CONSTRUCTION SECTOR CHARTER COUNCIL
BASELINE STUDY:
REPORT ON THE STATE OF EMPOWERMENT
IN THE CONSTRUCTION SECTOR
FOR THE PERIOD 2009 TO 2013
APRIL 2014
Presented by:
FF Fongoqa PrEng
Chairperson - CSCC
STRUCTURE OF PRESENTATION:

Construction Sector Charter Council

Construction Sector Code

Report on the Baseline Study

Conclusion and Recommendations
CONSTRUCTION SECTOR
CHARTER COUNCIL

Legal Basis for existence as a Council

Composition of the Council

Mandate and Authority of the CSCC
BASIS FOR EXISTENCE OF CSCC
In June 2009, the Minister of Trade and Industry
gazetted the Construction Sector Code as
provided for in Section 9 (1) of the Broad Based
Black Economic Empowerment Act 53 of 2003.
The code provides for the establishment of the
Construction Sector Charter Council, including its
composition, mandate and authority.
COMPOSITION OF CSCC
• Government (led by DPW)
• Organised business comprising:
- Building Contractors
- Civil Contractors

Built Environment Professionals
• Organised Labour (unions)
MANDATE OF THE CSCC
OVERSEE, EVALUATE, MONITOR
AND REVIEW the IMPLEMENTATION of the
Construction Sector Codes.

Sharing information with members of the Construction Industry,
appropriate Ministries and SOEs, Verification Agencies, CIDB, etc.

Development and distribution of best practice notes, which
provide guidance on construction specific transformation issues

Compile reports on status and track progress of transformation
within the construction Industry

Report to appropriate Ministries, BBBEE Advisory Council and
provide advice as appropriate.
THE CONSTRUCTION SECTOR
CODE (CSC)

Rationale

Objectives

Implications
RATIONALE FOR THE CSC
“The construction sector believes that positive and
pro-active responses through the implementation of
Construction Code of Good Practice would address
inequalities in the sector, unlock the sector’s potential
and enhance its growth”.
The founding organisations of the CSC concluded that the
peculiarities of the construction industry warrant a
specific sector code, and differentiation between BEPs
and Contractors is a given.
OBJECTIVES OF THE CSC






SUBSTANTIAL change in racial and gender
composition of ownership, control and management
PROMOTE effective advancement of employment equity
QUANTITATIVE measurement tools for monitoring of
BBBEE progress
ACCELERATING advancement of skills development for
black people, black women and the disabled
INCREASE procurement opportunities for Black Owned
companies
ENHANCE entrepreneurial development and PROMOTE
sustainable growth for SMMEs
IMPLICATIONS OF THE CSC
ALL companies whose main business activity
is classified as being in the construction sector MUST be
measured based on the CSC, incl. suppliers and those deriving
51% of income from related activities
 It is a contravention of the BBBEE Act for any entity to have
multiple scorecards for the same period
 It is mandatory for Public and Private Sector Clients & Industry
Regulators (e.g. CIDB/NHBRC etc) to require BBBEE Certificates
based on CSC for:
 Licensing & concessions
 Procurement based on 80/20 or 90/10
 Determining qualification criteria for PPPs
 Disposal & Sale of relevant state assets

REPORT ON THE BASELINE
STUDY

Objectives

Methodology

Comments on Data

Industry State of Transformation

Conclusion and Recommendations
STUDY OBJECTIVES
To establish the state of empowerment and
progress of transformation since the CSC was gazetted in
JUNE 2009 up to and including 2013

RELIABLE data and information to determine rate of progress
in the transformation objectives of the industry

Establish FACTUAL and SUBSTANTIVE reporting to DPW,
DTI, the BBBEE Advisory Council & industry

Engagement with the regulators on areas of alignment with the
new/revised BBBEE generic codes based on facts

To identify barriers to transformation & determine strategies
to resolve these
METHODOLOGY

Obtained verified scorecards for entities operating within
the construction sector, including Contractors and BEPs

Appointed Cuma IT and Blacklite to design an IT system,
analyse the captured data and produce the report

Employed data capturers on short term contracts to capture
data on a database

Commissioned an independent verifier (SP3 Ratings) to
comment on the integrity of the information
COMMENTS ON DATA


1770 companies (14% sample) participated in the study
3530 BBBEE certificates received for the study period out of
a possible 7080
27 BBBEE certificates excluded in study due to noncompliance by some Vas and fraudulent certs
 Further non-compliance by some VAs: BEPs verified as
Contractors



1068 (32%) EMEs; 1251 (39%) QSEs and 959 (29%) Large
90 % of scorecards received from Contractors and 10% BEPs
INDUSTRY TRANSFORMATION




Industry Composition
Overview of Transformation (ALL)
Transformation Trends: BEPs (Large)
Transformation: Trends Contractors (Large)
INDUSTRY COMPOSITION
BEPs: ±2000 companies employing Architects, Engineers,
Project Managers and Quantity Surveyors, of which over 80%
are QSE and EMEs
 Contractors: ± 10,500 companies, of which 9551 are
registered with the CIDB as follows:

CIDB
Grading
Number of
Companies
CSC
Category
Public Sector
Awards
2 to 4
6061 (64%)
EMEs
6%
5 to 7
3199 (33%)
QSEs
34%
8 and 9
291 (3%)
Large
60%
175 Large Contractors participated in study for 2013 (60% sample)
OVERVIEW: INDUSTRY TRANSFORMATION:
ALL SECTORS
Number of Scorecards that achieve relevant Level Contributor Status
500
438
409
450
Number of Scorecards
400
350
300
256
239
250
169
146
150
124
95
100
50
182
179
200
71
29
68
64
43
38
18
51 59
43
15
51
29
11
6
17 23 11
5
16
15
5
8 6 17
0
Level 1
Level 2
Level 3
Level 4
2009
Level 5
2010
2011
2012
Level 6
Level 7
Level 8
Non-compliant
2013
Upward Trend: 64% in 2009 to 85% in 2013 Level 4 and above
OVERVIEW: INDUSTRY TRANSFORMATION:
EMES
Detail Summary of level status: EME Entities-Total
Number of Scorecards
350
319
300
234
250
200
150
100
50
112
95
75
43
30
23
53
0
Level 3
Level 4
2009
2010
2011
2012
2013
High Contributor to overall Industry Transformation
above Level 4: 55% contribution in 2009 and 45%
in 2013
74
OVERVIEW: INDUSTRY TRANSFORMATION:
LARGE ENTERPRISES
Detail Summary of level status: Large Enterprises-Total
100
91
Number of Scorecards
90
80
71
70
54
60
58
53
56
51
46
50
40
34
40
30
23
20
10
2
6
34
23
19
38
23
12
9
8
35
16
33
21
21
7
2 4
6
4
10 8
5
12
12
2 3 4 3
0
Level 1
Level 2
Level 3
Level 4
Level 5
Level 6
Level 7
Level 8
Non-compliant
2009 2010 2011 2012 2013

Upward Trend: 38% in 2009 to 65% in 2013 Level 4 and
above (60% in 2012)
TRANSFORMATION TRENDS: LARGE BEPS
Average performance per Element: BEP Large Enterprises
100%
Average Element score
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Average
Average
Average SocioAverage Ownership
Average
Average Skills
Average Enterprise
Employment Equity
Preferential
economic
Score
Management Score
Development score
Development score
score
Procurement score
Development score
2009
80%
65%
82%
70%
44%
42%
64%
2010
75%
73%
71%
61%
79%
54%
63%
2011
76%
66%
67%
67%
87%
61%
82%
2012
69%
70%
72%
71%
86%
66%
88%
2013
75%
75%
76%
62%
82%
65%
88%
TRANSFORMATION TRENDS: LARGE
CONTRACTORS
Average performance per Element: Contractor Large Enterprises
90%
Average Element score
80%
70%
60%
50%
40%
30%
20%
10%
0%
Average
Average
Average SocioAverage Ownership
Average
Average Skills
Average Enterprise
Employment Equity
Preferential
economic
Score
Management Score
Development score
Development score
score
Procurement score
Development score
2009
50%
42%
44%
46%
70%
71%
75%
2010
45%
52%
53%
48%
75%
60%
77%
2011
56%
50%
57%
48%
82%
64%
83%
2012
58%
53%
55%
46%
81%
65%
82%
2013
55%
60%
59%
50%
82%
70%
85%
OTHER INDICATORS OF INDUSTRY
TRANSFORMATION
1.
QSEs priorities and highest levels of
achievement are EE (94%), ED (92%) and SED
(90%)
2.
General increase in black and black women
ownership in the industry
◦
◦
◦
BO (>50%): From 44% to 59%
BWO (>30%): From 10% to 24%
Largely EMEs and QSEs contribute to this
CONCLUSIONS AND
RECOMMENDATIONS (PAGE 1 OF 4)
Low industry participation in voluntary surveys
1.
◦
◦
DTI Regulations to include for mandatory submission
of all scorecards by VAs to CCs
CIDB Regulations to include mandatory submission of
scorecards by registered companies
Lack of critical knowledge of industry by some
VAs leads to misrepresentation and fronting
2.
◦
SANAS and IRBA to raise the bar in training and
compliance monitoring of members and take firm
action as appropriate
CONCLUSIONS AND
RECOMMENDATIONS (PAGE 2 OF 4)
High levels of BBBEE contribution by industry with
significant improvement over the years
3.
◦
◦
Industry to be commended on such achievements
Those not contributing to be encouraged to do so through
peer pressure and procurement reforms
Industry transformation efforts underlain by high
level of achievement in SED, Procurement and ED
4.
◦
These elements can be used effectively to grow the
industry through investments in industry priorities. CSCC
to lead agenda and set up appropriate guidelines in line
with new codes of good practice
CONCLUSIONS AND
RECOMMENDATIONS (PAGE 3 OF 4)
Levels of compliance for skills development
lower than expected for industry (knowledge
economy!)
5.
◦
Huge impact on achieving sustainable industry growth and
facilitating high levels of compliance in internal factors such
as ownership, management control and employment equity
◦
CSCC, in partnership with CIDB, to investigate causes of
this
◦
CSCC and CIDB to facilitate programmes that will lead to
better compliance levels
CONCLUSIONS AND
RECOMMENDATIONS (PAGE 4 OF 4)
High % of BO and BWO enterprises amongst
the EMEs: Scarcity of these amongst Large
Enterprises
6.
◦
Good feeder system for meaningful ED and
Procurement within industry. Deliberate programmes
to be developed
◦
DTI, CSCC and CIDB to develop strategies for
increasing No. of Large BO and BWO enterprises:
Strategic growth choices for the country:
Transforming, Transformed, BO and BWO!!!
SUMMARY

Transformation of the economy as one
of SA’s key sustainable growth pillars

The BBBEE legislation, with sector specific codes, and
industry programmes form the foundation of this pillar

The work done by industry on a daily basis in compliance
with the CSC forms the building blocks

The baseline study tells us that we are generally on the right
track, we can overcome stumbling blocks in achieving our
goals by putting in place appropriate strategies
THANK YOU!!!
WHERE TO FIND US
The CSCC is based at :
164 Katherine Drive
Pinmill Farm Office Park
Ground Floor – G Block
TEL : (011) 262 4644
www.cscc.org.za