Consulting engineers face a challenging future

Posted On Friday, 05 December 2003 02:00 Published by eProp Commercial Property News
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Good staff needed.

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In its latest management information survey to June 2003, the SA Association of Consulting Engineers has highlighted that as many as 90 percent of its member firms reported that they face increasing difficulties in recruiting good-quality engineering staff.

This is up 32 percent over the previous 12 months, with the last six months to June 2003 reflecting a 29 percent increase alone. In December 2002, only 69 percent of firms were reporting difficulty in finding engineering staff.

Graham Pirie, the executive director of the association, says:

"The high level of this statistic and the pace at which it has been increasing is a concern for the industry. We are already aware that the South African consulting engineering resource is an ageing one, with the average age of professional civil engineers being over 50."

"Since there is already a shortage of young engineers, as our professional engineers reach retirement age, the industry could find itself in a crisis and consequently the capacity of the construction industry to develop new infrastructure will be severely inhibited."

The survey shows that new engineering entrants to the job market are at an all-time low.

"For some time now the association has been highlighting the fact that there is a shortage of black engineers. However, this survey has shown that firms are now finding it equally hard to recruit white engineers," Pirie says.

The number of partners and directors have decreased from 11 percent in 2001 to 9.8 percent of people employed. While this reflects a change to less top-heavy structures, it supports the fact that the most skilled engineers are a declining resource.

"In less than a generation, South Africa may no longer have a skilled consulting engineering base capable of maintaining the current infrastructure or of developing new infrastructure."

The survey shows that employment in the industry is down, with total employment in all firms falling.

Only 30 percent of members feel they need to employ engineering staff in the next six months, 18 percent are considering technical staff and only 5 percent are planning to employ support staff.

"As a result, we have seen the emergence of a growing trend to outsourcing, with the percentage of total turnover outsourced reaching an all-time high at 22 percent. The prevalence of outsourcing appears to be strongest among small to medium-sized firms. Until recruitment difficulties are resolved, this is a trend that is likely to continue," Pirie says.

The survey shows that salaries and wages, which represent 48 percent of total fee income earned, is up 0.64 percent on the previous six months, although over 12 months compared with the previous 12 months, it has declined by only 2.3 percent.

"This indicates that more firms are being driven to pay a premium to retain and attract staff and while the pool of skills remains small, we may see a continuation of this trend."

"Capacity levels have been rising gradually from the mid-70 percent in the 2000/01 survey to the lower 80 percent in 2002, and it has risen by 10 percent in the past 12 months to rest at 89 percent of respondents as at June 2003," says Pirie.

"With the strengthening rand and good economic growth, we can expect the demand to increase further. With recruitment difficulties and marginal capacity available, we expect that unless some serious effort is made to recruit students to engineering, we are going to face a slowdown in the industry's ability to deliver."

In the distribution of work across various subdisciplines, building services reflect the largest gain, adding 1.8 percentage points, while the greatest losses are experienced in transportation and project management.  

"This is likely to be related to the falling interest rates and with two further cuts anticipated, building services is likely to continue to gain ground," he says.

On the provincial distribution of work, the survey shows that the Eastern Cape is adding to its share of the work, growing to 11.3 percent of the total fee income, up from 8 percent in the previous survey. The highest percentage of work in the Eastern Cape is reported as being civil works at 45 percent of the fee income earned.

Conversely, Gauteng has lost market share and reflected a fall in share of total fee income from 40 percent in 2001 to only 28.7 percent of the fee income in the June 2003 survey.

"This could be indicating a sharp increase in regional spending and when one considers developments such the industrial development zones like Coega, this could provide an explanation for why work seems to be coming from the regions other than Gauteng," says Pirie.

Work in Africa has increased over the previous 12 months and now rests close to 15 percent of total fee income, up on the 10 percent reported in 2000 and 2001. Larger firms average between 20 percent and 30 percent of income coming from Africa.

"Going forward, the challenge will be to find opportunities for more of our small and medium member firms to work in Africa. With the fragmentation of large projects into smaller portions, it is possible that smaller specialist niche firms will be able to make good inroads into Africa," Pirie says.

"We feel that as the New Partnership for Africa's Development gains momentum there will be more and more emphasis on sourcing consulting engineers from Africa and this is where our South African small firms have the opportunity to form alliances and partnerships with our engineering colleagues in the north, offering capacity and specialised resources to supplement local skills."

Only 16 percent of the firms responding operate outside Africa and generate fee income from international clients. A small percentage of these firms report earning more than 30 percent of fee income outside Africa, while the rest average between 1 percent and 22 percent.

"There is an area for concern when it comes to international clients, as the survey showed that delayed payments is reoccurring to a greater degree."

"In December 2002 about 8.4 percent of total fee income was outstanding for more than 90 days. This has now increased to 15.5 percent and specifically delayed payment by foreign clients has risen to an alarming 24 percent of total fee income earned outside Africa," he says.

The private sector remains the single most important client for consulting engineers, forming more than 41 percent of the client base, up from 37.7 percent in December 2002, with the next largest being local government at 20.8 percent, up from 17.8 percent in the previous survey.

Promisingly, for the industry's efforts to transform, the survey shows that across all employment categories African staff, not including Asians and coloureds, have risen from 22 percent of total people employed at June 2002 to 25 percent at end June 2003.

On average, 1.5 percent of the payroll is spent on training and 0.6 percent on bursaries, with the smaller firms generally spending a higher percentage than their counterparts at an average of between 2 percent and 3 percent of total payroll.

Across the survey respondents, 30 percent of firms are spending more than 2.5 percent of payroll on training.

Last modified on Thursday, 26 June 2014 19:08

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