programmes for construction workers; and workers are not involved when planning work practices. 4.0

CURRENT DEVELOPMENTS IN ENFORCING OCCUPATIONAL HEALTH AND SAFETY

In our country, two competent authorities are responsible to enforce safety and health requirements in the construction sites. The designated authorities to oversee health and safety matters in construction sites are the Occupational Safety and Health Authority (OSHA) under the Ministry of Labour, Youth Development and Sports and Contractors Registration Board (CRB) under the Ministry of Works. Implementation of health and safety in construction industry is achieved using the following instruments: The Factories Ordinance 1950, the principal legislation which makes provision for the safety, health and welfare of persons at work in factories and other places of work (including construction sites); and for matters incidental thereto and connected there with. This instrument is now outdated and a new instrument known as Occupational Health and Safety Act, 2003 has been enacted. The most important features of this new legislation are: introduction of health and safety representatives and committees of workers; legal responsibility in providing health and safety training to workers; legal responsible in providing information on hazards inherent in work; right to refuse dangerous work; powers to compound offences; incentive scheme for accident and occupational diseases prevention; preparation of health and safety policy and codes of practice. The Factories (Building Operations and Works of Engineering Construction) Rules of 1985 which make provisions for safety, health and welfare of persons engaged in building operations and works of engineering construction undertaken by way of trade or business or for the purpose of any industrial or commercial undertaking; and to building operations and works of engineering construction undertaken by or on behalf of the Government, a local authority or a public body. These Rules are subject to revision once the principal legislation becomes operational. The anticipated new features include: provisions to encourage voluntary compliance; deterrent penalties for regular non-compliance; training for designated safety officer for construction site; self-inspection system. 129

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Challenges faced in Occupational Health & Safety in Construction Sites – Y. M. Kishashu & J. M. Matiko

There are also subsidiary legislation such as Woodworking Machinery Rules, 1955; Factories (Electricity) Amendment rules, 1985; and Factories (Occupational Health Services) Rules, 1985 that make provisions for safety and health surveillance in the workplaces including construction sites. All the above subsidiary legislation will be revised to allow harmony with the principal legislation. Workmen’s Compensation Ordinance, 1949, which makes provision for compensation or benefits due to injuries or diseases or death arising in the course of employment is another instrument which can have indirect impact to health and safety of construction workers. The updating of this legislation, which is happening in line with other labour laws, has great impact in the prevention of accidents and occupational diseases in construction sites. The updated legislation is expected to come up with a compensation system that will encourage the prevention of accidents and occupational diseases, as opposed to the current situation where compensation is cheaper than prevention, and as a result no body wants to invest in the prevention of accidents. The calculations for insurance s will depend on many variables so as to benefit those investing in prevention of accidents and occupational diseases. Other statutes applicable in construction industry are by-laws made under the Contractors Registration Board Act No. 17 of 1997, which are istered by the Contractors Registration Board (CRB) under the Ministry of Works. The Engineering Departments of the Local Authorities are also involved in inspecting construction sites. However, they are concerned mainly with soundness of structures being erected. Our experiences show that, most of the statutes mentioned above do not seem to be inadequate, only that there is little awareness among the contractors and weak enforcement by competent authorities, possibly due to low capacity in of personnel and other resources. The enforcement by OSHA and CRB is not conflicting, but rather complementary. Although, the International Labour Organisation (ILO) has adopted a number of Conventions and Recommendations dealing with construction industry, our country has not ratified most of these Conventions and Recommendations except the Conventions C 148 and C 170. The following are ILO Conventions and Recommendations relevant to safety and health in construction activities: C 167 – Safety and Health in Construction Convention, 1988; C 62 – Safety Provisions (Building) Convention, 1937; C 115 – Radiation Protection Convention, 1960; C 119 – Guarding of Machinery, 1963; C 127 – Maximum Weight Convention, 1967; C 139 – Occupational Cancer Convention, 1974; C 148 – Working Environment (Air Pollution, Noise and Vibration) Convention 1977; C 155 – Occupational Safety and Health Convention, 1981; C 161 – Occupational Health Services Convention, 1985; C 162 – Asbestos Convention, 1986; C 121 – Employment Injury Benefits convention, 1964; C 170 – Safety in the Use of Chemicals at Work Convention, 1990; R 55 – Cooperation in Accident Prevention (Building) Recommendation, 1937. These Conventions apply to all construction activities, namely building, civil engineering, erection and dismantling work, any process, operation or transport on the construction site, from the preparation of the site to completion of the project. Special attention is given to construction activities involving exposure of workers to asbestos, as this area requires special measures. It is our hope that OSHA will take a lead in the ratification of all Conventions relevant to the national objectives of promoting health and safety in the workplaces.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Challenges faced in Occupational Health & Safety in Construction Sites – Y. M. Kishashu & J. M. Matiko

5.0

STRATEGIES TO ENHANCE OCCUPATIONAL HEALTH AND SAFETY COMPLIANCE

In the light of very low compliance of occupational health and safety among the contractors, there is a need to come up with strategies which will enable the construction industry meet the occupational health and safety challenges ahead of it. It is our hope that in preparing the Strategic Corporate Plan, CRB together with relevant stakeholders will strive to see that the construction industry is applying the best occupational health and safety practices. The competent authorities together with stakeholders in construction industry should endeavour to achieve the following strategic objectives: i. Creation of awareness and knowledge on occupational health and safety among site contractors, site managers, supervisors and workers. ii. Achievement of the highest degree of occupational health and safety compliance. iii. Ensure availability of occupational health and safety information. iv. Reducing the impact of HIV/AIDS on construction industry. Achievements of the above strategic objectives stand a better chance to be realised if the following recommendations will be implemented: •

Accidents and occupational diseases prevention should be a planned programme of activities which fit the needs and resources of the concerned construction company.

•

Arrangements for availability reliable safety and health information should be made to collect data on hazards at the construction sites to facilitate planning process.

•

Implementation of safety and health should not be regarded as an additional cost, rather it should be considered as an investment.

•

Safety and health should be part of the operational plans if the goal is to achieve optimum productivity.

•

Contractors should make provision for safety and health when preparing bids.

•

Employees should go for medical check-up at reasonable intervals during their emp1oyment to assess their health conditions as their health statuses need to be monitored regularly before the effects are uncontrollable.

•

Construction

companies

should

appoint

safety

representative

in

every

construction sites. •

Workers should be assigned to work with plants after proper training to acquire necessary safety and operational skills.

•

Work environment should be improved and workplace should be well equipped for employees comfort and convenience.

•

The government of Tanzania should ratify and adopt the ILO Conventions and Recommendations dealing with safety and health in construction industry. 131

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Challenges faced in Occupational Health & Safety in Construction Sites – Y. M. Kishashu & J. M. Matiko

•

Safety and health competitions in the construction sites should be introduced to encourage the compliance with safety and health standards.

6.0

CONCLUSION

The promotion of health and safety in construction industry should be considered as an important strategy to achieve improved working conditions and hence sustainable development in the industry. Contractors should take up the challenge to implement health and safety within the limits of their resources as this is an undertaking that can no longer be overlooked.

7.0

REFERENCES 1. Baseline Study on Health and Safety Conditions in Construction Sites, CRB, 2001. 2. Kitumbo, H.I. and Kirenga A.P., 2001. Construction Industry in Tanzania in African Newsletter on Occupational Health and Safety Vol. 11 April, 2001. 3. Ladders – International Occupational Safety and Health Information Centre (CIS), ILO Geneva, Switzerland. 4. Factories Ordinance, Cap. 297, 1950. 5. Factories (Building Operations and Works of Engineering Construction (Rules, 1985.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Preface

PREFACE It is again another opportune and exciting time for the contracting industry, where contractors, consultants, clients and the general public meet once again to review developments and chart out strategies for the future. This is no other occasion but the Annual Consultative Meetings. This crucial events name has been changed from Contractors Annual Workshops to Consultative Annual Meetings, more in line with the true focus of the meeting, where the Board consults with it’s stakeholders namely contractors, consultants, clients and the general public on matters pertaining to the contracting industry. In light of the increased need to chart out a strategic direction for the contracting industry, this year’s theme has been chosen to involve stakeholders in the preparation of a Strategic Corporate Plan to facilitate the regulation and development of a sustainable contracting industry. This year, your Board is embarking on a milestone achievement since establishment. Having ed five years since establishment, mainly focused on setting systems and tools in place, the Board this year will be charting out a Corporate Strategic Plan. In particular, participants will discuss issues related to Developments in the Industry, Challenges facing Contractors and CRB´s Five Year Corporate Strategy. The forum will also provide a good opportunity for you to interact and share experiences with fellow contractors and other actors in the industry. As has been the norm since the previous meeting, we will also be reporting on the status of implementation of the previous meetings recommendations. Recommendations from the meeting will assist CRB in formulating a Strategic Plan that will spearhead the contracting industry. In implementing out the strategic plan, the Board will be guided by CRB´s vision, mission strategic functions and corporate values as shown on the back cover of the Proceedings. I implore you to embrace this when preparing the Strategic Plan. The challenge, will not only be in formulating the Plan, but also implementing the Plan upon adoption. Stakeholders should prepare a Plan that will be implementable. This is an opportune time to put your mark on the future direction of the contracting industry. I wish you a successful meeting that will ensure achievement of our vision of being an exemplary regulator that develops dynamic, capable and competitive contractors who observe business ethics, undertake construction projects efficiently and participate in the regional and global markets.

B. C. Muhegi, REGISTRAR

ii

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Programme

CRB ANNUAL CONSULTATIVE MEETINGS 2003 PROGRAMME DAY 1 0800-0900

Registration of Participants

0900-1000

SESSION I – Opening

1000-1030

Tea Break

1030-1230

SESSION II - Overview of Progress in the Construction Industry Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – Eng. B. C. Muhegi Performance of Contractors During 2002 – Eng. J. K. Malongo Towards the Establishment of a Framework for Contractor Performance Measurement – Eng. A. Uriyo Contractors Assistance Fund: Lessons Learnt & Challenges Ahead – Mrs. D. R. Kagaruki Discussion

1230-1400

Lunch Break

1400-1530

SESSION III – CRB Five Year Strategic Plan: Goals & Strategies CRB’s Corporate Strategic Plan 2004 - 2008 – Eng. B. C. Muhegi Contractors Perspective on the Role of CRB & Contractors in Regulation & Development of the Contracting Industry - CATA Contractors Perspective on the Role of CRB & Contractors in Regulation & Development of the Contracting Industry - TACECA NSSF’s Perspective on the Role of CRB in Regulation & Development of Contractors – NSSF Discussion

1530-1600

Tea Break

1600-1730

Session IV – Challenges facing Contractors Ahead A Perspective on Current Trends in Contracting – R. Seng’enge Contractors Challenges in Tanzania: The Way Forward – Eng. M. Bairi A Sustainable Solution to the Resource Challenges facing Contractors – M. S. Rweyemamu Challenges on Occupational Health & Safety in Construction Sites – Mrs F. K. Mwombeki Challenges faced in Occupational Health & Safety in Construction Sites – Y. M. Kishashu & J. M. Matiko Discussions

END OF DAY 1 iii

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Programme

DAY 2 0830-1000

Session V - Group Discussions

1000-1030

Tea Break

1030-1230

Group Discussions Continued

1230-1400

Lunch Break

1400-1530

Session VI – Wrap Up Presentation & Discussion.

1530-1600 1600-1730

Tea Break Session VII – Closing Presentation of Summary of Recommendations Workshop Evaluation Closing Remarks/ Speech

END OF DAY 2

iv

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi

Status of Implementation Of Recommendations from the Contractors Registration Board (CRB) Annual Workshops 2002 Eng. B. C. Muhegi Registrar, CRB 1.0

INTRODUCTION The Contractors Registration Board (CRB) is established under the Contractors Registration Act, 1997 for the purpose of registration, regulation and promotion of Contractors in Tanzania. For four successive years, the Board has been conducting Workshops for Contractors as one of the initiatives of promoting the development of contractors. These Consultative Meetings are organized by the Board as a forum for bringing together contractors, consultants, clients and other stakeholders in the construction industry to meet and discuss issues related to sustainable performance and growth of the contracting industry. Such workshops have been successfully conducted as an annual event since 1999 and have been attended by a total number of 2,439 participants since inception. The workshops have been very effective, as major development initiatives such as formulation of By-laws and criteria for registration, sustainable structured training programme, creation of Contractors Assistance Fund and Formation of the Contractors Association of Tanzania (CATA) are a result of the recommendations emanating from the annual workshops. It has therefore been a norm to provide a on the status of implementation of recommendations made in the previous workshops, which forms the subject of this paper. Since the theme of last year’s workshop reviewed all the previous year’s developments, this paper will specifically deal with the major recommendations of the CRB Annual Workshop 2002. It is believed that the subject of this paper will also play a part in formulating our future strategies based on this year’s theme, namely: “CRB’s Five Year Corporate Plan: Goals & Strategies”.

2.0

MAJOR RECOMMENDATIONS OF THE PREVIOUS CRB ANNUAL WORKSHOPS Major recommendations of previous CRB Annual Workshops were on the following areas:(a) (b) (c) (d) (e) (f) (g) (h)

Work opportunities Finance: Working capital and credit facilities Equipment Policy issues on Development of local persons and firms Procurement of works Training and Business Promotion Taxation systems Contractors Performance Indicators

Most of these issues have been addressed by the Board and relevant public bodies and a on the same was made in the year 2002 annual workshops. 1

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi

3.0

THE CRB ANNUAL WORKSHOPS 2002 The theme for the year 2002 CRB Annual Workshops was “Five Years of CRB: Achievements & Challenges” in recognition of five years of the Board’s existence. It was held successfully from 28th May – 14th June 2002 in the four traditional centres of Dar es salaam, Mbeya, Arusha and Mwanza. The workshops were attended by a record number of 811 participants, which greatly sured the target of 640 participants. To grace the workshops, His Excellency, the President of the United Republic of Tanzania, Benjamin William Mkapa, opened the maiden workshop in Dar es Salaam. The workshop managed to achieve the objectives aimed of bringing together contractors and other stakeholders in the construction industry to discuss and review the achievements made, problems faced and challenges that lie ahead in the regulation and development of Contractors in Tanzania with particular reference to: Registration and Review of Contractors, Regulation, Contractors Associations, Contractors Assistance Fund and Training Programmes for contractors. The workshop also provided a forum for contractors and other stakeholders to interact and share experience. from the participants has also shown that the workshop was well received. For the first time, the Annual Workshop conducted in Dar es Salaam also held an exhibition to showcase construction material, technology and services. The Exhibition was attended by 15 exhibitors and was a great success. As usual the on the implementation of strategies agreed at the previous Annual Workshops was also well received. The showed the determination of the Board in, not only conducting the workshops, but in also ensuring that the workshops provide practical recommendations which can be implemented for the benefit and well being of all stakeholders.

4.0

STATUS OF IMPLEMENTATION The implementation status outlined here below covers recommendations addressed directly to CRB. However, attempts have also been made in addressing other key recommendations addressed to other institutions. During the year 2002 annual workshops six key areas were addressed, these are: (a) (b) (c) (d) (e)

President’s Speech Proposed Amendment to the Contractors Registration Act No. 17 of 1997 Proposed Amendment to the By-laws, Registration Criteria and Procedure Contractors Assistance Fund; Strategies for Mitigating Risks Contractors Sustainable Structured Training Programme, Seminars Consultative meetings (f) Contractors Association, issues for consideration. 4.1

and

President’s Speech All Contractors were very appreciative for the presence and good words of wisdom given by His Excellency, the President of the United Republic of Tanzania Benjamin William Mkapa during the opening ceremony of the maiden workshop in Dar es Salaam. The following are recommendations emanating from the President’s Speech 2

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi Recommendation The President’s Directive that Local Contractors should be employed on all public funded projects be empowered by law by incorporating it in the Procurement Act, 2001

Local Contractors should strive to enter into meaningful t ventures among themselves or with foreign contractors. In order to safeguard the interest of the general public, and employ public funds cost-effectively, contractors should be employed on all public funded works. On projects with social objectives, contractors should be given conditions to execute works by abiding to the social objectives e.g. employing local labour and material. This takes due cognizance of the law, results in added work opportunities to contractors and puts in place contractual obligations since the contractor besides being supervised by the employer is also regulated by the Board.

Contractors Association of Tanzania ed to spearhead such t ventures. Enforcement Department created. Establishment of Zonal Offices to beef up site inspections. Compliance on the rise.

Circulation of Presidential Directive to all client institutions.

Presidential Directive circulated to clients

The Board should co-operate and liaison with other Boards like ERB, AQRB and NBMM in regulating the construction industry so as to rid it of incompetence and corruption elements.

Currently t forum for site inspections with AQRB and ERB in place.

The Construction Sector should be seen within the public and government to uphold dignity, respect and professionalism by way of executing quality works and adhering to ethics in the building of the nation, and not by profiting at the expense of helpless Tanzanians.

Establishment of dedicated Enforcement Department. Establishment of Zonal Offices to beef up site inspections. Compliance on the rise. Continued exercise to educate and delete contractors who do not comply to Contractors Registration Act.

The Contractors Registration Board has the responsibility of ridding the construction sector of bad elements. If need be, continue weeding out those who do not perform and who tarnish the contracting industry.

4.2

Status of Implementation The Board has forwarded to the Government the proposal to set aside works not exceeding Tshs. 750,000 to be exclusively for local contractors.

Proposed Amendment to the Contractors Registration Act No. 17 of 1997 Recommendation The Board through the Ministry of Works to expedite Amendment to the Contractors Registration Act No. 17 of 1997 and Public Procurement Act, 2001 in the following key areas: Definition of the word “Contractor” to be changed to accommodate different types of works which are being carried out by contractors in different disciplines. Included a Clause to enable the Board to penalize clients/employers engaging non-ed contractors. Give prosecution powers to the Board to prosecute defaulters. Eliminate overlapping laws. Penalize Contractors selling business names to noned contractors.

Status of Implementation The proposed Amendments to the Act were commented upon by other stakeholders such as TACECA, AG. Chambers, etc. Comments were incorporated and have already been forwarded to the Government.

There is need to review the Public Procurement Act by raising the upper threshold value for works to be restricted to local contractors from the current value of Tshs. 200 million to say Tshs. 500 million so as to develop the local contractors.

Board forward comments and participated in Review of Public Procurement Act. The Board has recommended to increase the figure to Tshs. 750 million.

3

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi

4.3

Proposed Amendment to the By-laws, 1999 Recommendation Key recommendations include: -

Registration and Annual fees to be maintained.

-

Increase of class limits by 50%

-

Revised minimum requirements for equipment personnel and gear to correspond with the increased class limits Formulate list of specialist contractors

Status of Implementation The Board has adopted the recommendation and has not revised the registration and annual fees. Adopted (See Appendix I). Adopted (See Appendix I).

-

Foreign contractors will now not be allowed to in lower classes i.e. 2 and below (will be allowed in class one only).

4

List of specialized contractors prepared (See Appendix I). The proposed Amendments to the By-laws have been forwarded to the Ministry of Works for approval.

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi 4.4

CONTRACTORS ASSISTANCE FUND Strategies for mitigating risks

1.0

Issue Risks 1. Extension of time of Bid Bond. 2. Failure to agree with changes 1. in contract. Failure to sign 2. 3. contract. 3. Forfeiture of bid-bonds for failure to secure performance 4. bonds, clients delay in award 5. of tender, death of a 6. contractor, bankruptcy etc. 4. Price fluctuations after 7. submission of tender and B.O.Q may result in the Contractor failing to sign a contract, which will result in default, and eventual deletion 8. and legal action. 5. Misuse of the advance payment. 6. Losses and failure to complete the contract in respect of (i) advance payment guarantees. The Fund 1. The establishment of institutions and similar funds which offer all bond facilities (bid, advance and performance) on which are more favourable thereby leading to CAF having no . 2. Failure of the Fund to meet the demand of its due to limited guarantee capital. 3. Forfeiture of Bid Bonds or Advance Payment Guarantees by the Bank due to default by the Contractor may result in CRB suffering a loss in the monies guaranteed.

Recommendation Risk Mitigation

Clients not to make so many time extensions. Contractors to adhere to the conditions of contract. Educate the contractors through training in loans management and tendering. Contractors being faithful. Prompt communication. In the event of Advance Payment Guarantees, Contractors completing their contracts. Increasing the capital of the fund so as to be able to provide all three bond facilities (bid, advance, performance). The Fund should be expanded to include issuing of Performance Bonds, which continue to deter contractors in effective participation in works. CRB to liaison with the concerned authorities to ensure that the tender requirements take into consideration needs of both the employer and contractors instead of being biased in favour of only the employer. Contractors to take insurance cover for Contractors All-Risk to cover for unforeseen disasters e.g. heavy rains, hurricanes etc. (ii) Clients should clearly differentiate period for submission of Bid Bond and Performance Bond so that they do not overlap and result into forfeiture of the other. (iii) Employers should not initiate procurement processes for works before securing adequate funds.

5

Implementation Strategy Contractors to be educated on contractual obligations, financial management & discipline and insurance through SSTP CRB to consider possibility of exploring options of introducing performance bond, after thorough study and CAF has been operational for at least two years. CRB to continue dialogue with clients on balanced clientcontractor relationship through meetings and seminars.

Status of Implementation SSTP Courses structured to include aspects on contractual obligations, financial management & discipline and insurance. Options for introducing performance bond being studied. CRB has been conducting meetings with potential clients to discuss among other things, the need for continued balanced clientcontractor relationship. Contractors Consultative Annual Meetings to be used to discuss contractor – client relationships. Contractors will be required to submit progress reports.

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi Issue

2.0

Contractors 1. Bid Bonds are issued prior to g of the Contract. In the event of the Contractor not securing the job, the contractor looses the 0.75% Commission to CRDB and 0.2% paid to CRB. 2. Tender validity period can sometimes be extended which is contrary to the Contractors forecasts and can lead to extension of the Bid bond validity period and resulting increased interest period. 3. Sustainability & Growth of the Fund

Recommendation

Implementation Strategy

1. All contractors should make a statutory contribution of 25% - 50% of their Annual Subscription Fees towards the Fund. It should benefit Contractors in the following manner; Bid Bonds – All Contractors in Classes I – VII, Advance Payment Guarantees – Contractors in Classes V – VII. 2. Loan contractors with interest. 3. The Fund through CRB should explore options of seeking assistance from various donors and local and foreign institutions e.g. UNIDO, UNDP so as to increase the fund capital. 4. CRB should look into increasing its contribution to the Fund. 5. CRB should continue to sensitize contractors on the benefits of the Fund. 6. Interest realized from the “Fixed Deposit” of the Guarantee (Tshs. 300m) should be ploughed back as a Revolving Fund into increasing the capital of the Contractors Assistance Facility.

Possibility of expanded hip of CAF to be explored after it has been operational for at least two years. This will be preceded by a study on its feasibility. CRB to plough back the interest accrued back into the fund to increase the capital CRB to consider increasing the capital of the fund annually as the budget allows. hip fee and other monies realized from operation of the fund to be used to increase the capital of the fund. Awareness of the fund to be continue being disseminated in “The Contractor” newsletter and other forums.

Status of Implementation

Option for expanded hip of Fund being explored. CRB will increase the capital base of the Fund from this consultative meeting.

“The Contractor” newsletter has continued to sensitize contracting community on CAF. Soon, web-site will also be used to sensitize on the fund too. A substantive paper on this topic will be presented.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi 4.5

Training Courses/Seminars and Consultative Meetings Recommendation There is need to co-ordinate the training conducted between different institutions including CRB, TACECA and other institutions so as to avoid duplication reduce costs and time. CRB to continue educating clients through forums such as workshops and Seminars for District authorities. There is need to conduct training for clients and consultants so as to ensure better performance of all parties involved in project execution and management. CRB to continue conducting and reviewing the SSTP to ensure that it meets the needs of the contractors by considering recommendations made. Contractors should continue to participate in training programs, as they need to continuously upgrade their skills for them to be competitive and also recognize their rights and obligations in contracts.

Status of Implementation Sensitization and education of clients continues through Consultative Annual Meetings and Consultative Seminars for District Authorities. The Board has conducted 3 such meetings. CRB has reviewed SSTP and has also sought other construction industry practitioners to add value to its present training team.

Beginning the Year 2003. Training has been conducted on a rotational basis in the non-traditional centers.

CRB should educate and sensitize contractors to involve professionals during bidding, site management and preparation of claims so that they can realize profits in their business. Contractors should also understand that better remunerations for their workers leads to higher productivity and avoidance of thefts on site. Training programmes should be conducted on a rotational basis within the regions in zones to ensure effective participation of contractors from regions outside the traditional zonal centres.

4.6

CONTRACTORS ASSOCIATION Issues for consideration Recommendation 1.0 Draft Constitution

2.0

Status of Implementation Comments incorporated.

CRB to forward comments to the Expert for incorporation. Registration of Association Revised Draft Constitution to be prepared by end of July 2002 CRB to distribute revised draft constitution for approval by RCC’s by mid-August 2002. National Meeting to approve the constitution and elect interim national leadership to facilitate registration of association to be convened by end of August 2002. CRB to facilitate the meeting which is to comprise of 4 representatives from the RCC’s as decided by the contractors in the regions. Interim Leadership through facilitation by CRB to association by end of October 2002.

7

CRB carried out the necessary facilitation to ensure approval of constitution and election of interim office bearers Contractors Association of Tanzania (CATA) has been ed and is now operational.

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi

4.7

OTHERS Issue

(a)

Enforcement

Recommendation CRB should conduct awareness seminars to Police officers to facilitate their cooperation in arresting defaulters, without even the need for CRB to inform them. To create public awareness on the Contractors Registration Act, the Board should sensitize the public through media including Radio & TV. CRB should investigate allegations that employees of TANESCO in Rukwa region are undertaking electrical installations in Buildings, hence denying work opportunities to ed Electrical Contractors. CRB should establish a mechanism for ensuring that only competent persons operate branch offices of contracting firms. CRB is requested to protect professionals and contractors from harassment of unscrupulous politicians during project executions Contractors should report defaulters to CRB promptly. There is need for harmonization of existing legislations that conflict with the Contractors Registration Act such as Electricity Ordinance, Cap. 131; Tanzania Communications Act, 1993; and Fire Services & Regulations Ordinance. CRB should liaise with city, municipal, town and district authorities and client institutions to ensure effective enforcement of the Contractors Registration Act. This could be done by ensuring that building permits clearly state the name of the contractor. The Board should also liaison with the authorities to sensitize/educate developers/clients on the requirements for use of ed contractors when seeking approval and also when conducting inspections on sites. Contractors should be obliged to achieve fulfillment of social objectives in execution of their works because

8

Implementation Strategy CRB through Enforcement Department to conduct awareness forum on Contractors Registration Act for Police Officers. CRB to prepare TV and Radio programmes to disseminate the Act & By-laws Zonal Office – Southern Zone to investigate allegations on installations by TANESCO employees Registration Dept. to conduct audit of Branch Offices to ensure compliance to registration requirements.

Status of Implementation Awareness Forum for Police Officers to be conducted in latter part of the Year 2003. TV programmes prepared and aired in December 2002. Other TV and radio Programmes under preparation. Zonal Office has liaisioned with TANESCO regarding complaints. Enforcement Department conducts site visits to ensure compliance to registration requirements.

Contractors to be encouraged to lodge complaints to CRB upon harassment. Enforcement Department, Contractor Newsletter to encourage contractors to report defaulters. CRB to seek harmonization of overlapping legislations.

Sensitization campaigns ongoing.

CRB to work with PORALG for better enforcement of Contractors Registration Act. Possibility of ensuring that building permits clearly state the name of the contractor to be explored.

Client institutions seeking fulfillment of social objectives to be encouraged to clearly state them at

Current Review of Act seeks to harmonize overlapping legislations.

CRB has good working relationship with PORALG for enforcement of Contractors Registration Act. Recommendation on contractor name to appear in building permit not accomplished. Recommendation forwarded to relevant authorities including

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi Issue

(b)

Informal Sector & Regulations

Recommendation some contractors do not bother to employ workers from the project area and when they employ some, they do not pay them well. The Informal Construction Sector should be gradually phased out through streamlining its activities and strengthening the formal sector. This is necessary to ensure that structures built in the country meet the standards for long-term sustainability. It is necessary for a sustainable construction industry, to give due cognizance to safety requirements, proper town planning and building regulations through involvement of all stakeholders in the construction industry in developing appropriate standards and regulations

(c)

Equipment

(d)

Licensing

(e)

Zonal Offices

The Board should explore options aimed at assisting small and medium contractors to access construction equipment, which currently limits their effective participation in construction works. There is further need for the Board to work with the Government to get investors in construction equipment hiring business. Preferably, each zone should have their own investor The Board should seek to harmonize trading licenses for contractors such that a Contractor should be able to trade in any district in the country with a single business license and be eligible to pay the relevant license fees only when setting up an office in the particular locality. The Board should look into the possibility of increasing number of key staff at its Zonal Offices so as to ensure effective regulation of construction activities in the Zone. The Board should open a Zonal Office in Arusha as there is quite a number of construction activities which require regulation.

(f)

Safety & Occupational Health

Contractors should ensure compliance to Safety and Occupational Health requirements by making the necessary provisions for costs and remedies in the contract. CRB should work with major clients and consultants to agree on the appropriate way of making provision for safety measures in tender documents.

9

Implementation Strategy the pre-tender stage to avoid conflicts during execution.

Continued revision of Registration Criteria to allow for gradual phasing out of informal contractors through introducing lenient requirements. Encourage informal sector to shift to formal sector by propagating benefit of formal sector CRB to lobby for representation of contractors in setting out safety standards in ongoing projects/ commissions to develop standards being conducted by TBS, AQRB CRB to conduct study on equipment options for assisting contractors. Board to continue its policy of encouraging and ing equipment-hiring schemes. to CIDF and other such institutions with equipment leasing options. CRB to liaise and lobby with Ministry of Finance and Industry & Trade so that the business license issued for contracting is national and allows trading nationally. Board to study viability of recommendation based on current set-up. CRB to study possibility after studying feasibility of running Arusha Office under current organization structure. CRB to enforce Safety Compliance through: o Regular site inspections o Dissemination of information on safety and occupational health requirements to both contractors and clients through print and

Status of Implementation TASAF.

Current Registration Criteria includes entry as Labour-based Contractor with linient requirements to allow for transition from informal to formal. Awareness campaigns continue.

Board is in the process of identifying a Consultant to carry out the Study. Meanwhile Board continues to contractor development initiatives in this area. Through consultative meetings with Local Authorities the problem is easing now. Board has adopted recommendation and recruited an Enforcement Office for Mbeya & Mwanza Zonal Offices. Board continues to run operations for North Eastern Zone from DSM.. Enforcement Department continues to enforce on Safety Compliance during regular site visits. “The Contractor”, Newsletter continues to disseminate .information

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi Issue

Recommendation Contractors should educate their workers on the benefits of using safety gear and ensure that they comply as it is the obligation of the contractor to adhere to safety requirements and the colossal damage/losses suffered in the event of accident due to non-provision of safety gear is enormous.

10

o

Implementation Strategy electronic media. Education on requirements through CRB SSTP.

Status of Implementation through regular ‘Safety Corner’. TV Adverts on Safety Compliance aired in dec 2002. SSTP Programme on Safety & Occupational Health conducted in February, 2003.

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi

5.0

CONCLUDING REMARKS As has been the case since the inception of these meetings, it will be appreciated that the Board continues to work on your recommendations, and where appropriate it has forwarded the recommendations to the appropriate authorities for further action and will continue to make a follow – up on the status of implementation. In addition, during the previous workshop, the Board continued to promote the formation of the National Association of Contractors. It is gratifying to note that your Association is now in existence. Indeed, we hope that the Contractors Association of Tanzania (CATA) will take up a more pro-active role in matters related to you contractors and act as pressure group for your interests. There still remain some issues that will take time and it is hoped that you will work out strategies for them in the preparation of the Board’s five year strategic plan. Play your part. It can be done.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi

APPENDIX 1 SECOND SCHEDULE Table 1: Class Limits for Various Types of Contractors

CLASS LIMIT FOR ANY SINGLE CONTRACT (In Million Tshs.) CLASS ONE TWO THREE FOUR FIVE SIX SEVEN

Civil Unlimited

Building Unlimited

4,500 1,500 750 450 200 100

Mechanical Unlimited

1200 900 600 300 150 75

Electrical Unlimited

750 450 300 150 75 30

750 450 300 150 75 30

Specialist Unlimited

150 50 — — — —

Table 2: Minimum Technical Qualifications of a Technical Director

NOTE

Type of Contractor

Minimum Qualifications

Civil

Professional

Building

Architecture and Quantity Surveying or FTC in

Mechanical

Engineering,

Electrical

♦

Trade Test Grade I in relevant field

Specialist

♦

Trade Test Grade I in relevant field

♦

Trade Test Grade I in relevant field

♦

Trade Test Grade I in relevant field.

Qualified

person

in

Engineering,

When assessing minimum qualifications of a Technical director the Board may whenever necessary consider individual practical experiences in supervising construction projects, or relevant academic qualification in construction Management of one of the shareholders or the Board may whenever necessary consider that any qualified person may supervise construction.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi

Table 3:

CRITERIA FOR REGISTRATION OF CIVIL WORKS CONTRACTORS REGISTRATION REQUIREMENTS FOR PERMANENT PERSONNEL, PLANT, EQUIPMENT AND TOOLS, SAFETY GEAR, OFFICE SERVICE FACILITIES

RESOURCES

CLASS ONE

CLASS TWO

CLASS THREE

CLASS FOUR

CLASS FIVE

CLASS SIX

CLASS SEVEN

A. KEY STAFF (Attach CV’s) 1. Head of Organisation 2. ant

1 1*

1 1*

1 1***

1 1***

1 1***

1 1***

1 1***

Holder of Degree/A/ADA/ADCA

3. Structural/Civil engineers 4. Civil Engineering Technicians

2* 4

1* 3

1* 2

1* 1

1**** 1

1*** 1

1

Holder of FTC or equivalent

5.Land Surveyor

1

1

1

1

1

-

-

Holder of Diploma or Degree

6. Quantity Surveyor*

1

1

1

-

-

-

-

Holder of Diploma or Degree

7. Artisans

6

4

2

1

1

1

1

At least Trade Test Grade III and not less than 2 years practical experience.

8. Workshop Engineer 9. Workshop Mechanics 10. Electrical Technician**

1* 1 1

1 1 1

1 1

B. PLANT AND EQUIPMENT 1. Bull Dozers (Min capacity 120) 2. Graders (Min. capacity 100 HP) 3. Loaders (Min. Capacity 100 HP) 4. Vibrating Rollers (Min. capacity 10 T) 5. Tandem Rollers (Min. capacity 10T) 6. Pneumatic Tyre Rollers 7. Pedestrian Rollers 8. Plate Compactors 9. Water Bowsers

2 3 3 3 2 2 4 3 2

1 2 2 2 1 1 3 3 1

1 1 1 1 1 1** 3 2 1

-

-

-

-

2 2 1

1 1 1

1 1 1#

1 1#

# May be towed type

10. Tippers 11. Backhoes/Excavator 12. Agricultural Tractor/W/Loader 13 Low Loader 14. Non-tipping Truck 15. Light Duty Vehicles

6 3 1** 1 2 6

4 2 1** 1 1 4

3 1 1** 1** 1 3

2 1 1 2

1 1 1** 1

1** 1 1** 1

1

Min capacity 3T Pick-up/Station Wagon/Van

13

REMARKS

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi

RESOURCES

CLASS ONE

CLASS TWO

CLASS THREE

CLASS FOUR

CLASS FIVE

CLASS SIX

CLASS SEVEN

16. Concrete Mixers 17. Air Compressors 18. Water Pumps 19. Poker Vibrator 20. Hoisting Equipment 21. Generator Sets 22. Welding Sets 23. Mechanical Broom 24. Asphalt Plant 25. Asphalt Paver 26. Chipping Spreader 27. Stone Crusher 28. Bitumen Distributor or Sprayer 29 Levelling Instrument (e.g. Dumpy Level) 30. Theodolite/Total Station 31. Assortment of Hand Tools (Set of shovels, hand compactors, pick axes, hoes, wheel barrows etc.)

4 3 3 4 2 2 2 1 1** 1 1 1** 1 3 2 60

3 2 3 3 1 2 1 1 1** 1** 1 1** 1 2 1 40

2 1 2 2 1 1 1** 1** 1 1** 30

1 1 1 1 1 1 1 25

1 1** 1 1** 1 20

1** 1 15

1** 15

C: LAND & SERVICE FACILITIES 1. Storage Yard m2 2. Service W/Shop m2 3. Office m2

1000 200 100

800 150 60

500 100 50

300** 100** 30

100** 50** 20

100** 10

10

D. SAFETY GEAR 1. Helmets 2. Boots (pairs) 3. Gloves (pairs) 4. Reflective Jackets (pairs) 5. First Aid Kit

(Every person on a construction site must be provided with appropriate safety gear) 50 30 20 10 8 4 2 These are minimum stocks 50` 30 20 10 8 4 2 Additional requirements 50 30 20 10 8 4 2 to be procured on project 50 30 20 10 8 4 2 1 1 1 1 1 1 1

* ** *** **** #

Mandatory - Must be ed with Professional Board; Engineers must be in the professional category or above. Recommended but not Mandatory. ant may not be a permanent employee. Need not be ed professional engineers. May be towed type.

14

REMARKS

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi

Table 4:

CRITERIA FOR REGISTRATION OF BUILDING CONTRACTORS

REGISTRATION REQUIREMENTS FOR TECHNICAL PERSONNEL, PLANT, EQUIPMENT AND TOOLS, SAFETY GEAR AND OFFICE SERVICE FACILITIES RESOURCES

CLASS ONE

CLASS TWO

CLASS THREE

CLASS FOUR

CLASS FIVE

CLASS SIX

CLASS SEVEN

A: KEY STAFF (ATTACH CVs) 1. Head of Organisation 2 ant

1 1

1 1***

1 1***

1 1***

1 1***

1 1***

1 1***

3. 4. 5. 6. 7. 8.

2* 1 2 4 2 6

1* 1 1 3 2 4

1 1* 1 2 1 2

1* 2 1 2

1**** 1 1

1*** 1 1

1 1

B: PLANT AND EQUIPMENT 1. Tower (Building) Crane 2. Which/Hoisting Equipment 3. Concrete Batching Machine 4. Concrete Mixers 5. Concrete Vibrators 6. Block Making Machines 7. Steel Bending Machines (Set)

1 1 1 5 5 3 1

1 1 4 4 2 1

1 3 2 1 1

1 2 2 1 -

1 1 1 -

1 1 1 -

1** 1** 1 -

8. Light Duty Vehicles 9. Water Pumps 10. Concrete Dumpers 11. Trucks or Tippers 12. Plate Compactors 13. Compressors 14. Steel Scaffolding Set (400m/set) 15. Levelling Instrument (e.g. Dumpy Level)

4 2 2 4 2 1 2 2

3 1 1 3 1 1 1 1

2 1 2 1 1 1

1 1 1 1 1**

1 1 1 1**

1 1 -

1 1 -

Structural/Civil Engineers Quantity Surveyor Mechanical Engineering Technicians Civil Engineering Technicians Electrical Engineering Technicians Artisans

15

REMARKS

Holder of Degree/A/ADA/ADCA

Holder of Trade Test III or above

Pick-up/Station Wagon/Van

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi

RESOURCES 16. Assortment of Handtools (set of shovels, pans, etc). C: LAND & SERVICE FACILITIES 1. Storage Yard m2 2. Service W/Shop m2 3. Office m2 D. SAFETY GEAR 1. Helmets 2. Boots (pairs) 3. Gloves (pairs) 4. Reflective Jackets (pairs) 5. First Aid Kit * ** *** ****

CLASS ONE 20

CLASS TWO 20

CLASS THREE 15

CLASS FOUR 15

500 100 60

300 100** 40

200

100

40

20

20

10

10

50

30 30 30 30 1

20 20 20 20 1

10 10 10 10 1

8 8 8 8 1

4 4 4 4 1

2 2 2 2 1

1

CLASS FIVE 10

CLASS SIX 10

CLASS SEVEN 5

—

—

—

Mandatory - must be ed with Professional Board; Engineers must be in the professional category or above. Recommended but not Mandatory. ant need not be a permanent employee. Need not be ed professional engineers

16

REMARKS

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi

Table 5:

CRITERIA FOR REGISTRATION OF MECHANICAL CONTRACTORS

REGISTRATION REQUIREMENTS FOR TECHNICAL PERSONNEL, PLANT, EQUIPMENT AND TOOLS, SAFETY GEAR AND OFFICE SERVICE FACILITIES RESOURCES

CLASS ONE

CLASS TWO

CLASS THREE

CLASS FOUR

CLASS FIVE

CLASS SIX

CLASS SEVEN

A. KEY STAFF (Attach CV’s) 1. Head of Organisation 2. ant 3. Mechanical Engineer 4. Mechanical Engineering Technicians 5. Electrical Engineering Technicians 6. Artisans 7. Quantity Surveyors

1 1* 2* 4 2 5 1

1 1*** 1* 3 1 4 1

1 1*** 1* 2 1 3 1

1 1*** 1* 2 1 2 -

1 1*** 1**** 1 1 -

1 1*** 1**** 1 1 -

1 1*** 1 1 -

B. PLANT AND EQUIPMENT 1. Welding Equipment 2. Testing Equipment 3. Assortment of Jacks 4. Greasing Equipment 5. Lifting/Hoisting Equipment 6. Air Compressors 7. Truck Mounted Crane/Mobile Crane 8. Generators (Portable) 9. Heavy Duty Trucks 10. Light Duty Vehicles 11. Toolboxes with assortment of Handtools 12. Electric Hand Drills 13. Hand Grinders 14.Stocks and Dies (Set) 15. Pipe Cutter/Bender 16. Ladders (5m length) 17. Power Press 18. sheet Rolling Machine 19. Water Pump

6 3 1 1 2 2 1 3 2 4 10 3 4 6 8 10 2 2 2

5 2 1 1 1 1 1 2 1 3 8 2 4 6 6 8 2 2 1

4 1 1 1 1 1 1 2 5 2 3 4 5 6 1 1 1

3 1 1 1 1** 1 4 2 2 3 4 4 1 1 1

2 1 1 1 1 3 1 1 2 3 2 -

2 1 1 1 1 2 1 1 1 1 2 -

2 1 1 1 1 1 1 1 1 1 2 -

C. LAND & SERVICE FACILITIES 1. Service Workshop m2

500

300

200

100

50**

50**

30**

17

REMARKS

Holder of Degree/A/ADA/ADCA

Holder of Trade Test III or above

To be specific according to Trade

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi

RESOURCES 2. Office (m ) 3. Water Pump 4. Vacuum pump

CLASS ONE 60 2 6

D SAFETY GEAR 1. Helmets 2. Boots 3. Gloves (pairs) 4 Jackets (reflective) 5. Welding Shield/goggles 6. First Aid Kit

(Every person on site should be provided with safety gear, especially helmets) 50 30 20 10 8 4 2 50 30 20 10 8 4 1 50 30 20 10 8 4 1 10 8 5 4 3 2 1 10 8 5 4 3 2 1 1 1 1 1 1 1 1

2

* ** *** ****

CLASS CLASS TWO THREE 50 50 1 1 5 4

CLASS FOUR 20 1 3

CLASS FIVE 10 2

CLASS SIX 10 1

CLASS SEVEN 10 -

Mandatory - must be ed with Professional Board; Engineers must be in the professional category or above. Recommended but not Mandatory. ant need not be a permanent employee. Need not be ed engineers

18

REMARKS

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi

Table 6:

CRITERIA FOR REGISTRATION OF ELECTRICAL CONTRACTORS

REGISTRATION REQUIREMENTS FOR TECHNICAL PERSONNEL, PLANT, EQUIPMENT AND TOOLS, SAFETY GEAR AND OFFICE SERVICE FACILITIES RESOURCE A. KEY STAFF (attach CV’s) 1. Head of Organisation 2. ant 3.Electrical Engineers 4. Electrical Engineering Technicians 5. Mechanical Engineering Technicians 6.Electirical Licence Holder 7. Quantity Surveyor ** 8. Artisans B. PLANT, EQUIPMENT AND TOOLS 1. Complete Tool Box 2. Soldering Equipment 3. Welding Equipment 4. Bench Grinder 5. Bench Drill 6. Hand Drill 7.Stocks and Dies (Set) 8. Pipe Cutter/Bender 9. Ladders (5m length) 10. Light Duty Vehicles 11. Trucks 12. Compressor 13. Truck Mounted Crane/Mobile Crane 14. Climping Tool 15. Chain block 16. Drum Jack

17. Testing Equipment (set) 18..Generator

CLASS ONE

CLASS TWO

CLASS THREE

CLASS FOUR

CLASS FIVE

CLASS SIX

CLASS SEVEN

1 1* 2* 4 1 A 1 6

1 1*** 1* 3 1 A 5

1 1*** 1* 2 1 B 4

1 1*** 1* 1 C 3

1 1*** 1**** 1 C 2

1 1*** 1** 1 D 1

1 1*** 1 D 1

15 3 3 2 2 6 4 4 10 3 2 1 1 2 1 3 2

10 2 2 1 1 5 3 3 8 2 1 1 1 2 1 2 2

8 2 2 1 1 4 3 3 6 1 1 1 1 1 1 1 1

4 1 1 3 2 2 4 1 1 1 1 1

2 1 1 2 1 2 2 1 1 1 1

2 1 1 1 1 2 1 1 1

2 1 1 1 1 2 1 1 1

3

2

1

1

-

-

-

19

REMARKS

Holder of Degree/A/ADA/ADCA

One each Holder of Trade Test III or above

Minimum 3 tons

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from the CRB Annual Workshops 2002 – B. C. Muhegi

RESOURCE

CLASS ONE

CLASS TWO

CLASS THREE

CLASS FOUR

CLASS FIVE

CLASS SIX

CLASS SEVEN

C. SERVICE FACILITY 1. Service workshop m2 2. Office (m2)

100 60

100 50

80 50

50* 20

5** 10

5** 10

10

20 20 20 20 20 20 1

15 15 15 15 15 15 1

10 10 10 10 10 10 1

8 8 8 8 8 8 1

5 5 5 5 5 5 1

3 3 3 3 3 3 1

2 2 2 2 2 2 1

D. SAFETY GEAR 1. Gloves (pairs) 2. Overall/overcoat 3. Helmets 4. Goggles/Welding Shield 5. Safety belts 6. Safety boots 7. First Aid Kit * ** *** .****

Mandatory - Must be ed with Professional Board; Engineers must be ed engineers. Recommended but not Mandatory ant need not be a permanent employee Need not be ed engineers

20

REMARKS

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Table 7:

CRITERIA FOR REGISTRATION OF LABOUR BASED ROAD SPECIALIST CONTRACTORS

REGISTRATION FOR TECHNICAL PERSONNEL, PLANT & EQUIPMENT, AND TOOLS, SAFETY GEAR & OFFICE SERVICE FACILITIES RESOURCE A. 1. 2. 3.

CLASS ONE

CLASS TWO

CLASS THREE

4.

KEY STAFF Head of Organisation Labour Based Trained Engineer* Labour Based Trained Supervisor/Technician Artisans

B. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

PLANT & EQUIPMENT Tow Grader(s) Tipper(s) Tractor(s) Trailer Towed Water Bowser Pedestrian Roller Dead Weight Roller Plate Compactor Pick-Up/Van Motor Cycle Bicycle

1 1 1 2 1 2 1 1 1 1** -

1** 1** 1 1 1 1** 1 1 -

1**

C. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

HAND TOOLS Pick Axes/Mattocks Hoes Shovels Spreaders Wheel Barrows Earth Rammer Watering Cans/Buckets Water Storage Drums (200 L) Matchettes Slashers Head Pans (Karais)

50 30 60 30 20 6 10 2 20 20 30

30 20 30 15 10 4 5 2 10 10 20

5 5 5 5 5 2 5 1 5 5 5

D.

CONTROL/MEASUREMENT AIDS Camber Boards Profile Boards Line Levels Spirit Levels Ditch Templates Side Sloping Templates Ranging Rods Boning Rods (set of 3) Tape Measures (30m) Tape Measures (5m)

10 20 4 10 15 15 20 4 6 6

5 10 2 5 10 10 10 2 4 4

2 5 1 2 3 3 5 1 2 2

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

1 1 3

1 1** 2

1 1

2

1

1

21

REMARKS

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from CRB Annual Workshops, 2002 – B. C. Muhegi

RESOURCE

CLASS ONE

CLASS TWO

CLASS THREE

E. 1. 2. 3. 4. 5. 6.

SAFETY GEAR Helmets Gum Boots (pairs) Gloves (pairs) Reflective Jackets Reflective Cones First Aid Kit

10 10 10 10 12 3

5 5 5 5 8 2

2 2 2 2 4 1

F. 1. 2.

LAND & OFFICE Office (m2) Repair Workshop/Store (m2)

20 50

15 30

10 -

G.

FINANCIAL REQUIREMENT

1. 2.

30,000,000 10,000,000

15,000,000 2,000,000

N.A N.A

3.

Average Annual Turnover (Tshs) Liquidity [Cash, Stock & Bonds)(Tshs) Fixed Assets (Tshs.)

40,000,000

10,000,000

N.A

H.

EXPERIENCE***

1.

Year of Practice in the field of application Maximum size of any single project executed in the years of practice or since last upgrading (Tshs) Average size of at least 3 projects executed in the years of practice or since last upgrading (Tshs.)

2

N.A

2.

3.

* ** ***

4 80,000,000

40,000,000

N.A

30,000,000

7,500,000

N.A

Must be ed with Professional Board Recommended but not Mandatory Experience shall apply to applicants for upgrading only.

22

REMARKS

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from CRB Annual Workshops, 2002 – B. C. Muhegi

Table 8: Financial Requirements

Classes I-III

Class IV-VI

Classes VII

Average Annual Turnover

15% Of Class limit

15% of Class limit

N.A.

Liquidity (Cash in Bank, Redeemable Financial Securities)

5% Of Class limit

2% of Class limit

N.A.

Fixed Assets

20% Of Class limit

10% of class limit

N.A.

The limit of Class I is hereby assumed to be twice the limit of Class II for all types of contractors Table 9: Experience Requirements

Experience

Minimum Requirements

1.

Years of practice in the field of application

2.

Average size of at least 3 projects executed in At least 30% for Classes I-III, and 15% for Classes IV-VII of the the years of practice or since last upgrading Present Class Limit

3.

Maximum size of any single project executed At least 80% of present Class Limit in years of practice or since last upgrading.

Class I — 10 years Class II — 8 years Class III — 6 years Class IV —4 years

The limit of Class I is hereby assumed to be twice the limit of Class II for all types of contractors. Table 10:

Class I II III IV V VI VII Table 11:

Registration Fees for Local contractors (TShs)

Building 250,000 200,000 150,000 90,000 60,000 50,000 40,000

Civil Works 300,000 250,000 200,000 150,000 90,000 60,000 50,000

Electrical 150,000 90,000 60,000 50,000 40,000 30,000 25,000

Specialist 100,000 50,000 30,000

Annual subscription Fees for Local Contractors (TShs.)

Class I II III IV V VI VII

Registration Fee Mechanical 150,000 90,000 60,000 50,000 40,000 30,000 25,000

Building 1,000,000 650,000 420,000 280,000 140,000 70,000 40,000

Civil Works 1,500,000 800,000 650,000 330,000 200,000 100,000 50,000

Annual Subscription Mechanical Electrical 500,000 500,000 330,000 330,000 210,000 210,000 140,000 140,000 70,000 70,000 50,000 50,000 30,000 30,000

23

Specialist 300,000 100,000 30,000 -

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from CRB Annual Workshops, 2002 – B. C. Muhegi

Table 12: Fees for All Types of Foreign Contractors including Temporary Contractors (US$) Class

Building/Civil/Electrical/Mechanical Registration

I

Annual Subscription

20,000

Specialist Contractors Registration

10,000

II

Table 13:

Annual Subscription

15,000

6,000

10,000

4,000

Application of Fees for All types of Contractors (TShs.)

TYPE OF APPLICATION

FEES (TSHS)

1.

First application

10,000

2.

Upgrading

15,000

3.

Temporary Registration

20,000

24

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Status of Implementation of Recommendations from CRB Annual Workshops, 2002 – B. C. Muhegi

Table 14: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48.

Specialist Contractors shall cover the following areas and any other that shall be specified by the Board from time to time. Carpentry and ery works Plumbing and sanitation Glazing and aluminium Demolition Drilling Piling Labour based road maintenance Scaffolding Paving Roofing Painting Decorating Landscaping Refrigeration and air conditioning Lift and escalators installation Car or truck body building Motor rewinding Telecommunication Repair and maintenance of motor vehicles and machinery Rigging Tunnelling and underpinning Marine structures Irrigation and flood control system Railway tracks Slope protection system Oil and gas pipeline installation and maintenance Soil Investigation and stabilization Signcraft installation Offshore construction works Underwater construction works and maintenance Reclamation works Sewerage works Restoration and conservation Waterproofing installation Fire prevention and protection system installation and maintenance Workshop, Mill, Quarry system installation Medical equipment installation Heat recovery system Specialized plant Security, safety surveillance system installation and maintenance. Specialized lighting system Swimming pool filtration system. Installation and Maintenance of Computers. Sand Blasting Dredging Concrete works Ship Building Site Sterilisation 25

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Performance of Contractors during 2002 – J. K. Malongo

Performance of Contractors During 2002

Eng. J. K. Malongo Assistant Registrar - Research and Development, CRB 1.0 Introduction In order to provide a sustainable contracting capacity, it is necessary to have a system that will provide the necessary data with which the industry can be assessed. The absence of such data makes reliable decision making impossible and could lead to poor planning and strategising for the development of contractors. It is in recognition of this fundamental need that the Contractor’s Registration Board introduced the mandatory system of annual returns for ed contractors in 1999 with the following main objectives ; To provide a method of updating individual contractors records in the CRB database To assess the level or volume of construction activities To provide a forum for contractors to air their views on various issues affecting their performance To assess trends of work opportunities, skills deployment and equipment utilisation for the purpose of improving registration criteria To assess the performance of individual contractors In addition to collecting data from the Contractors the Board has initiated Annual Returns for Public Sector clients who are the main employers of the contractors. The submission of the Public Sector Client forms is not mandatory but the Board is making a lot of effort to sensitise the Clients on the importance of providing a to the Board on the performance of ed contractors, projects tendered and general comments and advise. It is through these returns that valuable data related to the contracting industry can be collected and analysed This enables the Board in collaboration with other stakeholders to strategise with a good deal of certainty on future development of contractors. This paper discusses a preliminary overview of the performance of contractors for the year 2002 based on samples of the annual return forms for the Contractors and the clients. Whenever possible comparisons will be made with the previous year’s performance. 2.0 Contractors Annual Returns A total of 1970 ed contractors were eligible to submit their Annual Return forms for 2002 by 30th March 2003. To date a total of 1001 contractors have submitted their returns representing only 50.8% of all the requested respondents. For the purposes of this paper a sample of 178 forms representing 18% of the received annual return forms was analysed. Some of the selected forms were from contractors who have ed in more than one type e.g. Building and Civil, since the analysis was done 26

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Performance of Contractors during 2002 – J. K. Malongo

per type of contractor, the resulting figure analysed was for 216 types of contractors. Furthermore, the selection of the forms was made in such a way that ensures that, the resulting sample was representative of the submissions received and therefore the resulting analysis is statistically acceptable. Table 1 below indicates the sampled returns by Class and Type Table 1 : Sampled Annual Returns by Class and Type CLASS/TYPE Building I 3 II 1 III 4 IV 7 V 13 VI 13 VII 62 TOTAL 103

Civil 2 2 1 7 9 16 49 86

Electrical 1 1 2 14 18

Mechanical Specialist 2 3 1 11 1 1 4 15

TOTAL 11 4 16 15 24 30 126 216

2.1 Classification of the Data The evaluation of contractor’s performance for the year 2002 will be made in of Work Opportunities, Staffing Situation and Equipment Usage during the year under review. Furthermore, problems encountered with regards to Finance, Work Availability, Equipment, Personnel and materials are also analysed. 2.2 Quality of Submissions The sampled forms indicate that there have been significant improvements in the quality of submissions received as compared to the year 2001 returns. However, there still are several shortfalls which include that ; Majority of contractors submit sketchy information on staff employment. This poses a problem in making a proper assessment on the capacity of the industry to employ or utilise skilled personnel Many contractors do not provide adequate information on contracts carried over from 2001 and those secured during 2002, thus making it difficult to ascertain the volume of construction work undertaken 3.0 Overview of the Contractors Performance for 2002 3.1 Work Opportunities 3.1.1 Sampled Contractors without Work During the year under review 22.2% of the contractors sampled did not have any work at all. This is a decrease from the figures of contractors without work during the previous years (Table 2 below). The most severely affected type is that of Electrical Contractors followed by Specialist and Mechanical Contractors. The attributing factor to the plight of electrical contractors is that most of the electrical works currently in the market are part of building projects in which case electrical contractors should appear as sub contractors. Recent investigations have revealed that most building contractors do the electrical works in house .

27

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Performance of Contractors during 2002 – J. K. Malongo

Table 2 : Percentage Contractors without Work Year Building 34.1 35.2 35.3 18.4

1999 2000 2001 2002 3.1.2

Civil 35.1 29 29.8 17.44

% Contractors Without Work Electrical Mechanical Specialist 37.1 33.0 7.7 44.4 n/a 9.1 34.8 n/a 16.7 50 25 26.6

Total 30.9 34.9 32.9 22.22

Contracts Executed

The sampled data indicates that the remaining 77.78% of the sampled Contractors managed to get a total average of 630 projects which is an average of three projects per contractor during the whole year . Table 3 : Number of Contracts Executed Type of Contractor Building Civil Electrical Mechanical Specialist TOTAL

I

II

III

IV

V

VI

VII

TOTAL

10 6 1 7 4 28

9 9

19 6 29 54

43 22 5 -

47 37 19 -

31 41 3

132 97 62 -

70

103 75

291

291 209 87 10 33 630

The distribution of executed works indicates that Building Contractors had the most jobs (46%) followed by Civil 33% , the least jobs were for the Mechanical contractors who did only 1.65% of all available jobs. The distribution according to classes indicates that most contracts amounting to 74.4% ( in number) were done by small contractors from classes V to VII. Table 4: Average Value of Contracts in Tanzanian Shillings Type of Contractor Building Civil Electrical Mechanical Specialist TOTAL

I

II

III

IV

V

VI

VII

3504 595 160 1838 31 6128

138 62 200

113 25 22 160

43 41 10 -

49 46 5 -

25 29 7

13 17 3 -

94

100

61

33

The distribution of executed work in of average value of the contracts indicate that although small contractors in classes V to VII had won a total of 74.4% of all projects tendered as shown in Table 4, their projects worth in of average values was only 2.8% of the gross average contract earnings during the year. This indicates that a lot of small contractors bid for a lot of small packaged jobs most of which are far below the class average resulting to high mobilisation and demobilisation costs and low turnovers. On the contrary larger contractors bid for few high value, high turnover jobs. Table 5 below illustrates the trend for the average size of contracts won by Building and Civil Contractors since 1999. 28

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Performance of Contractors during 2002 – J. K. Malongo

The trend is that foreign contractors continue to lead in of earnings in the Building and Civil Contracting industries. 3.1.3 Trend of Average Size of Contracts for Civil and Building Contractors Table 5: Trend for Average Contracts Size for Building and Civil works Contractors. Class / Year I F L II III IV V VI VII

Building Contractors Millions of Shillings 1999 2000 2001 2002 2414 7195 3050 4884 137 346 737 698 81 120 230 138 61 58 76 113 39 38 69 43 31 29 38 49 14 20 35 25 12 13 15 13

1999 1856 221 84 49 52 26 27 18

Civil Contractors Millions of Shillings 2000 2001 2002 283 250 917 1797 868 595 347 326 62 127 111 25 73 81 41 63 66 46 20 27 29 15 16 17

3.2 Problems Encountered by Contractors during 2002 Table 6 below gives an overview of the major problems encountered by contractors by type during the year under review. Table 6 : Problems Encountered by Contractors % Respondents by Type

3

Finance

4

Equipment

5

Materials

Specialist

Skilled Personnel

Mechanical

2

Stiff competition / few work opportunities Corruption, Favouritism, bureaucracy Proliferation of uned contractors No ability to pay Lack of practical skills No reliability/ trustworthiness Limited / small capital base Difficulty in assessing loans / credit facility Delays in payments from clients No ability to purchase High hire rates Poor condition of hired equipment Insufficient plant hire facilities Low quality Frequent price fluctuations High prices

Electrical

Work Opportunities

Civil

1

Type of Problem

Building

Problem Area

34 6.8 3.9 4.9 7.8 1.9 18.4 16.5 17.5 12.6 14.6 4.9 10.7 7.8 9.7 8.7

43 7.0 3.5 18.6 10.5 3.5 20.9 16.3 14 15.1 14.0 4.6 18.6 3.5 9.3 6.9

66.7 16.7 5.6 11.1 11.1 11.1 16.7 33.3 11.1 16.7 5.6 27.8 4.8

75 25 -25 50 25 25 50

46.7 6.7 6.7 26.7 13.3 46.7 20.0 6.7 13.3 -6.7 -

3.2.1 Work Opportunities Work opportunities continue being a major problem amongst contractors due to a host of reasons. This corroborates the findings in table 6 whereby there is a general decline in the average contract sizes. 29

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Performance of Contractors during 2002 – J. K. Malongo

Proliferation of uned contractors continues being a problem contributing to reduction of work opportunities for ed contractors particularly for Specialist and Electrical Contractors. There is definitely a need to sensitise the public on the types of specialist jobs that have to be carried out by ed Mechanical and Specialist contractors. As for the electrical works the limitation to the type and extent of electrical works that can be carried out by building contractors needs to be enforced. To that end the Board has intensified site inspections to ensure that such works are carried out by ed electrical contractors. 3.2.2 Skilled Personnel The ability to retain skilled personnel is still a problem in the industry especially for Civil works contractors of whom 18.6% conceded of their inability to pay skilled personnel. This forces the industry to rely on personnel without the requisite practical experience. The problem of lack of skills is particularly serious in the Specialist category where specialist skills are needed to perform the required tasks. 3.2.3 Finance The problem of weak capital base especially among local ors of lower classes continues unabated. This is compounded by strict conditions imposed by financial institutions when applications for credits and loans are submitted. 3.2.4 Equipment Availability of equipment in the industry continues being a problem. There is a cause and effect relationship with the finance problem in that the lack of equipment is probably a consequence of most contractors having a weak financial base 3.2.5 Material Poor quality of materials is a problem especially to electrical contractors, while price fluctuations have an adverse effect on building and civil contractors. 4 Public Sector Clients Annual Returns 4.1 Submission of the Return Forms Despite efforts to sensitise public sector clients on the importance of submitting the annual returns, the response remains poor. During the year under review a total of 148 respondents were requested to submit the returns of which only 22 respondents which is 15% of the requested submitted their returns as indicated in Table 7 below. Table 7 : ARF Public Sector Respondents S/N 1 2 3 4 5 6

Category District & Town Councils Municipal Councils City Councils TANROADS Regional Managers Government Ministries Parastatals Total

No Requested 101 12 2 20 5 8 148

No Submitted 11 2 0 5 0 3 21

It is apparent that the efforts to develop the construction industry will not be fruitful if all partners and stakeholders do not share information on their experiences and problems and recommended remedial actions.

30

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Performance of Contractors during 2002 – J. K. Malongo

3.2 Analysis of the Major Public Sector Clients Annual Returns In the majority of these returns (Appendix 1) major areas of concern from the clients as regards to the performance of contractors are as as shown in Table 8 below; Table 8 : Public Sector Concerns Problem Area Respondents 65%

1

Contractors not using qualified staff

2

Poor knowledge of tendering procedures & bureaucracy of the Public Procurement Act of 2001

58%

3

Lack of equipment especially for civil works

53%

4

Poor Financial and Project Management by contractors

53%

5

Lack of working capital

41%

By and large the information contained in the Clients annual returns corroborates the analysis of the returns by contractors. 5.0 Major Recommendations from Annual Returns 5.1 Contractors Annual Returns The following are the major recommendations emanating from the contractors annual return. These are listed in order of their frequency i. The Board should increase the frequency of conducting training workshops for contractors ii. The Board should curb the use of uned contractors. iii. Assist local contractors in securing loans from financial institutions iv. Government to take stronger measures against corruption in the construction industry v. Assist lower class contractors to secure subcontracts in big projects vi. Simplify conditions and improve efficiency in processing applications for the Contractors Assistance Fund and Extend it for all classes of contractors. vii. Assist contractors in getting payments from clients viii. Reduce participation fees for annual workshops, seminars and training. 5.2 Major Public Sector Clients Contractors should form Ventures to enable them to bid tly for large contracts and purchase equipment. Advice government on the bureaucracy of the public procurement act. Contractors should use skilled employees 31

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Performance of Contractors during 2002 – J. K. Malongo

CRB to intensify training programs for Contractors to enhance their knowledge in tendering procedures, Technical and business skills 6.0 Conclusions Data collection continues being a problem especially from major public sector clients and to a lesser extent the Contractors. In the absence credible statistics it is impossible for the Board and other stakeholders to ascertain the actual size and turnover of the industry, hence making it difficult to not only convince any potential investor on the viability of investing in the industry, but also to ascertain the exact proportion of the problems in the industry. On the basis of the data received it can be deduced that the performance of the contracting industry during 2002 was satisfactory. The problems facing the industry during 2002 are still the same core problems of ; Equipment Skilled human resources Capital Work opportunities All stakeholders in the industry should work together to alleviate these problems. During preparation of the CRB corporate Strategic Plan the Board will strive to ensure that strategies are put in place to mitigate these problems. The onus is now on the contractors and all stakeholders in the industry to contribute positively in enabling the Board to come up with the right interventions that will be included in strategic plan in order to reverse the status quo.

32

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Performance of Contractors during 2002 – J. K. Malongo

APPENDIX 1 COMMON PROBLEMS AND RECOMMENDATIONS EXPRESSED BY SOME PUBLIC CLIENTS ON CONTRACTORS PERFORMANCE IN YEAR 2002 S/No 1

Client District Executive Director, Pangani.

Noted Problem • • • •

2

District Executive Director, Sumbawanga

• • •

3

District Executive Director, Bunda

• •

4

Municipal Director, Iringa

•

5

Tanzania Electric Supply Company Limited (TANESCO)

•

• 6

Tanzania Harbours Authority (THA)

• •

Contractors • Use qualified technical personnel • Use banks’ credit facilities

Most local contractors lack seriousness Lack/inadequate capital Lack of equipment especially road construction equipment Underutilization/lack of key technical personnel Lack of enough working capital Lack of equipment/plant within neighbouring region Prolonged execution period of projects Many contractors are in class seven and they do not own equipment but they depend on hiring Lack of equipment hiring pools

• • •

Most contractors have no personnel who can read, understand and fill tender documents properly The Public Procurement Act (PPA) of 2001 is very bureaucratic and its application entails long period before contract award The use of contractors is more expensive than using force

• •

Establish t venture/cooperation to improve capacity Employ qualified personnel Contractors should make necessary arrangement to secure equipment before submitting tenders

Contractors should understand the PPA of 2001 Advice the government on the bureaucracy of the PPA of 2001

Recommendation Contractors Registration Board • Review the registration of contractors yearly

•

Establish a system/fund to facilitate contractors to secure funds for equipment/plant hiring or purchase

•

Facilitate establishment of equipment hiring pools in each district

•

Conduct seminars/workshops on procurement procedure

•

Advise the government on the bureaucracy of the PPA of 2001 Organize seminars on PPA of 2001

•

•

Long periods of time are spent on procurement High registration fees levied on foreign contractors

33

Review (downward) fees for foreign contractors or rename/give different title to the fee such as Contribution to Capacity Building etc

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Performance of Contractors during 2002 – J. K. Malongo

S/No 7

Client District Executive Director, Mbinga

Noted Problem • • •

8

District Executive Director, Ulanga

• •

•

•

• •

Recommendation Contractors Registration Board • Continue to penalize and delete misbehaved contractors • Collaborate/liase with other boards (e.g. ERB, etc) to make sure that the discipline of technical personnel and companies is up to date • Visit sites to see the performance and working environments • Cooperate with districts in giving current information e. g. new by laws or any significant change. • Provide some monitoring and inspection guideline to boards representatives especially at the district levels Get training in contract • Conduct training programmes for management and contractors in the field of contract supervision of management, supervision of construction works construction works, financial management and enterprenuaship Train to acquire skills financial management and enterprenuaship • only technically qualified skills contractors (at least one of the directors should be a technical Employ competent person) staff for the works • Design means of knowing all Allocate funds contracts performed by contractors obtained to procure throughout the country and then necessary equipment make strictly follow up of the wherever possible contractors performance

Contractors • They should be committed • Employ qualified personnel • Attend different seminars to acquire knowledge and skills • Be honesty

Most of the contractors are not committed Key personnel declared by some contractors during tendering do not appear during works execution Poor participation of contractors in tendering (in many cases similar contractors do appear in all tendering within the region or district despite of the public ments)

•

Procurement process is too long and very expensive for small projects istration and management of contracts is time consuming and difficult to be executed by unqualified or un-experienced staff Unavailability of contractors in some areas (remote) make small projects to be uncompetitive and uneconomical if done by contractors Low financial capacity of contractors especially during mobilization and provision of securities. Poor contract management Misuse of project funds by many contractors

•

• •

34

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Performance of Contractors during 2002 – J. K. Malongo

S/No 9

Client District Executive Director, Mbozi

Noted Problem • •

•

10

District Executive Director, Ruangwa

• •

11

12

District Executive Director, Biharamulo

District Executive Director, Ukerewe

•

• • •

Recommendation Contractors Registration Board • CRB should continue to conduct training/seminars and short courses not only to contractors and consultants but to district councillors as well • During registration/upgrading of class seven or six to higher classes (five and above) possession of equipment should be one of the major condition (it is better to have few contractors with equipment than having thousand of contractors without equipment Employ proper trained • Conduct seminars and workshops to technical staff contractors Attend different seminars/workshops conducted by CRB and NCC Give true, correct and • Guarantee contractors or rather reliable information help/guide them on how to obtain equipment at reasonable costs Look ways for securing equipment (at • Maintain an updated contractors a subsidised costs if information regarding companies’ possible) equipment and technical personnel where by clients can easily the correctness of the information given in tender documents Employ • CRB should conduct surprise check competent/qualified on contractors to rectify the staff situation /problems identified Improve management skills Contractors should pay their labourers on time

Contractors • Since construction equipment/plant are expensive two or three contractor should forces so that they can manage to own basic equipment • Contractors should employ qualified ants to help them in financial management

Lack of knowledge in procurement procedure to councillors in case district councils Contractors do not posses construction equipment/plant especially those in class seven to four Insufficient capital to our contractors

Most of the contractors have no knowledge about contract procurement Most of the contractors have no professional technical trained manpower Most contractors cheat during tendering (give incorrect information regarding equipment, technical staff and financial capacity) this causes problems during project execution

•

Most contractors do not have qualified staff Poor management skills Most contractors do not pay their workmen on time

•

•

• •

• •

35

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Performance of Contractors during 2002 – J. K. Malongo

S/No

Client

Noted Problem

13

Municipal Director, Mbeya

•

14

District Executive Director, Manyoni

•

•

15

District Executive Director, Hanang

• • • • • •

16

17

TANROADS Regional Manager, Arusha

TANROADS Regional Manager, Tabora

• • • • • •

Contractors • Reschedule the working procedures • Employ and utilize qualified personnel • Unite and purchase equipment even in phases

Contractual conditions as it is done away from the site No contractors in Manyoni, we procure services from contractors based in Dodoma, Singida, and Dar es Salaam, as a result we suffer high mobilization costs Local contractors do not own equipment especially loaders, graders and compactors (rollers) Knowledge of procurement procedures (procurement act of 2001) Transparency during procurement process Politician especially in Local Government (District Council) No qualified staff which results to poor quality work No equipment (which result to poor workmanship) Mismanagement of fund leading termination or extension of work/project completion time Procurement Act Plant and equipment Securities and bonds Expertise

•

Most of contractors have no plant/equipment Lack of technical/skilled personnel as a result unable to tender correctly and execute the works as

•

• •

• • •

36

Recommendation Contractors Registration Board • Conduct seminars to contractors and clients • Organize seminars and workshops to address the identified problems

Employ qualified manpower Own at least reasonable number of equipment Avoid mismanagement of project fund /transfer of fund

• •

Form groups and t ventures Employ expertise Procure plant and equipment on loan

•

Form t ventures to purchase plant and equipment and also improve working capital

•

• •

• •

•

Conduct training to contractors Provide/facilitate acquisition of soft loan to contractors to enable them purchase reasonable equipment Confirm by checking that the personnel listed by the contractors are the one working with them Conduct training on management of project fund (transfer fund from one project to another)

Encourage contractors to hands and t ventures Establish special fund for securities/bonds Make sure that contractors employ professionals Urge contractors to unit together and form big companies with equipment and plant Visit the contractors regularly to ensure that they have technical

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Performance of Contractors during 2002 – J. K. Malongo

S/No

Client

Noted Problem •

Contractors • Employ technical/skilled staff to enable correct tender filling and execution of works as per contract

per the contract Lack of enough working capital and unable to plan their works

18

TANROADS Regional Manager, Singida

•

Most of contractors are not aware with procurement procedures

•

19

TANROADS Regional Manager, Mtwara

• •

Lack of equipment Lack of technical/skilled personnel

•

•

No comments

•

No comments

•

No comments

20 21 22

District Executive Director, Newala TANROADS Regional Manager, Mbeya Tanzania Railways Corporation (TRC)

•

37

Read and understand procurement regulations & procedures Employ technical/skilled staff Make t ventures to overcome equipment/plant problem

Recommendation Contractors Registration Board personnel especially during execution of works • Arrange loans systems/programmes for small contractors • Conduct training and seminars to contractors to enable them understand their contractual obligation and how to plan their works • Initiate various courses/seminars to educate local contractors on procurement issues • •

Continue with SSTP programme Work out ways which can help contractors to access equipment

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Towards the Establishment of a Framework for Contractor Performance Measurement – A. Uriyo

Towards the Establishment of a Framework for Contractor Performance Measurement

Eng. A. Uriyo Principal Research Officer, CRB Abstract The Tanzanian construction industry, similarly to others, is faced with challenges that inhibit the performance of contractors. There is need for among other things a “performance revolution” among Contractors to redress the situation. This paper seeks to advocate for the establishment of a Contractor Performance Assessment Framework, a concept that was initiated during the Contractors Annual Workshops 2000. The model’s long-term objective is to contribute to the promotion of a culture of business performance excellence in the Tanzanian construction industry. Based on a Study of other Models, a Proposal is made for the adoption of a Model which is primarily based on the South African Construction Excellence Model (SACEM), a well tested tool for business performance assessment. The model’s basic structure, function, benefits and its relationship with CRB´s contractor development strategy is elaborated. The various merits and problems are highlighted and finally recommendations are drawn on the implementation strategy. Key words: contractor development strategy, best practice, contractor performance assessment, performance excellence, and competitiveness The State of the Contracting Industry The Tanzanian Construction Industry, which is an important player in the economy has not been performing well when measured against the usual criteria of cost, productivity, quality, safety and environmental responsibility (Ofori, 2002). Contractors continue to face challenges including inadequate work opportunities, lack of access to capital, lack of access to equipment and lack of technical and management skills in their endeavour to deliver infrastructure projects effectively. It is also argued that there is lack of preparedness to work in the fast changing technological, economic and social environment. The resulting effect is that though the Contractors has more than 2000 Contractors, with 97% being local contractors, foreign contractors continue to dominate the Tanzanian contracting industry (Materu, 2000). The majority of the local contractors remain small to medium contractors (92%) with a small segment (8%) being large contractors. The local contracting industry thus continues to be hampered by poor capacity, low productivity, poor quality workmanship, and low profit margins for contractors.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Towards the Establishment of a Framework for Contractor Performance Measurement – A. Uriyo

The Need for Strategic Intervention Tanzanian contractors need to be more competitive by improving their level of performance, There is thus the need to evaluate, control and improve performance owing to the tight competition, globalisation, limited resources, changing technology, higher customer expectations and awareness, quality, safety & environmental standards. In order to improve their performance, contractors need to acknowledge the significance of key construction issues that seriously affects contractor performance, such as integration of the design and construction process, as well as the quality management process. Performance management is a subject receiving considerable attention. The importance of performance management as a key business process is well known. Indeed, some scholars argue that a performance measurement revolution is taking place (Neely, 1998; 1999). Performance excellence is the highest possible level of performance that can be reached by organisations that incorporate best practices in all their processes and activities, thus becoming highly effective, efficient and competitive. To illustrate this is the case of Neil Muller Construction, a medium-sized South African construction company. According to Smallwood (1999), Neil Muller implemented the following Total Quality Management activities, based on a self-assessment over a five year period: Promoted a “Jika Hut” (a dedicated tearoom and communication forum) Daily meetings, peer group communication Weekly site management meetings Fortnightly production meetings Monthly unity forums between management and workers Literacy training and worker information sessions upon project start. As a result of the above, Neil Muller Construction achieved the following: Won a Diamond Award and achieved an 18% increase in real in output per employee in 1994 compared to 1993 A decrease in time between practical completion and agreement of the final from 12 weeks to 4 weeks over a period of six years A 12% saving in construction time of the Sanlam Business Park Achievement of the BIFSA 5-Star health and safety grading for 85% of their projects. As was the case for Neil Muller, contractors need to raise the levels of competitiveness through application of performance assessment tools as a means of ing performance improvement programmes. To facilitate this there is a need for the establishment of a Contractor Performance Measurement Framework. The Contractor Performance Measurement Framework may be applied at three levels, foremost for the aim of contractor self-assessment and improvement, secondly at institution level, to analyse contractor performance trends and thirdly for the exchange of contractor information between client institutions.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Towards the Establishment of a Framework for Contractor Performance Measurement – A. Uriyo

A Perspective of Experiences from Different Countries An increasing number of contracting and construction industries in different countries are adopting performance measurement as a step towards improving their industry performance. In recent years many industry development programmes have been conceptualized, developed and implemented. Such programmes have involved many industry stakeholders including government departments, particularly those involved in public works and infrastructure development. Many countries such as the United Kingdom (Latham, 1994; Egan, 1998), Australia and Singapore have made remarkable progress in these programmes. While full impact of these programmes have not been fully understood, more and more countries have been inspired to go down this road. South Africa have also made great in-depths in this area with the development of the South African Construction Excellence Model (SACEM). Closer to home, Samson and Lema have developed a Conceptual Framework to be used by Contractors for assessing their own performance (Samson, 2002). A Critique of Various Performance Measurement Models During the Contractors Annual Workshops 2000 with the theme “Towards a Sustainable Contracting Capacity”, the idea for establishment of a Contractor Performance Measurement Criteria was proposed. The Performance Measurement Indicators included: Good Management Skills, Financial Ability, Manpower, Equipment Management, Completion of Work in Time & Budget, Quality & Workmanship, Adherence to Safety Rules, Company Growth, Environmental Preservation, Relationship with Others and Training. The Indicators proposed reflect the needs of the industry, but they do not encom the Total Quality Management concept, as they do not cover the whole organizational and business aspect of the contractor eg. leadership, planning etc. Further, all the indicators were accorded similar weights, while in true context, they do vary in importance according to their input to the construction process. Contractors have traditionally been evaluating their performance by financial measures and indicators such as costs, revenues, income, expenditure, profit as they are well tried, easily understood and produce apparently clear signals. However, financial indicators have limitations including that they are generally outcomes of what happened in a business process. They cannot fully explain what happened in the process in order to form a basis for future actions (Samson et al, 2002). The Contractor Registration Board has been using Annual Returns Forms (ARF) from Contractors and Clients to assess the Performance of Contractors. While the Annual Returns have provided some vital and useful on work opportunities, skills, equipment, and problems faced by contractors for the Board’s planning and monitoring functions , the ARF’s do not form an objective assessment tool for the various organizational and business aspects of a contractors performance, from which a contractor can diagnose and improve performance. 40

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Towards the Establishment of a Framework for Contractor Performance Measurement – A. Uriyo

The New South Wales (NSW) Government has in place a Contractor Performance Reporting Framework that assesses Contractors while executing various public projects... Contractors performance is graded either as superior, good, acceptable or unsatisfactory based on a set of twelve performance criteria. The indicators include time management, standard of work, quality systems, management and suitability of site personnel, management of sub-contractors, etc., contract istration, OHS & R management, management of industrial relations, environmental management, workforce or skills development, co-operative relationships and any other indicator deemed appropriate. This method may be used when assessing a contractor’s performance on a single contract, several contracts, over a period of time, or on a particular type of contract. The NSW Contractor Performance Framework is a very good simplified initiative for assessing the contractors performance when related to projects implementation, and gives a good of the contractor during project execution. However, in order for performance improvement to be carried out effectively, there is a need to explore the whole business process, beginning with procurement, financial management, shareholder satisfaction and the like. This is a shortfall of the NSW Contractor Performance Framework. A Conceptual Framework is being developed by Samson & Lema for use by Tanzanian Contractors. The framework comprises of construction business perspectives including innovation and learning, processes, project, stakeholders, and financial perspective, with different dimensions. Indicators have been developed that stem from these perspectives and dimensions, further categorised into three main groups according to measurement process, namely driver, process and results indicators. Leadership commitment; employees involvement and empowerment; and information coordination and management are identified as enablers which are key to the success or failure of the measurement system. The Samson & Lema Conceptual Framework, is a comprehensive framework that has taken into the needs of the Tanzanian construction industry. However, the framework which has been primarily designed for contractors own assessment is still in its development stages and has as yet not been finalized nor tested. The South African Construction Excellence Model (SACEM), which is based on the principles of the SA Excellence Foundation’s Excellence Model, is a business performance assessment tool developed to evaluate overall performance of contractors to address these challenges faced. Through performance scores, the model identifies contractor’s strengths and areas for improvement, thus enabling top management to systematically assess their business performance and respond accordingly. Pilot assessments have been completed on the model. The model embraces the principles of strong leadership, long-term approach, continous improvement, client-focus, people management and results-orientation. SACEM is a comprehensive, systematic model intended to promote the concept of ‘total quality management’ at both the corporate and construction site level.. While the model is diagnostic, and can identify specific problem areas, its strength lies in directing management towards a lasting, holistic approach to managing the construction firm. More than just an assessment tool, the model can also be integrated with the Board’s development strategy by facilitating rapid adoption of best practice, improvement of contractors’ productivity and competitiveness.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Towards the Establishment of a Framework for Contractor Performance Measurement – A. Uriyo

Based on a synthesis of the Recommendations made during the Contractors Annual Workshops 2000, Best Practice Models on Contractor Performance Measurement Criteria, , Conceptual Excellence Tools, applicability and relevance of the Model to the Tanzanian context, it is proposed to further study the South African Construction Excellence Model (SACEM), for replication in the Tanzanian context. The South African Construction Excellence Model The South African Construction Excellence Model (SACEM) is advocated as a tool most suitable to facilitate the culture of continuous improvement for ors. What is the South African Construction Excellence Model? The South African Construction Excellence Model (SACEM) is a contractor performance assessment tool. But more than just a tool, it is a comprehensive, systematic model intended to promote the concept of ‘total quality management’ at both the corporate level as well as the construction site level. SACEM’s approach to excellence is through systematic, continuous improvement of eleven key performance criteria. The model is diagnostic in its approach and does not provide a specific solution, only an indicative approach towards a solution. SACEM is strongly based on the principles of the South African Excellence Foundation’s model - the South African Excellence Model (SAEM). The Structure of the Model The structure of SACEM is illustrated in Figure 1. SACEM comprise of eleven performance assessment criteria as shown in Table 1., which are strongly linked to one another such that activities on the enabler side have a direct result on the supply side. For example, a deployment of a customer management system – an activity on the enabler side - will have an impact on the results side of the performance equation. Each criterion carries a score weighted according to its importance in helping a contractor achieve superior performance.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Towards the Establishment of a Framework for Contractor Performance Measurement – A. Uriyo

Table 1.

SACEM Performance Criteria

Performance Criteria Leadership

Relation

Strategy and Planning

Strategy and planning relates to how management formulates, deploys, reviews and turns policy and strategy into plans and actions

Customer and Market Focus

Customer and market focus relates to how the contracting organization determines the needs, requirements and expectations; enhances relationships and determines satisfaction of customers and markets People management relates to how the contracting organization releases the full potential of its people.

People Management

Criteria Element

Leadership relates to how the behaviour and actions of the executive team and all other leaders inspire, and promote a culture of business excellence

Resources and Information Management

Resources and information management relates to how the contracting organization manages and uses resources and information effectively and efficiently.

Business Processes

Business processes relates to how the contracting organization uses resources and information to its plans. Business processes forms an important area of study in business management and improvement. This topic is

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How leaders visibly demonstrate their commitment to a culture of Business Excellence How leaders improvement and involvement by providing appropriate resources and assistance How leaders are involved with customer and supplier chains How leaders recognise and appreciate people's efforts and achievements How leaders address public responsibilities and practice good citizenship How policy and strategy are based on information which is relevant and comprehensive How policy and strategy are developed How policy and strategy are communicated and implemented How policy and strategy are regularly reviewed, updated and improved How customer and market intelligence is determined How customer and market information is collected and used How the organisation maintains accessibility to customers and manages complaints How customer satisfaction is determined How people resources are planned and improved How people capabilities are sustained and developed How people agree targets and continuously review performance How people are involved, enabled, empowered and recognised How people and the organisation have an effective dialogue How people are cared for How financial resources are managed How information resources are managed How comparative information and data are selected and used How partnering and supplier relationships and materials are managed How buildings, equipment and other assets are managed How technology and intellectual property are managed How processes key to the success of the organisation are identified How processes are systematically managed How processes are reviewed and targets are set for improvement How processes are improved using innovation and creativity

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Towards the Establishment of a Framework for Contractor Performance Measurement – A. Uriyo

Performance Criteria Impact on Society

Customer Satisfaction

People Satisfaction

Suppliers and Partnership Performance

Business Results

Relation

Criteria Element

very important for, without business processes, a contracting organisation cannot deliver the required end-product Impact on society relates to what the contracting organization achieves in satisfying its local community and society. The criterion areas included are the society’ perception of the organization and other additional measurements of the organisation’s impact on society Customer satisfaction relates to what the contracting organization achieves concerning the satisfaction of its customers. Customer satisfaction assesses the customer’s perception of the organisation’s products and services and other additional measurements relating to satisfaction of the organization’s customers. People satisfaction relates to what the contracting organization achieves concerning the satisfaction of its people. People satisfaction is assessed by measuring people’s perception of the organization and other additional measurements relating to people satisfaction. Suppliers and partnership performance relates to what the contracting organization achieves with its supplier and partner processes and relationships. This aspect of performance is assessed by measuring the organisation’s perception of its suppliers’ and partners’ performance and other additional measures relating to the performance of the organisation’s suppliers and partners. Business results relates to what the contracting organization is achieving in relation to its planned business objectives and in satisfying the needs and expectations of everyone with a financial interest or other stake in organization. Assessment should demonstrate the performance of the contractor as shown by results, trends, targets and comparison with competitors or ‘best-in-class’ organizations. Information on the relevance of these to those with a financial or other stake in the organization should also be presented.

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How processes are changed and the benefits evaluated How processes are designed, managed and improved Society's perception of the organisation Additional measurements of the organisation's impact on society

The customer's perception of the organisation's products, services and customer relationships Additional measurements relating to the satisfaction of the organisation's customers The people's perception of the organisation. Additional measurements relating to people satisfaction.

The organisation's perception of its suppliers' and partners' performance. Additional measures relating to the performance of the organisation's suppliers and partners.

Financial measurements of the organisation's performance. Additional measurements of the organisation's performance.

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Towards the Establishment of a Framework for Contractor Performance Measurement – A. Uriyo

How SACEM is used to assess performance? The primary objective of performance assessment is to identify areas of improvement and strengths of the contractor’ overall business and to focus improvement effort accordingly. SACEM systematically assesses the overall performance of a contractor using eleven performance criteria described in the previous section. Several questions relating to the overall performance of a contractor are asked under each criterion. Contractor’s responses are scored on a 0-3 scale where 0 means that the activity is not done or has “not started”, and 3 represents “fully achieved”. The scores are aggregated out of a total possible score of 1000. Contractors who score close to, and up to 1000, are well managed and show good results. Information relating to how a contractor manages the overall business is captured in a questionnaire and report detailing all the necessary evidence as proof of facts. Areas of improvement as well as strengths of the contractor are summarised such that the necessary improvement action can be taken. The Performance Assessment could be approached in two ways; by contractors themselves as part of an internal exercise, or by an independent agent, where external recognition is required. The SACEM project is currently undergoing pilot testing to evaluate the model’s robustness, appropriateness and usefulness to the contractors. The results of the pilot study will be used to indicate the level of contractor’s understanding of total quality management (TQM) principles, acceptance of the model and the willingness and preparedness to use the model. Performance Assessment Tool Benefits As earlier highlighted, the Performance Measurement Framework, stands to benefit the whole industry in of performance improvement. Based on the SACEM experience, key benefits of the adoption of the Performance Assessment Tool include: Standard, structured tool to assist contractors assess and improve performance through higher productivity, quality and effectiveness. The Performance Assessment Tool can serve as a useful performance benchmarking tool for contractors. Risk management tool for construction clients. Contractors´ risk profiles will be easily identifiable and managed appropriately. Tendering costs can be reduced for both the clients and contractors if the Performance Assessment Tool is used as a pre-qualification system. Results from using the Performance Assessment Tool can add value for money on projects and therefore satisfaction for clients, taxpayers and end-s. Contractors can also market themselves strongly based on a transparent means of assessment. In addition, the Contractor Performance Assessment framework will enable the Board to objectively assess the performance of contractors so as to plan, monitor and implement various initiatives in fulfilment of its objectives. It will also assist the Board to get an effective on a regular basis on the performance of all contractors. The Performance Measurement Framework, can also be used as a means of improving performance through motivation. An award on best-practice could be introduced to motivate well performing contractors. Performance measurements can be used in the assessment of a contractor for prequalification, selective tender list, tender evaluation and—in the event of termination—for unsatisfactory performance under a contract. The performance measures truly provide objective assessment during the procurement and implementation stages. Projects also stand to benefit in lieu of the monitoring mechanism in place. 45

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Towards the Establishment of a Framework for Contractor Performance Measurement – A. Uriyo

Many other applications of the Performance Assessment Tool abound. The Performance Assessment Tool could also be used by financial institutions, such as commercial banks, to assess the level of contractors overall performance and to determine the level of financial risk associated with contractors. The Implementation Strategy A key component of the Board´s strategy is to directly assist contractors to identify their areas of improvement and thus continuously improve their operations. Based upon the above, the need has been identified for the establishment of a Performance Assessment Tool. SACEM presents a model best suited for the needs of the Tanzanian industry, There are however, a number of issues that need be taken into consideration. The Establishment of the Contractor Performance Assessment Framework will involve the following steps that need to be encomed in the roap: Development of the Contractor Performance Measurement Framework Adoption of the Framework by Stakeholders Establishment of Co-ordinating Facility & Capacity to manage the evaluation Training Implementation of the Performance Measurement Establishment of Standards through Benchmarking Dissemination of to Stakeholders Performance Improvement Initiatives Continous Review of the Performance Measurement To facilitate the adoption of SACEM to the Tanzanian construction industry, there do arise a number of issues as shown below: Validity of SACEM to Tanzanian Context SACEM is a very comprehensive and applicable generic tool that has been well tested and was developed after taking consideration, the conditions of the South African construction industry, in particular the developing country environment. However, the construction industry is dynamic and the Tanzanian construction industry has certain unique challenges that are not prevalent in the South African context. There is thus, a need to ensure that the Model suits the Tanzanian context. For this to take place, there is need for testing and applying the model on a pilot-phase, and then based upon the results fully develop a model that suits the Tanzanian context. This may involve modification of the various performance criteria or assignment of different weights. While, the importance of people management to the construction process is primary, there may be need to allocate more weight to the management of other resources based on the needs of the Tanzanian industry for instance access to plant and equipment, which is not much of a problem in South Africa. Another case is the validity of social responsibility, which may be applicable to a large firm, and probably not applicable to a small firm. Following independence, South Africa has also been advocating for the empowerment of disadvantaged groups, policies which may not be in place in Tanzania and may thus require a revision of the model. The absence of an information culture in Tanzania, may also necessitate the modification of the model in relation to sourcing of certain types of information. However, it is appreciated that all the SACEM key performance criteria are relevant, and what may need to be done is the revision of the criteria elements, subelements and weights to fit the Tanzanian construction industry. The review has established that all the indicators proposed during the Annual Workshops 2000, are covered exhaustively and on much broader aspects in SACEM. 46

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Towards the Establishment of a Framework for Contractor Performance Measurement – A. Uriyo

Primary in ensuring adoption of the framework, is the need for consensus among stakeholders, including contractors, consultants and public client institutions on the acceptance of the framework. The Performance Assesment Tool´s Relationship with the CRB Development Strategy Among the proposed plans for CRB is the need for a Contractor Grading System similar to the South African “Star Grading System” or the Malaysian “Default Point System”,aimed at promoting best practice. The framework can make use of an assessment process to evaluate current performance of contractors and allocate one or more stars to indicate the level of overall business performance of contractors. In of the grading system contractors scoring five stars can be regarded as “excellent” contractors that incorporate best practices. Such contractors can be regarded as having the lowest possible risk and capable of managing complex public and private projects relatively more effective than contractors with fewer stars. The Performance Measurement Tool could be integrated into the CRB strategy. The Performance Measurement Tool could among other things, be used as a pre-qualification system for managing risk associated with contractors. The Performance Measurement Tool could therefore be linked to the CRB’s Grading System by converting the Performance Measurement Tool scores into CRB’s grades. This link between the Performance Measurement Tools and the CRB processes is illustrated in figure 2. For this link to be established it is critical that there be a strong co-ordination role played by CRB in development and implementation of the tool. CRB would thus be responsible for carrying out the independent assessment. This could be carried out either by its own internal capacity or by external agents.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Towards the Establishment of a Framework for Contractor Performance Measurement – A. Uriyo

Application As highlighted earlier, the Performance Assessment could be approached in two ways; by contractors themselves as part of an internal exercise, and also by the Board in pursuit of performance improvement and in fulfillment of its other functions. The complete implementation of the programme is a big undertaking. It is recommended that the implementation should involve a phased pilot approach beginning with the testing of practicality of information collection and applicability of the performance indicators. To begin with, the Performance Assessment Tool could be applied to those construction firms aiming to improve their performance and willing to voluntarily participate in a Best – Practice Accreditation or Construction Excellence Programme, to be carried out on an annual basis. This Programme could be conducted by the Board Award and would provide motivation awards and recognition to those meeting the set targets on best-practice. Contractors aiming to participate in such a programme, would voluntarily apply and participate, which would entail assessment based on the agreed Performance Measurement Framework. This would motivate contractors to apply best-practice and excellence in all their business processes, and would ultimately result in recognition and the need to maintain excellence for those succeeding and performance improvement for those who do not succeed. The Best Practice Accreditation or Construction Excellence Programme could later transform from a voluntary to a mandatory requirement for contractors. This could be enforced through contractors themselves or through clients eg. public institutions, as it may be difficult enforcing this requirement for private developers. At this stage, it would then integrate with the CRB Grading Scheme. To enforce its application, there might be a need to network with the appropriate authorities for a need to introduce standard clauses in the standard contract documents which compel contractors to provide a performance assessment report conducted at pre-determined periods. Furthermore, contractors themselves should recognize the need to carry out self-assessment on a continuous basis for their own performance improvement. Capacity & Co-ordination There is a need to create the capacity to manage such a Performance Assessment Tool. This includes acquiring rights, conducting training on the Assessment Tool and Training of External Assessors to conduct the assessments. The establishment of the Performance Assessment Tool requires development, testing, and application and information management. Central co-ordination is therefore recommended.. Based on the need for improvement by the contracting industry stakeholders, resource requirements, benefits owing to the integration with the proposed CRB grading scheme, and the mandate vested upon the board for assessing the performance of Contractors, it is deemed that the Board is probably most-suited to co-ordinate this exercise. Targets For the proper functioning of the Performance Measurement Framework, it is important that standards or targets should be set. A standard should be attainable and measurable. Standards may be published or well-recognized industry wide standards. In general, the purpose of targets is to assist in improving performance, and the intention in this case is no different. In choosing targets, which will help the contractor and ultimately the industry in improving performance, it will be important to strike a balance between setting a challenge and what is realistically attainable. It will thus be the responsibility of the various stakeholders, be it the Board, Client Institutions or Contractors to set standards that are accepted by all stakeholders. 48

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Towards the Establishment of a Framework for Contractor Performance Measurement – A. Uriyo

Financial Aspects There is need to appreciate that there will be a cost component involved. However, judging on the state of the industry, and the need for the performance measurement, the cost will yield returns. Frequency The assessment of performance is a continuous process, and it should be conducted on a periodic basis. In the event of a contractor carrying own – assessment, the frequency will be as the contractor deems fit to ensure meaningful results. However, the Board will need to develop a mechanism that will ensure regular assessment of performance, which will serve the industry based on the needs and capacity. Risks Risks also abound when using Performance Measurement. The disadvantage is that performance measurement may sometimes give a misleading impression of the value added of a contractor. This disadvantage may be reduced by developing better performance measures and by careful use of performance indicators. Performance Measurement may also give rise to impartiality. No performance management system will be perfectly fair, because it is impossible to measure perfectly and quickly the value added of each contractor. Any system will sometimes reward an individual or organization whose true performance is not as good as others. However, what we need is not a perfect performance measure, but one that the individual or organization, finds it easiest to increase by improving value added. The Way Forward The Paper has presented the need for developing contractors through the use of a Performance Measurement Tool. It has also presented an existing well tested Excellence Model that is currently in place and being applied in a developing country, with challenges similar to our context. The application of the Assessment Tool, with the necessary adoptions stands to yield great dividends towards the improvement of the Construction Industry. The paper advocates for the use of a Performance Assessment Tool for the Tanzanian Contracting Industry. It is expected that this initiative would contribute towards improved performance, growth & sustainability, customer satisfaction, improved contractor capacity, fair competition, credibility, contractor marketability, increased profits, improved supervision and quality finished works among others. The need is however recognized for further ground-work, including further adoption of the Tool to the Tanzanian context. The need for a wide consensus agreement on the framework is primary to its effective implementation. There are also a number of implementation issues that need further redress. To begin with, the Board could promote a best-Practice Award scheme that would make use of the framework, and contribute towards application of bestpractice and performance improvement. This could later be integrated to a Contractor Grading System, which is a current cry from the industry. Indeed, with the recognized need to chart out a Five Year Corporate Strategic Plan for the Contracting Industry, it is strongly recommended that the Establishment of a Performance Assessment Framework, should form one of the strategic activities to facilitate the 49

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Towards the Establishment of a Framework for Contractor Performance Measurement – A. Uriyo

improvement of the contracting industry. In a construction industry, which is devoid of critical information and tools on performance, this would be a bold and timely initiative. This paper has provided a framework, aimed at stimulating discussion on the applicability of the initiative and best mode of implementation. References CRB Annual Workshops (2000), Contractor Performance Indicators, Workshop Report, CRB Dlungwana DW and Rwelamila PD (2002), The Role of Performance Assessment Tools in Improving Contractor Performance in Developing Countries, Proceedings of the CIB W107 1st International Conference: Creating a Sustainable Construction Industry in Developing Countries, Pretoria, 11-13 November, Vol.1, Dlungwana S, Nxumalo CH, Husteen S, Rwelamila PD and Noyana C (2002), Development and Implementation of the South African Construction Excellence Model (SACEM), Proceedings of the International Conference on Construction in the 21st Century (CITC2002) “Challenges and Opportunities in Management and Technology”, Miami, Florida, 25-26 April, Egan, J. (1998). “Rethinking Construction: The Report of the Construction Task Force”. Her Majesty’s Stationery Office., London Latham, M.(1994). “Constructing the Team” Final Report of the Government. Industry Review of Procurement and Contractual Arrangements in the UK Construction Industry. HMSO, London Materu S (2000)., Towards Sustainable Local Contracting Capacity – CRB Approach, Proceedings of the 2nd International Conference of the CIB Tak Group 29 on Construction in Developing Countries, 15th – 17th November, Gaborone, Botswana, pp 316 - 327 Neely A (1998), Measuring Business Performance: Why, What and How, The Economist Books, London Neely A (1999), The Performance Measurement Revolution: Why Now and What Next? International Journal of Operations and Production Management, 19:2, pp 205-228 NSW Government (1999), Contractor Performance Reporting and Exchange of Reports between Government Agencies Guidelines, 2nd Edition Ofori G and Debrah Y (2002), Establishing a Sustainable Funding Mechanism for Training for the Construction Industry in Tanzania, Final Report Samson M and Lema NM (2002), Development of Construction Contractors Performance Measurement Framework, Proceedings of the CIB W107 1st International Conference: Creating a Sustainable Construction Industry in Developing Countries, Pretoria, 11-13 November, 2002, Vol.1, Smallwood JJ.and Rwelamila PD (1998), The need for Implementation of Quality Management Systems in South African Construction, Proceedings in the 3rd International Congress on Construction, May, Singapore South African Excellence Foundation Criteria for Business Excellence and General Guidelines for Self Assessment

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Assistance Fund: Lessons Learnt & Challenges Ahead – Mrs. D. R. Kagaruki

Contractors Assistance Fund: Lessons Learnt & Challenges Ahead

Mrs. D. R. Kagaruki Assistant Registrar – Finance & istration, CRB 1.0

INTRODUCTION

Contractors Assistance Fund (CAF) was established by Contractors Registration Board’s initiative to assist Local Contractors in classes V-VII. CAF started operating on 10 April 2002 through CRDB Bank – Tower Branch, Dar-essalaam. The Main objective of establishing the Fund was to assist small and medium contractors to take full advantage of available work opportunities to improve their capability and capacity through participation in competitive bidding and execution of works within their class limits by facilitating them to get Bank Guarantees for Bid Bonds and Advance Mobilization payments. 2.0

PROCEDURE FOR REGISTRATION

The Contractors eligible to receive assistance from the Fund are those ed by CRB in classes V – VII and Specialist contractors in classes 2 & 3. Contractors requiring bid bonds or Advance Payment guarantees shall be required to fill in registration forms and to pay a non-refundable fee of TShs. 100,000/=. The registration form is appended as Appendix I. Additional conditions are: (i) An application submitted on CRB Form F 12 appended as Appendix II. (ii) A Contractor must be current on his obligations to CRB including payment of Annual subscriptions and submission of Annual Returns. Other conditions are indicated on the Registration Form under checklist table. (iii) The contractor must indicate the specific contract to which the Guarantee is applicable and submit Tender condition and/or signed contract to CRB before any Guarantee can be issued. (iv) The contractor can only be guaranteed for one tender/contract at any time subject to a limit of TShs 50.0 million per guarantee. (v) The contractor shall be required to pay to the bank the bank Commission applicable on the Bond/Advance Payment Guarantee. 3.0

PROCEDURES FOR APPLYING CRB GUARANTEE.

3.1 CRB PROCEDURES In order to secure a CRB Guarantee from the Fund, the following procedure shall apply: In case the contractor has not filled registration forms for the fund. (a) Fill in registration form shown as Appendix I and payment of non refundable registration fees of TShs. 100,000/= (b) Make an application to CRB using standard Application Forms shown in Appendix II (CRB F12), giving details on the tender/contract and value of guarantee required. (c) CRB shall scrutinize the application using form attached as Appendix III (CRB F 13) and taking into consideration the eligibility criteria as set below: 51

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Assistance Fund: Lessons Learnt & Challenges Ahead – Mrs. D. R. Kagaruki

Specimen sheet has been shown below as a basis for recommending the contractors. Name of Contractor

Registration (Reviewed)

Legal Aspect

Professional Development

Financial Aspect

**Fund Related Issues

Total Marks

Marks

20

20

20

20

20

100

Guarantee’s due date

Remarks

Conditions for the contractor to qualify for a guarantee: *Total marks should not be less than 60 marks. *In any marking aspect the contractor should not get less than 11 marks. **Should all 20 marks failing to score in any question the contractor will fail. (d) Upon its satisfaction, CRB will sign an agreement with the applicant using standard format shown in Appendix IV. (e) The applicant for advance payment guarantee shall then pay to CRB the nominal commitment fee equal to 0.2% of the guaranteed amount (f) CRB shall then write to the Bank a Letter of Authority authorising the Bank to issue a Bank Guarantee to the Contractor under the and conditions of the said Tender or Contract. 3.2

CRDB PROCEDURES Contractors Assistance Fund Applicants should submit along with their application letters, copies of the following documents: • Official application letter to CRDB- Tower Branch • Board Resolution to borrow. • Letter of authority to the bank to issue Guarantee. • Copy of application form for CRB Guarantee. • Copies of Bid/Tender documents. • Format of Bid Security or Advance Payment Guarantee as per Tender document or Contract Agreement. The list may change depending on the nature of application. • The Contractor shall be required to pay commissions negotiated between CRB and the Bank, which are 0.75% at the time of issuing guarantee and 0.5% on the subsequent quarters. 4.0

CURRENT STATUS This paper gives a brief outline on CRB’s experience in operating the Contractors Assistance Fund by sighting current registration, guaranteed contractors, experiences, lessons learned and challenges facing the Board and the Fund.

4.1

As of April 2003, the Board had ed 140 of CAF from the following Regions:

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Assistance Fund: Lessons Learnt & Challenges Ahead – Mrs. D. R. Kagaruki

Regions

ed Contractors Classes 5- of CAF 7 & Classes 2& 3 Specialists Dar-es-salaam 455 83 Morogoro 48 11 Mwanza 63 8 Dodoma 49 6 Iringa 38 6 Ruvuma 24 5 Mbeya 53 5 Shinyanga 59 4 Mtwara 13 3 Pwani 14 2 Tabora 27 2 Arusha 48 1 Lindi 2 1 Rukwa 20 1 Kigoma 13 1 Tanga 26 1 Mara 16 Manyara 1 Kilimanjaro 18 Kagera 27 Singida 19 Zanzibar 5 Total 1039 140 From the above table the of CAF are 13% of the total classes 5-7 and classes 2&3 Specialist ed contractors from the above regions, the highest registration being in Dar-es-salaam. There are no from Regions like Mara, Kagera, Manyara, Kilimanjaro, Ruvuma, Singida and Zanzibar Island. 4.2

GUARANTEED CONTRACTORS Out of 140 ed of CAF, the Board had received 83 applications, out of them 77 contractors have been guaranteed by the Board; 50 on Bid Bonds and 27 on Advance Payments. The amount spent totals to Tshs. 483.1m, Bid Bonds Tshs.166.2m and Advance Payment Guarantee Tshs. 316.9m. Five (5) applications were unsuccessful because some of the applicants applied for works above their class limits and some requested for Working Capital viz a viz Bid Bond/Advance Payment guarantees. From the figures above, Advance Payment guarantee applications are small in number but take longer time to mature hence, tie a lot of money. Out of 50 applicants who applied for Bid Bond 10 has been awarded contracts, this is the sign of success.

4.3

EXPERIENCES While processing guarantees the following have been observed: • Contractors do not know how to fill in application forms. On several occasions Board officials have been asked to fill in their application forms. • At the time of submitting application forms Contractors are forwarding documents requested by CRDB to the Board. • Contractors are not cancelling Bid bonds/ Advance payments at the time of maturity of the guarantee, hence denying other contractors opportunity to use the facility. 53

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Assistance Fund: Lessons Learnt & Challenges Ahead – Mrs. D. R. Kagaruki

•

Contractors are submitting their applications belatedly causing pressure to the Board and CRDB Bank to process their guarantees. • Contractors are requesting for Working Capital and some for direct cash assistance contrary to CAF guidelines and conditions of the Fund. • Contractors are not returning the Bonds for cancellation to the right place i.e. CRDB Tower branch, instead some are sending them to CRDB Headquarters. • Some contractors who were guaranteed Advance Payment took too long to cancel the guarantees. • Some contractors especially those who didn’t attend previous Workshop are not reading instructions to and apply for the fund properly. • Once the contractor has been guaranteed by CRB, the contractor treats it as permanent guarantee for his subsequent projects forgetting that the guarantee is for specific project and the fund is of revolving nature. • Some of the contractors are failing to distinguish between Bid bond and Advance payment guarantee. • Some of the contractors are confusing CAF registration fees with the contributions to NCC towards CIDTF. The above-mentioned experiences are the major cause of presenting this paper in order to make some of the procedures understandable. 5.0

LESSONS LEARNT AND ADVICE TO CONTRACTORS From the above experiences the following are lessons learnt: • Until now some of the contractors have not understood the purpose of establishing CAF, it is hoped that presentation of this paper, sections 1-3 will reduce if not end problems experienced in section 4.3. • Majority of contractors lack skills in tendering therefore contractors are encouraged to attend seminars and SSTP training. • Some of the contractors lack Managerial and Office Management skills. Formal business training is recommended by attending short courses in Management and Finance. • Works are procured without following Public Procurement Act, 2001 regulations. Contractors are encouraged to read and understand the Public Procurement Act. • Some contractors who were guaranteed by the Board on Bid Bonds have won tenders. ed contractors are advised to the Fund and try their luck.

6.0

CHALLENGES AHEAD •

Delayed cancellation of Advance payment guarantees, the Board has introduced the system, whereby the applicant will be required to submit Works/Activity schedule, dully signed by the client along with the application form. The Board will further require submission of progress report from those who have been given Advance Payment guarantees.

•

Contractors who will delay in cancellation of bonds or guarantees will be penalised.

•

Delayed cancellation of Bid Bonds guarantees has lead to introduction of 0.2% commission to Bid bond applicants as istrative costs.

•

Upper classes i.e. classes 1-4 ed contractors are requesting for similar assistance. 54

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Assistance Fund: Lessons Learnt & Challenges Ahead – Mrs. D. R. Kagaruki

7.0

•

Considering the number of applications the Board received and request from classes 1-4 contractors the Fund is not enough therefore it needs enhancement.

•

Encourage Contractors to attend relevant training including SSTP trainings.

CONCLUSION The Fund is a partial solution to your financial problems of getting Bid Bond and Advance Payments. It is therefore imperative that contractors should ensure that the Fund is enhanced and used judiciously.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Assistance Fund: Lessons Learnt & Challenges Ahead – Mrs. D. R. Kagaruki

Appendix I P.O. Box 13374 DAR ES SALAAM Tel No. 2131169/2137962-3 Fax No. 2137964

CONTRACTORS REGISTRATION BOARD

E-mail : [email protected]

CONTRACTORS ASSISTANCE FUND Registration Form 1

Name of Contractor: ……………………………………………………………………………………………

2

Registration Status: Type

Class

Reg. No.

3

Postal Address:

4

…………………………………………………………………………………… Physical Address: HouseNo/Building ………………………………. Street: ……………………… ………………………………….. Town: …………………..

Area:

5

Branch Office:

Area:

6

Name(s) of Managing Director(s)/Partner(s): (These will be the only persons allowed to make application for a Bank Guarantee under the Contractors Assistance Fund) S/No Name Position Specimen Signature 1

HouseNo/Building ………………………………. Street: …………………… ………………………. Town: ………………………

2 Attach

7

(i) One port Size Photograph of each of the above Directors/Partners (ii) Letter of Authority Signed by all Partners/Directors, or Power of Attorney authorising the above persons to act on behalf of the firm.

Declaration: I/We declare that to the best of my/ our knowledge, the information stated herein is true and correct. We further declare that we have read the conditions governing the operations of the Fund and that Messrs ……………………………………………………………….. (name of contractors) undertakes to abide them. We understand that the Board reserves the right to issue guarantee to any applicant.

8

Signed on this ………. day of ………………………………………… in the year ………….. Name: ………………………………………… Signature: …………………………….. ( First Director/Partner) Name: ……………………………………….. Signature: …………………………….. (Second Director/Partner) (Affix Company Seal/Stamp)

For Official Use Only Date Received: ……………………..

Confirmation of Registration Information(AR/RS): ……………………

Registrars Approval: ……………………… Payment Receipt No. …………………………. Fund Ref. No. ……….

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Assistance Fund: Lessons Learnt & Challenges Ahead – Mrs. D. R. Kagaruki

Appendix II CRB –F 12

CONTRACTORS REGISTRATION BOARD Application Form for CRB Guarantee Name of Contractor: ……………………………………………………………………………. Fund Reference No.: ……………………………

Type ………………….

Current Address:

Building/Plot No: …………..

Bank Particulars:

House/Room Number: ……………..

Class: ………

Street: …………………..

Area: ………………….

Town: …………

Postal Box: ……………..

Tel:……………………..

Fax: ……………

Name of Bank: ……………………………………… Postal Address: …………………

Branch: ………...

Number: ………………..

Type of Guarantee being applied for: Bid Bondα/ Advance Loan Guaranteeβ. (delete whichever is not applicable) Particulars of the Project:

Name of the Project: ………………………………………………………... Location: ……………………………………………………………………. Value of works: (TShs): ……………………… (Amount in figures)

Financier: …………...

Name of Client: …………………………………………………………….. Address of Client: …………………………………………………………….. Consultant:………………………………………………………………….... 7.

Particulars of Bid Bond/Bank Guarantee required Value(TShs): …………………………… (Shillings …………………………………………… (amount in figures) (in words) ………………………………………….…………and cents ……..…………………………… Validity period: …………………………………………... days/months Last date for submission of Bids/Start of mobilisation: ………………………………………

8.

Declaration: I …………………………………………………………declare that, to the best of (Name of Person Lodging the Application) my knowledge, all the information provided above is true and correct. Position: ………………………………………..

Signature: ………………………. Date:……… ………………..

α

Attach copy of Tender Document including Tender Notice, Invitation to Tender and Tender Conditions showing clearly the amount of Bid Bond required. β Attach copy of contract agreement including the draft Form of bank Guarantee.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Assistance Fund: Lessons Learnt & Challenges Ahead – Mrs. D. R. Kagaruki

Appendix III CHECKLIST FOR APPROVING GUARANTEES UNDER THE CONTRACTORS ASSISTANCE FUND CRB F 13

The following criteria shall apply to determine whether a particular applicant qualifies for granting a Bank Guarantee or not. S/No. 1

Criteria Y/N Registration (i) Is the Current Registration for the type of Application within Classes V - VII? (ii) Has the contractor been reviewed?

Remarks (State type and class)

……………………………… Name, Signature and Date 2

3

4

Legal aspects: (i) Does the applicant have any pending Default Notice ? (ii) Is there a pending case in court against the contractor? Professional Development:: (i) Has the applicant attended CRB Workshops in the last two years? (ii) Has the applicant participated in the SSTP courses in the last two years? (iii) Has the Applicant submitted Annual Returns for the current Year?

6

……………………………… Name, Signature and Date

Financial Aspects: (i) Is the applicant current on Annual subscriptions (ii)

5

……………………………… Name, Signature and Date

Does the applicant have any pending fines?

Fund Related Issues (i) Is the applicant a member of the Fund? (ii) Is there an outstanding Guarantees in the name of the Applicant? (iii) Has the Applicant ever Defaulted against previous Guarantees

……………………………… Name, Signature and Date

……………………………… Name, Signature and Date

Conclusion: Does the Applicant Qualify for the Loan (To be signed by the Registrar or his Deputy)

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……………………………… Name, Signature and Date

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Assistance Fund: Lessons Learnt & Challenges Ahead – Mrs. D. R. Kagaruki

Appendix IV FORM OF AGREEMENT FOR CRB GUARANTEE This Agreement is made on this …………………day of ……………… in the year …….. between the CONTRACTORS REGISTRATION BOARD of P.O. Box 13374 Dar es Salaam (hereinafter referred to as the Guarantor) on the one part, and ………………………………………………………………………………………

M/S of

……………………………………………………………… (hereinafter referred to as the Applicant) on the other party. Whereas, (a)

The Applicant is desirous of tendering for works stipulated on Schedule one of this Agreement; hereinafter referred to as the Works;

or

The Applicant has secured a works contract stipulated on Schedule one to this Agreement (hereinafter referred to as the Contract) for which he is entitled to Advance Payment/Mobilisation Loan; (b)

The applicant is required to submit a Bank Guarantee to secure the Tender/Advance Mobilisation Loan; (delete whichever is not applicable)

(c)

The Applicant has requested the Guarantor to provide him financial guarantee to a commercial Bank; and

(d)

The Guarantor has accepted to guarantee the Applicant.

Now therefore, the parties hereby Agree as follows: 1. The Guarantor shall guarantee the Applicant to the …………………………… Bank for the sum of TShs ……………………………………… (state value of Guarantee) under the and conditions of the Bank hereto attached. 2. The Applicant shall observe all and conditions of the Tender/Contract during the period of validity of the bank guarantee. 3. The Applicant undertakes to pay to the Bank any commissions, related to the bank guarantee. 59

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Assistance Fund: Lessons Learnt & Challenges Ahead – Mrs. D. R. Kagaruki

4. The Applicant undertakes to pay the Guarantor within a period of …………… months, any financial losses arising out of the Bank Guarantee as a result of his/her own default or otherwise. 5. The applicant understands that failure to pay back the Guarantor; the financial losses as stated in (4) above, shall result into disciplinary and legal action against him in accordance with the laws of the country. 6. In consideration of this Guarantee the Applicant agrees to pay to the Guarantor a nominal fee of TShs ………………….., calculated as 0.2% of the guaranteed amount. In witness whereof, the two parties have set their respective hands on the day and year first above written Signed for/on behalf of the Guarantor

In the presence of:

Signature: ………………………….

Signature:………………………..

Name:……………………………….

Name: ……………………………

Position: …………………………..

Position: …………………………..

Signed for/on behalf of the Applicant:

In the presence of:

Signature:……………………………

Signature: …………………………

Name: …………………………………

Name: …………………………...

Position: ………………………………

Position: …………………………..

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" CAF Experiences – Mrs. D. R. Kagaruki

SCHEDULE I 1. Name of the Project: ……………………………………………………………….. …………………………………………………………………………….

2. Location: ……………………………………………………………………………… 3. Value of works: (TShs): ……………………………………………………………….. (Amount in figures and in words)

……………………………………………………………………

4. Financier: ..…….……………………………………………………………………… 5. Name of Client: ………………………………………………………………….…….. 6. Address of Client: ……………………………………………………………………… ………………………………………………………………………

7. Consultant: …………………………………………………………………………….. 8. Value of Bank Guarantee required (in TShs): (a)

Bid Bond: …………………………………………………

(b)

Advance Loan: …………………………………………….

9. Tender Authority: ……………………………………………………………………….

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" CRB’s Corporate Strategic Plan 2004 - 2008 – B. C. Muhegi

CRB’s Corporate Strategic Plan 2004-2008

Eng B. C. Muhegi Registrar, CRB 1.0 Introduction The Contractors Registration Board was incepted in 1997 through the Contractors Registration Act No 17, 1997. The Board is charged with the responsibility for registration of contractors, regulation of the contracting industry and development of contractors. During the initial five years after inception the Board had concentrated its efforts to set up a framework that will enable it to accomplish its objectives. A mammoth task was done to develop the CRB By Laws of 1999 to complement Act No 17, setting criteria and classes for registration, methods and systems for contractor registration, regulation and development. Based on data collected from various sources including annual return forms from contractors and clients and these annual workshops during the five years, the Board has been able to identify various problem areas and implemented the relevant interventions. However several problems have been recurring year in year out, these include; Financial problems facing contractors Lack of work opportunities Lack of equipment for use by contractors Poor technical and business knowledge by contractors Safety and occupational health on construction sites After a mammoth task of setting up the requisite framework during the initial five years, the Board now intends to focus its efforts to address these problematic areas holistically during the next five years. It is for this reason that the focus for this years Contractors Consultative Meeting is on collating valuable input from all stake holders and target groups in the preparation of a Corporate Strategic Plan 2004-2008 for the Contractors Registration Board. 2.0 The CRB Corporate Plan 2.1 The Planning Process In preparation of the corporate plan the CRB intends to collect as much input as possible from all stake holders and target groups in conducting a) An organisational assessment of the Board b) A program assessment of all contractor development programs currently undertaken by CRB to determine their • Impact to the target groups • Effectiveness and usefulness • Comparative and competitive advantages 62

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" CRB’s Corporate Strategic Plan 2004 - 2008 – B. C. Muhegi

c) Forecasting a strategic direction for the industry taking into cognisance • The Micro and Macro environment ( economical, political, technological, Social demographical etc) • National initiatives and priorities – e.g. Construction Industry Policy, Vision 2025 d) Identification of Key Result Areas, Objectives and Indicators e) Formulating Strategies, Initiatives and Action Plans with Performance Measures The plan is a five year rolling plan with a midterm review in 2006 2.2 Salient Features of the Plan The strategic Planning process is guided by the following features The CRB Corporate Vision To be an exemplary regulator that develops dynamic, capable, and competitive contractors who observe business ethics, undertake construction projects efficiently and participate in the regional and global markets The Corporate Mission To regulate and develop a Competitive and Sustainable Contracting Industry with capable contractors who deliver quality works and observe safety in pursuit of economic growth And Corporate Functions 1) To local and foreign contractors in the construction industry 2) To regulate the activities and conduct of all contractors in the construction industry. 3) To set criteria for registration of contractors in different classes and review these criteria from time to time. 4) To and ensure that all construction works are being undertaken by ed contractors 5) To ensure that all construction works comply with governing regulations and laws of the country 6) To review the performance of ed contractors from time to time. 7)

To develop skills and capacity of Local Contractors.

8) To liase and interact with both local and international professional boards and associations. 9) To publish and disseminate information related to the construction industry 63

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" CRB’s Corporate Strategic Plan 2004 - 2008 – B. C. Muhegi

3.0 Key Result Areas of the Plan During an initial meeting with key stakeholders conducted during April 2003 in Dar es salaam, some Key Result Areas for the plan were identified. Based on these key result areas the objectives and appropriate indicators for each areas were formulated as indicated in the table below ; Key Result Area 1. Ethics in construction

Objective Ethics in construction enhanced and maintained

2. Capability and competence

Operational capacity and competence of contractors improved

3. Deployment of Local Contractors

Increased deployment of local contractors in and outside the country.

4. Quality of construction works

Quality of construction works attained

5. Safety and occupational health

Safety and occupational health of staff in construction assured

6. Gender balance

Women participation on the construction increased

7. Sustainable construction methods

Environmentally friendly construction measures in place

64

Indicators 1) Reduced cases of corruption complaints 2) Reduced cases of contract awards to incredible contractors 3) Clean s of contractors 4) Reduced number of conflicts between the clients, and labourers/workers 5) Adherence to specifications in the tendering process 6) Reduced number of uned contractors 1) Timely completion of the works 2) Reduced number of terminations 3) Increased rate of upgrading contractors 4) Competitive tender rates 1) Increased market share of local contractors 2) Increased turn-over by local contractors 3) Increased export income from the construction industry 1) Reduced frequency and costs of unplanned maintenance 2) Reduced incidences of Pre-mature damages/Faults 3) No. of Contractors with ISO 9000 (Equivalent to quality assurance) 4) Reduced number of conflicts resulting from quality aspects 1) Reduced number of incidents, accidents, and deaths 2) Presence of Safety and Health policies within individual companies 3) Reduced level of compensations 4) Reduced excused duties due to ill health 1) Increased market share for women contractors 2) Reduced number of corruption (sexual) complaints Number of contractors with ISO 14000 (or equivalent in environmental protection)

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" CRB’s Corporate Strategic Plan 2004 - 2008 – B. C. Muhegi

Furthermore a SWOT Analysis conducted during the same session revealed that the following were the Opportunities and Threats of the Board. Opportunities a) b) c) d) e) f) g) h) i) j) k) l) m) n) o) p) q) r)

Increased Professional involvement in construction Political stability Established contractors association Willingness to CRB Favourable national policy and legislative framework CRB’s ability to link with other stakeholders Co-operative stakeholders like TANROADS Power to influence legislation Being a Government institution they have a chance in participating in policy making Growing construction industry of stakeholders Low local contracting capacity in need of development International recognition Past records/experience Increased investment in construction Advanced Information Technology Construction works have to be regulated Increased level of funding for road works is good opportunity to build capacity of local contractors s) Existence of training institutes Threats a) WTO for regulatory bodies b) Globalisation c) Inconsistent and overlapping legislations d) Poor economic growth e) Donor who attach conditions to foreign funded projects f) Conflicting government stand on procurement of some construction works g) Political interference Any strategies formulated to achieve the objectives should take cognisance of the available Opportunities and impending Threats 4.0 Conclusion In conclusion, our Task during these consultative meetings is to tly validate the proposed Key Result Areas, Objectives and Indicators. Participants should feel free to propose any amendments and / or additions to the proposals. After consolidating these we should now utilise the working sessions to develop strategies that should be put in place in order to achieve these objectives. The strategies that we will be tly agreed will be the basis for the CRB Corporate Strategic Plan and consequent Annual Action Plans.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Perspective on the Role of CRB and Contractors in Regulation & Development of the CI – CATA

Contractors Perspective on the Role of CRB & Contractors in Regulation & Development of the Contracting Industry

Contractors Association of Tanzania (CATA) 1.0 INTRODUCTION. The construction industry is a paradox in many ways .The construction industry is a major contributor to the social economic development process. In Tanzania it s for about 50% of the Gross Fixed Capital Formation (44% in 1999-NESR 1999) and currently has an average contribution of GDP of 5%. Despite these contributions to the economy the majority of the contractors and professional firms who are involved in the construction industry are small business. To date we have 2565 ed contractors. There are also players in the construction industry such as the informal sector and equipment and material suppliers. All these are involved in intense competition yet the construction industry has remained underdeveloped. The construction yields physical products like the manufacturing industry which are often of mind-boggling size, cost and complexity but yet it does not accumulate significant capital amounts when compared to other industries. There are many ways to show how construction has benefited the Nation more than it has done to the construction industry and its main players. The business risk is therefore high for the participants especially contractors such that deliberate efforts by the government and regulatory bodies, contractors and other stake holders to nurture the industry are of paramount importance. The establishment of the Contractors Registration Board as registration, regulation and development body for contractors is therefore a response to this requirement by the industry. 2.0 REGISTRATION AND REGULATION DEVELOPMENT OF CONTRACTORS BEFORE 1997. Registration and regulation of contractors has ed through a long history dating back to colonial era. Prior and after independence up to 1972, the Government Stores and the Public Works Department maintained s of contractors for the purpose of the executing national projects, mainly, building and civil works. In 1972, the Government through an act of parliament established the National Board of Architects, Quantity Surveyors and Building Contractors. Registration of contractors form other type of businesses continued to be carried out by the Ministry responsible for the works. For example, while the Ministry of Works ed civil works contractors, the Ministry of Water Energy and Minerals ed Electrical Contractors. There were no clear and proper classification of contractors on the basis of type of works they were being ed for. This system remained in place until in 1997 when the Government through the acts of Parliament established three regulatory bodies namely the Architects and Quantity 66

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Perspective on the Role of CRB and Contractors in Regulation & Development of the CI – CATA

Surveyors Registration Board, The Engineers Registration Board and Contractors Registration Board. Prior to the establishment of the three Boards, no specific body was charged with the duty of developing Contractors or the consultants for that matter. As one of the basic functions, the Registration Board is duty bound to develop contractors in addition to its registration and regulation functions. Before 1997 therefore, only registration and regulations services were being provided by the regulatory bodies. The development of contractors was not seen as an essential element in the development of the construction Industry. 3.0 CONTRACTORS REGISTRATION BOARD AND ITS FUNCTIONS. The Contractors Registration Board was established by the Contractors registration Act No. 17 of 1997, Section 3 as published in the Government Gazette No.317 of 1997. The main functions of the Board being (1) Registration of Contractors. (2) Regulation of the Construction Business. (3) Promotion of Contractors. In executing its duties, the three functions are interdependent. In the part five years, the Board has ed a paramount success in carrying out its functions. 3.1 Registration. The Board has been able to 2565 contractors as against 1567 contractors ed in 1998 when the Board became operational. It has also deleted contractors who failed to meet the registration requirements under the new Act. The Board therefore has freed the construction of bogus contractors who apart from causing loses to the customers, made the general public loose confidence on contractors especially the local ones. Prudent registration has therefore created:(1) Better business environment through restoration of client confidence and competition among reputable contractors. (2) Equal opportunities among contractors. (3) Better environment for regulation of the contracting business. 3.2 Regulatory Function. The registration act and subsequent by laws provides a regulated contracting environment. This is beneficial to both contractors and consumers of the construction services. Contracting firms meeting the conditions for registration are able to perform the contracts more diligently and cost effectively. Also through regulation, a fair competition environment is created thus increasing job opportunities to all contractors. The Contractors Registration Board has to some extent succeeded in this function and compliance is increasing. Regulation is still a challenge to the Board especially because in addition to contractors, the Board has to deal with the public in general including the Government. Between 1998 and 2002 out of 419 site inspected for example 125 were under the construction of uned contractors, about 30% of all the sites inspected. 67

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Perspective on the Role of CRB and Contractors in Regulation & Development of the CI – CATA

The informal sector is now ing for most of the buildings built in urban areas, and almost all buildings in the rural areas. This creates an uphill task for enforcing the law. 3.3 Development of Contractors. Despite the immense contribution to the economy, the majority of the contractors are small contractors. To date 90% of all the contractors are in class VII-V. Most of these contractors have no reliable and sustainable contracting capacity. In developing the contractors, the following issues need to be addressed: (1) (2) (3) (4)

Management development. Financial capabilities and credits. Equipment. Job opportunities.

The contractors Registration Board has put in an institutional frame work for the development of contractors. It has established the following activities as its strategy to develop contractors. 1. Workshops. CRB has been organizing workshops every year covering the whole country on the zonal basis at the Dar es salaam, Mwanza, Arusha, and Mbeya centres. The workshops are used to identify challenges facing the industry and recommend necessary intervenitions. Workshops therefore have been a tool for development of contractors. Participation of contractors in these workshops has been encouraging and most of the CRB development plans has evolved from them. 2. CRB Training Programme. The Contractors Registration Board has successfully developed a sustainable structured Training Programme which focuses on contractors needs identified during the annual workshop and other issues found necessary for the development of contractors. The Sustainable Structured Program (SSTP) is aimed at equipping contractors with the relevant skills in the construction industry. It covers entrepreneurship, construction management, project management as well as corporate management. The Training adopted is Continuing Development (CD), which facilitates maintenance and updating of knowledge and practical professional skills, with the rapidly advancing technology. The approach is conducting such courses. Through the modular approach, modules designed to meet the need of the specific target group(s) in the construction industry, contractors at all levels (small to large) have benefited from this training. Between 2001 and to date, a total of 648 have participated in the training. Interesting to note that of these 10% were from large contractors. The majority of the STTP attendants have been Directors, Partners, and Top Management Executives

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Perspective on the Role of CRB and Contractors in Regulation & Development of the CI – CATA

3. Contractors Assistance Fund. The CRB established a Contractors Assistance Fund with the CRDB Bank Limited which became operational in May 2002. The beneficiaries of this fund are contractors in class V and below who constitute 90% of all contractors. To date contractors have benefited from the services of this fund. This has not only increased job opportunities for the contractors but also improved their financial capabilities. The beneficiaries of the scheme also include clients through timely delivery of projects and insurance against loss of capital through non-performance of contracts. 4. Annual Returns. The annual returns submitted by both contractors and Public Clients (who are major employers of contractors) have assisted the CRB in knowing the business trend and the performance of contractors. This has inter alia made it possible for the Board to devise more reliable and responsive plans for developing contractors and the industry in general. 5. Consultative Meetings with Stake Holders. In addition to annual returns received from public clients, the Board has been holding Consultative Meetings with stake holders such as Councilors through various seminars. The exchange of experiences has helped create a conducive environment for the contracting business and for the construction industry development 6. National Contractors Association CRB facilitated the formation of Contractors Association of Tanzania, a National contractors association uniting contractors both at Regional and National level whose main objective is to foster the development of contractors and the construction industry in general. The Board continues to the Association which is still in its infancy. This is a great step towards the emancipation of contractors. From the afore said, the ors Registration Board has played an important role in the development of contractors and the construction industry as a whole over a short period of its existence. 4.0 CONTRACTORS’ PERFORMANCE. Contractors are the major players in the construction industry. Their performance determines the survival of the construction business as an industry. Contractors performance has generally improved but there are more challenges than the success as far as local contractors are concerned. Among the many challenges the contractors have been facing, the following are the most common. (1) Work opportunities. In general the volume of work has bee increasing due to the increased development of activities such as maintenance, Education Improvement Programs, Irrigation Scheme Developments, Rural and Urban Water Supply Improvement Projects etc. However, the job opportunity for contractors has remained a major problem. About 30-40% of ed contractors go without a single job each year. 69

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Perspective on the Role of CRB and Contractors in Regulation & Development of the CI – CATA

(2) Financial Capabilities and Access to Credit. Most of the construction firms are small businesses which are yet to accumulate enough capital. Inadequacy in financial ability is the main factor contributing to poor contract performance by contractors. Access to credit has also remained a challenge to the contractors. Banks and other Institutions prefer to offer credits to trading firms which have a more predictable cash flow than to construction business. Due to uncertainty in the job availability and erratic payments by clients the projected cash flows are usually not met hence frustrating the credit systems. (3) Equipment. Most of the contractors have basic equipment only. Due to weak capital base and low rates of return on investments most of the contractors have not been able to expand their plants and equipment. Invariably, projects demand more than the basic plant and equipment. The market does not offer sufficient equipment for hire, thus frustrating efforts by small contractors to perform their contracts effectively. This currently more experienced with civil works contractors. For those few available equipment, the hire rates are constantly in the increase, and invariably they are in bad state of disrepair (4) Procurement of Works. In general Procurement procedures and conditions have not taken into the local conditions. Most of the tender conditions are restrictive hence, denying most contractors from participating in the tendering process even for small contracts. These include: (i) (ii) (iii) (iv)

Bid security. Possession of liquid cash or guaranteed credit lines sometimes excess of the contract value. Turn over. The turn over values and durations are set without regard to the job availability, making a condition difficult to meet. Performance Guarantee. Performance guarantee issue is restricted to Banks only. Other financial Institutions such as Insurance Companies have been left out. The conditions set by the banks are insurmountable by most of the local contractors. There are many procurement related problems. However the few mentioned above serves to enlighten on the prevailing situation.

(5) Site Organization and Compliance Safety Regulations. Compliance in safety regulation is improving albeit to a small scale. Out of 308 surveyed sites in 2002 complied with regulation by 37%. Occupation health and safety requirements is a cost which should be borne by clients. Clients have to be ready to bear this cost. It is also a question of habit difficult to enforce on site, making awareness campaign vital. To tackle these challenges, contractors and other stake holders have a role to play.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Perspective on the Role of CRB and Contractors in Regulation & Development of the CI – CATA

5.0 THE WAY FORWARD. After exploring the achievements and challenges facing the contractors, in order to foster the contractors’ development and the construction industry, the following has to be done. (i)

Work opportunities.

Awareness campaign through CRB / client consultative meeting to continue so as to create a more conducive business environment and hence increase utilization of contractors in public projects. One of the approach will be to implement the National Preference Strategy where the projects financed by owned funds, contracts not exceeding Tzs 2,000,000,000/= should be exclusive for local contractors to be undertaken by single contractor or in t ventures. In other countries like Botswana, there is a system where by contractors are allocated jobs on a competitive basis and no contractor goes without a job in a year unless the contractors performance is poor. CRB through its Enforcement department should also compel the private sector to utilize the services of ed local contractors. (ii)

Financial capabilities and Access to Credits.

The efforts by CRB in establishing the Contractors Assistance Fund are commendable. More products should be gradually added. To start with the Board should consider the Performance guarantee as the next product to be offered by CAF (iii)

Equipments.

It is not possible for a single contract to solve this problem. The Board should assist in negotiating financing packages by Banks or credit supplies by suppliers. For this approach to work however, contractors through the Contractors Association of Tanzania (CATA) should organize themselves into tangible partnership for purchase of equipment. CRB could also extend guarantee on equipment purchases through the CAF. (iv)

Procurement of Works.

The CRB and CATA have started working on this matter. It’s only recently that they have participated in the review of the Public Procurement Act, 2001 and its corresponding Regulations. The contractors Association of Tanzania should continue to work on other restrictive. CRB should also assist registration and standard tender and contract document and seek their improvements. (v)

Compliance.

The issue of uned contractors and proxy names is still rampant. CRB should start by tackling the two. This will protect the clients and public at large as well as create more job opportunities for ed contractors, hence an incentive to compliance. CATA should also carry out an awareness campaign to ensure compliance of all contractors and the public.

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(vi)

Contractors’ Empowerment.

Contractors will only be able to solve most of their problems if they are united. The Contractors Association of Tanzania provides a forum where united contractors can tackle their problems. CRB should also continue to the Contractors Association of Tanzania so that it can grow in a formidable force that can solve most of the contractors problems and hence spearhead their development. 6.0 CONCLUSION. The Contractors Registration Board has done a commendable job in the few years of its existence. There is still much to be done by the Board as regulatory body and in the development of contractors. The strategies adopted so far are appropriate and need to be sustained. However, more is yet to be done since all performance indicators show that the construction industry is still underdeveloped. In so doing the Board has to work in partnership with contractors. This is only possible if the contractors are united and have a common voice. The forum that unites all contractors in Tanzania is the Contractors Association of Tanzania (CATA). CRB should therefore continue to CATA especially in the early stages to enable the Association to realize its objective and hence extend the necessary partnership to CRB and other stake holders in the construction industry. The Contractors on the other hand should the Association by enrolling, paying subscriptions, and participating in the activities of the Association without reservation.

References: 1. Barrie, D and Paulson, B. P (1992). Professional Construction Management, McGraw Hill International. 2. Manyanga, M.H “The Impact of Contractors Registration Board Efforts in Developing Contractors”. Proceedings of CRB Annual Workshop 2002, Dar Es Salaam. pp 2128. 3. Contractors Registration Board. Annual Workshop Reports 2000,2001 & 2002. 4. Contractors Registration Board: List of ed contractors January 2003.

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Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Perspective on the Role of CRB and Contractors in Regulation & Development of the CI – TACECA

Contractors Perspective on the Role of CRB & Contractors in Regulation & Development of the Contracting Industry

Tanzania Civil Engineering Contractors Association (TACECA) 1.0

Introduction Contractors constitute a group of one of the main stakeholders in the Construction Industry. The Construction Industry embraces the construction, renovation, maintenance and/or demolition of immobile social and economic infrastructure which include roads, buildings (residential houses, offices, hospitals, schools, factories, godowns), railways, airports, dams, irrigation schemes, water supply networks, ports and harbours, to mention some. A combination of the above named activities emerges as the most important single constituent in the country’s investment programmes contributing about 50% of the total capital formation. Nearly 60% of annual development budget of our country is spent on construction activities. Consequently, the realisation of our country’s sustainable development seriously requires, among others, a sustainable Construction Industry, which in turn hinges on the existence of a sustainable contracting capacity. A sustainable contracting industry in the Tanzanian context is defined as, “The ability of Tanzanian contractors to competitively participate in the contracting industry and undertake works efficiently and effectively with continuous growth and performance improvement to meet current and future needs of the contracting industry”. Contractors, as the key players in the Construction Industry, have the task of developing themselves into efficient contractors, so that they can compete for works and effectively contribute to the development of the industry and the national economy. On the other hand, CRB, being a government institution responsible for ing, regulating and developing contractors, has a noble task to make possible the sustainable development of the contracting industry, by among others, meaningfully participating in contractor development.

2.0

Experience On The Performance Of Contractors And CRB

2.1

Contractors: The performance of contractors can be measured in of: • Access to work opportunities • Participation in regard to size of jobs • Financial ability • Management capability • Access to equipment

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2.1.1

Access to work opportunities: Most of Tanzanian contractors obtain between one (1) and three) 3) contracts per year. A handful of them go a whole year without a job. This situation is exemplified by the data below: Table 1: Proportion of Contractors Without a Job each year. Year 1999 2000 2001

2.1.2

% of contractors Without a Job Building Civil Electrical Mechanical 34.1 35.1 37.1 33.0 35.2 29.0 44.4 n.a 35.3 29.8 34.8 n.a

Specialist 7.7 9.1 16.7

Overall 30.9 34.9 32.9

Participation in Regard to size of Jobs: Again, most of Tanzanian contractors work in small jobs in comparison to their classes of registration. Taking into that most of them secure between one (1) and three (3) jobs a year, their annual turnover is consequently very low. Tables 2 and 3 below exemplify the said situation. (Tshs. x 106)

Table 2: Average size of Contract Class I

Building Contractors Limit 1999 2000 Unlimited 2,413.7 7,195.4 Unlimited 136.6 346.0 800 80.8 119.7 600 61.3 57.9 400 38.9 37.8 200 30.5 28.9 100 13.5 20.2 50 12.2 12.5

F L

II III IV V VI VII

2001 197.0 190.2 136.7 40.3 32.6 18.3 11.1

Civil Works Contractors Limit 1999 2000 2001 Unlimited 1,855.8 282.9 1,004.4 Unlimited 221.4 1,797.4 212.1 3,000 83.7 346.9 87.8 1,000 49.4 127.1 213.6 500 52.4 73.1 175.5 300 26.4 62.7 31.6 100 27.4 20.2 25.0 50 17.6 14.8 21.3

Table 3: Average Annual Turnover Class I II III IV V VI VII

F L

Building Contractors 1999 1,552 343 100 154 50 77 16 61

Civil Works Contractors 2000 2001 1999 2000 3,158.2 4,773.5 8,428 3,277.7 416 734.6 961 1,654 542 439 168 353 252 274 83 115 63 163 79 166 51 67 63 105 27 30 29 35 14 10 21 16

20001 4,132.8 1,003 168 183.4 167 48 24 12

2.1.3 Financial Ability: More than 50% of Tanzanian contractors are handicapped as far as working and investment capital are concerned. This is attributed to: • The fact that more than 80% of the said contractors are small and medium companies (classes VII – III) operating with very small capital base, 74

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Perspective on the Role of CRB and Contractors in Regulation & Development of the CI – TACECA

• • • • 2.1.4

Most of such small and medium companies find it impossible to get lines of credit/loans from existing financial institutions due to lack of collaterals; The fact that even when the Bank loans are available, they are so expensive that the contractors cannot afford them due to the high interest rates charged; Delayed/erratic payments from clients, which in turn impairs the small capital of such firms. Poor accessibility to work opportunities and participation in very small size of jobs. Management capability:

Contractors’ management capabilities are measured in of: a) The ability of company owners to mobilise and effectively deploy resources; b) The capacity and ability of manpower resources accessible to the company. Information gathered by CRB and TACECA indicates that most contracting firms are small and are owned by one to three individuals. Most of these are also managed by the owners themselves. Available information also indicates that these ownermanagers lack enough management skills to undertake sophisticated medium and large-scale contracts. Additionally, they lack even the skills to recruit and retain the required manpower resources. Furthermore, the few retained manpower resources rarely undergo continuing professional training/education to equip them with changing and modern techniques and technologies as far as the contracting industry is concerned. 2.1.5 Access to Equipment More than 90% of Tanzanian Civil works contractors do not own the right combination of equipment. However, majority of Building, Electrical, Mechanical & Specialized contractors do have access to right combination of equipment. Major reasons for the poor availability of equipment to civil contractors are: a) Majority of the contractors cannot afford to purchase and own equipment because of poor access to work opportunities in addition to very small size of jobs. To further substantiate this, let us look at Civil Works contractors: In civil works, equipment for about 20-30% of the contract value. From Table 2, take a class III contractor with the highest average size of contract of Tsh. 213,600,000/= : 213,600,000/contract x3 contracts per year = Tshs. 640,800,000 Profit Margin at 20% of 640,800,000/= = Less: Taxes & Levies min.30% of 128,160,000 = Retained Profit per year =

128,160,000 38,448,000 89,712,000

Cost of purchasing a new grader is USD 200,000 while a second hand grader costs between USD 70,000-100,000. Hence, this contractor requires a good number of years to purchase such equipment based on the retained profit. b) Equipment owned by a good number of local contractors is old and inadequate. Availability of spare parts is again another set back. 75

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Perspective on the Role of CRB and Contractors in Regulation & Development of the CI – TACECA

c) There are very few viable plant hire pools either owned by government/public or private sector. As a result of the above reasons, the equipment hire-rates are very prohibitive as far as the small and medium contractors are concerned. 2.2

Contractors Registration Board (CRB): The performance of CRB can be measured in of its fulfilment of the three functions for which it was established, namely Registration, Regulation and development of Contractors

2.2.1

Registration: Table 4: ed contractors as of January, 2002

Type Building Civil Electrical Mechanical Specialist TOTAL

Classes I II 45 14 34 14 14 1 8 1 32 133 30

III 24 21 4 1 13 63

IV 61 53 7 2 123

V 95 76 24 2 85 282

VI 95 197 18 2 312

VII 790 357 111 8 97 1363

TOTAL 1124 752 179 24 142 2221

Generally, the Board has performed well as regards to registration of all types of contractors. Of the ed contractors: • Small contractors (classes-V) constitute 84% • Small and Medium contractors (classes VII-III) make up 93% • Local contractors constitute 96% while foreign contractors are 4%. Registration has encountered two major problems as follows: a)

Differentiation between local and foreign contractors: A firm is categorized as local if the majority of shares are owned by citizens(s) of Tanzania, otherwise the firm is ed as a foreign one. It is difficult to ascertain the shareholding of some of the companies because of cheating on ownership of shares. Either out of ignorance or desperation, Tanzanian citizen(s) accept to subscribe, in de facto foreign firms, as majority shareholder(s). Then such firms are ed as local firms. Worse still, these citizens of Tanzania who are cheated to be majority shareholders do not have controlling authority and do not therefore benefit according to their purported status for they are normally sidelined when it comes to real business transactions of the firm. Such firms: • Will enjoy local privileges once enacted, • Deny CRB of the commensurate payable fees by foreign firms to the Board, • Realize profits illegally at the expense of such Tanzania citizens.

b) Absence of lower threshold The spirit of ing foreign contractors in classes I & II only is to ensure that such contractors undertake jobs, which are worth values around or above class II 76

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Perspective on the Role of CRB and Contractors in Regulation & Development of the CI – TACECA

limit. However, being ed in classes one and two only does not restrict these foreign contractors from undertaking jobs specified for classes III – VII contractors. This practice, apart from violating the above said spirit, it also lessens the small and medium local contractors accessibility to such job opportunities. 2.2.3 Regulation In such an infant economy like ours, the regulation of the conduct and activities of contractors is very important. This regulation is intended not only to protect the s of contractors’ services and the public in general but also to protect the contractors themselves. Currently, the Board needs to do a lot in order to ensure that the contracting industry is well regulated. The following are some of the aspects, which need quick attention in this area: a) Local Authorities and some Public Institutions are offering works to individuals under the guise of Poverty Reduction. Such works should have been awarded to ed contractors as per the Act No. 17 of 1997. b) CRB is painting a wrong impression to the Public on the reasons for deleting contractors. The general impression is that the deleted contractors are “bogus contractors”. Deletion is the heaviest punishment. It is logical to categorise the present reasons leading to deletion of a contractor in such penalties as: Offence • Non-payment of fees • No-submission of review documents • Misconduct o Cheating the client o Corruption

Penalty Suspension for 2 years Suspension for 3months Deletion Deletion

Following table shows the number of contractors deleted from 1999 to 2002. Table 5: Deleted Contracts from Jan, 1999 – 2002 Type Buillding Civil Electrical TOTAL

2.1.5

Classes 1999 2000 233 206 248 78 559 206

2001 92 31 6 129

2002 246 52 10 308

TOTAL 777 331 94 1202

Development of contractors The following are key measures taken by CRB in an effort to develop the Tanzanian contractors: a) Annual Workshops These are very important meetings for it is at these meetings that contractors share their experiences, problems and possible solutions amongst themselves. On the other hand CRB gets one to one communication with the Contractors. The ultimate result is the government- private partnership in identifying and solving of problems in the contracting industry. 77

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Perspective on the Role of CRB and Contractors in Regulation & Development of the CI – TACECA

Table 6: Number of Contractors Attended Annual Workshops 1999 1560 222 14

ed Contractors Contractors Attended Contractors Attended %

Years 2000 1700 301 18

2001 2047

2002 2221

The table above indicates that the number of ed contractors attending these workshops is far on a lower side compared to the total number of ed contractors. b) Sustainable Structured Training Programme (SSTP) In order to increase the ability of local contractors to undertake projects efficiently, CRB introduced this training programme since October 2001 in order to impart to the contractors the necessary knowledge and skills. Number of contractors trained under the programme as of April 2002 is 269. The majority of the trained contractors are small ones (75%) and medium ones (25%). The training programme does not include practical training on the field/site. c) CRB Contractors Assistance Fund (CAF): Small contractors in classes V, VI & VII will benefit from CAF by being able to secure Bank Guarantees for Bid Bonds and Advance payments. CRB has initially deposited Tsh. 300m/ in CRB Bank to be used as security to facilitate guarantees to ed contractors when procuring Bid Bonds and Advance payment loans. d) Formation of Contractors Association of Tanzania (CATA): Mainly through Annual Workshops, CRB made possible the formation of CATA, which now has the interim leadership at a national level. CATA is meant to cater for all types of contractors in Tanzania. CATA’S constitution does not recognize the existence of contractors Associations for specific types of contractors as specified by CRB. 3.0

Challenges The Tanzanian contracting industry is still facing a good number of challenges towards attainment of sustain ability. Following are some of the major challenges:

3.1

Poor Accessibility to Work Opportunities: The level of participation of local contractors in projects is very low. This is both in of number of jobs performed per year and size of jobs executed. This unfavourable trend is attributed to • Low investment in construction works by both government and private sector, • Lack of adequate policy to stimulate participation of local contractors, • Stiff and sometimes unfair competition from foreign contractors; • Contractors low capacity and capability

3.2

Low Financial Ability Poor accessibility to work opportunities automatically results into inability to accumulate adequate working and investment capital. The presence of such prohibitive commercial banks conditionalities for contractor to secure credit facilities/loans, leaves the contractor to operate with very low working capital. 78

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3.3 Low Management Capability: Most of the owners of the contracting firms lack the necessary ability to efficiently and effectively manage their companies. This lack of ability is attributed to: • Low education • Lack of business entrepreneurship • Lack of exposure to the contracting industry within and outside our country. On the other hand, there is low capacity and ability of manpower accessible to these companies. This is seen in: • The low number of trained and skilled personnel who have the right practical professional experience • The low number of manpower resources who receive continuing professional education programmes. 3.4 Creation and Maintenance of True Government-Contractors Partnership in Development: Contractor development involves assisting contractors to efficiently execute projects and hence build the necessary capacity. This is achieved through: a) Identifying the contracting industry needs and correctly responding to them. It should not be on an ad-hoc basis but should be part of an overall strategic framework. The following are some of the aspects which lack an overall strategic framework: • Contractors training offered by CRB; • Establishment of CATA b) Helping create a conducive environment by: • Government and CRB instituting policies and procedures which are focused to contractors development • Pro-active attitudes in such a way that CRB truly understands the predicament of contractors as opposed to showering blames upon the latter. 4.0

Roles To Be Played By Both CRB And Contractors Associations Government commitment, through CRB, in closely working with well-established contractors Associations is an essential requirement for sustainable development of the contracting industry. Some of the roles to be undertaken by both CRB and contractors Associations are:

4.1 Registration Of Contractors Creating a ive mechanism whereby the contractor registration process involves both the contractors Associations and CRB eg Preliminary information regarding the suitability of contractors for registration to be issued by the respective contractors Associations. 4.2 Contractors Ethics Contractors Associations have the potential of promoting and maintaining ethics of their . Hence, contractor ethics can be nicely controlled and maintained by both contractors Associations and CRB while the latter is exercising its regulatory function. 4.3 Training Co-ordinating the training programmes carried out by CRB with the ones undertaken by contractors Associations. Inherent advantages of such co-ordination are: • Elimination of possible duplication of efforts, • Enhanced possibilities of merging of the theoretical and practical training. 79

Proceedings of CRB Annual Consultative Meetings 2003 "CRB’s Five Year Corporate Plan: Goals & Strategies" Contractors Perspective on the Role of CRB and Contractors in Regulation & Development of the CI – TACECA

4.4 ive Environment Both CRB and contractors Associations should ensure that policies and procedures in the contracting industry are ive of the contractors’ performance and development. 5.0 Recommendations Sustainable development of the contracting industry will be achieved if and only if most of the jobs will be efficiently and effectively carried out by local contractors. This, in turn calls for improved local contractors accessibility to job opportunities. The following recommendations will help achieve this requirement: 5.1 Legislation Of The Construction Industry Policy (CIP): Experience has proved that sustainable development of the contracting industry, which is a subset of the construction industry, strongly, requires, among others. • Government commitment, • Right/ive operating environment, • Capable and able contractors. All these requirements are well covered in the CIP document. 5.2 Strengthening Of Contractors Training Programmes. Contractors’ ability to efficiently carry out projects can be enhanced through sustainable training programmes by: • Government, through the Ministry of Works, setting aside specific training works. This does not mean that the government will spend money on training because such reserved works will still be done per government programmes. • Co-ordinating the training programmes offered by CRB with the ones offered by Contractors Associations and other institutions. 5.3 Contractors Registration • CRB should involve contractors Associations in the contractor registration process. This will help in curbing such acts as cheating on ownership of shares by de facto foreign firms which otherwise are ed as local firms. • ed foreign contractors should not tender for jobs worth values below class III limit. 5.4 Need for an Apex of Contractors Associations It is true that the newly formed contractors Association of Tanzania (CATA) craves to cater for the interests of all types of contractors. But it is also true that all contractors are all inclusive but very much mutually exclusive in the sense that the interests and problems of Building, Civil, Mechanical, Electrical, etc contractors vary very much. This is even more evident in the Tanzanian context. Consequently, we highly need to have well established voluntary Contractors Associations, which are focused in the sense that each of such Associations should represent a particular profession/area of competence such as Building, Civil, Electrical, Mechanical works, etc. These voluntary Associations will ultimately form an Apex Association of such Associations. CRB should spearhead the strengthening of such focused contractors Associations.

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5.5 Enhancement of CAF Local contractors urgently need financial in of lines of credit/loans, bank guarantees for bid bonds, advance payments and performance bonds for them to undertake construction projects efficiently and effectively. Commercial banks have proved to be not the best choice. As a result, CRB should seriously look into ways of making possible the above requirements by expanding the base of CAF the soonest. The possibility is there for similar arrangements have been done in such countries like South Korea, Malaysia, etc.

REFERENCES 1. Notes on Capacity Building for Public-Private (Infrastructures), May,2000 by Eng. M.R. Meghji;

Partnership

in

Construction

2. Report on the CRB Annual Workshops, 2000, “Towards Attainment of a Sustainable Contracting Capacity in Tanzania” 3. CRB Annual Workshop 2001, “Improving Your Construction Business: Problems and Strategies” 4. CRB Annual Workshop 2002: “Five Years of CRB: Achievements and Challenges” 5. The Contractor” CRB’S Newsletter, Issue 8: September 2002 6. TACECA’S Plan of Operations for Year 2002/03

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