CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

1. CONSTRUCTION INDUSTRY DEVELOPMENT BOARD Umgeni Supplier Information Session Tuesday 27September 2005 Presented by Ronnie Khoza

2. 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)

3. Mandate of the CIDB • “to provide strategic leadership to construction industry stakeholders to stimulate growth, reform and improvement of the construction sector”.

4. 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”

5. 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))

6. 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.

7. 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;

8. 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 minimumstandards and best practice of contractors

9. 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

10. 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).

11. Classes of Construction for Contractor Registration • CE = Civil Engineering • EE = Electrical Engineering • GB = General Building • ME = Mechanical Engineering • SW= Specialist Works

12. 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.

13. 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

14. 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

15. Documentation Requirements • Special Requirements • Electrical contractor’s- ECBSA Registration Certificate (where applicable). • NHBRC Registration number (Where applicable)

16. Payment for Registration • Registration Fees • Administration Fees • R250 to R750 per contractor • Annual Fees • R200 to R40 000 per contractor.

17. Schedule of Fees

18. 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.

19. 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.

20. Grading Criteria • 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

21. Financial Capability Criteria

22. Grading Criteria • 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

23. Qualified Persons

24. Grading Categories

25. Contractor Grading Designation Contract value 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. 5 Type of work Two letters depict the class of construction worksin which a contractor is registered. CE

26. 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.

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

28. Implementation dates of Register of Contractors

29. Implementation dates of Register of Contractors

30. Private Sector Projects

31. 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.

32. or or or Values in Regulations

33. Joint ventures (transitional arrangements)

34. THANK YOU!