Annual Report 2010 - 2011 - CIDB Report 2010-2011.pdf · achieving an unqualified audit report...
147
ANNUAL REPORT 2010/11 TEN YEARS STRONG 2001- 2011
Transcript of Annual Report 2010 - 2011 - CIDB Report 2010-2011.pdf · achieving an unqualified audit report...
ANNUAL REPORT2010/11
TEN YEARS STRONG2001- 2011
2001
1st CEO, Spencer Hodgson, appointed
2003
Code of Conduct for all parties engaged in construction procurement is published
2006 Publishing of Practice Notes begins
2nd IDM Toolkit Launched
2007
5 year review Report 3rd Board appointed 2nd CEO, Ronnie Khoza, appointed Grade 1 Registration Regulations simplified and improved· Over the counter registration · Reduced fees over the three year period of registration · Distribution of Registration Certificates stopped due to
fraud
National Stakeholder Forum
KwaZulu-Natal CCC Launched Eastern Cape CCC Launched Western Cape CCC Launched
2008
National Infrastructure Maintenance Strategy Launched Publishing of Inform Practice Notes begins 1st MoU signed with the two Banks
MoU with SA CD Organisations
Women in Construction Excellence Awards Launched
Youth in Construction Launched
1st cidb Quarterly Monitor
cidb SME Business
Conditions Survey
Gauteng CCC Launched
Free State CCC Launched
2009
Status Quo Report of Contractor Development Programmes in South Africa published
Sedic Launched National Stakeholder Forum
Northern Cape CCC Launched Mpumalanga CCC Launched
2010
National Stakeholder Forum
3rd IDM Toolkit Launched
Limpopo CCC Launched
2011
4th Board appointed
cidb Centre of Excellence
(CoE) awarded to Nelson
Mandela Metropolitan
University
CoST is introduced to SA
construction industry
10 YEARS – A MILESTONE ACHIEVEMENT IN THE CONSTRUCTION INDUSTRY OF SOUTH AFRICA
2004
Registration of Contractors commenced Standard for Uniformity (SfU) is published SA Construction Status Report 1st IDM Toolkit Launched
2nd Board appointed
1st cidb Post Graduate
Conference convenes
iA
NN
UA
L RE
PO
RT 2
01
0/1
1
TEN YEARS STRONG2001- 2011
ii
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
1A
NN
UA
L RE
PO
RT 2
01
0/1
1
CONTENTS
List of Abbreviat ions 2
Min is ter ’ s Foreword 4
Chai rperson’s Statement 6
CEO’s Report 8
cidb Board Members 14
cidb Leadersh ip 16
2010/11 Per formance Summary 19
The Const ruct ion Regis ters Serv ices 40
Publ ic Sector Procurement and Development Management 48
Faci l i tat ing Growth and Development 66
Moni tor ing Indust ry Per formance 80
Corporate Serv ices 88
Account ing Author i ty ‘s Report 97
Report of the Audi t Commit tee 101
Statement of Respons ib i l i ty and Going Concern 103
Report of the Audi tor-General 104
Annual F inancial S tatements 108
2
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
LIST OF ABBREVIATIONS
AG Auditor-General
BAC Bid Adjudication Committee
BEC Bid Evaluation Committee
BER Bureau for Economic Research
BPCRS Best Practice Contractor Recognition Scheme
CCC Construction Contact Centres
CD Contractor Development
CDP Contractor Development Programme
CE Civil Engineering
CETA Construction Education and Training Authority
cidb Construction Industry Development Board
CIFOZ Construction Industry Federation of Zimbabwe
CIOB Chartered Institute of Building
CII Construction Industry Indicators
CPUT Cape Peninsula University of Techonology
CMS Construction Management System
CRS Construction Registers Service
CRS Contractor Registers Services
DBSA Development Bank of Southern Africa
DPW Department of Public Works
ECDC Eastern Cape Development Programme
EDMS Electronic Document Management System
EPIN European Policy Institutes Network
EPWP Expanded Public Works Programme
ESDA Employment Skills Development Agency
FET Further Education and Training
FHU Fort Hare University
FIDIC Fédération Internationale Des Ingénieurs-Conseils
(International Federation of Consulting Engineers)
GB General Building
GBCSA Green Building Council of South Africa
GCC General Conditions of Contract
GCD Growth and Contractor Development
GDP Gross Domestic Product
HR Human Resources
3A
NN
UA
L RE
PO
RT 2
01
0/1
1
IDC Industrial Development Corporation
IDIP Infrastructure Delivery Improvement Programme
IDMT Infrastructure Delivery Management Toolkit
IDT Independent Development Trust
IDZ Industrial Development Zone
ILO International Labour Organisation
ISO International Organisation for Standardisation
JBCC Joint Building Committee Contract
JV Joint Venture
LTA Long Term Technical Assistant
MoU Memorandum of Understanding
M&E Monitoring and Evaluation
NCDP National Contractor Development Programme
NCV National Certificate Vocational
NEC New Engineering Contract
NEF National Empowerment Fund
NSF National Stakeholder Forum
OHS Occupational Health and Safety
OHSAS Occupational Health and Safety Advisory Services
OHSC Occupational Health and Safety Committee
PCDF Provincial Contractor Development Forum
PDP Performance Development Plan
PDM Procurement and Delivery Management
PPP Public Private Partnership
PPPFA Preferential Procurement Policy Framework Act
RoC Register of Contractors
RoPSP Register of Professional Service Providers
RPL Recognition of Prior Learning
SABS South African Bureau of Standards
SADC Southern African Development Community
SAWIC South African Women in Construction
SBSA Standard Bank of South Africa
SCM Supply Chain Management
SEDA Small Enterprise Development Agency
4
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
FOREWORD BY MINISTER
The highlight of the year under review for the construction industry in South Africa
was the hosting of 2010 FIFA World Cup™. As a country, not only did we embrace
the gathering of nations on our shores, but we also embraced a golden opportunity
to stand as a beacon of hope and support for the construction industry during a
period of uncertain global economic performance. The unprecedented demand
for infrastructure linked to the 2010 FIFA World Cup™ demanded technical
expertise during the period when we were faced with an acute shortage of skills.
It also demanded that we deliver the required infrastructure under the given tight
deadlines without a streamlined procurement system for the construction industry.
In this regard, as the Minister for Public Works, I am deeply indebted to the
Construction Industry Development Board (cidb), the host cities, the built
environment professions and contractors for a spectacular performance. The role
that they played is indeed testimony to the fact that together we can build better
communities.
We were hoping that the positive effects of the demand for infrastructure would
lead to many years of growth in our economy. But the South African construction
industry is now faced with a sustainability challenge based on a world-wide
economic downturn as well as our own country specific problems. The future
of the industry and how through focused infrastructural development we can
revitalize our economy requires renewed critical analysis.
There is overwhelming evidence that numerous construction companies have
been forced to close down due to the difficult operating environment. Payment
delays and poor project implementation have imposed an unpleasant climate for
mainly small businesses. It is unacceptable that we are failing to roll out approved
projects. It is also unacceptable for us to return unutilised funds to the fiscus at a
time when the job creation agenda of government is of the essence. The role of the
cidb with the Department of Public Works in reversing a decline in the construction
industry is urgent. This must include amending regulations aimed at improving the
registration criteria to remove unnecessary bottlenecks in the registration process
as well as improving efficiency and integrity of the Register of Contractors. The
significance of supporting emerging contractors and transforming the industry in
this regard cannot be over-emphasized.
5A
NN
UA
L RE
PO
RT 2
01
0/1
1
I am pleased that the cidb has again achieved an unqualified audit report. In this regard I wish to congratulate the Board,
management and staff for this achievement. All areas that the Auditor-General has highlighted as requiring attention must be
resolved before the end of the financial year 2011/12 and the next external audit.
I take this opportunity to thank the outgoing Board whose term ended in December, for providing the required guidance and
leadership not only to the cidb but the construction industry at large.
I thank the CEO for holding the fort while there was no Board, effectively acting as Accounting Authority until the new Board was
appointed. In the same spirit I welcome the new Board with the hope that the members will harness their expertise for the good
of the industry, providing the required leadership and guiding the cidb to deliver on its mandate.
GL Mahlangu-Nkabinde, (MP)
Minister of Public Works
Date:
The 2010 FIFA World Cup™ was
a golden opportunity for South Africa
6
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
CHAIRPERSON’S STATEMENT
The term of the third Board of the cidb ended in the middle of December 2010.
The appointment process for the new Board was finalised in April 2011. Effectively,
the cidb did not have a Board in the last quarter of the 2010/11 financial year.
During the period December 2010 to 31 March 2011 the CEO acted as Accounting
Authority, holding the fort until the new Board was appointed.
I wish to take this opportunity to thank the outgoing Board members for their role
in leading the cidb. I also wish to congratulate fellow Board members for the
opportunity to serve the people of this country and the construction industry in
particular. Last but not least, I wish to thank the Minister for her confidence in us
to lead the cidb for the next three years. We are committed to perform the task
entrusted upon us by the Minister.
We are happy that the cidb continued to operate and provide its services to
stakeholders when there was no Board. On behalf of the new Board I wish to thank
the CEO, management and staff for the work they have done over the years and
achieving an unqualified audit report during the year under review.
A special appreciation to the outgoing CEO, Ronnie Khoza, for the wonderful work
that he has performed while in the service of the cidb and we wish him well in his
future endeavours.
Bafana Ndendwa
Board Chairperson
7A
NN
UA
L RE
PO
RT 2
01
0/1
1
8
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
CEO’S REPORT
INDUSTRY OVERVIEW
We live in times that require responses to ever changing priorities. The recent
global crisis that culminated in the 2009-2010 economic recession, and how it
has affected various sectors of the economy, requires our collective wisdom, effort
and speedy resolution. Our responses should be able to focus on our unique as
well as common challenges as different nations and sectors of the economy. It
is therefore important that we are able to identify solutions for micro challenges
and extrapolate the solutions we provide to a macro level, taking advantage of
common threads between us. It is also important for us to be guided by leaders
who are able to live by example and show us sustainable solutions.
The South African construction industry has experienced a positive image, state-
of-the-art infrastructure and economic development between 2004 and 2010,
leading to the 2010 FIFA World Cup™. As a nation we have passed the litmus
test on hosting a successful world cup of this magnitude. The built environment,
and the construction industry in particular, should be celebrated for this national
achievement. While it is still a long road to where we should be in tackling the
infrastructure backlog, our achievements during the 2010 FIFA World Cup™ were
no small feat. We have demonstrated capability and capacity to design, fund and
construct a diverse suite of modern infrastructure under tight deadlines. Through
the lessons learnt in various aspects of project managing the delivery of the 2010
FIFA World Cup™ infrastructure, we are now able to share our experiences with
the world.
Our country has an unfortunate combination of first world and third world
economies. We still have a huge backlog of critical and basic infrastructure for
the vast majority of our people. With proper planning we should be able to design,
fund and construct the much needed infrastructure that will improve the quality of
life for our citizens, especially the poorest of the poor.
There are numerous opportunities for construction companies to take on new
infrastructure projects in power generation plants, power transmission and
distribution, water resources, wastewater treatment and water reticulation,
new approaches to power generation using renewable and non-fossil sources
9A
NN
UA
L RE
PO
RT 2
01
0/1
1
of energy, construction of rural schools and clinics as part of rural development, construction and tarring of township roads,
maintenance of existing infrastructure and other areas with obvious backlogs.
One of Government’s strategic priorities is job creation. Our country has experienced jobless economic growth between 1995
and 2007. While jobless growth as such was not intended, we had developed a strategy that worked in growing the economy.
We should now be able to develop a strategy that will help us to match economic growth with job creation. The construction
industry, due to its nature, is one of the biggest employers of unskilled and semiskilled labour. Formal employment is normally
easy to track and reported on while informal employment is difficult to confirm. We will need to deal with the discrepancy in
reporting on the number of informal jobs.
The concept of job creation should not be underestimated. While we may get too obsessed with the concept of job creation,
we should guard against the illusion of job creation on each project but focus on net job creation from all identified projects.
We therefore need to analyse construction projects carefully and identify those that may need quick delivery for the benefit
of supporting the economy in the long-term through lower costs and many potential jobs afterwards. An example is in the
revamping and construction of new railway lines and the introduction of efficient rail stock. We may want to use labour-based
methods for many years in order to create jobs but this may be counterproductive. There is a dire need to provide an efficient
rail system urgently in South Africa so that we can transport goods through such a system and benefit from lower transport costs.
There is now technology to deliver such systems quickly, with the benefit of more jobs in the manufacturing and other sectors as
easy spin-offs later. So the issue of job creation should be broader and consider where we should create jobs in a sustainable
way while improving productivity and sustainability at the same time.
The recent economic recession requires alignment of Government’s strategic priorities supported by innovative, sustainable
recovery strategies. The industry has lost more than 150 000 formal jobs in the last two years and a number of construction
companies have closed shop. Our focus should prioritise recovery while creating new jobs and companies. As we create new
jobs and small medium and micro enterprises, we should not forget that the existing jobs and SMMEs must also be maintained.
All the project opportunities available in the construction industry in South Africa will not make a positive impact in the identified
areas if the observed disturbing trends of slow project implementation continue. This trend, together with payment delays, is
eroding the existing companies and leads to job losses. All construction companies are affected negatively by the payment
delays but the emerging sector is the one where the impact is most severe. The cidb is working with various stakeholders to
improve payment delays and create awareness on the slow contract award on new projects.
“Celebrating 10 Years of Sustainable Development through Partnership”
10
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
TRAINING AND CONTRACTOR DEVELOPMENT
It was reported last year that training and contractor development were not prioritised by those mandated to do so. The cidb was
therefore requested to play a role, beyond its mandate, to improve performance in this area. The cidb has therefore decided
to facilitate training through various interventions, including injecting funding for strategic training opportunities. Contractor
Development has been recommended for consideration as a national priority. In this regard a Steering Committee has been
formed between the cidb and the national Department of Public Works. Provinces have been selected for progressive inclusion
regarding improved reporting on all contractor development opportunities, implemented through the framework for the National
Contractor Development Programme (NCDP). The consultative process with MECs and HoDs and senior management in the
identified provinces has been very positive.
The cidb has undertaken an initiative to expand the training and development of contractors by considering overseas
opportunities, sharing of information with regional partners as well as identifying and partner with tertiary institutions in South Africa.
The South African/German initiative has been pursued with the intention of sourcing funding and signing an MoU with the German
counterparts. This is to be supported by our respective government’s bilateral agreements. The cidb has undertaken a number
of trips in the SADC region and hosted visitors from SADC countries that wanted to partner with the cidb on issues of common
interest. The cidb has also supported the graduation ceremonies in the Limpopo and Western Cape provinces for the ESKOM
training programme and sponsored training through the University of Fort Hare.
REVIEW OF THE REGISTRATION CRITERIA
The cidb has finalised its consultative process to improve the registration criteria. The details of the proposed amendments
prepared for this purpose have been packaged for easy understanding. A Practice Note has been developed to clarify the
changed position where contractors are not required to submit the names of registered professionals at the point of registration.
A submission is due to be made to the Minister to take to the next step of publishing the proposed amendments for public
comments.
IMPROVING THE EFFICIENCY AND EFFECTIVENESS OF THE REGISTER OF CONTRACTORS
The registration software re-write and the Electronic Document Management System (EDMS) have been approved and are being
implemented over a three year period. The new registration software will provide a flexible platform to accommodate future
registers and other improvements.
INDUSTRY PERFORMANCE AND BEST PRACTICE
The various components of the Best Practice Contractor Recognition Scheme and Best Practice Project Assessment Scheme
are at various stages of piloting. The Best Practice Schemes will usher in a new approach to how quality, health & safety and the
environment will be dealt with in future.
11A
NN
UA
L RE
PO
RT 2
01
0/1
1
FRAUD AND CORRUPTION
The industry continues to be plagued by various forms of fraud and corruption. The cidb has an established disciplinary procedure
to deal with contractors and clients who fail to comply with the Code of Conduct or participate in fraudulent activities as well as
officials who do not comply with the cidb requirements. The cidb has worked with the Competition Commission in its quest to
deal with anti-competitive behaviour in the industry. The cidb has also articulated its strong stance against fraud and corruption
in an article published in 6 March 2011, and has repeated this position at various seminars and conferences.
In an effort to provide leadership on fighting fraud and corruption in the construction industry, the cidb has recently hosted the
CoST initiative (Construction Sector Transparency Initiative), introducing this international initiative to the South African sector while
demonstrating that we cannot fight this scourge on our own but need to partner with the international community to succeed.
A follow up meeting was hosted by the cidb on 30 June 2011. The process of establishing the Multi-Stakeholder Group SA (MSG
SA) is now being pursued at high speed.
RESEARCH AGENDA AND ACADEMIC EXCELLENCE
The cidb has appointed WITS University and the Nelson Mandela Metropolitan University as the Centres of Excellence to support
the research agenda that has been envisaged over some time now. The youth will benefit from this initiative as the ultimate
intention is to expose students to research and try and retain them at tertiary institutions.
This initiative is funded by the cidb from its limited resources as we feel it is a critical step towards innovation in the construction
industry. It is intended to be a partnership that should succeed on the basis of the capacities for innovation and commitment of
the universities appointed and the funding provided by the cidb.
This initiative will, as indicated in previous years, complement the cidb’s Post Graduate Conference Series and the newly
established Doctoral Workshops.
AUDIT PROCESS
The audit process has been finalised. It is pleasing to announce to our stakeholders that the cidb has achieved an unqualified
report during the year under review. This has happened as a result of strategic and operational efforts to ensure that all our
systems are operating optimally and that we have qualified staff in each area. While the Finance and Asset Management units
remain sensitive areas, there has been consistent improvement in general in these areas. More work is required to deal with
recommendations from both internal and external auditors.
The Supply Chain Management (SCM) and performance information need a special mention. SCM, responsible for procurement
in compliance with National Treasury regulations, received major focus for the last two years. The cidb management had
recognised the SCM as one requiring a major overhaul and regular “spring cleaning” since it was established as a fully-fledged
12
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
unit late in 2008. The unit has been restructured, training has been provided to employees responsible in the area and professional
support has been used to identify weak links and apply corrective measures holistically. Old contracts have been terminated
and new ones implemented in accordance with Treasury regulations. New policies and procedures have been implemented.
Performance information has also received special attention. Training has been provided over two years to designated managers
to use the SMART approach and improvements have been noted in the revised targets and the targets for the year 2011/12.
Unfortunately, there was no response on the approval of the revised targets for the year under review. The targets audited were
based on the original set developed during the training phase, which is historical.
These areas have been noted by the Auditor-General as requiring attention. The cidb wishes to confirm that the previous Board
was appraised on the work that was being done in these areas and that the findings noted were not due to the Board’s lack
of oversight. A clear, long-term strategy of analysing and improving these areas has been implemented for future sustainable
results.
IMPROVING COMMUNICATION WITH STAKEHOLDERS
The last annual National Stakeholder Forum was held in October 2010. It was followed, as usual, by the now established Provincial
Stakeholder Workshops. These Provincial Stakeholder Workshops are intended to reach out to a broader audience of stakeholders.
Again it proved to be successful. Only two provinces have not convened workshops; communication with the relevant MECs to
reschedule the Stakeholder Workshops in their provinces is progressing well.
CELEBRATING THE 10TH ANNIVERSARY OF THE cidb
The cidb was established in November 2001 when the first CEO was appointed. It is therefore an opportunity for the cidb to
in the celebrate its first ten years and host various awareness campaigns to share achievements over the first ten years with
stakeholders. A programme of action is being drawn up to culminate in the second independent review of the cidb early in
2012.
SOCIAL RESPONSIBILITY AND STAFF MOTIVATION
The cidb has again participated in National Construction Week, an initiative of the Department of Public Works, through the
“Youth in Construction”. The cidb works with various stakeholders in coordinating activities that expose secondary school learners
to the construction industry.
13A
NN
UA
L RE
PO
RT 2
01
0/1
1
ESTABLISHMENT OF THE LAST CONSTRUCTION CONTACT CENTRE – NORTH WEST
The cidb provincial office in North West (NW) is almost complete and will be officially opened in due course. This will complete a
total of nine cidb provincial offices established under the negotiated agreements in which the provincial departments of Public
Works provide premises where the cidb can offer its services.
REGISTER OF PROFESSIONAL SERVICES PROVIDERS (ROPSP)
The Board, in its meeting on 7 December 2010, approved the piloting of the RoPSP as an approach to demonstrate how this
register could work. The timelines and initial framework for this register are being developed for presentation and approval by
the Board.
CORPORATE GOVERNANCE AND ACCOUNTING AUTHORITY OVERSIGHT
The term of the third Board ended on 12 December 2010. The delay in the appointment of the fourth Board resulted in the entity
operating without a Board from the middle of December through to the end of March 2011. The CEO acted as the Accounting
Authority during this period, using the PFMA Section 49 (2)(b) as a basis for this. The cidb obtained the Minister’s concurrence on
this position and the Auditor-General was advised accordingly.
SPECIAL ACKNOWLEDGEMENTS
On behalf of cidb Management and staff, I wish to acknowledge the solid support of the outgoing Board, under the leadership
of its Chairperson, Professor Raymond Nkado. The term of the Board ended on 12 December 2010.
A new Board, led by Mr Bafana Ndendwa as Chairperson, has been appointed. I take this opportunity to wish the new Board
success in the execution of its responsibilities.
I also wish thank the Minister of Public Works, Minister Gwen Mahlangu-Nkabinde, her Deputy, Hendrietta Bogopane-Zulu, their
staff and Senior Management and Staff in the Department for their support.
Ronnie Khoza
Chief Executive Officer
14
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
cidb BOARD MEMBERS
Marten GovenderDeputy Chai rperson:
L indelwa Myataza
Hareesh Patel
Lwandi le Kona
Chai rman:
Bafana Ndendwa
15A
NN
UA
L RE
PO
RT 2
01
0/1
1
Not in picture: Gi lber to Mart ins
Dr. Pat r ic ia Makhesha
Al igasen NaiduZanele Ntombela
Nico MaasShereen Bogosing
Nyelet i Makhubele
16
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
cidb LEADERSHIP
Ebrahim Moola
Dr. Rodney Mi l fordInba Thumbiran
17A
NN
UA
L RE
PO
RT 2
01
0/1
1
Ronnie Khoza
Gerard Naidoo
Peter Mongwenyana
18
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
19A
NN
UA
L RE
PO
RT 2
01
0/1
1
2010/11 PERFORMANCE SUMMARY
20
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
PART A: PROGRESS AGAINST BUSINESS PLAN OBJECTIVESPROGRAMME 1: GROWTH AND CONTRACTOR DEVELOPMENT
PURPOSETo promote sustainable growth of contractors and the participation of the emerging sector in the
industry.
MEASURABLE
OBJECTIVE
Promote enterprise development, investment and spending as the basis for a stable, developing
industry and the participation of the emerging sector.
KEY POLICY PRIORITY Growth and Contractor Development.
EXPECTED OUTCOME Sustainable growth of the construction industry and development of contractors.
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Contractor Development Interventions
Focused and
targeted
implementation
of the NCDP
to all public
sector clients
responsible for
infrastructure
(National,
Provincial, SOEs,
Municipalities).
Facilitate
monitoring
and evaluation
for National
Contractor
Development
Programme
(NCDP).
Continuous
monitoring and
evaluation.
Achieved:
Developed and circulated a template for
reporting on provincial CDPs.
Quarterly reporting provided from
provinces via CCCs and consolidated
and provided to N.DPW policy unit/NCDP
Steering Committee.
Concluded NCDP client capacitation
workshops in all nine provinces with at
least three clients and 15 officials per
province.
Finalised a baseline assessment on
Provincial Contractor Development
Programmes.
Facilitated formulation of NCDP guidelines
and indicators to assist N.DPW in their
M&E of CDPs. Provided to NCDP Steering
Committee.
Publish the
Contractor tips
and advice
brochure.
Publish one
brochure per
quarter.
Achieved:
Four brochures produced (one per
quarter). These are Tips and Advice for:
• Health and Safety.
• Contract Management.
• Marketing.
• Tender processes for Public Sector
Procurement.
21A
NN
UA
L RE
PO
RT 2
01
0/1
1
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Construction Contact Centres (cidb Provincial Partnered offices)
Assessed impact
to clients and
contractors.
Conduct impact
assessments of
CCC towards
clients and
contractors.
Impact
assessments
completed by
Sep 2010.
Achieved:
Customer satisfaction survey system
(Phase 1) of impact assessment
complete.
In addition:
Baseline study complete on provincial
CDP’s. Field surveys (contractors)
completed. Reports were finalised and
form part of reputation audit survey.
Reputation audit service performance
and system reviews (at CCCs) report
concluded in February 2011.
Implemented
initiatives for
provincial client
contractor
development.
Develop and
Implement
a support
programme
for provincial
client contractor
development
initiatives.
Implementation
a support
programme by
Jul 2010.
Achieved:
A support programme was developed
early in Jul 2010.
Implementation commenced in terms
of the programme in Jul 2010. Four pilot
provincial catalytic strategic projects
have been funded or partnered via the
cidb and were rolled out in 2010/11.
Financing
models
developed for
contractors.
Develop
financing model
based on
implementation
of various banks
MoAs.
Developed by
Nov 2010.
Achieved:
A single finance model was developed
by end Nov 2010.
A workshop was held with financial
stakeholders, including banks, in
Dec 2010 and the model tabled.
Refinements, expansion and phasing
have been requested by banks to
facilitate ease of MoA implementation
and addressing their concerns and
challenges. A Mar 2011 finance
modelling options and phases document
was finalised. Prior to publishing,
further presentations, circulation and
participation were solicited. Considering
all input a working document to be
published in May 2011.
22
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
PROGRAMME 2: CONSTRUCTION INDUSTRY PERFORMANCE
PURPOSETo determine, establish and promote improved performance and best practice of public and
private sector clients, contractors and other participants in the construction delivery process.
MEASURABLE
OBJECTIVE
Improved performance and best practice for an industry that delivers reliable value to clients,
investors and end-users, information on construction industry indicators to inform cidb strategy,
policy makers and stakeholders.
KEY POLICY PRIORITY Construction Industry Performance.
EXPECTED OUTCOME Improved performance and best practice for the construction industry.
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Institutional Support
On hand support
to national and
international
structures.
Participation in
national and
international
structures:
• Green Building
Council of
South Africa
(GBSA).
• UNEP
Sustainable
Building and
Construction
Initiative (UNEP-
SBCI).
Four GBCSA
meetings by Mar
2011.
Two UNEP-SBCI
meetings by Mar
2011.
Achieved:
Participation in:
• Board: May 2010.
• Exco: Jul 2010.
• Board: Aug 2010.
• Exco: Sep 2010.
• AGM: Oct 2010.
• Board: Nov 2010.
• Exco: Dec 2010 (telecom).
• Board: Feb 2011 (Strat).
Achieved:
• AGM; May 2010 (Paris).
• SBCI SB Index; Oct (Singapore).
STRATEGIC OBJECTIVE: Status Reports & Surveys
Monitored
industry
performance.
Ongoing
monitoring
of industry
performance
and
dissemination of:
• cidb
Construction
Industry
Indicators
(CIIs).
• cidb Quarterly
Monitor.
CIIs annually.
Quarterly Monitor.
Achieved:
• CII Report published.
Achieved:
Quarterly monitors published:
• 2010 Q1; Apr 2010
• 2010 Q2; Jun 2010
• 2010 Q3; Oct 2010
• 2010 Q4; Jan 2010.
23A
NN
UA
L RE
PO
RT 2
01
0/1
1
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Status Reports & Surveys (continued)
• cidb SME
Business
Conditions
Survey.
BCI quarterly. Achieved:
SME Surveys published:
• 2010 Q1; Apr 2010.
• 2010 Q2; Jun 2010.
• 2010 Q3; Sep 2010.
• 2010 Q4; Dec 2010.
Obtainable status
reports.
Development of
status reports:
• Construction
Quality
(initiated
2009/10).
• Workplace
Conditions
(draft).
1 printed by Mar
2011.
1 draft produced
by Mar 2011.
Achieved:
• Discussion document published.
Not Achieved: • Not achieved
due to change in
priorities.
• Replaced with
“Construction Skills
Report - 1st draft
available.
STRATEGIC OBJECTIVE: Performance Improvement
Implementa-
tion of cidb Best
Practice Contrac-
tor Recognition
Scheme.
Further
development,
piloting and
assessment
of cidb Best
Practice
Contractor
Recognition
Scheme:
• Construction
Management
Systems (CMSs)
• Contractor
performance
reports.
• Competence
assessment.
4 pilots assessed
by Mar 2011.
3 of 4 Achieved:
• Assessment of WC CMS Pilot; QES
Report on record.
• Performance Reports Pilot; PGWC;
Internal assessment signed off by
PGWC on record.
• Competence Assessment Focus
Group; Internal assessment on record.
• 1 Assessment not
achieved due to
delays in setting
up pilot within
eThekwini, COEGA
and/or ECPW.
24
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Performance Improvement (continued)
Implementation
of cidb Best
Practice
Contractor
Recognition
Scheme.
Finalise
development
and assessment
of cidb Best
Practice Project
Assessment
Scheme:
• Building skills
policy (BSP).
• H&S
management
plans.
2 assessments by
Mar 2011.
1 of 2 Achieved:
• BSP Focus Group; Internal assessment
on record.
• Assessment
of H&S
Management
Plans not
achieved due
to capacity
constraints within
service provider.
• 1st draft of H&S
plans is available.
Well developed
and effective
Health & Safety
Practice guides.
Development of
relevant
practice guides:
• H&S Practice
Guides.
1 by Mar 2011. Not Achieved/WIP.
• H&S Practice
Guides not
achieved due to
internal capacity
constraints.
• 1st draft
developed.
Improved
reporting systems
on cidb H&S and
GHG.
Facilitate the
uptake of recom-
mendations from
the cidb H&S
and GHG Reports
which have not
yet been
implemented.
All cidb responsi-
ble recommen-
dations imple-
mented by Dec
2010.
Achieved:
• H&S; Participation in SACPCMP
standards committee
• Competence Assessment, CMS,
performance Reports; Ongoing
interactions with DoL
• GHG; cidb participation on SANS
01400, comments on CO2 tax,
participation in gov. workshops,
support to DME on Energy, etc.
25A
NN
UA
L RE
PO
RT 2
01
0/1
1
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Infrastructure Delivery Skills
Improved and
sustainable skills
within the con-
struction industry.
Assess cidb /
industry ESDA
pilot.
Assessment by
Mar 2011.
Achieved:
• ESDA established.
• 20 learners placed
Assessment of ESDA by Advisory
Committee.
STRATEGIC OBJECTIVE: NIMS
Improved Nation-
al Infrastructure
Maintenance
Strategy.
Programme
Management of
NIMS.
Continuous
management
until Mar 2011.
Not Achieved: • Delays in transfer
of funds from
DPW.
• MoU has been
prepared for
signing.
• Should start May
2011.
Project
Manage and
development of
maintenance
management
framework,
maintenance
accounting
framework,
maintenance
planning
guidelines.
3 draft guidelines
by Dec 2010.
See above.
STRATEGIC OBJECTIVE: R&D and Academic Excellence
Informative and
well supported
Post Graduate
Conference
series.
Ongoing support
to the cidb
Post Graduate
Conference
series.
PG Conference
held by Dec
2010.
Achieved:
Post-doctoral workshop held in Sep 2010.
STRATEGIC OBJECTIVE: Knowledge Centre
Resourceful
Knowledge
Centre.
Ongoing
provision of library
management
services and
development of
cidb Knowledge
Centre intranet.
Mar 2011. Achieved.
Informative
endorsement to
ISIZA.
Support cidb
endorsed
quarterly
magazine ISIZA.
4 endorsed by
Mar 2011.
Not Achieved: (Partially Achieved).
• 2010 Q1.
• 2010 Q2.
• 2010 Q3.
• Publication
changing from
quarterly to twice
per year.
26
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
PROGRAMME 3: PROCUREMENT AND DELIVERY MANAGEMENT
PURPOSE
Promote uniform application of policy throughout all spheres of government and promote uni-
form and ethical standards, construction procurement reform, and improved procurement and
delivery management – including a code of conduct.
MEASURABLE
OBJECTIVE
Enhanced public sector construction procurement and infrastructure delivery management ca-
pability of public sector clients enabling efficient and effective delivery of quality infrastructure to
the public.
KEY POLICY PRIORITY Procurement and Delivery Management.
EXPECTED OUTCOMEEnhanced public sector construction procurement and infrastructure delivery management.
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Infrastructure Delivery Improvement
Improved cidb
Toolkit.
Upgrading of the
cidb Toolkit.
Upgrade by
Jul 2010.
Achieved:
Upgrade completed in July 2010 and
peer reviewed by an independent
external team.
Appointment of publisher completed in
Sep 2010.
Completion of Management Guide in
Sep 2010.
Publishing of the Toolkit on the cidb
website and in CD Completed and
published in Oct 2010.
Toolkit Upgrade is complete.
Monitoring of Toolkit institutionalisation will
be undertaken under the Infrastructure
Delivery Improvement Programme
and through Toolkit training in the next
financial year.
Improved cidb
Toolkit.
Implementation
of Toolkit Training
Programmes.
Training
programmes to
take place by
Mar 2011.
Achieved:
Planning for the development of Training
Strategy for the roll-out of the Toolkit has
commenced.
Induction program held at National
Treasury on 8-10 Dec 2010 for all TA’s.
Schedule of roadshows to all provinces
finalised in Jan 2011.
Identifying
alternative
models for
infrastructure
delivery.
Identify
Aug 2010.
Achieved:
Alternative models for delivery are
supported by alternative procurement
strategies. These have been completed
and incorporated into final version of the
Toolkit.
Practice Note 23: Construction
Procurement Strategy published in Sep
2010 in support of alternative models for
delivery.
27A
NN
UA
L RE
PO
RT 2
01
0/1
1
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS FOR DEVIATION
STRATEGIC OBJECTIVE: Improvement and Maintenance of Regulations to support Procurement Reform
Improved cidb Regulations.
Development, improvement and maintenance of cidb Regulations.
Dec 2010. Achieved:Focus Group Meeting hosted on 18 Nov for consultation on regulation amendments.
Amendments presented and approved at Board meeting held on 7 Dec 2010.
Amended regulations have been prepared and submitted to CEO’s office for submission to Minister of Public Works.
Reliable and effective communication methods.
Administer communication methods to inform and train clients on cidb Regulations.
30 Nov 2010. Achieved:The following Practice Note has been drafted in the reporting period:
Draft Practice Note 25 prepared in Dec 2010 to inform clients of changes to cidb Regulations.
Training of Clients as per Client requests has continued for the reporting period. The development of an electronic tool to monitor and administer requests for training has progressed well for the reporting period.
A communication strategy has been developed for the dissemination of information to clients and other industry stakeholders on cidb prescripts.
28
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Compliance and Enforcement
Compliance to
cidb Regulations.
Development and
implementation
of a strategy to
monitor, evaluate
and report on
compliance to
cidb Regulations.
Aug 2010. Achieved:
A Compliance Strategy has been
prepared outlining the cidb’s
methodology for monitoring
compliance.
As part of the action plan, certain public
sector clients have been identified
for phase one of a compliance
performance audit.
A pilot project was launched in Nov for
the collation of data on construction
contracts awarded during 2009/2010
financial year. Only 2 out of 9 clients
submitted information on construction
contracts awarded during 2009/2010
financial year.
The Compliance Strategy was reviewed
and adjusted according to the learnings
from the pilot phase in Nov 2010.
A Board Notice has been published in
the government gazette and will be sent
to all clients performing infrastructure
delivery. An Audit Blitz will be conducted
after assessing the information submitted
by the clients for the reporting period.
29A
NN
UA
L RE
PO
RT 2
01
0/1
1
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Compliance and Enforcement
Diminished fraud
and corruption.
Forensic
investigations of
cases of fraud
and corruption
reported to the
cidb.
As and when
cases are
reported.
Achieved:
The forensic investigation into reported
cases of fraud and corruption has
progressed very well.
During this financial year, 26 new cases
were referred for investigation and were
finalised. 24 case were recommended
for prosecution and two were not
recommended.
The reports of the completed
investigations have been evaluated for
further action.
Since the appointment of the service
provider to manage the fraud hotline, 12
cases were reported and received from
the fraud hotline.
The Investigations Committee which
presides over cases of alleged
non-compliance has progressed well.
The Investigating Committee concluded
6 disciplinary hearing this quarter. There
were however 33 cases heard during this
financial year.
No challenges were received in terms of
Promotion Administrative Justice Act.
The cidb continues to maintain a
database for the reporting and tracking
of cases of non-compliance by public
sector clients.
30
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
PROGRAMME 4: CONSTRUCTION REGISTERS SERVICE (CRS)
PURPOSE
Implement, manage and improve national registration services covering the Register of
Contractors, Register of Projects and new Registers that may be implemented in terms of the
cidb Act.
MEASURABLE
OBJECTIVE
• Registration of contractors and both public and private sector projects.
• Regulation to effect improved performance and best practice of clients and suppliers.
KEY POLICY PRIORITY Construction Registration Services.
EXPECTED OUTCOME Effective and Efficient Registration Processes.
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS
FOR
DEVIATION
STRATEGIC OBJECTIVE: Service Excellence and Integrity in Registrations Process
Sustained and
measurable
registration
service
excellence using
Business Process
Management
(BPM) best
practice.
Alignment of
registration Quality
Management
System (QMS) with
ISO standards and
recommendations.
Grade 2-9
Registrations
Turnaround time.
Query resolutions
efficiency.
Fraud Awareness
Workshop 1.
Fraud Awareness
Workshop 2.
Conduct Gap
Analysis by
30 Jul 2010.
21 working days.
Turnaround time:
48 hours .
30 Sep 2010.
31 Mar 2011.
Achieved:
The gap analysis was conducted in
Apr 2010.
Achieved:
Compliant applicants are registered
within 21 working days.
Achieved:
The average time that it takes to
respond to queries is within the stipulated
turnaround time.
Achieved:
The fraud awareness workshop took
place on 13 and 14 Oct 2010, which
was the date provided by the service
provider.
Achieved:
The fraud awareness workshop took
place on 31 Mar 2011.
31A
NN
UA
L RE
PO
RT 2
01
0/1
1
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Enhancement of Software Systems
New software
system that
support flexible
business
processes, work
flow integration
and improved
performance
monitoring across
Head Office and
CCCs.
Implementation
of new and
improved CRS
software system.
Complete
phased imple-
mentation by
30 Sep 2011.
On Track:
The service provider was appointed in
Jan 2011. The Business Requirements
Specifications were approved on
24 Mar 2011.
The proposed solution includes three
technologies i.e. Microsoft CRM,
Microsoft SharePoint and K2 for business
process management.
The delivery of the solution will comprise
the Register of Contractors, the Register
of Projects and the Electronic Document
Management System (EDMS).
The EDMS is being prioritised. A pilot was
conducted at the cidb KwaZulu-Natal
Construction Contact Centre (CCC) in
Apr 2011.
Efficient
document
handling.
Document
handling through
Electronic
Document
Management
System (EDMS)
implemented
at Registers
head office and
integrated with
CCCs.
Implemented by
31 Dec 2010.
Not Achieved. • This project
has been
combined with
the Construction
Registers Service
software re-write
project to allow
for seamless
integration.
• The EDMS will be
developed and
implemented on
or before
30 Sep 2011.
STRATEGIC OBJECTIVE: Improved Communication
Well informed
Contractors
and Clients
on registration
requirements and
processes.
Development
and distribution
of registration
brochures to
assist contractors
with registration.
Assessment and
revision of the
Quick Guide to
Contractor Reg-
istration Brochure
by 28 Feb 2011.
Achieved:
The brochure has been assessed and
reviewed. The outcome is that the
current brochure is still relevant and will
remain in print.
Update to the
comprehensive
Registrations
Guideline
brochure.
Assessment and
revision by
31 Dec 2010.
Partially Achieved. • The brochure
was assessed.
The revisions and
design have
been finalised
and approved for
print. Delivery is
expected by
29 Apr 2011.
32
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
PROGRAMME 5: CHIEF EXECUTIVE OFFICER’S OFFICE
PURPOSEProvide strategic leadership to construction industry stakeholders to stimulate sustainable growth,
reform and improvement of the construction sector.
MEASURABLE
OBJECTIVE
• Overall strategic leadership, risk management and corporate governance in support of the
Board.
• Marketing, stakeholder consultations and communications
KEY POLICY PRIORITY Overall strategic leadership, risk management and corporate governance in support of the Board.
EXPECTED OUTCOME Effective stakeholder relations, risk management, compliance with good corporate governance.
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Stakeholder Management
Annual
Stakeholder
Forum meetings.
Stakeholder
Forum (SF)
meetings
coordinated.
SF 2010 meeting
held by end of
Oct 2010-
depending
on Minister’s
availability.
Achieved:
The National Stakeholder Forum
convened on 18 Oct 2010.
The KZN stakeholder workshop was held
on 30 Jul 2010.
STRATEGIC OBJECTIVE: Public Relations
Well informed
Contractors and
Government
Clients about
cidb mandate.
Well informed
and educated
contractors
about the cidb
mandate.
All government
departments
to be informed
about the
mandate of the
cidb.
Regular articles
in the com-
mercial press
and endorsed
publications once
a quarter.
Meetings with
emerging
contractor
associations and
clients at least
once a quarter;
Stakeholder
Forum –
Oct 2010;
Construction
Conference –
May 2010.
Achieved:
ISIZA magazine published for the 1st, 2nd
and 3rd quarters.
Achieved:
cidb participated in:
• MBSA Congress held in Namibia on 19
– 22 Sep 2010. The topic presented by
cidb at the Congress was “The future
of the SA/SADC construction industry -
Beyond 2010”.
• Fifth Built Environment Conference on
19 – 20 Jul 2010. Topics presented
by cidb were “Targeting Strategies for
Contractor Development Programmes
(CDPs) “and Contractor Development:
from Transformation to Performance
Improvement”.
The Provincial Women in Construction
Excellence Awards were held between 5
& 28 Aug 2010.
The National Women in Construction
Excellence Awards was held on 31 Aug
2010.
Youth in Construction initiative was coor-
dinated in the 2nd quarter as part of the
annual National Construction week.
33A
NN
UA
L RE
PO
RT 2
01
0/1
1
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Public Relations (continued)
Participation in
HOD’s Forums,
MINMEC’s and
other relevant/
selected industry
conferences.
Participation as
and when sched-
uled (these are
not coordinated
by cidb).
Achieved:
cidb participated in:
• HOD’s forums held on 9 Jul 2010 and
25 Jan 2011. Could not attend the
HOD forum scheduled for 11 Mar 2011
due to another commitment with the
Northern Cape MEC.
• DPWNIF which took place on
27 Aug 2010.
• MINMEC which took place on
25 Jan 2011.
STRATEGIC OBJECTIVE: Communication, including publications
Internal
newsletter.
Production of
the internal
newsletter.
Internal
newsletter once
every 2 months.
Not Achieved. • Cancelled due to
lack of capacity
and problems
with a previously
awarded service
provider contract.
Own and
endorsed
publications.
Production of
own (women’s
magazine)
and endorsed
publications
(ISIZA, 3s Media –
Business Guide).
Women’s
magazine by
Sep 2010.
Endorsed
publications –
quarterly.
Not Achieved. • The publication
has been
cancelled; the
coverage of
the Women in
Construction
Excellence
Awards has been
included in the
internal newsletter.
• See CIP report.
The authorisation
of the distribution
costs for the 3rd
quarter ISIZA
publication was
done by the
Office of the CEO,
which is relevant
for this section.
Corporate
Communication
Strategy.
Approval and
Implementation
of Corporate
Communication
Strategy.
Implementation
of communica-
tions strategy by
end of Apr 2010.
Partially achieved. • The Communica-
tions Policy was
approved by the
Board and the
Communica-
tion Strategy is in
hand.
STRATEGIC OBJECTIVE: Fraud and Corruption
Eradicated fraud
and corruption
in construction
industry.
Continuous
participation
in global
and regional
campaigns to
eradicate fraud
and corruption in
the construction
industry.
Publishing of
successfully pros-
ecuted contrac-
tors in the press
and cidb website
by 1 April 2010
and 1 Oct 2010.
Achieved:
See PDM report on the Forensic
investigations of cases of fraud and
corruption.
cidb continues to maintain a database
for the reporting and tracking of cases of
non-compliance by Public Sector Clients.
34
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Risk Management and Corporate Governance
Eliminated risks Annual risk
assessment and
mitigation.
Risk
assessment per-
formed by Aug
2010.
Achieved:
The Strategic and operational risks
assessment completed on 5 Nov 2010.
The delay in meeting the target was
due to the late appointment of the
internal auditors as reported in the 2nd
quarter report. The risk information is
now maintained on the Barn Owl Risk
Management system.
Updated risk
register.
Regular updating
of risk register.
Updated
monthly.
Partially Achieved. The updating
of the strategic
and operational
registers has
been completed
including the
identification of
new risks but the
Audit Committee
requested that
a review of the
strategic risks be
done. The exercise
was started in
Feb 2011 with
Leadership Team
but partially
completed.
Monthly risk reports
of the operational
risks were issued
as from Jan 2011
for management
noting and
updating. Quarterly
monitoring of risk
action plan exercise
has started from Apr.
Risk
management
reports.
Regular
reports on risk
management
produced and
submitted to
Board and
management.
Risk reports
presented
monthly to
Leadership
as well as Risk
Committee
meetings.
Partially Achieved. Risk report for the
1st quarter was
generated. Monthly
reports were issued
from Jan 2011.
Proper
management of
Internal
Audit
process.
Management
of outsourced
Internal Audit
Unit’s scope of
work and 3 year
contract.
Ongoing
management.
Achieved:
The management of the internal audit
process is in place and managed
through the Risk and Governance
manager.
The new Internal Auditors have
commenced with the Internal Audit
Annual Plan.
35A
NN
UA
L RE
PO
RT 2
01
0/1
1
PROGRAMME 6: CORPORATE SERVICESSUB PROGRAMME 6.1: HUMAN RESOURCES MANAGEMENT
OUTPUTPERFORMANCE
INDICATORTARGET PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Training and Development
Motivated staff. Benefits and
processes in
place to improve
staff retention.
Phase 2 of the
cidb Provident
Fund in place by
October 2010.
Employee
Wellness
programme in
Jun 2010.
Achieved:
It is now a condition of employment for
new employees to be members of the
provident fund.
Commenced with the SCM process
before the programme could be
implemented.
STRATEGIC OBJECTIVE: Training and Development
HR related
competent
management
team.
Disciplinary, poor
performance
training done.
Job profiling
training done.
Training done by
May 2010.
Training done by
Oct 2010.
Selection training
done by
Jul 2010.
Not Achieved. Training providers
appointed to start in
May 2011:
• Job Evaluation
training: To
commence on
03/05/2011.
• Training on
staff discipline
and grievance
handling: to
commence on
16/05/2011.
The delay was
caused by the
involvement of the
HR manager in the
critical disciplinary
process involving the
CRS staff members
relating to fraud and
corruption.
PURPOSE Human Resource Management
MEASURABLE
OBJECTIVE
Provision of Human Resource administration and management to all programmes.
KEY POLICY PRIORITY Effective Human Resource Management
EXPECTED OUTCOME To retain staff who are productive, knowledgeable and well motivated in their work
36
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
SUB PROGRAMME 6.2: FINANCIAL MANAGEMENT
PURPOSE To provide a dependable and accountable Financial Management
MEASURABLE
OBJECTIVE
Financial management including registers fees
KEY POLICY PRIORITY Provision of financial management services
EXPECTED OUTCOMETo safeguard assets, ensure observation of best practice governance principles and maintain the
good name of the cidb
OUTPUTPERFORMANCE
INDICATORTARGET 2010/11 PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Corporate Governance
Asset register Perform Asset
count.
Regions count to
be completed
by 31 Oct 2010
and HO by
30 Nov 2010.
Achieved:
• All regional counts have been
completed in timeously
• Head office counts have been
completed timeously.
Reviewed
residual values
Review useful
lives and residual
values.
First review by
31 Jan 2011 and
Second review by
31 Mar 2011.
In progress. Estimate of residual
values is in progress
and the exercise
is expected to be
completed before
31 May 2011 in line
with the GRAP 17
requirements.
STRATEGIC OBJECTIVE: Corporate Governance
Internal/External
Audit
Provide
information to
the internal and
external auditors.
In line with the
annual plan.
Achieved:
• Internal audits have been completed
for the following audits
- Financial discipline review
- Supply chain management
- Follow up audits.
• Interim audit has been completed.
Discussion of audit findings with the audit
committee is in progress.
All information required by the auditors
has been provided.
Policies and
procedures
Develop required
policies and
procedures.
Ongoing Achieved:
• All policies governing critical areas
have been developed.
37A
NN
UA
L RE
PO
RT 2
01
0/1
1
PURPOSE To provide information technology management services to all programmes including the CCCs
MEASURABLE
OBJECTIVE
Management of the Information Technology Systems
KEY POLICY PRIORITY Information (Technology) Systems
EXPECTED OUTCOME An efficient, effective and well managed ICT infrastructure
SUB PROGRAMME 6.3: INFORMATION TECHNOLOGY
OUTPUTPERFORMANCE
INDICATORTARGET 2010/11 PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Corporate Governance
Compliance
with security
requirements.
Provide
information for
security integrity.
May – Oct
2010
Achieved:
• UPS & Aircon Maintenance done
• Follow up Audit completed.
- Result: Adequate controls in place
• Monthly reports sent to Exco on IT
environment, including security related
information.
• Setup reports for internet usage of staff
- Daily reports
- Monthly reports
- Automated email of reports to IT
management staff implemented.
• Setup a new application to monitor for
the following:
- New computers added to the
network
- New applications installed on
computers
- Reports e-mailed weekly to IT
management staff.
• Security/antivirus application
maintained
- Daily checking of activities /
potential threats
- Improved access permissions
(increased lockdown of
unauthorised sites and personnel).
38
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
OUTPUTPERFORMANCE
INDICATORTARGET 2010/11 PERFORMANCE PROGRESS TO DATE
REASONS FOR
DEVIATION
STRATEGIC OBJECTIVE: Corporate Governance (continued)
Compliance
with security
requirements.
Provide
information for
security integrity.
May – Oct
2010.
• Additional security built into the
Registers website.
- Added trigger to divert any hack
attempts to another site where we
log details of attempt.
- Automated logging of such
attempts.
- Automated notification of such
attempts to relevant IT staff.
• New backup and recovery solution
implemented to ensure security of
information in the event of a disaster.
• Improved security within applications
- User account management done
on a monthly basis.
- Implemented reporting tools and
improved management of network
access.
- Improved security criteria within
applications (password controls);
Pastel, VIP, CRS.
• Physical security systems and access
control maintenance done.
Reviewed Policies
and procedures.
Annually updated
IT policies.
Oct 2010. Achieved
• Reviewed IT policies.
• 5 policies approved by the Board.
- Confidentiality Policy.
- Disaster Recovery Plan.
- Security Policy.
- Access Control and passwords
Policy.
- Data Backup and recovery policy.
• Policies and framework for project
management within cidb approved
and rolled out to strategic focus group.
39A
NN
UA
L RE
PO
RT 2
01
0/1
1
SUB PROGRAMME 6.4: SUPPLY CHAIN MANAGEMENT
PURPOSE To provide supply chain management services to all programmes including the CCCs.
MEASURABLE
OBJECTIVE
Supply Chain Management
KEY POLICY PRIORITY Provision of Supply Chain Management services
EXPECTED OUTCOMEA well managed SCM system that eliminates bottlenecks and prevents any
fruitless, irregular and unauthorised expenditure
OUTPUT PERFORMANCE
INDICATOR
TARGET
2010/11
PERFORMANCE
PROGRESS TO DATE
REASONS
FOR DEVIATION
STRATEGIC OBJECTIVE: SCM / Governance
SCM
Governance.
Annually
updated
SCM
policies.
SCM policies
reviewed
and rolled
out to all
staff by
Oct 2010.
• SCM policies have been reviewed
and updated accordingly in line with
the most recent National Treasury
guidelines.
• Communication of Thresholds and
guidelines by means of directives and
through workshops were postponed to
the end of February pending adoption
of the SCM policy amendments.
40
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
THE CONSTRUCTION REGISTERS SERVICE
THE CONSTRUCTION REGISTERS SERVICE
The Register of Contractors and the Register of Projects have been established in
terms of the Construction Industry Development Board Act, Act 38 of 2000. The
Register of Contractors grades and categorises contractors according to financial
and works capability. It is mandatory for public sector clients to apply the register
when considering construction works tenders. The Register of Contractors facilitates
public sector procurement and promotes contractor development.
The Register of Projects gathers information on the nature, value and distribution
of projects. When clients register projects, the track records of contractors are
updated and the information is available to other clients through the cidb website.
The cidb has embarked on an accelerated drive to improve client compliance
with the application of the Registers. This will also form the basis for driving
performance improvement through project close out reports. Public sector clients
are required to register projects above R200,000 while private sector clients and
large state owned entities are required to register projects above R10 million.
The cidb has also developed the free i-Tender service which enables clients to
advertise tenders on the cidb website. The i-Tender service automatically alerts
registered contractors of tender opportunities by email and sms. Tenders are
also displayed on the cidb website. Compliance with legislative requirements
to Register of Projects is made easy for clients who convert the same tender
information after award and add basic additional ‘post award’ information.
By 31 March 2011, there were 6,803 projects registered and 9,766 tenders
advertised. The number of tender notifications distributed increased to 3,327,683
by the end of March 2011. A total of 81,856 contractors have received notifications
of tender opportunities through the i-Tender service.
41A
NN
UA
L RE
PO
RT 2
01
0/1
1
Growth in the Register of Contractors has continued in the year under review with a total of 99,421 Grade 1 Contractors registered
and 13,749 Grade 2 to 9 Contractors registered by 31 March 2011. Chart 1 below indicates the growth in the total number of
registrations across Grades 2 to 9 from January 2005 to January 2011.
Chart 1: Growth of Contractor Registrations
0
20 000
40 000
60 000
80 000
100 000
120 000
Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11
No.
of A
ctiv
e Re
gist
ratio
ns
Regis ter of Contractors (Grade 1 to 9)
An accelerated drive to improve client compliance with the application of
the Registers.
42
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
A comprehensive review process of the criteria for registration on the Register of Contractors was undertaken. The
range of proposed improvements includes a reduction in the qualifying Track Record values and Annual Turnover
requirements, an emphasis on the combination of both financial capacity and also track record (as opposed to the
consideration of Available Capital only), removal of the requirement for contractors to have professional resources
in their employ at the time of registration with the cidb, provision for the Minister to publish revised tender value limit
adjustments and other improvements. It is envisaged that the Regulations will be published for public comment before
30 September 2011.
Information from the cidb Quaterly Monitor is included in Chart 2 below and shows the total number of registrations in the General
Building (GB) and Civil Engineering (CE) classes of works for the past three years. It is seen that there has been a slight increase
in the number of registrations for the first quarter of 2011. Furthermore, there has been a consistent increase in the number of
registrations in Grades 5 and 6 and above.
The application of best practice Business Process Management (BPM) methodologies coupled with skilled and committed
personnel has ensured that the cidb meets its commitment to stakeholders by providing an efficient registrations service.
Compliant applications are processed within 21 working days. Potential backlogs are identified early and resolved. The approach
is to get it right the first time with quality assurance processes in place.
A dedicated training function has been established to ensure that all cidb registrations personnel are knowledgeable on
registration requirements and processes. Registration services are offered at the cidb provincial offices and at the cidb head
Office. The entry level Grade 1 applications are processed ‘over the counter’ with registrations activated within a period of 48
hours.
The registration software systems are being redesigned to provide for seamless processing activities between the cidb Head
Office and the Provincial Partnered Offices. This new system will include electronic document management which will both
reduce the turnaround time in processing applications and also increase the integrity of the registrations process. The project
commenced on the 28th January 2011 with implementation planned for September 2011 onwards.
The new system will provide better access to information inside the organisation, reduce the risk of fraud and corruption, increase
efficiency and productivity, improve data validation functions, improve user interfaces, allow for better integration and greater
flexibility in business processes.
Chart 2: Number of Registrations 2008 Quarter 1 to 2011 Quarter 2
43A
NN
UA
L RE
PO
RT 2
01
0/1
1
STATISTICS FROM THE REGISTER OF CONTRACTORS
Information from the Construction Registers Service is used to direct development interventions and inform procurement strategy.
This information is accessible to the public on the cidb website, www.cidb.org.za. The statistics below are as at the end of the
financial year, 31 March 2011.
Table 1: Tender Value Ranges
GRADE MAXIMUM VALUE OF CONTRACT THAT A CONTRACTOR IS CONSIDERED CAPABLE OF PERFORMING
1 R 200 000
2 R 650 000
3 R 2 000 000
4 R 4 000 000
5 R 6 500 000
6 R 13 000 000
7 R 40 000 000
8 R 130 000 000
9 > R 130 000 000
(Indicates the maximum value of a contract that a contractor is considered capable of performing).
GRADE 1 STATISTICS
The statistics for Grade 1 Contractors have been separated from Grades 2 to 9 in order to better illustrate contracting capacity
while also allowing for improved identification of development targets.
There are no substantive registration requirements for Grade 1 contractors. The actual available contracting capacity is
therefore reflected in the number of registrations in Grades 2 to 9.
44
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
REGIONCLASS OF WORKS
GB CE ME EP EB SW TOTAL
Eastern Cape 8210 2872 180 212 103 1547 13124
Free State 2885 1037 189 90 52 485 4738
Gauteng 13782 4465 803 925 312 4090 24377
KwaZulu-Natal 14671 7091 666 349 279 3187 26243
Limpopo 5286 2658 294 416 113 915 9682
Mpumalanga 4821 1876 385 356 88 637 8163
North West 3393 964 160 160 41 609 5327
Northern Cape 718 184 61 36 28 115 1142
Western Cape 3580 929 171 142 124 1178 6124
Total 57346 22076 2909 2686 1140 12763 98920
Table 2: Class of Works per Province - Grade 1
GB: General Building CE: Civil Engineering ME: Mechanical Engineering. EP: Electrical Engineering (Infrastructure) EB: Electrical Engineering (Building) SW: Specialist Works.
Table 3: Consolidated Ownership Profile (%) Grade 1
REGION TOTAL BLACK OWNED YOUTH OWNED WOMEN OWNED
Eastern Cape 13124 97 31 46
Free State 4738 95 29 43
Gauteng 24377 95 28 44
KwaZulu-Natal 26243 98 36 49
Limpopo 9682 98 39 54
Mpumalanga 8163 98 37 55
North West 5327 97 28 43
Northern Cape 1142 89 26 34
Western Cape 6124 90 21 43
GRADE 2 TO 9 STATISTICS
Table 4: Contractor Grading by Class of Works
GRADECLASS OF WORKS
GB CE ME EP EB SW TOTAL
2 1987 1493 189 106 131 464 4370
3 583 542 81 59 86 107 1458
4 848 765 132 167 159 134 2205
5 568 643 190 193 153 221 1968
6 553 642 83 68 39 58 1443
7 216 228 38 38 21 29 570
8 77 87 18 13 2 7 204
9 29 48 19 18 4 9 127
Total 4861 4448 750 662 595 1029 12345
Table 4 shows the total number of registrations in the various grades and classes of works nationally. The low numbers of registrations in the specialist classes of works such as Mechanical Engineering (ME) indicates the need to accelerate skills development in these specialist areas.
45A
NN
UA
L RE
PO
RT 2
01
0/1
1
Table 5: Black Owned by Grade
GRADE TOTAL BLACK OWNED % OF THE TOTAL
2 4370 4046 93
3 1458 1261 86
4 2205 1729 78
5 1968 1381 70
6 1443 992 69
7 570 292 51
8 204 71 35
9 127 11 9
Total 12345 9783 79
Medium sized contractors (Grades 3 to 6) of which 76% are black owned.Table 5 reflects the percentage of black owned enterprises (where at least 50% of the enterprise is black owned). It is evident
that there is a low level of black ownership at the higher grades. It is to be noted however that there are many public listed
enterprises at Grade 9; therefore the 9% indicated at Grade 9 is not an accurate reflection of the actual level of black ownership.
GRADE TOTAL WOMAN OWNED % OF THE TOTAL
2 4370 2153 49
3 1458 687 47
4 2205 942 43
5 1968 670 34
6 1443 474 33
7 570 143 25
8 204 29 14
9 127 1 1
Total 12345 5099 41
Table 6: Women Owned by Grading
Table 6 reflects the percentage of women owned enterprises (where at least 50% of an enterprise is women owned). There is a low level of women ownership at the higher grades.
Table 7: Grading by Province
Table 7 shows the registrations by regional breakdown. While the Gauteng province displays the highest number of registrations at the higher grades, It should be noted that most of the larger contractors establish their head offices in the Gauteng province but operate across the country.
REGIONGRADE
2 3 4 5 6 7 8 9 TOTAL
Eastern Cape 438 176 236 177 113 42 12 0 1194
Free State 262 51 72 70 60 29 8 3 555
Gauteng 949 270 541 625 466 205 102 90 3248
Foreign 2 0 0 3 2 9 3 8 27
KwaZulu-Natal 1215 469 542 380 277 102 34 10 3029
Limpopo 363 143 242 241 158 51 7 1 1206
Mpumalanga 408 123 206 186 162 38 6 3 1132
North West 250 61 121 87 62 21 4 0 606
Northern Cape 64 13 32 28 16 3 3 0 159
Western Cape 416 148 211 170 127 70 25 12 1179
Total 4367 1454 2203 1967 1443 570 204 127 12335
46
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
STATISTICS FROM THE i -TENDER REGISTER OF PROJECTS
By 31 March 2011 there were 6,803 projects registered on the Register of Projects and 9,766 tenders advertised using the i-Tender
service. The number of tender notifications distributed increased to 3,327,683 with a total of 81,856 contractors receiving
notifications of tender opportunities through the i-Tender service.
Table 8: Number of Clients registered to use the i-Tender Register of Projects
REGISTERED CLIENTS 31 MARCH 2008 31 MARCH 2009 31 MARCH 2010 31 MARCH 2011
National Departments 13 15 15 60
Provincial Departments 24 31 33 37
District and Local Municipalities 69 162 174 179
State Owned Entities 32 38 41 42
Private Sector Clients 52 58 58 62
Total 190 304 321 380
Chart 3: Number of Projects registered by Provinces by 31 March 2011
47A
NN
UA
L RE
PO
RT 2
01
0/1
1
48
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
PUBLIC SECTOR PROCUREMENT AND DELIVERY MANAGEMENT
AMENDMENT TO THE GRADING CRITERIA FOR THE REGISTER OF CONTRACTORS.
The Procurement and Delivery Programme is custodian to the development,
maintenance and implementation of the cidb, Regulations and prescripts.
cidb workshops and the National Stakeholder Forum provide valuable feedback
on the cidb Regulations. Feedback is analysed and necessary amendments
prioritised. The following draft amendments to Part 11 of the (Register of Contractors)
were submitted to the Minister of Public Works for consideration and gazetting for
public comment:
The following challenges with proposed amendments have been documented
for Part 11 (Register of Contractors) and submitted to the Minister of Public Works
for approval to gazette for public comment:
QUALIFIED PERSONS
It has been recommended that the requirement for contractors to have qualified
persons (commonly referred to as registered professionals) in their employ
be removed. Contractors will not be required to provide proof of registered
professionals at cidb registration stage.
Clients will be required to determine the resource requirements on a ‘project by
project’ basis based on the scope of work, the complexity and the size of the
project. The cidb has drafted a Practice Note to coincide with the implementation
of this amendment.
ANNUAL TURNOVER
It has been recommended that annual turnover qualifying values be reduced.
Annual Turnover is a measure that is easy to verify as the information is provided
in the financial statements of the enterprise. It should be noted that there is no
Annual Turnover requirement at Grades 1 and 2. At Grades 3 and 4 there is
flexibility in terms of financial capacity as contractors are allowed to meet either
the Annual Turnover or Available Capital requirements. At Grade 5 and above
both the Annual Turnover and Available Capital are required.
49A
NN
UA
L RE
PO
RT 2
01
0/1
1
CONTRACT (TRACK RECORD)
It has been recommended that annual the largest project completed to be reduced as follows (values rounded):
ANNUAL TENDER VALUE LIMIT ADJUSTMENT
The Regulations have made provision for the Minister, in consultation with the cidb, to publish tender value limit adjustments (at
least once in three years but may publish annually depending on the market conditions) with proportional registration criteria
adjustments. This is to be done on a set date each year and based on the principles of ‘inflation and market conditions’.
METHOD B
The Method B registration option essentially provides a mechanism for enterprises with large financial capacity to obtain high
grades without having any track record. Feedback was received by large public sector clients on poor delivery by contractors.
Contractors are awarded tenders but do not have any experience in the Class of Works under consideration. Bona fide
contractors have also raised the issue of losing out to ‘contractors’ who have no experience and track record.
The Method B registration option has accordingly been deleted from the regulations.
GRADEUPPER LIMIT OF
TENDER VALUE RANGE
CURRENT VALUES
LARGEST CONTRACT
(25 & OF UPPER LIMIT OF
TENDER VALUE RANGE)
REDUCED VALUES
LARGEST CONTRACT (22.5% OF
UPPER LIMIT OF TENDER VALUE
RANGE. 20 % FOR GRADE 2)
2 650,000 R 150 000 R 130 000
3 2,000,000 R 500 000 R 450 000
4 4,000,000 R 1000 000 R 900 000
5 6,500,000 R 1 600 000 R 1 500 000
6 13,000,000 R 3 250 000 R 3 000 000
7 40,000,000 R 10 000 000 R 9 000 000
8 130,000,000 R 32 500 000 R 30 000 000
9 400,000,000 R 100 000 000 R 90 000 000
50
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
TRANSFER OF RECORDS
Regulation 11(4) provides for the transfer of records from one contractor to another contractor and treated as if it were the same
entity for the purpose of assessment under various cases such as the amalgamation of companies.
As a measure to cater for legitimate cases where companies want to register but cannot meet the required criteria in the name
of the enterprise, it is further recommended that Regulation 11(4) (manner of determination of contractor grading designation)
be extended to include the transfer of records from one contractor to another in the case of an incorporated company wholly
owned by a cidb Registered company(‘s) and cidb registered companies setting up subsidiaries.
JOINT VENTURE CALCULATION
The Regulations provide for joint ventures to submit tender offers or expressions of interest if every member of the joint venture is a
registered contractor in terms of the Regulations and the lead partner has a contractor grading designation in the Class of Work
under consideration, and possesses the required recognition status. The calculator sums the financial and works capabilities of
the individual joint venture partners.
A problem is that contractors and clients are effectively bypassing the ‘lead partner’ rule in that bigger contractors are placing
smaller, often Grade 1 and 2, contractors as the lead partner in order to satisfy the requirement that the lead partner is registered
in the relevant Class of Work e.g. Mechanical Engineering.
It has accordingly been recommended that the lead partner must hold a Contractor Grading Designation not more than one
level (tender value limit) below the required grade.
51A
NN
UA
L RE
PO
RT 2
01
0/1
1
WAY FORWARD
Once the public comment phase is closed, the cidb will collate all comment and prepare a final submission to the Minister
of Public Works for approval. Once approved, the necessary changes will be effected and the regulations will be republished.
52
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
COMPLIANCE AND ENFORCEMENT OF cidb LEGISLATION
The cidb Regulations are mandatory for all public sector infrastructure clients. However poor levels of compliance with the cidb
Regulations have been noted in the following areas:
1. Advertising of tenders on the i-Tender system.
2. Recording of project award, construction and close out of a project on the Register of Projects.
3. Application of the cidb Standard for Uniformity.
4. Layout of the tender specification.
5. Matching projects with the contractor grades as a result of a poorly written scope of work and incorrect estimates.
6. Project specific quality and eligibility criteria.
7. Applying well-constructed procurement strategy to promote government’s social agenda.
8. Adherence to the requirements of the Preferential Procurement Policy Framework Act and the Supply Chain Management
Guidelines as prescribed by the National Treasury.
The cidb has implemented a strategy to monitor and enforce regulations as a result of high levels of non-compliance. The
fundamental principles of this initiative are:
a. To educate public sector clients on the legislative requirements by hosting training and awareness campaigns.
b. To create awareness of the cidb Code of Conduct for all parties involved in construction procurement.
c. To widely communicate the cidb Anonymous Fraudline to promote reporting of fraudulent, unethical and corrupt practices
and to discourage fraud by advertising penalties imposed.
d. To record, investigate and take action where necessary.
e. Develop strategic partnerships in the promotion of procurement compliance.
The cidb has partnered with the office of the Auditor-General, Competition Commission, Special Investigation Unit, academic
institutions and various voluntary associations such as CESA, SAFCEC, MBSA to promote compliance with procurement regulations.
To this effect the cidb has signed a Memorandum of Understanding (MoU) with CESA.
The cidb has appointed two companies of forensic investigators to audit and investigate non compliance by both the contractors
and clients and to initiate hearings in terms of Part V of the Construction Industry Development Regulations.
Chart 4: Categories of investigations conducted under the Register of Contractors
F inancial S tatements
T rack Record
Profess ionals
Tax Clearance Cert i f icates
Corrupt Payments
cidb Cert i f icate
PE Status
Non-Compl iance
53A
NN
UA
L RE
PO
RT 2
01
0/1
1
All prosecuted fraud and corruption cases are published in the Government Gazette and are posted on cidb website.
Delivery ManageMent
infrastructure Delivery iMproveMent prograMMe (iDip)
The Infrastructure Delivery Improvement Programme (IDIP) is a partnership programme championed by the National Treasury
as the lead partner, the Department of Public Works, and the Development Bank of Southern Africa (DBSA). The programme is
primarily aimed at improving performance and the rate of delivery of infrastructure projects at a provincial level, whilst facilitating
the spending of allocated infrastructure budgets by provincial clients. A key focus is on improving infrastructure planning, aligning
infrastructure delivery and budgeting cycles, and refining roles and responsibilities of the client and implementing agents.
Table 3 below compares the consolidated sectoral provincial infrastructure budgets and expenditure trends for the third quarter
of 2009/10 and 2010/11.
source – infrastructure reporting MoDel (irM)
The budget growth trends per sector show that the Health budget has grown by 15% between the third quarters of 2009/10 and
2010/11 financial years followed by Education at 30.20%. Health and Education reflect negative growth in expenditure of 4.8%
and 22.1% respectively across 2009/10 and 2010/11 financial years. Comparative analysis across sectors shows that Education
spent 50.10% of its allocated budget by the end of the third quarter 2010/11 financial year. Over the same period Health spent
52% of its infrastructure budget respectively. The slow spending in Health relates to late awarding of tenders, poor performance
by contractors, capacity of Implementing Agents to deliver and late payments of certificates.
IDIP has continued to make a positive impact in the delivery of infrastructure by the Provincial Departments of Education, Health
and Public Works. Phase 2 of IDIP ended on 31 March 2010.
Table 3: Consolidated sectoral provincial infrastructure budgets and expenditure trends – y/y comparisons
sector
% BuDget
groWtH:
y/y
(%)
%
eXpenDiture
groWtH:
y/y
(%)
aDJusteD
BuDget
(r ‘000)
eXpenDiture
as at 31
DeceMBer
2009
(r ‘000)
%
actual
vs
BuDget
(%)
aDJusteD
BuDget
(r ‘000)
eXpenDiture
as at 31
DeceMBer
2010
(r ‘000)
%
actual
vs
BuDget
(%)
Educat ion 5 598 637 4 685 892 83,7% 7 287 397 3 648 658 50,1% 30,2% (22,1%)
Heal th 7 770 835 4 884 399 62,9% 8 938 595 4 649 982 52,0% 15,0% (4,8%)
Total 13 369 472 9 570 291 71,6% 16 225 992 8 298 640 51,1% 21,4% (13,3%)
Table 1: Categories of case
categories of cases of finaliseD Hearings /
convicteD contractors 57
Tax Clearance Cert i f icate 5
F inancial s tatements 15
Profess ional persons 8
Track record 16
Unauthor ised payments to cidb employees 0
Forged cidb cert i f icates 0
Unauthor ised use of c idb logo / let terhead 2
Sponsorsh ip 1
Non-compl iance by employer 10
Table 2: Formal Enquiries
overall nuMBer of investigations
earMarKeD for Hearings37
Hear ings pending as at 31 March 2011 7
Hear ings f inal i sed as at 31 March 2011 22
Number of cont ractors convicted 21
Number of cases wi thdrawn 2
Number of cases removed 1
Number of cont ractors acqui t ted 1
2009/10 2010/11
54
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
IDIP Phase 3 commenced in April 2010. It adopts a different model for the mobilisation and utilisation of experts to the model
that was used in Phase 2. During Phase 2 companies were appointed to provide the technical assistance teams to the provinces
but in Phase 3 individual experts are contracted directly or through their parent companies. This does not only contribute to
significant cost savings but it provides more direct management control to officials over the experts. Four Long Term Technical
Assistants (LTAs) are deployed to each province and they are based in the Provincial Treasury Provincial Departments of Health,
Education and Public Works. It is required in each province for the LTAs to operate as a multi- disciplinary team that works closely
with and report to government officials, thereby enabling transfer of skills. Phase 3 is focused on the implementation of the
Infrastructure Delivery Management Toolkit. Consequently it aims to support the following five Outputs during the next three years:
• Effective functioning of the institutional arrangements and enabling environment for infrastructure delivery
• Improved infrastructure planning, budgeting, maintenance and programme management
• Improved Infrastructure procurement systems and practices
• Improved infrastructure delivery skills
• Effective management of IDIP.
THE INFRASTRUCTURE DELIVERY IMPROVEMENT PROGRAMME (IDIP) TOOLKIT
The Construction Industry Development Board in conjunction with National Treasury, Department of Public Works and the
Development Bank of Southern Africa are delighted to announce that the third edition of the Infrastructure Delivery Management
Toolkit (IDMT) has been published on the cidb website.
The purpose of the IDMT is depicted as follows:
• Provides a documented body of knowledge and set of processes that represent generally recognised best practices in the
delivery management of infrastructure
• Focussed on the delivery and life cycle management of South African public sector infrastructure
• Includes information applicable to both technical and nontechnical managers
• Provides “how to” guidelines for infrastructure delivery and procurement management that are necessary to deliver, operate
and maintain infrastructure
• Helps to capacitate managers
• Facilitates a uniform approach to infrastructure delivery management
• Assist the public sector to demonstrate compliance with the applicable legislative requirements.
The 2010 edition introduces significant updates and amendments to the previous edition. It caters for:
• A modernised approach to procurement
• Greater emphasis on Portfolio Management
• Readiness for local government
• Alignment to the requirements of the Government Immovable Asset Management Act, No.19 of 2007.
• Additional modules to provide an expanded body of knowledge in strategy, construction procurement strategy and
performance management.
The application is based on modern technology and has a web (cidb website) based navigation tool for users to navigate
through the delivery processes, practice guides and their associated supporting documents.
55A
NN
UA
L RE
PO
RT 2
01
0/1
1
PROVINCE DATE NO. OF ATTENDEES CLIENT THEME
Limpopo 8 - 10 Mar 2011 60 Department of Health
and Social
Development and
Department of Public
Works
•Construction
Procurement
Western Cape 30 Sep 2010
28 - 29 Mar 2011
50
17
Western Cape
Provincial Treasury,
Department of Public
Works
Department of
Transport & Public
Works, Department
of Health and IDIP
Technical Assistants
• Portfolio Planning
• Project Management
• Construction
Procurement
Gauteng 8 - 10 Dec 2010
23 - 25 Mar 2011
14 - 15 Apr 2011
55
80
40
IDIP Technical
Assistants for
Departments of
Education, Health and
Public Works
IDIP Technical
Assistants for
Departments of
Education, Health and
Public Works
All Provincial Treasuries
and all Departments
of Public Works
• Portfolio Planning
• Project Management
• Construction
Procurement
• Construction
Procurement
• Portfolio Planning
• Project Management
• Operations and
Maintenance
Eastern Cape 15 - 17 Mar 2011 32 Department of Roads
& Public Works, Health
and Education
• Construction
Procurement
The strategic plan for training on IDMT will be implemented in the 2011/2012 financial year.
IDIP TOOLKIT TRAINING
T ra in ing on the Toolk i t commenced in September 2010.
56
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
DELAYS IN PAYMENTS
The cidb through its partnership programme, Infrastructure Delivery Improvement Programme (IDIP) identified delayed payment
to contractors as one of the main blockages to infrastructure delivery in the construction industry. Practice Note 19 issued in June
2009 reviewed the three phases of the payment cycle, namely the certification, authorisation, processing and also examined
the flow of funds between the client departments and the implementing agents. The Practice Note has had minimal impact on
public sector clients, and the issue of delays in payments remains as one of the crippling constraints to effective infrastructure
delivery.
The cidb hosted a workshop on 28 September 2010 at the Reserve Bank Conference Centre to promote consultation with
industry stakeholder for the development of an all-encompassing strategy to enable prompt payment for all service providers
responsible for delivering construction projects. Participants of this workshop supported the following recommendations:
• That the cidb examine its authority to introduce regulation permitted by its Act on this matter
• That further research be undertaken on the continued lack of understanding in industry regarding payment events, especially
regarding disputes and related adjudication provisions
• That further action could entail the “naming and shaming” of especially serial defaulting payers
• The possible introduction of construction legislation of greater influence such as the Housing Act of the UK or similar legislation
in Singapore, which includes security of payment but also covers compulsory adjudication and eases the enforcement of
adjudication decisions.
In April 2011, the cidb commenced with a literature review to:
1. Investigate the legal remedies available to the South African building and civil engineering contractors and consultants to
enforce their right of payment for work completed or services performed
2. To determine the effectiveness of said remedies and the enforcement thereof and
3. Suggest possible solutions on how to improve current payment practices in the South African building and construction
industry.
An Industry Work Group will be established for consultation on the outcomes proposed by the research findings.
INFRASTRUCTURE GATEWAY SYSTEM (IGS)
Virtually all public sector infrastructure projects are delivered using a traditional preplanned, non-integrated procurement
approach. In terms of this approach, each project is typically executed as a single contract, or may be broken down into
smaller contracts allocated to small and emerging contractors. Contractors would price and construct infrastructure on the basis
of designs prepared under the direction of departments and municipalities or their agents.
Previously, organs of state had their own internal design, construction and maintenance resources that were capable of
designing, constructing and maintaining public infrastructure. These functions were only outsourced to the private sector where
insufficient capacity existed. Over time, this internal capacity has been eroded. Today most of these functions are outsourced
to the private sector, with the design and project management functions typically being outsourced on a discipline specific
basis and rarely on a consortium basis. Consultants are appointed at the inception of a project and are required to scope the
project and to develop the project brief.
The traditional approach to infrastructure delivery works best when an organ of state has sufficient in-house capability and
capacity to oversee the design process resulting in the design and associated documentation being completed before tenders
are invited. The current reality is that while organs of state continue to adopt the traditional approach to deliver their infrastructure
projects, they have severe difficulty in attracting and retaining suitably qualified staff to manage the project process. Many
multidisciplinary consulting teams involved in the delivery of building projects rarely have completed designs at the time that the
contractor is appointed, resulting in poor project outcomes.
For this reason, there is a dire need to consider alternative options for delivery and maintenance of the much needed public
sector infrastructure. Simultaneously, tighter controls are required to align infrastructure investment to the social and economic
development agenda of government to ensure value for money. In addition, there are many challenges, risks and opportunities
for government in delivering the required quantum of public infrastructure in an efficient and effective manner.
57A
NN
UA
L RE
PO
RT 2
01
0/1
1
In response to these national imperatives, the cidb has developed an Infrastructure Gateway System which has been embedded
in the upgrade to the cidb Toolkit. The 2010 IDMT caters for infrastructure projects from concept through to delivery, maintenance
and where, necessary the decommissioning of the asset, thus incorporating all aspects of life cycle management of an asset.
The Gateway System provides for a number of control points (approval gates) in the asset life cycle where a decision is required
before proceeding from one phase or sub-phase to another. An informed decision at each gate will provide the assurance that
a project:
• Remains within agreed mandates
• Aligns with the purpose for which it was conceived; and
• Can progress successfully from one phase to the next.
More importantly, the approval gates minimise the project risk to the limitations of the capability of a client to control its risk, whilst
improving governance, accountability and oversight in the infrastructure delivery process.
The Infrastructure Gateway System comprises four planning phases (infrastructure planning, procurement planning, package
preparation and package solution) and a number of implementation phases. The deliverables at the end of the each of the
planning phases are:
• An infrastructure plan which identifies long term needs and links prioritised needs to a forecasted budget for the next five
years
• A procurement strategy for implementing the infrastructure plan in the medium term
• A strategic brief setting out the package information and
• A report setting out the integrated concept for the package ensures that projects are developed not only in accordance with
legislative requirements but also embrace best procurement and delivery management practices in their implementation.
The implementation gates ensure that the design is developed in line with the integrated concept for the package using a
range of contracting strategies (i.e. design by employer, develop and construct and design and construct) and the necessary
information is obtained soon after the completion of the works.
The information upon which a decision is based at a gate and the decisions made can be audited to ensure that projects
remain within a Client’s mandate, are equitable and realise value for money. The opportunity to audit the life cycle of projects
also:
• Improves transparency which reduces opportunity for mismanagement and corruption in planning and implementation;
• Enables the procurement strategy adopted for a sector or a package to be reviewed and improved upon when delivering
similar future projects
• Enables post implementation reviews to take place to examine whether planned benefits are achieved and risks are being
effectively managed; and
• Removes perverse incentives relating to the promotion of one project or a solution over another.
58
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
PROCUREMENT REFORM
REGISTER OF PROFESSIONAL SERVICE PROVIDERS (RoPSP)
The Constitution of the Republic of South Africa, 1996, determines as a basic human right that every person is free to choose
a trade, occupation or profession, but that the trade, occupation or profession may be regulated by law. In addition, the
Constitution determines as a basic right for every person to live in an environment that is not harmful to his or her health
or well-being and an environment protected, for the benefit of present and future generations. Against this background,
government has promulgated the built environment legislation, regulating the professions and determining the need for every
built environment professional to be registered with a Council for the Professions. It is therefore essential that those professional
service providers who provide construction related services to organs of state are registered with the relevant statutory councils
or if not so registered, perform work under the direction of such persons.
Section 5(2)g of the cidb Act empowers the Board to establish and maintain a Register of Suppliers, Manufacturers or Service
Providers. In this regard, the Board has decided to establish a Register for Professional Service Providers (RoPSP) to assist organs of
state in the procurement of appropriately qualified built environment professionals.
On infrastructure projects, professional services are required to plan, budget, conduct condition assessments of existing
infrastructure, scope requirements in response to the owner or operator’s brief, propose solutions, evaluate alternative solutions,
develop the design for the selected solution, produce production information enabling construction, confirm that design intent
is met during construction, manage programmes and projects, prepare procurement documents, administer contracts and
adjudicate disputes.
Decisions made during the design stage of a project can have a major impact on the service life, the usefulness, the performance
and the life cycle costs of construction works. It is accordingly imperative that the professional service provider appointed to
design construction works has the necessary expertise and, most importantly, experience to provide the required knowledge
based services. It is also essential for professional service providers to have not only the capability to perform a service but also
the resources and internal management systems to provide such service to the required quality within the time frames set by the
client. The appointment of under-qualified, under-experienced and under-resourced service providers has led to fruitless and
wasteful expenditure and the compromising of service delivery on public sector projects.
The cidb’s mandate is to provide strategic leadership, to promote sustainable growth, improved procurement and delivery
management, improved performance and best practice, and to develop systematic methods for monitoring and regulating
the performance of the industry and its stakeholders. The Register of Contractors is applied whenever a contractor is appointed,
with or without design responsibilities to provide construction works (i.e. irrespective of the contracting strategy). The award of
a contract triggers the population of the Register of Projects. The reporting on the completion of a project triggers aspects of
the Register of Contractor’s Best Practice Recognition Scheme. The Register of Professional Service Providers can be applied in
the procurement of professional service providers. The linking of the Register of Projects to the Register of Contractors and the
Register of Professional Service Providers enables information between the professional service and the product (construction
works) to be linked e.g. quality and performance etc. It also allows the professional service to be linked to the construction
service, e.g. cost, time overruns and disputes etc.
Defects that manifest several years after completion e.g. a collapse of a roof, severe cracking in a building or a subsidence in
the earthworks, can be readily linked back to both the contractor and the professional.
The integration of the cidb Registers, transforming the information obtained from the Registers into knowledge that will inform
government expenditure in relation to infrastructure as well as economic planning for both the public and private sectors is
pivotal to the success of the cidb in developing the construction industry.
59A
NN
UA
L RE
PO
RT 2
01
0/1
1
The development and implementation of a Register of Professional Service Providers will be approached in the following phases:
PHASE DESCRIPTION EXPECTED PROCUREMENT RELATED OUTCOMES
Phase 1:
Establishment of a
basic register categorised
in broadly defined practice
areas.
Gather basic data of firms
operating in broadly defined
practice areas.
Reduce risk by:
• requiring services to be provided within a discipline to
be rendered under the supervision of a persons is in
the full time employ of a PSP and who is appropriately
registered with a statutory council;
• establishing requirements for PSPs to maintain
minimum levels of competencies in order to remain
on the RoPSPs in a particular discipline;
• providing a means for prohibiting PSPs and their
principals, if necessary, from contracting with a public
sector client for a period of time when they default
on a contract, breach the registration conditions or
breach the cidb Code of Conduct for the Parties
Engaged in Construction Procurement; and
• providing a means for identifying interlocking business
ownerships through common principals which can
lead to the detection of conflicts of interest or collusive
practices.
Phase 2:
Peer assessment of PSPs
capabilities in narrowly
defined practice areas.
Records outcomes of peer
assessment in a narrowly defined
practice area of:
a) the quality of outputs;
or
b) the qualifications, experience
and contextual knowledge of
a registered person, enabling
registration in such practice
areas (process will be piloted
on adjudicators and thereafter
expanded to other areas).
Reduce risk by enabling an employer to identify
specialist capabilities of PSPs.
Phase 3:
Performance reporting
after completion of a
construction works contract.
Records performance of PSPs in
delivering a service.
(process will be piloted)
Reduces risk by identifying under-performers.
Enables quality of service to be improved as employer
will have a means to include performance records in the
evaluation of tenders.
Phase 4:
Best practice
recognition scheme
Records assessed abilities of a PSP
to comply with or apply specified
best practices.
Reduces risk by enabling an employer to identify PSPs
who are capable of delivering a service that satisfies
prescribed best practices.
Enables quality of service to be improved as employer
will have a means to use of only those PSPs who have
an assessed ability to deliver in terms of specific best
practices.
The cidb has commenced an investigation to develop Phase 1, and where possible, aspects of Phase 2. Piloting of the system
is estimated to be in February 2012.
60
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
PREFERENTIAL PROCUREMENT POLICY FRAMEWORK ACT (PPPFA)
The Construction Industry Regulations, 2004, adheres to the principles of the Preferential Procurement Policy Framework Act
(No.5 of 2000) and its Regulations published in 2001. Since 2004 the Minister of Public Works has made Regulations and the cidb
has issued subsidiary legislation (as authorised by the Regulations) referred to as the Standard for Uniformity. This Standard for
Uniformity promotes procurement reform in the construction industry.
One of the four procurement standards promoted in the Standard for Uniformity refers to Method 4 which is a combination
of points for price, functionality (quality) and preference to arrive at the highest point scoring tender, in accordance with the
PPPFA Regulations, 2001. The validity of Preferential Procurement Regulations 2001 relating to the evaluation of functionality
and price were challenged in the KwaZulu-Natal High Court, in Pietermaritzburg. The court found that “the word price does
not include functionality and that they are entirely distinctive concepts.” and consequently ruled that some of the regulations
relating to functionality were inconsistent with the Act and therefore declared them to be invalid. The cidb Method 4 has been
compromised by this court judgement, effectively ruling out a key mechanism used to determine the most economically
advantageous tender offer in the pursuance of the following key mandates of the cidb Act, which is to, amongst others:
• Determine, establish and promote improved performance and best practice of public and private sector clients, contractors
and other participants in the construction delivery process; and
• Promote uniform application of policy throughout all spheres of government and promote uniform and ethical standards,
construction procurement reform, and improved procurement and delivery management – including a code of conduct.
National Treasury has issued an Instruction Note to prescribe the use of functionality only as pre-qualification criteria i.e. tenders
satisfying the specifications and / or minimum levels of functionality are evaluated on the lowest price taking into account
equity considerations i.e. a preference. Of importance is that the Instruction Note permits tenders in the case of the construction
industry to be evaluated in terms of the cidb prescripts (as provided for in the Supply Chain Management Regulations issued
in terms of the Public Finance Management Act of 1999 and the Local Government: Municipal Finance Management Act of
2003).
The approach adopted by National Treasury rules out the determination of the most economically advantageous offer. This
approach is suitable for non-construction procurement which deals in the main with direct acquisitions which involve standard,
well defined and scoped services, off the shelf items and readily available commodities. Construction procurement differs in
that there is seldom the direct acquisition of infrastructure, professional services are required, as necessary, to plan and design
the works, the services are frequently performed on infrastructure that is in use. The risk of the unforeseen occurring during the
performance of the contract frequently leads to changes in the timing for the delivery of the works and the price agreed at
the time that contracts were awarded. The total cost of ownership over life span also needs to be considered. Accordingly,
lowest price adjusted for a preference to meet a minimum standard, is appropriate only where projects are very well defined,
are straight forward and have a low risk profile. There is accordingly a need in construction procurement to evaluate price and
other factors which relate directly to the procurement in line with the Preferential Procurement Regulations 2001, prior to the court
judgement.
61A
NN
UA
L RE
PO
RT 2
01
0/1
1
The construction industry has recently begun to modernise its approach to delivery as depicted in the 2010 version of the
Infrastructure Delivery Management Toolkit (IDMT) developed by the cidb in conjunction with National Treasury), e.g. by
integrating the design and construction aspects of construction works, forming long-term relationships to improve performance
including the quantum of service delivered by entering into framework contracts, paying more attention to the management
of construction related risks through the contract, fostering collaborative relationships and engaging in a competitive selection
process for professional services. This shift in procurement arrangements is underpinned by alternative contracting strategies
and pricing strategies and is aimed at not only improving the quality of infrastructure but also increasing government’s capacity
to deliver and maintain much needed infrastructure. The successful implementation of all of these modern approaches is to a
large extent dependent upon the evaluation of tenders being on the basis of the most economically advantageous offer as
opposed to lowest price.
Evaluation Method 4 as prescribed by the Standard for Uniformity provides for price (financial offer), preference and functionality
(quality) and is typically applied to ensure that the appointed contractor is able to add value in the delivery of construction works.
Such value add may be demonstrated in a number of areas including construction methodologies (build ability), experience
in projects of a similar nature, programming of the works, management of the site and supply chain, what innovation can be
brought to a specific project in terms of managing risks relating to health and safety, environmental requirements and quality.
Method 4 recognises and rewards those contractors who have made investments in improving their performance in the delivery
of construction works and their service to clients. This not only adds value and reduces life cycle costs but also minimise risks
(the effect of uncertainty on objectives) in relation to time, cost and quality of the works and health, safety and environmental
incidents which can impact negatively on project outcomes.
After extensive research, the cidb is working closely with the National Department of Public Works and in consultation with
the National Treasury for an amicable solution to retain Method 4. Application for a possible remedy has been prepared for
Ministerial approval.
62
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
The cidb provides training to all infrastructure clients in the public sector on the application of cidb Regulations and prescripts.
The table on the following page provides a list of capacitation programmes conducted on cidb Regulations in the 2010-2011
financial year:
CLIENT CAPACITATION AND TRAINING
STRATEGIC TRAINING PROGRAMME
63A
NN
UA
L RE
PO
RT 2
01
0/1
1
PROVINCE ORGANISATION AREAS OF CAPACITATION
Gauteng
Botjheng Water
Ekurhuleni Metropolitan Municipality
cidb: Head Office
Sedibeng District Municipality
Ekurhuleni Metropolitan Municipality
Randfontein Local Municipality
Ekurhuleni Metropolitan Municipality
Eskom
Independent Development Trust
South African Police Service
South African Police Service
Auditor General South Africa
Department of Public Works
Randwater
Provincial Stakeholder Forum
cidb Regulations and impact of compliance.
cidb Regulations and processes
i-Tender Training
Procurement Strategy Meeting for Contractor Development.
cidb Regulations, Compliance Audits.
Site inspection of Platkop and Rietfontein landfill sites.
cidb Regulations and impact of compliance.
Register of Contractors & Practice
Note 21.
cidb Regulations and impact of compliance.
CCC Contractor Development Roll Out
Procurement Processes
cidb Regulations and impact of compliance.
KwaZulu-Natal Umgeni Water
Department of Public Works
cidb Regulations, Compliance Audits
CCC Contractor Development Roll Out
Northern Cape
Department of Roads and Public Works,
Provincial Treasury, Department of
Agriculture , Education
& National Public Works
Department of Agriculture
Construction Procurement, i-Tender Training, Practice Note 3
and 21.
Construction Procurement and i-Tender Training.
Western Cape Department of Public Works, Provincial
Treasury, City of Cape Town, &
Department of Housing.
Saldhana Municipality
cidb Regulations and impact of compliance.
Eastern Cape Nelson Mandela Bay Metro
Department of Roads and Public Works
Department of Public Works
Amatole District Municipality
Provincial Stakeholder Forum
cidb Regulations and impact of compliance.
CCC Contractor Development Roll Out
CCC Contractor Development Summit
Procurement Strategy Meeting for Contractor Development
cidb Regulations and impact of compliance.
North West Department of Public Works
Provincial Stakeholder Forum
CCC Contractor Development Roll Out
cidb Regulations and impact of compliance.
Free State Department of Public Works CCC Contractor Development Roll Out
Mpumalanga Department of Roads and Public Works
Eskom Meeting
Provincial Stakeholder Forum
Emalahleni Local Municipality
cidb Regulations and impact of compliance.
Limpopo Department of Education
Department of Public Works
Polokwane Municipality
cidb Regulations and impact of compliance.
64
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
CONSTRUCTION PROCUREMENT SKILLS PROGRAMME
The cidb has identified a deficiency in skills required by public sector officials and other stakeholders involved in construction
procurement and delivery management.
The cidb has commenced work on a Construction Procurement Skills Framework which aims to create an enabling environment
to provide continuing professional development and a formal accreditation/certification as well as training opportunities for
construction procurement practitioners. The Framework will consider the development and implementation of a certification
system for procurement practitioners to ensure compliance with the requirements of the Standard for Uniformity in Construction
Procurement. Such a system will enable Accounting Officers and Heads of Supply Chain Management to entrust construction
procurement related activities only to staff members and consultants / agents who are conversant with the cidb standard.
65A
NN
UA
L RE
PO
RT 2
01
0/1
1
COMPETITION COMMISSION
Section 5(4) of the Construction Industry Development Board Act, 2000 determines that the Board must publish a code of
conduct for all construction-related procurement and all participants involved in the procurement process. The ambit of this
section includes all players in the construction procurement process, from Clients through to subcontractors and suppliers.
The Code of Conduct applies to all construction-related procurement and all participants involved in the procurement process,
from the application for registration as a contractor, through to the tender process and the registration and completion of a
project, including participation in the Best Practice Project Assessment Scheme and the Best Practice Contractor Recognition
Scheme.
In relation to the conduct of tenderers, the Code of Conduct indicates that a tenderer, his employees or agent should:
• Not, except for the purpose of joint venture formation or collective action deal with unfair conditions or other faults in
documentation, become involved in collusion with other tenderers, or potential tenderers
• Not exchange information regarding tenders with any other tenderer prior to the closing time and date for tenders
• Not knowingly price his tender in such a way as to gain an unfair advantage from an obvious error, or oversight, in the tender
documents
• Not attempt to influence the tender evaluation process
• Not approach any representative or employee directly in connection with a tender.
With regard to the conduct of a contractor, the Code of Conduct inter alia lists that “The contractor or his employees should
not engage in collusive practices that have direct or indirect adverse impacts on the cost of the project to the employer”. The
actions of collusive tendering and price fixing, commonly referred to as collusive practices, have an adverse impact on the cost
of the project to the Client, and therefore constitute a transgression of the cidb Code of Conduct in addition to a contravention
of the Competition Act, 1998.
The cidb will be formalising a relationship with the Competition Commission via a Memorandum of Understanding (MoU) to
ensure synergies in the investigation and prosecution of both contractors and built environment professionals found to be guilty
of collusive practices.
INVESTIGATION INTO TRANSNET’S NEW MULTI PRODUCT PIPELINE (NMPP)
In December 2010, the cidb was approached to participate in a Ministerial Review Task Team under the leadership of the
Department of Public Enterprises to investigate the cost overruns and time delays associated with Transnet’s New Multi Product
Pipeline.
The Ministerial Review Team was to explore whether the key parameters of the NMPP in terms of construction and output
performance were reasonable, and the shortcomings that resulted in cost trends of the project cycled through massive
fluctuations.
The Review Team’s approach was to access all possible perspectives on the technical characteristics, cost and schedule trends
of the NMPP project through interviews and to cross-check these with accessed documentary evidence, and subsequently
formulate its findings and recommendations. The cidb’s prescripts and regulations were monitored for compliance, as well as
an examination of the appropriateness of the procurement models and its outcomes in relation to the massive cost increases
of the project.
A report of the findings and recommendations of the Ministerial Review Task Team was concluded in April 2011. The report has
been tabled with the Minister of the Department of Public Enterprises.
66
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
BACKGROUND
The Growth and Contractor Development GCD programme gave focus in
2010/11 to:
• Supporting national, provincial and other Contractor Development (CD)
programme implementation
• Strengthening clients capacity to manage the implementation of their CD
programmes
• Facilitating access to various CD support initiative, and
• Ensuring stakeholder capacitation and interaction
Contractor development objectives were implemented through its core units the
Enterprise Development Unit and the Construction Contact Centre (CCC)/cidb
provincial partnered offices.
ENTERPRISE DEVELOPMENT
Informed by lessons from interactions with key stakeholders, both through the
provincial contractor development fora (PCDF) and through the cidb Provincial
Stakeholder Workshops, the GCD Enterprise Development Unit focussed its activities
on the following areas:
• Strengthening the institutional arrangements for the National Contractor
Development Programme (NCDP)
• Developing knowledge and information materials
• Providing technical support and assistance to clients
• Undertaking a Baseline Study of contractor development programmes
• Developing guidelines for implementing contractor development
• Convening a national workshop on the promotion of Green and Decent Jobs
in the South African building and construction sector
• Establishing strategic and smart partnerships, and
• Promoting regional collaboration on contractor development.
FACILITATING GROWTH AND DEVELOPMENT
67A
NN
UA
L RE
PO
RT 2
01
0/1
1
STRENGTHENING THE INSTITUTIONAL ARRANGEMENTS FOR NCDP
The cidb assisted by the Policy and Monitoring Branch of the National Department of Public Works established a Steering
Committee to coordinate the implementation of the NCDP.
The NCDP Steering Committee comprises of representatives from:
• National Department of Public Works
• cidb and
• Other role players who may be co-opted as and when necessary (these representatives are not permanent Steering
Committee members).
The main functions of the NCDP Steering committee are to:
• Co-ordinate the NCDP implementation
• Provide strategic guidance and leadership on contractor development
• Facilitate consultation and input through workshops and national fora
• Facilitate development of guidelines
• Monitor and review alignment of contractor development programmes to the NCDP Framework
• Monitor and evaluate the implementation of contractor development programmes.
The NCDP Steering Committee complements the provincial contractor development fora (PCDF) that have been established by:
• Promoting and capacitating on the NCDP
• Sharing knowledge and experience on contractor development
• Adopting and promoting good practice contractor development guidelines and processes; and
• Aligning contractor development programmes to the NCDP.
DEVELOPING KNOWLEDGE TOOLS AND INFORMATION MATERIAL
The cidb developed knowledge and information tools to empower contractors on the critical aspect of managing a construction
business. During the year under review four brochures were added to the existing series of Tips and Advice. These focused on:
• Contract management
• Health and Safety
• Marketing and
• Tendering processes for public sector procurement.
Supporting Contractor
Development in South Africa
68
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
TECHNICAL SUPPORT TO CLIENTS
A major focus was on providing technical support to clients to promote common approaches to contractor development, good
practices and models for contractor development.
Technical support, to clients and capacitation were provided through:
• Bilateral engagements with clients in response to ad-hoc request
• Regular provincial contractor development forum meetings
• Roadshows and workshops
• Information sharing through provincial cidb stakeholder workshops.
The NCDP provincial client capacitation road shows and workshops were convened in all provinces. The focus of the workshops
was to:
• Capacitate clients on the NCDP framework and its components
• Capacitate clients on other cidb products and services that facilitate or support contractor development such as targeting
and procurement strategies
• Share experiences and good practice in contractor development.
The cidb responded to ad-hoc requests and assisted the following government departments with the conceptualisation of their
contractor development programmes:
• The Northern Cape Department of Roads and Public Works – Rea Gona Emerging Contractor Development Programme
• KwaZulu-Natal Department of Public Works – Masakhe Emerging Contractor Development Programme
• Mpumalanga Province Department of Public Works – Sakhabakhi Contractor Development Programme.
Based on the review of the above programmes, it is apparent that clients are at varying stages of aligning their programmes
to the NCDP Framework. It is also evident that client are desirous of obtaining the best possible results for their contractor
developmentprogrammes. In this regard the cidb seeks to further strengthen its capacity to provide technical support to clients.
BASELINE STUDY OF CONTRACTOR DEVELOPMENT PROGRAMMES
A Baseline Study on Provincial Contractor Development
Programmes in South Africa was completed. The study updates
the Status Quo Review of Contractor Development Programmes
previously carried out by the cidb in March 2009.
The aim of the study was to review the performance of existing
contractor development programmes and identify key success
factors, best practice and appropriate indicators for monitoring
and evaluation of contractor development programmes. It was
also to:
• Review the performance and outcomes of contractor
development programmes to date
• Identify indicators for success of contractor development
programmes that can be used as the basis for effective
monitoring and evaluation system of contractor development
programmes; and
• Provide baseline information for use by contractor
development practitioners to benchmark programmes.
The study of baselines has commenced with participating
organisations. The aim is to effect corrective measures where
necessary and to agree on the basis for monitoring of future
participating programmes.
69A
NN
UA
L RE
PO
RT 2
01
0/1
1
GUIDELINES FOR IMPLEMENTING CONTRACTOR DEVELOPMENT
The cidb developed guidelines for design and implementation of
contractor development programmes (CDP’s), to assist clients as a means
of engaging grade 2-6 contractors. The objectives of the guidelines is to
establish all the necessary mechanisms, as recommended by the “Status
Quo Report: SA Contractor Development Programmes” for implementing
CDP’s.
The NCDP framework forms the basis of the guidelines. Therefore all clients
who want to align their programmes to the framework are required to
comply with the guidelines in implementing their prospective CDP’s. The
mechanisms established by the guide include:
• Targeting of budgets, projects and contractors
• Evaluation of contractors when entering a programme
• Training and mentoring
• Sharing the cost of contractor development
• Payment dispute resolution
• Exiting from the programme; and
• Monitoring and evaluating the programme.
NATIONAL WORKSHOP ON THE PROMOTION OF GREEN AND DECENT JOBS IN THE SOUTH AFRICAN BUILDING AND CONSTRUCTION SECTOR
The State of the Nation Address by the President of South Africa, and the Industrial Policy Action Programme II presented by
the Minister of Trade and Industry outlines the promotion of decent work and the creation of green jobs as two policy priorities
of the Government of South Africa and its social partners. There is a need for strategies to make these goals ‘actionable’ in a
collaborative effort between Government, private sector and civil society.
To contribute to the debate on creation of decent and green jobs in using the building and construction sector the cidb
in partnership with the Ministry of Economic Development, the International Labour Organisation (ILO), the United Nations
Environment Programme (UNEP), and the Centre for Industrial and Scientific Research (CSIR) organised a one-day workshop for
selected sector stakeholders.
The workshop took place on 17 May 2010 at the Sandton Convention Centre.
The objectives of the workshop were to:
• Validate the findings of field research on the potential for greening the building and construction sector in South Africa, and
how to maximise the creation of decent jobs in the process
• Jointly review best practice in promoting decent and green jobs in the building and construction sector worldwide, and to
discuss concrete proposals for further driving this agenda in the building and construction sector in South Africa.
Observations from the workshop included:
• Issues related to skills gaps.
• Workforce development related to green technologies
• The need for a government supported training programme
• The importance of SME’s uptake and involvement.
The cidb is considering strategies to respond to these observations.
70
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
ESTABLISHING STRATEGIC AND SMART PARTNERSHIP
The cidb continued to develop relations with stakeholders
who can offer cidb registered contractors value and support
enterprise development. These include training providers,
material suppliers, government entities, banks and finance
intermediaries.
On 1 October 2010 the cidb signed a MoU with Nedbank.
The focus has now shifted to ensuring that the MoUs are
operationalised.
The cidb commissioned a study into the South African financing
landscape, with the aim of developing a financial model and
implementation strategy.
The study acknowledges lack of financial support as one of
many constraints to contractors development and recommends
(particularly for financing houses) implementation of various
strategies that will facilitate quicker access to finance as well as
non-financial support.
A series of workshops and focused presentations were conducted
as part of a consultative process which included participants
from the insurance sector, banking and financial intermediaries.
Key issues raised include the need to create an enabling
environment for accessing finance, improved financial
infrastructure and government and private sector collaboration
in the medium to long term.
PROMOTING REGIONAL COLLABORATION ON CONTRACTOR DEVELOPMENT
As the current secretariat of the Contractor Development Organisations in Africa and other Developing Countries of the World
the cidb undertook a fact finding visit to Harare, Zimbabwe. The trip followed a study trip to South Africa by a delegation from
Construction Industry Federation of Zimbabwe (CIFOZ) on the 26 – 27 May 2010.
The purpose of the visits was to explore prospects for establishment of partnerships between local construction companies and
their Zimbabwean counterparts.
They also provided an opportunity to review progress in taking forward the objectives of the MoU signed on 31 October 2009 in
Johannesburg South Africa Botswana, Ghana, Malawi, Mauritius, South Africa, Tanzania, Zambia and Zimbabwe.
71A
NN
UA
L RE
PO
RT 2
01
0/1
1
CONSTRUCTION CONTACT CENTRES (CCCS)(PROVINCIAL PARTNERED cidb OFFICES)
With a footprint in the nine provinces the cidb offered improved service
delivery on both registration functions and other supportive service:
• Facilitating contractor development and other cidb support services
• Strategic partnerships
• Customer service orientation.
FACILITATING CONTRACTOR DEVELOPMENT AND OTHER cidb SUPPORT SERVICES
The provincial partnered offices/CCCs provide improved registration service with shorter turnaround times. They also provide an
advice service facilitating better compliance to registration requirements. The centres support clients on contractor development,
procurement and information dissemination. They also facilitate implementation of national initiatives at provincial level. Initiatives
include contractor workshops, client capacitation on contractor development, implementation of alternative procurement
strategies, and Women in Construction Excellence Awards.
PROVINCIAL STAKEHOLDER WORKSHOPS
Provincial stakeholder workshops aimed to benefit provincial stakeholders with regards to delivery of cidb programmes and
projects to support the cidb mandate, thus encouraging participation in shaping the programmes.
Well attended Workshops were convened in various Provinces as follows:
CONTRACTOR DEVELOPMENT CATALYTIC PROJECTS
Relationships with provincial client departments were promoted for the purpose of sustainable contractor development. Project
models that support and elevate contractor development were coined in partnership with provincial departments. Catalytic
projects were defined as those projects that have links to a specific development programme or developmental initiative.
These projects financial contribution serve as contribution to stimulate similar contributions from other stakeholders. The major
principle was to enhance partnerships within Provincial Department of Public Works as the primary partner for initiatives, where
possible, but such projects may extend to any stakeholder or partner striving to achieve positive developmental outcomes.
PROVINCE VENUE DATE HOSTED
Gauteng Leriba Hotel and Spa Feb 2011
Western Cape Old Mutual Con. Cen. Mar 2011
North West Palms Hotel Mar 2011
Eastern Cape Pick and Pay Bisho. Mar 2011
Mpumalanga Bundu Lodge Mar 2011
Northern Cape Flamingo Conference Centre. Apr 2011
KwaZulu-Natal Sibaya Sun International Apr 2011
Free State To be hosted in 2011/12
Limpopo To be hosted in 2011/12
Table 1. Provincial Stakeholder Workshops:
72
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
CONTRACTOR DEVELOPMENT FORUMS
The provincial contractor development fora provide an opportunity for benchmarking best practices amongst participating
clients and stakeholders by sharing pertinent information that builds on successes, failures and best practices in the contractor
development landscape.
Table 3: Provincial Contractor Development Forum Meetings were convened as follows:
PROVINCE NUMBER OF ENGAGEMENTS ISSUES DISCUSSED INCLUDE
Northern Cape 1
• NCDP Framework
• Purpose, role and
responsibilities of a PCDF
• Targeting Strategies
• Procurement Strategies
• Sharing and collating
information on CDP/initiatives in
the province
• Sharing of ideas
Eastern Cape 3
Western Cape 1
KwaZulu-Natal 1
Free State 2
Gauteng 2
Mpumalanga 0
North West 1
Limpopo 2
PROVINCE CATALYTIC PROJECT NAME PROJECT AMOUNT
Mpumalanga Yanyuk’ Imbombela Youth Contractor Development Programme R 79,173.00
Eastern Cape JV and Subcontracting seminar R 24,000.00
Eastern Cape SMME summit on contracting options R 55,475.00
Western Cape Provision of Contractor Development training to department CDP
related staff
R 100,000.00
Northern Cape Contractor Development Skills Development training R 100,385.00
Table 2: Participation in Special Projects to support CD:
WOMEN IN CONSTRUCTION EXCELLENCE AWARDS
Women in construction awards were conducted in various provinces. The awards recognise outstanding achievements by
women contractors in business and in delivering construction projects. The provincial awards culminated in the national awards
with provincial winners competing at national level. The following provincial award winners competed at national level:
CATEGORY GRADES COMPANY PROVINCE
EPWP 1 - 2 Mbonelaphanda Gauteng
3 - 4 Ntshonondo Civils Gauteng
Contractors in a development programme 1 – 2 Bokang Q Trading Free State
3 – 4 Kanjo Business Enterprise Limpopo
Tawana Business Enterprise Gauteng
Mainstream contractors 1 – 2 Lezelrique’s Development Northern Cape
3 – 4 Tawana Business Enterprise Gauteng
5 – 6 Phuma Ukhanye Construction Mpumalanga
7 Mmamoleboge Investments Limpopo
Table 4: Women In Construction Excellence Awards: National
73A
NN
UA
L RE
PO
RT 2
01
0/1
1
Table 5: Clients capacitated on NCDP -the rollout and implementation targets
NCDP CLIENT CAPACITATION WORKSHOP
The CCCs held workshops for clients on topics including cidb Regulations, targeting strategies, The National Contractor
Development Programme framework, Procurement Strategies in support of contractor development, Supply Chain Management
Procedures and prompt payments.
PROVINCE TARGETED CLIENTS
Gauteng
National Public Works
Department of Infrastructure Development
Ekurhuleni Municipality
Department of Water Affairs
Limpopo
National Public Works
Provincial Public Works
Department of Roads and Transport
Department of Health and Social Development
Department of Education
Western Cape
Department of Transport and Public Works
Department of Public Works National
City of Cape Town
Department of Treasury
KwaZulu-Natal
Ethekwini
Department of Public Works Provincial
Department of Public Works National
Department of Transport
Municipalities
Eastern Cape
Department of Public Works
IDZ
ECDC
IDT
Chris Hani and Amathola District Municipality
COEGA
Mpumalanga
Msukaliwa Local Municipality
Emalahleni Local Municipality
Department of Public Works
Mbombela District Municipality
Free State and Northern Cape
Department of Public Work Provincial
Department of Public Works National
Department of Treasury
Department of Housing
Department of Health
IDT
North West
Department of Public Works, Roads and Transport
Department of Treasury
Department of Health
Municipalities
74
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
STRATEGIC PARTNERSHIPS
In order to truly give effect to the cidb motto of ‘development through partnerships’, the cidb continued to implement provincial
MoA’s. These included improving relations and facilitating training and support to contractors in partnership with training service
providers and government entities. Training was conducted on Occupational Health and Safety and on financial management.
CCC CUSTOMER SERVICE ORIENTATION
The cidb adopted a monitoring and evaluation (M&E) strategy for its provincial partnered CCC offices. One of the key indicators
to be measured as part of the M&E strategy was the performance and service delivery by the staff as assessed by contractors,
clients and stakeholders. Internal assessment systems during 2009/10 were considered necessary and a reputation survey for all
provincial offices was commissioned.
The objectives of the survey was to:
• Measure performance of the CCCs on service and reputation amongst clients, stakeholders and contractors so as to
establish initial baseline benchmarks for the various services rendered
• Review the effectiveness of the current systems in place
• Propose amendments or improvements to the systems in place; and
• Further streamline service delivery effectiveness.
Table 6: Typical responses received were measured against a performance benchmarking rate of 68% formulated as follows:
Rat ing % = [ (% of responses x 1) + (% of responses x 2) + (% of responses x 3) ] /3, e.g.
SCORE BELOW PAR (1) AVERAGE (2) EXCELLENT (3)
% of Responses 22% 52% 26%Rating = 68%
75A
NN
UA
L RE
PO
RT 2
01
0/1
1
How well is the CCC performing in respect of…?
Chart 5: Typical survey responses against performance benchmark
Contractors Perspective (Red) Clients and stakeholders Perspective (Brown)
76
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
Same
58%
Much better
37%
Much worse
5%
Much better
64%Much worse
1%
Same
35%
Chart 6: The current performance against a previous experience
Chart 7: Rating the current performance against previous experience
Key findings and recommendations will form the basis for streamlining and efficiency going into the future.
77A
NN
UA
L RE
PO
RT 2
01
0/1
1
STAFF TRAINING AND CAPACITATION
In order to respond to the benchmark and service level gaps, employees were continuously exposed to training, to build
capacity that would respond positively to customer needs and improve service. Training and capacitation were based on needs
analysis conducted by managers.
Attended Staff Training Various training areas focused upon are highlighted below:
PROVINCE COURSE DESCRIPTION
Eastern Cape
Effective Management Skills
Inter-personal Skills
Service Level Agreements and Contracts
Ethics Management
Customer Care
Gauteng
People Management for new managers
Service Level Agreements and Contracts
Essential Assertiveness Skills
Limpopo
Key Skills for Effective Managers
Finance for Non-Financial Managers
Customer Care
Advanced Computer Course
Service Level Agreements and Contracts
Registration Training
Northern CapeRegister Training
Service Level Agreements and Contracts
Western CapeMicrosoft Training
Service Level Agreements and Contracts
KwaZulu-NatalMicrosoft Training
Service Level Agreements and Contracts
MpumalangaRegistration Training
Service Level Agreements and Contracts
Free StateRegistration Training
Service Level Agreements and Contracts
78
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
GROWING cidb PROVINCIAL REACH
The cidb has established 9 Construction Contact Centres (CCCs) as partnered provincial offices. The North West CCC operates
in temporary premises and will relocate to new permanent offices which will be launched during 2011/12, in partnership with the
NW Department of Public Works, Roads and Transport.
The project in the North West was constructed and completed by a cidb registered grade 6 contractor. The expected focus in
2011/12 will be on improved service delivery, customer satisfaction and growing the value add and offerings.
To this end, a phased approach commencing in 2011/12, will see staff resourcing, and a priority on contractor development
and other cidb services being more accessible within the Provincial Partnered Offices.
FOCUS AREAS FOR 2011/12• Continued service improvement
• Focus on impact surveys and M&E
• Extension of resources to offer more cidb services
• Increased focus on contractor development
• Space and resource planning for maximum efficiency
• Addressing the challenge of influx of Grade 1s
• Utilisation of professional services and rollout of catalytic projects
• Ongoing support on procurement and contractor development to clients and industry.
79A
NN
UA
L RE
PO
RT 2
01
0/1
1
80
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
MONITORING INDUSTRY PERFORMANCE
The cidb has developed a suite of products to help monitor and evaluate the
performance of the industry and to support contractor development, including:
• Sector specific status reports
• The cidb Construction Industry Indicators (CIIs)
• The cidb Quarterly Monitor; and
• The cidb SME Business Conditions Survey.
Collectively, these products provide a base for a detailed understanding of the
industry by the cidb.
The cidb Construction Industry Indicators (CIIs) have been captured annually since
2003, and measure the performance of the industry focusing on Clients, the client’s
agent / consultant and contractors. The CIIs are currently being captured by the
cidb in partnership with the Department of Quantity Surveying and Construction
Management of the University of the Free State.
The current CIIs reflect indicators measured for projects completed in the 2009
calendar year, drawn from client departments involving 434 projects and 1053
contractors from across all nine provinces. The indicators captured cover:
• Client satisfaction
• Contractor satisfaction
• Profitability and payment delays
• Procurement indicators; and
• Health and safety.
As in previous years, while the overall performance results for the industry are
encouraging, and overall show an improvement over previous years, the
challenge is to raise the performance of the industry as a whole, and in particular
the performance of “the bottom 30%”:
• Clients were neutral or dissatisfied with the performance of contractors on 15%
of the projects surveyed in 2010
• Around 12% of the projects surveyed had levels of defects which are regarded
as inappropriate
• Contractors were neutral or dissatisfied with the quality of tender documents
and specifications obtained from clients on around 22% of the projects
surveyed. Contractor satisfaction was lowest for national/district council clients,
followed by national departments.
81A
NN
UA
L RE
PO
RT 2
01
0/1
1
• Contractors were neutral or dissatisfied with the management of Variation Orders on 26% of the projects surveyed
• Contractors were least satisfied with the management of Variation Orders with the national departments, followed closely by
the metropolitan councils and provincial departments
• 48% of payments to contractors were made over 30 days or longer after invoicing; this shows a welcome improvement over
the payment delays compared to the 2008 and 2009 results. Payment delays recorded in the 2010 survey were highest in
the regional/district and metropolitan councils.
The cidb Quarterly Monitor provides an overview of the state of contractor development in South Africa as input to developing
targeted intervention strategies in support of the National Contractor Development programme (NCDP). The cidb Quarterly
Monitor focuses on public sector supply and demand at a provincial level, and currently deals only with the General Building
(GB) and Civil Engineering (CE) cidb Class of Works.
Details of contract awards are obtained from the cidb i-Tender Register of Projects supported by the Industry Insight Project
Database. (The support of Industry Insight in providing this information is gratefully acknowledged.) Contractor information is
obtained from the cidb Register of Contractors.
A specific focus of the cidb Quarterly Monitor has been on obtaining a detailed analysis of contractor upgrades, downgrades,
and new registrations. The cidb Quarterly Monitor also monitors empowerment trends:
Chart 8
Chart 9
82
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
• Ownership: Around 80% of cidb registered General
Building (GB) and Civil Engineering (CE) contractors in
Grades 2 to 4 are black owned (defined as 50% or
more ownership control). Furthermore, around 70%
to 80% of all Grade 5 and 6 General Building and
Civil Engineering contractors are black owned, while
around 50% to 60% of all Grade 7 and 8 General
Building contractors are black owned.
• Contracts Awarded: Estimates of the value of
public sector contracts awarded to black owned
companies during 2010/11 suggest that around 75%
to 80% of the value of Grade 2 to 4 tenders have
been awarded to black owned contractors. In tender
Grades 7 and 8, the value awarded to black owned
contractors is significantly lower – namely around
50%.
• Ownership History: The change in black-ownership
over the past three years (2008 Quarter 2 to 2011
Quarter 1) for general Building is shown in the adjacent
Figure. Of concern is that black-ownership in Grades
2 to 4, 5 and 6, and 7 and 8 has in fact decreased
over this period. Similar results are obtained for Civil
Engineering, although black ownership in Grades 7
and 8 has increased over time.
• Upgrade History: The percentage of contractors
upgrading per quarter in the General Building Class
of Works and from Grades 1, 2 to 4 and 5 and 6
is shown in the adjacent Figure. It is seen that the
number of upgrades per quarter from Grades 1, 5
and 6 (and from Grades 7 & 8 which are not shown)
has decreased over the period 2008 Quarter 2 to
2011 Quarter 1. Similar trends are observed with Civil
Engineering. It is likely that this decreasing trend in
contractor upgrades is due largely to the negative
economic conditions being experienced (see
below).
This understanding of contractor progression on the
cidb register of contractors is being used as a proxy
for measuring contractor development and an input
to developing targeting strategies for contractor
development.
The cidb SME Business Conditions Survey measures
contracting business conditions amongst cidb registered
contractors at a provincial level and in various contractor
grades. The SME Business Conditions Survey is undertaken
by the Bureau for Economic Research (BER) for the cidb.
The Survey measures, amongst others, the business
confidence, construction activity, tendering competition,
employment and labour constraints amongst cidb
registered contractors, predominantly in cidb Grades 3
to 8.
The results of the Business Conditions Surveys show that,
business confidence in the General Building and Civil
Engineering sectors has decreased significantly over the
period 2008 Quarter 3 to 2011 Quarter 1 – but indications
are that business conditions could now be improving.
Chart 10
Chart 11
Chart 12
83A
NN
UA
L RE
PO
RT 2
01
0/1
1
CONSTRUCTION QUALITY IN SA: A CLIENT PERSPECTIVE
Value to clients is a very complex and often subjective
issue, but it is recognised that quality of construction is a
key component of perceived value to clients. As noted by
FIDIC, “lack of quality in construction is manifested in poor
or non-sustainable workmanship, and unsafe structures;
and in delays, cost overruns and disputes in construction
contracts”. Value and quality of construction is of concern
to both public and private sector clients.
Against this background, the cidb undertook a study on the
quality of construction in South Africa. The report shows that,
overall, clients are satisfied with the quality of construction
in South Africa, but that the quality of construction does
vary between construction projects. However, clients in
general, and in particular public sector clients, should not
be complacent with this, and should strive for better value
and higher quality construction.
This report highlights that the major contributors to poor
quality of construction in South Africa are likely to be
procurement related barriers. Such procurement related
barriers include:
• Fraud and corruption, or ’political interference‘ (including
cronyism and nepotism)
• The procurement and delivery model
• The use of procurement systems based on price
and preference only, and not taking into account
functionality (or quality)
• And/or insufficient information to be able to select professional services and/or contractors based on quality criteria.
The report concludes with specific recommendations that the cidb and other stakeholders could action to support enhanced
construction quality in South Africa (several of which the cidb has had already initiated), including:
• Strong consideration should be given by the cidb to introduce requirements for integrity and transparency in construction
procurement
• Strong consideration should be given by the cidb to advocate for procurement and delivery models promoting collaborative
relationships and integrated supply teams (including design and build contracting strategies)
• The cidb needs to continue to advocate for and to strengthen requirements for the appointment of professional services
and contractors based on quality criteria – supported by performance assessment reports for professional service providers
and contractors and
• The cidb must continue to advocate for a building and construction component to be incorporated into the South African
World Skills activities – and should actively seek to incorporate a construction skills component into the South African
delegation.
84
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
PROGRESS WITH THE cidb BEST PRACTICE PROJECT ASSESSMENT SCHEME
The cidb Act requires that the Board must establish a Best Practice Project Assessment Scheme based on the best practices
identified by the Board. All construction contracts above a prescribed tender value will then be subject to an assessment of
compliance with best practice standards and guidelines published by the Board.
Several key best practices are currently being finalised by the cidb together with industry stakeholders for possible roll-out as part
of the Best Practice Project Assessment Scheme.
Enterprise Development: Growth of the emerging sector can be facilitated through a number of mechanisms, including:
• Directly through structured public or private sector contractor
development programmes together with appropriate preference
models; or
• Indirectly through a procurement model with targeted
development outcomes; and
• Indirect targeting includes mechanisms such as those where a
condition of contract is for the main contractor to develop joint-
venture partners and/or sub-contractors.
A Focus Group has completed the development of draft requirements
and guidelines for indirect targeting to promote enterprise development.
These requirements provide for a minimum of 5% of the total project
value on selected contracts to be undertaken by Joint-Venture
partners or to sub-contracted to developing contractors that are also
to be beneficiaries of enterprise development support from the main
contractor.
The draft requirements will be submitted to the Board in 2011/12
for possible submission to the Minister of Public Works and for
subsequent implementation. If implemented, it is estimated that the
recommendations could result in around R4,6 billion of contracts
to developing enterprises per year; and 700 contractors receiving
developmental support per year.
Construction Skills Policy: A Focus Group has completed the development
of draft requirements and guidelines for workplace training of interns
and up-skilling of company employees in programmes that result in
nationally accredited outcomes, such as, learnerships and accredited
skills programmes.
The draft requirements provide for 0,5% of the tender value of General
Building (GB) contracts and 0,25% of the tender value of Civil Engineering
contracts (CE) to be allocated to workplace training on public sector
contracts in tender Grades 7 to 9. It is estimated that this will translate to
around: R280 million spend on workplace training per year; and 3 000
learning opportunities per year.
The draft requirements will be submitted to the Board in 2011/12 for
possible submission to the Minister of Public Works and for implementation.
Energy Efficient Buildings: A Focus Group has endorsed the Green Star
SA rating tools of the Green Building Council of South Africa (GBCSA)
as a best practice for public and private sector buildings – which has
subsequently being gazetted by the cidb.
The Board also approved the requirements and guidelines developed
by the Focus Group, requiring that all public buildings (including PPPs) for
85A
NN
UA
L RE
PO
RT 2
01
0/1
1
which the planning phase is begun (including major renovations for which planning approval is required) should be designed
and/or constructed to achieve, at a minimum, 4 Star Green Star SA certification. These requirements and guidelines for energy
efficient public buildings will be submitted to the Minister of Public Works in 2011/12 for possible roll-out. If implemented, it is
estimated that the recommendations could result in around:
• R850 million pa savings in cost of carbon for non-residential buildings; and
• R55 million pa savings in cost of carbon for the national DPW portfolio.
PROGRESS WITH THE cidb BEST PRACTICE CONTRACTOR RECOGNITION SCHEME
The Construction Industry Development Board Act (Act 38 of 2000) requires the Board 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 developed by the Board.
Work is progressing well with the development of the cidb Best Practice Contractor Recognition Scheme, and framework
documents have been developed and endorsed by industry for key components of the Best Practice Contractor Recognition
Scheme. Most of these frameworks are now in a piloting phase before possible final endorsement by stakeholders and roll-out:
Contractor Performance Assessment: A Focus Group
has developed and endorsed recommendations that
Contractor Performance Assessment reports will be
required to be submitted by the employer to the cidb
on practical completion of all prescribed public and
private sector projects. These reports will provide a
track record of the performance of contractors which
can be used for:
• Assessing the suitability of contractors for
registration, pre-qualification, selective tender lists
or expressions of interest
• Adjudication for the award of a contract; or
termination of contract.
A pilot project to evaluate the Contractor Performance
Assessment reports was initiated with the Western Cape
Department of Roads and Works in 2009/10. To date,
a total of 126 Contractor Performance Assessment
forms covering mainly maintenance and renovations
on building projects have been evaluated, covering
projects ranging in value from R200k to R28m. The pilot
is progressing well, and it has been recommended
that the pilot continue through 2011/12.
Discussions are continuing on extending the pilot to other provinces and to selected metros.
cidb Competence Accreditation: A Focus Group has developed and endorsed recommendations that will provide for an
assessment of the competencies of a contracting enterprise measured against acceptable standards necessary for running
a contracting enterprise and for supervising building and construction works – targeting Grade 2 to 4 contractors. In terms of
the recommendations, once incorporated into the cidb Best Practice Contractor Recognition Scheme, clients will then be
encouraged to procure work from contractors that possess such minimum standards.
A draft framework for external assessment (RPL equivalence) has been developed to accredit these competences in contractors
who do not hold any formal qualifications. This framework will be piloted in 2011/12.
In addition, a skills survey of a sample of Grade 2 to 6 contractors has also been completed to assess the level of competencies
that contractors currently possess, as an input into assessing the resource requirements an external assessment of a contractor’s
competencies where the contractor or his nominated representative does not hold the required minimum formal qualifications.
Chart 13
86
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
A survey of Business Management courses for contractors completed in 2010/11, and requirements for Unit Standards in business
management are also currently being finalised.
cidb Standard for Construction Management System: To promote and recognise performance improvement by contractors in,
typically, Grades 5 to 7, the cidb has developed a customised standard for Construction Management Systems (CMSs) based
on recognisable construction industry minimum standards covering:
• Health and safety management
• Quality management; and
• Environmental management (covering air, water, land and waste).
This cidb standard allows for expansion and conversion to meet ISO or OHSAS requirements in the future.
In terms of the recommendations developed and endorsed by a Focus Group, once incorporated into the cidb Best Practice
Contractor Recognition Scheme clients will be encouraged to procure work from contractors with cidb accredited Construction
Management Systems.
A pilot project was initiated in 2010 in the Western Cape in which 15 contractors were enrolled to be trained and evaluated on
the cidb CMS standard over a one year period. The pilot is currently drawing to conclusion, and a similar pilot project is being
initiated in Gauteng for 2011/12.
0
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2 to 4 5 & 6
Staf
f (%
)
Highest Qualification: Supervisor
B Tech +
NDip
Foreman Cert
Trade Test
None / Other
Chart 14
87A
NN
UA
L RE
PO
RT 2
01
0/1
1
cidb INDUSTRY ESDA
The cidb in partnership with industry partners have established an Employment Skills Development Agency (ESDA) to provide work
placement opportunities to FET college learners to gain vital workplace experience. The cidb industry ESDA is currently rolling out
a pilot project with 20 learners who have completed their National Certificate Vocational (NCV) Level 4 in Civil Engineering and
Building Construction.
The candidates are employed by the cidb industry ESDA and placed with construction companies for relevant practical exposure
and coaching in bricklaying, plastering and concreting. The ESDA pays the learner stipend; provides personal protective clothing
and basic tools for their respective trades. The cidb industry ESDA also takes care of the administrative burdens that come with
taking on interns. The ESDA also tracks their progress with the assistance of the on-site coach and FET lecturers.
The ESDA will be integral to the roll-out of the Construction Skills Policy (see page 84)
cidb DOCTORAL WORKSHOP
A one day cidb doctoral workshop was held in Cape Town in October 2010, organised jointly by UCT and CPUT. The aim
of the one-day workshop was to draw together students registered towards a research degree (typically PhD’s DTech and
MSc and MTech) with their supervisors and for the students to present their work (in progress), focusing on deployed research
methodologies but also on theoretical frameworks in use into their peers, supervisors and other academics. Five students from
four universities presented their work.
Very informative interactions were had between the cidb, academic staff and students regarding their research during the
workshop, and useful feedback was given to students regarding presentation skills and research methodology.
It was also clear from the workshop that the base of experienced supervisors within the built environment community needs to
be grown, and suggestions are made to encourage active cross-university co-supervision – particularly to support academics
from previously disadvantaged institutions.
88
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
The Corporate Services unit of the cidb encompasses four separate units, namely:
Human Resources, Information and Technology, Supply Chain Management and
Finance.
An overview of the status of these units during 2010/11 follows.
HUMAN RESOURCES AND ORGANISATIONAL MANAGEMENT
OVERVIEW, ACTIVITIES AND RESPONSIBILITIES
The activities and responsibilities of the Human Resources (HR) unit are driven
from within the Corporate Services cluster, while a number of HR activities have
been devolved to Business Units. Some of the HR activities handled by the unit
include recruitment and selection, placement and induction, performance
management, employee relations, human resources planning as well as training
and development.
The organisational structure of the cidb groups various functions or activities together
to avoid duplication and unintended overlaps. Below are different programmes
and units that are supported by the HR overleaf department. It is on the basis of
this cohesive structure that strategic decisions are taken at a centralised point thus
creating a systematic and effective flow of work in response to the organisation’s
legislative mandate and strategic imperatives focus areas.
CORPORATE SERVICES
89A
NN
UA
L RE
PO
RT 2
01
0/1
1
PROGRAMME FUNCTIONAL AREAS
Programme 1:
Growth and Contractor Development
Focus:
Promotion of enterprise development, investment and spending as the basis for a stable, developing industry and the
participation of the emerging sector.
Programme 2:
Construction Industry Performance
Focus:
Improved performance and best practice for an industry that delivers reliable value to clients, investors and end-users, information
on construction industry indicators to inform cidb strategy, policy makers and stakeholders.
Programme 3:
Procurement and Delivery Management
Focus:
Enhanced public sector construction procurement and infrastructure delivery management capability of public sector clients
enabling efficient and effective delivery of quality infrastructure to the public.
Programme 4:
Construction Registers Service
Focus:
Registration of contractors and both public and private sector projects;
Regulation to effect improved performance and best practice by clients and suppliers.
Programme 5:
Office of the Chief Executive Officer
Focus:
Overall strategic leadership and governance in support of the Board;
Stakeholder consultations and communications.
Programme 6:
Corporate Services
Focus:
Financial management including registers fees;
• Information technology;
• Human resource management and administration;
• Supply chain management.
CHIEF EXECUTIVE OFFICER
PROGRAMME MANAGER:
GROWTH AND CONTRACTOR DEVELOPMENT
PROGRAMME MANAGER:
CONSTRUCTION INDUSTRY
PERFORMANCE
PROGRAMME MANAGER:
PROCUREMENT AND DELIVERYMANAGEMENT
PROGRAMME MANAGER:
CONSTRUCTION REGISTERS SERVICES
CHIEF FINANCIAL OFFICER:
CORPORATE SERVICES
90
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
STAFF RECRUITMENT
Through the human resource planning process, critical posts are given priority to ensure that posts do not remain vacant for too
long.
During the period under review, cidb has made strides in ensuring that vacancies are filled timeously especially in areas where
outgoing staff members had to be replaced. As at 31 March 2011, cidb had only eight vacant permanent positions which were
occupied by temporary staff members.
cidb has signed SLAs (Service Level Agreements) with all recruitment agencies on its database where rates have been negotiated
and set at an agreed minimum of 12% in respect of all the placements regardless of the level of the position that is to be filled.
STAFF COMPLEMENT
For the period under review, the total staff complement was 163 of which 139 were permanent employees while 24 were
employees on fixed term contracts.
Below is the breakdown of human capital across the organisation based on gender and race classifications:
REPRESENTIVITY: (01/04/2010 – 31/03/2011)
RACE FEMALE MALE
African 79 54
Asian 1 3
Coloured 7 10
White 5 4
TOTAL 92 71
STAFF MOVEMENT: (01/04/2010 – 31/03/2011)
During the period under review, cidb experienced staff movement between programmes and at times where employees left
the organisation. Below is a summary of the staff movement during the period in question.
STAFF
COMPLEMENT
31/03/2010
CONTRACT
TERMINATIONS
CONVERSION
(FTC – PERM)
NEW STAFF
31/03/11
TOTAL AS AT
31/03/2011
Permanent 120 10 20 9 139
Contract 43 5 20 6 24
91A
NN
UA
L RE
PO
RT 2
01
0/1
1
JOB EVALUATION
As one of the means to resolve anomalies relating to job levels and remuneration, cidb management approved that a Job
Evaluation system be introduced to ensure that work of the same value is rewarded or remunerated at the same or equal pay
scale. This process started in December 2010 and will be completed in the following year. The intended outcome of this process
is to ensure that all jobs are properly evaluated and linked to applicable pay scales.
HUMAN RESOURCE DEVELOPMENT
For the period under review, cidb continued on its commitment to train and develop its personnel in areas that require technical
skills as well as soft skills. Of the annual payroll budget, 1.92% was committed to Human Resources Development (HRD) as
guided by employees PDPs as well as outcomes from staff performance assessments.
HUMAN RESOURCES CHALLENGES
The cidb continues to experience challenges in terms of attracting and retaining human resources with specialised skills and
capabilities. During the period under review, some of the human resources challenges experienced were:
• Staff attraction: Good candidates not keen to respond to job adverts whilst others reject offers; and
• Staff retention: resignation by key personnel to join other organisations that have better incentives schemes.
EMPLOYMENT EQUITY
cidb’s commitment to Employment Equity continues to yield positive results. Not only are women in the majority, 41% of
supervisory and managerial positions at cidb are currently occupied by women while black women represent 81% of the total
number of women employed by the cidb.
cidb has a total number of 39 managers and supervisors six of which occupy senior positions in the organisation and 16 of them
are women as per below breakdown:
MANAGERS AND SUPERVISORS
RACE MALE FEMALE
African 18 16
Indian 3 1
White 3 -
Coloured 2 -
Below is the Employment Equity status of the cidb as at 31 March 2011 per Occupational Level:
OCCUPATIONAL LEVELS MALE FEMALE FOREIGNERS TOTAL
A C I W A C I W MALES FEMALES
Top Management 2 0 2 1 0 0 1 0 0 0 6
Snr. Management 1 1 0 0 2 0 0 0 0 0 4
Professionally qualified and
experienced specialists and mid-
management.
Skilled technical and academically
qualified workers, junior
management, supervisors, foremen
and superintendents.
31 2 4 2 35 3 0 0 0 0 77
Semi-skilled 19 3 1 1 36 4 0 5 0 2 71
Unskilled 1 0 0 0 4 0 0 0 0 0 5
TOTAL PERMANENT 54 6 7 4 77 7 1 5 0 2 163
Temp Employees 6 1 0 0 2 0 0 0 0 0 9
TOTAL 60 7 7 4 79 7 1 5 0 2 172
People with disabilities 0 0 0 0 0 0 0 0 0 0 0
92
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
EMPLOYEE RELATIONS AND DISCIPLINARY MATTERS
During the period under review, the cidb had to address issues relating to allegations of improper conduct by some of staff
members. The table below shows a summary of steps taken by it’s management to address the alleged misconduct.
Steps taken to address misconduct
OCCUPATIONAL HEALTH AND SAFETY
cidb management continues to encourage staff members to adopt a positive attitude towards the fight against HIV / AIDS and
towards those persons who are infected and affected by HIV / AIDS pandemic.
During the year under review, the following steps were taken to address occupational risk and exposure to HIV / AIDS:
• Awareness campaigns (distribution of banners and information booklets to all cidb centres and head office)
• Continuous supply of protective materials (condoms) which are placed at strategic points for staff
• Review of HIV / AIDS policy by Occupational Health & Safety Committee.
PROGRAMMEWRITTEN
WARNING
PRECAUTIONARY
SUSPENSIONS
UPLIFTED
SUSPENSIONS
DISCIPLINARY
HEARINGS IN
PROGRESS
DISMISSALS
Construction Registers Services 4 5 1 1
Corporate Services 1 - - -
Staff against whom disciplinary actions have been taken
EMPLOYEE RANK PROGRAMME NATURE OF MISCONDUCT SANCTION
Call Centre Agent Construction Registers Services Absent without permission Written Warning
Assessor Construction Registers Services Absent without permission Written Warning
Admin. Clerk Construction Registers Services Absent without permission Written Warning
Call Centre Agent Construction Registers Services Absent without permission Written Warning
General Office Assistant Corporate Services Absent without permission Written Warning
93A
NN
UA
L RE
PO
RT 2
01
0/1
1
INFORMATION AND TECHNOLOGY
The Information and Technology unit is committed to continuous improvement and providing a service that fully supports and
enhances the delivery of the various business units within the cidb. A strong focus on business alignment and improvement of
processes is the driving factor of the unit and will continue to ensure the delivery of successful services and solutions.
The IT unit is successfully delivering and supporting information systems infrastructure, custom built applications and “off the shelf”
products for nine provinces from a single location in Gauteng. The forward looking approach ensures all solutions are scalable,
easy to maintain and flexible to adapt to the changing environment both internally and externally. The uptime of measured,
critical services was in excess of 99% for the year.
The following highlights governance reviews and improvements that have taken place during the period;
• A risk assessment exercise has been completed and linked to the various capabilities within the unit; this is being monitored
and maintained on an on-going basis.
• The cidb’s capability requirements have been reviewed and fully documented and initiatives for improving the IT unit’s
service delivery are continuously being implemented.
• A King III readiness review has been completed and the cidb is sufficiently providing governance within the guidelines of
King III, additional recommended improvements will be reviewed and implementation will be done where appropriate in
the coming year.
• Follow up audits, relating to the past three financial years, on both external and internal audit work have been completed
and the required controls have been implemented satisfactorily.
• Various Software Development Lifecycle reviews have taken place and recommendations have been implemented and will
continue to provide improved delivery of solutions to business and external stakeholders.
• The IT unit’s project management framework has been finalised and has shown a marked improvement in delivery of
solutions on time and within budget.
These reviews and initiative undertaken have allowed the IT unit to implement further improvements and will continue to support
the unit in delivering a quality service within business expectations on a regular basis.
The planning and procurement phases for the rewrite of the EDMS and CRS applications have been completed and the
project is now underway. The delivery of the project, which is expected to meet the requirements of the business and relevant
stakeholders, is envisaged to take place in the following financial year.
There has been improved system security, monitoring and disaster recovery solutions implemented and these will continue to be
reviewed and improved on during the coming year.
94
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
SUPPLY CHAIN MANAGEMENT (SCM)
The Supply Chain Management unit became fully operational during the 2008/09 financial year and continues to grow from
strength to strength. The control environment continues to improve significantly, with all the critical positions filled accordingly,
and the structures within the Supply Chain Management process functioning effectively throughout the year.
The cidb has in its endeavour to comply with the King III Report, Treasury Regulations, Preferential Procurement Policy Framework
Act and Public Finance Management Act, developed a comprehensive Supply Chain Management Policy that supports Broad
Based Black Economic Empowerment. The policy is reviewed annually to incorporate the changes and legislations pertaining to
Broad Based Black Economic Empowerment that are pronounced regularly.
The unit ensures that the cidb procures goods and services in a manner that is consistent with fairness, equitability, transparency
and cost effectiveness by adhering to the relevant legislations, implementing efficient and effective procurement practices in
an integrated manner across all elements of the supply chain and develop appropriate systems that would give effect to the
principles of fair dealings and providing cidb with the best value for money whilst improving service delivery.
The cidb discharges its procurement duties through the following main structures:
• The Supply Chain Management function
• The Bid Specification Committee
• The Bid evaluation Committee; and
• The Bid Adjudication Committee.
All these structures are kept independent of each other in line with maintaining adequate segregation of duties and in order to
uphold the main keystones of good governance.
BID ADJUDICATION COMMITTEE
The Bid Adjudication Committee (BAC) was effective throughout the year. The committee is a permanent structure, with
membership rotated on an annual basis. The committee has a cross functional representation with diversely qualified officials
who have adequate supply chain and construction related experience. These individuals also hold senior positions in their
respective programmes. The committee is guided by the terms of reference aligned to the SCM policies that specify their code
of conduct amongst other things. All BAC members are required to disclose their interest prior to any evaluation meeting.
95A
NN
UA
L RE
PO
RT 2
01
0/1
1
BID EVALUATION COMMITTEE
The Bid Evaluation Committee (BEC) oversees the evaluation of all procurement services above R30,000.00 and presents a
detailed report for adjudication to the BAC. cidb’s BEC is kept as a floating structure to allow specialist participation.
IRREGULAR EXPENDITURE
The Supply Chain Management unit maintains a register of all irregular expenditure and actions taken in line with National
Treasury Practice Note 4 of 2008/2009. All relevant disclosure requirements have been complied with as reported in the cidb’s
Annual Financial Statements.
EXPENDITURE
The cidb will endeavour to promote Broad Based Black Economic Empowerment in its sourcing and related spend without
compromising quality. Of the total spend of R 37,894,912 (2009/10: R 37,715,836) for the 2010/11 financial year, 31% (2009/10:
30%) was spent on historically disadvantaged individuals, with 20% (2009/10: 7%) of which was spent on women ownership.
9% (2009/10: 8%) of the total spent went to related parties. cidb intends growing the HDI spent to 50% within the next two years.
SCM PROJECTS
PROJECTS DURING THE YEAR
SCM embarked on a clean-up project in an effort to identify all irregular expenditure incurred during the financial year which
project focused at conducting the review of the supply chain management process. The project was successfully completed
and all irregular expenditure has been disclosed in the Annual Financial Statements.
The cidb supplier database project which is aimed at updating the supplier information on our system has also been completed
with success and is working effectively. Through this system, all prospective and existing service providers will now be given an
equal opportunity and assurance that the SCM processes are fair, transparent, cost-effective, competitive and equitable.
UPCOMING PROJECTS
Training of SCM officials and staff: This is targeted for the 2011/2012 financial year to ensure that the supply chain unit is operating
at its peak in all aspects of the supply chain. Workshops will be conducted during the year to ensure that all officials involved in the
SCM process are fully aware of the procedures and processes in order to minimise irregular expenditure within the organisation.
Supplier performance: The purpose of this is to monitor supplier performance against the agreed service level agreement
and make sure public funds are spent wisely on suppliers that will add value for money to the organisation. It aims to improve
performance of all parties involved in the contract by measuring supplier’s ability to comply with and or preferably exceed their
contractual obligation.
SCM automation: Automating the supply chain management process will help the personnel in the unit to execute their
responsibilities in an effective and efficient manner. The SCM is of the view that once procurement module is in place, it will
scale down most of the work that are performed manually and reduce the risk of non-compliance and errors.
96
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
97A
NN
UA
L RE
PO
RT 2
01
0/1
1
ACCOUNTING AUTHORITY’S REPORT FOR THE YEAR ENDED 31 MARCH 2011
98
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
NATURE OF BUSINESS
The Construction Industry Development Board (cidb) is a Schedule 3A public entity established in terms of the cidb Act, 2000 to
provide strategic leadership to stakeholders to stimulate sustainable growth, reform and improvement of the construction sector
and the industry’s enhanced role in the country’s economy, as well as regulate the industry. The cidb is under the Executive
Authority of the Department of Public Works.
OBJECTIVES AND TARGETS
The objectives and targets of the cidb are summarised in the organisation’s Strategic Plan, Business Plan and the performance
summary. In terms of the external strategic context the activities of the cidb were focused on Public Sector Procurement reform
and Delivery Management, facilitating training and fast tracking Contractor Development, Infrastructure Delivery Skills as well
as improved stakeholder relations. The capacitation of public sector clients continued on an “as required” basis. Public sector
delivery has been enhanced through the Infrastructure Delivery Improvement Programme (IDIP) that is run in partnership with
the National Treasury and the DBSA. The National Contractor Development Programme (NCDP), a contractor development
framework, was identified as a national priority. It was supported by the establishment of the Steering Committee between the
cidb and the National Department of Public Works. Already, the cidb has worked with the provincial departments of Public Works
to acquire their statistics on contractor development, an activity that was difficult to accomplish in the past.
The cidb /industry ESDA (Employment Skills Development Agency) was kick-started through a pilot phase using internal resources.
The first group of learners was inducted and placed with various companies in the industry. The absorption capacity of this
initiative will depend on funding. During the year under review, the cidb appointed Wits University and NMMU (Nelson Mandela
Metropolitan University) as its Centres of Excellence to drive the research agenda and improve academic excellence. Again this
has been achieved with limited resources from the cidb.
There was a further delay with the construction of the permanent Construction Contact Centre (CCC) office in the North West
province, the last one to be officially opened. The North West CCC will continue to operate from the current temporary premises.
The official opening will now be in the financial year 2011/12. The cidb Register of Professional Service Providers (RoPSP) could
not be implemented as previously envisaged but the Board approved that this register be implemented as a pilot from the year
2011/12. The implementation plan will be finalised and rolled out during the year 2011/12.
The National Stakeholder Forum was successfully held in October 2010. It was supported by the Provincial Stakeholder Workshops
in six provinces by the end of March 2011. The remaining provinces were KwaZulu-Natal (KZN), Limpopo and the Free State. The
KZN workshop was re-scheduled to April 2011 due to other commitments by the provincial Department of Public Works. Also, the
cidb cohosted the international 2010 Construction Summit with the CIOB (Chartered Institute of Building) in May 2010.
The Best Practice Schemes have progressed further in that the piloting of the prioritised components has moved to the final
stages with participants. The pilot outcomes will inform how and when the next stages of implementation will be developed.
The review of the registration criteria was concluded and the proposed amendments to the regulations are ready for submission
to the Minister to publish for public comments and further processing. This will see many changes aimed at improving the
registration process being implemented. The initial phase of the registration software rewrite has been started in a project that will
create a new platform for the Registers Programme over the next three years.
In terms of corporate governance, the term of the 3rd Board of the cidb ended on 12 December 2010. The Board appointment
process was finalised in April 2011, with the first meeting scheduled for 30 May 2011. During the period from 13 December
2010 to 31 March 2011 the CEO acted as Accounting Authority, based on the PFMA Section 49(2)(b), a position that the Minister
concurred with during the period under review.
ACCOUNTING AUTHORITY’S REPORT for the year ended 31 March 2011
99A
NN
UA
L RE
PO
RT 2
01
0/1
1
FINANCIAL PERFORMANCE
The Register of Contractors’ previous growth momentum has levelled off in the current year. During the year under review
actual total revenue raised amounted to R45.1m. Of this revenue, R21.4m was realised from annual fees of new contractor
registrations, upgrades and renewals, the balance of R23.6m was generated from administration fees and other related income
(all classified as “the rest”). All compliant applications were processed and communication requesting outstanding information
was sent out for non-compliant applications.
Refunds of annual fees become due to contractors who qualify for grades lower than that applied for, and also for applications
that are not processed due to non-compliance by contractors. The cidb managed to process refunds amounting to R3.9m. In
order to action any refunds cidb prompts contractors by sending refund request forms for contractors to complete. This is done
in order to ensure that refunds are processed to correct and up to date banking accounts.
Total revenue budget was exceeded by R8.8m of which R6.8m relates to registers revenue and the balance is for interest and
other revenue.
The surplus for the year amounts to R10.0m and accumulated reserves total R52.6m. Of the accumulated surpluses, R1.2m will
be utilised for the future amortisation of the lease rentals on the office building and the balance will be used mainly to fund the
development of the EDMS and Registration systems, special projects such as communication, research & development, green
star rating, contractor development and fraud prevention.
Cash and cash equivalents balance for the year amount to R80.8m.
EVENTS SUBSEQUENT TO STATEMENT OF FINANCIAL POSITION DATE
No events took place between the year-end date (31 March 2011) and the date on which the financial statements were signed
that were sufficiently material to warrant disclosure to interested parties.
AUDIT COMMITTEE
The Audit Committee consists of external members and two Board members. The external members, namely Ms Shelley Thomas
(Chairperson), Victor Nondabula and Bryan Chaplog (resigned in August 2010 and replaced by Nala Mhlongo in January
2011), are supported by two Board members: Messrs Marten Govender and Lwandile Kona both their terms of office expired in
December 2010. A new rotation system was adopted during the current period whereby the current members of the committee
are replaced in a staggered approach over the next three years in order to ensure continuity within the committee. The charter
has been amended accordingly in this regard. The committee meets at least twice per annum as per its approved terms of
reference.
Appointed by the Board from 1 July 2007, the Committee met ten times in the current year, five of the meetings were special
meetings. The Audit Committee is chaired by an independent chartered accountant who is neither an executive nor a Board
member of the cidb. Committee meetings are attended by members of the Auditor-General’s office and the internal auditors.
INTERNAL AUDIT UNIT
The internal audit unit is outsourced to KPMG Chartered Accountants. Their function is mandated by the Audit Committee. The
internal audit unit measures and evaluates the effectiveness and application of policies, procedures, systems and processes
designed to fulfil the requirements of the risk management policy, and general compliance with governance principles,
regulation and the safeguarding of assets. In the year under review internal audit focused on the Construction Registers Service
(CRS), Finance, IT and Human Resources.
ACCOUNTING AUTHORITY’S REPORT for the year ended 31 March 2011
100
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
REMUNERATION COMMITTEE
The Remuneration Committee comprises three Board members appointed by the Board, namely Ms Nyeleti Charmaine
Makhubele (Chairperson), Messrs Nazir Alli and Cannon Noyana. This committee is tasked with the evaluation and review of human
resource strategy and operations. The committee’s terms of reference include considering and making recommendations to
the Board on matters relating to general staff policy, remuneration, bonuses, review of service contracts and other benefits. The
Remuneration Committee also evaluated and approved staff salaries during the current period and its term of office came to
an end in December 2010. The evaluation of performance bonuses for the period ending 31 March 2011 was conducted by
the Leadership and approved by the CEO as the standing Accounting Authority while the Board was still being appointed.
PROPERTY, PLANT AND EQUIPMENT
The cidb continues to implement the policy as prescribed by GRAP 17 relating to the assessing of useful life and residual value of
property, plant and equipment. Residual values and useful life are assessed at the end of each financial year. There has been
no change in the policy relating to the use of property, plant and equipment.
MATERIALITY FRAMEWORK
The cidb in line with the Public Finance Management Act has updated its materiality framework. The framework has been
presented to the Board for their approval.
RISK ASSESSMENT AND INTERNAL CONTROLS
The cidb endeavours to minimise risk by ensuring that appropriate systems, policies, personnel and controls are in place
throughout the organisation. A risk assessment exercise was performed during 2009/2010 financial year to identify areas of risk
and to map appropriate controls over the past financial year. The process was facilitated by the Risk and Governance manager
and was aimed to determine the material risks to which the cidb was exposed and to evaluate the strategy for managing these
risks. The cidb relied on the outsourced internal audit function and external auditors for independent appraisal of the adequacy
and effectiveness of the internal controls. The Audit and Risk Committees, with extensive input by the internal and external
auditors, played a role in assisting management to assess the adequacy and effectiveness of the accounting system, records
and internal control.
ENTITY DOMICILE AND LEGAL FORM
Block N & R, SABS Campus
No 2 Dr. Lategan Road
Groenkloof, 0027
Pretoria
Website address: www. cidb.org.za
Telephone: (012) 482 7200
Fax: 086 680 8569
Ronnie Khoza
CEO
Date: 28 July 2011
Bafana Ndendwa
Board Chairperson
Date: 28 July 2011
Business Address and Registered Office:
P.O Box 2107
Brooklyn Square
0075
ACCOUNTING AUTHORITY’S REPORT for the year ended 31 March 2011
101A
NN
UA
L RE
PO
RT 2
01
0/1
1
REPORT OF THE AUDIT COMMITTEEfor the year ended 31 March 2011
We are pleased to present our report for the financial year ended 31 March 2011.
AUDIT COMMITTEE MEMBERS AND ATTENDANCE
The audit committee consists of the members listed hereunder and meets at least two times per annum as per its approved
terms of reference. Special meetings of the Audit Committee may be convened as required. During the current year five
ordinary and five special meetings were held. The purpose the five special audit committee meetings was to evaluate and
appoint the Internal Auditors.
Name of Member Number of Meetings attended
Shelley Thomas (Chairperson) 10
Bryan Chaplog 7
Victor Nondabula 9
Marten Govender 8
Lwandile Kona 5
Nala Mhlongo 2
Mr Lwandile Kona and Mr Marten Govender’s term as committee members expired in December 2010 as a result of their term as
Board members expiring. In terms of the entity’s rotation policy, Mr Bryan Chaplog’s retired as a member of the audit committee.
Mr Nala Mhlongo was appointed to the Audit Committee in January 2011.
The External Auditors, the Chief Executive Officer, Internal Auditors as well as the Chief Financial Officer have a standing invitation
to Audit Committee meetings and have attended most of the meetings during the year under review.
The Audit Committee comprises five members, all of whom are from the private sector and two of whom are members of the
Board.
AUDIT COMMITTEE RESPONSIBILITY
The Audit Committee reports that it has complied with its responsibilities arising from Treasury Regulations 27.1.7 and 27.1.10(b)
and (c) issued in terms of the Public Finance Management Act 1 of 1999, as amended by Act 29 of 1999.
The Audit Committee also reports that it has adopted appropriate formal terms of reference as its audit committee charter, has
regulated its affairs in compliance with this charter and has discharged all its responsibilities as contained therein.
THE REPORT ON PERFORMANCE INFORMATION
Whilst the Board has additional responsibility as required by Section 55(2)(a) of the PFMA to ensure that the annual report and
audited financial statements fairly present its performance against predetermined objectives, it is the Audit Committee’s opinion
that performance information is appropriately reported.
THE EFFECTIVENESS OF INTERNAL CONTROL
During the year under review internal controls were predominantly effective. However internal control weaknesses were identified
in supply chain management. The opinion of the Auditor General was however an unqualified audit opinion.
There will be continued focus on internal control including assets, revenue and month end processes. There will also be increased
focus on performance information systems and controls.
102
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
REPORT OF THE AUDIT COMMITTEEfor the year ended 31 March 2011
The quality of management and monthly/quarterly reports submitted in terms of the PFMA
The Audit Committee has reviewed and commented on the content and quality of monthly and quarterly reports prepared and
issued by the Board during the year under review and provided input if any was required.
Internal Audit
The Board has outsourced the internal audit function to a private firm of chartered accountants and the areas covered were
in terms of a three year rolling plan. The Audit Committee has reviewed the adequacy of the coverage and, subject to certain
deviations, is satisfied therewith.
Evaluation of Financial Statements
The Audit Committee has:
• reviewed and discussed the audited annual financial statements to be included in the annual report with the Auditor-
General and the Accounting Officer;
• reviewed the Auditor-General’s management letter and management’s response thereto;
• reviewed the accounting policies and practices;
• reviewed the significant adjustments resulting from the audit.
The Audit Committee concurs and accepts the Auditor-General’s conclusions on the annual financial statements and is of the
opinion that the audited annual financial statements be accepted and read together with the report of the Auditor-General.
Shelley Thomas
Chairperson of the Audit Committee
103A
NN
UA
L RE
PO
RT 2
01
0/1
1
STATEMENT OF RESPONSIBILITY AND GOING CONCERN
STATEMENT OF RESPONSIBILITY FOR ANNUAL FINANCIAL STATEMENT FOR A GOING CONCERN
At the time of preparation of Annual Financial Statements for the period under review, the Board members believed that the
cidb will be a going concern in the foreseeable future. For this reason they continue to adopt a going concern basis in the
preparation of these Annual Financial Statements.
RESPONSIBILITY FOR ANNUAL FINANCIAL STATEMENTS
The members of the Board are responsible for the preparation of the Annual Financial Statements.
APPROVAL OF cidb ANNUAL FINANCIAL STATEMENTS
The Annual Financial Statements for the year ended 31 March 2011, set out on pages 108 to 139, have been approved by the
Board in terms of section 51(1) (f) of the Public Finance Management Act (PFMA), No 1 of 1999 on 31 May 2011. However the
financial statements were materially revised as a result of the audit findings and the final approved financial statements were
signed on 28 July 2011 on behalf of the Board by:
Ronnie Khoza
CEO
Date: 28 July 2011
Bafana Ndendwa
Board Chairperson
Date: 28 July 2011
104
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
REPORT OF THE AUDITOR-GENERALto Parliament on the Financial Statements of the Construction Industry Development Board for the year ended 31 March 2011
REPORT ON THE FINANCIAL STATEMENTS
INTRODUCTION
1. I have audited the accompanying financial statements of the Construction Industry Development Board, which comprise
the statement of financial position as at 31 March 2011, and the statement of financial performance, statement of changes
in net assets and statement of cash flows for the year then ended, a summary of significant accounting policies and other
explanatory information as set out on pages 108 to 139.
ACCOUNTING AUTHORITY’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
2. The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance
with the South African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and the requirements
of the Public Finance Management Act of South Africa, 1999 (Act No.1 of 1999) (PFMA), and for such internal control
as management determines necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
AUDITOR-GENERAL’S RESPONSIBILITY
3. As required by section 188 of the Constitution of the Republic of South Africa, 1996 (Act No. 108 of 1996) and, section 4
of the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA), my responsibility is to express an opinion on these
financial statements based on my audit.
4. I conducted my audit in accordance with International Standards on Auditing and General Notice 1111 of 2010 issued in
Government Gazette 33872 of 15 December 2010. Those standards require that I comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
5. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
6. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
OPINION
7. In my opinion, the financial statements present fairly, in all material respects, the financial position of the Construction
Industry Development Board as at 31 March 2011, and its financial performance and cash flows for the year then ended in
accordance with SA Standards of GRAP and the requirements of the PFMA.
EMPHASIS OF MATTERS 8. I draw attention to the matters below. My opinion is not modified in respect of these matters:
105A
NN
UA
L RE
PO
RT 2
01
0/1
1
REPORT OF THE AUDITOR-GENERALto Parliament on the Financial Statements of the Construction Industry Development Board for the year ended 31 March 2011
FRUITLESS AND WASTEFUL EXPENDITURE
9. As disclosed in note 16.1 to the annual financial statements, fruitless and wasteful expenditure to the amount of R262 152
was incurred.
IRREGULAR EXPENDITURE
10. As disclosed in note 16.2 to the annual financial statements, irregular expenditure to the amount of R9 265 765 was incurred
in the current year as the correct procurement processes had not been followed.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
11. In accordance with the PAA and in terms of General Notice 1111 of 2010, issued in Government Gazette 33872 of 15 December 2010, I include below my findings on the annual performance report as set out on pages 20 to 39 and
material non-compliance with laws and regulations applicable to the public entity.
PREDETERMINED OBJECTIVES
USEFULNESS OF INFORMATION
12. The reported performance information was deficient in respect of the following criteria:
• Consistency: The reported objectives, indicators and targets are not consistent with the approved strategic plan.
• Measurability: The indicators are not well defined and verifiable, and targets are not specific and measurable.
13. The following audit findings relate to the above criteria:
• Reported performance against predetermined objectives is not consistent with the approved strategic plan.
• For the selected programmes, 72% of the planned and reported targets were not specific in clearly identifying the nature
and the required level of performance.
• For the selected programmes, 44% of the planned and reported targets were not measurable in identifying the required
performance.
• For the selected programmes, 53% of the planned and reported indicators were not clear, as unambiguous data definitions
were not available to allow for data to be collected consistently.
• For the selected programmes valid performance management processes and systems that produce actual performance
against the planned indicators do not exist for 36% of the indicators.
RELIABILITY OF INFORMATION
14. The reported performance information was deficient in respect of the following criteria:
• Validity: The reported performance did not occur and does not pertain to the entity.
• Accuracy: The amounts, numbers and other data relating to reported actual performance have not been recorded and
reported appropriately.
106
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
REPORT OF THE AUDITOR-GENERALto Parliament on the Financial Statements of the Construction Industry Development Board for the year ended 31 March 2011
15. The following audit findings relate to the above criteria:
• For the selected programmes the accuracy and validity of 25% of the reported targets could not be established as sufficient
appropriate audit evidence or relevant source documentation could not be provided.
COMPLIANCE WITH LAWS AND REGULATIONS
ANNUAL FINANCIAL STATEMENTS
16. The accounting authority submitted financial statements for auditing that were not prepared in all material aspects in
accordance with generally recognised accounting practice as required by section 55(1) (b) of the PFMA. The material
misstatements identified by the AGSA with regard to the disclosure of irregular expenditure, operating lease commitments
and the reconciliation of budget to surplus note was subsequently corrected.
PROCUREMENT AND CONTRACT MANAGEMENT
17. Goods and services with a transaction value of between R10 000 and R500 000 were procured without inviting at least three
written price quotations from prospective suppliers, as per the requirement of Practice Note 8 of 2007-08 issued in terms of
section 76(4)(c) of the PFMA.
18. Goods and services with a transaction value of more than R500 000 were procured without inviting competitive bids from
prospective suppliers, as per the requirement of Practice Note 8 of 2007-08 issued in terms of section 76(4)(c) of the PFMA.
19. Goods and services with a transaction value of more than R1 000 000 were procured without inviting competitive bids from
prospective suppliers, as per the requirement of Practice Note 8 of 2007-08 issued in terms of section 76(4)(c) of the PFMA.
No letter was sent to the relevant Treasury or to the Auditor-General, within 10 days, as per the requirements of Practice Note
6 of 2007-08 issued in term of section 76(4)(c) of the PFMA.
EXPENDITURE MANAGEMENT
20. The accounting authority did not take effective and appropriate steps to prevent irregular and fruitless and wasteful
expenditure as per the requirements of section 51 (1 )(b) of the PFMA.
INTERNAL CONTROL
21. ln accordance with the PAA and in terms of General notice 1111 of 2010, issued in Government Gazette 33872 of 15 December 2010, I considered internal control relevant to my audit, but not for the purpose of expressing an opinion on
the effectiveness of internal control. The matters reported below are limited to the significant deficiencies that resulted in
the basis for my opinion, the findings on the annual performance report and the findings on compliance with laws and
regulations included in this report.
LEADERSHIP
22. The accounting authority did not exercise effective oversight in ensuring that the planning and monitoring of performance
information were aligned to National Treasury’s Framework for Managing Programme Performance. Furthermore the cidb did
not have sufficient monitoring controls to ensure compliance with Supply Chain Management legislation.
107A
NN
UA
L RE
PO
RT 2
01
0/1
1
REPORT OF THE AUDITOR-GENERALto Parliament on the Financial Statements of the Construction Industry Development Board for the year ended 31 March 2011
FINANCIAL AND PERFORMANCE MANAGEMENT
23. The financial statements and other information to be included in the annual report are not adequately reviewed for
completeness and accuracy prior to its submission for audit purposes.
Pretoria
31 July 2011
108
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
ANNUAL FINANCIAL STATEMENTSas at 31 March 2011
CONTENTS PAGE
Statement of financial position 109
Statement of financial performance 110
Statement of changes in net assets 111
Cash flow statement 112
Notes to the financial statements 113 -139
The Annual Financial Statements were approved by the Accounting Authority and the Chief Executive Officer and are signed
below:
Ronnie Khoza
CEO
Date: 28 July 2011
Bafana Ndendwa
Board Chai rperson
Date: 28 July 2011
109A
NN
UA
L RE
PO
RT 2
01
0/1
1
STATEMENT OF FINANCIAL POSITIONas at 31 March 2011
2011 2010
NOTES R R
ASSETS
CURRENT ASSETS 83 686 629 66 740 755
Cash and cash equivalents 2 80 811 763 62 313 159
Receivables : exchange transactions 3 1 682 109 1 118 822
Operating lease asset 4 1 192 757 3 308 774
NON-CURRENT ASSETS 14 764 827 15 827 805
Property, plant and equipment 5 12 617 297 13 083 841
Intangible assets 6 2 147 530 1 551 207
Operating lease asset 4 - 1 192 757
TOTAL ASSETS 98 451 456 82 568 560
LIABILITIES
CURRENT LIABILITIES 45 744 200 39 575 264
Payables: exchange transactions 8 19 085 819 15 261 849
Income received in advance 9 26 336 614 24 030 828
Finance lease liability 10 321 768 282 587
NON-CURRENT LIABILITIES 90 134 411 902
Finance lease liability 10 90 134 411 902
TOTAL LIABILITIES 45 834 334 39 987 166
NET ASSETS 52 617 122 42 581 394
REPRESENTED BY:
Accumulated Surpluses 11 52 617 122 42 581 394
110
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
STATEMENT OF FINANCIAL PERFORMANCEfor the year ended 31 March 2011
2011 2010
NOTES R R
REVENUE
Non exchange transactions
Grants received 12, 30.1 63 665 000 59 269 000
Exchange transactions 50 046 576 50 846 841
Registers revenue 13 45 073 460 47 059 809
Finance income 14 4 131 542 3 733 289
Other income 15 841 574 53 743
TOTAL REVENUE 113 711 576 110 115 841
EXPENDITURE
Administrative expenses 17 (9 672 160) (7 738 124)
Staff costs 18 (52 867 578) (44 285 120)
Marketing costs 19 (2 898 103) (2 432 705)
Audit fees 20 (1 469 479) (1 476 977)
Other operating expenses 21 (36 694 166) (32 997 386)
Finance costs 22 (74 360) (108 803)
TOTAL EXPENDITURE (103 675 846) (89 039 115)
SURPLUS FOR THE YEAR 10 035 730 21 076 726
111A
NN
UA
L RE
PO
RT 2
01
0/1
1
STATEMENT OF CHANGES IN NET ASSETSfor the year ended 31 March 2011
NOTES R
Balance at 31 March 2009 21 519 880
Prior year adjustment 23 (15 214)
Balance at 31 March 2009 as restated 21 504 666
Surplus for the period 21 076 726
Surplus for the period as previously stated 21 026 367
Prior year adjustment 23 50 359
Balance at 31 March 2010 as restated 42 581 392
Surplus for the period 10 035 730
Balance at 31 March 2011 52 617 122
112
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
2011 2010
NOTES R R
CASH FLOWS FROM OPERATING ACTIVITIES
Operating activities
Receipts 24 112 324 941 107 067 752
Registers income 47 818 367 47 745 009
Grants received 63 665 000 59 269 000
Other receipts 841 574 53 743
Payments 25 (94 861 421) (82 000 955)
Compensation to employees 18 (52 867 578) (44 285 120)
Payments to suppliers and other (41 993 843) (37 715 834)
Cash generated from operations 26 17 463 520 25 066 797
Finance income 15 4 131 542 3 733 289
Finance costs 22 (74 360) (108 803)
Net cash inflow from operating activities 21 520 703 28 691 283
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment 5,1 (1 736 641) (1 596 562)
Purchase of intangible assets 6,1 (1 002 872) (331 326)
Net cash outflow from investing activities (2 739 513) (1 927 888)
CASH FLOWS FROM FINANCING ACTIVITIES
Finance lease repaid (282 586) (248 144)
Net increase in cash and cash equivalents 18 498 604 26 515 25
Cash and cash equivalents at beginning of the year 62 313 159 35 797 908
Cash and cash equivalents at end of the year 2 80 811 763 62 313 159
CASH FLOW STATEMENTSfor the year ended 31 March 2011
113A
NN
UA
L RE
PO
RT 2
01
0/1
1
1. ACCOUNTING POLICIES 1.1. BASIS OF PREPARATION
The Annual Financial Statements have been prepared in accordance with Generally Recognised Accounting Practice (GRAP),
issued by the Accounting Standards Board in accordance with Section 89 of the Public Finance Management Act (Act No. 1 of
1999).
The Annual Financial Statements have been prepared on the historical cost basis unless otherwise indicated.
The principle accounting policies adopted in the preparation of these financial statements are set out below.
Assets, liabilities, revenues and expenses have not been offset except where offsetting is required or permitted by a Standard of
GRAP.
The principle accounting policies are applied consistently with those used to present the previous year’s financial statements,
unless explicitly stated. The details of any changes in principle accounting policies are explained in the relevant policy.
The principle accounting policies for material transactions, events or conditions not covered by the GRAP reporting framework,
as detailed above, have been developed in accordance with paragraphs 7, 11 and 12 of GRAP 3 and the hierarchy approved
in Directive 5 issued by the Accounting Standards Board.
The following GRAP Standards have been issued but are not yet effective and have not been early adopted by the Construction
Industry Development Board:
GRAP 21: Impairment of non-cash-generating assets (effective date 1 April 2012)
GRAP 23: Revenue from non-exchange transactions (taxes and transfers) (effective date 1 April 2012)
GRAP 24: Presentation of Budget Information in Financial Statements (effective date 1 April 2012)
GRAP 25: Employee Benefits (not yet announced)
GRAP 26: Impairment of cash-generating Assets (effective date 1 April 2012)
GRAP 103: Heritage Assets (effective date 1 April 2012)
GRAP 104: Financial Instruments (not yet announced)
IGRAP 2: Changes in Existing Decommissioning, Restoration and Similar Liabilities (effective date 1 April 2011)
IGRAP 3: Determining whether an Arrangement contains a lease (effective date 1 April 2011)
IGRAP 4: Rights to interests arising from decommissioning, restoration and environmental rehabilitation funds (effective date
1 April 2011)
IGRAP 7: The limit on a defined benefit asset, minimum funding requirements and their interaction (not yet announced)
IGRAP 10: Assets received from customers (effective date 1 April 2011)
IGRAP 13: Operating leases - Incentives (effective date 1 April 2011)
IGRAP 15: Revenue - Barter transactions involving advertising services (effective date 1 April 2011)
GRAP 18: Segment Reporting (not yet announced)
IGRAP 5: Applying the restatement approach under the standard of GRAP on financial reporting in hyperinflationary economies
(effective date 1 April 2011)
IGRAP 6: Loyalty Programmes (effective date 1 April 2011)
IGRAP 8: Agreements for the construction of assets from exchange transactions (effective date 1 April 2011)
GRAP 9: Distributions of non-cash assets to owners (effective date 1 April 2011)
GRAP 14: Evaluating the substance of transactions involving the legal form of a lease (effective date 1 April 2011)
ACCOUNTING POLICIES
114
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
1.2. PRESENTATION CURRENCY The financial statements are presented in South African Rand, which is the functional currency of the entity, and are rounded off
to the nearest Rand.
1.3. GOING CONCERN ASSUMPTION These Annual Financial Statements have been prepared on the assumption that the entity will continue to operate as a going
concern for at least the next 12 months.
1.4. COMPARATIVE INFORMATION When the presentation or classification of items in the Annual Financial Statements is amended, prior period comparative
amounts are restated. The nature and reason for the reclassification is disclosed. Where accounting errors have been identified
in the current year, the correction is made retrospectively as far as is practicable, and the prior year comparatives are restated
accordingly. Where there has been a change in accounting policy in the current year, the adjustment is made retrospectively
as far as is practicable, and the prior year comparatives are restated accordingly.
1.5. PROPERTY, PLANT AND EQUIPMENT
An asset of property, plant and equipment is recorded on receipt of the item at cost. Cost of an asset is defined as the total
cost of acquisition.
An asset is recognised when it is probable that there will be an inflow of future economic benefits associated with it and its cost
or fair value can be measured reliably.
All property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Such
cost includes the cost of replacing a portion of equipment only when it is probable that future economic benefits associated with
the item will flow to the entity and the cost of the item can be measured reliably. Subsequent costs and additions are included
in the asset’s carrying amount or are recognised as a separate asset, as appropriate. All other repairs and maintenance are
charged to the statement of financial performance during the financial period in which they are incurred. All property and
equipment are depreciated. Depreciation of property, plant and equipment begins when it is available for use, ie when it is in
the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation
ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognised. Property,
plant and equipment are depreciated on the straight-line basis to write of the cost of each asset to its residual value over its
estimated useful life.
The depreciation rates applicable to each category of property, plant and equipment are as follows:
Computer equipment 8 years to 12 years
Office equipment 8 years to 12 years
Furniture and fittings 10 years to 14 years
The residual values and the useful lives of property, plant and equipment are reviewed at each balance sheet date and, if
expectations differ from the previous estimates, the changes are accounted for as a change in an accounting estimate in
accordance with standard of GRAP.
An item of property, plant and equipment is scrapped upon disposal or when no future economic benefits and service potential
are expected from its use or disposal. Any surplus or deficit arising on scrapping of the assets (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is included in the statement of financial performance
in the year the asset is derecognised.
ACCOUNTING POLICIES(continued)
115A
NN
UA
L RE
PO
RT 2
01
0/1
1
1.5. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Surpluses and deficits on disposal of property, plant and equipment are determined by reference to their carrying amount and
are taken into account in determining operating surplus.
1.5.1 Impairment of Property, Plant and Equipment
At each financial position date or more frequently where events or changes in circumstances dictate; indicators of impairment
of property and equipment are assessed. If there is an indication of impairment, a review is performed which includes a
comparison of the carrying amount of the asset with its recoverable amount which is the higher of the asset’s or the cash-
generating unit’s fair value less costs to sell, and its value in use. Fair value less costs to sell is calculated by reference to the
amount at which the asset could be disposed of in a binding sale agreement in an arm’s length transaction evidenced by an
active market or recent transactions for similar assets. Value in use is calculated by discounting the expected future cash flows
obtained as a result of the asset’s continued use, including those resulting from its ultimate disposal, at a market based discount
rate on a pre-tax basis.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment had been recognised.
The carrying values of property, plant and equipment are written down by the amount of any impairment and this loss is
recognised in the statement of financial performance in the period in which it occurs.
Repairs and maintenance are charged to the statement of financial performance during the financial period in which they are
incurred.
1.6. INTANGIBLE ASSETS
An intangible asset is recorded on receipt of the item at cost. Cost of an asset is defined as the total cost of acquisition .
An intangible asset is recognised when it is probable that there will be an inflow of future economic benefits or service potential
associated with it and its cost or fair value can be measured reliably.
Costs associated with developing or maintaining computer software programmes are recognised as an expense when incurred
in the statement of financial performance. Costs that are directly associated with the production of identifiable and unique
software products controlled by the Construction Industry Development Board, and that will probably generate economic
benefits and service potential exceeding costs beyond one year, are recognised as intangible assets.
The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at each reporting
date and any changes are recognised as a change in accounting estimate in the Statement of Financial Performance.
Amortisation is charged so as to write off the cost or valuation of intangible assets over their estimated useful lives using the
straight line method. Amortisation commences when the asset is available for use, ie when it is in the location and condition
necessary for it to be capable of operating in the manner intended by management. Amortisation ceases at the earlier of the
date that the asset is classified as held for sale and the date that the asset is derecognised. The annual amortisation rates are
based on the following estimated average asset lives:
Computer software 5 years to 10 years
ACCOUNTING POLICIES(continued)
116
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
1.6. INTANGIBLE ASSETS (CONTINUED)
The entity tests intangible assets with finite useful lives for impairment where there is an indication that an asset may be impaired.
An assessment of whether there is an indication of possible impairment is done at each reporting date. Where the carrying
amount of an item of an intangible asset is greater than the estimated recoverable amount (or recoverable service amount),
it is written down immediately to its recoverable amount (or recoverable service amount) and an impairment loss is charged to
the Statement of Financial Performance.
A previously recognised impairment loss is reversed when there is an indication that it may no longer exist or may have decreased,
however not to an amount higher than the carrying amount that would have been determined (net of amortisation) had no
impairment been recognised in prior years.
1.7. TRADE AND OTHER RECEIVABLES
Trade and other receivables are categorised as financial assets: loans and receivables and are initially recognised at fair value
and subsequently carried at amortised cost. Amortised cost refers to the initial carrying amount, plus interest, less repayments
and impairments. An estimate is made for doubtful receivables based on a review of all outstanding amounts at year-end.
Impairments are determined by discounting expected future cash flows to their present value. Amounts that are receivable
within 12 months from the reporting date are classified as current.
An impairment of trade receivables is accounted for by reducing the carrying amount of trade receivables through the use of
an allowance account, and the amount of the loss is recognised in the Statement of Financial Performance within operating
expenses. When a trade receivable is uncollectible, it is written off in the Statement of Financial Performance . Subsequent
recoveries of amounts previously written off are recognised as income in the Statement of Financial Performance.
1.8. TRADE PAYABLES
Financial liabilities consist of trade payables. They are categorised as financial liabilities held at amortised cost, are initially
recognised at fair value and subsequently measured at amortised cost which is the initial carrying amount, less repayments, plus
interest.
1.9. CASH AND CASH EQUIVALENTS
Cash includes cash on hand (including petty cash) and cash with banks (including call deposits). Cash equivalents are short-
term highly liquid investments, readily convertible into known amounts of cash, which are held with registered banking institutions
with maturities of three months or less and are subject to an insignificant risk of change in value. For the purposes of the cash
flow statement, cash and cash equivalents comprise cash on hand, deposits held on call with banks. The entity categorises cash
and cash equivalents as financial assets: loans and receivables.
1.10. IRREGULAR, FRUITLESS AND WASTEFUL EXPENDITURE
Irregular expenditure means expenditure incurred in contravention of, or not in accordance with, a requirement of any applicable
legislation, including the PFMA.
Fruitless and wasteful expenditure means expenditure that was made in vain and would have been avoided had reasonable
care been exercised.
All irregular and fruitless and wasteful expenditure is charged against the respective class of expenditure in the period in which
they are incurred and disclosed in a note in the period that it is identified.
ACCOUNTING POLICIES(continued)
117A
NN
UA
L RE
PO
RT 2
01
0/1
1
1.11. REVENUE RECOGNITION
1.11.1 Revenue from non-exchange transactions
Revenue from non-exchange transactions refers to transactions where Construction Industry Development Board received
revenue from another entity without directly giving approximately equal value in exchange. Revenue from non-exchange
transactions is generally recognised to the extent that the related receipt or receivable qualifies for recognition as an asset and
there is no liability to repay the amount.
Revenue takes the form of grants from the Department of Public Works and is received on a quarterly basis and raised as revenue
on receipt.
1.11.2 Revenue from exchange transactions
Revenue from exchange transactions refers to revenue that accrued to the Construction Industry Development Board directly
in return for services rendered, the fair value of which approximates the consideration received or receivable. Revenue from
exchange transactions is measured at the fair value of the consideration received or receivable and is recognised when it is
probable that future economic benefits or service potential will flow to the Construction Industry Development Board and these
benefits can be measured reliably.
The Construction Industry Development Board receives income by way of registration of contractors in accordance with
the Construction Industry Development Board Act, Act 38 of 2000. Due to the nature of the registration of contractors, the
Construction Industry Development Board only recognises this income once a contractor has been assessed with the exception
of administration fees. Revenue from administration fees is recognised once an application has been received by Construction
Industry Development Board and is based on the grade applied for.
1.12. FINANCE INCOME
Interest income is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable.
1.13 LEASED ASSETS
Finance leases refers to a contract that transfers the substantial risks, rewards, rights and obligations incident to ownership to
the lessee and is recorded as a purchase of equipment by means of long-term borrowing. All other leases are classified as
operating leases.
1.13.1 Operating Leases – expense
Lease payments under an operating lease are recognised as an expense on a straight-line basis over the term of the relevant
lease.
1.14. FINANCIAL INSTRUMENTS
1.14.1 Financial Assets
Financial assets are initially measured at a fair value plus transaction cost. However, transaction costs in respect of financial
assets classified as at fair value are expensed in the statement of financial performance.
ACCOUNTING POLICIES(continued)
118
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
1.14. FINANCIAL INSTRUMENTS (CONTINUED)
1.14.1 Financial Assets (continued)
- Cash and cash equivalents
Cash and cash equivalents are subsequently measured at armortised cost.
- Interest received
Interest is recognised on the time apportion basis using the effective rate applicable over the period of investment.
1.14.2 Financial Liabilities
Financial liabilities are initially measured as at fair value plus transaction costs. However, transaction costs in respect of financial
liabilities as at fair value through profit or loss are expensed. Recognised on the statement of financial position include trade and
other payables.
Financial liabilities that are not designated on initial recognition as financial liabilities at fair value through profit or loss are
measured at amortised cost.
Financial liabilities that are designated on initial recognition as financial liabilities at fair value through profit or loss are measured
at fair value, with changes in fair value being recognised in profit or loss.
1.15. ACCRUAL FOR LEAVE PAY
Employee entitlements to annual leave are recognised when they accrue to employees. An accrual, based on total cost to
company, is raised for the estimated liabilities as a result of services rendered by employees.
1.16. EMPLOYEE BENEFITS
Employee benefits comprise of leave entitlements, and performance bonuses.
There are no post-retirement benefits currently with the Construction Industry Development Board.
1.17. PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES Provisions are recognised when Construction Industry Development Board has a present obligation as a result of past event,
when it is probable that an outflow of resources embodying economic benefits or service potential will be required to settling the
obligation when a reliable estimate can be made of the obligation
The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation at the
reporting date.
Where the effect of time value of money is material, the amount of a provision is the present value of the expenditures expected
to be required to settle the obligation.
The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to
the liability.
ACCOUNTING POLICIES(continued)
119A
NN
UA
L RE
PO
RT 2
01
0/1
1
1.17. PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES (CONTINUED)
Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the
reimbursement is recognised when, and only when, it is virtually certain that reimbursement will be received if Construction
Industry Development Board settles the obligation. The reimbursement is treated as a separate asset. The amount recognised
for the reimbursement does not exceed the amount of the provision.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no
longer probable that an outflow of resources embodying economic benefits or services potential will be required, to settle the
obligation.
Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This
increase is recognised as an interest expense.
Provision is used only for expenditures for which the provision was originally recognised.
Provisions are not recognised for future operating losses.
If the Construction Industry Development Board has a contract that is onerous, the present obligation (net of recoveries) under
the contract is recognised and measured as a provision.
Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed unless the possibility of an inflow/
outflow of resources embodying economic benefits is remote.
1.18. RELATED PARTIES
Construction Industry Development Board operates in an economic sector currently dominated by entities directly or indirectly
owned by the South African Government. As a consequence of the constitutional independence of the three spheres of
government in South Africa, only entities within the national sphere of government are considered to be related parties.
Key management is defined as being individuals with the authority and responsibility for planning, directing and controlling the
activities of Construction Industry Development Board, including those charged with the governance of the entity in accordance
with legislation in instances where they are required to perform such functions. Construction Industry Development Board regards
all individuals at senior management per the definition of the financial reporting standard.
Close members of the family of key management personnel are considered to be those family members who may be expected
to influence, or be influenced by, management in their dealings with Construction Industry Development Board.
Only transactions with related parties not at arm’s length or not in the ordinary course of business are disclosed.
1.19. CASH FLOW STATEMENT
The cash flow statement is prepared on the direct method.
1.20. SIGNIFICANT JUDGMENTS AND ESTIMATES
The preparation of Annual Financial Statements requires the use of estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingents assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expense during the reporting periods. Although these estimates are based on management’s best
knowledge of current events and actions that Construction Industry Development Board may undertake in the future, actual
results ultimately may differ from those estimates.
ACCOUNTING POLICIES(continued)
120
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
1.20. SIGNIFICANT JUDGMENTS AND ESTIMATES (CONTINUED)
The presentation of the results of operations, financial position and cash flows in the financial statements of the Construction
Industry Development Board is dependant upon and sensitive to the accounting policies, assumptions and estimates that are
used as a basis for the preparation of these financial statements. Management has made certain judgments in the process of
applying the accounting policies. These, together with the key assumptions concerning the future, and other key resources of
the estimation uncertainty at the financial position date, are discussed below:
- Property,Plant and Equipment
The useful lives of assets are based on management’s estimation. Management considers the impact of changes in technology,
customer service requirements, availability of funding to determine the optimum useful life expectation of each individual item
of property and equipment. The estimation of residual values of assets is also based on management’s judgment whether the
assets will be sold and what their condition will be at that time.
ACCOUNTING POLICIES(continued)
121A
NN
UA
L RE
PO
RT 2
01
0/1
1
2011 2010
R R
2. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand
and balances with bank including investments in call accounts.
Cash and cash equivalents included in the cash flow statement
comprise the following balance sheet amounts:
Bank 1 641 770 991 212
Cash on hand 14 343 8 960
Investments 79 155 650 61 312 987
80 811 763 62 313 159
3. RECEIVABLES: EXCHANGE TRANSACTIONS
Trade receivables 506 803 1 328 187
Add : Reversal of bad debts provision 456 491 -
Less : Provision for bad debts (216 013) (456 491)
747 281 871 696
Prepayments 934 828 247 126
1 682 109 1 118 822
4. OPERATING LEASE ASSET
Lease improvements: Current 1 192 757 3 308 774
: Non-Current - 1 192 757
1 192 757 4 501 531
Operating lease asset are in respect of a lease agreement entered into with SABS, for the occupation of office buildings, whereby
cidb undertook to renovate the office buildings and in return future lease rentals will be offset against the total cost of renovations
over 3,5 years. The lease period is five years. Refer to Note 27.2.
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
122
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
5. PROPERTY, PLANT AND EQUIPMENT
Year ended 31 March 2011
2011 2010
Cost Accumulated Carrying Cost Accumulated Carrying
Depreciation Value Depreciation Value
R R R R R R
Computer equipment 8 970 884 (3 501 000) 5 469 884 8 016 221 (2 691 153) 5 325 068
Furniture and fittings 5 126 007 (1 882 531) 3 243 476 4 896 022 (1 485 862) 3 410 160
Office equipment 5 622 241 (2 019 115) 3 603 126 5 305 811 (1 519 473) 3 786 338
Office equipment leased 1 307 320 (1 006 509) 300 811 1 307 320 (745 045) 562 275
21 026 452 (8 409 155) 12 617 297 19 525 374 (6 441 533) 13 083 841
5.1 CARRYING VALUES OF PROPERTY, PLANT AND EQUIPMENT CAN BE RECONCILED AS FOLLOWS:
2011
Opening Additions Write-offs Depreciation Carrying
balance amount
R R R R R
Computer equipment 5 325 068 1 083 103 (65 158) (873 129) 5 469 884
Furniture and fittings 3 410 160 240 888 (4 773) (402 799) 3 243 476
Office equipment 3 786 338 412 650 (37 418) (558 444) 3 603 126
Office equipment leased 562 275 - - (261 464) 300 811
13 083 841 1 736 641 (107 349) (2 095 836) 12 617 297
2010
Opening Additions Write-offs Depreciation Carrying
balance amount
R R R R R
Computer equipment 6 308 818 391 962 (502 038) (873 674) 5 325 068
Furniture and fittings 3 299 015 602 920 (96 272) (395 503) 3 410 160
Office equipment 3 910 382 601 680 (188 764) (536 960) 3 786 338
Office equipment leased 823 739 - - (261 464) 562 275
14 341 954 1 596 562 (787 074) (2 067 601) 13 083 841
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
123A
NN
UA
L RE
PO
RT 2
01
0/1
1
6. INTANGIBLE ASSETS Year ended 31 March 2011
2011 2010
Cost Accumulated Carrying Cost Accumulated Carrying
Depreciation Value Depreciation Value
R R R R R R
Computer software 3 719 951 (1 572 421) 2 147 530 2 717 079 (1 165 872) 1 551 207
3 719 951 (1 572 421) 2 147 530 2 717 079 (1 165 872) 1 551 207
6.1 CARRYING VALUES OF PROPERTY, PLANT AND EQUIPMENT CAN BE RECONCILED AS FOLLOWS:
2011
Opening Additions Write-offs Depreciation Carrying
balance amount
R R R R R
Computer software 1 551 207 1 002 872 - (406 549) 2 147 530
1 551 207 1 002 872 - (406 549) 2 147 530
2010
Opening Additions Write-offs Depreciation Carrying
balance amount
R R R R R
Computer software 1 677 656 331 326 (38 536) (419 239) 1 551 207
1 677 656 331 326 (38 536) (419 239) 1 551 207
7. CHANGE IN ACCOUNTING ESTIMATE
During the current financial period, management revised the estimated useful lives of computer equipment and office equipment
to twelve years, furniture and fittings to fourteen years and computer software to ten years. In prior periods, management had
estimated the useful lives of computer equipment and office equipment to be eight years, computer software to be five years
and that of furniture and fittings to be ten years. The revision of these assets’ useful lives has been treated as a change in estimate
in line with GRAP 3. This has resulted in adjustments to the current depreciation of R 76,055.65.
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
124
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
2011 2010
R R
8. PAYABLES: EXCHANGE TRANSACTIONS
Trade and other payables 13 569 853 10 060 535
- Trade payables 7 141 058 4 489 150
- Accruals 5 097 995 4 362 577
- Accrual for leave pay 1 330 800 1 208 808
Unallocated deposits 5 515 966 5 201 314
19 085 819 15 261 849
9. INCOME RECEIVED IN ADVANCE
Contractors not assessed (work in progress) 26 336 614 24 030 828
26 336 614 24 030 828
10. FINANCE LEASE OBLIGATION
Minimun lease payments due
- within one year 356 947 356 947
- in second to fifth year inclusive 92 408 449 355
449 355 806 302
Less: Future finance charges 37 453 111 813
Present value of minimum lease payments 411 902 694 489
Non-current liabilities 90 134 411 902
Current liabilities 321 768 282 587
411 902 694 489
cidb leases the photocopying machines on the finance lease, the average lease term is five years and the average effective
borrowing rate of 13%. The organisation’s obligations under finance leases are secured by the lessor’s charge over the leased
assets. Refer to Note 5
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
125A
NN
UA
L RE
PO
RT 2
01
0/1
1
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
11. CONTINGENT LIABILITIES
Sections 53(3) of the PFMA states that a public entity may not accumulate surpluses unless prior written approval of the National
Treasury has been obtained. The approval of accumulated surpluses for the period ending 31 March 2010, to be rolled over to
the following financial year was obtained after comparative year end. At the time of reporting the approval for the period ending
31 March 2011 were not yet obtained.
2011 2010
R R
Liable to:
National Treasury 52 617 122 42 581 394
12. TRANSFERS AND SUBSIDIES
Grants received 63 665 000 59 269 000
13.REGISTERS REVENUE
Annual fees 21 424 664 24 681 523
Assessment fees 23 072 141 21 966 783
Contractor fines 576 655 411 503
45 073 460 47 059 809
14. FINANCE INCOME
Interest on
- cash and bank deposits 4 131 542 3 733 289
4 131 542 3 733 289
15. OTHER INCOME
Proceeds on insurance claims 40 228 52 093
Sponsorship received 341 500 -
Reversal of provision for bad debts 456 491 -
Sundry income 3 355 1 650
841 574 53 743
126
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
2011 2010
R R
16. IRREGULAR, FRUITLESS AND WASTEFUL EXPENDITURE
Components
16.1 FRUITLESS AND WASTEFUL EXPENDITURE Bad debts written off * 45 580 70 976
Cell phone airtime paid for stolen cell phone 13 913 -
Storage fees paid in excess of the agreed limit 202 659 -
262 152 70 976
*Erroneous refunds relating to periods prior to September 2007. Subsequent to September 2007 controls were put in place to
prevent these errors from occurring.
16.2 IRREGULAR EXPENDITURE
16.2.1. Reconciliation of irregular expenditure
Opening balance 1 717 210 621 834
Add: Irregular expenditure - current year 9 265 765 1 095 376
10 982 975 1 717 210
Less: Amount condoned (10 982 975) -
Amount not condoned - 1 717 210
16.2.2. Details of irregular expenditure not recoverable
INCIDENT DISCIPLINARY STEPS TAKEN/CRIMINAL PROCEEDINGS R R
Five year lease not
initially approved by the
National
Treasury
No disciplinary action required against any staff member. This
was subsequently confirmed by National Treasury that, there
was no impropriety in the transaction which requires action to
be taken against anybody. The condonation was granted by
National Treasury.
1 335 728 978 781
Transactions where
notice was not given to
Treasury and
Auditor General
Written warning has been issued against the responsible staff
member. No losses were incurred by the cidb as a result of this
expenditure.
2 266 283 -
Extensions of
contracts
No disciplinary action required against any staff member. These
contracts relate to old tenders, before the establishment of the
SCM unit. The responsible staff members have left the employ-
ment of the cidb. Extensions were in line with business needs
while tenders were being processed. New tenders awarded in
May 2011
5 286 944 738 429
8 888 955 1 717 210
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
127A
NN
UA
L RE
PO
RT 2
01
0/1
1
16.2.3. Details of irregular expenditures under investigations
INCIDENT DISCIPLINARY STEPS TAKEN/CRIMINAL PROCEEDINGS R R
Appointments made on the basis
of the cidb’s framework agreement
structure.
Matter still under investigation 1 297 571 -
Transactions procured without
obtaining three quotations
Matter still under investigation 796 449 -
2 094 020 -
2011 2010
NOTES R R
17. ADMINISTRATIVE EXPENSES
Fees for services
- Board members 258 542 322 112
- Audit committee fees 599 053 462 825
Legal fees 182 472 29 072
Provision for bad debts 216 012 456 491
Bad debts written off 332 741 138 489
Entertainment 2 500 588
Stationery and printing 3 270 251 2 535 978
Venues and facilities 2 072 381 1 251 886
Bank charges 351 048 364 811
Training and staff development 2 387 160 2 175 871
9 672 160 7 738 124
18. STAFF COSTS
Basic salaries - Executives 33 5 866 230 5 379 105
- Other 29 42 716 081 34 461 782
Performance award - Executives 33 393 433 413 394
- Other 29 2 812 428 1 957 030
Temporary staff 859 616 1 710 693
Leave payment 29 219 790 363 116
52 867 578 44 285 120
19. MARKETING COSTS
Advertising 2 898 103 2 432 705
2 898 103 2 432 705
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
128
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
2011 2010
R R
20. AUDIT FEES
External audit fees 714 147 757 489
Internal audit fees 755 332 719 488
1 469 479 1 476 977
21. OTHER OPERATING EXPENSES
Consultants, contractors and special services 15 520 121 12 748 406
Insurance 816 437 435 984
Membership fees 32 826 584 177
Security 657 076 567 785
Maintenance, repairs and running costs 1 807 416 1 537 808
-Property and buildings 27 246 27 576
-Computer equipment and consumables 1 116 182 871 693
-Other maintenance, repairs and running costs 663 988 638 539
Depreciation 2 095 836 2 066 204
Amortisation 406 549 419 239
Loss on assets written off 107 375 776 652
Municipal services 757 610 955 313
Sponsorship 1 905 702 237 753
Travel and subsistence 4 301 038 4 095 992
Courier and delivery charges 554 280 514 740
Communication costs 3 476 917 3 884 393
Rentals 4 254 984 4 172 939
-Property and buildings 3 377 961 2 894 322
-Furniture and fittings 893 332 1 288 109
-Office equipment (17 509) (11 762)
-Other rentals 1 200 2 270
36 694 166 32 997 386
22. FINANCE COSTS
Interest expense
-Finance lease 74 360 108 803
74 360 108 803
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
129A
NN
UA
L RE
PO
RT 2
01
0/1
1
23. PRIOR PERIOD ERRORS
Property, Plant and Equipment
23.1 ASSETS INCORRECTLY WRITTEN-OFF IN THE PRIOR YEAR
In the comparative year, cidb incorrectly wrote off assets that were located in the current financial year. The assets have been
included in the current financial year’s fixed asset register. The comparative figures have been adjusted to correct the error.
23.2 ACCUMULATED DEPRECIATION OF LEASED ASSET WERE INCORRECTLY DISCLOSED
In the comparative year, cidb incorrectly disclosed the accumulated depreciation of office equipment leased. The error have
been corrected in the current financial year and comparatives adjusted accordingly.
Effect on the statement of financial position
Computer Furniture Office Office Computer Total
Equipment and Fittings equipment equipment Software
leased
R R R R R R
Recognise assets (cost)
Balance per the prior year audited
financial statements at 31 March 2009 8 643 717 4 454 053 4 999 721 1 307 320 2 495 963 21 900 774
Correction of error 23.1 - - - - - -
Correction of error 23.2 - - - - - -
Restated balance at 31 March 2009 8 643 717 4 454 053 4 999 720 1 307 320 2 495 963 21 900 773
Balance per the prior year audited
financial statements at 31 March 2010 8 016 221 4 882 839 5 239 161 1 307 320 2 717 079 22 162 619
Correction of error 23.1 - 13 183 66 650 - - 79 833
Correction of error 23.2 - - - - - -
Restated balance at 31 March 2010 8 016 221 4 896 022 5 305 811 1 307 320 2 717 079 22 242 452
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
130
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
23. PRIOR PERIOD ERRORS (CONTINUED)
23.2 ACCUMULATED DEPRECIATION OF LEASED ASSET WERE INCORRECTLY DISCLOSED (CONTINUED)
Computer Furniture Office Office Computer Total
Equipment and Fittings equipment equipment Software
leased
R R R R R R
Recognise assets
(accumulated depreciation)
Balance per the prior year audited
financial statements at 31 March 2009 2 334 899 1 161 170 1 133 563 468 367 818 309 5 916 308
Correction of error 23.1 - - - - - -
Correction of error 23.2 - - - 15 214 - 15 214
Restated balance at 31 March 2009 2 334 899 1 161 170 1 133 563 483 581 818 309 5 931 522
Balance per the prior year audited
financial statements at 31 March 2010 2 691 153 1 478 811 1 497 048 729 832 1 165 872 7 562 716
Correction of error 23.1 - 7 051 22 425 - - 29 476
Correction of error 23.2 - - - 15 214 - 15 214
Restated balance at 31 March 2010 2 691 153 1 485 862 1 519 473 745 046 1 165 872 7 607 406
Restated carrying amounts
- 31 March 2010 5 325 068 3 410 160 3 786 338 562 274 1 551 207 14 635 046
Effect on accumulated surpluses
– 31 March 2009 (15 214)
Effect on accumulated surpluses
– 31 March 2010 35 143
23.3 Permanent staff incorrectly disclosed as temporary staff.
cidb incorrectly disclosed permanent staff relating to construction contact centres under temporary staff in the prior years. The
error has been corrected in the current financial year for comparability.
23.4 Operating lease commitments incorrectly disclosed
cidb incorrectly disclosed the operating lease commitment in the previous financial year. The amount that was suppose to be
disclosed in the current financial year were disclosed in the prior year. The error had been corrected in the current financial year
and prior year figures adjusted accordingly.
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
131A
NN
UA
L RE
PO
RT 2
01
0/1
1
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
2011 2010
R R
24. CASH RECEIPTS FROM STAKEHOLDERS
Revenue per statement of Financial Performance 113 711 576 110 115 841
Finance income (4 131 542) (3 733 289)
Movement in receivables 2 744 907 685 201
112 324 941 107 067 753
25. CASH PAID TO STAKEHOLDERS, SUPPLIERS AND EMPLOYEES
Expenses per statement of Financial Performance 103 675 846 89 039 115
Movement in payables (6 130 305) (3 667 264)
Finance cost (74 360) (108 803)
Scrapping of assets (107 375) (776 652)
Depreciation, amortisation and Impairment (2 502 385) (2 485 443)
94 861 421 82 000 955
26. RECONCILIATION OF SURPLUS TO CASH GENERATED BY OPERATIONS
Operating surplus 10 035 730 21 076 726
Adjustment for item not affecting the movement of cash
- Depreciation, amortisation and Impairment 2 502 385 2 485 443
- Finance cost 74 360 108 803
- Finance income (4 131 542) (3 733 289)
- Loss on disposal of assets 107 375 776 652
Operating surplus before working capital changes 8 588 308 20 714 333
Working capital changes 8 875 212 4 352 465
(Increase) / decrease in accounts receivable and lease improvements 2 744 907 685 201
Increase / (decrease) in accounts payables 6 130 305 3 667 264
Cash generated from operations 17 463 520 25 066 797
27.1 COMMITMENTS
Amounts approved and contracted
- outstanding contractual obligations at year-end 57 235 036 16 076 188
27.2 OPERATING LEASE COMMITMENTS
The future minimum lease payments under
non-cancellable operating lease are as follows:
- within one year 3 573 475 3 308 773
- in second to fifth year inclusive 4 901 379 8 474 854
8 474 854 11 783 627
132
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
28. INCOME TAX EXEMPTION
The cidb is exempt from Income Tax in terms of section 10 (1) (cA) (i) of the Income Tax Act
29. EMPLOYEE BENEFITS 2011 2010
R R
All employees are employed on a contract basis on a cost to Board package
and are not entitled to any other benefits.
Salaries 42 716 081 25 976 014
Leave entitlement 219 790 363 116
Performance bonus 2 812 428 1 957 030
45 748 299 28 296 160
30. RELATED PARTIES
30.1 DEPARTMENT OF PUBLIC WORKS
The following is a summary of transactions with DPW:
Statement of financial performance amounts during the year:
Transfer from Department of Public Works 63 665 000 59 269 000
30.2 PROVINCIAL DEPARTMENTS OF PUBLIC WORKS
The cidb has entered into an arrangement with the Provincial department of Public Works whereby the departments will provide
office space for the cidb operations for free. The cidb operates out of the following provincial offices:
- Eastern Cape Department of Roads and Public Works
- Western Cape Department of Transport and Public Works
- KwaZulu-Natal Department of Public Works
- Free State Department of Police, Roads and Transport
- Mpumalanga Department of Public Works
- Limpopo Department of Public Works
- North West Department of Public Works, Roads and Transport
- Northern Cape Regional Department of Roads and Public Works
30.3 GREEN BUILDING COUNCIL OF SOUTH AFRICA
The cidb donated an amount of R1,482,000 to the council during the financial year under review. Although the council is not part
of the government but it is a related party to the cidb in that one of cidb’s senior manager is a Board member of the council.
30.4 SPONSORSHIPS RECEIVED 2011 2010
R R
The cidb received the following sponsorships from the fellow public sector entities:
- Department of Public Works 110 000 150 000
- Industrial Development Corporation 30 000 30 000
- COEGA Development Corporation 20 000 -
- Department of Communication - 30 000
- Department of Housing - 85 000
- Independent Development Trust - 1 250
- Small Enterprise Development Agency 20 000 -
- Chris Hani Disctrict Municipality 50 000 -
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
133A
NN
UA
L RE
PO
RT 2
01
0/1
1
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
31. FINANCIAL RISK MANAGEMENT
The main risks arising from the cidb’s financial instruments are market risk, liquidity risk and credit risk.
Credit risk
The cidb trades only with recognised, creditworthy third parties. It is the cidb’s policy that all customers who wish to trade on credit
terms are subject to credit verification procedures. In addition, receivables balances are monitored on an ongoing basis with the
result that the cidb’s exposure to bad debts is not significant. The maximum exposure is the carrying amounts as disclosed in Note
5. There is no significant concentration of credit risk within the cidb.
With respect to credit risk arising from the other financial assets of the cidb, which comprise cash and cash equivalents, the cidb’s
exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these
instruments. The cidb’s cash and cash equivalents are placed with high credit quality financial institutions therefore, the credit risk
with respect to cash and cash equivalents is limited.
Exposure to credit risk
The maximum exposure to credit risk at the reporting date from financial assets was:
2011 2010
R R
Cash and cash equivalents 80 811 763 62 313 159
Other receivables 1 682 109 1 118 822
Total 82 493 872 63 431 981
Concentration of credit risk
The following table provides information regarding the credit quality of assets which may expose the cidb to credit risk
2011
NEITHER
PAST DUE
NOR IMPAIRED
R
PAST DUE BUT NOT
IMPAIRED – LESS
THAN 2 MONTHS
R
PAST DUE BUT NOT
IMPAIRED – MORE
THAN 2 MONTHS
R
CARRYING VALUE
R
Cash and cash equivalents 80 811 763 80 811 763
Other receivables 1 682 109 1 682 109
2010
NEITHER
PAST DUE
NOR IMPAIRED
R
PAST DUE BUT NOT
IMPAIRED – LESS
THAN 2 MONTHS
R
PAST DUE BUT NOT
IMPAIRED – MORE
THAN 2 MONTHS
R
CARRYING VALUE
R
Cash and cash equivalents 62 313 159 62 313 159
Other receivables 118 160 1 000 662 1 118 822
134
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
31. FINANCIAL RISK MANAGEMENT (CONTINUED)
The maximum exposure to credit risk for financial assets at the reporting date by credit rating category was as follows:
2011 AAA UNRATED
R R
Cash and cash equivalents 80 811 763
Other receivables 1 682 109
2010 AAA UNRATED
R R
Cash and cash equivalents 62 313 159
Other receivables 1 118 822
Market risk
Market risk is the risk that changes in market prices, such as the interest rate will affect the value of the financial assets of the
cidb.
Interest rate risk
The cidb is exposed to interest rate changes in respect of returns on its investments with financial institutions and interest pay-
able on finance leases contracted with outside parties.
The cidb’s exposure to interest risk is managed by investing, on a short term basis, in current accounts and the call accounts.
Sensitivity Analysis
A Change in the market interest rate at the reporting date would have increased/ (decreased) the surplus for the year by the
amounts below:
31/3/2011 CHANGE IN INVESTMENTSINCREASE/(DECREASE)
IN NET SURPLUS FOR THE YEAR
UPWARD
CHANGE
R
DOWNWARD
CHANGE
R
Cash and cash equivalents 1% 80 811 763 (808 118)
31/3/2010
Cash and cash equivalents 1% 62 313 159 (623 132)
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
135A
NN
UA
L RE
PO
RT 2
01
0/1
1
31. FINANCIAL RISK MANAGEMENT (CONTINUED)
Liquidity risk
Liquidity risk is the risk that the cidb would not have sufficient funds available to cover future commitments. The cidb regards
this risk to be low; taking into consideration the cidb’s current funding structures and availability of cash resources.
The following table reflects the cidb’s exposure to liquidity risk from financial liabilities:
2011 CARRYING
AMOUNT
R
TOTAL
CASH FLOW
R
CONTRACTUAL
CASH FLOW
WITHIN 1 YEAR
R
CONTRACTUAL
CASH FLOW
BETWEEN
1 AND 5 YEARS
R
Other financial liabilities 45 834 334 45 834 334 45 744 201 90 134
2010 CARRYING
AMOUNT
R
TOTAL
CASH FLOW
R
CONTRACTUAL
CASH FLOW
WITHIN 1 YEAR
R
CONTRACTUAL
CASH FLOW
BETWEEN
1 AND 5 YEARS
R
Other financial liabilities 39 987 166 39 575 264 39 575 264 411 902
Financial instruments
The following table shows the classification of the cidb’s principal instruments together with their carrying value:
FINANCIAL INSTRUMENT CLASSIFICATION CARRYING
AMOUNT 2010
CARRYING
AMOUNT 2009
R R
Cash and cash equivalents Loans and receivables 80 811 763 62 313 159
Receivables Loans and receivables 1 682 109 1 118 822
Payables Financial liabilities 45 834 334 39 987 166
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
136
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
31. FINANCIAL RISK MANAGEMENT (CONTINUED)
Net gains and losses on financial instruments
The following table presents the total net gains or losses for each category of financial assets and financial liabilities:
2011
LOANS
AND
RECEIVABLES
R
FINANCIAL
LIABILITIES AT
AMORTISED
COST
R
TOTAL
R
Interest income 4 131 542 4 131 542
Finance charges (74 360) (74 360)
Total net gains recognised in the statement of financial performance 4 131 542 (74 360) 4 057 182
2010 LOANS
AND
RECEIVABLES
R
FINANCIAL
LIABILITIES AT
AMORTISED
COST
R
TOTAL
R
Interest income 3 733 289 3 733 289
Finance charges (108 803) (108 803)
Total net gains recognised in the statement of financial performance 3 733 289 (108 803) 3 624 486
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
137A
NN
UA
L RE
PO
RT 2
01
0/1
1
2011 2010
R R
32. RECONCILIATION OF BUDGET SURPLUS
Net surplus/deficit per statement of financial performance 10 035 730 21 076 726
Adjustment for:
- Depreciation, amortisation and Impairment 2 502 385 2 485 443
- Provision for bad debts 216 012 456 491
- Bad debts written off 332 741 138 489
- Reversal of bad debts provision (456 491) -
- Amortisation of prepayment 3 307 619 3 063 679
- Loss on disposal of assets 107 375 776 652
Over recovery of revenue (9 354 576) (14 533 840)
Revenue per budget 104 357 000 95 582 000 - Transfer and subsidies 63 665 000 59 269 000
- Registers income 38 272 000 34 113 000
- Finance income 2 420 000 2 200 000
Revenue per statement of financial performance (113 711 576) (110 115 840)- Transfer and subsidies (63 665 000) (59 269 000)
- Registers income (45 073 460) (47 059 809)
- Finance income (4 131 542) (3 733 289)
- Other income (841 574) (53 743)
Under utilisation of expenditure (6 690 796) (13 463 640)
Expenditure per budget (104 357 000) (95 582 000)- Administrative expenses (26 251 827) (27 587 068)
- Staff cost (56 019 352) (49 402 131)
- Equipment - (3 070 000)
- Professional services (22 085 821) (15 522 801)
Expenditure per statement of financial performance 97 666 204 82 118 360 - Administrative expenses 29 278 505 23 819 598
- Staff cost 52 867 578 44 285 120
- Equipment - 1 265 235
- Professional services 15 520 121 12 748 406
Net surplus/deficit per approved budget - -
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
138
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
33. DIRECTORS’ EMOLUMENTS 31 March 2011 No. of Meetings Fees as member Salary Travel Performance Total Name Sched. Other Sched. Other allowance bonusBoard Committee Chairperson R Nkado 4 21 14 968 54 727 40 600 110 295Deputy chairperson Risk Com CA Rose 4 7 12 716 22 253 82 774 117 743 Member G Strydom 1 0 2 909 - 25 324 28 233 Member G Steele 3 2 8 727 5 818 19 887 34 432 Member L Mchunu # 3 0 - - - - Mem/Aud Com L Kona 5 6 14 545 14 727 7 632 36 904 Member ST Bogosing 4 4 11 636 6 000 15 116 32 752 Member N Alli # 2 0 - - - - Member M Mabuza # 4 0 - - - - Mem/Aud Com/Risk Com M Govender 5 13 12 545 32 727 130 810 176 082 Member S Ngebulana 2 0 5 818 - - 5 818 Member N Makhubele 5 0 - - 38 094 38 094 Member M Noyana 3 1 8 727 727 6 974 16 428 92 591 136 979 367 211 596 781 Remuneration Committee Chairperson N Makhubele 1 0 - - - - Member N Alli 0 0 - - - - Member M Noyana 1 0 2 909 - - 2 909 2 909 - - 2 909 Audit Committee Chairperson S Thomas 10 23 167 520 48 162 5 942 221 624Member V Nondabula 9 4 143 568 7 976 4 910 156 454Member B Chaplog * 7 0 111 664 - 1 188 112 852Member N Mhlongo ^ 2 0 31 904 - 600 32 504 454 656 56 138 - 12 641 - 523 435 Risk Committee Member V Nondabula 4 0 63 808 - 1 637 65 445Member N Mhlongo ^ 1 0 9 573 - 600 10 173 73 381 - - 2 237 - 75 618
Executives Chief Executive Officer R Khoza 1 143 430 91 474 1 234 904Chief Financial Officer P Mongwenyana 929 373 78 067 1 007 440Growth & Contractor Dev. G Naidoo 920 304 73 624 993 928Constr. Industry Perform. R Milford 1 024 239 90 133 1 114 372Procurement & Delivery I Thumbiran 921 300 75 547 996 847Contractor Registers Service E Moola 927 584 76 062 1 003 646 - - 5 866 230 - 484 907 6 351 137 Totals emoluments March 2011 1 075 284 249 255 5 866 230 394 729 484 907 8 070 406 Totals emoluments March 2010 530 982 216 987 5 379 105 445 649 413 394 6 986 118
* Bryan Chaplog resigned from audit committee on 31 August 2010 ^ Nala Mhlongo joined the audit committee on 03 January 2011 # Lungile Mchunu, Nazir Alli and Mandla Mabuza are not entlitled to remuneration as they are public servants
139A
NN
UA
L RE
PO
RT 2
01
0/1
1
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
34. WORLD CUP EXPENDITURE
2011 2010
Quantity R Quantity R
Bafana Bafana Supporter T-shirts 214 78 190 - -
TV Plasma Screens “42” 2 4 400 - -
82 590 -
The cidb incurred the above expenditure to acquire cidb-branded soccer shirts in Bafana Bafana colours to show support to
the national team and to adapt the event for team building purposes.
In addition, two TV Plasma screens “42” were rented for the duration of the World Cup for staff members.
140
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
141A
NN
UA
L RE
PO
RT 2
01
0/1
1
142
CO
NSTR
UC
TION
IND
USTR
Y DE
VE
LOP
ME
NT B
OA
RD
W: www.cidb.org.za
E: c [email protected]
T: +27 12 482 7200 or +27 86 100 cidb
F: +27 12 349 8986 or +27 86 681 9995
Fraud Hot l ine: 0800 112 432
PO Box 2107, Brook lyn Square, 0075
Block N&R, SABS Campus, 2 Dr Lategan Rd, Groenkloof, P retor ia, South Af r ica
