2. Construction Industry Development Board development through partnership CONSTRUCTION INDUSTRY DEVELOPMENT BOARD Umgeni Supplier Information Session Tuesday 27 September 2005 Presented by Ronnie Khoza

3. Construction Industry Development Board development through partnership What is the CIDB?  CIDB is a statutory body appointed by the National Minister of Public Works to drive a comprehensive industry development strategy in the country (CIDB Act 38 of 2000)

4. Construction Industry Development Board development through partnership Mandate of the CIDB  “to provide strategic leadership to construction industry stakeholders to stimulate growth, reform and improvement of the construction sector”.

5. Construction Industry Development Board development through partnership Ch. 3 of CIDB Act 38 of 2000 – Register Contractors  “.. establish a national Register of Contractors, which categorises contractors in a manner that facilitates public sector procurement and promotes contractor development”

6. Construction Industry Development Board development through partnership Register of Contractors  Legislative requirements for Register of Contracts  Register must categorise contractors in a manner that (16(1)): facilitates public sector procurement promotes contractor development.  A contractor may not undertake, carry out or complete any construction works or portion thereof for public sector contracts, awarded in terms of competitive tender or quotation, unless he or she is registered with the Board and holds a valid registration certificate issued by the Board. (18(1))

7. Construction Industry Development Board development through partnership Exemptions Labour-Only Contractors  Bulk of materials being supplied by the employer Sub-Contractors  Sub-contractors are not required to register with the CIDB. Private Sector Contractors  Contractors who work only for the private sector are not required to register. NHBRC Contractors  Contractors who are registered with the NHBRC as home builders are exempt from registration provided that they only undertake the construction of homes. Joint Ventures  If all JV partners are registered, JV need not register  If all contractors registered, “effective” contractor grading designation calculated from the sum of the individual parameters.

8. Construction Industry Development Board development through partnership Objectives of the Register of Contractors  Support risk management in the tendering process;  Reduce administrative burden associated with the award of contracts;  Reduce tendering costs to both clients and contractors;

9. Construction Industry Development Board development through partnership Objectives of the Register of Contractors  Enable effective access by the emerging sector to work and development opportunity;  Assess performance of contractors in the execution of contracts and thus provide a performance record for contractors;  Regulate behaviour and promote minimum standards and best practice of contractors

10. Construction Industry Development Board development through partnership Registration Process of Contractors Collect Registration Forms : CIDB Help Desk?; and Download from the CIDB Website. Completion of Forms Complete the forms, attach all the documentation, pay the fees and submit the forms to the CIDB for processing

11. Construction Industry Development Board development through partnership Registration Process of Contractors Acknowledgement of Receipt of application CIDB will acknowledge the receipt of the application for registration Processing of Forms Within 21 days CIDB will process the forms (provided that all the documentation have been submitted by the Contractor).

12. Construction Industry Development Board development through partnership Classes of Construction for Contractor Registration  CE = Civil Engineering  EE = Electrical Engineering  GB = General Building  ME = Mechanical Engineering  SW=Specialist Works

13. Construction Industry Development Board development through partnership Documentation requirements Proof of Payment Proof of payment (Bank deposit slip or internet transfer print-out) Tax Clearance Certificate Original and Valid Tax Clearance Certificate Previous Contracts (5 years) Documentary proof by the employer of contracts completed during the last five years.

14. Construction Industry Development Board development through partnership Documentation Requirements Financial statements- Grade 5 upwards Audited financial statements for the past two years (for 5 and above). VAT Returns- Grades 3 & 4 VAT Returns for the past two years for those enterprises that do not have audited financial statements and are applying for contractor designation 3 & 4. Sponsorships All financial sponsorships or credit facilities

15. Construction Industry Development Board development through partnership Documentation Requirements Legal entity Certified Copies of enterprise registration documents Identification Documents Certified copies of all enterprise principals Work Permits Work permits of all principals / residents of foreign descent

16. Construction Industry Development Board development through partnership Documentation Requirements Special Requirements Electrical contractor’s- ECBSA Registration Certificate (where applicable). NHBRC Registration number (Where applicable)

17. Construction Industry Development Board development through partnership Payment for Registration Registration Fees Administration Fees R250 to R750 per contractor Annual Fees R200 to R40 000 per contractor.

18. Construction Industry Development Board development through partnership Schedule of Fees Contractor Grading Designation Maximum Value that a Contractor is considered capable of handling Administratio n Fee for each grade Annual Fee for the highest Contractor Grading Designation 1R 200 000R250R 200 2R 500 000R250 3R 1, 500 000R750R 300 4R 3, 000 000R750R 800 5R 5, 000 000R750R 1,500 6R 10, 000 000R750R 3,000 7R 30, 000 000R750R 8,000 8R 100, 000 000R750R 25,000 9UnlimitedR750R 40,000

19. Construction Industry Development Board development through partnership Payment for Registration Contractors to pay directly at the Bank. Proof of payment to be submitted with the Registration Forms. Without the payment, the CIDB will not be able to process the applications.

20. Construction Industry Development Board development through partnership CIDB Grading of Contractors The Grades indicate the size of contracts a contractor is capable of undertaking within specified categories of construction works. Determine the capability of enterprises in terms of financial and works capability.

21. Construction Industry Development Board development through partnership Financial Capability Criterion A Minimum Average Annual Turnover – over 2 Yrs Criterion B Largest construction works contract by value – over 5 Yrs Criterion C Employable capital (NAVxr)+ S Grading Criteria

22. Construction Industry Development Board development through partnership Financial Capability Criteria Designation & Tender Value Range Track Record past two Yrs Current Financial Capability DesignationMax Value of Contract that a contractor is considered capable of financing Min Ave- Annual Turn over in the last two 2Yrs. (Rand) Value largest contract in the last 2yRS (Track record) (Rand) Min- Employable Capital + Guarantees Newly constituted enterprise Min employable capital (Rand) 1200 000 No Requirement 2500 000 No Requirement or 80000or 60 00060 000 31 500 000or 780 000260 000or 195 000325 000 43 000 000or 2 400 000800 000or 600 0001 000 000 55 000 0004 800 0001 600 0001 200 0002 000 000 610 000 0009 000 0003 000 0002 250 0003 750 000 730 000 00024 000 0008 000 0006 000 00010 000 000 8100 000 00078 000 00026 000 00019 500 00032 500 000 9No limit240 000 00080 000 00060 000 000100 000 000

23. Construction Industry Development Board development through partnership Works Capability Criterion D Number of full time qualified personnel Criterion E Specific requirements for the category – applying For, e.g. ECBSA Certificate. Criterion F Track record in Works capability over 5 years Grading Criteria

24. Construction Industry Development Board development through partnership Contractor Grading Designation Maximum Value Of Contract X 1000 Registered in terms of a built environment profession Act Registered in terms of the SAPCMP Act or the Engineering Profession Act GBSpecialistCEEEME 1200----- 2500----- 31 500----- 43 000----- 55 000----- 610 000-1-11 730 00012122 8100 00023233 9No limit34344 Qualified Persons

25. Construction Industry Development Board development through partnership Grading Categories Contractor Grading DesignationMaximum Contract Value 1R 200 000 2R 500 000 3R 1, 500 000 4R 3, 000 000 5R 5, 000 000 6R 10, 000 000 7R 30, 000 000 8R 100, 000 000 9Unlimited

26. Construction Industry Development Board development through partnership Contractor Grading Designation Contract value Type of work 5 CE The single number represents a contractor’s capability to undertake a contract in a particular class of construction works with a specified tender value range. Two letters depict the class of construction works in which a contractor is registered.

27. Construction Industry Development Board development through partnership Potentially emerging contractors The Act provides for “emerging enterprise” i.e. an enterprise which is owned, managed and controlled by previously disadvantaged persons and which is overcoming business impediments arising from the legacy of apartheid. Contractors may apply to the Board to be registered as potentially emerging enterprise. Clause 25(8) CIDB Regulations- Potentially Emerging Enterprises may be awarded contracts in one contractor grading designation level higher than what they are registered in provided that the employer: is satisfied that such a contractor has the potential to develop and qualify to be registered in that higher grade; and ensures that financial, management or other support is provided to that contractor to enable the contractor to successfully execute that contract.

28. Construction Industry Development Board development through partnership Possible Contact Areas Motivate service required Award contract Supply tender Information to tenderes Tenderer Prepares tender Receive tenders Contractor selection Manage contractor Planning purposes Contract award- check CIDB Reg. Reg Con Register a Project Award, Interim, Practical & Final Completion Reg Proj

29. Construction Industry Development Board development through partnership Client site Implementation date Limpopo Provincial Department of Public Works 15 Oct 2004 eThekwini Metropolitan Council 14 Jan 2005 National Department of Public Works (all regions) and All Provincial Departments 30 Aug 2005 All Other National Departments other than the National DPW 30 Sep 2005 Every Public Entity 30 Nov 2005 Implementation dates of Register of Contractors

30. Construction Industry Development Board development through partnership Client site Implementation Dates Local Government Institutions Metropolitan Municipalities (except eThekwini Metropolitan Municipality) 15 March 2006 High Capacity Municipalities 30 April 2006 Medium Capacity Municipalities 30 July 2006 Low Capacity Municipalities 30 Nov 2006 Implementation dates of Register of Contractors

31. Construction Industry Development Board development through partnership All Private sector projects Greater than or Equal to R3.0 m – 30 August 2005 Private Sector Projects

32. Construction Industry Development Board development through partnership Transitional arrangements The regulations permit the Board to relax any of the criteria contained in the regulations in the transitional period up to 15 November 2007. The Board has published a number of relaxations in the manner in which a contractor is assessed and has significantly reduced the values published in the regulations for annual average turnover, highest value of contract completed and employable capital associated with all designations.

33. Construction Industry Development Board development through partnership Desig- nation Maximum value of contract X 1000 Min average turnover of last 2 years x 1000 Min contract value over last five years X 1000 Employable capital X 1000 1 200 0 00 2 500 08050 3 1 500 750260150 4 3 000 1 500800300 5 5 000 2 5001 600500 6 10 000 6 0003 0001 500 7 30 000 18 0008 0004 500 8 100 000 70 00026 00018 000 9No limit 210 00080 00054 000 or Values in Regulations

34. Construction Industry Development Board development through partnership Joint ventures (transitional arrangements) DesignationDeemed to satisfy joint venture arrangements 33 x designation 2 43 x designation 3 52 x designation 4 1 x designation 4 + 2 designation 3 62 x designation 5 1 x designation 5 + 2 x designation 4 72 x designation 6 1 x designation 6 + 2 x designation 5 83 x designation 7 93 x designation 8

35. Construction Industry Development Board development through partnership THANK YOU!