The Eastern Cape department of human settlement is battling to pay contractors entrusted with building 13 100 low-cost homes – because the contractors are too efficient.
But the pay squeeze may force the contractors to lay off thousands of workers.
The problem for the department is that contractors are over-performing and it says it can’t keep up with them and the contractors are owed millions.
Provincial department spokesman Lwandile Sicwetsha said: “The department is not bankrupt. Performing contractors that have huge projects are ahead of their schedule and this has impacted our cashflow and that of their projects.
“The contractors are paid on a monthly basis and per milestones and value created on site. The last time we invoiced was last week and there is another run this week.”
Sicwetsha said the delivery of housing units has surpassed the department’s targets due to the impressive performance of contractors on their projects. He said 9724 houses had been built, 4018 were at roof level and 1088 at the finishing stage.
By the end of January, the department had spent R1.8-billion of its R2-billion budget allocation.
“Since December, the department has been focusing on completion units and not foundations because foundations will not give us completed units by the end of March,” said Sicwetsha.
Contractors who spoke to the Saturday Dispatch this week feared the department was bankrupt and said they were contemplating having to lay off thousands of workers if the situation was not immediately resolved.
“Construction has slowed down immensely and is on the brink of complete halt,” said one contractor who declined to be named for fear of losing their contract.
A heated meeting between 15 major contractors and head of department Gaster Sharpley took place on Monday night in East London.
In the meeting, Motheo Construction Group CE Dr Thandi Ndlovu suggested contractors form a committee to make representations to Minister of Human Settlement Lindiwe Sisulu.
Ndlovu was the 2013 winner of the business woman of the year award in the entrepreneurs category awarded by the Business Women Association of South Africa.
Another contractor who did not want to be named said: “Mr Sharpley shot down the suggestion fearing it would embarrass him because the provincial department was recently injected with an additional R400-million to pay contractors.
Contractors said that in accordance with a “funding agreement” the department was supposed to pay for each achieved milestone within 30 working days from the submission of claims.
This had not happened since August.
“Due to the forced slow down of production targets by the end of March will not be achieved. — zwangam@ dispatchlive.co.za/
Firms too efficient for Bhisho
But the pay squeeze may force the contractors to lay off thousands of workers.
The problem for the department is that contractors are over-performing and it says it can’t keep up with them and the contractors are owed millions.
Provincial department spokesman Lwandile Sicwetsha said: “The department is not bankrupt. Performing contractors that have huge projects are ahead of their schedule and this has impacted our cashflow and that of their projects.
“The contractors are paid on a monthly basis and per milestones and value created on site. The last time we invoiced was last week and there is another run this week.”
Sicwetsha said the delivery of housing units has surpassed the department’s targets due to the impressive performance of contractors on their projects. He said 9724 houses had been built, 4018 were at roof level and 1088 at the finishing stage.
By the end of January, the department had spent R1.8-billion of its R2-billion budget allocation.
“Since December, the department has been focusing on completion units and not foundations because foundations will not give us completed units by the end of March,” said Sicwetsha.
Contractors who spoke to the Saturday Dispatch this week feared the department was bankrupt and said they were contemplating having to lay off thousands of workers if the situation was not immediately resolved.
“Construction has slowed down immensely and is on the brink of complete halt,” said one contractor who declined to be named for fear of losing their contract.
A heated meeting between 15 major contractors and head of department Gaster Sharpley took place on Monday night in East London.
In the meeting, Motheo Construction Group CE Dr Thandi Ndlovu suggested contractors form a committee to make representations to Minister of Human Settlement Lindiwe Sisulu.
Ndlovu was the 2013 winner of the business woman of the year award in the entrepreneurs category awarded by the Business Women Association of South Africa.
Another contractor who did not want to be named said: “Mr Sharpley shot down the suggestion fearing it would embarrass him because the provincial department was recently injected with an additional R400-million to pay contractors.
Contractors said that in accordance with a “funding agreement” the department was supposed to pay for each achieved milestone within 30 working days from the submission of claims.
This had not happened since August.
“Due to the forced slow down of production targets by the end of March will not be achieved. — zwangam@ dispatchlive.co.za/
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