Contractors must be registered on the CIDB’s Register of Contractors to tender for construction projects in the public sector. This does not include home building and renovations, which fall within the mandate of the National Home Builders Regulatory Council (NHBRC). By implication, contractors that work in the public sector housing field, however, do not need to be registered with the CIDB.
All construction projects with a value exceeding R200,000 (including VAT) in the public sector or R10 million (including VAT) by state-owned entities must be registered on the CIDB's Register of Projects.
The Register of Contractors, together with the Register of Projects, play a vital role in the CIDB’s efforts to ensure the success of the local construction industry.
This article aims to take a closer look into the Register of Contractors by focussing on the different CIDB gradings and thresholds, how this is applied by government in the construction procurement process and the current shortcoming and problems being experienced as contractors desiring to be listed on the Register of Contractors must apply for a CIDB grading.
1. The CIDB grading classes and thresholds
According to the CIDB website, a contractor’s CIDB grading is considered its “
license to trade with government.” The Construction Industry Development Regulations of 2004 (as amended) requires that public sector clients may only award construction contracts to contractors registered with the CIDB and listed on the Register of Contractors. It provides certification that a contractor can execute projects of a certain class of works and up to a pre-determined value, based on previous experience and financial capability.
1.1 Who is required to be registered on the CIDB’s Register of Contractors?
Any contractor that intends to tender for a public sector construction contract must be registered on the CIDB’s Register of Contractors. Currently, it is not compulsory for sub-contractors to be registered, nor Joint Ventures (JV). All the partners of a JV, however, must be individually registered on the CIDB’s Register of Contractors. The combined CIDB grading of the JV can be determined by the
CIDB Joint Venture Calculator that can be found on the CIDB’s website.
Home builders (as mentioned in the Introduction), as well as Labour only contractors, are exempted from the CIDB Register of Contractors.
1.2 How does the CIDB grading system work?
There are nine (9) grading levels on the CIDB Register of Contractors, with nine being the highest and one (1) the lowest. According to the CIDB, there is no qualifying criteria to be registered as a grade 1, but from grades 2 – 9, contractors need to comply with financial and track record criteria to qualify.
According to the CIDB website, a CIDB grade enables you to do business with government. This enables a government entity to ascertain that the contractors can deliver projects up to a pre-determined contract value within a class of works. As stated above, grade 2 – 9 contractors need to comply with financial and track record criteria, and the tables below show the criteria required:
| WORKS CAPABILITY/TRACK RECORD |
| Designation |
Maximum value of contract that contractor is considered capable of performing |
Track Record / Largest Contract completed, during the 5 years immediately preceding the application, in the class of construction works applied for. |
| 2 |
R 1 000 000.00 |
R 130 000.00 |
| 3 |
R 3 000 000.00 |
R 450 000.00 |
| 4 |
R 6 000 000.00 |
R 900 000.00 |
| 5 |
R 10 000 000.00 |
R 1 500 000.00 |
| 6 |
R 20 000 000.00 |
R 3 000 000.00 |
| 7 |
R 60 000 000.00 |
R 9 000 000.00 |
| 8 |
R200 000 000.00 |
R 30 000 000.00 |
| 9 |
No Limit |
R 90 000 000.00 |
Table 1: Track Record Criteria
| REQUIREMENTS FOR CAPITAL |
| Grade |
Best annual turnover |
Available Capital |
| 2 |
- |
|
| 3 |
R 1 000 000.00 |
R 100 000.00 |
| 4 |
R 2 000 000.00 |
R 200 000.00 |
| 5 |
R 3 250 000.00 |
R 650 000.00 |
| 6 |
R 6 500 000.00 |
R 1 300 000.00 |
| 7 |
R 20 000 000.00 |
R 4 000 000.00 |
| 8 |
R 65 000 000.00 |
R 13 000 000.00 |
| 9 |
R200 000 000.00 |
R 40 000 000.00 |
Table 2: Financial Criteria
A contractor’s grading is represented by one digit and two letters, e.g., 6GB. This displays the maximum capacity at which a contractor is allowed to execute projects (
represented by the digit) as well as the class of works that the contractor is certified to be capable of executing projects in (
represented by the two letters). Contractors can also request to be classified as “potential emerging” (PE) in which case their CIDB gradings will be displayed as one digit and four letters, e.g. 6GBPE.
A CIDB gradings determine the maximum tender value of a construction project that can be awarded to a contractor by a public sector client. However, PE contractors are an exception to this rule. They may be awarded construction projects one level above their grading level, but only under certain conditions. These conditions include the public sector client having a developmental policy in place to provide contractors with the necessary support and the tender being advertised to accept offers from PE contractors.
According to the CIDB website, contractors that fall within a grade 1 can register online on the CIDB’s website. This process is said to take 48 hours to process and activate on the system.
Contractors that fall within a grade 2 to 9 must register at their nearest CIDB Provincial Office. These applications can take up to 21 working days to process and must be supported by the necessary supporting documents.
1.3 The validity period of a CIDB grading (contractor registration)
A contractor’s CIDB grading is valid for three years from the date of registration, before becoming eligible to apply for renewal. After six years from the date of registration, a contractor must resubmit proof that it still meets the qualifying criteria to remain in the respective grade. According to the CIDB’s website, it has relaxed the 3-year renewal requirement due to the current economic crisis, to help contractors maintain their grades.
Contractors may apply for an upgrade at any time where their circumstances have changed to allow them to qualify for a higher grading.
Contractors (with CIDB gradings higher than grade 1) are required to pay an annual fee for their grading to be updated on an annual basis. Should contractors neglect to update their gradings (and pay the annual fees), their gradings will be suspended on the CIDB Register of Contractors.
1.4 Tender value ranges
A contractor’s grading level determines the maximum value that it can tender for. Clients may not award contracts to contractors above their maximum limit, unless awarding to a PE contractor (up to a maximum of 1 grading level higher).
The following table displays the current tender value limits of each grading level (as of 07 October 2019), which is reviewed on a periodic basis to align with inflation and economic conditions:
| GRADE |
TENDER VALUE RANGE (LESS THAN OR EQUAL TO) |
| 1 |
R0 - R500 000 |
| 2 |
R501 000 – R1 000 000 |
| 3 |
R1 000 001 – R3 000 000 |
| 4 |
R3 000 001 – R6 000 000 |
| 5 |
R6 000 001 – R10 000 000 |
| 6 |
R10 000 001 – R20 000 000 |
| 7 |
R20 000 001 – R60 000 000 |
| 8 |
R60 000 001 – R200 000 000 |
| 9 |
R200 000 001 – No limit |
Table 3: Tender Value Ranges
1.5 CIDB Classes of Works
Contractors are allocated different CIDB gradings based on “classes of works” or previous work experience (track record). The different classes are abbreviated and displayed in the two letters representing each CIDB grading. The CIDB categorises contractors into the following classes of works based on their work experience (track record):
| CODE |
CLASSES OF WORKS |
| GB |
General Building |
| CE |
Civil Engineering |
| EB |
Electrical Engineering Works – Building |
| EP |
Electrical Engineering Works – Infrastructure |
| ME |
Mechanical Engineering |
| SB |
Asphalt Works (Supply and Lay) |
| SC |
Building Excavations, Shaft Sinking, Lateral Earth Support |
| SD |
Corrosion Protection (Cathodic, Anodic and Electrolytic) |
| SE |
Demolition and Blasting |
| SF |
Fire Prevention and Protection Systems |
| SG |
Glazing, Curtain Walls and Shop Fronts |
| SH |
Landscaping, Irrigation and Horticulture Works |
| SI |
Lifts, Escalators and Travellators (Installation, Commissioning and Maintenance) |
| SJ |
Piling and Specialised Foundations for Buildings and Structures |
| SK |
Road Markings and Signage |
| SL |
Structural Steelwork Fabrication and Erection |
| SM |
Timber Buildings and Structures |
| SN |
Waterproofing of Basements, Roofs and Walls using Specialist Systems |
| SO |
Water Supply and Drainage for Buildings (Wet Services, Plumbing) |
| SQ |
Steel Security Fencing or Precast Concrete |
Table 4: Classes of Works
Conclusion
The CIDB's grading system is crucial for contractors to participate in public sector construction projects in South Africa. The system ensures that contractors are qualified and capable of executing projects based on their financial capacity and track record. By maintaining an efficient grading process, the CIDB supports the growth of the local construction industry and contributes to the country's social and economic development. Contractors must adhere to the specific requirements for each grading level and stay updated on renewal procedures.
Overall, the CIDB's grading system and registration process are essential in promoting transparency, quality, and efficiency in the construction industry while fostering economic development in South Africa.
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References List
- Lwandu, C. (2021) Requirements for grading, cidb. Available at: https://www.cidb.org.za/contractors/register-of-contractors/requirements-for-grading/ (Accessed: July 3, 2023)
- Construction Industry Development Board (no date) Western Cape Government. Available at: https://www.westerncape.gov.za/public-entity/construction-industry-development-board (Accessed: July 3, 2023).
- Construction Industry Development Board Act 38 of 2000 | South African Government.” Www.gov.za, www.gov.za/documents/construction-industry-development-board-act#:~:text=The%20Construction%20Industry%20Development%20Board. Accessed 12 July 2023.
- Construction industry development board act: Regulations Gov.za. Available at: https://www.gov.za/documents/construction-industry-development-board-act-regulations (Accessed: July 3, 2023).