Source: Charles Wright, Stefanutti Stocks enterprise development director
The key objective of the Voluntary Rebuild Programme (VRP) is to transform the South African construction industry by developing a number of black-owned emerging enterprises into meaningful competitors. The VRP partner programme will see Stefanutti Stocks, over a period of seven years, assist in developing the skills, systems and resources of its VRP construction partners, so that they can be rated as CIDB Level 9 (CE or GB category) companies. By 2024 these companies must achieve a cumulative combined annual revenue that is equal to at least 25 per cent of Stefanutti Stocks’ annual South African Civil Engineering and Building turnover.
The industry’s relatively low profit margin / high turnover business model represents a challenge to enterprise development within the construction sector, as this is not an easily achievable model for smaller or start-up entities. “Smaller companies depend on sub-contract work from the larger construction companies, but cannot be sustained at the profit margins required to win tenders,” says Charles Wright, enterprise development director for Stefanutti Stocks. “In order to be effective in assisting emerging contractors to be sustainable in the long term, as well as meeting VRP turnover requirements, we will focus on establishing strong working relationships with our VRP partners and working jointly on projects in South Africa.”
Stefanutti Stocks is required by the VRP to develop beneficiaries, and will partner with Axsys Projects (Pty) Ltd, previously a strategic enterprise development partner to Stefanutti Stocks.
Axsys Projects (Pty) Ltd
Axsys Projects is a black-women owned, B-BBEE Level 1, CIDB 6CE construction company that undertakes structural, civils, roads, earthworks, building and marine infrastructure construction projects across South Africa. It was founded in October 2011 by successful property development entrepreneur and corporate executive Halga Ninow-Cohen. Her vision was to establish a fully-fledged black female owned construction company that could meaningfully contribute to infrastructure development across South Africa.
The relationship between the two companies began in 2012 when Axsys Projects joined Stefanutti Stocks’ enterprise development programme while subcontracting to the company on a pipeline project. Following the completion of this contract, Axsys subcontracted to Stefanutti Stocks Coastal on the North Eastern Waste Water Treatment Works (WWTW) project. This project saw it take on more responsibility and expand its skills set to include concrete work, the construction of three sludge lagoons (the size of football fields), pipework and building work.
The partnership began to bear real fruit when early in 2014 a joint venture between Stefanutti Stocks Marine and Axys secured the R760-million Transnet Capital Projects contract to reconstruct the sheet-pile quay walls at six berths on Maydon Wharf in Durban Harbour. Here Axsys Projects stepped out of the subcontractor role, and as a 26 per cent shareholder in the joint venture, contributed to the resources utilised on the project.
In total the two companies have tendered on eight projects in joint venture to date. In addition to the Maydon Wharf project, a further three projects have been awarded to joint ventures between the two including the civil construction of the Zuikerbosch Sedimentation Plant, and two building projects for Nedbank and Mercedes Benz South Africa.
The VRP partner will have a champion within its sponsor business unit. The champions (the respective business units’ managing director) will promote the developing entity within Stefanutti Stocks and identify potential synergies on tenders and future prospects across the group. The partner may have several mentors who will assist with the transfer of knowledge and skills in their specific field, thus enabling a broad and comprehensive development of the VRP partner employees.
The multiple benefits to a VRP partner include having access to projects that are outside its existing CIDB tender range as well as involvement in joint ventures that will enable an improved CIDB grading as well as real skills transfer, access to established industry best practices and operational experience. “The intention is to create a more continuous workflow for our VRP partners, that in addition to a significantly increased turn over will provide regular income to build resources, invest in capital equipment and ensure long-term sustainability,” concludes Wright.