2003 Van der Bijl lecture

Hendrik van der Bijl Lecture 2003

University of Pretoria
15 May 2003

THE CONSTRUCTION INDUSTRY AND SOCIO-ECONOMIC DEVELOPMENT

Brian C Bruce


 

Brian C Bruce

Introduction

I believe that a Curriculum Vitae should indicate more of what we can expect from someone in the future rather than a summary of past achievement. We are more likely to have been influenced by our past environment than by our past actions.

I am a true ’child of the 60’s‘ having been significantly influenced by the events and music of the time. I would like to have played for you “Another Brick in the Wall” by Pink Floyd – a protest song of the 1960’s that achieved renewed fame and popularity in its symbolism around the fall of the Berlin Wall in 1989. This event signified a critical shift in human behaviour (I believe in advance of the new millennium) with the collapse of institutionalised communism in Eastern Europe, closely followed by the fall of apartheid in South Africa. Is there a system dynamic here?

I have had to unlearn much of my traditional background to set myself free for my chosen journey into a new world of the future. I have been inspired by the creative genius in people, including Leonardo da Vinci, Jules Verne, William Shakespeare, Charles Darwin, Ludwig von Beethoven and many others from our history.

Many of us engineers are predominantly left-brain oriented, whereas the right brain is home to our sense of creativity. How do we ensure more balance in our industry and profession – integrating design and build to deliver greater value to our market? This is my mission for our future. I can’t help but feel that where artists create aspiration, engineers deliver on it.

I am here tonight as an “amateur philosopher in lapsed-engineer clothing”. I thank you for the opportunity to share my thoughts, and the time you have given to do so. I have chosen to live my life in and for South Africa, serving the development of the construction economy, from the platform provided by Murray & Roberts.

There are two parables I would like you to think about in the context of tonight’s session.

First, the two stonemasons doing the same job in a quarry, one who sees himself chipping stone, the other who see himself building cathedrals. Second, the sculptor who sees the final work of art in a block of granite, and removes everything that isn’t to reveal its form.

Background

Murray & Roberts was founded in 1902 in Cape Town, when Hendrik van der Bijl was just 15 years old and at school in Franschoek. The following year saw the first meeting of the Cape Society of Engineers (now the South African Institution of Civil Engineering), which is celebrating its centenary this year.

The Union of South Africa was formed in 1910, starting a new development journey for the peoples of our region, which had become quite an integrated system under the British colonial umbrella. And so it was in 1920 that General Jan Smuts called the young Hendrik van der Bijl from the United States of America, to do national service as Technology Advisor to the government. This was a brilliant leadership move that enabled the establishment of key agencies for development and growth.

In 1929 Roberts Construction was established in Johannesburg and today the Group has important relationships with the companies founded by Hendrik van der Bijl, that serve the current and future socio-economic development of the region.

  • Eskom – with whom we are partners in the development of PBMR
  • Iscor – from whom we purchase 800 000 tons of steel per annum to convert
  • IDC – for whom we partner in the R 45 billion aluminium smelter program; and
  • Safmarine – with whom we built our marine design and services capabilities.

We are nine years into our new South African democracy, and I have been involved in construction industry development for the past six years. And for the past three years, I have led the Rebuilding of Murray & Roberts as a South African enterprise.

Focusing more on the theme of my proposition tonight, what can we determine might be the fundamental drivers behind socio-economic development? And, what is the role of the construction industry in this respect?

If it is about thinkers and dreamers, how do we interpret creativity and ideas?

If it is about leaders and doers, why would we follow their course?

If it is about followers and commentators, how do we integrate their diversity?

I have engaged a personal journey of exploration and discovery that I would like to share with you this evening. This is not an academic presentation. It is a reflection of ideas gathered from many conversations with great thinkers of the day, combined with much of my own thought and experience, and distilled through my experience of implementation in my daily working and personal life.

My journey is to explore the concept of ASPIRATION as a primary development driver. And this is my second public sharing, the first being as a keynote speaker at an international conference in Manchester UK titled Revaluing Construction.

Aspiration

This is a painting by James Ford dating back to 1899. I have permission from the South African National Gallery to present it in this form. Interestingly, this painting is included in a book titled “The Tale of Three Cities” published by Murray & Roberts in the 1980’s depicting Cape Town past, present and future. It was also on the cover of the invitation to the SAICE Centenary Congress held in Cape Town this year.

The painting depicts the aspiration of James Ford of what Cape Town might look like as a holiday destination in the year 2000. Interestingly, it really reflects the building and architectural style of the London he left in 1895. It seems to me, therefore, that globalisation (previously in the form of conquest and colonialism, today more in the context of access to information) should be considered a primary driver of aspiration.

We have experienced in South Africa (and have ample historic evidence from elsewhere, of) the level of development that results from the mass migration of society from a “more developed” to a “less developed” environment.

We have ample historic and increasing current evidence that this model also works in reverse. That the migration of society to a “more developed” from a “less developed” environment often results in built environment degradation. We need look no further than inner-city decay for this evidence. Do peoples take their standards with them and impose them against their new environments? Is this what is behind developmental growth in some areas and built environment degradation in others?

We have another question to answer. What is the aspiration of an indigenous society? In this context, I refer to a society that has received limited external influence. Where perhaps today just needs to be at least the same as or preferably a little better than yesterday. Think of some of the communities in the Amazon, or in Papua New Guinea.

These are challenging questions for which we need a better understanding of demographics and psychology.

There is a strong likelihood that under certain development conditions, original concepts of idealism change to entrenched ideology. We have experienced this in our own history, where EUROPEAN IDEALISM became APARTHEID IDEOLOGY in defence of a status quo that was unsustainable in open democracy.

It is these challenges that have caused me to become interested in the connection between aspiration and development. What is our learning as a society that will help us make our choices for the socio-economic challenges that lie ahead of us in the 21st century? What must we as the construction industry understand of our future?

Was it dreams or intervention that inspired the early civilizations of Egypt, Greece, China, the Aztecs and others, to build and develop? And what caused their eventual degradation? Could it have been a combination of low aspiration (defending the status quo!) and high cost of maintenance?

We already see the signs in our own society. The backlog in transport infrastructure maintenance is clearly evident, as is the extent of degradation of the national property asset. And this coincides with a need for even more investment into infrastructure and property to meet new demands for socio-economic development.

Urbanisation

We live in a world of constant transformation. Every society (including business, professions, industries and countries) has at different times attempted to create some form of change stability. Maintaining a status quo. I was privileged to chair a session at the World Economic Forum titled “City of the Future”. Included amongst the panellists were eminent academics and thought leaders on the subject.

The panel centred its deliberations on the effect of migration on the city of the future. The statistics are staggering! We are experiencing a time of unprecedented migration in modern history. The developing world is on the move.

In 1970 an estimated 30% of the world’s population was urbanised
In 2000 this had increased to an estimated 49%
By 2020 as much as 70% of the world’s population will be urbanised.

Most of this is intra-national and intra-regional migration in the developing world, where governments are not able to do enough to prepare for the human deluge. So what are the consequences if there is less investment than meets the demand for new urban facilities in the developing world? Is it possible to do so without significant participation from the developed world economies? If not, can it be done without creating a new form of economic colonialism?

I fear that unless we find a way to solve this conundrum, we will see in this century a new Diaspora from developing to developed world. Can we even begin to imagine the consequences of such an outcome? The basic battle will be for opportunity. If the incremental gain of a thousand people from the developing world is to be at the cost of an incremental loss of a single person in the developed world ($30 000 GDP per capita against $ 300 GDP per capita) then we have a challenge on our hands.

We see this movement already, but also in the protection afforded farmers in Europe and North America at the expense of emerging market imports. Every cow in these regions is subsidised at an estimated average of $7 500 per annum, against an average human per capita income of $ 500 in the poorest agricultural-based nations.

But there are even greater challenges to our demographic future. The long-term development impact of HIV/AIDS remains uncertain. We assume that science and pharmaceuticals will resolve all problems. This may not be! What if the current SARS virus becomes an endemic and incurable killer? A form of the common cold that kills rather than temporarily incapacitates!

Sir Martin Rees, the Astronomer Royal, is a brilliant man of the ilk of our creative inspirations from history. In his latest book titled “Our Last Century” I understand he postulates that a virus such as SARS has the potential to eliminate 50% of the global population. He also believes we cannot escape the consequences of biological warfare. Has the developed world unleashed the Four Horsemen of the Apocalypse?

But the drivers of migration are not only developmental difference. What might the consequences of global warming be? Development excess in western economies could lead to a warming planet, raising the level of the oceans and breaching the defences of countries such as the Netherlands. Can we imagine the citizens of this country being forced to migrate to a new life in neighbouring Europe?

Systems Dynamics

I have become an amateur student of Systems and Quantum Dynamics and as a consequence, the Theory of Chaos. This interest was sparked by my interaction with Professor Jay Forrester and Peter Senge at MIT in 1984. I have built my strategic thinking on these concepts. This mantra “The Destination Is Our Point Of Departure” defines the business philosophy of my company Murray & Roberts.

Murray & Roberts celebrated its centenary in 2002, but almost did not make it. The effects of aging, the sudden changes in South Africa during the 1990’s and our brutal exposure to the global business environment, were almost terminal. We too, were caught in the defence of status quo! The first question I asked on my appointment as Group Chief Executive in July 2000 was “what right do we have to exist?”

I learned through that question that we were considered by many to be integral within the fabric of South African society. It is for this reason that we have recently made the commitment “We are South African”. This demands that we develop our credentials to achieve legitimacy in both the domestic and international markets.

We have chosen to serve the developing world and emerging economy markets, primarily in the Southern Hemisphere. We believe implicitly in the competitiveness of South African enterprise. Building on the legacy left us by such pioneers as Hendrik van der Bijl, we have a number of industrial enterprises in Murray & Roberts that live this belief every day.

We have chosen to pursue a strategy that will increasingly integrate design and build in the delivery of value solutions. We are engineers and contractors, our core competence is industrial design and we commit to world-class fulfilment in everything we do. We are committed to sustainable earnings growth and value creation, for which we recognise the need to take total responsibility for our destiny.

We have even explored and defined the “Strange Attractor” for Murray & Roberts. This is a concept in Chaos Theory that defines the nature of a repetitive pattern of system behaviour – a genetic behavioural fingerprint. If such behaviour is repetitively destructive, as we believe it has been in Murray & Roberts, then by identifying its characteristic we can genetically redesign our “corporate DNA” for a different future.

For most societies, the strongest memories are of the past 100 years. These reflect our own experiences and those of our parents and grandparents relayed directly to us. In a business or professional sense, the experiences of our leaders and mentors.

Humanity has lived the consequences of its invention over the past century. Our strongest memory is of unprecedented growth, opportunity and quality of life. We continue to expand in every direction, and I suspect humanity might be experiencing now, some feelings of dislocation in its identity, disparity and common purpose.

But can we have a memory of our future? There are theories in Quantum Physics (and here I really am on dangerous ground) that suggest we develop to our ultimate destiny, because we have been there before!

But perhaps we also experience the systems consequence of globalisation. Where development leadership (say in the USA) has dislocated the global equilibrium (the developing world), leading to global opportunity (for the USA) that leads to global interaction and assimilation that leads to an adjustment (redefinition in the developing world) that feeds back into the original source of disequilibrium (September 11).

The Construction Industry And Socio-Economic Development

This brings me to the socio-economic challenge we face in South Africa. Our current memory of the past 100 years is strongest, which for South Africans will be dramatically different at an individual, ethnic, racial, religious, educational, regional or income level based on very different experiences of this period.

You heard from my CV that I have been significantly influenced by certain periods and events in my life, and that I have also had to unlearn a great deal of the influence I have been subjected to in so many ways. I have tried to liberate the way I THINK, to be what I AM so as to do what I DO. But how many people in South Africa engage this challenge? Are we able to imagine a common destination for our current journey that will meet the expectations of all South Africans? Can we do so without compromising much that has already been achieved?

I cannot imagine that we will escape the challenge of redistribution. But we do have choices that define past and future. We can choose to redistribute future opportunity, which demands a current commitment to investment utilising the benefits of our past.

We are nine years into our New South Africa. Socio-economic development is on the agenda, just as industrial development was on the agenda after the formation of South Africa in 1910 and Hendrik van der Bijl was called to make it happen.

Quality of life is a function of many factors – and is many things to different peoples. It is in my view unlikely that South Africans will aspire to a socio-economic framework that matches what we currently see in much of the so-called developed world. It is more likely to imagine that significant elements of our socio-economic framework will match what is available in these areas. Our banking sector is currently so. A great deal of our industrial capacity is another. Many parts of most of our cities and towns and much of our farming sector as well. Our construction industry, too, has proved itself against the worlds’ best. These are national assets, to preserve and use for the benefit of our future development aspiration for our total society.

Every modification to the natural environment that results in the built environment should result in an improvement to the quality of life, and is the work of the construction industry. The following statistics are approximate and give some indication of the challenge we face in matching construction industry capacity and capability with the future demand for socio-economic development.

Year Population GDP per Capita % Construction Construction Economy
1994 40 million @ $ 3000 @ 3,5% $ 4,2 billion
2002 45 million @ $ 2500 @ 5,0% $ 5,5 billion + 30%
My aspiration for the second eight years is
2010 50 million @ $ 4000 @ 9,0% $ 18,0 billion + 325%
Mamphela Ramphela recently cited the following growth challenge. I have inserted a benchmark level of construction spend to GDP for sustainable development
2020 50 million @ $ 10000 @ 7,5% $ 37,5 billion + 680%

Is this a possible aspiration?

As Chairperson of the Construction Industry Development Board, I am privileged to have been asked to lead a public-private initiative of government that has the mission to develop and engage the following mission.

“A construction industry policy and strategy that promotes stability, fosters economic growth and international competitiveness, creates sustainable employment and which addresses historic imbalances at it generates new industry capacity.”

There is a worldwide renaissance emerging in construction and engineering. I am a member of the Board of Governors for Construction and Engineering at the World Economic Forum. Murray & Roberts is a member of the Major Projects Association in the United Kingdom. Both are involved in Revaluing Construction as an essential strategy for society to understand what is required to create its own future?

Research by the Major Projects Association has shown that between 1960 and 1990, the Capital Employed in Major Projects increased more than 100 times faster than the Capital Employed of Major Contractors. This led to major project failures and the development of a variety of risk abatement partnering and partnership arrangements.

However, I have a different supposition that defines our developmental challenges.

I believe that over the 100 years between 1900 and 2000, the Net Present Value (NPV) of expressed aspiration for quality of life has significantly outgrown the NPV of construction industry capacity to deliver on that aspiration.

Due to geographic and cultural isolation, it is thought that only 20% of the 1,5 billion people inhabiting our planet in 1900 were relatively dissatisfied with their quality of life. It is likely, however, that of the 6,0 billion people inhabiting our planet in 2000, more than 80% could be dissatisfied with their quality of life.

This means that the same absolute number of 1,2 billion people are as satisfied today as in 1900, relative to all other people inhabiting our planet. This means that the total population growth over this period has been born into relative dissatisfaction.

This defines for me, our collective and major challenge for the 21st Century.

I would like to end with an excerpt from a book by Brazilian author Paulo Coelho, from his “Manual of the Warrior of Light” page 96.
The warrior of light studies the two columns on either side of the door he is trying to open. One is called Fear and the other is called Desire. The warrior looks at the column of Fear and on it is written: ‘You are entering a dangerous, unfamiliar world where everything you have learned up to now will prove useless.’
The Warrior looks at the column of Desire and on it is written: ‘You are about to leave a familiar world wherein are stored all the things you ever wanted and for which you struggled long and hard.’
The warrior smiles because nothing frightens him and nothing holds him. With the confidence of someone who knows what he wants, he opens the door.”

Thank you for your time and patience.

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SYNOPSIS

Amongst the many nations making-up the so-called emerging world, South Africa has for more than three centuries enjoyed a unique status in the community of nations. It has been and remains a critical link between the old and new worlds, west and east, white and black and now the developed and developing worlds.

In their respective times and fields of expertise, many South Africans have offered leadership, discovery and inspiration to a greater global society. As Jan Smuts had played a leadership role in shaping the post-war world, so does President Thabo Mbeki play his role in the current global dialogue. As ex-president Nelson Mandela continues his worldly campaign against human deprivation and injustice, Africa’s first astronaut Mark Shuttleworth, inspires the children of South Africa to a greater scientific endeavour.

The recent accelerated expansion of South African business enterprise into global markets underscores the inherent capability and potential of the country. This includes the ownership, extraction and beneficiation of natural resources; the manufacture and distribution of consumer products; the provision of financial and technical services; the export of sophisticated engineered and manufactured machinery, equipment and products; and of course, engineering and construction services.

However, within South Africa, as with the rest of Africa, the development of human capital and creation of a socio-economic environment that nurtures the total potential of society, does not meet current global standards. Although great improvements have been recorded in basic education and primary health care since 1994 under the leadership of our new democratic government, many South Africans still have inadequate access to even the most basic of services, including potable water, sanitation, housing, employment, transportation, communications and finance.

Murray & Roberts has developed in South Africa over the past 100 years, influenced by but largely separated from the global engineering and construction industry. We accept that one of our greatest challenges is human sustainability. Our industry is uniquely responsible for the modification of the natural environment in the delivery of the built environment for the benefit of humanity. In Murray & Roberts, we seek to find the balance between doing this in a responsible and sustainable way, including the development of indigenous construction capacity, and meeting the investment requirements of our shareholders.

As chairperson of the Construction Industry Development Board (CIDB), I am privileged to lead a process with the principle objective to ensure a total capacity in South Africa to meet the built environment needs for development of a whole society; to ensure that the construction industry in its broadest definition offers access into the mainstream economy for those sectors of society disadvantaged over decades and centuries by the policies of apartheid and the forces of colonialism respectively; and to ensure a construction industry that meets global standards of performance from both a quality and productivity perspective.

THE DESTINATION IS OUR POINT OF DEPARTURE

We place ourselves at a point in time in the future, look back over a socio-economic environment defined by our current aspiration and from this macro perspective we first see the patchwork of agricultural and built environment modifications made by humankind to the natural environment. As we increase our focus we are able to discern the finer details of a socio-economic framework within the built environment that defines our construction industry and corporate challenge and the task ahead.

The sustainability of humanity in its current geo-political form will depend to a significant degree on the willingness of the developed world to create opportunity for the developing world where it is, rather than face the inevitable migratory pressure of billions of people seeking a better life where that quality of life currently is.

In remembering Hendrik van der Bijl tonight, we recognise the key role he played in the early development of South Africa as an industrial nation.