Prepared by : SAPAC Reporter
Article Classification: Information
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South African Professionals and Contractors Collective (SAPAC) is a diversified platform only for approved legal contractors and professionals in South Africa. SAPAC offers a variety of services, including:
- Tender submission without biased interference
- Professional and Contractor analysis before initial contracting
- Handling of issues and complaints
- Legal commercial and home building inspections
- Plus more
SAPAC also offers services for business & home renovations including commercial and industrial construction. SAPAC is a versatile entity that serves both the industrial and private sector. SAPAC is in partnership with Sanlam
Trust is the new currency, however it has to be put into action and this is where SAPAC steps in! Trust has become a buzzword in the business world. But the concept of trust has always been central to the professional and construction industry. Many have become aware that SAPAC is not your average entity, but a scalable contender that is pushing reform within the industry. Still keeping to the same standards and conceptual requirements of law.
Clients in the private and public sector make huge investments in building projects, having to trust that they’ll get the outcome they’re promised.
Every project involves a huge number of collaborators, from architects to quality and quantity surveyors. With the Electrical discipline as the backbone of the industry. Each stakeholder of SAPAC has to trust that work will be completed on time and to the standard required, and that they will be rewarded fairly upon completion.
The end users
And finally, there are the end users of the building. Whether they’re working a shift, taking the train, or going to bed at night, members of the public need to trust that the infrastructure around them is safe and to code.
Trust impacts Performance
Despite this, trust in construction has often been regarded as a very intangible quality, a secondary outcome of good projects – a “nice to have,” rather than an attribute that directly impacts performance.
This SAPAC objective is to ensure that trust does exist and that proper communication techniques and the application of technology will render back trust to industry stakeholders. In a scalable and achievable measurable manner!
Trust can be improved as a Collective
In 2022, SAPAC partnered with Sanlam Corporate and relevant inspection authorities in the industry that handles construction professionals and contractors in South Africa. SAPAC undertook a questionnaire where public participants were asked to rank the level of trust within their own organization and between collaborators on projects. The study suggests that businesses and project teams can not only measure trust, but actively improve it. Construction firms can take proactive steps to build stronger relationships, deliver more certain outcomes and, ultimately, improve their profitability.
SAPAC Professionals and Contractors Collective, is associated with a global entity that monitors global fraud. According to the World Bank Economic Update of South Africa. South Africa's GDP growth has returned to its pre-pandemic trend and is expected to increase by 0.7 percent in 2023 and is projected to rise to an average of 1.5 percent from 2024 to 2026 due to the gradual easing of electricity supply constraints. Accelerating the implementation of structural reforms will boost South Africa’s growth potential. The challenge of high crime rates undermines the country’s economic dynamism, with an impact estimated to be at least 10 percent of GDP every year.
Trust SAPAC stakeholders
SAPAC Professionals and Contractors Collective, through collaboration with current SAPAC stakeholders have actively started to make a difference within the disciplines. From its initial inception to 2023 the figures do not lie. Professionals and Contractors that utilize SAPAC in the manner it is supposed to be used have made a difference and is starting to be recognized. It is no longer the case if you are associated with industry references. It goes about the internal workings of the SAPAC stakeholders themselves and much more. Across South Africa a total of 4,727 business owners and private individuals has been assisted correctly in line with Standards and legal requirements. With a projection of quadrupling this figure by the end of 2024 .
SAPAC Linking Up
Organizations with a High Level of Trust, forms part of SAPAC understanding that Trust is pivotal in sustainability!
In South Africa, construction is one of the largest contributors to the economy. According to STATISTA, the construction industry in South Africa contributes to the country's gross domestic product (GDP). In 2022, the construction sector contributed about 107 billion rand (roughly 5.9 billion U.S. dollars) to the country's GDP.
Like construction professionals in other countries, South Africans felt that construction is largely built upon relationships and trust. Its is therefore no great secret that there are individuals and proxies trying to misuse the construction industry at a very large scale. This creates confusion among the public and the property market. SAPAC therefore refrains from 10% commission fees and or finders fee agreements! Ethical business is required to be driven by all stakeholders that forms part of the collective.
Organizations with very high levels of trust therefore link with each other through SAPAC.
A common topic of discussion among construction professionals is striking the balance between growth and trust within organizations. A project executive at a South African based electrical contractor explained how growth has impacted their trust within the organization.
“When I joined the company, there was a lot of interaction between contractors and the executive leadership, and you were able to form relationships and bonds". "However in the last seven or eight years, with the tremendous growth we’ve had, just naturally that is harder to obtain.”
In other words, trust—forged through years of communication at all levels of the project teams—was a key ingredient of successful projects in previous years. In more recent years, with self named contractors coming onto the scene without the relationship history, it’s become harder to forge those bonds. This is creating barriers to communication between leadership and other parts of the workforce.
Companies with rapid growth commonly have challenges creating and maintaining trust across the organization. As a construction company scales, building those person-to-person relationships becomes more challenging. With more people on a project and teams scattered across larger geographic regions, collaborating with peers that you’ve not even met in person becomes the new normal. It is likely why only one-third of respondents report very high trust within their organization and only a quarter reported very high collaboration.
The project executive felt that focusing on creating trust at the regional level could solve this common challenge.
Contractors take on trust in the field
A senior supervisor from a electrical contractor noted the importance of building these trusting relationships in the field because, ultimately, the field team executes the work. It is worthwhile to note that we can utilize SAPAC to initiate contact and start from a general consensus in meeting in person and build a basis of trust!
He continued: “I spend as much of my time out there with my staff teaching them the things that I know, so that they can continue to develop and learn to see the bigger picture.”
He focuses on three things: spending one-on-one time with employees, taking responsibility for the work, and having respect for others. That’s how, he feels, a successful field superintendent builds teams and empowers employees on site.
As an example, he described how he [the supervisor] helped a new employee who was struggling to fit into the team. “Every tradesperson has their own process for doing things and it can take adjustment to learn the preferred method. This employee was having a difficult time understanding the process, so I had an in-person conversation with them and explained in a very informal, casual way exactly what was needed and expected.”
“It wasn’t 15 minutes after that he came up and thanked me for the conversation. He said it had really, really helped him, and that I had no idea the impact that it had made on him.”
Examples like this are not uncommon, especially in South Africa. Over one-third of all respondents in South Africa feel that employees in their organization almost always go above and beyond what is expected of them.
"Organizations where employees almost always go above and beyond what is expected of them to help other employees"
In this industry, things can go wrong at any time. While many errors may be unavoidable, teams can control how they respond. In this scenario, the supervisor believes in taking responsibility, because when he does, it leads to his employees trusting him.
“Often I’ll tell somebody to do something and then things go wrong later. Somebody will come up and say, ‘Why did that man do that?’ I just tell him, ‘Because I told him to.’ I try never to blame an employee for something I did, and that’s a big deal in our industry. It’s easier to blame somebody else than take the blame yourself. When employees see you blame them, they will lose all trust in you.”
When it comes to trust on the jobsite, he treats the external project partners the same way he treats his employees. To him, building trust means doing what you say you’re going to do and treating people with respect. Ultimately, it all comes back to building relationships.
Building Trust, Employee Retention, and Return Business
Trust and relationships matter. These relationships are how the industry operates and often they lead to repeat work. This is especially true in South Africa.
When asked how frequently they work with repeat clients, roughly a third of all SAPAC respondents said almost always, or more than 80% of the time. When we look at South Africa alone, the majority of respondents said that they almost always work with repeat clients.
Great relationship building based on communication between the field and the office means a more successful project. A forged relationship between contractors and architects facilitates communication in subsequent projects, and a history of successful projects leads to trust and loyalty between contractors and their clients, which results in future partnerships.
"It helps to be a trusted SAPAC Professional and Contractor seeing that fly by night companies are not allowed with SAPAC and that we can be instantly checked by anyone!" It restores the feasibility of business!"
Benchmarking trust in Construction
Trust is central to the construction industry, but, historically, it has been difficult to quantify. To understand how trust is created and the outcomes it can produce, construction professionals were asked to rate the levels of trust within their organization and between other companies on a project.
The research explored the behaviors and KPIs seen in organizations with differing trust ratings. Although many different kinds of businesses were surveyed, the link between trust and sustained success is conspicuous.
Trust can be defined as how an individual or an organization views and relies upon other individuals and organizations across a company or project team. Or what that organization has to say about another organization. A key factor utilized in the ISO 9001 series is customer feedback. SAPAC redefined this process with a quality conformance process built in. Another reason why SAPAC is utilized by these firms.
In business, trust comes down to knowing what you’ll get from others because their behavior and output are consistent.
For construction businesses, trust is experienced in two contexts:
The one is organizational trust
The level of trust between people within an organization, such as between colleagues or between employees and managers. A crucial factor that is developed within each organization from the top to the bottom.
The other is project trust
The level of trust between two or more external organizations, typically experienced during a construction project. This is were the key players interact with each other on site, through electronic communication and during and after the planning phases for each step of the project.
Trust is vital in construction because of how much each stakeholder and each step of a project relies on the performance of others. Therefore trust is crucial not merely from a practical and commercial application but also from a health and safety perspective.
It is therefore crucial to ensure that any health and safety person on a project is capable, competent and clear of mind. As this crucial role can impact the trust between organizations.
“Trust is essential. Without it you don’t go into business with companies.”
Construction professionals ranked the level of trust within their organization and between other companies across a project on a scale of 1–5 (very low = 1; very high = 5).
Trust extends throughout the organization and across all functions. Trust is core to the way they work.
These firms may have pockets of strong trust, but individuals may still distrust or feel suspicious of others, even unconsciously. To some degree, trust must still be earned.
AVERAGE TO BELOW AVERAGE
Employees of these firms may not be consistently trustful, and internal groups may feel suspicious of others. Individual employees may also act in their own best interest rather than for the benefit of their organization or other team members.
Good – But Not Good Enough
On average, South African construction professionals rated trust in their organization as “above average,” or a 4.1. This indicates that it is unlikely people are operating with either low or no trust, but that trust must still be earned – and is unlikely to extend to everyone.
Achieving Success through Clearly Defined Goals and Responsibilities
The head of one of the SAPAC Stakeholders company spoke about trust in their organization. He defines trust as teams working towards a common goal. “We set straightforward and simple strategic goals that everyone can buy into, which creates trust and efficiency. Everyone is more effective and not focused on potentially conflicting personal goals.”
An area where the this firm stands out is defining individual roles and responsibilities for teams. People know what they’re supposed to be working on and how they personally can help achieve the organization’s goals.
By defining individual responsibilities, workers can clearly understand their contribution to the whole. The correlation between organizational goals and organizational trust cannot be overstated. When each team member that has a firm picture of the overall objective and clear direction for their part, the process runs smoothly.
The head of the firm pointed out that:
“When everyone works towards the common goal, they are more confident that their schedule and budget will be met. They know what work is getting done and when it will be completed.” The client is brought up to speed and the overall process and end result is captured on our SAPAC profile. If there is a situation SAPAC informs me directly and we can perform our own internal investigation an realign or re-assign so we continuously develop and hone our employees skills. This feedback is important and assist us overall as a company."
Combining personal responsibility with organizational goals means projects are less apt to go over budget or fall prey to mistakes caused by a lack of communication. In fact, over one-third of respondents in South Africa had very high confidence in the project schedule, and 29% had similarly high confidence in the project budget. Having the entire team working towards a common goal contributes significantly to successful project execution.
Trust and relationship-building initiatives contribute to better outcomes and greater project success rates.
Trust and Financial Performance
The construction industry is built on relationships. Firms with higher trust have stronger relationships and perform more strongly overall. Having the highest level of trust brings three key advantages, each with direct financial benefits.
Higher trust means lower employee turn over!
One of the greatest challenges for the construction industry is the shortage of skilled labor, and it’s experienced in nearly every country. In South Africa, construction firms struggle to recruit for one in three roles, while 80% of South African general contractors are finding it difficult to hire qualified workers.
With new staff in short supply, voluntary turnover – when employees themselves choose to leave the business – is a significant issue. Experienced workers take skills and knowledge out of the organization when they leave. Moreover, the cost of replacing an employee is estimated to be one third of their annual salary. Retention rates have a direct impact on the financial performance of each construction organization.
Levels of trust appear to have a direct impact on retention, as the firms with the highest trust report the lowest voluntary turnover. Turnover rates are good – staff are choosing to stay – at the majority of firms with the highest trust (56%), compared to nearly a third of firms (32%) where trust is above average.
Given the costs associated with recruiting new employees, the firms with the highest levels of trust save more annually on simply not replacing their staff, compared to what organizations with “above average” trust will spend.
“With trust, you avoid a high turnover of contractors or employees. You develop a healthy environment where they want to work or projects that they want to work on.”
Higher Trust Organizations Miss Fewer Schedules, Saving much more.
Completing work on time impacts the financial performance of every construction firm. Missing schedules can lead to higher costs for staffing, equipment, and materials – as well as the lost opportunity of taking on other work. Delays can also damage a firm’s relationships and reputation. Hence the fact that the standard for becoming a SAPAC recognized stakeholder is so high.
Construction businesses with the highest levels of trust are the most confident about meeting their project schedules. In fact, organizations where trust is very high are twice as confident as those where trust is “above average” (43% compared to 21%). This may reflect organizations’ sense of the reliability of their employees – and their strong relationships with other businesses.
“When everyone works towards the common goal, they are more confident that their schedule and budget will be met.”
Higher Trust Firms like SAPAC stakeholder firms Get More Repeat Business, Potentially Boosting Gross Margins by Millions
Repeat business is profitable. Returning clients keep the business pipeline full, and also provide significant financial benefit over newer unfamiliar customers.
Acquiring a new client is estimated to cost 5 to 25 times more than continuing with an existing one, and research suggests that increasing client retention by 5% can increase profits by 25% to 95%8. Once again, the highest trust firms report the most success with retaining clients.
At firms where trust is very high, the majority of respondents (57%) say more than four out of five of their projects are repeat business. This is significantly higher than firms where trust is lower: in fact, the lower your level of trust, the less you can expect repeat business.
Across the board, firms with the highest level of trust can expect 5% more repeat business than those where trust is only above average. That would translate to gross margins 2%–7% higher: the highest trust firms could expect gross margins several million rands higher than organizations of a similar size with lower trust.
Why Client Loyalty Means Higher Profits
Most construction companies instinctively know the value of a loyal client. But the financial returns might be higher than you imagine. A SAPAC stakeholder firm found that a 5% increase in customer retention can produce an increase in profits of between 25% and an astounding 95%9. Why is that?
Firstly, the cost of serving retained clients is lower, because you’ve already completed the onboarding process. There’s no need to align your technology, confirm billing processes, and even conduct background checks – cutting upfront admin costs and delays. This can make a significant difference to the profitability of each job and adds up over time.
The Harvard Business School has outlined a loyalty ladder that describes how customers behave as they become more committed to an organization. Their behavior progresses from endorsing your services and resisting the approaches of competitors through to paying a premium to do business with you.
Customers are often willing to pay more to work with a company they’re familiar with, rather than take a risk on a newcomer. Equally, return customers will tend to buy more over time. This relates to trust: the customers know they can depend on a certain outcome. Finally, returning customers are likely to refer your SAPAC profile to others, driving further business.
Retention, Reliability, and Repeat Business
Above average can often mean high levels of performance, but in construction it’s not enough to be above average. By creating an environment where trust is at the highest possible level and extends throughout the ecosystem of a project, organizations can realize three important benefits: higher retention, more reliable project performance, and more repeat business. Together, these can add up to many millions of rands in financial advantage.
“With repeat work, you develop a deeper relationship. Through that relationship, you build even more trust and it makes where the work is more enjoyable.”
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SAPAC Professionals and Contractors is national in all South African provinces.
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