BUSINESS INTEL
The amended B-BBEE Construction Code
By Eamonn Ryan
The following overview of the amended B-BBEE construction sector code is based on a presentation delivered by Vash Singh , managing director of Xcelerate Verification Agency on 17 May at the African Construction and Totally Concrete Expo at the Gallagher Convention Centre .
Vash Singh , managing director of Xcelerate Verification Agency .
The amended Construction Code was gazetted on 1 December 2017 with immediate effect . Those who already have an Amended DTI Code certificate have two options available to them : continue with their existing certificate until it expires , whereafter the amended Code must be used ; or have their existing certificate re-evaluated . In the latter case , the additional items on the amended Construction Code is verified for the same financial period and a revised certificate issued . The existing expiry date of the certificate remains even though the issue date changes .
Priority elements
In what is probably the most critical amendment , the amended Code introduces the concept of Priority Elements . Companies will be obliged to meet at least the
36 - CEC September 2018
Xcelerate Verification Agency minimum threshold of 40 % of the target of each of the following three elements :
• Ownership : 40 % of net value
• Skills Development : 40 % ( excluding bonus points
• Preferential Procurement and Supplier Development : 40 % ( excluding bonus points ).
This is aimed at promoting fairness , best practice , and compliance , and to this degree compliance is rigid . Large companies that do not meet the minimum 40 % thresholds will be penalised one level after scoring is completed if they do not meet all three elements . For example , if the scorecard totals 73 ( Level 6 ), then the entity ’ s rating will drop to Level 7 with 50 % recognition . In the case of a qualifying small enterprise ( QSE ), the business ’ s rating will drop one level after scoring is completed if it does not meet Ownership as a compulsory element as well as just one of the other Priority Elements . The next most-critical amendment to the process is that it is generally stricter and much harder to reach the desired level . For instance , a company cannot be a Level 3 without having the correct ownership structures in place .
Changes to the B-BBEE scorecard rating for the construction sector indicate that companies who in the past would have possibly reached a
Level 3 without necessarily having ownership , would now reach a Level 5 . They would also be discounted a level for not meeting the Priority Element and the same would apply to Skills Development as well as Preferential Procurement and Supplier Development .
Who it applies to
The Code applies to those entities in which the majority of its core activities are in the construction field and with more than 50 % of their annual turnover coming from construction-related activities . It would also cover :
• Businesses registered with industry bodies such as CIDB , NHBRC , and CETA ;
• Material suppliers to manufacturing , creation or supply of building material and equipment used in construction , such as cement , concrete , bricks , electrical equipment , steel , plant hire , plumbing , and others ;
• Built environment professionals ( BEP ) involved in planning , design , and costing of construction projects , including consulting engineers , architects , quantity surveyors , and town planners ;
• Businesses in the project management and design of construction value chain , including environment , energy , industrial , property , transport ,