20th Anniversary of the Power Group

1993

Business Personality of the Week

Exactly 10 years ago Graham Power drove from his Sir Lowry’s Pass smallholding in a second-hand bakkie, with two casual labourers, to start Power Construction’s first civil engineering contract.

The months of agonising, which had culminated in his decision to “go do it alone”, lay behind. Immediately ahead lay the Herculean task of persuading clients and consultants – all wary of the “new boy on the block” who had no machinery and no infrastructure – to give him work. To this day Graham Power remembers his bitter disappointment when. After being the lowest tenderer, a consultant nevertheless awarded a valuable R26 000 contract to a competitor.

Disappointed, yes. Daunted, not at all. Power secured proof that whatever machines he needed would be available to him, and only six months later that same consultant handed him a R260 000 contract – a breakthrough which allowed him, less that a year later to buy his first second-hand grader, the first of hundreds of vehicles and earthmoving machines which today make up the Power Construction fleet.

The company’s turnover in that difficult first year was R300 000, but with his personal reputation now endorsed by a track record of successfully completed contracts, Power was able to secure more and more work. The scale of contracts multiplied as did Power Construction’s turnover.
Today the company employs more than 600 people working from its head office in Blackheath and branches in Vredenburg on the West Coast and in George. Activities have diversified into paving with the launch of its subsidiary Blitz Asphalt in 1988; Power Properties, a property development company, has several successful township developments to its credit; the popular Firlands Equestrian Centre and Farmstall in Gordon’s Bay is already a thriving commercial venture.
From that inconspicuous start with just a single bakkie, Power Construction this year celebrates its 10^th anniversary with an annual turnover for the Power Group of Companies approaching R70-miilion!

Power started his career immediately after his year of national service, joining Savage and Lovemore as a learner surveyor, often riding 75km to and from work on the back of a bakkie during his first year. Within months his thrusting, decisive style-wryly recalled by colleagues as “cheek” – earned him a reputation as a man able to cut through to the heart of a problem, eliminate fuss and delays, get the job done.

At the age of just 19, Power was appointed site agent (one of the youngest such appointments on record) and by his 21^st birthday was given charge of supervision construction of the Steenbras hydro-electric lower dam, near Gordon'’ Bay. This level of responsibility however, did not prevent him indulging his other great love, rugby. As a hooker he captained the Gordon’s Bay club team and later as chairman of the club, was instrumental in the club’s promotion to the first division. He is still the club’s honorary chairman.

Power remained with S&L for nine years, gathering experience, a reputation for straight direct dealing and the momentum which led to his decision to go out on his own.

“Among the lessons I learned very quickly was that without good men, you cannot do good work; that an ambition to be the “biggest” look ridiculous beside an ambition to be the best; and that if you take out, without putting back, you are signing your own death warrant.”
Power Construction specialises in township development, pipelines and roadwork, activities in great demand with the recent upsurge in the formalisation of settler communities. The company has completed contracts, among others in Khayelitsha, Wallacedene and Kayamandi in the Western Cape and Thembalethu, Kwanankwaba in Hillview in the Southern Cape. It was in the development of these townships that Power’s belief in “reinvestment”- which in the company itself takes the form of an elaborate programme of staff training and self-realisation – found fertile ground for innovation.
The company broke new ground in the civil engineering industry by undertaking in consortium, the financing, conveyancing, construction and even re-location of residents to the 4 100 site Village 5, town 3 township in Khayelitsha. Graham Power has also been a prime mover in the civil engineering industry’s initiative to give settler communities a stake in the development of their townships. Through the use of labour intensive construction methods, hundreds of men from these communities have been given jobs ore-casting kerbing and construction blocks on site, trenching and backfilling for pipelines and building toilets.

This movement to implement labour intensive construction methods in every possible civil engineering contract now has national backing. The National Committee for Labour Intensive Construction (NCLIC), representing the industry, with Graham Power as its chairman has already secured the vital backing of COSATU and the Government.

IN 1990 Graham Power was awarded the “Junior Sakeman van die Jaar” title by the Johannesburg Afrikaanse Sakekamer, an award he typically claims belongs to his team, rather than to himself.
“I have personally done virtually every job now done by me staff. I know the difficulties they experience and see it as my job to make it easier for them to get the job done, quickly and efficiently. That way everyone benefits. I believe in employing above average people, expect above average performance and I provide above average reward. With this kind of philosophy, how can I take sole credit for the achievements of Power Construction?”
These are more than just words. Graham Power mixes freely with his men, wherever their job or status in the company. No “stern, distant manager” he is often seen on site, giving solid advice without being patronising, guiding without dictating. And he refuses to wear a tie, unless absolutely necessary.
“Management too often pays lip service tot he need for close communication. By talking to my men, trying to understand them, mixing with them, I get to know their problems and can feed their strengths. We have set up training programmes designed not only to help our staff do their jobs better, but also give them an understanding of how every part of the company works. Our elected Employees Liaison Committee makes it possible for any man, whatever his position in the company, to communicate his difficulties to management. Every problem raised by this committee is dealt with and solved.”
Power has strong confidence in South Africa’s future and in the role of the civil engineering industry in that future.
“Already we are seeing a resurgence of infrastructural development. Political changes have already made it possible for large-scale township developments to be planned and executed, but what we are now seeing is only the spearhead of the massive development which will undoubtedly take place in the next decade. The civil engineering industry can, I believe, play a key role not only in realising that potential, but also in helping to generate the employment which will promote development in other directions and in other sectors.”

1993
Dual carriageway planned
Voortrekkerweg, the main road through Malmesbury is being converted to a dual carriageway to cope with increased traffic to the N7 highway and the northern Cape.
Mr Robbie Zamudio site agent for civil engineering contractors Power Construction, said the R1.65 million project also called for the diversion of the town’s main underground stormwater culvert and the relacation of all underground services beneath Voortrkkerweg.
The seven-month contract for the municipality of Malmesbury is due to completion in October. Consulting engineers are Vorster van der Westhuizen.

January 1993
Contractors share in risk
The unique R30.75-million Village 5 township development at Khayelitsha, providing 4 100 fully services plots on the 144 ha site, is reported to be the first such development in South Africa, in which the contractors themselves have undertaken a major portion of the capital risk. The project was completed in December.
An unprecendented constraint on the development was that the civil engineering consortium received payment only on completion of the services and registration of the properties to individual owners. Payment at the rate of R7 500 per erf, was funded by the Independent Development Trust (IDT). To facilitate transfers and therefore cash flow, the contracting consortium, CDC (Community Development Consortium), consisting of Power Construction, Clifford Harris and EU Civils, in association with WCUSA (Western Cape United Squatters’ Association) had to set up a management, information and conveyancing facility to identify, register, screen and apply for subsidies for eligible buyers. At times the contractors were even required to apply for and arrange ID documents for buyers and to organize their relocation.
The CDC was also required to provide finance to the value of R 12 million at any stage. “To our knowledge this is the first time contractors have been prepared to undertake a capital risk of this magnitude in the interests of job creation and the local communities.” Said Graham Power, managing director if Power Construction.
All project costs, including land costs, town planning, land survey, engineering fees, legal and transfer fees, information services, facilitating costs, escalation costs and bridging finance had to be allwed for within the subsidy and the project team also had to assume all responsibility for the development from inception in January until the development agreement with the IDT was finalized in May last year.
Planning and design by consulting eingineers Hill Kaplan Scott Inc (HKS) began in September 1991, and work on the project started in January 1992. “This project is elevated above the norm by several factors,” Andre du Preez, operations director for Power Construction said recently. “It reflects a new development procedure between government, local authorities, the private sector and, more important, the recipient communities and their representatives; through close liaison we were able to ensure orderly relocation to areas which had been upgraded to normal services standards at a very low cost; and the project is indicative of the short timespan in which such developments can be completed.”
The total development, with provision for 12 schools, crèches and churches, business and service trades, community facilities and public open space, in addition to the 4 100 residential sites, includes: surfaced roads – 26km; water mains – 27km; sewer mains – 24km; stormwater mains – 5km; cable ducts (electrical and telephone) – 2.5km; high voltage reticulation – 6km; low voltage reticulation – 5km; and precast concrete toilet units – 4 100 (all with flushing toilet).
Bus route roads were provided with mountagle kerbs on both sides, 2m surfaced footways on both sides and bus bays at 200m intervals. Minor roads incorporated a mountable kerb on the lower side of the roadway and road edging on the high side.
Design parameters called for minor stormwater to be conventionally piped, while major stormwater runoff will be along the surfaced roads through a series of retention ponds to a main stormwater culvert previously provided for the development. The ponds are located in public open spaces or are part of specially designed sportsfields.
Sanitation is through a conventional waterborne sewerage system with separate connections to individual erven. Each erf is provided with a toilet unit with conventional earthenware closet and flushing system.
Although no electricity is provided for residential erven, adequate ducting under roads was installed for future electrification. Du Preez added that in spite of one of the worst winters in 20 years, and the need for waterborne sewerage demanded by the Cape’s high water table, the project had been completed to a high standard with low costs in a very short time and had also made some use of labour-based construction methods to create jobs for the beneficiary community.

June 1993
Agreement could pave way for job creation
An agreement was signed in Johannesburg last night, paving the way for possible job creation in the construction industry. The signatories are the Congress of South African Trade Unions (COSATU), the South African National Civics Organisation (SANCO) and the civil engineering sector’s National Committee for Labour Intensive Construction.
Discussion between the three groups for the last two years have led to the Framework Agreement for Public Works Projects for Using Labour Intensive Construction Systems. Now, the recession-hit construction industry can begin to offer jobs up to 10 times the 55 000 people it currently employs.
Eight years ago it offered 135 000 jobs. For the industry, the agreement means maximizing the use of labout intensive methods within public works programmes, in spite of its enormous investments in machinery.
COSATU and SANCO on the other hand, have compromised by agreeing to payment through the productivity lnked task based payment systems. Other features of the framework include:

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  Agreed consultation procedures for communities and other interested parties on the implementation of projects.
  
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  Project designed changes to absorb more labour.
  
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  Training procedures that ensure that public works projects will have a lasting effect in communities.
  

“The framework agreement formalizes the desire and intention of both the civil engineering industry and organized labour to raise employment levels in the construction industry,” a joint statement reads.

1993
R2.5m contract awarded
Power Construction has been awarded the R2.5 million contract for civil works at the N1 Value Centre shoping complex next to N1 City in Goodwood.
The 17-week contract is for earthworks, stormwater, sewage and water main services, and for the provision of 700 parking bays and the consulting engineers are De Vos Paxton. The clinet is Syfin Holdings.
Power Construction site agent Mr Andre Zandberg said more than 6 000 squar emetres of brick paving would be laid for the parking areas and paths. The high water table in the area has demanded 24-hour draining for the past six weeks so as not to delay completion of the project.
August 1993
The Framework Agreement: a shot in the arm or the foot?
The Framework Agreement has been billed as an historic co-operative between the oftentimes contrary concerns of Cosatu and its affiliates and the civil engineering industry. While its precedental overtones are not in doubt, it could spell trouble for plant hire agencies who place a premium on advanced technology and yet may see demand for it wane. True or false?

David McKay reports . . .

The Framework Agreement was concluded after a year of talks between representatives of the civil engineering industry and Cosatu. Its raison d’etre was a commitment to labour intensive projects in return for task-based payment system to be overseen by a boardacronymously referred to as NCLIC. Cosatu’s Jay Naidoo says the agreement amounts to a re-structuring of the civil engineering industry akin to larger economic changes that have to be made to parallel political transition.
“The agreement is a recognition on both sides of how South Africa’s economic problems can be addressed in the broadest sense,” says Naidoo. He also gave the assurance that he agreement did not necessarily mean the impending redundance of technology. “Cosatu is not against technology,” he said shortly after signing the agreement with representatives from the industry and Sanco. “But the agreement must be in the interests of the community.” He added. NCLIC describes its policy as the employment of as many people as can be economically and technically afforded. Importantly, it ends its definition with the words – “thus the effective substitution of labour for equipment.”
Are the assurances of NCLIC merely a palliative and how is the council able to guarantee the continued development of the capital equipment industry in South Africa in the face of forces that want to see less of it? NCLIC chairperson graham Power says the changes facing the construction industry in the wake of last month’s Framework Agreement will undoubtedly impact on the plant hire industry. But these will be neither as wide spread or as immediate as is feared, he adds. The changes could also generate a positive spinoff for the plant hire industry. Power says the primary objective of the Framework Agreement was to reverse the downward trend of employment in the construction industry. Employment now stands at 55 000 compared with 135 000 in 1980.
But the broader objective was to stimulate the construction industry as a whole and to promote the flow of new capital into the industry, he says. “It is simplistic to assume that with the introduction of LI contracting on all earthmoving plant will be immediately mothballed.

“This is neither practical or possible and, for a number of reasons, nobody involved in the LI initiative sees any significant short-term negative effect on the plant hire business,” he explains. “Firstly we foresee that the majority of LI projects will emerge from government and local authority sources rather than from the private sector.

“But while we would like all future contracts to be labour intensive to some degree, it will never be possible for a project to be 100% LI. The most we can expect is about 50%.
“We also anticipate that upcoming LI projects will be funded from new sources such as the National Economic Forum (NEF), additional government funding and from external sources. The government and local authorities will be lobbied to promote and fund LI contracts. The injection of this new money is likely to have a domino effect on construction in general and the plant hire industry.”
Power made it clear the construction industry was facing inevitable changes towards LI contracting. He warned the plant hire industry to gear itself up for long-term strategic planning which will allow it to take advantage of the new opportunities presented by these changes. “The construction activities which are particularly adaptable to LI work are the manufacture of precast elements, shallow trenching and rural road maintenance,” says Power.
“It is immediately clear that while these operations have some impact on the plant hire business, they will also open many opportunities for that industry, particularly in the field of compaction,” Power says. “He adds that a marked overall improvement in the construction and plant hire industries should become apparent within the next two years. Fears that projects will fragment into disjointed “mini-contracts” were also unfounded.
Power stresses that “the main contractor route” would be followed in which local entrepreneurs and subcontractors would be trained. This will help them to gain the experience which later may enable them to become contractors in their own right,” he concludes. Consulting eingineer Mike Judd represented the South African Road Federation in negotiations leading up to the signing of the agreement. He says fast-track projects are unlikely to become LI. Projects which rely on state-of-the-art technology or machines for their viability are also likely to stay out of the LI paradigm.
These are high-tech finish projects such as major roads, airports or freeways, major bridges and high-rise buildings. He also rejects fears that major commercial undertakings would be pressurized to make use of LI methods. “I believe we cannot prevent the move towards LI construction since there is an existing plant hire industry that needs all the work it can get to keep going.” He says.
“Construction work will not suddenly switch to LI overnight anyway. This will take time. Early and careful consideration of the LI trend will reduce any marked negative effects on the plant hire industry. “Plant will have to be looked at carefully and owners will need to take the movement into account as with all changes in life and technology.” Judd adds that any increase in funding brought about by LI construction would have a ripple effect which would translate into an overall stimulus to the economy.
This would encourage further construction, not all of which would be LI, and benefit the plant hire industry. I believe the private sector will accept LI construction as a viable alternative only if there is a commercial advantage. While there may be incentives to adopt LI methods, there will be no pressure on anyone to go the LI route (or to seek accreditation) if the project is unsuited to it,” says Judd.
“There will always be a larger sector of the construction industry which will steer clear of LI construction.” Ivor Korck of Rohr Roads comments that “the backlog in respect of LI civil contracts versus those that require conventional construction methods is enormous. “If the level of funding from both external and internal sources is adequate, it is probably safe to predict that the total construction cake will increase to such an extent that conventional or plant intensive work will not reduce from its preent level – and will probably increase,” says Korck.
Andre Lanbrechts who represented the South African Association of Consulting Engineers (SAACE) on the NCLIC negotiating team says the board has often stated that LI construction is a process of symbiosis where first-world technology meets third-world preferances.
“In this context, the management contractor’s approach corresponds best to meet demands from both sides,” he says. The definition of LI construction calls for an economically justifiable process that must be within the time contraints. “IT is therefore inevitable that conventional contracting methods will still be employed to foster production, economy and the execution of those processes which cannot economically be performed by hand labour means. “I can foresee that a big demand for conventional plant will still exist if a massive amount of money is to be spent by government to catch up with the housing backlog,” he says.
The amount of money available for construction and housing will be larger to sustain both LI methods conventional construction,” he says. In terms of the Framework Agreement employment in the industry could be increased tenfold on current levels. The proportion spent on labout in urban development projects would be raised from about 10% of the contract value to at least 40%. In rural development this could be increased to 25%. Priority has to be given to the employment of single heads of households and the long-term unemployed in a community while women and youths also had to constitute a “specified proportion” of people employed.
January 1992
Khayelitsha Village 5 near completion
The R30.75 million Village 5 township development at Khayelithsa, providing 4 100 fully serviced plots on the 144 hectare site, is scheduled for completion in December.
An unprecedented constraint on the development was that the civil engineering consortium received payment only on completion of the services and registration of the properties to individual owners.
Payment at the rate of R7 500 per erf, was funded by the Independent Development Trust (IDT). To facilitate transfers and therefore cash flow, the contracting consortium, CMD (Community Development Consortium), consisting of Power Construction, Clifford Harris and EU Civils in association with WCUSA (Western Cape United Squatter’s Association) had to set up a management information and conveyancing facility to identify, register, screen and apply for subsidies for eligible buyers.
At times the contractors were even required to apply for an arrange ID documents for buyers and to organize their relocation. The CDC was also required to provide finance to the value of R12 million at any stage.

All project costs, including land costs, town planning, land survey, engineering fees, legal and transfer fees, information services, facilitating costs, escalation costs and bridging finance had to be allowed for within the subsidy and the project team also had to assume all responsibility for the development until the development agreement with the IDT was finalized in May this year.

Planning and design by consulting engineers Hill Kaplan Scott Incorporated (HKS) began in September last year and work on the project started in January 1992.
The total development with provision for 12 schools, crèches and churches, business and service trades, community facilities and public open space, in addition to the 4 100 residential sites, includes: surfaced roads 26km; water mains 27km; sewer mains 24km, stormwater mains 5km; cable ducts (electricity and telephone) 2.5km; high voltage reticulation 6km; low voltage reticulation 5km; recast concrete toilet units 4 100 (all with flushing toilets).