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What percentage of Transnet’s Capital Expenditure projects are being outsourced and how does this affect skills transfer at Transnet

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What percentage of Transnet’s Capital Expenditure projects are being outsourced and how does this affect skills transfer at Transnet
19/12/2012

Question for written reply

Question no.: 278

Date of publication: 08 June 2012
278.
 
Mr H B Groenewald (DA-NW) to ask the Minister of Public Enterprises:
(a) What percentage of Transnet’s Capital Expenditure projects are being outsourced and (b) how does this affect skills transfer at Transnet?    CW376E
Reply

According to Transnet

(a) The level of outsourcing differs from project to project. Transnet estimates that over the next seven years, the State Owned Company (SOC) will outsource 86% of its capital projects as part of its Market Demand Strategy, (MDS) which will invest R300 billion for the period 2012/13 to 2018/19 to create and sustain infrastructure capacity. These costs include the expenditure on acquired materials and machinery (e.g. locomotives, cranes) from suppliers outside of Transnet.

Transnet has defined in-sourced project expenditure as that which is attributable to internally generated costs. The vast majority of the 14% in-sourced capital relates to Transnet Employee costs (including contract labour). 

(b) The outsourcing of Transnet’s Capital Expenditure projects does not negatively affect skills transfer within Transnet.  
The execution plan for the MDS encapsulates the development and sustaining of Transnet’s internal capital capabilities through the transfer of skills and skills development in line with the objectives contained in the New Growth Path.

Transnet’s internal capital capabilities that contribute to skills transfer and development within Transnet are outlined hereunder:

  • Transnet Rail Engineering is a division of Transnet that provides in-house manufacturing capabilities in the areas of wagon, locomotive, wheel and component manufacture (capital and operating expenditure). Through this division a programme has been developed to provide a skills pipeline, to support the MDS through a consistent flow of:
-   Engineers (increasing from 50 to 100 per annum)
-   Technicians (increasing from 55 to 100 per annum) 
-   Artisans (increasing from 1 200 to 2 000 per annum) 
  • Transnet Capital Projects (TCP) is a division of Transnet that rolls out centrally focussed cross divisional projects and mega infrastructure projects and other designated projects through the deployment of permanent employees that have been dedicated to the roll out of a major component of Transnet’s investment plan. Transnet enters into partnerships with engineering, procurement and construction management (EPCM) contractors to assist in rolling out projects. A key component of the service level agreements is the mentoring and training of staff involved in the projects to ensure skills transfer.

 

  • Various in-house project management capabilities are also being enhanced and developed within the operating divisions, specifically to roll out projects that are not executed by Transnet Capital Projects. These capabilities will reside in dedicated project management/project support offices and are headed by senior managers who are members of Divisional Executive Committees in certain instances. This arrangement ensures the continued skills transfer and development within Transnet.
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