Low-cost houses in Olievenhoutbosch. Picture: File
Pretoria - The City of Tshwane’s initial budget of R23 million set aside for building low-cost houses in Olievenhoutbosch Extension 60 in 2019 has rocketed to almost R43m owing to increased cost of construction and labour, among other things.
This was revealed in a council report detailing how the project’s budget adjustment was undertaken since the contractor’s appointment in November 2019.
The budget adjustment was recently approved by the council sitting at Tshwane House Council Chamber.
The report said the contractor’s appointment four years ago was in line with the 2015/16 subsidy quantum at an amount of R110 947 per housing unit. At the time of appointment, the report said, the subsidy quantum was already outdated as the City had not received the 2018/19 subsidy quantum.
“The adjustment of the fees is in line with the national subsidy quantum adjustment which is managed and approved by the Department of Human Settlements,” said the report.
It further said the subsidy quantum price increased from R110 947 per house up to an amount of R141 294, in line with adjustment of the 2022 housing subsidy grant quantum.
The amendment to the budget related to the construction of at least 447 top structures in Olievenhoutbosch by a company called GS Fencing and Construction (Pty) Ltd, awarded a contract in 2019.
Compiled by the Human Settlement Department group head, Nonto Memela, the report stated: “The implication is that the contract value will increase from R23 888 108.32 to R42 872 822.69.”
It was envisaged that the amended contract value would assist in expediting the completion of the project and ensure completion of the units.
“Amendment of the contract to align with the revised subsidy quantum is necessary due to the increase of cost of construction, material, labour and rates,” the report said.
In the past, the housing project was dogged by delays caused by protests by disgruntled residents and Covid-19, resulting in financial implications for the construction.
The report said: “Further delays in council not resolving this matter will result in the City losing the grant funding from the province. The current funding is already an approved roll-over from the previous financial year, as the process of requesting council to amend the contract has been referred many times to different committees.”
The report came under criticism when it was presented to council last year, resulting in a resolution taken to be referred to the Section 79 oversight committee: human settlements for in- loco inspection. It was also required to be tabled to the municipal public account committee.
“The in-loco inspection was undertaken by the committee and the report tabled to the oversight committee with additional information requested. The oversight committee considered the report and the outcomes of the inspection in loco and expressed support for the report to proceed to Section 79 standing committee: public accounts and subsequently council for final resolution,” it said.
The committee sought clarity in respect of the fact that 75% of the project was completed, and a structural engineer and quantity surveyor were appointed to supervise the construction of the houses.
The report said the project was funded by the Human Settlements Development grant – a provincial operational grant, quantum-based.
“The contractor is appointed on a turnkey basis in line with the provisions of national subsidy quantum.
“Over and above that, GS Fencing and Construction still appointed Cade Consulting as the structural engineer to manage and certify the quality of the works,” said the report, adding that the adjustment on the contract is 64% of the initial appointment value, and not 80%.
Pretoria News