The Construction Industry Development Board’s (CIDB’s) lowest contractor grading, Grade 1, offers “no barrier” to entry into the industry, making it difficult for companies to select high-potential entities from the “magnitude” of those registered, says civil engineering construction contractor Stefanutti Stocks enterprise development manager Charles Wright.
“The CIDB should reconsider its Grade-1 entry requirements,” he remarked at the Civilution Congress 2014, in Ekurhuleni, on Tuesday.
According to Wright, the easy access to CIDB grading made it easier for “inappropriate entrants”, such as those with insufficient basic skills or the “wrong motives”, to gain credibility in the industry.
This exacerbated fronting activities, such as the emergence of “opportunistic intermediaries”, which included enterprises that had concluded agreements with other enterprises with a view to leveraging the opportunistic intermediary's favourable black economic-empowerment status.
These scenarios occurred largely in circumstances where the agreement involved significant limitations or restrictions on the identity of the “opportunistic intermediary's” suppliers, service providers, clients or customers.
Wright asserted that, of the 94 792 contractors registered wth the CIDB in Levels 1 to 9, 84 770 were active, Level 1-registered contractors in the civil engineering and general building divisions.
“All you need to do is fill in a few pieces of paper, pay a small fee and you’ve got a CIDB Grade 1 rating and some 94 000 people with certain expectations,” he commented.
To receive a CIDB Grade 1 registration, contractors were required to submit a company registration certificate and a tax clearance certificate, but were not required to submit proof of financial capability or a record of projects previously completed.
Grade 1 contractors were only authorised to tender for contracts valued at less than or equal to R200 000.