Enterprise and Supplier Development (ESD) Mario Venter Executive, Resources and Industry AECOM South Africa

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 Policy Strategy Institutional Framework Report, Monitor and Evaluate 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

Local Participation Local economic development and sustainability Job creation and skills retention Experienced team leadership Compliance monitoring Quality control Develop ESD Procurement Strategy Process Demand and Supply Status Quo Analysis Database Development Identify Opportunities and Gaps

ESD Components Technology transfer using our best-in-industrypractice systems and processes Skilled and unskilled job creation ESD Local spend to improve logistics and support local business sectors Skills transfer through oversight, mentoring, onthe-job training and quality control

ESD Focus Areas FOCUS AREAS 1.Job Creation & Job Preservation 2. Skills Development DESCRIPTION - 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 - 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 4. Small Business Promotion - Refers to suppliers/sub-contractors functioning within the project community, region, district or country. - What is manufactured locally and what is considered an import - 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 6. Regional Development & Rural Integration - Refers to the process, know-how and IP associated with developing a comprehensive local supply base - 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

Post Bid : Tender example of Supplier Development Strategy 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

Spend Calculation Project mentors + Rates- Preserved/retai ned Jobs- manmonths Project related pre-requisite training ( programmes + hours) Sub-consulting scope manhours, roles, potential SED partners Project related Expensessecurity, cleaning, travel, etc.. Cost to company of new hires (BM,WF,BF)- man-months ESD Spend 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 Online system that is easy to link into and provide reporting Supplier development management systems Job creation, preservation, retention information. Independent audit process Build a portfolio of evidence. Pre-planning job designations in the resourcing plan for supplier development for all project phases Small Business Development & Local spend Skills transfer Technology Transfer Compile a database that allows ESD complaint companies to register and be audited. Technical teams need to pre-plan based on companies available Identify train the trainer skilled individuals in the resourcing plan Reduce subjectivity of the training and make it structured. Identify technology and IP training and software transfer that can be utilised.

Key Success Factors

Local Participation: We Have Done it Before Gautrain Project Developed Monitored Implemented Reported PMR. Africa Diamond Arrow Award - stimulate economic growth and development in Tshwane Municipal District

Local Participation: We Have Done it Before 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)

Questions

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