1. development through partnership Applying the cidb registers in construction procurement (Based on Regulations which became effective on 1 January 2009)

2. development through partnership Register of contractors - Background - Contractor grading designations Register of projects - Background - i-tender and reporting on projects When to apply the registers How to apply the register of contractors - When calling for tender offers - When calling for expressions of interest Applying the registers in construction procurement

3. development through partnership Register of contractors - Background - Contractor grading designations Register of projects - Background - i-tender and reporting on projects When to apply the registers How to apply the register of contractors - When calling for tender offers - When calling for expressions of interest Applying the registers in construction procurement

4. development through partnership Statutory body established in terms of the Construction Industry Development Board Act Mandated to: Provide leadership to industry stakeholders for growth, reform and improvement Drive a comprehensive industry development strategy The CIDB

5. development through partnership Register of contractor 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)) CIDB Act

6. development through partnership Phase 1 (in place) support risk management in the tendering process; reduce the administrative burden associated with the award of contracts; reduce tendering costs to both clients and contractors; enable effective access by the emerging sector to work and development opportunity regulate behaviour store and provide data on the size and distribution of contractors operating within the industry; and NB Mandatory for public sector to use it. Register is available to private sector. Purpose of Register of Contractors

7. development through partnership NB registers will reflect B-BBEE status when accreditation agencies are in place Phase 2 (under development) assess the performance of contractors in the execution of contracts and thus provide a performance record for contractors; promote minimum standards and best practice NB next phase is designed enable organs of state to manage risk on complex contracting strategies Purpose of Register of Contractors

8. development through partnership Register of contractors - Background - Contractor grading designations Register of projects - Background - i-tender and reporting on projects When to apply the registers How to apply the register of contractors - When calling for tender offers - When calling for expressions of interest Applying the registers in construction procurement

9. development through partnership Two letters depicting the class of construction works (general building (GB), civil engineering (CE), electrical engineering (buildings (EB) and infrastructure (EP)), mechanical engineering (ME) or specialist category) 5CE PE Designates potentially emerging status i.e. owned managed and controlled by PDIs cidb Contractor grading designations Contractor’s capability to undertake a contract in a specified tender value range

10. development through partnership Transition Tender value ranges Tender Value Upper limit of tender Range designationvalue range (Rand) 1 200 000 2 650 000 3 2 000 000 4 4 000 000 5 6 500 000 6 13 000 000 7 40 000 000 8130 000 000 9No limit Entry level Typically one person business Typically a company structure Often publically listed

11. development through partnership Grade 1 contractors – entry level Entry requirements: certified copy of id of principal(s) company registration number if applicable tax clearance Electrical Contractor Board of SA registration if EB payment of R450 NB “over-the-counter” registrations possible with grade 1 registration valid for three years only grade 2 to 9 contractors - pay an administration fee and an annual renewal fee - must confirm their particulars annually

12. development through partnership Grading criteria Two methods Method A (Grade 2 to 9)Method B (Grade 5 to 9) Financial capability Available capital based on last financial statement Available capital (net asset value plus financial sponsorships (collectable guarantee)) based on last financial statement (higher requirement than for method A) Best turnover over last 2 years Highest value contract over last 5 years Works capability Qualified personsHigher number of qualified persons Highest value contract over last 5 years License issued by ECBSA, if applicable (EB only) Amount permitted varies depending upon type of sponsor

13. development through partnership Grading criteria Desig- nation Tender value Range inc VAT Professionally Registered (qualified) Person Method AMethod B Largest contract Turn over Available capital Available capital 20,65 m - Value -- 32,0 m One of the values 44,0 m 56,5 m# - Method B Value 613,0 m# (most grades) 740,0 m# 8130,0 m# 9>130,0 m # Values based on: % of median value of “upper” and “lower limits” Annual turnover 70 - 106% Employable capital 8 - 15% for Method A and 25 - 30% for Method B Highest contract 35 - 38% Relevant registrations (ECBSA for EB)

14. development through partnership SA Alarms, security and access control systems SB Asphalt works (supply and lay) SC Building excavations, shaft sinking & lateral earth support SD Corrosion protection (cathodic, anodic and electrolytic) SE Demolition and blasting SF Fire prevention and protection systems SG Glazing, curtain walls and shop fronts SH Landscaping, irrigation and horticultural works SI Lifts, escalators and travellators SJ Piling and specialized foundations for buildings &structures SK Road markings and signage SL Structural steelwork fabrication and erection SM Timber buildings and structures SN Waterproofing using specialist systems. SO Water supply and drainage for buildings (wet services) SP Building of Homes in terms of NHBRC scheme SQ Precast concrete or steel fencing Specialist works

15. development through partnership Capability vs Capacity Capability – inherent ability / potential to perform a contract Capacity – concerned with having sufficient resources to execute a contract cidb contractor grading designations access broad capabilities of a contractor Register is first line risk management tool Those responsible for evaluating tenders need to establish that tenderers have the necessary capability and capacity to perform the contract Assess at a point in time Assess in relation to a contract

16. development through partnership The Regulations require the Board to identify whether a contractor can be classified as a potentially emerging enterprise if they are owned, managed and controlled by previously disadvantaged individuals. Where employers have in place a targeted development programme, contractors who are registered PE may be awarded a contract in one contractor grading designation higher than their current contractor grading designation provided that the Employer is satisfied that the contractor has the potential to develop into and qualify for registration in a higher grade ensures that financial, management or other support is provided to that contractor to enable the contractor to successfully execute the contract. See CIDB specification for social and economic deliverables Potentially emerging contractors

17. development through partnership Joint Ventures All partners must be registered or the joint venture must be registered Joint venture calculator on cidb website Desig- nation Deemed to satisfy joint venture arrangements 33 x grade 3 4 52 x grade 4 1 x grade 4 + 2 x grade 3 62 x grade 5 1 x grade 5 + 2 x grade 4 72 x grade 6 1 x grade 6 + 2 x grade 5 83 x grade 7 93 x grade 8

18. development through partnership Register of contractors - Background - Contractor grading designations Register of projects - Background - i-tender and reporting on projects When to apply the registers How to apply the register of contractors - When calling for tender offers - When calling for expressions of interest Applying the registers in construction procurement

19. development through partnership The Act requires the register (22(1)) to: gather information on the nature, value and distribution of projects; and provide the basis for a best practice project assessment scheme to promote the performance of public and private sector clients in the development of the construction industry. Register of projects Applies where value of contract (incl VAT) exceeds Public sector (except major public entities eg Transnet and Eskom) R200 000 Private sector and major public entities R10 million

20. development through partnership Register of contractors - Background - Contractor grading designations Register of projects - Background - i-tender and reporting on projects When to apply the registers How to apply the register of contractors - When calling for tender offers - When calling for expressions of interest Applying the registers in construction procurement

21. development through partnership CIDB Regulations Calls for expressions of interest and invitations to tender must be advertised on the CIDB website (public sector only) (Reg 24) The CIDB must be notified on the website of the award of the contract and, if relevant, the cancellation or termination thereof: public sector: within one month private sector: within 3 months Note: Currently no payment for registration of a project Batch submission possible

22. development through partnership @cidb facilitates exchange of tender information between clients and contractors using: -SMS (short messaging system) -e.mail and -Internet (search engine) www.cidb.org.za allows tenders to be advertised and awards to be reported on i-Tender@cidb Tender TN2005/2/56 available from (client) for 2CE Closing 5/26/2005 Call 0124189500 i-Tender service

23. development through partnership Register of contractors - Background - Contractor grading designations Register of projects - Background - i-tender and reporting on projects When to apply the registers How to apply the register of contractors - When calling for tender offers - When calling for expressions of interest Applying the registers in construction procurement

24. development through partnership Act defines construction works as: the provision of a combination of goods and services arranged for the development, extension, installation, repair, maintenance, renewal. removal, renovation, alteration, dismantling or demolition of a fixed asset including building and engineering infrastructure; The critical issues in the definition is that it: is a combination of goods and services (not just services or just goods) must result in a fixed asset. Construction works

25. development through partnership Exemptions The following is exempt from registration: contractor who undertakes construction works substantially consisting of the provision of labour / supplies subcontractors Register of contractors is not to be applied to: Top structures (houses) covered by the NHBRC ‘s warranty scheme Mining areas below the shaft collar / portal to the adit or by the pit rim for open cast mines Plant maintenance and modifications associated with continuous petro-chemical process plants Installation, repair, maintenance or alteration of bulk materials / container handling and lifting machinery

26. development through partnership Register of contractors - Background - Contractor grading designations Register of projects - Background - i-tender and reporting on projects When to apply the registers How to apply the register of contractors - When calling for tender offers - When calling for expressions of interest Applying the registers in construction procurement

27. development through partnership Identify preferably one, but not more than two class(es) of construction works that best describe the works to be performed More than one class of construction works may be required to describe a contract, e.g. a steel bridge, which may fall under Structural Steelwork Fabrication and Erection or Civil Engineering Works. Calling for a single class in these circumstances may prejudice qualified contractors. Calling for an alternative class of work addresses this concern. Regulations only permit alternatives and not dual classes. For example, the requirement may be for a 1GB or 1CE, but not a 1GB and 1CE. Step 1

28. development through partnership Estimate the tender value including value added tax and identify the tender value range designation within which this value falls. Term / multi-year contract, base on the annual estimated value of the contract, if: “as and when required” routine nature grouped into identifiable and similar components which are constructed after first completing the previous component Limit of tender value range 20% line (7,8 m) Where the estimated value falls in this zone, use tender value range below Step 2 6 (13m) 5 (6,5m) 4 (4m)

29. development through partnership Step 3:Determine the approximate contractor grading designation / alternative designation, based on the class(es) of construction works selected in step 1 and the tender value range identified in step 2. Consider PE status if employer has a targeted development programme in place that provides the necessary support. Step 3 Note: very few targeted development programmes are in place or able to properly support PE contractors

30. development through partnership Step 4: Notify tenderers of the approximate contractor grading designation requirements in the Tender Notice and Invitation to Tender using the wording prescribed in the Standard for Uniformity in Construction Procurement. It is estimated that tenderers should have a CIDB contractor grading of 6GB or 6CE or higher. 5GB or 5CE potentially emerging enterprises who satisfy criteria stated in the Tender Data may submit tender offers. Step 4 Include only where employer has a targeted development programme in place and is able to provide the necessary support

31. development through partnership Step 5: State the requirements for contractor grading designation in the Tender Data in the form of eligibility criteria in using the wording prescribed in the Standard for Uniformity in Construction Procurement. Step 5

32. development through partnership The CIDB Standard for Uniformity in Construction Procurement requires that the following clauses be inserted in the Tender Data: Clause number F.2.1Only those tenderers who are registered with the CIDB, or are capable of being so prior to the evaluation of submissions, in a contractor grading designation equal to or higher than a contractor grading designation determined in accordance with the sum tendered, or a value determined in accordance with Regulation 25 (1B) or 25(7A) of the Construction Industry Development Regulations, for a GB or CE class of construction work, are eligible to have their tenders evaluated. Joint ventures are eligible to submit tenders provided that: …………. Use CIDB joint venture calculator to establish grading Standard wording

33. development through partnership “capable of being so prior to the evaluation of submissions” Permits an employer to evaluate a tender received from an unregistered contractor if such a contractor complies with all the legal requirements to be registered in the category required by the tender invitation. An employer may evaluate a tender received from an unregistered tenderer, but is only permitted to do so if there is a reasonable chance that the unregistered contractor will become registered in the required contractor grading designation. Evaluation commences with the reduction of tender offers to a comparative basis to perform comparisons NB cannot award a contract to an unregistered contractor Capable of being registered

34. development through partnership Step 6:Advertise tenders using the CIDB i-Tender service on the CIDB website Step 7: Look up each tenderer’s contractor grading designation on the CIDB register (www.cidb.org.za) and evaluate only those tenderers who have not tendered an amount which exceeds the tender value range associated with their respective contractor grading designations, except where: i-Tender@cidb Tender TN2005/2/56 available from (client) for 2CE Closing 5/26/2005 Call 0124189500 the margin by which the tendered sum exceeds this value is reasonable; or they are capable of being registered in the required contractor grading designation. NB Compulsory Enterprise Questionnaire contains CIDB registration no of contractor. Don’t accept certificates Steps 6 and 7

35. development through partnership An organ of state may subject to its procurement policy and notwithstanding anything to the contrary contained in this regulation, evaluate and award a tender offer from a tenderer who is registered but who tendered outside of his or her tender value range as contemplated in regulation 17, provided that – -the margin with which the tenderer exceeded his or her tender value range contemplated in regulation 17, is reasonable; -the award of the contract does not pose undue risk to the organ of state; -the tender offer in all other aspects comply with these Regulations; and -the report referred to in regulation 21 or 38(5)and (6), indicates whether this subregulation was applied in the award of the tender. Regulation 25(7A)

36. development through partnership Regulation 25(7A) provides clients with a degree of latitude to evaluate tenders which are in relatively close proximity to the lower limit of a tender value range In accordance with case law, “reasonable” has been interpreted to mean that a value judgment must be made that is balanced and justifiable. The Supreme Court of Appeal has also on occasion decided that the application of a formula (in this case of granting fishing quotas) can lead to “anomalous results which the officials (of environment affairs and tourism) were unable to explain; or that at least some of the results were irrational and inexplicable and, consequently, unreasonable.” Interpreting “reasonable”

37. development through partnership “reasonable” means that the employer’s assessment of the capabilities and capacity of the tenderer to perform a specific contract above the tender value range of his or her contractor grading designation is fully justifiable and acceptable to someone who was not part of the evaluation process. Unreasonable to award a contract to a registered contractor which is significantly higher than the maximum tender value range associated with their current contractor grading designation CIDB guideline: 10 or 15 percent above the upper limit of the tender value range will in most circumstances be considered “reasonable”. 20% or more above the upper limit is likely to be considered unreasonable. Interpreting “reasonable”

38. development through partnership Step 8: Declare as non-responsive all tenders received from: a)registered contractors who tender above their designated tender value range, except where the margin by which the tender value range is exceeded is reasonable; or b)unregistered contractors who are not considered as being capable of being registered in the required contractor grading designation prior to the evaluation of tenders. Step 9:Decide in the case of a tenderer who tenders above his tender value range if: a)the amount by which the tendered sum exceeds the tender value range is reasonable; b)the award of a contract to such a contractor does not impose any undue risk. Steps 8 and 9

39. development through partnership Step 10:Confirm that the tenderer has specific capabilities, if relevant, and the necessary capacity to perform the works. Step 11:Confirm that the tenderer is on the register and is in possession of the required contractor grading designation immediately prior to the award of the contract. Step 12: Register contract award within 21 working days of acceptance of offer, indicating whether or not Regulation 25(7A) relating to the awarding of a contract outside of a contractors contractor grading designation was applied in the award of the contract. Steps 10, 11 and 12

40. development through partnership Register of contractors - Background - Contractor grading designations Register of projects - Background - i-tender and reporting on projects When to apply the registers How to apply the register of contractors - When calling for tender offers - When calling for expressions of interest Applying the registers in construction procurement

41. development through partnership Step 1: Identify preferably one, but not more than two class(es) of construction works that best describe the works to be performed. Step 2:Estimate the tender value including value added tax Step 3:Determine the contractor grading designation and, where applicable, the alternative designation, based on the class(es) of construction works selected in step 1 and the tender value range identified in step 2. Consider PE status if employer has a targeted development programme in place that provides the necessary support. Steps 1 to 3

42. development through partnership Step 4 Notify respondents of the contractor grading designation requirements in the Notice and Invitation to Submit an Expression of Interest using the wording prescribed in the Standard for Uniformity in Construction Procurement. Respondents must have a contractor grading designation of 5GB or 5CE or higher. 4GB or 4CE potentially emerging enterprises who satisfy criteria stated in the Submission Data may submit expressions of interest. Step 4 Include only where employer has a targeted development programme in place and is able to provide the necessary support

43. development through partnership Step 5 Step 5 State the requirements for contractor grading designation in the Submission Data in the form of eligibility criteria in using the wording prescribed in the Standard for Uniformity in Construction Procurement. Only those respondents who are registered with the Construction Industry Development Board, or are capable of being so registered within 21 working days from the closing date for submission of tenders, in a contractor grading designation of GB or CE or higher, are eligible to have their submissions evaluated.

44. development through partnership Step 6 Step 6:Declare as non-responsive all submissions received from registered contractors who do not possess the required contractor grading designation and unregistered contractors who are not capable, within 21 days of the closing date of submissions of interest, of being registered in the required contractor grading designation. When tenders are invited, the steps for the calling for tender offers applies

45. development through partnership