Amended Construction Sector Code

On the 01st of December 2017, the amended Construction Sector Codes were published via Government Gazette No 41287.

The gazette may be downloaded here

For this article, we will focus on the priority elements and certain definitions.

The Amended Construction Sector Code distinguishes, in certain instances between Built Environment Professionals (BEP) and Contractors in respect of targets, weightings and methodology. A Measured Entity is either measurable against the targets and weightings of a BEP or a Contractor and cannot apply the set of targets, weightings and methodology applicable to BEP’s in the case of one element and the set applicable to Contractors in the case of another element.

The priority elements are as follows:

Ownership

The sub-minimum requirement for Ownership is 40% of Net Value (40% of the 6 points for Contractors i.e. 2.4 points, or 40% of the 4 points for BEP’s i.e. 1.6 points) based on the Time Based Graduation Factor.

Time-Based Graduation Factor is related to the Net Value Economic Interest compliance target outlined in Annexure E of the Amended Code.

Skills Development

The sub-minimum requirements for Skills Development is 40% of the total weighting points (excluding bonus points) for Skills Development.

Preferential Procurement and Supplier Development

The sub-minimum for Preferential Procurement and Supplier Development is 40% of the total weighting points (excluding bonus points) of each of the three broad categories, within the Preferential Procurement and Supplier Development element, namely ‘Preferential Procurement’, ‘Supplier Development Programmes’ and ‘Supplier Development Contributions’.

For the avoidance of doubt, this means that a Measured Entity measurable in terms of the Large Enterprise Scorecard must achieve at least:

7.6 points for Contractors and 7.2 points for BEPs under the Preferential Procurement category;

2 points for Contractors and 1.6 points for BEPs under the Supplier Development Programmes category;

4 points for Contractors and 2 points for BEPs under the Supplier Development Contributions category;

The principles above also apply to the determination of the 40% threshold for the QSE Scorecard when determining whether a QSE or EME’s B-BBEE Status is to be discounted or not (by one level).

Further to compliance with the priority elements of the amended code, compliance with:

  • Management Control
  • Skills Development
  • Preferential Procurement and Supplier Development and
  • Socio-Economic Development will be required.

Definitions

“BEP” means Built Environment Professional. These are enterprises that conduct the following activities: Planning, design and costing of construction projects in the built environment. Also, project management and design of a construction value chain including environment, energy, industrial, property, transport and infrastructure. Enterprises typically classified as BEP’s include, but are not limited to, consulting engineering practices, architects, quantity surveyors and town planners.

“Contractors” means enterprises that conduct construction project activities that include, civil engineering, electrical engineering, power transmission, general building and specialist construction works.

Schedule 1 of the Amended Code contains a lengthy list of definitions to be understood when interpreting the Code.

This article is provided for information only and does not constitute the provision of professional advice of any kind.

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