cidb Quarterly Monitor; Contractor Development; July 2020 · 2 2. Contractor Development 2.1 Background and Context Contractor development can be viewed as improvements in a contractor’s1:

Construction MonitorCONTRACTOR DEVELOPMENT

JULY 2020

CIDB CONSTRUCTION MONITOR - CONTRACTOR DEVELOPMENT; JULY 2020 1.  Introduction _______________________________________________________________________________ 1 2.  Contractor Development __________________________________________________________________ 2 

2.1  Background and Context ________________________________________________________________ 2 2.2  The National Contractor Development Programme _____________________________________ 2 

3.  Contractor Registrations __________________________________________________________________ 3 3.1  5-year View – Upgrades _________________________________________________________________ 4 3.2  3-year View – Upgrades _________________________________________________________________ 4 3.3  Annual View – Upgrades ________________________________________________________________ 5 

4.  Contractor Development Programmes ____________________________________________________ 6 4.1   Contractor Registrations ________________________________________________________________ 7 4.2   Contractor Upgrades ____________________________________________________________________ 7 

Appendix 1: Provincial Data: Upgrades: Entity ____________________________________________________ 8 

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CIDB CONSTRUCTION MONITOR - CONTRACTOR DEVELOPMENT; JULY 2020

1. Introduction The cidb Quarterly Monitors cover the following themes: Quarter 1: Supply & Demand; Quarter 2: Contractor Development; Quarter 3: Employment; and Quarter 4: Empowerment. This cidb Construction Monitor – Contractor Development (Quarter 2) covers the state of contractor development in the contracting sector. Details of contractor upgrades is obtained from the cidb Register of Contractors, which contains records of the gradings of contractors over the life of the Register. The assessment of contractor gradings is presented for all contractors in the Register of Contractors, as well as for contractors within public sector contractor development programmes (CDPs). As context, contractor information is aggregated into the following categories:

Grade 9 contractors; typically contractors that operate at a

national and international level; Grades 7 and 8; typically contractors that operate at a regional / provincial level; Grades 5 and 6; typically contractors in transition from operating at a local to a regional / provincial

level; and Grades 2 to 4; typically established and developing contractors that operate at a local level.

Grade Characteristics 9 national / international

7 & 8 provincial / regional 5 & 6 local / regional 2 to 4 local

2

2. Contractor Development

2.1 Background and Context Contractor development can be viewed as improvements in a contractor’s1: • grading status; and • performance and quality of work. Studies by the cidb have highlighted the slow pace of development from small and medium-size contractors to large contractors2. This study has also highlighted that sustainable contractor development is dependent on enterprise factors which often take time to grow and develop, including financial resources, management skills, and technical capabilities. Other factors such as construction experience, as well as process maturity (business and construction processes) are also relevant for growth. As organisations grow, their processes have to be continually adapted. It should be stressed, however, that all construction companies can mature over time – even if they remain at the same grade. The cidb study also highlighted several other factors which also influence the growth of contracting enterprises. These include: • good individual and collective experience; • attracting and retaining the right people and maintaining a strong workforce; • the maintenance of high standards; • investment in fixed assets; and • working closely with the supply chain. The growth of contractors measured in terms of contractor upgrades is examined in Section 3, while client perceptions as to the performance of contractors and possible changes in the performance of contractors is given in Section 4.

2.2 The National Contractor Development Programme An important instrument in supporting contractor development and transformation within the construction sector is the National Contractor Development Programme (NCDP), which is a public sector led programme comprising of a partnership between the cidb, National and Provincial Public Works and other willing stakeholders and partners3. Key objectives of the NCDP are to increase the capacity, equity ownership, sustainability, quality and performance of cidb registered contractors – effectively raising the contribution of the construction industry to South Africa’s accelerated and shared growth initiative. An assessment of contractor development within the NCDP is not included here. The cidb is however establishing mechanisms to monitor such contractor development, and aims to report on the NCDP in future editions of the cidb Construction Monitor – Contractor Development.

1 NCDP (2011). NCDP Summary Framework. Produced by Department of Public Works and the Construction

Industry Development Board, September 2011, accessible at cidb.org.za. 2 cidb (2012). The Construction Industry as a Vehicle for Contractor Development and Transformation. Construction

Industry Development Board, March 2012, accessible at cidb.org.za. 3 NCDP (2011). NCDP Summary Framework. Produced by Department of Public Works and the Construction

Industry Development Board, September 2011, accessible at cidb.org.za.

3

3. Contractor Registrations As context, an overview of the structure of the industry is given below, in terms of the absolute number of contractors and a percentage of cidb registered contractors.

For later comparisons, the number of black-, women- and youth owned contracting entities as at 2020Q1 is given below, namely;

Grade Number (%) 

9 209 1%7 & 8 1846 11%5 & 6 3519 21%2 to 4 10928 66%Total 16502 100%

Supply; Registrations per Grade (% Grades 2 to 9); 202001

Entity

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

Entity

Grade Number (%) 

9 9 1%7 & 8 150 9%5 & 6 332 19%2 to 4 1214 71%Total 1705 100%

Supply; Black‐Owned 51+%; Registrations per Grade (% Grades 2 to 9); 202001

Entity

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

Entity

Grade Number (%) 

9 2 0%7 & 8 40 7%5 & 6 103 19%2 to 4 392 73%Total 537 100%

Supply; Women‐Owned 51+%; Registrations per Grade (% Grades 2 to 9); 202001

Entity

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

Entity

4

The rate of contractor upgrades over the past 5 years, three years and annual rates of contractor upgrades are given in the following sections.

3.1 5-year View – Upgrades Details of upgrades of contractors that have upgraded from an initial grade of 1 to 8 over the past five years across any Class of Works is given in the table below. It should be noted that the information presented below refers to upgrades from a lower grade to the highest grade achieved. (Note that the table includes contractors that achieved a maximum grade but are no longer registered with the cidb.)

   Contractor Upgrades; 2015Q2 to 2020Q1    Total%  Black 51%+  Women 51 %+  Youth  51%+ Grades  %  %  %  % 7 & 8  41%  42%  40%  58% 5 & 6  51%  51%  41%  72% 2 to 4  54%  52%  45%  80% 

Average %  49%  48%  42%  70% 1  N/A  N/A  N/A  N/A 

Due the data system being rebuild, we currently do not have results on Grade 1 contractors. Furthermore, it is seen that the rate of upgrades for youth-owned contractors that have upgraded one or more grades over five years exceeds that for all cidb registered contractors.

3.2 3-year View – Upgrades A shorter-term perspective of contractor development is given below, in which details of upgrades of contractors that achieved a maximum Grade of 1 to 8 across any Class of Works over the past three years is given. Again, it should be noted that the information presented below refers to upgrades from a lower grade to the highest grade achieved. It is seen that the average percentage of black-owned contractors that have upgraded one or more grades over three years exceeds that for all cidb registered contractors.

Grade Number (%) 

9 0 0%7 & 8 13 3%5 & 6 66 16%2 to 4 330 81%Total 409 100%

Supply; Youth‐Owned 51+%; Registrations per Grade (% Grades 2 to 9); 202001

Entity

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

Entity

5

   Contractor Upgrades; 2017Q2 to 2020Q1    Total%  Black 51%+  Women 51 %+  Youth  51%+ Grades  %  %  %  % 7 & 8  19%  18%  17%  16% 5 & 6  30%  30%  23%  30% 2 to 4  28%  26%  22%  29% 

Average %  26%  25%  21%  25% 1  N/A  N/A  N/A  N/A 

3.3 Annual View – Upgrades Details of the annual upgrading of contractors in within the past four quarters (2019Q3 to 2020Q2) is shown in the following table. Note that the data reflects the number of upgrades from a particular grade to a higher grade (i.e. from / to). It is seen that the average rate of contractor upgrades per year for contractors in Grade 1 is around 2% per annum, and around 9% per annum for Grades 2 to 6. In Grades 7 & 8, the average rate of upgrade is around 5% per annum.

Details of contractor upgrades for selected provinces is given in Appendix 1, and further details are available on request from the cidb.

From/To 2 to 4 5 & 6 7 & 8 9 Total Registrations %

7 & 8  0  0  62  15  77 1 929 7%5 & 6  0  80  144  2  226 3 802 8%2 to 4  447  302  34  0  783 13 416 11%1 1 978  114  0  0 2 092 122 192 2%

Total 2 425  496  240  17 3 178 141 339 2%

Upgrades; 201903 to 202002

Entity

0% 5% 10% 15% 20%

7 & 8

5 & 6

2 to 4

1

Entity

6

4. Contractor Development Programmes A CDP is defined within the NCDP as:

an entity that is established for the purpose of providing developmental support to contractors. Contractors who participate within CDPs receive structured developmental support which is targeted to achieve predetermined developmental objectives.

Work opportunities are typically provided through direct contracts with the developing contractors within the CDP. Structured developmental support could be provided by the government institution that is providing the work opportunities, or could be outsourced to a developmental institution. The Contractor Development monitor assesses and analyses the role played by the CDPs over the last three years in terms of the development of contractors, as detailed in the following table, 25 CDPs are presently being assessed as part of the Contractor Development monitor:

Province CDP Number of Contractorsꞏ Incubator 60ꞏ COEGA (IDZ) 96ꞏ Intergrated Contractor Development Programme 200

ꞏ Masakhesonke Contractor Development Programme 33

ꞏ Mthatha Contractor Development Programme 31ꞏ NMMB Contractor Development Programme 24

Free State ꞏ Department of Police Roads and Transport 101ꞏ CIP NW 10ꞏ IDT CIP NW 1ꞏ IDT Vuk'Uphile NW 14ꞏ LP IDT Contractor Development 24ꞏ Vuk'uphile Learnership NW 13ꞏ Vukuphile Learnership 27ꞏ Joburg Water (Vukuphile) CDP 18ꞏ Sihamba Sonke 1

KwaZulu-Natal ꞏ KZN Master Builders Association (ECDP) 38ꞏ Limpopo Contractor Development - Steffanuti Stocks 10ꞏ Vuk'Uphile Contractor Development 4ꞏ Vuk'uphile Contractor Development Programme 34

Northern Cape ꞏ Dept. of Roads and Public Works CDP GB and CE 29ꞏ Vuk'uphile Contractor Development Programme 9ꞏ Vuk'uphile Tlokwe City Council 63ꞏ Advance M & T Shortlist 2016 20ꞏ DT & PW Roads Branch CDP 55ꞏ Siyenyuka 12

Total 927

Western Cape

North West

Eastern Cape

Gauteng

Limpopo

7

4.1 Contractor Registrations An overview of the total number of contractor registrations across any Classes of Works within these CDPs as at 2019Q2 is given below. The graph reflects registration that are currently active, and that contractors can have more than registration. It is seen that around 927 contractors are registered in CDPs.

4.2 Contractor Upgrades An assessment of contractors that have upgraded one or more grade over the last three years and who are currently or previously have participated in CDPs that have is given below. Also included in the table below is the upgrades for the whole population of contractors (section 3.2).

   Contractor Upgrades; 2016Q3 to 2019Q2 Grades  CDPs %  Total % 7 & 8  28%  19% 5 & 6  27%  31% 2 to 4  39%  30% 

Average %  36%  27% 1  42%  8% 

It is seen that the average number upgrades of contractors in Grades 2 to 8 that have participated in CDPs is substantially higher that the average of all cidb Registered contractors (i.e. 35% vs. 27%). Furthermore, it is seen that over 40% of contractors that entered CDPs on Grade 1 have upgraded one or more grades.

Current Grade Number % Distribution

7 & 8 8 1%5 & 6 60 6%2 to 4 223 24%1 636 69%

Total 927 100%

CDP Contractor Registrations; 2019Q2

Entity

0% 20% 40% 60% 80%

7 & 8

5 & 6

2 to 4

1

Entity

8

Appendix 1: Provincial Data: Upgrades: Entity

Eastern Cape

Gauteng

From/To 2 to 4 5 & 6 7 & 8 9 Total Registrations %

7 & 8  0  0  6  1  7  133 5%5 & 6  0  10  10  0  20  373 5%2 to 4  44  28  2  0  74 1 538 5%1  238  7  0  0  245 14 879 2%

Total  282  45  18  1  346 16 923 2%

Upgrades; 201903 to 202002

Entity

0% 5% 10% 15% 20%

7 & 8

5 & 6

2 to 4

1

Entity

From/To 2 to 4 5 & 6 7 & 8 9 Total Registrations %

7 & 8  0 0 28 6  34  767 4%5 & 6  0 16 49 2  67 1 142 6%2 to 4  102  77  13  0  192 3 173 6%1  489  37  0  0  526 31 481 2%

Total  591  130  90  8  819 36 563 2%

Upgrades; 201903 to 202002

Entity

0% 5% 10% 15% 20%

7 & 8

5 & 6

2 to 4

1

Entity

9

KwaZulu-Natal

Western Cape

From/To 2 to 4 5 & 6 7 & 8 9 Total Registrations %

7 & 8  0 0 16 2  18  332 5%5 & 6  0 22 25 0  47  764 6%2 to 4  134  82  5  0  221 4 203 5%1  550  22  0  0  572 33 874 2%

Total  684  126  46  2  858 39 173 2%

Upgrades; 201903 to 202002

Entity

0% 5% 10% 15% 20%

7 & 8

5 & 6

2 to 4

1

Entity

From/To 2 to 4 5 & 6 7 & 8 9 Total Registrations %

7 & 8  0 0 3 1  4  137 3%5 & 6  0 5 5 0  10  255 4%2 to 4  40  16  3  0  59  749 8%1  95  3  0  0  98 4 970 2%

Total  135  24  11  1  171 6 111 3%

Upgrades; 201903 to 202002

Entity

0% 5% 10% 15% 20%

7 & 8

5 & 6

2 to 4

1

Entity

10

Notes

GAUTENG PROVINCIAL OFFICE PRETORIA [email protected]

WESTERN CAPE PROVINCIAL OFFICE CAPE TOWN [email protected]

EASTERN CAPE PROVINCIAL OFFICE BISHO [email protected]

NORTHERN CAPE PROVINCIAL OFFICE KIMBERLEY [email protected]

FREE STATE PROVINCIAL OFFICE BLOEMFONTEIN [email protected]

KWAZULU-NATAL PROVINCIAL OFFICE DURBAN [email protected]

LIMPOPO PROVINCIAL OFFICE POLOKWANE [email protected]

MPUMALANGA PROVINCIAL OFFICE NELSPRUIT (MBOMBELA) [email protected]

NORTH WEST PROVINCIAL OFFICE MAHIKENG [email protected]

cidb contact number: 086 100 2432

Anonymous Fraud Line: 0800 11 24 32

email: [email protected]

www.cidb.org.za

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