Construction Industry Charter Progress Update Prepared for: Portfolio Committee Prepared by: Lydia Bici Date: 17 November 2004

Recap Procedural issues Launch of the charter 04 0ctober 2004 Integrated Management Committee Technical teams Role of government Launch of the charter 04 0ctober 2004

Construction Transformation Charter (1) 1. Process Issues Charter process launched by Minister on 4 October 2004 All technical committees operational Integrated Management Committee comprising of all stakeholders manages the process Work plan for the Charter process developed Anticipating Charter to be submitted to DTI for approval at end of July 2005

Construction Transformation Charter (2) 2. Technical Committees (TTs) Feedback All TTs operational TTs work to be complete by December 2004 Corporate Social Investment (CSI) TT Definition of CSI has been reviewed and reworked. The working definition incorporates projects that are aimed primarily at black groups, communities and individuals that contribute towards transformation and have a strong developmental approach.

Construction Transformation Charter (3) Corporate Social Investment (CSI) TT (cont) Further discussions necessary irt: Whether CSI projects should be targeted to CI or to the society as a whole Possibility of premium scoring or bonus points in the CI Costing time and skills put into dev projects Exemptions of certain companies from CSI Approval of CSI projects

Construction Transformation Charter (4) Ownership and Control TT The definition and application of ownership was reviewed and redefined to apply to South African operations of enterprises operating in the construction sector. Other issues for discussion included: Whether a subsidiary could count control at a group level Acquiring equity on a conditional, deferred basis shall not be counted as direct ownership until equity is actually transfered Whether the Charter should prescribe where companies should implement BEE ownership

Construction Transformation Charter (5) Procurement Definitions Basic definition accepted as “ all expenditure for goods and services including capital expenditure, excluding: expenditure classes covered elsewhere in the charter (salaries, wages, csi), all VAT payable, goods which cannot be sources locally or goods specified by client”

Construction Transformation Charter (6) Procurement (cont) Definitions Proposed that premium scoring be applied on spend on black women women-owned companies, black owned companies or companies rated A Spend on black empowered companies and companies rated B Spend on black owned labour only contractors at 50% of actual spend Capital expenditure to be counted at the time of placing the order and not amortised over the lifespan of the asset.

Construction Transformation Charter (7) Human Resources The TT has worked on definitions, reviewed challenges as they related to HRD in the CI and made recommendations Interventions: Mentoring of black people and designated groups Development of the youth through learnerships and apprenticeships, bursaries Increase direct training costs spent on training Compliant with the legal requirements Increase level of black representation within management

Construction Transformation Charter (8) 3. Process forward TTs’ outputs to be further refined and planned for completion by December 04 IMC to have a workshop on 25/26 Nov 04 An Indaba with all stakeholders planned for early next year Provincial briefings planned for beginning of February 05 1st draft of Charter by end December 04