Applying Register of Contractors
Applying Register of Contractors
Purpose of the Register of Contractors
The Register of Contractors is a macro risk management tool to support public sector clients in construction procurement. The Register categorises and grades contractors according to capability to carry out infrastructure projects.
The Construction Industry Development Regulations (CID) of 2004, as amended, binds all public sector clients to apply the Register of Contractors in construction procurement.
When to Apply the Register of Contractors
Clients must apply the Register of Contractors when preparing a tender, advertising a tender and when evaluating a tender.
The client must:
• Specify the required cidb contractor grading in the tender data, when preparing a tender.
• State the cidb grading required for a contractor to undertake the project. This information must be stipulated in the tender advert and tender document.
• Only consider contractors who meet the required cidb grade as stipulated in the tender document and advertisement when evaluating a tender.
The Clients Must Vet the Contractor
The cidb Register of Contractors is a macro- risk management tool. The client remains accountable and responsible for ensuring that the capacity, competence, expertise, experience and financial capability of the contractor appointed for a project, match the requirements of the project or tender.
A number of cidb classes of works, such as Civil Engineering (CE), Electrical Engineering (EE) and General Building (GB) are broad and encompass diverse fields of expertise, specialization and competence. The client must, in addition to the class of works required, also specify the field of specialization, expertise and experience applicable to the tender.
This is critical to ensure that the right contractor is selected for the right project. It is the role of the client to conduct due diligence when awarding projects.
By regulation, contractors no longer have to proof that they employ registered professionals in order to qualify for cidb registration in higher grades. The onus is now on the client to specify the technical resource requirements in the tender data and to ensure that the contractor that is appointed has access to requisite expertise per project. cidb Practice Note 31: Requirements for Registered Professionals on Construction Works Contracts; provides guidelines to clients on how to specify technical resource requirements of a project.
Applying the Potentially Emerging (PE) Status
The cidb Act defines and an emerging enterprise as a business that is at least 50% owned and controlled by a person(s) previously disadvantaged. The enterprise must be overcoming business impediments arising from the legacy of apartheid.
The Register of Contractors (RoC) recognises this kind of businesses as Potentially Emerging (PE) and reflects them as such in their gradings. For example 5GBPE reflects that the contractor is registered as a Grade general building 5 contractor with a PE status. To get recognition as PE the contractor must apply for this status when registering.
All clients have the option to apply a contractors’ PE status to promote targeted development of contractors. But Construction Industry Regulations (CID) prescribe conditions under which PE may be used by a client as development tool, when procuring goods and services from contractors. The client may use PE status to award a contractor a contract which is 1 grade above the contractor’s maximum permissible tender value limit.
To do so, the client must have a targeted development programme in place. The client must be satisfied that the contractor has the potential to develop into and qualify for registration in a higher grade.
The client must ensure that financial, management or other support is provided to the contractor to enable them to successfully execute the contract. Other support may include things like technical training, professional mentorship, third party construction management support, materials supply, shorter payment cycles, sponsorships, reduced guarantees and bridging finance.
Incorporating minimum grading required in tender notices & invitation to tender
The Register of Contractors facilitates procurement of construction goods and services. It is an integral part of establishing eligibility criteria for contractors to tender for construction projects.
Construction Industry Development (CID) Regulations bar clients from awarding contracts to unregistered contractors. CID Regulations also bar clients from awarding the contractor a project which exceeds their cidb grading tender value limit.
When advertising a tender or invitation for expression of interest, the client must indicate the estimated minimum grade that the contractors must have, to be eligible to respond to the tender. The cidb prescribes how the minimum grading requirement must be worded in the tender advert. “It is estimated that tenderers must have a cidb contractor grading designation of (applicable grade here) or (applicable grade here) or higher.”
Verify the contractor’s grading designation and classes of works on the cidb website: www.cidb.org.za
How far may a contractor exceed their tender value limit when responding to a tender?
A contractor’s grade defines the maximum value of a project they may be awarded a contract for. Regulations don’t allow the client to award a contractor a contract beyond this amount. However, there are instances where excessing a tender value limit may be considered reasonable.
This where the contractor’s tender exceeds the tender value limit by a margin that is relatively close to limit. The recommended margin is 10 to 15% above the contractor’s maximum tender value limit. The award of a contract to such a contractor must not impose any undue risk.
Before awarding such a contract the client must assess whether the contractor has capabilities and capacity to perform the contract above their tender value range. The client must ask themselves a question, ‘would someone who was outside the tender evaluation process find the decision justifiable?
Verify the contractor’s grading designation and classes of works on the cidb website: www.cidb.org.za
Specifying the required class of works in tender notices & invitations to tender
The Register of Contractors facilitates procurement of construction goods and services. It is an integral part of establishing eligibility criteria for contractors to tender for construction projects.
Construction Industry Development (CID) Regulations bar clients from awarding contracts to unregistered contractors. The Regulations also bar clients from awarding the contractor a project which falls outside the contractor’s registered class of works.
When specifying requirements of the tender the client must preferably identify one, but not more than two classes of construction works that best describe the work to be performed.
The bill of quantities is the best source of information to determine the most applicable class of works to call for in the tender data and advert.
Verify the contractor’s grading designation and class(es) of works on the cidb website: www.cidb.org.za
Evaluating tenders from contractors not yet registered with the cidb
The Construction Industry Development (CID) Regulations bar clients from awarding tenders to contractors who are not registered with the cidb. However, the client may not exclude a tender from being evaluated where the unregistered contractor is capable of being registered in the required grade. This is provided that the contractor will be registered within 21 working days after the closing date for tender submissions.
The contractor must prove that they are capable of being registered as required by furnishing the client with copy of their cidb grading application, together with their tender documents. The client may request the cidb to speed up processing of such a contractor’s application so as not to delay the award of a contract.
