SMME SUB-CONTRACTORS: CHALLENGES IN EXCECUTION OF GOVERNMENT INFRASTRUCTURES

By: Siseko Bonelwa
Posted on: 4 November 2020
INTRODUCTION
The Small Micro Medium Enterprise (SMME) firms include classifications such as micro-enterprises, survivalist-enterprises, informal sector enterprises, and formal small and medium-sized enterprises Gasa (2012). These contractors in the construction sector normally specialise in civil works, electrical work, concrete work, steelworks, glazing, etc. They may employ between 100 and 200 people.
The National treasury’s implementation guide (formally known as Preferential procurement regulations, 2019 pertaining to the preferential procurement policy framework ACT, ACT No 5 of 2000) requires public institutions to identify procurement opportunities for designated groups (SMME contractors) and apply the 30% compulsory sub-contracting provision where feasible for projects above R30 million.
CHALLENGES FACED BY THE SMME CONTRACTORS
It is evident that SMME contractors are one of the major contributors of delays in the execution of government projects in South Africa.
The figure below highlights some of the factors that are affecting the SMME contractor’s performance and quality of work.

RECOMMENDATIONS
Below are some of the preventative measures that may be implemented:
- Government departments must ensure that the SMME contractors receive reasonable payments on time from the main contractor to avoid strikes and other distractions on site.
- Main contractors must engage with the SMME sub-contractors in terms of pricing criteria and select the sub-contractors that priced at market-related rates.
- The work to be sub-contracted to the SMME should not be of specialized nature and must be mostly labour-intensive work to reduce the risk.
- Development of diversified skills and expertise
CONCLUSION
With the factors highlighted above, it is vital that SMME development strategies be put in place to ensure that the SMME contractors fully understand the construction law, processes, and techniques. But to be successful, these investments need to be accurately targeted.
PREVIOUS POSTS
- Defects Liability Period And Final Completion – Clause 21 And 22 Of The JBCC
- Concrete In The Construction Industry
- Insurances & Guarantees – Clause 8, Clause 10 And Clause 11 Of The JBCC
- Renovate, Remodel or Rebuild? Here’s How to Choose
- Your Guide To Modular Buildings
- JBCC Selected Subcontractor, Nominated Subcontractor And Direct Contractor
- Women In Construction From The Inside Out
- BIM (Building Information Modeling) – Solution
- Work Smarter, Not Harder
- BEATING THE ODDS - The AGORA perspective of 2020's first half
- 3D Printing in the construction industry
- The impact of Covid-19 on the economy and businesses
- Covid-19 as a force majeure event
- The state of SA’s construction industry
- Hotels – change in development approach’s
- Geothermal heating & cooling systems
- Words matter, but written words matter more
- Who owns the float?