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,