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Growth
Delivery
Performance
Capacity
Empower-ment
Annual Report 2003/2004of the
Construction Industry Development Board
the development framework
Construction Industry Development BoardTel: +27 (0)12 481 9030Fax: +27 (0)12 343 7153E-mail: [email protected]: www.cidb.org.zaPO Box 1027, Brooklyn Square, 0075Pretoria, South AfricaRegisters Helpline: 0860 103 353
development through partnership
ci bd
ci b is constituted to lead construction industry development in South Africa.
is for a regulatory and development framework that builds:
• The total construction delivery capability for South Africa's social and
economic growth.
• A proudly South African construction industry that delivers to globally
competitive standards.
is on:
• sustainable growth, capability and empowerment
• improved industry performance and best practice
• a transformed delivery environment underpinned by consistent and
ethical procurement practice
• enhanced value to clients and society.
drive this vision, united by common values, the ethos of effective
partnership and a “can do, will do!” commitment.
reflect our ownership of the development challenge.
The Construction Industry Development Board (ci b) is a Schedule 3A public entity established in
terms of the CIDB Act, 2000 to provide leadership to stakeholders for sustainable growth, reform
and improvement of the construction sector and the industry's enhanced role in the country's
economy.
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Our aim
Our focus
Our people
Our values
R P 1 3 8 / 2 0 0 4
I S B N 0 - 6 2 1 - 3 5 2 5 3 - 5
C o p y r i g h t © C I D B 2 0 0 4
C h a i r p e r s o n ’ s Re p o r t
C E O ’s Re p o r t
C o r p o ra t e G o ve r n a n c e Re p o r t
A u d i t C o m m i t t e e Re p o r t
B o a r d A p p r o va l o f t h e F i n a n c i a l S t a t e m e n t s
Re p o r t o f t h e Au d i t o r - G e n e ra l
F i n a n c i a l S t a t e m e n t s
M e m b e r s o f t h e S t a k e h o l d e r Fo r u m
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development through partnership
Contents
Chairperson's Statement
Brian Bruce, Chairperson of the ci b.d
1 ci b - development through partnershipd
This third year of formalised construction
industry development has crystallised into
tangible action much of the great
preparatory work done by so many people over
the past seven years of both Task Team and Board
activity. The Construction Registers Service is a
significant milestone in creating a more regulated
industry for the sustainable benefit of all industry
participants and its broader stakeholder group.
The construction economy in South Africa is
performing at its best levels in more than a
decade. Investment into public infrastructure and
services has grown at a steady rate over the past
few years, offering increased levels of opportunity
to the empowerment and SMME sectors of the
construction industry. Historically lower interest
and inflation rates seem to be sustainable,
boosting private investment into the commercial
building and residential sectors.
Cement demand has reached record levels and
producers are considering a step-change in new
capacity investment for the first time in many
years. Building and construction material
suppliers in general are benefiting and for the first
time in more than a decade, are utilising more
than 50% of previous installed capacity.
But not all is working to gear the full potential of
our industry. The resources sector is suffering
from the strength and volatility of our currency,
forcing major cutbacks in capital expansion. A
resurgence in the Asian economies and China in
particular offers a competitive alternative to
industrial investment in South Africa. We are
challenged by our distance from global export
markets, and again by the capacity of our
transport infrastructure. An approach is needed
that addresses the collective consequence of
these factors to stimulate a greater appetite for
fixed investment into productive capacity.
Growth of construction remains pivotal to South
Africa's economic prospect and is an indicator of
progress. Our work of the past year has focused
on instruments to drive an enabling environment
within which construction industry growth,
twinned with empowerment, can be realised.
Growth of construction is equally pivotal to
Africa's economic progress and this vast
opportunity seems out of reach at present, with
most South African contractors reporting
difficulties with operating conditions and delayed
payments. Much of the work crystallised by cidb
2annual report 2004
Minister Stella Sigcau formally accepts the ci b's
SA Construction industry Status Report - 2004.
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over the past year has broad relevance for the
continent, including streamlined procurement,
governance and the management of
infrastructure delivery.
The Construction Industry Development Board
has proved its early capacity in leading our
industry and its stakeholders on a journey of
transformation. I take this opportunity to thank
my Board colleagues and the CIDB executive
team under the leadership of Spencer Hodgson
for the exceptional dedication they have shown to
our common objective of industry development.
All South Africans will benefit in time from the
work that has been and is being done.
Brian Bruce
CEO's Report
The Construction Industry Development Board (ci b)
completes the financial year ready to roll-out the
development framework envisaged in its founding Act.
The strategic priorities of the ci b 2003/04 business plan have
been realized thanks to the achievement of our growing
executive capacity and our partnership with industry and its
stakeholders. Board leadership has guided and continuously
tested progress against the principal objectives of construction
industry development.
In facing the challenges of the past year the process of
construction industry development has continued to draw on
the championship role played by the Minister of Public Works,
Ms Stella Sigcau, the leadership and people in her department
and in provincial public works and transport departments
around the country. Common objectives have underpinned
collaboration with leaders of industry, National Treasury,
government departments and development agencies. Their
support, advice and commitment have been instrumental at
pivotal moments of the industry development process.
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We are indebted to the many stakeholder organizations and
individuals who have invested time and experience to deepen
our understanding and to shape the development framework
and progress reflected in this report. Through partnership we
have moved the construction industry development process
from concept and strategy to the point of implementation that
marks our challenge for the year ahead.
With this objective we have concentrated on key
components of the regulatory and development framework that
will drive a convergence of stakeholder focus for sustainable
delivery, growth, empowerment, and improving capability and
performance of the industry.
Spencer Hodgson,CEO of the ci b.d
the development framework to drive “…a conver-
gence of stakeholder focus for sustainable delivery,
growth, empowerment and the improving capability
and performance of the industry.”
Key components of the framework delivered this
year
• Enabling Construction Industry Development
Regulations promulgated by the Minister of Public
Works and articulating the regulatory framework for
development progress.
• Development and piloting of the Construction
Registers Service that will now be rolled out to
drive improved performance, delivery, sustainable
growth and empowerment.
• Finalisation of a national procurement framework
to promote consistent procurement and delivery,
including
• Library of Procurement Best Practice,
• Code of Conduct, and
• Standard for Uniformity in Construction
Procurement.
• Finalisation of the Toolkit Delivery Management
System which underpins government's public sector
Infrastructure Delivery Improvement Programme for
roll-out in the year ahead.
• Publication of Construction Industry Indicators
to measure and reflect development progress by the
industry and its stakeholders.
• SA Construction Industry - Status Report 2004,
that crystallizes challenges, opportunities and the
strategic way forward.
Growth
Delivery
Performance
Capacity
Empowerment
convergence
of
focus
3 ci b - development through partnershipd
Over the past year we have continued to build an all-round
ability and to bed down standards of delivery and governance.
Once again we take pride in the unqualified Auditor General's
Report, which together with the year's output reflects a “can-
do, will-do!” ownership of the development and corporate
challenge.
Epitomising this commitment is our CFO, Nellie Pillay, who
retires for family reasons. She hands over to Amit Ramasar an
impeccable set of financial and corporate governance systems,
a capable team and a leadership contribution to the building of
ci b.
In our second full year of executive capacity, the
organization has taken up permanent accommodation on the
SABS campus. We are pleased to be able to share this facility
with our sister institution, the Council for the Built Environment
From the start of the financial year we were able to build on
a core executive team of 13 people, growing to 18 at year end.
Increasingly the executive has shouldered operational and
strategic responsibility, enabling ci b to respond to rising
demands on our service.
Internal growth continues to reflect the organisation's
resolve to ensure a representative make-up of management
and staff in terms of race, gender and skills. With over 80
percent black and 60 percent women, we remain well ahead of
the equity targets set out in our business plan. Our diversity
reinforces an all-round appreciation of the implementation
tasks ahead.
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Building our specialist capacity has required the executive
to stretch its conceptual understanding in a range of forums and
in the development and presentation of peer-reviewed papers,
both nationally and internationally. These have covered key
aspects of our development agenda including the role of
procurement and public sector delivery. A paper on client best
practice and sustainable construction received a best paper
award at the international conference on Knowledge
Construction in Developing Countries held in Singapore.
Among a range of focused capacity building activities was
the participation of three of our managers in the one-month
Construction Management Programme held bi-annually in
Stellenbosch. This intensive course consolidated their growth
and linkage to stakeholders represented on the programme.
Into the future we will continue with industry to promote the
role and relevance of CMP in shaping the leading edge
performance of constructors and clients.
Construction Management Programme (CMP)
This year the cidb's capacity building benefited from
involvement in the intensive one-month Construction
Management Programme (CMP) held bi-annually in
Stellenbosch. This premier development programme,
sponsored by the industry for construction executives,
ranks with the top international programmes of its kind,
and over the years has helped to shape industry leaders.
The 2003 CMP programme embraced a two-prong
focus on Construction Industry Development and
Construction Business Development.
ci b support to the programme included various
presentations by the CEO and Board members, amongst
whom are former CMP graduates.
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“I am pleased to say that the delegates from
ci b did the organisation proud with their input
during the CMP 2003."
Prof Fred Hugo
d “…the year's output reflects a 'can-do, will-do!'
ownership of the development and corporate
challenge.”
Outgoing Chief Financial Officer, Nellie Pillay, with colleagues Gladness
Moorosi, Astrid Swarts and the new CFO, Amit Ramasar.
Building CIDB
4annual report 2004
Building the regulatory platform
Primary effort over the past year has been directed at delivering
the regulatory platform that will enable ci b to implement the
development mandate entrusted to it by Parliament. This finds
expression in the new Construction Industry Development
Regulations.
Grounded in the CIDB Act, the enabling regulations were
published for comment by the Minister of Public Works in March
2004. Subsequent promulgation in June paves the way for
implementation of the Construction Registers Service and for
consistent and uniform construction procurement.
Government Gazette 26427 reflects the considerable input
of public and private sector stakeholders to formulate and refine
the conceptual framework for the Register of Contractors, the
Register of Projects and the Standard for Uniformity in
Construction Procurement. Reinforcing the regulatory
framework is the ci b Code of Conduct - also published during
the year.
The regulations have also been firmly embedded in the
Toolkit Delivery Management System, developed with National
Treasury to provide the basis for improved public sector delivery
and capacity building.
We are convinced that the newly published regulations will
drive a convergence in development focus by the industry and
its clients. The challenge ahead is effective implementation to
promote:
• enhanced infrastructure delivery,
• improved performance of industry and clients,
• sustainable industry growth, capability and empowerment.
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Our mandate: a regulatory and development
framework
cidb is a Schedule 3a public entity. The Board comprises
private and public sector individuals appointed by the
Minister of Public Works on the basis of their individual
knowledge and expertise. It is supported by a knowledge-
based organization that is committed to the development
objectives defined in the CIDB Act (38 of 2000).
The ci b's mandate is to:
• Provide strategic leadership to construction
industry stakeholders and develop effective
partnerships for growth, reform and improvement of
the construction sector
• Promote sustainable growth of the construction
industry and the sustainable participation of the
emerging sector in the industry
• Promote improved performance and best
practice of public and private sector clients,
contractors and other participants in the
construction delivery process
• Promote procurement and delivery
management, the uniform application of policy
throughout all spheres of government, uniform and
ethical standards including a code of conduct
• Establish the registration of projects and
contractors, and other suppliers, to systematically
regulate and monitor the performance of the
industry and its stakeholders for sustainable growth,
delivery and empowerment and for improved
performance and capability.
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Government Gazette 26427, Notices No. 692, 62, 63.
AIDS HELPLINE: 0800-0123-22 Prevention is the cure
Government GazetteStaatskoerant
REPUBLIC OF SOUTH AFRICAREPUBLIEK VAN SUID-AFRIKA
No. 26427 JuneJunie
2004Pretoria,
5 ci b - development through partnershipd
Development context
6annual report 2004
To both focus our work and shape a common understanding of
the industry's strategic direction, we have engaged the broader
strategic debate and the implementation environment.
Growth
All indicators and stakeholder perceptions recorded in Status
Report 2004 confirm our conviction that the construction
industry will need to double its output over the next 10 years to
meet rising demand and South Africa's objectives for economic
and social growth. This growth presents challenges to all
stakeholders in respect of employment, empowerment,
capacity, delivery and performance.
Employment
Engaging the job creation focus of the Expanded Public Works
Programme, ci b has commenced a process to declare best
practice guidelines for labour-based construction. Similarly we
initiated a review of the new regulations that promote client
responsibility for occupational health and safety.
Empowerment
In the context of the Broad-based Black Economic
Empowerment Act (BEE Act) ci b has aligned the potential of
the Construction Registers Service to underpin empowerment
in the sector. In response to a request of industry constituents,
we have engaged our capacity in support of the charter process.
Towards this process ci b commissioned a study on
empowerment progress, opportunities and challenges. It is
clear that significant investment prospects provide the potential
to deliver empowerment objectives.
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A key finding of the study captured in the Status Report
confirms a perception that stakeholders believe a shift is
needed from the current increase in number of enterprises to a
focus on sustainability, capacity and enterprise growth. With
this objective we have shaped the Register of Contractors and
its grading system to provide a framework for targeted success-
driven enterprise development and for monitoring and
promoting empowerment progress against targets that will be
established by government and industry in the Construction
Charter.
Capacity
The capacity challenge was raised at the November 2003
Stakeholder Forum and also emerged in the context of major
private sector projects, including minerals and mining. A study
developed by the National Advisory Council for Innovation
promoted debate on skills gaps and shortages in specific sectors
of the industry. ci b was called upon to draft a chapter on
Structural Issues Impacting on Capacity to Deliver Major
Projects.
This input for sustainable skills development highlights the
responsibility of clients and proposes a set of principles to
promote partnership for development. ci b has also called on
the industry to take ownership of the new skills training
environment and to invest in people.
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Client responsibility in enterprise sustainability
and skills
(Extract from ci b input to a study on industry skills and
capability)
Decades of declining demand and demand volatility has
led to a decline of specialist skills and capability within
the industry at management, supervisory and artisan
level. Linked to this, the procurement practices of major
clients focused on lowest price awards of contract have
driven the industry into unsustainable levels of com-
petition. This has resulted in the shedding of labour and
a reliance on labour brokers, who are not part of the
skills development equation.
ci b has advanced a set of principles to underpin the
role of clients, including the need to:
• Recognise that clients are the drivers of positive
change and that their delivery and procurement
practices shape the development and sustainability
of the industry
• Ensure that major projects are planned, scheduled
and procured with cognizance of the need to develop
and retain capability
• Recognise that win-win outcomes are the basis for
partnership and therefore ensure that client procure-
ment practices minimize waste and maximise the
use of existing capability by:
• promoting greater consistency in the procure-
ment process
• promoting value based solutions rather than
lowest price
• optimising the potential of the contracting sector
to innovate.
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Engaging the environment
“…the construction industry will need to double
its output over the next 10 years to meet rising
demand and South Africa's objectives for
economic and social growth.”
The Construction Industry Stakeholder Forum, 2003.
Delivery
We have also highlighted the positive impact that will derive
from major public sector reform initiatives and the roll-out of
the Toolkit Infrastructure Delivery Management system to build
public capacity.
In this context and in response to requests from the Eastern
Cape, ci b in cooperation with Coega Development Corporation
and the Rapid Infrastructure Development Agency (RIDA), has
mobilized technical capacity to support the provincial
government's drive to build delivery capability. Our input in
terms of the Toolkit and the new Framework for Supply Chain
Management and procurement aims at reinforcing the initiative
of the poorest province with the largest infrastructure backlog
and largest planned expenditure over the next five years.
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7 ci b - development through partnershipd
Phumelele Siphayi and Thuli Manana of SAWIC at the
Construction Industry Stakeholder Forum, 2003.
ci b workshop on the Register of Contractors in Limpopo. d
8annual report 2004
In November 2003, the ci b again convened the
Stakeholder Forum of over 80 delegates appointed from all key
sectors. Under the theme “A better industry for all!”, the
meeting was attended by Minister Sigcau and Deputy Minister
of Public Works, Rev Musa Zondi and reviewed ci b progress
and plans since the inaugural meeting in 2002.
Breakaway groups led by Board and executive members
reviewed the role of stakeholders towards an improved
industry. The central themes and issues informed the findings
and conclusions of the Status Report that was presented to
stakeholders in April 2004. In the year ahead we will call for
nominations to reconstitute the forum in accordance with the
CIDB Act.
The November Forum meeting was preceded by workshops
in Bloemfontein, Durban, Port Elizabeth and Midrand where
staff and Board members engaged discussion on the
Construction Registers Service, procurement best practice, the
Toolkit and Code of Conduct. In Limpopo, piloting and
refinement of the Registers has been further informed by
workshops with contractors across the province.
Expanding international partnership, the organisation
hosted delegations from sister institutions in Africa, including
Malawi, Zambia and Tanzania. Responding to a request from
Tanzania's National Construction Council, ci b delivered a
keynote address to its conference on “Construction Industry
Development in a Changing Global Environment”. We were also
able to mobilize associate industry expertise to provide insight
to the conference on South Africa's experience in the
development of public private partnerships.
Continued cooperation with the Building Construction
Authority (BCA) of Singapore was consolidated by a visiting
delegation that peer-reviewed the principles, technical
infrastructure and business processes of the pilot Construction
Registers Service.
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“Construction industry development addresses the
role and contribution of all who add value to the
construction delivery process, and all those who
influence the industry's performance and
transformation.”
CIDB Act 38 of 2000:
The Board must constitute a ”Stakeholder Forum to
inform it on matters that affect the development of
the construction industry.”
November Stakeholder Forum:
breakaway themes and some issues
Growth and sustainable empowerment
• repeat work, long-term relationships and improved
profit margins
• access to finance and credit
• opportunities across the supply chain.
Delivery and procurement
• improved public sector delivery management
• uniform, efficient, transparent and fair procurement
• tender award on the basis of best value, not lowest
price.
Employment, skills and capacity
• improved employment practices by contractors &
subcontractors
• investment in human capital, management training
and mentoring
• safety, health and HIV/Aids awareness.
Industry and client performance
• improved safety and health, including HIV/Aids
awareness
• improved definition of project scope, and prompt
payment
• improved industry image.
Mmapula Ikaneng of NUM at the Construction Industry Stakeholder
Forum, 2003.
Building partnership
Development context
Our commitment to a partnership model is founded on the
understanding that construction industry development
addresses the role and contribution of all who add value to the
construction delivery process, and all those who influence the
industry's performance and transformation.
Intensive focus through the year has delivered the Construction
Registers Service that will shape and reflect progress in the
transformation of the South African construction industry.
With publication of regulations in June this year, we are able
to commence the 2004 national roll-out of the Register of
Projects and the Register of Contractors in line with our
business plan commitment.
Promulgating the Construction Industry Development
Regulations, Minister Sigcau said “The CIDB will implement the
Construction Registers Service as legislated by Parliament to
create an enabling regulatory environment that supports
improved industry performance and more effective delivery.”
As required by the Act, contractors registered with the ci b
will be assessed in terms of their construction works and
financial capability. The assessment criteria are built around
basic business sustainability criteria, which will ensure that
contractors only execute construction works within their
capability. This will result in a more sustainable tendering and
contracting environment for contractors, and in significantly
reduced project failures.
We have now concluded the pilot phase of the Registers with
support of a client steering committee including the Limpopo
and Gauteng Department of Public Works and Transport, the
National Department of Public Works and eThekwini Metro. The
pilot phase registered almost 2000 contractors and has enabled
valuable feedback to improve a range of criteria relating to
grading, fees, ci b capacity and other aspects of the service.
Registration has received the broad support of industry and
stakeholders in a wide range of workshops held with clients and
contractors. Clients like the Department of Public Works await
the registers roll-out as a basis for targeted enterprise
development initiatives such as the envisaged incubator
programme.
In Limpopo, where 80% of public construction is delivered
by black contractors, many complained that industry
opportunity is being raided by “part-time” players, who win
tenders and subcontract to real contractors. Their aspiration is
that registration will promote more sustainable opportunity and
growth for committed industry participants. The unsustainable
tendering environment is borne out by client experience.
Limpopo Public Works has reported receiving over 100 tenders
for a classroom block with an estimated value of R300 000.
A case study conducted by ci b on a tender for housing
services at Hammanskraal illustrates the tender evaluation
dilemma facing public officials and the wasteful cost of
tendering to the industry, with 21 tenders ranging from R6
million to over R60mn. An analysis of the capabilities of
tenderers in terms of the proposed ci b contractor grading
system indicated that 6 tenderers were competent to tender.
Their offers ranged from R11m to R17m, demonstrating the
potential of the Register to regularize the tendering
environment.
Phased implementation in the year ahead will be closely
monitored to ensure that the system design and requirements
are practically aligned with the principles and intentions of
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construction industry development and the CIDB Act. We will
also be challengened to expand the full potential of the registers
to:
• incorporate empowerment criteria agreed by industry and
government
• introduce the phase two requirements for client and
contractor best practice
• measure and report on impact
• promote the grading system as a basis for targeted
development interventions by clients
• conceptualise a register of professional service providers.
CIDB Act 38 of 2000:
The CIDB Act stipulates that to promote best practice,
the Board must establish and maintain:
• “…a national Register of Contractors …, which
provides for categories of contractors in a
manner which facilitates public sector
procurement.
• a best practice contractor recognition scheme
…which promotes contractor development
and monitors contractor performance.
• the Register of Projects and the best practice
project assessment scheme…for the promotion,
assessment and evaluation of best practice on
construction contracts
and may establish and maintain “…a register of
suppliers, manufacturers or service providers.”
The CIDB Act and the new regulations stipulate that:
• All contractors undertaking work for the public
sector must be registered
• All public and private sector projects above a
certain value must be registered by clients.
Building the construction registers service
9 ci b - development through partnershipd
Framework for transformation
Addressing his aspiration, Pepi Silinga, ci b Deputy
Chairperson and CEO of Coega (a major industry client), said
that the “grading assessment envisaged in the regulations will
enable clients to target their development programmes in a
more focused way so that contractors are able to grow and
evolve within the framework.
By promoting best practice and compliance with statutory
obligations throughout the delivery chain, the Registers will
begin to close the gap between the formal and informal sectors.
Importantly, we believe the Registers will support sustainable
broad based Black Economic Empowerment.”
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Construction Registers Service - an overview
The registers drive a macro risk management process for
clients and contractors regulating the construction industry
around a common development agenda underpinned by best
practice procurement and project processes.
As envisaged by the legislation, the registers are the
principle instruments driving improved demand and supply-
side industry performance. They constitute a regulatory
framework that supports sustainable delivery, development
and empowerment.
The data assembled by the registers will provide a
comprehensive overview of construction demand and supply
across the country as well as information on the transforming
practices of clients and contractors.
The national Register of Contractors supports public
sector risk management, reduces the administrative burden
associated with the award of contracts, and promotes the
performance and development of contractors.
The national Register of Projects registers all public and
private sector projects above a prescribed value. The
Register provides information on the nature and distribution
of projects and promotes the performance of public and
private sector clients in the development of the construction
industry.
In its design and piloting, the ci b has aimed to ensure
that the service meets the following objectives:
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Reduced risk to public sector clients through the
Register of Contractors that will categorise contractors in
accordance with their capability
Streamlined procurement with reduced wastage,
including reduced tendering costs to industry, and reduced
tender evaluation costs to public sector clients.
Improved construction delivery through
• requirements on private and public sector clients that
promote consistent procurement practice, sustainable
development and transformation
• a contractor recognition scheme that promotes supply-
side performance in terms of quality, safety, health and
the environment
A framework that supports sustainability in the
tendering environment and enables clients to structure
their contracting and development strategies to target
appropriate sectors of the market
An established track record for emerging contractors
that will facilitate public and private sector confidence and
access to credit, finance and opportunity
Access by decision makers, clients and service
providers to live and comprehensive geographic
information on construction demand and supply, including
size, nature and distribution of projects and service
providers
Business to business linkages
An improved industry image that fosters investment.
The ci b Registers team from left to right (back) Enoch Masibi, Caswell Mtombeni (associate), Pregan Pillay, Mthetheleli Baqwa, Ebrahim Moola, Katlego
Molibeli (front) Annah Modiba, Tiego Vuma.
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"the Registers will begin to close the gap between
the formal and informal sectors. Importantly, we
believe the Registers will support sustainable
broad based Black Economic Empowerment.”
Pepi Silinga, cidb Deputy Chairperson”
10annual report 2004
Streamlined and uniform procurement
development through partnership
Construction Procurement Best Practice Library
The regulatory framework for public sector procurement in South Africa - highlighted are the ci b components finalised during the year in review.
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11 ci b - development through partnershipd
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This year we were able to report on delivery in relation to the
June 2003 Growth and Development Summit agreement
stating that “…the construction industry is working with the ci b
to address the confusion amongst participants in construction
contracts and bring a modicum of standardization to the
delivery process…” The report requested by Business Unity
South Africa acknowledges the significant effort of private and
public sector stakeholders.
In 2003, the ci b convened a focus group of over 50
industry specialists, practitioners and stakeholders, including
client representatives, to peer-review and refine:
a) A Code of Conduct for all participants in the construction
procurement process, including the private sector.
b) Construction Procurement Best Practice guidelines for
public and private sectors.
These were published for comment in the government
gazette. Comment was reviewed by the focus group and the
ci b Board. The refined outcome has subsequently been
published in accordance with the CIDB Act.
c) The Standard for Uniformity in Construction Procure-
ment
In line with regulations promulgated by the Minister of
Public Works on the 9th June 2004, the ci b has finalized and
published the Standard for Uniformity in Construction
Procurement, which incorporates best practice. The regulations
and the standard reflect government's determination to
promote uniform procurement practice throughout the public
sector.
The Standard is aligned with National Treasury's regulations on
Supply Chain Management (December 2003) and is
underpinned by the Public Finance Management Act. ci b has
ensured that the standard is also embedded in the Toolkit
Delivery Management System which provides the platform for
roll-out and capacity building throughout the public sector.
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CIDB Act 38 of 2000:
The establishment and gazetting of construction
procurement best practice and the Standard for Uniformity
in Construction Procurement realizes the ci b's obligation
to:
“determine and establish best practice that
promotes procurement and delivery manage-
ment reform
“provide information to stakeholders on best
practice”
and “within the framework of the procurement
policy of government, promote the standardi-
sation of the procurement process with regard to
the construction industry.”
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Standard for Uniformity in Construction
Procurement: an overview
The ci b Standard for Uniformity in Construction Procure-
ment establishes requirements for construction
procurement that are aimed at bringing about stan-
dardisation and uniformity in procurement documentation,
practices and procedures. This Standard establishes
minimum requirements which are consistent with the
provisions of the regulatory framework for public
procurement. It provides the overarching framework for
the inviting of tender offers, for procurement documents
and procedures.
The Standard references best practice and is published
in Government Gazette 26427 of 09 June. It is also
available on the ci b website.
The ci b has worked with a focus group of industry
experts to develop a library of best practices relating to
procurement in the construction industry.
The Construction Best Practice Library has been peer
reviewed by industry experts and is referenced in the
Standard for Uniformity in Construction Procurement and
in the Toolkit Delivery Management System. The Library
comprises best practices in the following categories:
• Procurement procedures
• Procurement documentation
• Contracting strategies
• Alternative dispute resolution
• Subcontracting arrangements
• Joint venture arrangements
The Best Practice Library is available on CD and can be
downloaded from the ci b website - www.cidb.org.za.
d
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Delivery and Procurement Team. Osafo Gyimah, Bridgette Gasa,
Linda Vabaza and Malcolm Pautz.
“Procurement arrangements bind the supply
chain and define the obligations, liabilities and
risks that link the parties together in the delivery
process."
12annual report 2004
Procurement
Delivering the Code of Conduct
The construction industry operates in a uniquely project-
specific environment, continuously combining different clients,
consulting professions, as well as different contractors and
subcontractors in a variable supply chain. Procurement
arrangements, which also vary considerably, bind this supply
chain and define the obligations, liabilities and risks that link the
parties together in the delivery process.
The conduct of parties throughout the supply chain impacts
on the ability of the construction industry to deliver value and to
perform efficiently and competitively. A high standard of
conduct is essential to the growth, development and
sustainability of enterprises and to the objectives of
empowerment and transformation. Conduct impacts directly on
project costs, timely completion and delivered quality.
The ci b Code of Conduct for construction represents an
important step in the management of integrity and the creation
of an environment within which business can be conducted in a
fair and transparent manner. It also forms an essential first line
of defence in combating the scourge of corruption, including the
practice of fronting. The Act provides for enforcement of the
Code. But it is in the interests of a better construction industry
d
CIDB Act 38 of 2000:
The CIDB Act mandates the ci b to establish and promote
uniform and ethical standards “that regulate the
actions, practices and procedures of parties engaged
in construction contracts” and stipulates that:
“To promote uniform and ethical standards within the
construction industry the Board: must publish a code
of conduct for all construction-related procurement
and all participants involved in the procurement
process.”
d
Code of Conduct:
The six-point Code of Conduct deliberately avoids the pitfall
of detail. The Code states that the parties in any public or
private construction-related procurement should in their
dealings with each other:
• Behave equitably, honestly and transparently.
• Discharge duties and obligations timeously and with
integrity.
• Comply with all applicable legislation and associated
regulations.
• Satisfy all relevant requirements established in pro-
curement documents.
• Avoid conflicts of interest.
• Not maliciously or recklessly injure or attempt to injure
the reputation of another party.
The Code has been published with a set of examples that
illustrate good conduct and, by implication, conduct that
would breach this Code.
The Code is available in hard copy and can be
downloaded from the ci b website.d
to have all parties committed and to do business only with those
who apply the code in all business processes.
Promoting the Code of Conduct is an industry wide
challenge. ci b will ensure its distribution to all registered
contractors and all clients that register projects. In cooperation
with the South African Institution of Civil Engineering, we have
embarked on workshops around the country to promote the
Code and the role of the professions in best practice procure-
ment.
Our joint commitment must also translate into a programme
that supports the empowerment of SME's to know their “rights
responsibilities and risks” in construction contracts. The cidb
“3R's guide to contracts” produced last year provides a basic
tool for this purpose and has been much in demand from
stakeholders.
d
development through partnership
for all parties engaged
in construction procurement
October 2003
code
of
conduct
The construction industry in South Africa now has a Code of
Conduct for all parties engaged in construction procurement,
including clients, the professions and all service providers. This
is a landmark achievement for industry development and
transformation. It aligns industry and its partners with
international standards for good corporate governance and the
provisions of the King Report 2002. The code was developed in
consultation with stakeholders through the procurement focus
group and was published in Government Gazette No. 25656 of
October 2003.
“Our joint commitment must also translate into
a programme that supports the empowerment of
SME's to know their 'rights responsibilities and
risks' in construction contracts.”
13 ci b - development through partnershipd
ci b has delivered on the strategy conceived last year for a
systematic approach to improved delivery of public
infrastructure.
The Infrastructure Delivery Management Toolkit has been
developed in collaboration with National Treasury. Consultation
with provincial treasuries and delivery departments has
brought the prototype Toolkit to completion.
The Toolkit provides a systematic guide to the full cycle of
infrastructure delivery from needs identification, planning and
budgeting through to procurement, construction, handover and
maintenance. It provides a common platform for public sector
delivery which accounts for about 40% of construction
investment.
The Toolkit underpins the planned implementation of
government's Infrastructure Delivery Improvement Pro-
gramme (IDIP) that will be rolled out in a phased approach over
the next 2 years.
d
The key strategy of the roll out programme is to facilitate the
development of appropriate capacity in each identified
provincial department. An extensive induction, capacity
building, mentoring and coaching programme on the Toolkit will
be initiated in key provincial departments.
It is particularly rewarding that our early conceptual work
has led to this programme and partnership, which is expressed
in a Memorandum of Understanding with National Treasury and
the Department of Public Works. Our investment of effort has
helped to leverage a R20 million capacity building programme
for 2004/05 that is supported by the European Commission in
cooperation with the Development Bank of South Africa.
In the year ahead, ci b resources will be severely tested to
ensure our obligation to train the 13 Technical Assistants
recruited for the pilot roll-out, to monitor success of the
capacity building process, and to adapt and maintain the Toolkit
and its integrity.
d
CIDB Act 38 of 2000:
The Act mandates the ci b to:
“…determine and establish best practice that
promotes improved public sector delivery
management; promote uniform application of policy
with regard to the construction industry throughout
all spheres of Government;” and in this regard “develop
and promote appropriate training programmes for
public sector officials.”
d
Delivery and capacity
“a R20 million capacity building programme
for 2004/05.”
The Toolkit Delivery Management System:
The IT-based methodology will enable public-sector
delivery managers to:
• Design infrastructure & maintenance programmes
using simple templates and guides to formulate
effective programme implementation plans
• Locate policy guidelines relevant to each delivery
stage
• Appropriately allocate budget in alignment with
programmes
• Identify and prioritise projects
• Manage planning and the design of projects
• Procure professional services, goods and supplies
• Manage construction procurement
• Oversee the implementation of projects and administer
contracts
• Consistently report on progress using a Management
Information System.
The Toolkit incorporates the ci b Standard for Uniformity in
Construction Procurement and client procedures in terms
of contractor and project registration. It forms the basis for
roll-out of government's Infrastructure Delivery and
Improvement Programme, commencing in 2004.
"A holistic model that provides guidance for the
management of public-sector processes.”
Dr Sean Phillips, who leads implementation of the
Expanded Public Works Programme.
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Building public sector capacity
The Prototype Delivery Management System
the infrastructure delivery
toolkit for the public sector
October 2003
development through partnership
14annual report 2004
Pepi Silinga, Deputy Chairperson of the ci b with James Maseko,
Director-General of Public Works at the Construction Industry
Stakeholder Forum, 2003.
d
This year we have responded to government's focus on job
creation and poverty alleviation as embodied in the Expanded
Public Works Programme (EPWP). Using labour-based
construction methods, the EPWP will promote short-term work
opportunities and training in the delivery of national, provincial
and municipal infrastructure.
On the request of the EPWP we have started a process to
establish Labour-Based Best Practice Guidelines that extend
the job creation potential of existing guidelines. Building on the
work of the Inter-ministerial Task Team on Construction
Industry Development which preceded the ci b, our executive
has expanded the application of technologies and methods to
increase the employment generated per unit of expenditure.
A focus group of industry specialists and stakeholders has
reviewed and refined these guidelines with a view to their
publication and promotion during 2004.
Referring to the agreement reached by the social partners at
the Growth and Development Summit, Minister Sigcau has
highlighted “the special responsibility placed on the
construction industry to spearhead job creation and skills
development so that our growing economy is increasingly
accessible to all citizens and in turn is injected with the vigour
of expanding productive participation.”
Beyond the pressing need for job creation lies the challenge
of sustainable and improved employment. Enterprise con-
solidation and growth are fundamental to meeting this
challenge and will be fostered by the Construction Registers
Service as it begins to stabilize the market, providing a
framework for targeted enterprise development initiatives. The
service will also drive improved health and safety practices and
client responsibility to ensure HIV/Aids awareness on
construction projects.
d
CIDB Act 38 of 2000:
The Act defines best practice as “a desirable and
appropriate standard, process, procedure, method
or system in relation to the delivery process and the
life cycle of fixed assets.”
The Act tasks the Board to determine and establish best
practice that promotes national social and economic
objectives including labour absorption in the
construction industry, growth of the emerging sector,
improved labour relations, positive safety, health and
environmental outcomes.
Labour-Based Best Practice Guidelines in
development
It is generally accepted that employment intensive
methods are technically feasible for a wide range of
construction activities and, with the appropriate use of
equipment, can generally produce the same quality as
equipment-intensive methods.
The ci b best practice guidelines establish desirable
and appropriate standards, processes, procedures and
methods relating to the design and implementation of:
• Labour-based construction methods for earthworks.
• Labour-based methods for materials manufacture
covering:
- precast concrete products using hand methods and
light equipment,
- stabilized adobe block walling.
• Labour-based construction technologies for open flow
channels, rubble masonry, dam and arch bridge
construction, roads and pavements.
• Procurement methods for implementing labour based
construction works projects.
The draft guidelines are available on the ci b website and
will be published and promoted in the year ahead.
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Special responsibility is "placed on the
construction industry to spearhead job creation
and skills development so that our growing
economy is increasingly accessible to all
citizens.” Stella Sigcau, Minister of Public Works
Shaping best practice for development
15 ci b - development through partnershipd
Lietsiso Mohapeloa ci b Board member, at the Bloemfontein
preliminary Stakeholder Forum 2003 workshop.
d
In partnership with industry and academics the ci b held a Post
Graduate Student Conference as a step towards a national
research agenda for construction industry development.
The Conference received support from the provincial MEC
for Public Works, Ms Gloria Barry and Minister Stella Sigcau,
who engaged students and academics in a special imbizo on
research issues and priorities. The generous contributions and
commitment of industry players including FEM, Lafarge SA,
Coega, AAAMSA Group, UPE and the Peninsula Technikon
ensured the conference viability.
Thirty research papers highlighted current areas of
academic interest. The conference enabled greater focus of
South Africa's intellectual capability on the critical challenges of
construction industry development. It provided students,
researchers and practitioners with a unique opportunity to
network, share ideas and learn from each other's work.
We have taken the work of the conference forward to
develop a research database. The second post graduate student
conference to be held in Cape Town will be facilitated in
partnership with the University of Cape Town and ci b intends
to present a survey of current tertiary research on the built
environment.
A key challenge in development of the R&D agenda is the
limited availability of funding impairing the ability of industry,
government and clients to sustain a national built environment
research capability that stimulates innovation and underpins a
quality teaching capability. In collaboration with CSIR, the ci b
has developed a preliminary concept document to promote
discussion on a research and development partnership by
government, private sector clients and industry.
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Performance
Building a research and development agenda
16annual report 2004
1st post graduate student conference:
The conference attracted 30 research papers from
students, researchers and educational institutions across
the country, with some papers co-authored by
international researchers. These were peer reviewed by a
scientific and technical committee comprising academics
from the Peninsula Technikon, the universities of Pretoria,
Free State, Botswana, Witwatersrand, South Africa and
Port Elizabeth.
Three award-winning papers came from the University
of Witwatersrand and one from the Peninsula Technikon.
Papers were called for on the following themes:
Construction Demand Capacity
Empowerment Quality and Productivity
Business Performance Procurement Strategies
Emerging Contractor Briefing, Planning and
Development Design
Construction Management Best Practice and
Benchmarking
Human Resource Safety, Health and
Development Environment
Information Technology Construction Industry
in Construction Policy
Value based approaches Role of clients and the
professions
The conference report and papers are available on the ci b
website.
d
CIDB Act 38 of 2000:
The Act mandates the Board to “promote appropriate
research” and “to develop, promote and update a
construction industry research agenda that defines
national development priorities.”
Ms Edith Nyandoro, Winner of Best Paper at 1st post graduate
student conference, Port Elizabeth.
“Technical capability and a culture of innovation
are the cornerstones for Research and
Development, driving academic institutions in
their quest to shape the human capital of industry.”
Status Report 2004
The ci b framework of CII's has been developed with the
support of CSIR Boutek and initial work by DPW. The framework
is based on a review of international benchmarking and
performance indicators for the construction industry. A focus
group of industry experts provided guidance to the ci b in the
finalisation of indicators that encompass the specific objectives
of industry development in South Africa.
The summary results included in this report reflect selected
indicators measured for the 2001, 2002 and 2003 calendar
years. In 2001 the project based pilot measurement was based
on 250 returns from a mix of clients and contractors. In 2002
and 2003 the measurement was expanded to include the
consulting professions, with a total of 900 and 1 250 returns
received, respectively.
On the basis of the unfolding 2003 BEE strategy and
scorecard, a company-based pilot measurement was
undertaken to measure broad based black economic
empowerment in the contracting sector for the year 2003. Fifty
four firms were measured. The consulting professions were not
surveyed as a similar survey was being undertaken at the time
by SAACE.
The samples for the various measurements have been taken
from a cross-section of project or enterprise type and size, or
value. Except for the pilot BEE indicators, the 2003
measurement was based on a sample designed to provide at
least a confidence level of 90% and a reliability of 5%. Further
expansion of the sample is planned in order to increase the
confidence level and reliability of future measurements.
The indicators are expected to show improvement over
time. However, experience elsewhere has shown that as
performance improves, the expectation of participants also
grows in relation to some of the perception based indicators
such as defects and client satisfaction.
d
d
Part of the ci b Status Report team (from left to right) Sheila Hughes,
Steve van Huyssteen (CSIR), Llewelyn van Wyk (CSIR),
Maurice Makhathini and Lizette van Heerden.
d
As an annual snapshot in time the indicators
provide a benchmark against which, clients,
consultants and constructors can measure and
improve their own performance in relation to
industry norm.
Client Performance
<30 days
100
80
60
40
20
030+ days 60+ days 90+ days
2001 2002 2003
Prompt payment: The average number of days’delay between certification of work and receipt of payment.
Contractors: average number of daysdelay before payment
<30 days
100
80
60
40
20
030+ days 60+ days 90+ days
Prompt Payment: The average number of daysdelay from receipt of invoice.
Consultants: average number of daysdelay before payment
2001
100
80
60
40
20
02002 2003
Use of modern contracts:
Percentage (by number) of contracts meeting the principles of modern contracts
Payment is the single
overriding obligation of
clients in terms of their
contractual relationships
with contractors and
consultants. The general
contractual norm is 30
days from receipt of
invoice.
Modern forms of contract are those that appropriately
allocate risks, liabilities and obligations and contain
administrative procedures that enable proactive
management of the delivery process.
2001 2002 2003
Types of contract considered to meet the principles of modern contracts were unaltered versions
of: GCC-90, GCC, NEC, JBCC 1991, JBCC 2000, and FIDIC.
Construction Industry Indicators (CIIs)
17 ci b - development through partnershipd
Benchmarking progress
Industry Performance Black economic empowerment contracting sector
67
66
65
64
63
62
61
60
59
58
57
Percentage of contracts completed within or under budget
Cost predictability: Was the project completed within the proposed budget?
2001 2002 2003
68
66
64
62
60
58
Percentage of contracts completed on time or earlier
Time predictability: Was the project completed within the proposed schedule?
2001 2002 2003
70
60
50
40
30
20
Percentage of contracts where the productwas relatively defect-free or better
Defects: The percentage of contracts, where the product was defect-free or relatively defect-free and where defects
had little or no impact on the client.
2001 2002 2003
Average % dividend accruing to black owners across small, medium and large enterprises
BEE ownership and accrued benefit: The graph illustrates that, for the sample measured, the percentage black ownership is lower among
firms of high turnover than among firms of low turnover.
<R2m
80%
60%
40%
20%
0%R2m-R10m R10m-R50m >R50m
Enterprise turnover category (Rands)
Average % black participation atsenior management level
Management equity: The percentage black senior management at the level of contracts manager or above is lower among firms
of high turnover.
<R2m
80%
60%
40%
20%
0%R2m-R10m R10m-R50m >R50m
Enterprise turnover category (Rands)
Percentage procurement fromblack owned enterprises
Procurement from black-owned and black-empowered enterprises: The percentage of the value of goods and services
that was procured from black owned and black empowered enterprises by the contracting enterprise during the last financial year.
<R2m
80%
60%
40%
20%
0%R2m-R10m R10m-R50m >R50m
Turnover category (Rands)
2001
70
60
50
40
30
202002 2003
Consultants Contractors
Percentage of contracts with a high levelof client satisfaction
Client satisfaction: The percentage of contracts where clients had a high level of satisfaction with the process and outcome of the
project and the service received.
BEE ownership excludes the listed contracting
companies, which express difficulty identifying
shareholders. Listed companies account for about 20% of
total turnover in South Africa.
The results of the BEE pilot survey need to be treated with
some caution, particularly those relating to procurement
which appear high. Future measurement will need to
ensure greater understanding and clarity in relation to the
survey questions.
Many factors contribute to time and cost
predictability, including the more ac-
cepted factors of inclement weather,
unexpected founding conditions, etc.
Poor pre-contract planning and “scope
creep”, late design, over-commitment
and poor implementation can be
attributed to industry performance. Late
interim payments by clients can also be
a factor.
Client satisfaction and the perception
of defects are subjective indicators
and the perception of performance
depends on the sophistication and
expectation of the client.
18annual report 2004
This year we fulfilled our undertaking to deliver a structural
review of the industry and its development.
ci b Status Report 2004 is a milestone product of
stakeholder collaboration that takes stock of the state of the
construction industry and its preparedness for key
development challenges facing our country. The report has
been tabled in parliament and at NEDLAC to inform the
Construction Summit planned by government, business and
labour.
The Status Report offers a comprehensive view of current
dynamics impacting on the creation of an enabling environment
for construction industry development. The report draws on the
views and insights of a wide range of stakeholders who engage
in the delivery process and affect the performance of
construction. The views were obtained through a survey of over
200 representatives of key sectors, including: investors, public
and private sector clients, the built environment consulting
professions, contractors and subcontractors, organised labour,
academics, materials manufacturers and suppliers.
The ci b project team included associate researchers of
CSIR Boutek, associate practitioners and academics.
Interpretation of trends and challenges also took account of
the June 2002 and November 2003 Stakeholder Forum
meetings. The views expressed in the survey were interpreted
against factual information, reports and research studies.
A “Strategic Group” of over twenty leading informants in
different sectors helped to shape the survey and its findings,
and provided insight on interpretation. Many people provided
valuable comment on draft documentation.
In finalising the report, ci b has provided a documentary
framework for future debate and engagement of the challenges
ahead, including a value proposition that supports sustainable
construction, the built environment needs of present and future
society and the development of the industry and its people.
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CIDB Act 38 of 2000:
Status Report 2004 responds to the ci b's mandate: to
“facilitate communication between construction
industry stakeholders, all spheres of Government",
”, to publish “reports on the state of the industry” and
to “… provide strategic leadership to stakeholders
for growth .”
d
Status Report 2004:
Synthesis review of the SA construction industry
Status Report 2004 documents the role of the industry in
the context of South Africa's growth and transformation
agenda.
Based on surveys, stakeholder perceptions, studies and
factual data, it assesses the performance of the different
sectors that influence the construction delivery process
and the development of the industry. Crosscutting findings
are organised within the strategic framework of growth,
delivery performance, capacity and empowerment.
In this context the report highlights a range of
challenges and opportunities. It invites discussion by all
stakeholders and endeavours to plot a path into the future.
A central challenge lies in the dispersed nature of the
industry and its client base requiring a convergence of
stakeholder focus for improved performance with regard to
product, process and people issues.
The way forward offers a crystallized perspective of
actions and initiatives deemed necessary to advance
industry development from the platform created over the
past few years. It suggests measures to:
• boost delivery capability and skills
• engender a culture of respect for people and pride in the
industry
• deliver sustainable empowerment
• implement an improved regulatory and procurement
framework
• promote greater public and private sector partnership.
Mapping a path forward
“The way forward offers a crystallised perspective
of actions and initiatives deemed necessary to
advance industry development from the platform
created over the past few years.”
19 ci b - development through partnershipd
The way forward presents new and exciting challenges to ci b
and all stakeholders as we roll out the development framework
created jointly over the past year. We will continue to expand
partnership with clients and constructors in our quest to shape
an enabling environment for growth, performance and
sustainable empowerment.
Central to this transforming environment is the
Construction Registers Service rolling out nationwide into late
2005. Our joint progress further equips stakeholders with
procurement best practice, a Code of Conduct and a Toolkit
infrastructure delivery management system to drive consistent
procurement and improved delivery capacity. We will establish
benchmarks to measure progress.
Implementing the development framework is a collective
challenge for the year ahead.
d
Special thanks
It has been a great privilege to participate in the thirty Board
meetings that have guided the ci b's growth and progress over
the past three years. Every Board meeting has constructively
challenged our assumptions and outputs in order to validate the
strategic direction of construction industry development.
It gives me great pleasure to thank the Chairperson Brian
Bruce and the Deputy Chairperson, Pepi Silinga, the
Remuneration Committee led by Carl Grim, and all Board
members for leadership, wise advice and a commitment that
has extended way beyond the boardroom. I also wish to thank
the Minister of Public Works, Ms Stella Sigcau, and all
stakeholders for continued championship and support.
We will continuously evaluate progress to ensure that our
programmes are performing as the instruments of development
and transformation they are intended to be.
d
Spencer Hodgson
Chief Executive Officer
“Leadership and collaboration are needed to
enhance the capability and focus of all who
engage in the delivery process; a focus to grow,
transform and nurture the national asset base of
our construction industry.”
Stella Sigcau, Minister of Public Works
The year ahead
20annual report 2004
The staff of the ci b.
Bottom left:
Maurice Makhathini, Linda
Vabasa and Kotli Molise.
d
Into the future
Corporate Governance Report
CIDB Board
Board Members 2003 / 2004
The Board of the ci b has a mandate to approve the annual
financial statements and assure the auditors of their integrity
and reliability. The Board also reviews the entity's corporate
performance and its levels of responsibility, communication and
accountability as a public body. This responsibility
encompasses approval of strategic plans, the review and
monitoring of strategic deliverables, the determination of
internal control procedures, plus the appointment and
performance of the CEO.
The Board is appointed by the Minister of Public Works and
members are selected for their range of complementary
knowledge and skills, their public and private sector experience
and understanding, and their ability to provide collective
leadership for construction industry development in accordance
with the entity's founding legislation. The members of the ci b
Board serve a three year term as recommended by the enabling
legislation. To ensure continuity, the CIDB Act requires that at
least one third of the Board should be re-appointed to serve a
further term.
The Act requires the Board to meet at least four times per
annum. However, to ensure its strategic role, the Board has
scheduled monthly meetings and during the financial year in
review has held nine meetings, providing effective direction to
the operation of the entity. The Audit and Remuneration
Committees meet three to four times per annum and as
necessary.
The ci b Board consists of the following members, who were
appointed for a three-year term of office.
Non Executive Board Members Date of appointment:
Brian Bruce (Chair) 1 April 2001
Pepi Silinga (Deputy Chair) 1 April 2001
Carl Grim 1 April 2001
Mahlape Sello 1 April 2001
Khanyile Mlambo 1 April 2001
Cannon Noyana 1 April 2001
Sam Amod 1 April 2001
James Henrey 1 April 2001
Lietsiso Mohapeloa 1 April 2001
Rodney Milford 1 April 2001
Lydia Bici 20 Nov 2002
Mandla Ndlovu 20 Nov 2002
Executive members
Spencer Hodgson (CEO) 1 December 2001
Executive staff by invitation
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The ci b is a schedule 3A national public entity under the
executive authority of the Department of Public Works.
It is charged with the role of strategic leadership for
construction industry development. In this regard, the ci b
has a comprehensive vision and programme that is concretized
in the annual strategic and business plans, in accordance with
the enabling legislation of the entity, (CIDB Act 38, 2000). The
operating policy of the ci b upholds the principles of corporate
governance through its adherence to the PFMA, Treasury
Regulations and the advisory principles of the second King
Report.
The ci b Board, supported by an Audit Committee,
Remuneration Committee, the CEO and the executive
leadership team ensure the effectiveness of the enterprise's
good governance. Proper controls are in place to identify and
report any material breakdown and ensure that corrective
action is taken.
As part of the overall strategy to ensure that PFMA
requirements are met and good corporate governance policies
are adhered to, internal controls have focused on areas of risk
management, accountability of assets, staff policies and sound
procurement practice as well as the reliability and integrity of
the financial statements.
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The 30th ci b Board meeting.d
21 ci b - development through partnershipd
Resignations Date of resignation
Giovanna Fenster 30 September 2003
In addition to the nine Board meetings held, Board members
have engaged a range of other duties including the Stakeholder
Forum, focus groups meetings, staff interviews, Remuneration
and Audit Committees, procurement panels and presentations
at industry and stakeholder functions. Board members have
variously championed specific areas of ci b endeavour
including the Construction Registers Service, procurement
reform, delivery management, HIV/Aids, R&D, industry status,
including growth, capability and empowerment.
d
Remuneration Committee
Carl Grim (Chair)
Mahlape Sello (Board member)
Rodney Milford (Board member)
The Remuneration Committee is comprised of 3 Board
members appointed by the Board, who are tasked with the
evaluation and review of human resource strategy and
operations. The CEO and the CFO attend meetings by invitation.
The committee's specific terms of reference include direct
authority for consideration of and recommendation to the Board
on matters relating to general staff policy, remuneration,
bonuses, executive remuneration and review of service
contracts and other benefits. The remuneration committee also
evaluated and approved staff salaries and performance
bonuses for the period ending March 2004.
The Audit Committee is appointed by the board and is chaired
by an independent chartered accountant who is neither an
executive, nor a ci b Board member. The Committee further
includes 2 non-executive members and 2 board members.
Meetings are attended by the CEO, chief financial officer,
members of the Auditor General's office and members of the
internal audit unit. The functions of the audit committee are to:
• review the effectiveness of the internal audit function
• evaluate the annual financial statements
• monitor internal control systems
• agree the scope of the external audit by the Office of the
Auditor-General
• monitor compliance with the PFMA and Treasury
regulations.
The internal audit unit plays an important role in corporate
governance. ci b has outsourced this service to MSGM Masuku
Jeena Inc which has subsequently amalgamated with
Pricewaterhouse Coopers. The function is mandated by the
Audit Committee and advises the Committee and the CEO. The
internal audit unit measures and evaluates the effectiveness
and application of policies, procedures, systems and processes
designed to fulfill the requirements of the risk management
policy. It also measures general compliance with governance
principles, regulation and the safeguarding of assets.
The internal audit unit presented its quarterly reports to the
audit committee on 3rd June 2003, 7th October 2003 and 3rd
February 2004.
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Internal Audit Unit
Breakaway session during the Construction Stakeholder Forum, 2003.
Attendance Other
at board Engagements Earnings
meetings No. Of Days for Year
1. Brian Bruce 8 6 R 21 318
2. Pepi Silinga 6 5 R 15 664
3. Carl Grim 6 3 R 9 149
4. Mahlape Sello 6 1 R 9 052
5. Khanyile Mlambo 5 1 R 4 895
6. Giovanna Fenster 2 3 R 3 077
7. Cannon Noyana 9 30 R 49 616
8. Sam Amod 7 11 R 17 464
9. James Henrey 8 23 R 20 759
10. Lietsiso Mohapeloa 5 9 R 15 369
11.Rodney Milford 8 4 R 11 748
12. Lydia Bici 4 1 R -
13. Mandla Ndlovu 6 1 R 6 356
22annual report 2004
External Audit
Risk Management
The external audit for the period ending March 2004 was
performed by a team from the Office of the Auditor General.
As the accounting authority, the Board of ci b is accountable for
the process of Risk Management and the system of internal
control. This review includes regular monitoring of the risk
management policy and its effectiveness, together with the
control policies of the organisation.
A comprehensive risk management process was once more
undertaken during the course of the year to effectively identify
and re-assess risk, thereby enabling management to adopt a
proactive stance to risk management and potential failures in
controls, systems and the achievement of strategic objectives.
To this effect each business unit developed its own risk
profile and these were consolidated and reviewed by
independent risk management experts. The involvement of
each business unit results in an overall culture of risk awareness
enabling management to identify and take action in terms of
risks related to both governance and delivery.
The yearly risk assessments are reviewed by the Audit
Committee. A comprehensive risk assessment was undertaken
on the contractors register system during the period under
review and tabled at the Audit Committee meeting of 3rd
February 2004.
d
Materiality Framework
Executive Leadership Team
Related to the management of risk is the development of the
Materiality Framework, as defined by Treasury Regulations and
the PFMA. This framework defines the varying levels of
significance of any wasted resources whether through criminal
behaviour, negligence or fruitless expenditure. This develop-
ment of the Materiality Framework forms part of the ci b's
ongoing commitment to corporate governance. In accordance
with the PFMA, the Materiality Framework was submitted by
the Board for approval by the Minister of Public Works.
This internal team consists of the Chief Executive Officer, the
Chief Financial Officer and three programme managers. The
team ensures that ci b business outputs are strategically
aligned to enterprise objectives, and that measures are in place
to assess outcomes and performance. It reviews and makes
recommendations on business unit strategy and delivery, and
monitors budget expenditure.
The Leadership Team also reviews the human resource
policies and procedures of the entity. These include the plans
for human resource equity, personal staff development and
capacity building. The team provides leadership in promoting
the values, commitment and ethics that underpin the
organisation's mandate.
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23 ci b - development through partnershipd
The ci b Board
from left to right (back): Rodney Milford, Cannon Noyana, Giovanna Fenster,
Brian Bruce (Chairperson), Carl Grim, Mandla Ndlovu, James Henrey, (front)
Lietsiso Mohapeloa, Spencer Hodgson (CEO), Lydia Bici, Khanyile Mlambo, Pepi
Silinga (Deputy Chairperson).
Inset: Mahlape Sello and Sam Amod.
d
Code of Ethics
Health, Safety and the Environment
Disaster Management
Human Capital
ci b believes in the principles of good conduct, honesty and
transparency. To this effect, it has adopted the following core
values that guide the behaviour and belief system of the
organization and to which the staff have committed:
• To behave equitably, honestly and transparently
• To discharge duties and obligations timeously and with
integrity
• To comply with all applicable legislation and associated
regulations
• To avoid conflicts of interest
• To not maliciously or recklessly injure or attempt to injure
the reputation of another party
• To adhere to and promote the values of the ci b.
These principles are discussed and reinforced at each
individual's performance review.
The ci b is committed to ensure that employees work in a safe,
healthy and clean environment. The company's activities at
present have no adverse effect on the environment. Any activity
that may do so would be accompanied by a risk management
plan to ensure compliance with relevant regulations and
legislation. The ci b is aware of the importance of continuing
good environmental corporate governance. In the
refurbishment of its permanent accommodation we have
endeavoured to implement the principles of sustainable
construction through the reuse of materials, installation of
water saving toilets and an energy efficient cooling system.
In respect to HIV/Aids all employees have access to
awareness materials and precautionary medical advice upon
request. The ci b HIV/Aids Specification on the website
provides guidelines for best practices in awareness and
information services, accessible to the construction industry
and all interested parties.
The ci b is aware of the importance of managing accidents in
the workplace, and of external risk management regarding fire,
flood or personal injury. In the comming year, it will develop an
appropriate policy in this regard.
The ci b executive grew during the year from thirteen, to a total
of eighteen at financial year-end. It further employed 5
temporary staff members. One staff member resigned during
the period under review.
The ci b fosters and encourages personal development
plans in order to retain and nurture the best quality personnel l
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Employment Equity
The ci b has committed to the principles of employment equity
as prescribed in the Employment Equity Act, 55 of 1998.
Accordingly the Board has applied principles of fairness and
equity when recruiting and appointing staff. The ci b has met its
internal employment criteria of 60% black and 30% women for
the period under review.
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and to build a committed and professional executive, capable of
delivering on the organisations key objectives. This capability
has expanded significantly over the past year as a result of
several factors, including:
• focused capacity building, including attendance by three
managers of the one-month intensive Construction
Management Programme sponsored by industry and held
bi-annually
• attendance of a range of relevant workshops and seminars
• continuous learning from engagement with industry role-
players in both ci b focus groups and in industry and
stakeholder events
• collaboration in the development of peer-reviewed papers
presented at national conferences and in Tanzania, Russia
and Singapore, including an award-winning paper
• collaboration on the ci b SA Construction Industry Status
Report
• regular presentation and testing of ci b work in progress
with industry and stakeholders.
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Analysis of leave No. of days all
staff
Sick Leave 83
Paternity Leave 5
Family Responsibility Leave 10
Study Leave 22
52% 26% 22% 65% 4% 13% 18% 61%
Overview of ci b Core Teamd
Age Spread Representivity
27 - 34 35 - 46 47 - 57 Black Coloured Indian White Women
24annual report 2004
We are pleased to present our report for the financial year
ended 31 March 2004.
The Audit Committee consists of the members listed hereunder,
who were appointed on 20 September 2002, and meets twice
per annum as per its approved terms of reference. During the
current year three meetings were held.
Name of member No. of meetings
attended
1 Prof Herman de Jager (Chairperson) 3
(External member)
2 Mr Roy Parbhoo (External member) 3
3 Mr Thabo Pooe (External member) 3
4 Mr Carl Grim (Board member) 3
5 Mr Pepi Silinga (Board member) 2
The Audit Committee reports that it has complied with its
responsibilities arising from Treasury Regulation 27.1.1. 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 system of internal control is effective as the audit report on
the annual financial statements, the internal audit reports and
the management letter of the Auditor-General have not
reported any significant or material non-compliance with
prescribed policies and procedures.
Audit Committee members and attendance
Audit Committee responsiblity
The effectiveness of internal control
Evaluation of financial statements
The Audit Committee has
• reviewed and discussed with the Auditor-General and the
Accounting Authority the audited annual financial
statements to be included in the annual report; and
• reviewed the Auditor-General's management letter and
management response.
The Audit Committee concurs and accepts the conclusions of
the Auditor-General 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.
Chairperson of the Audit Committee
6 July 2004
Audit Committee Report
25 ci b - development through partnershipd
Discussion during a ci b Board meeting.d
The Board is responsible for the presentation to stakeholders of
the financial position of the entity at the end of the financial
year.
ci b Board members are responsible for the integrity of the
entity's annual financial statements and related information in
its annual report to parliament. In order for the Board to
satisfactorily discharge its responsibilities, there are a number
of procedures and controls in place to facilitate the role of the
Board in this respect.
Management has been delegated with the responsibility of
implementing systems of internal control and maintaining
accounting and information systems designed to provide
reasonable assurance as to the reliability of the financial
statements. These have been prepared in accordance with
South African Statements of Generally Accepted Accounting
Practice (GAAP).
The ci b receives transfer payments from the national
department of public works as per the MTEF. The ci b is
confident that it will remain a going concern in the year ahead
and that no event of significance has occurred subsequent to
balance sheet date.
The Auditor-General is responsible for auditing and reporting
on the financial statements and his report is set out on page 27.
The annual financial statements for the period ended 31 March
2004 are set out on pages 29 to 36. These statements were
approved by the Board on 6 July 2004.
Chairperson Chief Executive Officer
6 July 2004 6 July 2004
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Board Approval of the Financial Statements
26annual report 2004
Pepi Silinga, Deputy Chairperson of the ci b Board
addressing stakeholders.
d
Report of the Auditor-General
A U D I T O R - G E N E R A L
REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE FINANCIAL STATEMENTS OF THE CONSTRUCTION
INDUSTRY DEVELOPMENT BOARD FOR THE YEAR ENDED 31 MARCH 2004
1 AUDIT ASSIGNMENT
The financial statements as set out on pages 29 to 36, for the year ended 31 March 2004, have been audited in terms of section 188 of the Constitution of the Republic of South Africa, 1996 (Act No. 108 of 1996), read with sections 3 and 5 of the Auditor-General Act, 1995 (Act No. 12 of 1995). These financial statements, the maintenance of effective control measures and compliance with relevant laws and regulations are the responsibility of the chief executive officer. My responsibility is to express an opinion on these financial statements, based on the audit.
2 NATURE AND SCOPE
The audit was conducted in accordance with Statements of South African Auditing Standards. Those standards require that I plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement.
An audit includes:
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation.
Furthermore, an audit includes an examination, on a test basis, of evidence supporting compliance in all material respects with the relevant laws and regulations which came to my attention and are applicable to financial matters.
I believe that the audit provides a reasonable basis for my opinion.
3 AUDIT OPINION
In my opinion, the financial statements fairly present, in all material respects, the financial position of the Construction Industry Development Board (CIDB) at 31 March 2004 and the results of its operations and cash flows for the year then
ended, in accordance with generally accepted accounting practice and in the manner required by the Public Finance Management Act, 1999 (Act No. 1 of 1999).
4. APPRECIATION
The assistance rendered by the staff of the CIDB during the audit is sincerely appreciated.
J M Scottfor Auditor-General
Pretoria26 July 2004
•
•
•
27 ci b - development through partnershipd
28annual report 2004
B a l a n c e S h e e t
I n c o m e S t a t e m e n t
S t a t e m e n t o f C h a n g e s i n E q u i t y
C a s h F l o w S t a t e m e n t
N o t e s t o t h e A n n u a l F i n a n c i a l S t a t e m e n t s
S c h e d u l e t o t h e A n n u a l F i n a n c i a l S t a t e m e n t s
2 9
3 0
3 0
3 1
3 1
3 6
Contentsof the Financial
Statements
Financial Statements
BALANCE SHEET AS AT 31 MARCH 2004
TOTAL ASSETS 6 807 821 6 102 658
TOTAL EQUITY AND LIABILITIES 6 807 821 6 102 658
2004 2 0 03
N otes R R
ASSETS
NON-CURRENT ASSETS 2 715 456 2 851 557
Property, plant and equipment 2 2 715 456 2 851 557
CURRENT ASSETS 4 092 365 3 251 101
Stock 3 - 5 1 7 6 1
Accounts receivable 4 716 255 9 74 320
Prepayments 5 2 543 252 1 7 4 0 980
Cash and cash equivalents 11 832 858 484 040
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 5 281 1 2 7 4 933 436
Accumulated surplus 5 281 127 4 933 4 36
CURRENT LIABILITIES 1 526 694 1 169 222
Accounts payable 6 736 648 823 476
Provisions 7 790 046 345 746
Financial Statements
29 ci b - development through partnershipd
INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2004
20 406 668 13 678 782
OPERATING SURPLUS FOR THE YEAR 9 3 4 7 6 9 1 2 496 206
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2004
BALANCE AT 31 MARCH 2004 5 281 127 4 933 436
2004 2003
Notes R R
OPERATING INCOME
Transfers from Department of Public Works 20 086 858 13 181 000
Interest Received 317 768 496 048
Other income 8 2 042 1 734
Total Income
OPERATING COSTS ( 2 0 0 5 8 977) (11 182 576)
Accumulated Surplus
R R
Balance at 31 March 2002 2 437 230 -
Surplus for the period ending March 2003 2 496 206 2 437 230
Balance at 31 March 2003 4 933 4 36 2 437 2 30
Surplus for the year ending March 2004 347 691 2 496 206
30annual report 2004
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2004
1 1CASH AND CASH EQUIVALENTS AT END OF THE YEAR 832 858 484 040
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2004
2 0 04 2 0 03
Notes R R
CASH FLOWS FROM OPERATING ACTIVITIES 1 349 535 1 962 621
Cash generated by operations 10 1 031 767 1 466 573
Interest received 317 768 496 048
CASH FLOWS FROM INVESTING ACTIVITIES (1 000 717) (2 118 759)
Property, plant and equipment - acquired (1 000 717) (2 118 759)
Net (decrease) / increase in cash and cash equivalents 348 818 (156 138)
Cash and cash equivalents at beginning of the year 484 040 640 178
1. ACCOUNTING POLICIES
The financial statements are prepared on a historical cost basis and incorporate the following principal accounting
policies, that have been applied on a basis consistent with the prior period.
These financial statements comply with generally accepted accounting practice.
1.1 Property, plant and equipment
Assets costing less than R2 000 are written off in the year of acquisition.
Property, plant and equipment are stated at historical cost less depreciation. Depreciation is calculated on a
straight-line basis at rates considered appropriate to reduce the cost of the assets over their estimated useful
lives.
The depreciation rates are as follows:
Computer equipment 33.33%
Office equipment 20%
Furniture and fittings 20%
Books 33.33%
1.2 Cash and cash equivalents
This figure includes monies held in call accounts as well as cash in the bank and cash on hand.
31 ci b - development through partnershipd
1.3 Revenue
Revenue comprises of funds transferred from Department of Public Works.
1.4 Expenditure
All amounts are recorded exclusive of value-added tax (VAT).
1.5 Financial instruments
Financial instruments carried on the balance sheet include cash and bank balances, receivables and payables.
Measurement
Financial instruments initially measured at cost.
Subsequent to initial recognition, these instruments are measured as set out below:
• Accounts receivable are stated at cost
• Cash and cash equivalents measured at cost plus interest income as it accrues
• Financial liabilities recognised at cost namely original debt less principal payments
Credit Risk - where one party to a financial instrument fails to discharge an obligation and cause the other party
to incur a financial loss.
Interest rate risk - where the value of a financial instrument will fluctuate due to changes in interest rates.
Offsetting of financial assets and liabilities - not recognised as a legally enforceable right, and will not be settled
on a net basis nor will the asset be realised or the liability settled simultaneously.
Gains and losses that arise from a change in the fair value of financial instruments are included in the income
statement in the period in which it arises.
1.6 Provisions
Provisions are recognised when the CIDB has a present legal or constructive obligation as a result of past
events; it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are reviewed at
each statement of financial position date and adjusted to reflect the current best estimate.
32annual report 2004
The carrying values of property, plant and equipment can be reconciled as follows:
C arrying value Additions Depreciation C arrying value
at beg i nning of year at end of year
Computer equipment 1 621 572 387 072 ( 762 631) 1 246 013
Furniture and fittings 610 016 561 953 ( 214 825) 957 144
Office equipment 541 996 51 692 ( 120 381) 473 307
Books 77 9 73 - ( 38 981) 38 992
2004 2003
R R
3. STOCK
Stock of stationery on hand - 51 761
4. ACCOUNTS RECEIVABLE
Debtors Control 159 313 -
Deposits - 79 257
VAT refunds receivable 556 942 895 063
5. PREPAYMENTS
Rentals prepaid
Rentals prepaid are in respect of a lease agreement
entered into with the lessor whereby the entity undertakes
to refurbish the offices in lieu of 5 years free rental
2 851 557 1 000 717 ( 1 136 818) 2 715 456
716 255 974 320
2 543 252 1 740 980
2. PROPERTY, PLANT AND EQUIPMENT
2004 2003
R R
Cost Accumulated Net Cost Accumulate d Net
Depreciation Book Value Deprecia t i o n Book Value
Computer equipment 2 451 186 (1 205 173) 1 246 013 2 064 114 ( 442 542) 1 621 572
Furniture and fittings 1 234 162 ( 277 018) 957 144 672 209 ( 62 1 9 3 ) 61 0 016
Office equipment 625 169 ( 151 862) 473 307 573 477 ( 31 481 ) 541 996
Books 116 954 ( 77 962) 38 992 116 954 ( 38 981) 77 973
4 427 471 (1 712 015) 2 715 456 3 426 754 ( 575 19 7 ) 2 851 557
33 ci b - development through partnershipd
2004 2003
R R
6. ACCOUNTS PAYABLE
Trade payables 763 648 823 476
7. PROVISIONS
Carrying amounts Additional Amo unts Carrying amounts
a t beg i nning of year provisions applied at e nd of year
Audit fees 112 000 109 935 (132 216) 89 719
Bonus 96 464 344 581 (96 464) 344 581
Accruals - 153 398 - 153 398
Payroll liabilities 43 931 68 870 (43 931) 68 870
Provision for leave 93 351 40 615 (488) 133 478
8. OTHER INCOME
Income from 3R's Guide ( Rights, Responsibilities and Risks) 2 042 1 734
9. OPERATING SURPLUS FOR THE YEAR
Operating surplus is stated after taking into account the following items
of expenditure:
Auditors' remuneration
• Fees for audit
- current year provision 123 474 112 000
- prior period over provision (6 025) 24 814
Board expenses 184 467 189 474
Depreciation 1 136 818 575 1 9 7
- Computer equipment 762 631 4 4 2 542
- Furniture and fittings 214 825 6 2 19 3
- Office equipment 120 381 3 1 481
- Books 38 981 38 981
Employee costs 5 538 607 3 055 951
- CEO 630 856 585 205
- Other personnel 4 907 751 2 470 746
Professional services 9 455 779 5 208 596
Staff training 125 464 38 536
Staff recruitment 391 376 345 905
Rentals paid in respect of :
- Premises 757 575 170 200
- Telephone and other - 10 225
Other operating expenses 2 351 442 1 451 678
345 746 717 399 (273 099) 790 046
34annual report 2004
2004 2003
R R
10. RECONCILIATION OF SURPLUS TO CASH GENERATED BY OPERATIONS
Operating surplus 347 691 2 496 206
Adjustment for items not affecting the movement of cash
- Depreciation 1 136 818 575 197
Less: Interest received ( 3 17 768) (496 048)
Operating surplus before working capital changes 1 166 741 2 575 3 55
Working capital changes ( 134 974) (1 108 782)
Increase in stock, accounts receivable and prepayments (492 446) (2 206 315)
Increase in accounts payable 357 472 1 097 533
11. 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 208 432 381 679
Cash on hand 1 671 3 975
Investments 622 755 98 386
12. COMMITMENTS
Amounts approved and contracted - outstanding
contractual obligations at year end. 2 593 100 6 784 794
Capital commitments - 270 331
Current commitments 2 593 100 6 514 463
13. INCOME TAX EXEMPTION
The cidb is exempt from income tax in terms of section 10 (1) (cA) (i) of the Income Tax Act
14. FINANCIAL INSTRUMENTS
Credit riskFinancial assets that could subject the Board to credit risk consist principally of cash at bank and cash equivalents, deposits and accounts receivable. The Board's cash equivalents are placed with high credit quality financial institutions. Accounts receivable is presented at cost.
Interest Rate RiskThe cash flow is not significantly affected by fluctuations in interest rates. All cash is placed with reputable financial institutions.
Fair valuesThe carrying amount of cash and cash equivalents, deposits, accounts receivable and accounts payable approximated their fair values due to the short-term maturities of those assets and liabilities.
Cash generated from operations 1 031 767 1 466 573
832 858 484 040
35 ci b - development through partnershipd
SCHEDULE TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2004
20 058 977 11 182 576
2004 2003
R R
OPERATING COSTS
Audit fees - external
- provision for current year 123 474 112 000
- prior period over provision (6 02 5 ) 24 814
Audit fees - internal 83 225 -
Advertising 17 600 20 17 4
Bank charges 11 368 1 5 0 0 9
Board member expenses 184 467 1 8 9474
Computer expenses 288 505 110 586
Conferences and seminars 1 8 0 118 159 886
Depreciation 1 1 3 6 8 1 8 575 197
Interest paid - -
- bank overdraft 333 338
- late payment to suppliers - 173
Insurance 121 203 39 459
IT service 71 078 52 197
Legal fees 3 250 4 200
Levies 36 855 16 641
Office supplies 45 318 13 873
Printing, stationery and postage 247 073 43 667
Professional services 9 847 155 5 593 037
Publications, books and subscriptions 158 337 270 380
Rent/Rates/Electricity/Security 757 575 180 425
Repairs, maintenance and cleaning 134 507 5 625
Salaries 5 153 411 2 883 656
- bonus 344 58 1 96 464
- leave pay 40 615 75 831
Sponsorships 24 500 -
Staff training & welfare 125 464 -
Telephone 327 187 130 152
Traveling and entertainment 600 985 569 318
36annual report 2004
Academic Institutions
Contractor Employer
Bodies
Emerging Contractors
Organised Labour
Financial Institutions
Sector
Department of Construction Management, University of
Port Elizabeth
South African Subcontractors Association
Technikons for Programmes in the Building Construction Industry
Pretoria Technikon
University of Pretoria
University of Stellenbosch
Building Industries Federation South Africa
Eastern Cape Master Builders Association
Gauteng Master Builders Association
South African Federation of Civil Engineering Contractors
South African Subcontractors Association
Southern African Institute of Steel Construction
African Builders Association of South Africa
Black Construction Council
Black Contractors Federation
Greater Soweto Business Chamber
NAFCOC - Limpopo
South African Women in Construction
Black Construction Council - North West Province
Building Construction and Allied Workers' Union
National Union of Mineworkers
Glenrand MIB Ltd
Khula Enterprise Finance Ltd
SME Investments
Theta Investments
Nominating Organisation
Prof JJ Smallwood
Prof PD Rwelamila
Mr M Massyn
Mr MJ van Rensburg
Prof E Horak
Prof DG Brümmer
Prof F Hugo
Mr B van Breda
Mr NF Maas
Mr NL Klopper
Mr PC Fourie
Mr SD Moffat
Mr R Lavarinhas
Mr G Roberts
Mr CH Waterson
Mr GB Steele
Mr JS Strydom
Mr P Rude
Dr HKJ MacDonald
Mr BJ Westcott
Mr H Rademan
Dr H de Clercq
Mr C Kadwa
Mr SL Moleshiwa
Mr S Sibiya
Mr K Dlamini
Mr J Shibambo
Mr MJ Skosana
Mr C Jiyane
Mr B Makhetha
Mr TT Tebeila
Ms KM Choma
Ms P Siphayi
Ms TH Manana
Mr SJ Marumole
Mr JK Mpe
Ms MC Ikaneng
Mr DHH Campbell
Mr M Mothibedi
Mr T Makhetha
Dr DHH Randall
Mr P Allsopp
Full Name
During 2004 ci b will call for nominations to appoint new Stakeholder Forum members as required by legislation.d
37 ci b - development through partnershipd
Members of the Stakeholder Forum
ci b thanks all stakeholders for their contribution during the past year.d
Local Government
Material Suppliers
Public Entities
Private-Sector Client
Bodies
Professions
Provincial Government
National Government
Individual
City of Tshwane
Ethekweni Metro
Aggregate and Sand Producers Association of South Africa
Association of Architectural Aluminium Manufacturers of
South Africa
South African Cement Producers Association
Southern African Bitumen Association
Waterproofing Federation of Southern Africa
Agrément South Africa
National Home-builders Registration Council
Transportek (CSIR)
Independent Development Trust
Airports Company of South Africa
Construction Education and Training Authority
National African Federated Chamber of Commerce and Industry
South African Property Owners’ Association
Association of Construction Project Managers
Chartered Institute of Building [SA]
Engineering Council of South Africa
Institute of Municipal Engineers of Southern Africa
South African Council for the Quantity Surveying Profession
South African Council for the Architectural Profession
South African Association of Consulting Engineers
South African Federation of Civil Engineering Contractors
South African Institute of Civil Engineers
Association of South African Quantity Surveyors
South African Institute of Architects
Department of Public Works - Limpopo
Department of Public Works - Gauteng
National Treasury
Department of Public Works
Nominating Organisation
Cllr SS Mhlongo
Mr KC Rosenberg
Mr K Barnett
Mr N Macleod
Mr N Pienaar
Mr HA Schefferlie
Dr GRG Grieve
Mr PA Myburgh
Mr CL Tintinger
Mr TT Knoetze
Mr PN Makgathe
Mr PJ Hendricks
Mr M Msiwa
Mr JR Neville
Mr TTC Dlamini
Mr J Mbetse
Mr A Diepeneroek
Mr C Israelite
Mr BJ Hindle
Mr M Deeks
Mr B Havenga
Mr LV Naude
Prof G le Roux
Ms R Naiker
Mr HP Silbernagl
Mr G Pirie
Mr RA Saxby
Mr HP Langenhoven
Mr DB Botha
Mr TT Goba
Mr RL Chauke
Mr O Narker
Mr LV van Wyk
Dr S Phillips
Mr C Mthombeni
Mr WM Dachs
Mr G Damstra
Full Name Sector
38annual report 2004
Celebrating 10 years of democracy
development through partnership
Construction Industry Development BoardTel: +27 (0)12 481 9030Fax: +27 (0)12 343 7153E-mail: [email protected]: www.cidb.org.zaPO Box 1027, Brooklyn Square, 0075Pretoria, South AfricaRegisters Helpline: 0860 103 353