Enterprise and Supplier Development

(ESD)

• Mario Venter

• Executive, Resources and Industry

• AECOM

• South Africa

……………. Gas to Power definitely has a place in in Africa’s power generation and energy sector and will clearly provide invaluable contribution to the economic growth of the continent.

But let us not forget….

Enterprise and Supplier Development ESD

For the seventh consecutive year, Engineering News-Record (ENR) has ranked AECOM as the top design firm in the United States. The annual rankings were announced in ENR’s 2016 Top 500 Design Firms listing last week. In addition to a number one ranking, our company excelled in several individual categories, including: # 1 in Transportation # 1 in General Building # 1 in Hazardous Waste # 2 in the Top 50 Designers in International Markets # 3 in Water # 3 in Sewer and Waste # 4 in Power In an interview with ENR, Fred Werner, President, Design and Consulting Services Americas, said, “We no longer just draw up a set of plans to hand over to the contractors to tweak and build. Now, we are at the forefront of assessing the client’s needs, deal-making to finance a program and planning its execution.”

Presentation Outline

ESD unpacked

Case Studies: The AECOM Experience

ESD: Risk Management Approach

ESD unpacked

The ESD universe

LEGISLATIVE

FRAMEWORK

1. Local suppliers

Gaps & needs analysis

2. Foreign suppliers

Value Chain Analysis

3. Client needs

Ministry, Parastatals,

Private clients

• Skills & Capability levels

• Implementation opportunities

• Industrialisation

• Direct contract opportunities

• Implementation requirements

• Skills/technology transfer

• Procurement strategies

• Value chain opportunities

• Resource needs - skills

development, training, research,

educational requirements

• System needs- technology transfer

• Process needs- Reporting, Auditing

• Policy

• Strategy

• Institutional Framework

• Report , Monitor and Evaluate

Local Participation

Local economic development and sustainability

Compliance monitoring

Quality control

Job creation and skills retention

Experienced team leadership

Demand and Supply Status Quo Analysis

Database Development

Develop ESD Procurement

Strategy Process

Identify Opportunities

and Gaps

ESD Components

ESD

Technology transfer using our best-in-industry-practice systems and processes

Skills transfer through oversight,

mentoring, on-the-job training

and quality control

Local spend to improve logistics and support local business sectors

Skilled and unskilled job

creation

ESD Focus Areas

FOCUS AREAS DESCRIPTION

1.Job Creation & Job

Preservation

- Increase or preserve number of jobs by the

contractor

- Award of business from the project

- Favouring a more labour intensive method of job

creation

- Emphasis on skilled, semi-skilled, unskilled, local

labourers/employees

2. Skills

Development

- Refers to skills transfer with emphasis on

accumulation of knowledge & experience

- Generally targeted at sector specific skills, with

focus on artisans & technical skills

ESD Focus Areas

3. Local/National

Spend

- Refers to suppliers/sub-contractors functioning

within the project community, region, district or

country.

- What is manufactured locally and what is

considered an import

4. Small Business

Promotion

- Encourages the growth & expansion of SMME’s &

start-ups through procurement & support

mechanisms

- Emphasis on black owned & black woman owned

businesses

- Enterprise Development

ESD Focus Areas

5. Technology

Transfer

- Refers to the process, know-how and IP

associated with developing a comprehensive local

supply base

6. Regional

Development &

Rural Integration

- Refers to suppliers/sub-contractors functioning

within local communities and regional areas from

which goods & services will be procured

- Enterprise Development & Socio-Economic

Development

Case Studies:

The AECOM Experience

Project Life Cycle Needs

PRE-BID PROCESSES

DURING BID

CONTRACT NEGOTIATIONS POST CONTRACT AWARD

Pre-Bid Process

• Local content Strategy developed for Packages before the bid is released to the market

Tender Requirements • Tenderers must submit an ESD Plan with targeted figures equating

to no less than 25% of the total of the prices of the Contract (ex

VAT)

• The ESD Plan must indicate how the Tenderer plans to achieve the

set 25% of the total of the prices of the Contract by allocating spend

to the ESD Focus Areas

• Tenderers not submitting a signed the ESD related Returnable

Schedule and not committing to the minimum ESD target of 25%,

will be eliminated from further evaluation

• ESD is a pre-qualification criteria and Tenderers not conforming to

the ESD requirements, will be deemed non-responsive

• ESD is a contractual obligation which carries penalties for ESD

targets not achieved (related contractual and commercial clauses

are included)

Tender Evaluation Methodology A South African state owned parastatal utilises the following methodology and criteria in selecting a preferred Service Provider in certain Design tenders:

Post Bid : Tender example of Supplier

Development Strategy

Strategy

•Prioritise and engage qualifying small businesses

•Include mentoring and skills development in resourcing plan

•Employ an independent company to report, manage, monitor and ensure our compliance

•Pre-plan and supervise teams’ skills development programs & courses through independent yet relevant organisations like CESA/ SAICE

Implementation

•Pre-bid submission

•Identified and approached suitable partners for the technical scope

•Identified suitable work scope for qualifying Partners

•Identify resources needs that will meet job creation early in the manning plan

•Post-bid Submission- To mitigate risk against non-compliance with SED if successful

•Workshop with local partners to explain Client & project Team requirements

•Packaged out scope of works through an RFQ process to partners so that technical teams to assess and identify suitable partners

Post Bid : Tender example of

Supplier Development Strategy

Spend Calculation

ESD

Spend

Cost to

company of

new hires

(BM,WF,BF)-

man-months

Project

mentors +

Rates-

Preserved/retai

ned Jobs- man-

months

Project related

pre-requisite

training (

programmes +

hours)

Sub-consulting

scope –man-

hours , roles,

potential SED

partners

Project related

Expenses-

security,

cleaning,

travel, etc..

Man hour rates

( mentors, new

jobs, retained

jobs, trainers)

ESD: Risk Management Approach

Typical ESD Risks • Additional costs as ESD is a project on its own

• Interfaces for ESD implementation at project level include: HR, Finance, Technical teams, Procurement, etc.

• Constant changes in Client’s goal posts for ESD - localisation, skilled /unskilled, women/youth, area specific consultants, etc.

• Lack of sound stakeholder relations

• Database of appropriate ESD companies

• Relatively low priority for the project (Delivery of project on time & budget)

• Stringent project deadlines

• Lack of project line functions’ support and contribution

• Multiple ESD audit companies with different reporting requirements from government side

• Portfolio of evidence unclear from Client’s side

• Anticipated/ Projected ESD targets versus actual ESD targets

Risk Management approach Components Risk Mitigation

Supplier development

management systems

Online system that is easy to link into and provide reporting

information.

Independent audit process

Build a portfolio of evidence.

Job creation, preservation,

retention

Pre-planning job designations in the resourcing plan for

supplier development for all project phases

Small Business Development

& Local spend

Compile a database that allows ESD complaint companies to

register and be audited.

Technical teams need to pre-plan based on companies

available

Skills transfer Identify train the trainer skilled individuals in the resourcing

plan

Reduce subjectivity of the training and make it structured.

Technology Transfer Identify technology and IP training and software transfer that

can be utilised.

Key Success Factors

Local Participation: We Have Done it

Before

Gautrain Project

PMR. Africa Diamond

Arrow

Award - stimulate economic growth and development in

Tshwane Municipal District

Developed Implemented

Monitored Reported

Proactive facilitation and support: • Transfer of skills & knowledge • Process based on experience of • Monitoring and compliance of Enterprise

Development and Supplier Development

─ Gautrain Rapid Rail Link ─ Renewable Energy Feed-in Programme ─ Gauteng Freeway Improvement Project (SANRAL) ─ Cape Town EPCM Programme (Transnet) ─ Ngqura Manganese Export terminal project (Transnet) ─ Gibela Rolling Stock Manufacturing Facility (ALSTOM GIBELA)

Local Participation: We Have Done it Before

Questions

Thank you