South Africa is continuing to embrace the need for change through its Black Economic Empowerment (BEE) initiative. Gavin Davids tells Andrew Pelis how management restructuring in line with BEE means the sky is now the limit for Ruwacon.
Perhaps the biggest industrial change in South Africa in recent times has been the introduction of Black Economic Empowerment (BEE), a tool that encourages businesses to hire, train and give ownership to the country’s black community.
With incentives for those who embrace the initiatives, adhering to the rules can give a company a commercial advantage when tendering for contracts. Such has been the experience of Ruwacon, located in East End, Bloemfontein.
The business is seen as one of the country’s leading construction companies specialising in doing repair and maintenance work on government buildings and to date, it has been extensively involved in the construction of projects such as hospitals, criminal forensic laboratories, renovation of world heritage sites, military training facilities, reservoirs, water reticulation systems, sports stadia and various other building projects.
“Ruwacon is ten years old and was started by Pieter Ruthven, our current CEO, converting from a close corporation in 2003,” states Gavin Davids, managing director. “Our biggest client in recent years has been the Department of Public Works and we work on numerous projects across South Africa. Over the last ten years we’ve grown enormously and are now exploring new opportunities.”
That growth has seen the company increase its annual turnover from roughly R100 million three years ago to in excess of R500 million today.
Davids says that investment in BEE has contributed substantially to sustained growth at Ruwacon. “We started out in 2005 and since then, because of the growth we have enjoyed, our BEE rating has given us a much better position for tendering contracts,” he explains.
In the last couple of months, Ruwacon has changed its management structure. As a consequence, it has become one of only a few construction firms in South Africa with level 9 grading with the Construction Industry Development Board (CIDB), as well as black equity ownership of 51 per cent.
All government contracts require a CIDB rating and the higher your grade, the more scope you have to work on such projects. “With our 9 rating we are free to tender on any contract irrespective of size,” he continues.
Davids has no doubt that the company’s strategy of employee ownership is a key component of its success. “Our approach is always that what goes well with Ruwacon goes well with our staff—our communication with our people is crucial and helps to grow our business. As we grow we don’t want to lose touch with our people and culture and we have tried to put in place systems to maintain that contact with people on the ground, wherever they are based, through training programmes, support and incentives.”
With some 200 full-time employees (as well as another 1,300 sub-contractors), training is essential to ensuring safety is maintained. “As we began to win government maintenance contracts, we had a lot of qualified civil engineers but needed to increase our manpower with new capabilities,” comments Davids. “That presented some challenges as there is a lack of skilled people so we have to train people up to fit with our processes.”
That challenge remains today and Davids suggests that staff retention is very important, particularly given the recent slowdown in work and the need to hang on to qualified staff in anticipation of busier times.
The FIFA World Cup has presented opportunities for Ruwacon and the company were involved (as part of a four-way joint venture) in the construction of the new Free State Stadium in Bloemfontein, one of the first stadia to be completed ahead of the tournament in 2009. Having completed that venture, the company is now working on the R360 million project to construct Bloemfontein’s Intermodal Facility (taxi rank).
Many of the projects Ruwacon undertakes run for a 36-month period, with a programme of repair lasting six to 12 months, followed by maintenance work, with the company then looking to extend its contracts.
Quality plays a vital role in maintaining the company’s reputation and Davids says that all processes operate to ISO standards. “As we have grown some of our processes have changed to improve quality and we recognise how this can turn around figures when done properly,” he states. “We have monthly cost meetings where the board scrutinises each project and this has contributed to our success.”
Similarly he suggests that the issue of green construction—now getting a foothold in South Africa—is an area that Ruwacon intends to address quickly. “This has not been an important topic here until this time, but learning all about green initiatives and being able to deliver green services is definitely one of our strategies,” Davids comments.
“We don’t have any involvement in the design phase although we can make proposals, but we can see how environmental considerations could soon be imposed upon the construction industry here, in the same way they were with health and safety a few years ago. We want to be proactive and empower our guys here (through training) in areas of operations and methods, so that we’re prepared for the changes.”
While the opportunities for new projects have slowed down, Davids remains positive about the future, and hopes that the BEE programme will bring through black senior management in time. “We have hired black students with expertise in civil engineering, quantity surveying and construction and we have given them an opportunity to go into middle management. Eventually I hope that several of these will progress into upper management roles.
“We continue to look at opportunities, while there are also opportunities to work in neighbouring countries. However, our main focus is to grow and be recognised throughout the country. That will depend upon sustainability and winning projects. But I’m positive we will achieve our golden vision,” he concludes. www.ruwacon.co.za
