inform construction industry development practice note

1 development through partnership construction procurement and deliveryBoard: Prof Raymond Nkado (Chairperson) Cecil Rose (Deputy Chairperson) Nazir Alli Lwandile Kona Nyeleti Makhubele Cannon Noyana Gavin Strydom Lungile Mchunu Gregory Steele Sisa Ngebulana Shereen Tebogo Bogosing Nyiko Gudlhuza Marten Govender Ronnie Khoza (CEO) inform practice note construction industry development Issued by the construction industry development BoardI would like to receive the inform practice notes together with infocus newsletter and the information bulletins of the cidb subscribe I do not wish to receive the publications cancel Content Synopsis: cidb s inform practice notes provide guidance and clarity in achieving client objectives in construction procurement and delivery.

2 practice notes inform clients and practitioners on how to embrace best practice and to deal with issues that may arise. They are aligned with, but do not replace regulation. 2 2 Registration of contractors 2 Who must register 2 Categories of registration 3 Contractor grading designations 3 Joint ventures 4 3 Applying the register of contractors 4 General requirements 4 Activating the Register through procurement documents 5 Interpreting reasonable 6 Interpreting capable of being so registered 7 Procedure in relation to the invitation, evaluation and award of quotations 8 Procedure in relation to the invitation.

3 Evaluation and award of tenders 9 Procedure in relation to calls for expressions of interest 11 Applying the register of contractors in construction works contracts practice Note # 3 August 2006(Version 2 - February 2008) Section 16(3) of the construction industry development Board Act, 2000 requires that the Minister of Public Works prescribe the manner in which public sector construction contracts may be invited, awarded and managed within the framework of the registers and within the framework of the policy on procurement. Part IV (Invitation, Award and Management of construction Works Contracts) of the construction industry development Regulations, read in conjunction with the CIDB Standard for Uniformity in construction Procurement, establishes requirements for the application of the register of contractors in construction works contracts.

4 This practice note identifies which contractors need to register, describes the categories of registration and the CIDB contractor grading designations and establishes a step by step procedure to satisfy the requirements of the Regulations (as amended up to 23 November 2007) in relation to quotations, tenders and expressions of interest. practice Note # 3 2 of 12 1. Introduction The construction industry development Board Act of 2000 (Act 38 of 2000) prohibits the award of an engineering and construction works contract in the public sector to an unregistered contractor and requires the Board to establish a national register of contractors, which: categorises contractors in a manner that facilitates public sector procurement; indicates the size and distribution of contractors operating within the construction industry ; indicates the volume, nature and performance of contractors and target groups promotes contractor development ; and is accessible to the private sector to facilitate private sector procurement.

5 The register of contractors is intended to: support risk management in the public tendering process; reduce the administrative burden associated with the award of contracts; reduce tendering costs to both employers and contractors; enable effective access by the emerging sector to work and development opportunities; assess the performance of contractors in the execution of contracts and thus provide a performance record for contractors; regulate contractor behaviour and promote minimum standards and best practice ; store and provide data on the size and distribution of contractors operating within the industry and the volume, nature, performance and development of contractors and target groups; and enable access by the private sector and thus also facilitate private sector procurement and business to business linkages.

6 The second phase of the registers will introduce a best practice contractor recognition scheme. 2 Registration of contractors Who must register Only prime or main contractors must be registered. Subcontractors need not be registered. Labour only contractors and those contractors who are provided with the bulk of the materials required for engineering and construction works by the employer or an agent of the employer, need not register. Once-off joint ventures do not have to register, provided that each partner of the joint venture is separately registered. Contractors who work as Home Builders in terms of the Housing Consumer Phase II of the Registers Section 21 of the CIDB Act requires that the Board, within a reasonable period after the establishment of the register of contractors, to establish a best practice contractor recognition scheme which: a) enables organs of state to manage risk on complex contracting strategies; and b) promotes contractor development in relation to best practice standards and guidelines published by the Board.

7 (This scheme is still under development ) The CIDB is required in terms of the construction industry development Regulations to register a contractor within 21 working days of receipt of an application that is complete in all respects. The CIDB can only commence with the assessment of an application when it is in possession of all the information required for grading. As a result, those applicants whose submissions are incomplete will experience delays in the processing of their applications. 3 of 12 practice Note # 3 protection Measures Act of 1999 are deemed to be registered and only need to register on the CIDB Register of Contractors should they wish to contract with the public sector on construction work other than home building.

8 Categories of registration The category of registration of a contractor on the CIDB Register of Contractors is determined by the following: 1) the contractor grading designation; 2) the status of a contractor as a potentially emerging enterprise; 3) from a date determined by the Minister in the Gazette, recognition status in terms of a best practice recognition scheme; and 4) from a date determined by the Minister in the Gazette, the status of recognition of the progress of a contractor in terms of any black economic empowerment programme. Currently the register only records items 1 and 2 above contractor grading designations and emerging enterprise status. Contractor grading designations A contractor s grading comprises three characters which reflect a registered contractor s capability to perform a contract of a given tender value range (first character) in a class of construction works (second and third character).

9 The CIDB Act defines emerging enterprise as an enterprise which is owned (at least 50%), managed and controlled by previously disadvantaged persons and which is overcoming business impediments arising from the legacy of apartheid. 5 CE Single number representing a registered contractor s capability to undertake a contract in a particular class of construction works within a specified tender value range Two letters depicting the class of construction works (general building, civil engineering, electrical engineering, mechanical engineering or specialist category) in which the contractor is registered Range of Tender Values Tender Value Range designation Greater than Less than or equal to 1 R 0 R 200 000 2 R 200 000 R 500 000 3 R 500 000 R 1 500 000 4 R 1 500 000 R 3 000 000 5 R 3 000 000 R 5 000 000 6 R 5 000 000 R 10 000 000 7 R 10 000 000 R 30 000 000 8 R 30 000 000 R 100 000 0009R 100 000 000 No limitPE Designates potentially emerging status, if applicable Describing contractor grading designations Classes of construction works Description Designation Definition Civil engineering works CE construction works that are primarily concerned with the materials such as steel, concrete, earth and rock and their application in the construction , operation, maintenance and management of hydraulic, structural.

10 Environmental and systems aspects of infrastructure works and services. Electrical engineering works EE construction works that are primarily concerned with installation, testing, operation and maintenance of equipment, plant and systems within the electrical, electronic, communication and electrical systems areas. General building works GB construction works that: a) are primarily concerned with the provision of permanent shelter for its occupants or contents; or b) cannot be categorised in terms of the definitions provided for civil engineering works, electrical engineering works, mechanical engineering works, or specialist works. Mechanical engineering works ME construction works that are primarily concerned with the installation, testing, operation and maintenance of machines, machine and thermodynamic processes and manufacturing, materials handling plants and systems.