Builders’ council ‘fixes’ R110m mistake by blowing R35m

2013-09-29 06:00

The National Home Builders’ Registration Council (NHBRC) has spent R35?million on an IT system that’s not yet operational – and which was supposed to replace a system that cost R110 million and never really worked.

The latest contract, valued at R104?million, has cost the NHBRC three staff members and drawn ANC chaplain-general Reverend Vukile Mehana into the furore.

The council’s procurement manager, John Modise, and project manager Musa Mtshali have quit because of what insiders describe as frustration with the tender.

IT manager Johannes Swart has been suspended.

Mehana, who was the council’s chairperson until last April, has been blamed by a number of insiders for pushing through the tender.

Modise and Mtshali declined to comment, and the council has rejected claims that the suspension and resignations were because of the project.

Why should you care?

Quite simply, because it’s the NHBRC’s job to protect you, the consumer, against shoddy workmanship by the people who register with it to build homes.

The council controls a warranty fund which can be used to fix any structural defects in your home if the registered builder is unable or unwilling to rectify defects within five years of the home being built.

The warranty fund, which is estimated at R4 billion, gets its funds from annual fees paid by homebuilders and provincial housing development boards.

Homebuilders also pay an enrolment fee, estimated at 1.3% of the total value of the home, for every home they build.

The council is under the control of the department of human settlements.

The full story

The council decided in 2011 to replace its existing ERP (enterprise resource planning) system, which cost R110 million to install and was riddled with problems.

Mehana and the council he chaired have been accused by a consultant of awarding the tender to African Legend Indigo despite being warned that the company was not accredited to install the software.

The software is designed by SAP, which accredits partner companies to install it.

Patrick Murfin, the consultant who wrote the tender documents, said he and SAP executives were against the decision.

“I said to (the council) at the time that (African Legend Indigo) were not SAP business partners and they should not be allowed (to tender).

“I went to SAP to tell them (the council) were recommending a non-SAP partner and the chances of failure would be great.”

Murfin claims the new council terminated his contract three weeks after coming into office because he had reported his concerns to SAP.

Another company, HCL Axon, was subcontracted to African Legend Indigo because it was a certified SAP software partner.

But HCL abandoned the deal after not being paid by African Legend Indigo.

The project was meant to have been completed in April this year but has been delayed – and African Legend Indigo has already been paid R35 million since last September, despite no work having being done.

Mehana offers a different version of events. “It is not true that only AL Indigo was awarded the contract. AL Indigo was in a consortium with HCL.

What came up was that AL Indigo seemed not to have membership of SAP, therefore they could not be the leaders of this consortium.

HCL had to be the leader of the consortium.

“We said that whoever wins this tender must take responsibility of recourse,” Mehana explained. He believes that SAP should take responsibility.

Murfin said Mehana and the council opted for AL Indigo even though it came second on the bidding score card, because the company’s bid was cheaper.

Mehana said: “The decision to award AL Indigo was made totally outside my recommendation.”

AL Indigo managing director Mornics Mulaudzi confirmed the company was not SAP-accredited but said its partnership with HCL gave it these skills.

Mulaudzi confirmed that HCL walked out of the contract in January because of nonpayment.

He said the company’s new partners, EPI-USE and Collaborate, were accredited, and also insisted AL Indigo would get its SAP certificate “in the next few weeks”.

SAP managing director Brett Parker would not respond to Mehana’s accusations that SAP should take responsibility for the delays.

“My understanding is that (AL Indigo) have gone into a planning stage and they are waiting for the hardware to arrive so that they can move it into the next phase of implementation.

“There is a delay in the delivery of the hardware. That has nothing to do with SAP. Unless the hardware is in place you can’t do the software implementation,” said Parker.

Mongezi Mnyani, the council’s chief executive, blamed the delays on “challenges with internal capacity” by both AL Indigo and the council. He said the delays were being addressed through a “recovery plan”.

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