ERB cancels registration for 330 ‘bad’engineers

 

According to KRA, only 20 per cent of residential landlords in Kenya had declared their rental income by July 2015. PHOTO | FILE 

By Isabella MukumuMOSES MATTHEW in Mwanza

THE Engineers Registration Board (ERB) has revoked registration of 330 engineers and 37 companies over misconduct that has led to 9.1bn/- loss to the government.

The engineers and companies deregistered have entered into a dubious contract regarding the construction of a 4.85-kilometre road in Bariadi Township.

Speaking during the oath taking ceremony involving 42 professional engineers from the Lake Zone regions before the Resident Magistrate In- Charge Yusto Luboronga over the weekend, ERB Registrar, Engineer Steven Mlote, said that the board has exposed massive procurement act violations in Bariadi Town road projects.

“There is glaring procurement act violation and engineering act violation involving the construction of roads in Bariadi town, measuring 4.85 kilometres and worth 9.1bn/-, VAT exclusive. This is an enormous cost,” said Eng Mlote.

ERB has taken stern measures against the former engineer with Bariadi Town Council, Mr Reuben Muyungu, who had his registration revoked by the ERB.

The board’s disciplinary committee will discuss him and announce its decision in accordance with Article 18 of the engineers registration act for further action. According to the laws pertaining to engineering, Eng Muyungi is not allowed to involve himself with engineering activities in the country.

He said that the ERB has also annulled the registration of Engineer Heri Sanga, who designed and prepared engineering estimates from Nimeta Consult Ltd. The board’s disciplinary committee will discuss him and provide decision according to Article 18 of the engineers’ registration Act for further action. Eng Sanga is not allowed to operate in the country.

The board has also revoked the registration of Engineer Emmanuel Taseni, who is Nimeta Consult Ltd of Dar es Salaam’s Consultant Engineer and director. Eng Taseni was supposed to pass through and verify designs that were worked out by Eng Sanga but he did not. He will follow the same routine of Article 18 of the Act.

Eng Mlote noted that ERB is proceeding to investigate other engineers who were involved with the road project from the Ministry of Local Government and Regional Administration headquarters.

He said the ERB will continue to make a close follow-up to make sure all registered engineers perform professionally and according to the law. Those who will go against the profession will be taken to task and their registration revoked.

ERB has cautioned all those who might violate the engineers registration act number 15 of 1997, including engineers who don’t follow engineering code of conduct and ethics; and developers who don’t exercise professionalism.

ERB has to date registered 16,032 and 283 consultants companies to improve the construction industry, the objective being to protect national interest for the users of the construction industry to make sure that all construction projects are done professionally

Let us understand the importance of fixed expenses further. Assume a company has total fixed expenses of Sh2,000,000 (comprising salaries, rent and equipment depreciation).

The Sh2,000,000 is a must pay regardless of the sales volume. How much in terms of sales revenue should the company generate in order to cover the fixed expenses?

Contribution margin

This brings us to the concept of contribution margin. Unit contribution margin is simply the sales price per unit less the variable expenses per unit. If the selling price is Sh200 and the variable cost per unit is Sh100. The contribution margin in this case is Sh100.

Obtaining the number of units one should produce and sell is determined by simply dividing the total fixed expenses by the unit contribution margin.

The calculation tells us we should produce and sell 20,000 units. With the selling price of Sh200, the break-even revenue is Sh4,000,000.

Remember the variable expenses total to Sh2,000,000 ( Sh100 x 20,000 units). At the level of 20,000 units, the sales revenue is Sh4,000,000.

With total fixed expenses of Sh2,000,000 and with total variable expenses of Sh2,000,000, there is no profit or loss, hence the company is breaking even. Any production and hence sales revenue above break-even is known as margin of safety.

Strive to produce and sell well beyond break-even point but at the same time not compromising on quality.

Because fixed expenses are constant over a considerable period of time, it is important to source for better terms before you enter into future obligations like rental payment, interest payments, managerial salaries and other future payments whose cash out flows do not depend on level of production.

Done successfully, this may reduce considerably the break-even point and by extension increase profitability.

Mr Were is a consultant with Anchorage, a business and financial advisory firm. Email: odindiwere@anchorage.co.ke