Annual Report 2010 - 2011 - Parliamentary Monitoring Group

2010/11ANNUAL REPORT2001- 2011TEN YEARS STRONG

10 YEARS – A MILESTONE ACHIEVEMENT IN THE CONSTRUCTION INDUSTRY OF SOUTH AFRICA201120104 th Board appointed2008National InfrastructureMaintenance StrategyLaunched2009Status Quo Report ofContractor DevelopmentProgrammes in South AfricapublishedSedic LaunchedNational Stakeholder ForumNational Stakeholder Forum3 rd IDM Toolkit LaunchedLimpopo CCC Launchedcidb Centre of Excellence(CoE) awarded to NelsonMandela MetropolitanUniversityCoST is introduced to SAconstruction industryPublishing of Inform PracticeNotes beginsNorthern Cape CCCLaunched1 st MoU signed withthe two BanksMpumalanga CCCLaunched2007MoU with SA CDOrganisations5 year review Report3 rd Board appointedWomen in ConstructionExcellence AwardsLaunched2004Registration of Contractorscommenced2006Publishing ofPractice Notes begins2 nd IDM Toolkit Launched2 nd CEO, Ronnie Khoza, appointedGrade 1 Registration Regulations simplified and improved· Over the counter registration· Reduced fees over the three year period of registration· Distribution of Registration Certificates stopped due tofraudNational Stakeholder ForumYouth in ConstructionLaunched1 st cidb Quarterly Monitorcidb SME BusinessConditions SurveyGauteng CCC Launched2003Standard for Uniformity (SfU)is publishedKwaZulu-Natal CCC LaunchedEastern Cape CCC LaunchedFree State CCC Launched2001Code of Conduct forall parties engagedin constructionprocurement is publishedSA Construction Status Report1 st IDM Toolkit Launched2 nd Board appointedWestern Cape CCC Launched1 st CEO, SpencerHodgson, appointed1 st cidb Post GraduateConference convenes

CONSTRUCTION INDUSTRY DEVELOPMENT BOARDii

1CONTENTSList of Abbreviations 2Minister’s Foreword 4Chairperson’s Statement 6CEO’s Report 8cidb Board Members 14cidb Leadership 162010/11 Performance Summary 19The Construction Registers Services 40Public Sector Procurement and Development Management 48Facilitating Growth and Development 66Monitoring Industry Performance 80Corporate Services 88Accounting Authority‘s Report 97Report of the Audit Committee 101Statement of Responsibility and Going Concern 103Report of the Auditor-General 104Annual Financial Statements 108ANNUAL REPORT 2010/11

2LIST OF ABBREVIATIONSCONSTRUCTION INDUSTRY DEVELOPMENT BOARDAGBACBECBERBPCRSCCCCDCDPCECETAcidbCIFOZCIOBCIICPUTCMSCRSCRSDBSADPWECDCEDMSEPINEPWPESDAFETFHUFIDICGBGBCSAGCCGCDGDPHRAuditor-GeneralBid Adjudication CommitteeBid Evaluation CommitteeBureau for Economic ResearchBest Practice Contractor Recognition SchemeConstruction Contact CentresContractor DevelopmentContractor Development ProgrammeCivil EngineeringConstruction Education and Training AuthorityConstruction Industry Development BoardConstruction Industry Federation of ZimbabweChartered Institute of BuildingConstruction Industry IndicatorsCape Peninsula University of TechonologyConstruction Management SystemConstruction Registers ServiceContractor Registers ServicesDevelopment Bank of Southern AfricaDepartment of Public WorksEastern Cape Development ProgrammeElectronic Document Management SystemEuropean Policy Institutes NetworkExpanded Public Works ProgrammeEmployment Skills Development AgencyFurther Education and TrainingFort Hare UniversityFédération Internationale Des Ingénieurs-Conseils(International Federation of Consulting Engineers)General BuildingGreen Building Council of South AfricaGeneral Conditions of ContractGrowth and Contractor DevelopmentGross Domestic ProductHuman Resources

3IDCIDIPIDMTIDTIDZILOISOJBCCJVLTAMoUM&ENCDPNCVNECNEFNSFOHSOHSASOHSCPCDFPDPPDMPPPPPPFARoCRoPSPRPLSABSSADCSAWICSBSASCMSEDAIndustrial Development CorporationInfrastructure Delivery Improvement ProgrammeInfrastructure Delivery Management ToolkitIndependent Development TrustIndustrial Development ZoneInternational Labour OrganisationInternational Organisation for StandardisationJoint Building Committee ContractJoint VentureLong Term Technical AssistantMemorandum of UnderstandingMonitoring and EvaluationNational Contractor Development ProgrammeNational Certificate VocationalNew Engineering ContractNational Empowerment FundNational Stakeholder ForumOccupational Health and SafetyOccupational Health and Safety Advisory ServicesOccupational Health and Safety CommitteeProvincial Contractor Development ForumPerformance Development PlanProcurement and Delivery ManagementPublic Private PartnershipPreferential Procurement Policy Framework ActRegister of ContractorsRegister of Professional Service ProvidersRecognition of Prior LearningSouth African Bureau of StandardsSouthern African Development CommunitySouth African Women in ConstructionStandard Bank of South AfricaSupply Chain ManagementSmall Enterprise Development AgencyANNUAL REPORT 2010/11

4FOREWORD BY MINISTERThe highlight of the year under review for the construction industry in South Africawas the hosting of 2010 FIFA World Cup. As a country, not only did we embracethe gathering of nations on our shores, but we also embraced a golden opportunityto stand as a beacon of hope and support for the construction industry during aperiod of uncertain global economic performance. The unprecedented demandfor infrastructure linked to the 2010 FIFA World Cup demanded technicalexpertise during the period when we were faced with an acute shortage of skills.It also demanded that we deliver the required infrastructure under the given tightdeadlines without a streamlined procurement system for the construction industry.In this regard, as the Minister for Public Works, I am deeply indebted to theConstruction Industry Development Board (cidb), the host cities, the builtenvironment professions and contractors for a spectacular performance. The rolethat they played is indeed testimony to the fact that together we can build bettercommunities.We were hoping that the positive effects of the demand for infrastructure wouldlead to many years of growth in our economy. But the South African constructionindustry is now faced with a sustainability challenge based on a world-wideeconomic downturn as well as our own country specific problems. The futureof the industry and how through focused infrastructural development we canrevitalize our economy requires renewed critical analysis.CONSTRUCTION INDUSTRY DEVELOPMENT BOARDThere is overwhelming evidence that numerous construction companies havebeen forced to close down due to the difficult operating environment. Paymentdelays and poor project implementation have imposed an unpleasant climate formainly small businesses. It is unacceptable that we are failing to roll out approvedprojects. It is also unacceptable for us to return unutilised funds to the fiscus at atime when the job creation agenda of government is of the essence. The role of thecidb with the Department of Public Works in reversing a decline in the constructionindustry is urgent. This must include amending regulations aimed at improving theregistration criteria to remove unnecessary bottlenecks in the registration processas well as improving efficiency and integrity of the Register of Contractors. Thesignificance of supporting emerging contractors and transforming the industry inthis regard cannot be over-emphasized.

5The 2010 FIFAWorld Cup wasa golden opportunityfor South AfricaI am pleased that the cidb has again achieved an unqualified audit report. In this regard I wish to congratulate the Board,management and staff for this achievement. All areas that the Auditor-General has highlighted as requiring attention must beresolved before the end of the financial year 2011/12 and the next external audit.I take this opportunity to thank the outgoing Board whose term ended in December, for providing the required guidance andleadership not only to the cidb but the construction industry at large.I thank the CEO for holding the fort while there was no Board, effectively acting as Accounting Authority until the new Board wasappointed. In the same spirit I welcome the new Board with the hope that the members will harness their expertise for the goodof the industry, providing the required leadership and guiding the cidb to deliver on its mandate.GL Mahlangu-Nkabinde, (MP)Minister of Public WorksDate:ANNUAL REPORT 2010/11

7ANNUAL REPORT 2010/11

10TRAINING AND CONTRACTOR DEVELOPMENTIt was reported last year that training and contractor development were not prioritised by those mandated to do so. The cidb wastherefore requested to play a role, beyond its mandate, to improve performance in this area. The cidb has therefore decidedto facilitate training through various interventions, including injecting funding for strategic training opportunities. ContractorDevelopment has been recommended for consideration as a national priority. In this regard a Steering Committee has beenformed between the cidb and the national Department of Public Works. Provinces have been selected for progressive inclusionregarding improved reporting on all contractor development opportunities, implemented through the framework for the NationalContractor Development Programme (NCDP). The consultative process with MECs and HoDs and senior management in theidentified provinces has been very positive.The cidb has undertaken an initiative to expand the training and development of contractors by considering overseasopportunities, sharing of information with regional partners as well as identifying and partner with tertiary institutions in South Africa.The South African/German initiative has been pursued with the intention of sourcing funding and signing an MoU with the Germancounterparts. This is to be supported by our respective government’s bilateral agreements. The cidb has undertaken a numberof trips in the SADC region and hosted visitors from SADC countries that wanted to partner with the cidb on issues of commoninterest. The cidb has also supported the graduation ceremonies in the Limpopo and Western Cape provinces for the ESKOMtraining programme and sponsored training through the University of Fort Hare.REVIEW OF THE REGISTRATION CRITERIAThe cidb has finalised its consultative process to improve the registration criteria. The details of the proposed amendmentsprepared for this purpose have been packaged for easy understanding. A Practice Note has been developed to clarify thechanged position where contractors are not required to submit the names of registered professionals at the point of registration.A submission is due to be made to the Minister to take to the next step of publishing the proposed amendments for publiccomments.IMPROVING THE EFFICIENCY AND EFFECTIVENESS OF THE REGISTER OF CONTRACTORSCONSTRUCTION INDUSTRY DEVELOPMENT BOARDThe registration software re-write and the Electronic Document Management System (EDMS) have been approved and are beingimplemented over a three year period. The new registration software will provide a flexible platform to accommodate futureregisters and other improvements.INDUSTRY PERFORMANCE AND BEST PRACTICEThe various components of the Best Practice Contractor Recognition Scheme and Best Practice Project Assessment Schemeare at various stages of piloting. The Best Practice Schemes will usher in a new approach to how quality, health & safety and theenvironment will be dealt with in future.

12unit late in 2008. The unit has been restructured, training has been provided to employees responsible in the area and professionalsupport has been used to identify weak links and apply corrective measures holistically. Old contracts have been terminatedand new ones implemented in accordance with Treasury regulations. New policies and procedures have been implemented.Performance information has also received special attention. Training has been provided over two years to designated managersto use the SMART approach and improvements have been noted in the revised targets and the targets for the year 2011/12.Unfortunately, there was no response on the approval of the revised targets for the year under review. The targets audited werebased on the original set developed during the training phase, which is historical.These areas have been noted by the Auditor-General as requiring attention. The cidb wishes to confirm that the previous Boardwas appraised on the work that was being done in these areas and that the findings noted were not due to the Board’s lackof oversight. A clear, long-term strategy of analysing and improving these areas has been implemented for future sustainableresults.IMPROVING COMMUNICATION WITH STAKEHOLDERSThe last annual National Stakeholder Forum was held in October 2010. It was followed, as usual, by the now established ProvincialStakeholder Workshops. These Provincial Stakeholder Workshops are intended to reach out to a broader audience of stakeholders.Again it proved to be successful. Only two provinces have not convened workshops; communication with the relevant MECs toreschedule the Stakeholder Workshops in their provinces is progressing well.CELEBRATING THE 10 TH ANNIVERSARY OF THE cidbThe cidb was established in November 2001 when the first CEO was appointed. It is therefore an opportunity for the cidb toin the celebrate its first ten years and host various awareness campaigns to share achievements over the first ten years withstakeholders. A programme of action is being drawn up to culminate in the second independent review of the cidb early in2012.SOCIAL RESPONSIBILITY AND STAFF MOTIVATIONThe cidb has again participated in National Construction Week, an initiative of the Department of Public Works, through the“Youth in Construction”. The cidb works with various stakeholders in coordinating activities that expose secondary school learnersto the construction industry.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

13ESTABLISHMENT OF THE LAST CONSTRUCTION CONTACT CENTRE – NORTH WESTThe cidb provincial office in North West (NW) is almost complete and will be officially opened in due course. This will complete atotal of nine cidb provincial offices established under the negotiated agreements in which the provincial departments of PublicWorks provide premises where the cidb can offer its services.REGISTER OF PROFESSIONAL SERVICES PROVIDERS (RoPSP)The Board, in its meeting on 7 December 2010, approved the piloting of the RoPSP as an approach to demonstrate how thisregister could work. The timelines and initial framework for this register are being developed for presentation and approval bythe Board.CORPORATE GOVERNANCE AND ACCOUNTING AUTHORITY OVERSIGHTThe term of the third Board ended on 12 December 2010. The delay in the appointment of the fourth Board resulted in the entityoperating without a Board from the middle of December through to the end of March 2011. The CEO acted as the AccountingAuthority during this period, using the PFMA Section 49 (2)(b) as a basis for this. The cidb obtained the Minister’s concurrence onthis position and the Auditor-General was advised accordingly.SPECIAL ACKNOWLEDGEMENTSOn behalf of cidb Management and staff, I wish to acknowledge the solid support of the outgoing Board, under the leadershipof its Chairperson, Professor Raymond Nkado. The term of the Board ended on 12 December 2010.A new Board, led by Mr Bafana Ndendwa as Chairperson, has been appointed. I take this opportunity to wish the new Boardsuccess in the execution of its responsibilities.I also wish thank the Minister of Public Works, Minister Gwen Mahlangu-Nkabinde, her Deputy, Hendrietta Bogopane-Zulu, theirstaff and Senior Management and Staff in the Department for their support.Ronnie KhozaChief Executive OfficerANNUAL REPORT 2010/11

14cidb BOARD MEMBERSLwandile KonaDeputy Chairperson:Lindelwa MyatazaChairman:Bafana NdendwaHareesh PatelMarten GovenderCONSTRUCTION INDUSTRY DEVELOPMENT BOARD

15Not in picture: Gilberto MartinsNyeleti MakhubeleZanele NtombelaAligasen NaiduShereen BogosingNico MaasDr. Patricia MakheshaANNUAL REPORT 2010/11

16cidb LEADERSHIPInba ThumbiranEbrahim MoolaDr. Rodney MilfordCONSTRUCTION INDUSTRY DEVELOPMENT BOARD

17Ronnie KhozaGerard NaidooPeter MongwenyanaANNUAL REPORT 2010/11

CONSTRUCTION INDUSTRY DEVELOPMENT BOARD18

192010/11 PERFORMANCE SUMMARYANNUAL REPORT 2010/11

20PART A: PROGRESS AGAINST BUSINESS PLAN OBJECTIVESPROGRAMME 1: GROWTH AND CONTRACTOR DEVELOPMENTPURPOSEMEASURABLEOBJECTIVEKEY POLICY PRIORITYEXPECTED OUTCOMETo promote sustainable growth of contractors and the participation of the emerging sector in theindustry.Promote enterprise development, investment and spending as the basis for a stable, developingindustry and the participation of the emerging sector.Growth and Contractor Development.Sustainable growth of the construction industry and development of contractors.OUTPUTPERFORMANCEINDICATORTARGETPERFORMANCE PROGRESS TO DATEREASONS FORDEVIATIONSTRATEGIC OBJECTIVE: Contractor Development InterventionsFocused andtargetedimplementationof the NCDPto all publicsector clientsresponsible forinfrastructure(National,Provincial, SOEs,Municipalities).Facilitatemonitoringand evaluationfor NationalContractorDevelopmentProgramme(NCDP).Continuousmonitoring andevaluation.Achieved:Developed and circulated a template forreporting on provincial CDPs.Quarterly reporting provided fromprovinces via CCCs and consolidatedand provided to N.DPW policy unit/NCDPSteering Committee.Concluded NCDP client capacitationworkshops in all nine provinces with atleast three clients and 15 officials perprovince.Finalised a baseline assessment onProvincial Contractor DevelopmentProgrammes.Facilitated formulation of NCDP guidelinesand indicators to assist N.DPW in theirM&E of CDPs. Provided to NCDP SteeringCommittee.Publish theContractor tipsand advicebrochure.Publish onebrochure perquarter.Achieved:Four brochures produced (one perquarter). These are Tips and Advice for:• Health and Safety.• Contract Management.• Marketing.• Tender processes for Public SectorProcurement.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

21OUTPUTPERFORMANCEINDICATORTARGETPERFORMANCE PROGRESS TO DATEREASONS FORDEVIATIONSTRATEGIC OBJECTIVE: Construction Contact Centres (cidb Provincial Partnered offices)Assessed impactto clients andcontractors.Conduct impactassessments ofCCC towardsclients andcontractors.Impactassessmentscompleted bySep 2010.Achieved:Customer satisfaction survey system(Phase 1) of impact assessmentcomplete.In addition:Baseline study complete on provincialCDP’s. Field surveys (contractors)completed. Reports were finalised andform part of reputation audit survey.Reputation audit service performanceand system reviews (at CCCs) reportconcluded in February 2011.Implementedinitiatives forprovincial clientcontractordevelopment.Develop andImplementa supportprogrammefor provincialclient contractordevelopmentinitiatives.Implementationa supportprogramme byJul 2010.Achieved:A support programme was developedearly in Jul 2010.Implementation commenced in termsof the programme in Jul 2010. Four pilotprovincial catalytic strategic projectshave been funded or partnered via thecidb and were rolled out in 2010/11.Financingmodelsdeveloped forcontractors.Developfinancing modelbased onimplementationof various banksMoAs.Developed byNov 2010.Achieved:A single finance model was developedby end Nov 2010.A workshop was held with financialstakeholders, including banks, inDec 2010 and the model tabled.Refinements, expansion and phasinghave been requested by banks tofacilitate ease of MoA implementationand addressing their concerns andchallenges. A Mar 2011 financemodelling options and phases documentwas finalised. Prior to publishing,further presentations, circulation andparticipation were solicited. Consideringall input a working document to bepublished in May 2011.ANNUAL REPORT 2010/11

22PROGRAMME 2: CONSTRUCTION INDUSTRY PERFORMANCEPURPOSEMEASURABLEOBJECTIVEKEY POLICY PRIORITYEXPECTED OUTCOMETo determine, establish and promote improved performance and best practice of public andprivate sector clients, contractors and other participants in the construction delivery process.Improved performance and best practice for an industry that delivers reliable value to clients,investors and end-users, information on construction industry indicators to inform cidb strategy,policy makers and stakeholders.Construction Industry Performance.Improved performance and best practice for the construction industry.OUTPUTPERFORMANCEINDICATORTARGETPERFORMANCE PROGRESS TO DATEREASONS FORDEVIATIONSTRATEGIC OBJECTIVE: Institutional SupportOn hand supportto national andinternationalstructures.Participation innational andinternationalstructures:• Green BuildingCouncil ofSouth Africa(GBSA).Four GBCSAmeetings by Mar2011.Achieved:Participation in:• Board: May 2010.• Exco: Jul 2010.• Board: Aug 2010.• Exco: Sep 2010.• AGM: Oct 2010.• Board: Nov 2010.• Exco: Dec 2010 (telecom).• Board: Feb 2011 (Strat).• UNEPSustainableBuilding andConstructionInitiative (UNEP-SBCI).Two UNEP-SBCImeetings by Mar2011.Achieved:• AGM; May 2010 (Paris).• SBCI SB Index; Oct (Singapore).STRATEGIC OBJECTIVE: Status Reports & SurveysMonitoredindustryperformance.Ongoingmonitoringof industryperformanceanddissemination of:• cidbConstructionIndustryIndicators(CIIs).CIIs annually.Achieved:• CII Report published.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD• cidb QuarterlyMonitor.Quarterly Monitor.Achieved:Quarterly monitors published:• 2010 Q1; Apr 2010• 2010 Q2; Jun 2010• 2010 Q3; Oct 2010• 2010 Q4; Jan 2010.

24OUTPUTPERFORMANCEINDICATORTARGETPERFORMANCE PROGRESS TO DATEREASONS FORDEVIATIONSTRATEGIC OBJECTIVE: Performance Improvement (continued)Implementationof cidb BestPracticeContractorRecognitionScheme.Finalisedevelopmentand assessmentof cidb BestPractice ProjectAssessmentScheme:• Building skillspolicy (BSP).• H&Smanagementplans.2 assessments byMar 2011.1 of 2 Achieved:• BSP Focus Group; Internal assessmenton record.• Assessmentof H&SManagementPlans notachieved dueto capacityconstraints withinservice provider.• 1st draft of H&Splans is available.Well developedand effectiveHealth & SafetyPractice guides.Development ofrelevantpractice guides:• H&S PracticeGuides.1 by Mar 2011. Not Achieved/WIP.• H&S PracticeGuides notachieved due tointernal capacityconstraints.• 1st draftdeveloped.Improvedreporting systemson cidb H&S andGHG.Facilitate theuptake of recommendationsfromthe cidb H&Sand GHG Reportswhich have notyet beenimplemented.All cidb responsiblerecommendationsimplementedby Dec2010.Achieved:• H&S; Participation in SACPCMPstandards committee• Competence Assessment, CMS,performance Reports; Ongoinginteractions with DoL• GHG; cidb participation on SANS01400, comments on CO 2tax,participation in gov. workshops,support to DME on Energy, etc.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

25OUTPUTPERFORMANCEINDICATORTARGETPERFORMANCE PROGRESS TO DATEREASONS FORDEVIATIONSTRATEGIC OBJECTIVE: Infrastructure Delivery SkillsImproved andsustainable skillswithin the constructionindustry.Assess cidb /industry ESDApilot.Assessment byMar 2011.Achieved:• ESDA established.• 20 learners placedAssessment of ESDA by AdvisoryCommittee.STRATEGIC OBJECTIVE: NIMSImproved NationalInfrastructureMaintenanceStrategy.ProgrammeManagement ofNIMS.Continuousmanagementuntil Mar 2011.Not Achieved:• Delays in transferof funds fromDPW.• MoU has beenprepared forsigning.• Should start May2011.ProjectManage anddevelopment ofmaintenancemanagementframework,maintenanceaccountingframework,maintenanceplanningguidelines.3 draft guidelinesby Dec 2010.See above.STRATEGIC OBJECTIVE: R&D and Academic ExcellenceInformative andwell supportedPost GraduateConferenceseries.Ongoing supportto the cidbPost GraduateConferenceseries.PG Conferenceheld by Dec2010.Achieved:Post-doctoral workshop held in Sep 2010.STRATEGIC OBJECTIVE: Knowledge CentreResourcefulKnowledgeCentre.Ongoingprovision of librarymanagementservices anddevelopment ofcidb KnowledgeCentre intranet.Mar 2011.Achieved.Informativeendorsement toISIZA.Support cidbendorsedquarterlymagazine ISIZA.4 endorsed byMar 2011.Not Achieved: (Partially Achieved).• 2010 Q1.• 2010 Q2.• 2010 Q3.• Publicationchanging fromquarterly to twiceper year.ANNUAL REPORT 2010/11

26PROGRAMME 3: PROCUREMENT AND DELIVERY MANAGEMENTPURPOSEMEASURABLEOBJECTIVEKEY POLICY PRIORITYEXPECTED OUTCOMEPromote uniform application of policy throughout all spheres of government and promote uniformand ethical standards, construction procurement reform, and improved procurement anddelivery management – including a code of conduct.Enhanced public sector construction procurement and infrastructure delivery management capabilityof public sector clients enabling efficient and effective delivery of quality infrastructure tothe public.Procurement and Delivery Management.Enhanced public sector construction procurement and infrastructure delivery management.OUTPUTPERFORMANCEINDICATORTARGETPERFORMANCE PROGRESS TO DATEREASONS FORDEVIATIONSTRATEGIC OBJECTIVE: Infrastructure Delivery ImprovementImproved cidbToolkit.Upgrading of thecidb Toolkit.Upgrade byJul 2010.Achieved:Upgrade completed in July 2010 andpeer reviewed by an independentexternal team.Appointment of publisher completed inSep 2010.Completion of Management Guide inSep 2010.Publishing of the Toolkit on the cidbwebsite and in CD Completed andpublished in Oct 2010.Toolkit Upgrade is complete.Monitoring of Toolkit institutionalisation willbe undertaken under the InfrastructureDelivery Improvement Programmeand through Toolkit training in the nextfinancial year.Improved cidbToolkit.Implementationof Toolkit TrainingProgrammes.Trainingprogrammes totake place byMar 2011.Achieved:Planning for the development of TrainingStrategy for the roll-out of the Toolkit hascommenced.Induction program held at NationalTreasury on 8-10 Dec 2010 for all TA’s.Schedule of roadshows to all provincesCONSTRUCTION INDUSTRY DEVELOPMENT BOARDIdentifyingalternativemodels forinfrastructuredelivery.IdentifyAug 2010.finalised in Jan 2011.Achieved:Alternative models for delivery aresupported by alternative procurementstrategies. These have been completedand incorporated into final version of theToolkit.Practice Note 23: ConstructionProcurement Strategy published in Sep2010 in support of alternative models fordelivery.

27OUTPUTPERFORMANCEINDICATORTARGETPERFORMANCE PROGRESS TO DATESTRATEGIC OBJECTIVE: Improvement and Maintenance of Regulations to support Procurement ReformREASONS FORDEVIATIONImproved cidbRegulations.Development,improvementandmaintenance ofcidb Regulations.Dec 2010.Achieved:Focus Group Meeting hosted on 18Nov for consultation on regulationamendments.Amendments presented and approvedat Board meeting held on 7 Dec 2010.Amended regulations have beenprepared and submitted to CEO’s officefor submission to Minister of Public Works.Reliable andeffectivecommunicationmethods.Administercommunicationmethods toinform and trainclients on cidbRegulations.30 Nov 2010. Achieved:The following Practice Note has beendrafted in the reporting period:Draft Practice Note 25 prepared in Dec2010 to inform clients of changes to cidbRegulations.Training of Clients as per Client requestshas continued for the reporting period.The development of an electronic toolto monitor and administer requestsfor training has progressed well for thereporting period.A communication strategy has beendeveloped for the dissemination ofinformation to clients and other industrystakeholders on cidb prescripts.ANNUAL REPORT 2010/11

28OUTPUTPERFORMANCEINDICATORTARGETPERFORMANCE PROGRESS TO DATEREASONS FORDEVIATIONSTRATEGIC OBJECTIVE: Compliance and EnforcementCompliance tocidb Regulations.Development andimplementationof a strategy tomonitor, evaluateand report oncompliance tocidb Regulations.Aug 2010.Achieved:A Compliance Strategy has beenprepared outlining the cidb’smethodology for monitoringcompliance.As part of the action plan, certain publicsector clients have been identifiedfor phase one of a complianceperformance audit.A pilot project was launched in Nov forthe collation of data on constructioncontracts awarded during 2009/2010financial year. Only 2 out of 9 clientssubmitted information on constructioncontracts awarded during 2009/2010financial year.The Compliance Strategy was reviewedand adjusted according to the learningsfrom the pilot phase in Nov 2010.A Board Notice has been published inthe government gazette and will be sentto all clients performing infrastructuredelivery. An Audit Blitz will be conductedafter assessing the information submittedby the clients for the reporting period.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

29OUTPUTPERFORMANCEINDICATORTARGETPERFORMANCE PROGRESS TO DATEREASONS FORDEVIATIONSTRATEGIC OBJECTIVE: Compliance and EnforcementDiminished fraudand corruption.Forensicinvestigations ofcases of fraudand corruptionreported to thecidb.As and whencases arereported.Achieved:The forensic investigation into reportedcases of fraud and corruption hasprogressed very well.During this financial year, 26 new caseswere referred for investigation and werefinalised. 24 case were recommendedfor prosecution and two were notrecommended.The reports of the completedinvestigations have been evaluated forfurther action.Since the appointment of the serviceprovider to manage the fraud hotline, 12cases were reported and received fromthe fraud hotline.The Investigations Committee whichpresides over cases of allegednon-compliance has progressed well.The Investigating Committee concluded6 disciplinary hearing this quarter. Therewere however 33 cases heard during thisfinancial year.No challenges were received in terms ofPromotion Administrative Justice Act.The cidb continues to maintain adatabase for the reporting and trackingof cases of non-compliance by publicsector clients.ANNUAL REPORT 2010/11

30PROGRAMME 4: CONSTRUCTION REGISTERS SERVICE (CRS)PURPOSEMEASURABLEOBJECTIVEKEY POLICY PRIORITYEXPECTED OUTCOMEImplement, manage and improve national registration services covering the Register ofContractors, Register of Projects and new Registers that may be implemented in terms of thecidb Act.• Registration of contractors and both public and private sector projects.• Regulation to effect improved performance and best practice of clients and suppliers.Construction Registration Services.Effective and Efficient Registration Processes.OUTPUTPERFORMANCEINDICATORTARGETPERFORMANCE PROGRESS TO DATEREASONSFORDEVIATIONSTRATEGIC OBJECTIVE: Service Excellence and Integrity in Registrations ProcessSustained andmeasurableregistrationserviceexcellence usingBusiness ProcessManagement(BPM) bestpractice.Alignment ofregistration QualityManagementSystem (QMS) withISO standards andrecommendations.Grade 2-9RegistrationsTurnaround time.Conduct GapAnalysis by30 Jul 2010.21 working days.Achieved:The gap analysis was conducted inApr 2010.Achieved:Compliant applicants are registeredwithin 21 working days.Query resolutionsefficiency.Turnaround time:48 hours .Achieved:The average time that it takes torespond to queries is within the stipulatedturnaround time.Fraud AwarenessWorkshop 1.30 Sep 2010.Achieved:The fraud awareness workshop tookplace on 13 and 14 Oct 2010, whichwas the date provided by the serviceprovider.Fraud AwarenessWorkshop 2.31 Mar 2011.Achieved:The fraud awareness workshop tookplace on 31 Mar 2011.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

31OUTPUTPERFORMANCEINDICATORTARGETPERFORMANCE PROGRESS TO DATEREASONS FORDEVIATIONSTRATEGIC OBJECTIVE: Enhancement of Software SystemsNew softwaresystem thatsupport flexiblebusinessprocesses, workflow integrationand improvedperformancemonitoring acrossHead Office andCCCs.Implementationof new andimproved CRSsoftware system.Completephased implementationby30 Sep 2011.On Track:The service provider was appointed inJan 2011. The Business RequirementsSpecifications were approved on24 Mar 2011.The proposed solution includes threetechnologies i.e. Microsoft CRM,Microsoft SharePoint and K2 for businessprocess management.The delivery of the solution will comprisethe Register of Contractors, the Registerof Projects and the Electronic DocumentManagement System (EDMS).The EDMS is being prioritised. A pilot wasconducted at the cidb KwaZulu-NatalConstruction Contact Centre (CCC) inApr 2011.Efficientdocumenthandling.Documenthandling throughElectronicDocumentManagementSystem (EDMS)implementedat Registershead office andintegrated withCCCs.Implemented by31 Dec 2010.Not Achieved.• This projecthas beencombined withthe ConstructionRegisters Servicesoftware re-writeproject to allowfor seamlessintegration.• The EDMS will bedeveloped andimplemented onor before30 Sep 2011.STRATEGIC OBJECTIVE: Improved CommunicationWell informedContractorsand Clientson registrationrequirements andprocesses.Developmentand distributionof registrationbrochures toassist contractorswith registration.Assessment andrevision of theQuick Guide toContractor RegistrationBrochureby 28 Feb 2011.Achieved:The brochure has been assessed andreviewed. The outcome is that thecurrent brochure is still relevant and willremain in print.Update to thecomprehensiveRegistrationsGuidelinebrochure.Assessment andrevision by31 Dec 2010.Partially Achieved.• The brochurewas assessed.The revisions anddesign havebeen finalisedand approved forprint. Delivery isexpected by29 Apr 2011.ANNUAL REPORT 2010/11

33OUTPUTPERFORMANCEINDICATORTARGETPERFORMANCE PROGRESS TO DATEREASONS FORDEVIATIONSTRATEGIC OBJECTIVE: Public Relations (continued)Participation inHOD’s Forums,MINMEC’s andother relevant/selected industryconferences.Participation asand when scheduled(these arenot coordinatedby cidb).Achieved:cidb participated in:• HOD’s forums held on 9 Jul 2010 and25 Jan 2011. Could not attend theHOD forum scheduled for 11 Mar 2011due to another commitment with theNorthern Cape MEC.• DPWNIF which took place on27 Aug 2010.• MINMEC which took place on25 Jan 2011.STRATEGIC OBJECTIVE: Communication, including publicationsInternalnewsletter.Production ofthe internalnewsletter.Internalnewsletter onceevery 2 months.Not Achieved.• Cancelled due tolack of capacityand problemswith a previouslyawarded serviceprovider contract.Own andendorsedpublications.Production ofown (women’smagazine)and endorsedpublications(ISIZA, 3s Media –Business Guide).Women’smagazine bySep 2010.Endorsedpublications –quarterly.Not Achieved.• The publicationhas beencancelled; thecoverage ofthe Women inConstructionExcellenceAwards has beenincluded in theinternal newsletter.• See CIP report.The authorisationof the distributioncosts for the 3rdquarter ISIZApublication wasdone by theOffice of the CEO,which is relevantfor this section.CorporateCommunicationStrategy.Approval andImplementationof CorporateCommunicationStrategy.Implementationof communicationsstrategy byend of Apr 2010.Partially achieved.• The CommunicationsPolicy wasapproved by theBoard and theCommunicationStrategy is inhand.STRATEGIC OBJECTIVE: Fraud and CorruptionEradicated fraudand corruptionin constructionindustry.Continuousparticipationin globaland regionalcampaigns toeradicate fraudand corruption inthe constructionindustry.Publishing ofsuccessfully prosecutedcontractorsin the pressand cidb websiteby 1 April 2010and 1 Oct 2010.Achieved:See PDM report on the Forensicinvestigations of cases of fraud andcorruption.cidb continues to maintain a databasefor the reporting and tracking of cases ofnon-compliance by Public Sector Clients.ANNUAL REPORT 2010/11

34OUTPUTPERFORMANCEINDICATORTARGETPERFORMANCE PROGRESS TO DATEREASONS FORDEVIATIONSTRATEGIC OBJECTIVE: Risk Management and Corporate GovernanceEliminated risksAnnual riskassessment andmitigation.Riskassessment performedby Aug2010.Achieved:The Strategic and operational risksassessment completed on 5 Nov 2010.The delay in meeting the target wasdue to the late appointment of theinternal auditors as reported in the 2ndquarter report. The risk information isnow maintained on the Barn Owl RiskManagement system.Updated riskregister.Regular updatingof risk register.Updatedmonthly.Partially Achieved.The updatingof the strategicand operationalregisters hasbeen completedincluding theidentification ofnew risks but theAudit Committeerequested thata review of thestrategic risks bedone. The exercisewas started inFeb 2011 withLeadership Teambut partiallycompleted.Monthly risk reportsof the operationalrisks were issuedas from Jan 2011for managementnoting andupdating. Quarterlymonitoring of riskaction plan exercisehas started from Apr.CONSTRUCTION INDUSTRY DEVELOPMENT BOARDRiskmanagementreports.Propermanagement ofInternalAuditprocess.Regularreports on riskmanagementproduced andsubmitted toBoard andmanagement.Managementof outsourcedInternal AuditUnit’s scope ofwork and 3 yearcontract.Risk reportspresentedmonthly toLeadershipas well as RiskCommitteemeetings.Ongoingmanagement.Partially Achieved.Achieved:The management of the internal auditprocess is in place and managedthrough the Risk and Governancemanager.The new Internal Auditors havecommenced with the Internal AuditAnnual Plan.Risk report for the1st quarter wasgenerated. Monthlyreports were issuedfrom Jan 2011.

35PROGRAMME 6: CORPORATE SERVICESSUB PROGRAMME 6.1: HUMAN RESOURCES MANAGEMENTPURPOSEMEASURABLEOBJECTIVEKEY POLICY PRIORITYEXPECTED OUTCOMEHuman Resource ManagementProvision of Human Resource administration and management to all programmes.Effective Human Resource ManagementTo retain staff who are productive, knowledgeable and well motivated in their workOUTPUTPERFORMANCEINDICATORTARGETPERFORMANCE PROGRESS TO DATEREASONS FORDEVIATIONSTRATEGIC OBJECTIVE: Training and DevelopmentMotivated staff.Benefits andprocesses inplace to improvestaff retention.Phase 2 of thecidb ProvidentFund in place byOctober 2010.Achieved:It is now a condition of employment fornew employees to be members of theprovident fund.EmployeeWellnessprogramme inJun 2010.Commenced with the SCM processbefore the programme could beimplemented.STRATEGIC OBJECTIVE: Training and DevelopmentHR relatedcompetentmanagementteam.Disciplinary, poorperformancetraining done.Training done byMay 2010.Not Achieved.Training providersappointed to start inMay 2011:• Job Evaluationtraining: Tocommence on03/05/2011.Job profilingtraining done.Training done byOct 2010.Selection trainingdone byJul 2010.• Training onstaff disciplineand grievancehandling: tocommence on16/05/2011.The delay wascaused by theinvolvement of theHR manager in thecritical disciplinaryprocess involving theCRS staff membersrelating to fraud andcorruption.ANNUAL REPORT 2010/11

36SUB PROGRAMME 6.2: FINANCIAL MANAGEMENTPURPOSEMEASURABLEOBJECTIVEKEY POLICY PRIORITYEXPECTED OUTCOMETo provide a dependable and accountable Financial ManagementFinancial management including registers feesProvision of financial management servicesTo safeguard assets, ensure observation of best practice governance principles and maintain thegood name of the cidbOUTPUTPERFORMANCEINDICATORTARGET 2010/11PERFORMANCE PROGRESS TO DATEREASONS FORDEVIATIONSTRATEGIC OBJECTIVE: Corporate GovernanceAsset registerPerform Assetcount.Regions count tobe completedby 31 Oct 2010and HO by30 Nov 2010.Achieved:• All regional counts have beencompleted in timeously• Head office counts have beencompleted timeously.Reviewedresidual valuesReview usefullives and residualvalues.First review by31 Jan 2011 andSecond review by31 Mar 2011.In progress.Estimate of residualvalues is in progressand the exerciseis expected to becompleted before31 May 2011 in linewith the GRAP 17requirements.STRATEGIC OBJECTIVE: Corporate GovernanceInternal/ExternalAuditProvideinformation tothe internal andexternal auditors.In line with theannual plan.Achieved:• Internal audits have been completedfor the following audits- Financial discipline review- Supply chain management- Follow up audits.• Interim audit has been completed.Discussion of audit findings with the auditcommittee is in progress.All information required by the auditorshas been provided.Policies andproceduresDevelop requiredpolicies andprocedures.OngoingAchieved:• All policies governing critical areashave been developed.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

37SUB PROGRAMME 6.3: INFORMATION TECHNOLOGYPURPOSEMEASURABLEOBJECTIVEKEY POLICY PRIORITYEXPECTED OUTCOMETo provide information technology management services to all programmes including the CCCsManagement of the Information Technology SystemsInformation (Technology) SystemsAn efficient, effective and well managed ICT infrastructureOUTPUTPERFORMANCEINDICATORTARGET 2010/11PERFORMANCE PROGRESS TO DATEREASONS FORDEVIATIONSTRATEGIC OBJECTIVE: Corporate GovernanceCompliancewith securityrequirements.Provideinformation forsecurity integrity.May – Oct2010Achieved:• UPS & Aircon Maintenance done• Follow up Audit completed.- Result: Adequate controls in place• Monthly reports sent to Exco on ITenvironment, including security relatedinformation.• Setup reports for internet usage of staff- Daily reports- Monthly reports- Automated email of reports to ITmanagement staff implemented.• Setup a new application to monitor forthe following:- New computers added to thenetwork- New applications installed oncomputers- Reports e-mailed weekly to ITmanagement staff.• Security/antivirus applicationmaintained- Daily checking of activities /potential threats- Improved access permissions(increased lockdown ofunauthorised sites and personnel).ANNUAL REPORT 2010/11

38OUTPUTPERFORMANCEINDICATORTARGET 2010/11PERFORMANCE PROGRESS TO DATEREASONS FORDEVIATIONSTRATEGIC OBJECTIVE: Corporate Governance (continued)Compliancewith securityrequirements.Provideinformation forsecurity integrity.May – Oct2010.• Additional security built into theRegisters website.- Added trigger to divert any hackattempts to another site where welog details of attempt.- Automated logging of suchattempts.- Automated notification of suchattempts to relevant IT staff.• New backup and recovery solutionimplemented to ensure security ofinformation in the event of a disaster.• Improved security within applications- User account management doneon a monthly basis.- Implemented reporting tools andimproved management of networkaccess.- Improved security criteria withinapplications (password controls);Pastel, VIP, CRS.• Physical security systems and accesscontrol maintenance done.Reviewed Policiesand procedures.Annually updatedIT policies.Oct 2010.Achieved• Reviewed IT policies.• 5 policies approved by the Board.- Confidentiality Policy.- Disaster Recovery Plan.- Security Policy.- Access Control and passwordsPolicy.- Data Backup and recovery policy.• Policies and framework for projectmanagement within cidb approvedand rolled out to strategic focus group.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

39SUB PROGRAMME 6.4: SUPPLY CHAIN MANAGEMENTPURPOSEMEASURABLEOBJECTIVEKEY POLICY PRIORITYEXPECTED OUTCOMETo provide supply chain management services to all programmes including the CCCs.Supply Chain ManagementProvision of Supply Chain Management servicesA well managed SCM system that eliminates bottlenecks and prevents anyfruitless, irregular and unauthorised expenditureOUTPUTPERFORMANCEINDICATORTARGET2010/11PERFORMANCEPROGRESS TO DATEREASONSFOR DEVIATIONSTRATEGIC OBJECTIVE: SCM / GovernanceSCMGovernance.AnnuallyupdatedSCMpolicies.SCM policiesreviewedand rolledout to allstaff byOct 2010.• SCM policies have been reviewedand updated accordingly in line withthe most recent National Treasuryguidelines.• Communication of Thresholds andguidelines by means of directives andthrough workshops were postponed tothe end of February pending adoptionof the SCM policy amendments.ANNUAL REPORT 2010/11

40THE CONSTRUCTIONREGISTERS SERVICETHE CONSTRUCTION REGISTERS SERVICEThe Register of Contractors and the Register of Projects have been established interms of the Construction Industry Development Board Act, Act 38 of 2000. TheRegister of Contractors grades and categorises contractors according to financialand works capability. It is mandatory for public sector clients to apply the registerwhen considering construction works tenders. The Register of Contractors facilitatespublic sector procurement and promotes contractor development.The Register of Projects gathers information on the nature, value and distributionof projects. When clients register projects, the track records of contractors areupdated and the information is available to other clients through the cidb website.The cidb has embarked on an accelerated drive to improve client compliancewith the application of the Registers. This will also form the basis for drivingperformance improvement through project close out reports. Public sector clientsare required to register projects above R200,000 while private sector clients andlarge state owned entities are required to register projects above R10 million.The cidb has also developed the free i-Tender service which enables clients toadvertise tenders on the cidb website. The i-Tender service automatically alertsregistered contractors of tender opportunities by email and sms. Tenders arealso displayed on the cidb website. Compliance with legislative requirementsto Register of Projects is made easy for clients who convert the same tenderinformation after award and add basic additional ‘post award’ information.CONSTRUCTION INDUSTRY DEVELOPMENT BOARDBy 31 March 2011, there were 6,803 projects registered and 9,766 tendersadvertised. The number of tender notifications distributed increased to 3,327,683by the end of March 2011. A total of 81,856 contractors have received notificationsof tender opportunities through the i-Tender service.

41An accelerated drive toimprove client compliancewith the application ofthe Registers.Growth in the Register of Contractors has continued in the year under review with a total of 99,421 Grade 1 Contractors registeredand 13,749 Grade 2 to 9 Contractors registered by 31 March 2011. Chart 1 below indicates the growth in the total number ofregistrations across Grades 2 to 9 from January 2005 to January 2011.Chart 1: Growth of Contractor Registrations120 000100 000No. of Active Registrations80 00060 00040 00020 0000Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11Register of Contractors (Grade 1 to 9)ANNUAL REPORT 2010/11

42A comprehensive review process of the criteria for registration on the Register of Contractors was undertaken. Therange of proposed improvements includes a reduction in the qualifying Track Record values and Annual Turnoverrequirements, an emphasis on the combination of both financial capacity and also track record (as opposed to theconsideration of Available Capital only), removal of the requirement for contractors to have professional resourcesin their employ at the time of registration with the cidb, provision for the Minister to publish revised tender value limitadjustments and other improvements. It is envisaged that the Regulations will be published for public comment before30 September 2011.Information from the cidb Quaterly Monitor is included in Chart 2 below and shows the total number of registrations in the GeneralBuilding (GB) and Civil Engineering (CE) classes of works for the past three years. It is seen that there has been a slight increasein the number of registrations for the first quarter of 2011. Furthermore, there has been a consistent increase in the number ofregistrations in Grades 5 and 6 and above.The application of best practice Business Process Management (BPM) methodologies coupled with skilled and committedpersonnel has ensured that the cidb meets its commitment to stakeholders by providing an efficient registrations service.Compliant applications are processed within 21 working days. Potential backlogs are identified early and resolved. The approachis to get it right the first time with quality assurance processes in place.A dedicated training function has been established to ensure that all cidb registrations personnel are knowledgeable onregistration requirements and processes. Registration services are offered at the cidb provincial offices and at the cidb headOffice. The entry level Grade 1 applications are processed ‘over the counter’ with registrations activated within a period of 48hours.The registration software systems are being redesigned to provide for seamless processing activities between the cidb HeadOffice and the Provincial Partnered Offices. This new system will include electronic document management which will bothreduce the turnaround time in processing applications and also increase the integrity of the registrations process. The projectcommenced on the 28th January 2011 with implementation planned for September 2011 onwards.The new system will provide better access to information inside the organisation, reduce the risk of fraud and corruption, increaseefficiency and productivity, improve data validation functions, improve user interfaces, allow for better integration and greaterflexibility in business processes.Chart 2: Number of Registrations 2008 Quarter 1 to 2011 Quarter 2CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

43STATISTICS FROM THE REGISTER OF CONTRACTORSInformation from the Construction Registers Service is used to direct development interventions and inform procurement strategy.This information is accessible to the public on the cidb website, www.cidb.org.za. The statistics below are as at the end of thefinancial year, 31 March 2011.Table 1: Tender Value RangesGRADEMAXIMUM VALUE OF CONTRACT THAT A CONTRACTOR IS CONSIDERED CAPABLE OF PERFORMING1 R 200 0002 R 650 0003 R 2 000 0004 R 4 000 0005 R 6 500 0006 R 13 000 0007 R 40 000 0008 R 130 000 0009 > R 130 000 000(Indicates the maximum value of a contract that a contractor is considered capable of performing).GRADE 1 STATISTICSThe statistics for Grade 1 Contractors have been separated from Grades 2 to 9 in order to better illustrate contracting capacitywhile also allowing for improved identification of development targets.There are no substantive registration requirements for Grade 1 contractors. The actual available contracting capacity istherefore reflected in the number of registrations in Grades 2 to 9.ANNUAL REPORT 2010/11

44Table 2: Class of Works per Province - Grade 1REGIONCLASS OF WORKSGB CE ME EP EB SW TOTALEastern Cape 8210 2872 180 212 103 1547 13124Free State 2885 1037 189 90 52 485 4738Gauteng 13782 4465 803 925 312 4090 24377KwaZulu-Natal 14671 7091 666 349 279 3187 26243Limpopo 5286 2658 294 416 113 915 9682Mpumalanga 4821 1876 385 356 88 637 8163North West 3393 964 160 160 41 609 5327Northern Cape 718 184 61 36 28 115 1142Western Cape 3580 929 171 142 124 1178 6124Total 57346 22076 2909 2686 1140 12763 98920GB: General Building CE: Civil Engineering ME: Mechanical Engineering.EP: Electrical Engineering (Infrastructure) EB: Electrical Engineering (Building) SW: Specialist Works.Table 3: Consolidated Ownership Profile (%) Grade 1REGION TOTAL BLACK OWNED YOUTH OWNED WOMEN OWNEDEastern Cape 13124 97 31 46Free State 4738 95 29 43Gauteng 24377 95 28 44KwaZulu-Natal 26243 98 36 49Limpopo 9682 98 39 54Mpumalanga 8163 98 37 55North West 5327 97 28 43Northern Cape 1142 89 26 34Western Cape 6124 90 21 43Grade 2 to 9 StatisticsTable 4: Contractor Grading by Class of WorksGRADECLASS OF WORKSGB CE ME EP EB SW TOTAL2 1987 1493 189 106 131 464 43703 583 542 81 59 86 107 14584 848 765 132 167 159 134 2205CONSTRUCTION INDUSTRY DEVELOPMENT BOARD5 568 643 190 193 153 221 19686 553 642 83 68 39 58 14437 216 228 38 38 21 29 5708 77 87 18 13 2 7 2049 29 48 19 18 4 9 127Total 4861 4448 750 662 595 1029 12345Table 4 shows the total number of registrations in the various grades and classes of works nationally. The low numbers ofregistrations in the specialist classes of works such as Mechanical Engineering (ME) indicates the need to accelerate skillsdevelopment in these specialist areas.

45Table 5: Black Owned by GradeGRADE TOTAL BLACK OWNED % OF THE TOTAL2 4370 4046 933 1458 1261 864 2205 1729 785 1968 1381 706 1443 992 697 570 292 518 204 71 359 127 11 9Total 12345 9783 79Medium sized contractors (Grades 3 to 6) of which 76% are black owned.Table 5 reflects the percentage of black owned enterprises (where at least 50% of the enterprise is black owned). It is evidentthat there is a low level of black ownership at the higher grades. It is to be noted however that there are many public listedenterprises at Grade 9; therefore the 9% indicated at Grade 9 is not an accurate reflection of the actual level of black ownership.Table 6: Women Owned by GradingGRADE TOTAL WOMAN OWNED % OF THE TOTAL2 4370 2153 493 1458 687 474 2205 942 435 1968 670 346 1443 474 337 570 143 258 204 29 149 127 1 1Total 12345 5099 41Table 6 reflects the percentage of women owned enterprises (where at least 50% of an enterprise is women owned). There isa low level of women ownership at the higher grades.Table 7: Grading by ProvinceREGIONGRADE2 3 4 5 6 7 8 9 TOTALEastern Cape 438 176 236 177 113 42 12 0 1194Free State 262 51 72 70 60 29 8 3 555Gauteng 949 270 541 625 466 205 102 90 3248Foreign 2 0 0 3 2 9 3 8 27KwaZulu-Natal 1215 469 542 380 277 102 34 10 3029Limpopo 363 143 242 241 158 51 7 1 1206Mpumalanga 408 123 206 186 162 38 6 3 1132North West 250 61 121 87 62 21 4 0 606Northern Cape 64 13 32 28 16 3 3 0 159Western Cape 416 148 211 170 127 70 25 12 1179Total 4367 1454 2203 1967 1443 570 204 127 12335Table 7 shows the registrations by regional breakdown. While the Gauteng province displays the highest number of registrationsat the higher grades, It should be noted that most of the larger contractors establish their head offices in the Gauteng provincebut operate across the country.ANNUAL REPORT 2010/11

46Statistics from the i-Tender Register of ProjectsBy 31 March 2011 there were 6,803 projects registered on the Register of Projects and 9,766 tenders advertised using the i-Tenderservice. The number of tender notifications distributed increased to 3,327,683 with a total of 81,856 contractors receivingnotifications of tender opportunities through the i-Tender service.Table 8: Number of Clients registered to use the i-Tender Register of ProjectsREGISTERED CLIENTS 31 MARCH 2008 31 MARCH 2009 31 MARCH 2010 31 MARCH 2011National Departments 13 15 15 60Provincial Departments 24 31 33 37District and Local Municipalities 69 162 174 179State Owned Entities 32 38 41 42Private Sector Clients 52 58 58 62Total 190 304 321 380Chart 3: Number of Projects registered by Provinces by 31 March 2011CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

47ANNUAL REPORT 2010/11

48PUBLIC SECTOR PROCUREMENTAND DELIVERY MANAGEMENTAmendment to the grading criteria for the Register ofContractors.The Procurement and Delivery Programme is custodian to the development,maintenance and implementation of the cidb, Regulations and prescripts.cidb workshops and the National Stakeholder Forum provide valuable feedbackon the cidb Regulations. Feedback is analysed and necessary amendmentsprioritised. The following draft amendments to Part 11 of the (Register of Contractors)were submitted to the Minister of Public Works for consideration and gazetting forpublic comment:The following challenges with proposed amendments have been documentedfor Part 11 (Register of Contractors) and submitted to the Minister of Public Worksfor approval to gazette for public comment:Qualified PersonsIt has been recommended that the requirement for contractors to have qualifiedpersons (commonly referred to as registered professionals) in their employbe removed. Contractors will not be required to provide proof of registeredprofessionals at cidb registration stage.Clients will be required to determine the resource requirements on a ‘project byproject’ basis based on the scope of work, the complexity and the size of theproject. The cidb has drafted a Practice Note to coincide with the implementationof this amendment.CONSTRUCTION INDUSTRY DEVELOPMENT BOARDAnnual TurnoverIt has been recommended that annual turnover qualifying values be reduced.Annual Turnover is a measure that is easy to verify as the information is providedin the financial statements of the enterprise. It should be noted that there is noAnnual Turnover requirement at Grades 1 and 2. At Grades 3 and 4 there isflexibility in terms of financial capacity as contractors are allowed to meet eitherthe Annual Turnover or Available Capital requirements. At Grade 5 and aboveboth the Annual Turnover and Available Capital are required.

49Contract (Track Record)It has been recommended that annual the largest project completed to be reduced as follows (values rounded):GRADEUPPER LIMIT OFTENDER VALUE RANGECURRENT VALUESLARGEST CONTRACT(25 & OF UPPER LIMIT OFTENDER VALUE RANGE)REDUCED VALUESLARGEST CONTRACT (22.5% OFUPPER LIMIT OF TENDER VALUERANGE. 20 % FOR GRADE 2)2 650,000 R 150 000 R 130 0003 2,000,000 R 500 000 R 450 0004 4,000,000 R 1000 000 R 900 0005 6,500,000 R 1 600 000 R 1 500 0006 13,000,000 R 3 250 000 R 3 000 0007 40,000,000 R 10 000 000 R 9 000 0008 130,000,000 R 32 500 000 R 30 000 0009 400,000,000 R 100 000 000 R 90 000 000Annual Tender Value Limit AdjustmentThe Regulations have made provision for the Minister, in consultation with the cidb, to publish tender value limit adjustments (atleast once in three years but may publish annually depending on the market conditions) with proportional registration criteriaadjustments. This is to be done on a set date each year and based on the principles of ‘inflation and market conditions’.Method BThe Method B registration option essentially provides a mechanism for enterprises with large financial capacity to obtain highgrades without having any track record. Feedback was received by large public sector clients on poor delivery by contractors.Contractors are awarded tenders but do not have any experience in the Class of Works under consideration. Bona fidecontractors have also raised the issue of losing out to ‘contractors’ who have no experience and track record.The Method B registration option has accordingly been deleted from the regulations.ANNUAL REPORT 2010/11

50Transfer of RecordsRegulation 11(4) provides for the transfer of records from one contractor to another contractor and treated as if it were the sameentity for the purpose of assessment under various cases such as the amalgamation of companies.As a measure to cater for legitimate cases where companies want to register but cannot meet the required criteria in the nameof the enterprise, it is further recommended that Regulation 11(4) (manner of determination of contractor grading designation)be extended to include the transfer of records from one contractor to another in the case of an incorporated company whollyowned by a cidb Registered company(‘s) and cidb registered companies setting up subsidiaries.Joint Venture CalculationThe Regulations provide for joint ventures to submit tender offers or expressions of interest if every member of the joint venture is aregistered contractor in terms of the Regulations and the lead partner has a contractor grading designation in the Class of Workunder consideration, and possesses the required recognition status. The calculator sums the financial and works capabilities ofthe individual joint venture partners.A problem is that contractors and clients are effectively bypassing the ‘lead partner’ rule in that bigger contractors are placingsmaller, often Grade 1 and 2, contractors as the lead partner in order to satisfy the requirement that the lead partner is registeredin the relevant Class of Work e.g. Mechanical Engineering.It has accordingly been recommended that the lead partner must hold a Contractor Grading Designation not more than onelevel (tender value limit) below the required grade.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

51Way forwardOnce the public comment phase is closed, the cidb will collate all comment and prepare a final submission to the Ministerof Public Works for approval. Once approved, the necessary changes will be effected and the regulations will be republished.ANNUAL REPORT 2010/11

52Compliance and enforcement of cidb legislationThe cidb Regulations are mandatory for all public sector infrastructure clients. However poor levels of compliance with the cidbRegulations have been noted in the following areas:1. Advertising of tenders on the i-Tender system.2. Recording of project award, construction and close out of a project on the Register of Projects.3. Application of the cidb Standard for Uniformity.4. Layout of the tender specification.5. Matching projects with the contractor grades as a result of a poorly written scope of work and incorrect estimates.6. Project specific quality and eligibility criteria.7. Applying well-constructed procurement strategy to promote government’s social agenda.8. Adherence to the requirements of the Preferential Procurement Policy Framework Act and the Supply Chain ManagementGuidelines as prescribed by the National Treasury.The cidb has implemented a strategy to monitor and enforce regulations as a result of high levels of non-compliance. Thefundamental principles of this initiative are:a. To educate public sector clients on the legislative requirements by hosting training and awareness campaigns.b. To create awareness of the cidb Code of Conduct for all parties involved in construction procurement.c. To widely communicate the cidb Anonymous Fraudline to promote reporting of fraudulent, unethical and corrupt practicesand to discourage fraud by advertising penalties imposed.d. To record, investigate and take action where necessary.e. Develop strategic partnerships in the promotion of procurement compliance.The cidb has partnered with the office of the Auditor-General, Competition Commission, Special Investigation Unit, academicinstitutions and various voluntary associations such as CESA, SAFCEC, MBSA to promote compliance with procurement regulations.To this effect the cidb has signed a Memorandum of Understanding (MoU) with CESA.The cidb has appointed two companies of forensic investigators to audit and investigate non compliance by both the contractorsand clients and to initiate hearings in terms of Part V of the Construction Industry Development Regulations.Chart 4: Categories of investigations conducted under the Register of ContractorsCONSTRUCTION INDUSTRY DEVELOPMENT BOARDFinancial StatementsTrack RecordProfessionalsTax Clearance CertificatesCorrupt Paymentscidb CertificatePE StatusNon-Compliance

53Table 1: Categories of caseTable 2: Formal EnquiriesCATEGORIES OF CASES OF FINALISED HEARINGS /CONVICTED CONTRACTORS57Tax Clearance Certificate 5Financial statements 15Professional persons 8Track record 16Unauthorised payments to cidb employees 0Forged cidb certificates 0OVERALL NUMBER OF INVESTIGATIONSEARMARKED FOR HEARINGS37Hearings pending as at 31 March 2011 7Hearings finalised as at 31 March 2011 22Number of contractors convicted 21Number of cases withdrawn 2Number of cases removed 1Number of contractors acquitted 1Unauthorised use of cidb logo / letterhead 2Sponsorship 1Non-compliance by employer 10All prosecuted fraud and corruption cases are published in the Government Gazette and are posted on cidb website.Delivery ManagementInfrastructure Delivery Improvement Programme (IDIP)The Infrastructure Delivery Improvement Programme (IDIP) is a partnership programme championed by the National Treasuryas the lead partner, the Department of Public Works, and the Development Bank of Southern Africa (DBSA). The programme isprimarily aimed at improving performance and the rate of delivery of infrastructure projects at a provincial level, whilst facilitatingthe spending of allocated infrastructure budgets by provincial clients. A key focus is on improving infrastructure planning, aligninginfrastructure delivery and budgeting cycles, and refining roles and responsibilities of the client and implementing agents.Table 3 below compares the consolidated sectoral provincial infrastructure budgets and expenditure trends for the third quarterof 2009/10 and 2010/11.Table 3: Consolidated sectoral provincial infrastructure budgets and expenditure trends – y/y comparisons2009/10 2010/11SECTORADJUSTEDBUDGET(R ‘000)EXPENDITUREAS AT 31DECEMBER2009(R ‘000)%ACTUALVSBUDGET(%)ADJUSTEDBUDGET(R ‘000)EXPENDITUREAS AT 31DECEMBER2010(R ‘000)%ACTUALVSBUDGET(%)% BUDGETGROWTH:Y/Y(%)%EXpenDitureGROWTH:Y/Y(%)Education 5 598 637 4 685 892 83,7% 7 287 397 3 648 658 50,1% 30,2% (22,1%)Health 7 770 835 4 884 399 62,9% 8 938 595 4 649 982 52,0% 15,0% (4,8%)Total 13 369 472 9 570 291 71,6% 16 225 992 8 298 640 51,1% 21,4% (13,3%)SOURCE – INFRASTRUCTURE REPORTING MODEL (IRM)The budget growth trends per sector show that the Health budget has grown by 15% between the third quarters of 2009/10 and2010/11 financial years followed by Education at 30.20%. Health and Education reflect negative growth in expenditure of 4.8%and 22.1% respectively across 2009/10 and 2010/11 financial years. Comparative analysis across sectors shows that Educationspent 50.10% of its allocated budget by the end of the third quarter 2010/11 financial year. Over the same period Health spent52% of its infrastructure budget respectively. The slow spending in Health relates to late awarding of tenders, poor performanceby contractors, capacity of Implementing Agents to deliver and late payments of certificates.IDIP has continued to make a positive impact in the delivery of infrastructure by the Provincial Departments of Education, Healthand Public Works. Phase 2 of IDIP ended on 31 March 2010.ANNUAL REPORT 2010/11

54IDIP Phase 3 commenced in April 2010. It adopts a different model for the mobilisation and utilisation of experts to the modelthat was used in Phase 2. During Phase 2 companies were appointed to provide the technical assistance teams to the provincesbut in Phase 3 individual experts are contracted directly or through their parent companies. This does not only contribute tosignificant cost savings but it provides more direct management control to officials over the experts. Four Long Term TechnicalAssistants (LTAs) are deployed to each province and they are based in the Provincial Treasury Provincial Departments of Health,Education and Public Works. It is required in each province for the LTAs to operate as a multi- disciplinary team that works closelywith and report to government officials, thereby enabling transfer of skills. Phase 3 is focused on the implementation of theInfrastructure Delivery Management Toolkit. Consequently it aims to support the following five Outputs during the next three years:• Effective functioning of the institutional arrangements and enabling environment for infrastructure delivery• Improved infrastructure planning, budgeting, maintenance and programme management• Improved Infrastructure procurement systems and practices• Improved infrastructure delivery skills• Effective management of IDIP.The Infrastructure Delivery Improvement Programme (IDIP) ToolkitThe Construction Industry Development Board in conjunction with National Treasury, Department of Public Works and theDevelopment Bank of Southern Africa are delighted to announce that the third edition of the Infrastructure Delivery ManagementToolkit (IDMT) has been published on the cidb website.The purpose of the IDMT is depicted as follows:• Provides a documented body of knowledge and set of processes that represent generally recognised best practices in thedelivery management of infrastructure• Focussed on the delivery and life cycle management of South African public sector infrastructure• Includes information applicable to both technical and nontechnical managers• Provides “how to” guidelines for infrastructure delivery and procurement management that are necessary to deliver, operateand maintain infrastructure• Helps to capacitate managers• Facilitates a uniform approach to infrastructure delivery management• Assist the public sector to demonstrate compliance with the applicable legislative requirements.The 2010 edition introduces significant updates and amendments to the previous edition. It caters for:• A modernised approach to procurement• Greater emphasis on Portfolio Management• Readiness for local government• Alignment to the requirements of the Government Immovable Asset Management Act, No.19 of 2007.• Additional modules to provide an expanded body of knowledge in strategy, construction procurement strategy andperformance management.The application is based on modern technology and has a web (cidb website) based navigation tool for users to navigatethrough the delivery processes, practice guides and their associated supporting documents.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

55IDIP Toolkit TrainingTraining on the Toolkit commenced in September 2010.PROVINCE DATE NO. OF ATTENDEES CLIENT THEMELimpopo 8 - 10 Mar 2011 60 Department of Healthand SocialDevelopment andDepartment of PublicWorks•ConstructionProcurementWestern Cape 30 Sep 201050Western CapeProvincial Treasury,Department of PublicWorks• Portfolio Planning• Project Management28 - 29 Mar 201117Department ofTransport & PublicWorks, Departmentof Health and IDIPTechnical Assistants• ConstructionProcurementGauteng 8 - 10 Dec 201055IDIP TechnicalAssistants forDepartments ofEducation, Health andPublic Works• Portfolio Planning• Project Management• ConstructionProcurement23 - 25 Mar 201180IDIP TechnicalAssistants forDepartments ofEducation, Health andPublic Works• ConstructionProcurement14 - 15 Apr 201140All Provincial Treasuriesand all Departmentsof Public Works• Portfolio Planning• Project Management• Operations andMaintenanceEastern Cape 15 - 17 Mar 2011 32 Department of Roads& Public Works, Healthand Education• ConstructionProcurementThe strategic plan for training on IDMT will be implemented in the 2011/2012 financial year.ANNUAL REPORT 2010/11

56Delays in paymentsThe cidb through its partnership programme, Infrastructure Delivery Improvement Programme (IDIP) identified delayed paymentto contractors as one of the main blockages to infrastructure delivery in the construction industry. Practice Note 19 issued in June2009 reviewed the three phases of the payment cycle, namely the certification, authorisation, processing and also examinedthe flow of funds between the client departments and the implementing agents. The Practice Note has had minimal impact onpublic sector clients, and the issue of delays in payments remains as one of the crippling constraints to effective infrastructuredelivery.The cidb hosted a workshop on 28 September 2010 at the Reserve Bank Conference Centre to promote consultation withindustry stakeholder for the development of an all-encompassing strategy to enable prompt payment for all service providersresponsible for delivering construction projects. Participants of this workshop supported the following recommendations:• That the cidb examine its authority to introduce regulation permitted by its Act on this matter• That further research be undertaken on the continued lack of understanding in industry regarding payment events, especiallyregarding disputes and related adjudication provisions• That further action could entail the “naming and shaming” of especially serial defaulting payers• The possible introduction of construction legislation of greater influence such as the Housing Act of the UK or similar legislationin Singapore, which includes security of payment but also covers compulsory adjudication and eases the enforcement ofadjudication decisions.In April 2011, the cidb commenced with a literature review to:1. Investigate the legal remedies available to the South African building and civil engineering contractors and consultants toenforce their right of payment for work completed or services performed2. To determine the effectiveness of said remedies and the enforcement thereof and3. Suggest possible solutions on how to improve current payment practices in the South African building and constructionindustry.An Industry Work Group will be established for consultation on the outcomes proposed by the research findings.Infrastructure Gateway System (IGS)Virtually all public sector infrastructure projects are delivered using a traditional preplanned, non-integrated procurementapproach. In terms of this approach, each project is typically executed as a single contract, or may be broken down intosmaller contracts allocated to small and emerging contractors. Contractors would price and construct infrastructure on the basisof designs prepared under the direction of departments and municipalities or their agents.Previously, organs of state had their own internal design, construction and maintenance resources that were capable ofdesigning, constructing and maintaining public infrastructure. These functions were only outsourced to the private sector whereinsufficient capacity existed. Over time, this internal capacity has been eroded. Today most of these functions are outsourcedto the private sector, with the design and project management functions typically being outsourced on a discipline specificbasis and rarely on a consortium basis. Consultants are appointed at the inception of a project and are required to scope theproject and to develop the project brief.CONSTRUCTION INDUSTRY DEVELOPMENT BOARDThe traditional approach to infrastructure delivery works best when an organ of state has sufficient in-house capability andcapacity to oversee the design process resulting in the design and associated documentation being completed before tendersare invited. The current reality is that while organs of state continue to adopt the traditional approach to deliver their infrastructureprojects, they have severe difficulty in attracting and retaining suitably qualified staff to manage the project process. Manymultidisciplinary consulting teams involved in the delivery of building projects rarely have completed designs at the time that thecontractor is appointed, resulting in poor project outcomes.For this reason, there is a dire need to consider alternative options for delivery and maintenance of the much needed publicsector infrastructure. Simultaneously, tighter controls are required to align infrastructure investment to the social and economicdevelopment agenda of government to ensure value for money. In addition, there are many challenges, risks and opportunitiesfor government in delivering the required quantum of public infrastructure in an efficient and effective manner.

57In response to these national imperatives, the cidb has developed an Infrastructure Gateway System which has been embeddedin the upgrade to the cidb Toolkit. The 2010 IDMT caters for infrastructure projects from concept through to delivery, maintenanceand where, necessary the decommissioning of the asset, thus incorporating all aspects of life cycle management of an asset.The Gateway System provides for a number of control points (approval gates) in the asset life cycle where a decision is requiredbefore proceeding from one phase or sub-phase to another. An informed decision at each gate will provide the assurance thata project:• Remains within agreed mandates• Aligns with the purpose for which it was conceived; and• Can progress successfully from one phase to the next.More importantly, the approval gates minimise the project risk to the limitations of the capability of a client to control its risk, whilstimproving governance, accountability and oversight in the infrastructure delivery process.The Infrastructure Gateway System comprises four planning phases (infrastructure planning, procurement planning, packagepreparation and package solution) and a number of implementation phases. The deliverables at the end of the each of theplanning phases are:• An infrastructure plan which identifies long term needs and links prioritised needs to a forecasted budget for the next fiveyears• A procurement strategy for implementing the infrastructure plan in the medium term• A strategic brief setting out the package information and• A report setting out the integrated concept for the package ensures that projects are developed not only in accordance withlegislative requirements but also embrace best procurement and delivery management practices in their implementation.The implementation gates ensure that the design is developed in line with the integrated concept for the package using arange of contracting strategies (i.e. design by employer, develop and construct and design and construct) and the necessaryinformation is obtained soon after the completion of the works.The information upon which a decision is based at a gate and the decisions made can be audited to ensure that projectsremain within a Client’s mandate, are equitable and realise value for money. The opportunity to audit the life cycle of projectsalso:• Improves transparency which reduces opportunity for mismanagement and corruption in planning and implementation;• Enables the procurement strategy adopted for a sector or a package to be reviewed and improved upon when deliveringsimilar future projects• Enables post implementation reviews to take place to examine whether planned benefits are achieved and risks are beingeffectively managed; and• Removes perverse incentives relating to the promotion of one project or a solution over another.ANNUAL REPORT 2010/11

58Procurement ReformRegister of Professional Service Providers (RoPSP)The Constitution of the Republic of South Africa, 1996, determines as a basic human right that every person is free to choosea trade, occupation or profession, but that the trade, occupation or profession may be regulated by law. In addition, theConstitution determines as a basic right for every person to live in an environment that is not harmful to his or her healthor well-being and an environment protected, for the benefit of present and future generations. Against this background,government has promulgated the built environment legislation, regulating the professions and determining the need for everybuilt environment professional to be registered with a Council for the Professions. It is therefore essential that those professionalservice providers who provide construction related services to organs of state are registered with the relevant statutory councilsor if not so registered, perform work under the direction of such persons.Section 5(2)g of the cidb Act empowers the Board to establish and maintain a Register of Suppliers, Manufacturers or ServiceProviders. In this regard, the Board has decided to establish a Register for Professional Service Providers (RoPSP) to assist organs ofstate in the procurement of appropriately qualified built environment professionals.On infrastructure projects, professional services are required to plan, budget, conduct condition assessments of existinginfrastructure, scope requirements in response to the owner or operator’s brief, propose solutions, evaluate alternative solutions,develop the design for the selected solution, produce production information enabling construction, confirm that design intentis met during construction, manage programmes and projects, prepare procurement documents, administer contracts andadjudicate disputes.Decisions made during the design stage of a project can have a major impact on the service life, the usefulness, the performanceand the life cycle costs of construction works. It is accordingly imperative that the professional service provider appointed todesign construction works has the necessary expertise and, most importantly, experience to provide the required knowledgebased services. It is also essential for professional service providers to have not only the capability to perform a service but alsothe resources and internal management systems to provide such service to the required quality within the time frames set by theclient. The appointment of under-qualified, under-experienced and under-resourced service providers has led to fruitless andwasteful expenditure and the compromising of service delivery on public sector projects.The cidb’s mandate is to provide strategic leadership, to promote sustainable growth, improved procurement and deliverymanagement, improved performance and best practice, and to develop systematic methods for monitoring and regulatingthe performance of the industry and its stakeholders. The Register of Contractors is applied whenever a contractor is appointed,with or without design responsibilities to provide construction works (i.e. irrespective of the contracting strategy). The award ofa contract triggers the population of the Register of Projects. The reporting on the completion of a project triggers aspects ofthe Register of Contractor’s Best Practice Recognition Scheme. The Register of Professional Service Providers can be applied inthe procurement of professional service providers. The linking of the Register of Projects to the Register of Contractors and theRegister of Professional Service Providers enables information between the professional service and the product (constructionworks) to be linked e.g. quality and performance etc. It also allows the professional service to be linked to the constructionservice, e.g. cost, time overruns and disputes etc.Defects that manifest several years after completion e.g. a collapse of a roof, severe cracking in a building or a subsidence inthe earthworks, can be readily linked back to both the contractor and the professional.CONSTRUCTION INDUSTRY DEVELOPMENT BOARDThe integration of the cidb Registers, transforming the information obtained from the Registers into knowledge that will informgovernment expenditure in relation to infrastructure as well as economic planning for both the public and private sectors ispivotal to the success of the cidb in developing the construction industry.

59The development and implementation of a Register of Professional Service Providers will be approached in the following phases:PHASE DESCRIPTION EXPECTED PROCUREMENT RELATED OUTCOMESPhase 1:Establishment of abasic register categorisedin broadly defined practiceareas.Phase 2:Peer assessment of PSPscapabilities in narrowlydefined practice areas.Phase 3:Performance reportingafter completion of aconstruction works contract.Phase 4:Best practicerecognition schemeGather basic data of firmsoperating in broadly definedpractice areas.Records outcomes of peerassessment in a narrowly definedpractice area of:a) the quality of outputs;orb) the qualifications, experienceand contextual knowledge ofa registered person, enablingregistration in such practiceareas (process will be pilotedon adjudicators and thereafterexpanded to other areas).Records performance of PSPs indelivering a service.(process will be piloted)Records assessed abilities of a PSPto comply with or apply specifiedbest practices.Reduce risk by:• requiring services to be provided within a discipline tobe rendered under the supervision of a persons is inthe full time employ of a PSP and who is appropriatelyregistered with a statutory council;• establishing requirements for PSPs to maintainminimum levels of competencies in order to remainon the RoPSPs in a particular discipline;• providing a means for prohibiting PSPs and theirprincipals, if necessary, from contracting with a publicsector client for a period of time when they defaulton a contract, breach the registration conditions orbreach the cidb Code of Conduct for the PartiesEngaged in Construction Procurement; and• providing a means for identifying interlocking businessownerships through common principals which canlead to the detection of conflicts of interest or collusivepractices.Reduce risk by enabling an employer to identifyspecialist capabilities of PSPs.Reduces risk by identifying under-performers.Enables quality of service to be improved as employerwill have a means to include performance records in theevaluation of tenders.Reduces risk by enabling an employer to identify PSPswho are capable of delivering a service that satisfiesprescribed best practices.Enables quality of service to be improved as employerwill have a means to use of only those PSPs who havean assessed ability to deliver in terms of specific bestpractices.The cidb has commenced an investigation to develop Phase 1, and where possible, aspects of Phase 2. Piloting of the systemis estimated to be in February 2012.ANNUAL REPORT 2010/11

60Preferential Procurement Policy Framework Act (PPPFA)The Construction Industry Regulations, 2004, adheres to the principles of the Preferential Procurement Policy Framework Act(No.5 of 2000) and its Regulations published in 2001. Since 2004 the Minister of Public Works has made Regulations and the cidbhas issued subsidiary legislation (as authorised by the Regulations) referred to as the Standard for Uniformity. This Standard forUniformity promotes procurement reform in the construction industry.One of the four procurement standards promoted in the Standard for Uniformity refers to Method 4 which is a combinationof points for price, functionality (quality) and preference to arrive at the highest point scoring tender, in accordance with thePPPFA Regulations, 2001. The validity of Preferential Procurement Regulations 2001 relating to the evaluation of functionalityand price were challenged in the KwaZulu-Natal High Court, in Pietermaritzburg. The court found that “the word price doesnot include functionality and that they are entirely distinctive concepts.” and consequently ruled that some of the regulationsrelating to functionality were inconsistent with the Act and therefore declared them to be invalid. The cidb Method 4 has beencompromised by this court judgement, effectively ruling out a key mechanism used to determine the most economicallyadvantageous tender offer in the pursuance of the following key mandates of the cidb Act, which is to, amongst others:• Determine, establish and promote improved performance and best practice of public and private sector clients, contractorsand other participants in the construction delivery process; and• Promote uniform application of policy throughout all spheres of government and promote uniform and ethical standards,construction procurement reform, and improved procurement and delivery management – including a code of conduct.National Treasury has issued an Instruction Note to prescribe the use of functionality only as pre-qualification criteria i.e. tenderssatisfying the specifications and / or minimum levels of functionality are evaluated on the lowest price taking into accountequity considerations i.e. a preference. Of importance is that the Instruction Note permits tenders in the case of the constructionindustry to be evaluated in terms of the cidb prescripts (as provided for in the Supply Chain Management Regulations issuedin terms of the Public Finance Management Act of 1999 and the Local Government: Municipal Finance Management Act of2003).The approach adopted by National Treasury rules out the determination of the most economically advantageous offer. Thisapproach is suitable for non-construction procurement which deals in the main with direct acquisitions which involve standard,well defined and scoped services, off the shelf items and readily available commodities. Construction procurement differs inthat there is seldom the direct acquisition of infrastructure, professional services are required, as necessary, to plan and designthe works, the services are frequently performed on infrastructure that is in use. The risk of the unforeseen occurring during theperformance of the contract frequently leads to changes in the timing for the delivery of the works and the price agreed atthe time that contracts were awarded. The total cost of ownership over life span also needs to be considered. Accordingly,lowest price adjusted for a preference to meet a minimum standard, is appropriate only where projects are very well defined,are straight forward and have a low risk profile. There is accordingly a need in construction procurement to evaluate price andother factors which relate directly to the procurement in line with the Preferential Procurement Regulations 2001, prior to the courtjudgement.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

61The construction industry has recently begun to modernise its approach to delivery as depicted in the 2010 version of theInfrastructure Delivery Management Toolkit (IDMT) developed by the cidb in conjunction with National Treasury), e.g. byintegrating the design and construction aspects of construction works, forming long-term relationships to improve performanceincluding the quantum of service delivered by entering into framework contracts, paying more attention to the managementof construction related risks through the contract, fostering collaborative relationships and engaging in a competitive selectionprocess for professional services. This shift in procurement arrangements is underpinned by alternative contracting strategiesand pricing strategies and is aimed at not only improving the quality of infrastructure but also increasing government’s capacityto deliver and maintain much needed infrastructure. The successful implementation of all of these modern approaches is to alarge extent dependent upon the evaluation of tenders being on the basis of the most economically advantageous offer asopposed to lowest price.Evaluation Method 4 as prescribed by the Standard for Uniformity provides for price (financial offer), preference and functionality(quality) and is typically applied to ensure that the appointed contractor is able to add value in the delivery of construction works.Such value add may be demonstrated in a number of areas including construction methodologies (build ability), experiencein projects of a similar nature, programming of the works, management of the site and supply chain, what innovation can bebrought to a specific project in terms of managing risks relating to health and safety, environmental requirements and quality.Method 4 recognises and rewards those contractors who have made investments in improving their performance in the deliveryof construction works and their service to clients. This not only adds value and reduces life cycle costs but also minimise risks(the effect of uncertainty on objectives) in relation to time, cost and quality of the works and health, safety and environmentalincidents which can impact negatively on project outcomes.After extensive research, the cidb is working closely with the National Department of Public Works and in consultation withthe National Treasury for an amicable solution to retain Method 4. Application for a possible remedy has been prepared forMinisterial approval.ANNUAL REPORT 2010/11

62Client Capacitation and TrainingStrategic Training ProgrammeThe cidb provides training to all infrastructure clients in the public sector on the application of cidb Regulations and prescripts.The table on the following page provides a list of capacitation programmes conducted on cidb Regulations in the 2010-2011financial year:CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

63PROVINCE ORGANISATION AREAS OF CAPACITATIONGautengKwaZulu-NatalNorthern CapeWestern CapeEastern CapeNorth WestBotjheng WaterEkurhuleni Metropolitan Municipalitycidb: Head OfficeSedibeng District MunicipalityEkurhuleni Metropolitan MunicipalityRandfontein Local MunicipalityEkurhuleni Metropolitan MunicipalityEskomIndependent Development TrustSouth African Police ServiceSouth African Police ServiceAuditor General South AfricaDepartment of Public WorksRandwaterProvincial Stakeholder ForumUmgeni WaterDepartment of Public WorksDepartment of Roads and Public Works,Provincial Treasury, Department ofAgriculture , Education& National Public WorksDepartment of AgricultureDepartment of Public Works, ProvincialTreasury, City of Cape Town, &Department of Housing.Saldhana MunicipalityNelson Mandela Bay MetroDepartment of Roads and Public WorksDepartment of Public WorksAmatole District MunicipalityProvincial Stakeholder ForumDepartment of Public WorksProvincial Stakeholder Forumcidb Regulations and impact of compliance.cidb Regulations and processesi-Tender TrainingProcurement Strategy Meeting for Contractor Development.cidb Regulations, Compliance Audits.Site inspection of Platkop and Rietfontein landfill sites.cidb Regulations and impact of compliance.Register of Contractors & PracticeNote 21.cidb Regulations and impact of compliance.CCC Contractor Development Roll OutProcurement Processescidb Regulations and impact of compliance.cidb Regulations, Compliance AuditsCCC Contractor Development Roll OutConstruction Procurement, i-Tender Training, Practice Note 3and 21.Construction Procurement and i-Tender Training.cidb Regulations and impact of compliance.cidb Regulations and impact of compliance.CCC Contractor Development Roll OutCCC Contractor Development SummitProcurement Strategy Meeting for Contractor Developmentcidb Regulations and impact of compliance.CCC Contractor Development Roll Outcidb Regulations and impact of compliance.Free State Department of Public Works CCC Contractor Development Roll OutMpumalangaLimpopoDepartment of Roads and Public WorksEskom MeetingProvincial Stakeholder ForumEmalahleni Local MunicipalityDepartment of EducationDepartment of Public WorksPolokwane Municipalitycidb Regulations and impact of compliance.cidb Regulations and impact of compliance.ANNUAL REPORT 2010/11

64Construction Procurement Skills ProgrammeThe cidb has identified a deficiency in skills required by public sector officials and other stakeholders involved in constructionprocurement and delivery management.The cidb has commenced work on a Construction Procurement Skills Framework which aims to create an enabling environmentto provide continuing professional development and a formal accreditation/certification as well as training opportunities forconstruction procurement practitioners. The Framework will consider the development and implementation of a certificationsystem for procurement practitioners to ensure compliance with the requirements of the Standard for Uniformity in ConstructionProcurement. Such a system will enable Accounting Officers and Heads of Supply Chain Management to entrust constructionprocurement related activities only to staff members and consultants / agents who are conversant with the cidb standard.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

65Competition CommissionSection 5(4) of the Construction Industry Development Board Act, 2000 determines that the Board must publish a code ofconduct for all construction-related procurement and all participants involved in the procurement process. The ambit of thissection includes all players in the construction procurement process, from Clients through to subcontractors and suppliers.The Code of Conduct applies to all construction-related procurement and all participants involved in the procurement process,from the application for registration as a contractor, through to the tender process and the registration and completion of aproject, including participation in the Best Practice Project Assessment Scheme and the Best Practice Contractor RecognitionScheme.In relation to the conduct of tenderers, the Code of Conduct indicates that a tenderer, his employees or agent should:• Not, except for the purpose of joint venture formation or collective action deal with unfair conditions or other faults indocumentation, become involved in collusion with other tenderers, or potential tenderers• Not exchange information regarding tenders with any other tenderer prior to the closing time and date for tenders• Not knowingly price his tender in such a way as to gain an unfair advantage from an obvious error, or oversight, in the tenderdocuments• Not attempt to influence the tender evaluation process• Not approach any representative or employee directly in connection with a tender.With regard to the conduct of a contractor, the Code of Conduct inter alia lists that “The contractor or his employees shouldnot engage in collusive practices that have direct or indirect adverse impacts on the cost of the project to the employer”. Theactions of collusive tendering and price fixing, commonly referred to as collusive practices, have an adverse impact on the costof the project to the Client, and therefore constitute a transgression of the cidb Code of Conduct in addition to a contraventionof the Competition Act, 1998.The cidb will be formalising a relationship with the Competition Commission via a Memorandum of Understanding (MoU) toensure synergies in the investigation and prosecution of both contractors and built environment professionals found to be guiltyof collusive practices.Investigation into Transnet’s New Multi Product Pipeline (NMPP)In December 2010, the cidb was approached to participate in a Ministerial Review Task Team under the leadership of theDepartment of Public Enterprises to investigate the cost overruns and time delays associated with Transnet’s New Multi ProductPipeline.The Ministerial Review Team was to explore whether the key parameters of the NMPP in terms of construction and outputperformance were reasonable, and the shortcomings that resulted in cost trends of the project cycled through massivefluctuations.The Review Team’s approach was to access all possible perspectives on the technical characteristics, cost and schedule trendsof the NMPP project through interviews and to cross-check these with accessed documentary evidence, and subsequentlyformulate its findings and recommendations. The cidb’s prescripts and regulations were monitored for compliance, as well asan examination of the appropriateness of the procurement models and its outcomes in relation to the massive cost increasesof the project.A report of the findings and recommendations of the Ministerial Review Task Team was concluded in April 2011. The report hasbeen tabled with the Minister of the Department of Public Enterprises.ANNUAL REPORT 2010/11

66FACILITATING GROWTHAND DEVELOPMENTBACKGROUNDThe Growth and Contractor Development GCD programme gave focus in2010/11 to:• Supporting national, provincial and other Contractor Development (CD)programme implementation• Strengthening clients capacity to manage the implementation of their CDprogrammes• Facilitating access to various CD support initiative, and• Ensuring stakeholder capacitation and interactionContractor development objectives were implemented through its core units theEnterprise Development Unit and the Construction Contact Centre (CCC)/cidbprovincial partnered offices.Enterprise DevelopmentInformed by lessons from interactions with key stakeholders, both through theprovincial contractor development fora (PCDF) and through the cidb ProvincialStakeholder Workshops, the GCD Enterprise Development Unit focussed its activitieson the following areas:CONSTRUCTION INDUSTRY DEVELOPMENT BOARD• Strengthening the institutional arrangements for the National ContractorDevelopment Programme (NCDP)• Developing knowledge and information materials• Providing technical support and assistance to clients• Undertaking a Baseline Study of contractor development programmes• Developing guidelines for implementing contractor development• Convening a national workshop on the promotion of Green and Decent Jobsin the South African building and construction sector• Establishing strategic and smart partnerships, and• Promoting regional collaboration on contractor development.

67SupportingContractorDevelopment inSouth AfricaStrengthening the institutional arrangements for NCDPThe cidb assisted by the Policy and Monitoring Branch of the National Department of Public Works established a SteeringCommittee to coordinate the implementation of the NCDP.The NCDP Steering Committee comprises of representatives from:• National Department of Public Works• cidb and• Other role players who may be co-opted as and when necessary (these representatives are not permanent SteeringCommittee members).The main functions of the NCDP Steering committee are to:• Co-ordinate the NCDP implementation• Provide strategic guidance and leadership on contractor development• Facilitate consultation and input through workshops and national fora• Facilitate development of guidelines• Monitor and review alignment of contractor development programmes to the NCDP Framework• Monitor and evaluate the implementation of contractor development programmes.The NCDP Steering Committee complements the provincial contractor development fora (PCDF) that have been established by:• Promoting and capacitating on the NCDP• Sharing knowledge and experience on contractor development• Adopting and promoting good practice contractor development guidelines and processes; and• Aligning contractor development programmes to the NCDP.Developing knowledge tools and information materialThe cidb developed knowledge and information tools to empower contractors on the critical aspect of managing a constructionbusiness. During the year under review four brochures were added to the existing series of Tips and Advice. These focused on:• Contract management• Health and Safety• Marketing and• Tendering processes for public sector procurement.ANNUAL REPORT 2010/11

68Technical support to clientsA major focus was on providing technical support to clients to promote common approaches to contractor development, goodpractices and models for contractor development.Technical support, to clients and capacitation were provided through:• Bilateral engagements with clients in response to ad-hoc request• Regular provincial contractor development forum meetings• Roadshows and workshops• Information sharing through provincial cidb stakeholder workshops.The NCDP provincial client capacitation road shows and workshops were convened in all provinces. The focus of the workshopswas to:• Capacitate clients on the NCDP framework and its components• Capacitate clients on other cidb products and services that facilitate or support contractor development such as targetingand procurement strategies• Share experiences and good practice in contractor development.The cidb responded to ad-hoc requests and assisted the following government departments with the conceptualisation of theircontractor development programmes:• The Northern Cape Department of Roads and Public Works – Rea Gona Emerging Contractor Development Programme• KwaZulu-Natal Department of Public Works – Masakhe Emerging Contractor Development Programme• Mpumalanga Province Department of Public Works – Sakhabakhi Contractor Development Programme.Based on the review of the above programmes, it is apparent that clients are at varying stages of aligning their programmesto the NCDP Framework. It is also evident that client are desirous of obtaining the best possible results for their contractordevelopmentprogrammes. In this regard the cidb seeks to further strengthen its capacity to provide technical support to clients.Baseline study of contractor development programmesA Baseline Study on Provincial Contractor DevelopmentProgrammes in South Africa was completed. The study updatesthe Status Quo Review of Contractor Development Programmespreviously carried out by the cidb in March 2009.CONSTRUCTION INDUSTRY DEVELOPMENT BOARDThe aim of the study was to review the performance of existingcontractor development programmes and identify key successfactors, best practice and appropriate indicators for monitoringand evaluation of contractor development programmes. It wasalso to:• Review the performance and outcomes of contractordevelopment programmes to date• Identify indicators for success of contractor developmentprogrammes that can be used as the basis for effectivemonitoring and evaluation system of contractor developmentprogrammes; and• Provide baseline information for use by contractordevelopment practitioners to benchmark programmes.The study of baselines has commenced with participatingorganisations. The aim is to effect corrective measures wherenecessary and to agree on the basis for monitoring of futureparticipating programmes.

69Guidelines for implementing contractor developmentThe cidb developed guidelines for design and implementation ofcontractor development programmes (CDP’s), to assist clients as a meansof engaging grade 2-6 contractors. The objectives of the guidelines is toestablish all the necessary mechanisms, as recommended by the “StatusQuo Report: SA Contractor Development Programmes” for implementingCDP’s.The NCDP framework forms the basis of the guidelines. Therefore all clientswho want to align their programmes to the framework are required tocomply with the guidelines in implementing their prospective CDP’s. Themechanisms established by the guide include:• Targeting of budgets, projects and contractors• Evaluation of contractors when entering a programme• Training and mentoring• Sharing the cost of contractor development• Payment dispute resolution• Exiting from the programme; and• Monitoring and evaluating the programme.National workshop on the promotion of green and decent jobs in the South Africanbuilding and construction sectorThe State of the Nation Address by the President of South Africa, and the Industrial Policy Action Programme II presented bythe Minister of Trade and Industry outlines the promotion of decent work and the creation of green jobs as two policy prioritiesof the Government of South Africa and its social partners. There is a need for strategies to make these goals ‘actionable’ in acollaborative effort between Government, private sector and civil society.To contribute to the debate on creation of decent and green jobs in using the building and construction sector the cidbin partnership with the Ministry of Economic Development, the International Labour Organisation (ILO), the United NationsEnvironment Programme (UNEP), and the Centre for Industrial and Scientific Research (CSIR) organised a one-day workshop forselected sector stakeholders.The workshop took place on 17 May 2010 at the Sandton Convention Centre.The objectives of the workshop were to:• Validate the findings of field research on the potential for greening the building and construction sector in South Africa, andhow to maximise the creation of decent jobs in the process• Jointly review best practice in promoting decent and green jobs in the building and construction sector worldwide, and todiscuss concrete proposals for further driving this agenda in the building and construction sector in South Africa.Observations from the workshop included:• Issues related to skills gaps.• Workforce development related to green technologies• The need for a government supported training programme• The importance of SME’s uptake and involvement.The cidb is considering strategies to respond to these observations.ANNUAL REPORT 2010/11

70Establishing strategic and smart partnershipThe cidb continued to develop relations with stakeholderswho can offer cidb registered contractors value and supportenterprise development. These include training providers,material suppliers, government entities, banks and financeintermediaries.On 1 October 2010 the cidb signed a MoU with Nedbank.The focus has now shifted to ensuring that the MoUs areoperationalised.The cidb commissioned a study into the South African financinglandscape, with the aim of developing a financial model andimplementation strategy.The study acknowledges lack of financial support as one ofmany constraints to contractors development and recommends(particularly for financing houses) implementation of variousstrategies that will facilitate quicker access to finance as well asnon-financial support.A series of workshops and focused presentations were conductedas part of a consultative process which included participantsfrom the insurance sector, banking and financial intermediaries.Key issues raised include the need to create an enablingenvironment for accessing finance, improved financialinfrastructure and government and private sector collaborationin the medium to long term.Promoting regional collaboration on contractor developmentAs the current secretariat of the Contractor Development Organisations in Africa and other Developing Countries of the Worldthe cidb undertook a fact finding visit to Harare, Zimbabwe. The trip followed a study trip to South Africa by a delegation fromConstruction Industry Federation of Zimbabwe (CIFOZ) on the 26 – 27 May 2010.The purpose of the visits was to explore prospects for establishment of partnerships between local construction companies andtheir Zimbabwean counterparts.They also provided an opportunity to review progress in taking forward the objectives of the MoU signed on 31 October 2009 inJohannesburg South Africa Botswana, Ghana, Malawi, Mauritius, South Africa, Tanzania, Zambia and Zimbabwe.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

71CONSTRUCTION CONTACT CENTRES (CCCs)(Provincial partnered cidb offices)With a footprint in the nine provinces the cidb offered improved servicedelivery on both registration functions and other supportive service:• Facilitating contractor development and other cidb support services• Strategic partnerships• Customer service orientation.Facilitating Contractor Development and other cidbsupport servicesThe provincial partnered offices/CCCs provide improved registration service with shorter turnaround times. They also provide anadvice service facilitating better compliance to registration requirements. The centres support clients on contractor development,procurement and information dissemination. They also facilitate implementation of national initiatives at provincial level. Initiativesinclude contractor workshops, client capacitation on contractor development, implementation of alternative procurementstrategies, and Women in Construction Excellence Awards.Provincial Stakeholder WorkshopsProvincial stakeholder workshops aimed to benefit provincial stakeholders with regards to delivery of cidb programmes andprojects to support the cidb mandate, thus encouraging participation in shaping the programmes.Well attended Workshops were convened in various Provinces as follows:Table 1. Provincial Stakeholder Workshops:PROVINCE VENUE DATE HOSTEDGauteng Leriba Hotel and Spa Feb 2011Western Cape Old Mutual Con. Cen. Mar 2011North West Palms Hotel Mar 2011Eastern Cape Pick and Pay Bisho. Mar 2011Mpumalanga Bundu Lodge Mar 2011Northern Cape Flamingo Conference Centre. Apr 2011KwaZulu-Natal Sibaya Sun International Apr 2011Free State To be hosted in 2011/12Limpopo To be hosted in 2011/12Contractor Development Catalytic ProjectsRelationships with provincial client departments were promoted for the purpose of sustainable contractor development. Projectmodels that support and elevate contractor development were coined in partnership with provincial departments. Catalyticprojects were defined as those projects that have links to a specific development programme or developmental initiative.These projects financial contribution serve as contribution to stimulate similar contributions from other stakeholders. The majorprinciple was to enhance partnerships within Provincial Department of Public Works as the primary partner for initiatives, wherepossible, but such projects may extend to any stakeholder or partner striving to achieve positive developmental outcomes.ANNUAL REPORT 2010/11

72Table 2: Participation in Special Projects to support CD:PROVINCE CATALYTIC PROJECT NAME PROJECT AMOUNTMpumalanga Yanyuk’ Imbombela Youth Contractor Development Programme R 79,173.00Eastern Cape JV and Subcontracting seminar R 24,000.00Eastern Cape SMME summit on contracting options R 55,475.00Western CapeProvision of Contractor Development training to department CDPrelated staffR 100,000.00Northern Cape Contractor Development Skills Development training R 100,385.00Contractor Development ForumsThe provincial contractor development fora provide an opportunity for benchmarking best practices amongst participatingclients and stakeholders by sharing pertinent information that builds on successes, failures and best practices in the contractordevelopment landscape.Table 3: Provincial Contractor Development Forum Meetings were convened as follows:PROVINCE NUMBER OF ENGAGEMENTS ISSUES DISCUSSED INCLUDENorthern Cape 1Eastern Cape 3Western Cape 1KwaZulu-Natal 1Free State 2Gauteng 2Mpumalanga 0North West 1Limpopo 2• NCDP Framework• Purpose, role andresponsibilities of a PCDF• Targeting Strategies• Procurement Strategies• Sharing and collatinginformation on CDP/initiatives inthe province• Sharing of ideasWomen in Construction Excellence AwardsWomen in construction awards were conducted in various provinces. The awards recognise outstanding achievements bywomen contractors in business and in delivering construction projects. The provincial awards culminated in the national awardswith provincial winners competing at national level. The following provincial award winners competed at national level:Table 4: Women In Construction Excellence Awards: NationalCATEGORY GRADES COMPANY PROVINCEEPWP 1 - 2 Mbonelaphanda Gauteng3 - 4 Ntshonondo Civils GautengContractors in a development programme 1 – 2 Bokang Q Trading Free StateCONSTRUCTION INDUSTRY DEVELOPMENT BOARD3 – 4 Kanjo Business Enterprise LimpopoTawana Business EnterpriseGautengMainstream contractors 1 – 2 Lezelrique’s Development Northern Cape3 – 4 Tawana Business Enterprise Gauteng5 – 6 Phuma Ukhanye Construction Mpumalanga7 Mmamoleboge Investments Limpopo

73NCDP Client Capacitation WorkshopThe CCCs held workshops for clients on topics including cidb Regulations, targeting strategies, The National ContractorDevelopment Programme framework, Procurement Strategies in support of contractor development, Supply Chain ManagementProcedures and prompt payments.Table 5: Clients capacitated on NCDP -the rollout and implementation targetsPROVINCETARGETED CLIENTSGautengLimpopoWestern CapeKwaZulu-NatalEastern CapeMpumalangaFree State and Northern CapeNorth WestNational Public WorksDepartment of Infrastructure DevelopmentEkurhuleni MunicipalityDepartment of Water AffairsNational Public WorksProvincial Public WorksDepartment of Roads and TransportDepartment of Health and Social DevelopmentDepartment of EducationDepartment of Transport and Public WorksDepartment of Public Works NationalCity of Cape TownDepartment of TreasuryEthekwiniDepartment of Public Works ProvincialDepartment of Public Works NationalDepartment of TransportMunicipalitiesDepartment of Public WorksIDZECDCIDTChris Hani and Amathola District MunicipalityCOEGAMsukaliwa Local MunicipalityEmalahleni Local MunicipalityDepartment of Public WorksMbombela District MunicipalityDepartment of Public Work ProvincialDepartment of Public Works NationalDepartment of TreasuryDepartment of HousingDepartment of HealthIDTDepartment of Public Works, Roads and TransportDepartment of TreasuryDepartment of HealthMunicipalitiesANNUAL REPORT 2010/11

74Strategic PartnershipsIn order to truly give effect to the cidb motto of ‘development through partnerships’, the cidb continued to implement provincialMoA’s. These included improving relations and facilitating training and support to contractors in partnership with training serviceproviders and government entities. Training was conducted on Occupational Health and Safety and on financial management.CCC Customer Service OrientationThe cidb adopted a monitoring and evaluation (M&E) strategy for its provincial partnered CCC offices. One of the key indicatorsto be measured as part of the M&E strategy was the performance and service delivery by the staff as assessed by contractors,clients and stakeholders. Internal assessment systems during 2009/10 were considered necessary and a reputation survey for allprovincial offices was commissioned.The objectives of the survey was to:• Measure performance of the CCCs on service and reputation amongst clients, stakeholders and contractors so as toestablish initial baseline benchmarks for the various services rendered• Review the effectiveness of the current systems in place• Propose amendments or improvements to the systems in place; and• Further streamline service delivery effectiveness.Table 6: Typical responses received were measured against a performance benchmarking rate of 68%formulated as follows:Rating % = [(% of responses x 1) + (% of responses x 2) + (% of responses x 3)]/3, e.g.SCORE BELOW PAR (1) AVERAGE (2) EXCELLENT (3)% of Responses 22% 52% 26%Rating = 68%CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

75Chart 5: Typical survey responses against performance benchmarkContractors Perspective (Red)Clients and stakeholders Perspective (Brown)How well is the CCC performing in respect of…?ANNUAL REPORT 2010/11

76Chart 6: The current performance against a previous experienceMuch worse5%Much better37%Same58%Chart 7: Rating the current performance against previous experienceSame35%Much better64%Much worse1%CONSTRUCTION INDUSTRY DEVELOPMENT BOARDKey findings and recommendations will form the basis for streamlining and efficiency going into the future.

77Staff Training and CapacitationIn order to respond to the benchmark and service level gaps, employees were continuously exposed to training, to buildcapacity that would respond positively to customer needs and improve service. Training and capacitation were based on needsanalysis conducted by managers.Attended Staff TrainingVarious training areas focused upon are highlighted below:PROVINCECOURSE DESCRIPTIONEastern CapeGautengLimpopoNorthern CapeWestern CapeKwaZulu-NatalMpumalangaFree StateEffective Management SkillsInter-personal SkillsService Level Agreements and ContractsEthics ManagementCustomer CarePeople Management for new managersService Level Agreements and ContractsEssential Assertiveness SkillsKey Skills for Effective ManagersFinance for Non-Financial ManagersCustomer CareAdvanced Computer CourseService Level Agreements and ContractsRegistration TrainingRegister TrainingService Level Agreements and ContractsMicrosoft TrainingService Level Agreements and ContractsMicrosoft TrainingService Level Agreements and ContractsRegistration TrainingService Level Agreements and ContractsRegistration TrainingService Level Agreements and ContractsANNUAL REPORT 2010/11

78Growing cidb Provincial reachThe cidb has established 9 Construction Contact Centres (CCCs) as partnered provincial offices. The North West CCC operatesin temporary premises and will relocate to new permanent offices which will be launched during 2011/12, in partnership with theNW Department of Public Works, Roads and Transport.The project in the North West was constructed and completed by a cidb registered grade 6 contractor. The expected focus in2011/12 will be on improved service delivery, customer satisfaction and growing the value add and offerings.To this end, a phased approach commencing in 2011/12, will see staff resourcing, and a priority on contractor developmentand other cidb services being more accessible within the Provincial Partnered Offices.Focus areas for 2011/12• Continued service improvement• Focus on impact surveys and M&E• Extension of resources to offer more cidb services• Increased focus on contractor development• Space and resource planning for maximum efficiency• Addressing the challenge of influx of Grade 1s• Utilisation of professional services and rollout of catalytic projects• Ongoing support on procurement and contractor development to clients and industry.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

79ANNUAL REPORT 2010/11

80MONITORINGINDUSTRY PERFORMANCEThe cidb has developed a suite of products to help monitor and evaluate theperformance of the industry and to support contractor development, including:• Sector specific status reports• The cidb Construction Industry Indicators (CIIs)• The cidb Quarterly Monitor; and• The cidb SME Business Conditions Survey.Collectively, these products provide a base for a detailed understanding of theindustry by the cidb.The cidb Construction Industry Indicators (CIIs) have been captured annually since2003, and measure the performance of the industry focusing on Clients, the client’sagent / consultant and contractors. The CIIs are currently being captured by thecidb in partnership with the Department of Quantity Surveying and ConstructionManagement of the University of the Free State.The current CIIs reflect indicators measured for projects completed in the 2009calendar year, drawn from client departments involving 434 projects and 1053contractors from across all nine provinces. The indicators captured cover:• Client satisfaction• Contractor satisfaction• Profitability and payment delays• Procurement indicators; and• Health and safety.CONSTRUCTION INDUSTRY DEVELOPMENT BOARDAs in previous years, while the overall performance results for the industry areencouraging, and overall show an improvement over previous years, thechallenge is to raise the performance of the industry as a whole, and in particularthe performance of “the bottom 30%”:• Clients were neutral or dissatisfied with the performance of contractors on 15%of the projects surveyed in 2010• Around 12% of the projects surveyed had levels of defects which are regardedas inappropriate• Contractors were neutral or dissatisfied with the quality of tender documentsand specifications obtained from clients on around 22% of the projectssurveyed. Contractor satisfaction was lowest for national/district council clients,followed by national departments.

81• Contractors were neutral or dissatisfied with the management of Variation Orders on 26% of the projects surveyed• Contractors were least satisfied with the management of Variation Orders with the national departments, followed closely bythe metropolitan councils and provincial departments• 48% of payments to contractors were made over 30 days or longer after invoicing; this shows a welcome improvement overthe payment delays compared to the 2008 and 2009 results. Payment delays recorded in the 2010 survey were highest inthe regional/district and metropolitan councils.The cidb Quarterly Monitor provides an overview of the state of contractor development in South Africa as input to developingtargeted intervention strategies in support of the National Contractor Development programme (NCDP). The cidb QuarterlyMonitor focuses on public sector supply and demand at a provincial level, and currently deals only with the General Building(GB) and Civil Engineering (CE) cidb Class of Works.Details of contract awards are obtained from the cidb i-Tender Register of Projects supported by the Industry Insight ProjectDatabase. (The support of Industry Insight in providing this information is gratefully acknowledged.) Contractor information isobtained from the cidb Register of Contractors.A specific focus of the cidb Quarterly Monitor has been on obtaining a detailed analysis of contractor upgrades, downgrades,and new registrations. The cidb Quarterly Monitor also monitors empowerment trends:Chart 8Chart 9ANNUAL REPORT 2010/11

82• Ownership: Around 80% of cidb registered GeneralBuilding (GB) and Civil Engineering (CE) contractors inGrades 2 to 4 are black owned (defined as 50% ormore ownership control). Furthermore, around 70%to 80% of all Grade 5 and 6 General Building andCivil Engineering contractors are black owned, whilearound 50% to 60% of all Grade 7 and 8 GeneralBuilding contractors are black owned.• Contracts Awarded: Estimates of the value ofpublic sector contracts awarded to black ownedcompanies during 2010/11 suggest that around 75%to 80% of the value of Grade 2 to 4 tenders havebeen awarded to black owned contractors. In tenderGrades 7 and 8, the value awarded to black ownedcontractors is significantly lower – namely around50%.• Ownership History: The change in black-ownershipover the past three years (2008 Quarter 2 to 2011Quarter 1) for general Building is shown in the adjacentFigure. Of concern is that black-ownership in Grades2 to 4, 5 and 6, and 7 and 8 has in fact decreasedover this period. Similar results are obtained for CivilEngineering, although black ownership in Grades 7and 8 has increased over time.• Upgrade History: The percentage of contractorsupgrading per quarter in the General Building Classof Works and from Grades 1, 2 to 4 and 5 and 6is shown in the adjacent Figure. It is seen that thenumber of upgrades per quarter from Grades 1, 5and 6 (and from Grades 7 & 8 which are not shown)has decreased over the period 2008 Quarter 2 to2011 Quarter 1. Similar trends are observed with CivilEngineering. It is likely that this decreasing trend incontractor upgrades is due largely to the negativeeconomic conditions being experienced (seebelow).Chart 10Chart 11This understanding of contractor progression on thecidb register of contractors is being used as a proxyfor measuring contractor development and an inputto developing targeting strategies for contractordevelopment.Chart 12CONSTRUCTION INDUSTRY DEVELOPMENT BOARDThe cidb SME Business Conditions Survey measurescontracting business conditions amongst cidb registeredcontractors at a provincial level and in various contractorgrades. The SME Business Conditions Survey is undertakenby the Bureau for Economic Research (BER) for the cidb.The Survey measures, amongst others, the businessconfidence, construction activity, tendering competition,employment and labour constraints amongst cidbregistered contractors, predominantly in cidb Grades 3to 8.The results of the Business Conditions Surveys show that,business confidence in the General Building and CivilEngineering sectors has decreased significantly over theperiod 2008 Quarter 3 to 2011 Quarter 1 – but indicationsare that business conditions could now be improving.

83Construction Quality in SA: A Client PerspectiveValue to clients is a very complex and often subjectiveissue, but it is recognised that quality of construction is akey component of perceived value to clients. As noted byFIDIC, “lack of quality in construction is manifested in pooror non-sustainable workmanship, and unsafe structures;and in delays, cost overruns and disputes in constructioncontracts”. Value and quality of construction is of concernto both public and private sector clients.Against this background, the cidb undertook a study on thequality of construction in South Africa. The report shows that,overall, clients are satisfied with the quality of constructionin South Africa, but that the quality of construction doesvary between construction projects. However, clients ingeneral, and in particular public sector clients, should notbe complacent with this, and should strive for better valueand higher quality construction.This report highlights that the major contributors to poorquality of construction in South Africa are likely to beprocurement related barriers. Such procurement relatedbarriers include:• Fraud and corruption, or ’political interference‘ (includingcronyism and nepotism)• The procurement and delivery model• The use of procurement systems based on priceand preference only, and not taking into accountfunctionality (or quality)• And/or insufficient information to be able to select professional services and/or contractors based on quality criteria.The report concludes with specific recommendations that the cidb and other stakeholders could action to support enhancedconstruction quality in South Africa (several of which the cidb has had already initiated), including:• Strong consideration should be given by the cidb to introduce requirements for integrity and transparency in constructionprocurement• Strong consideration should be given by the cidb to advocate for procurement and delivery models promoting collaborativerelationships and integrated supply teams (including design and build contracting strategies)• The cidb needs to continue to advocate for and to strengthen requirements for the appointment of professional servicesand contractors based on quality criteria – supported by performance assessment reports for professional service providersand contractors and• The cidb must continue to advocate for a building and construction component to be incorporated into the South AfricanWorld Skills activities – and should actively seek to incorporate a construction skills component into the South Africandelegation.ANNUAL REPORT 2010/11

84Progress with the cidb Best Practice Project Assessment SchemeThe cidb Act requires that the Board must establish a Best Practice Project Assessment Scheme based on the best practicesidentified by the Board. All construction contracts above a prescribed tender value will then be subject to an assessment ofcompliance with best practice standards and guidelines published by the Board.Several key best practices are currently being finalised by the cidb together with industry stakeholders for possible roll-out as partof the Best Practice Project Assessment Scheme.Enterprise Development: Growth of the emerging sector can be facilitated through a number of mechanisms, including:• Directly through structured public or private sector contractordevelopment programmes together with appropriate preferencemodels; or• Indirectly through a procurement model with targeteddevelopment outcomes; and• Indirect targeting includes mechanisms such as those where acondition of contract is for the main contractor to develop jointventurepartners and/or sub-contractors.A Focus Group has completed the development of draft requirementsand guidelines for indirect targeting to promote enterprise development.These requirements provide for a minimum of 5% of the total projectvalue on selected contracts to be undertaken by Joint-Venturepartners or to sub-contracted to developing contractors that are alsoto be beneficiaries of enterprise development support from the maincontractor.The draft requirements will be submitted to the Board in 2011/12for possible submission to the Minister of Public Works and forsubsequent implementation. If implemented, it is estimated that therecommendations could result in around R4,6 billion of contractsto developing enterprises per year; and 700 contractors receivingdevelopmental support per year.Construction Skills Policy: A Focus Group has completed the developmentof draft requirements and guidelines for workplace training of internsand up-skilling of company employees in programmes that result innationally accredited outcomes, such as, learnerships and accreditedskills programmes.CONSTRUCTION INDUSTRY DEVELOPMENT BOARDThe draft requirements provide for 0,5% of the tender value of GeneralBuilding (GB) contracts and 0,25% of the tender value of Civil Engineeringcontracts (CE) to be allocated to workplace training on public sectorcontracts in tender Grades 7 to 9. It is estimated that this will translate toaround: R280 million spend on workplace training per year; and 3 000learning opportunities per year.The draft requirements will be submitted to the Board in 2011/12 forpossible submission to the Minister of Public Works and for implementation.Energy Efficient Buildings: A Focus Group has endorsed the Green StarSA rating tools of the Green Building Council of South Africa (GBCSA)as a best practice for public and private sector buildings – which hassubsequently being gazetted by the cidb.The Board also approved the requirements and guidelines developedby the Focus Group, requiring that all public buildings (including PPPs) for

85which the planning phase is begun (including major renovations for which planning approval is required) should be designedand/or constructed to achieve, at a minimum, 4 Star Green Star SA certification. These requirements and guidelines for energyefficient public buildings will be submitted to the Minister of Public Works in 2011/12 for possible roll-out. If implemented, it isestimated that the recommendations could result in around:• R850 million pa savings in cost of carbon for non-residential buildings; and• R55 million pa savings in cost of carbon for the national DPW portfolio.Progress with the cidb Best Practice Contractor Recognition SchemeThe Construction Industry Development Board Act (Act 38 of 2000) requires the Board to establish a Best Practice ContractorRecognition Scheme which:a) enables organs of state to manage risk on complex contracting strategies; andb) promotes contractor development in relation to best practice standards and guidelines developed by the Board.Work is progressing well with the development of the cidb Best Practice Contractor Recognition Scheme, and frameworkdocuments have been developed and endorsed by industry for key components of the Best Practice Contractor RecognitionScheme. Most of these frameworks are now in a piloting phase before possible final endorsement by stakeholders and roll-out:Contractor Performance Assessment: A Focus Grouphas developed and endorsed recommendations thatContractor Performance Assessment reports will berequired to be submitted by the employer to the cidbon practical completion of all prescribed public andprivate sector projects. These reports will provide atrack record of the performance of contractors whichcan be used for:• Assessing the suitability of contractors forregistration, pre-qualification, selective tender listsor expressions of interest• Adjudication for the award of a contract; ortermination of contract.Chart 13A pilot project to evaluate the Contractor PerformanceAssessment reports was initiated with the Western CapeDepartment of Roads and Works in 2009/10. To date,a total of 126 Contractor Performance Assessmentforms covering mainly maintenance and renovationson building projects have been evaluated, coveringprojects ranging in value from R200k to R28m. The pilotis progressing well, and it has been recommendedthat the pilot continue through 2011/12.Discussions are continuing on extending the pilot to other provinces and to selected metros.cidb Competence Accreditation: A Focus Group has developed and endorsed recommendations that will provide for anassessment of the competencies of a contracting enterprise measured against acceptable standards necessary for runninga contracting enterprise and for supervising building and construction works – targeting Grade 2 to 4 contractors. In terms ofthe recommendations, once incorporated into the cidb Best Practice Contractor Recognition Scheme, clients will then beencouraged to procure work from contractors that possess such minimum standards.A draft framework for external assessment (RPL equivalence) has been developed to accredit these competences in contractorswho do not hold any formal qualifications. This framework will be piloted in 2011/12.In addition, a skills survey of a sample of Grade 2 to 6 contractors has also been completed to assess the level of competenciesthat contractors currently possess, as an input into assessing the resource requirements an external assessment of a contractor’scompetencies where the contractor or his nominated representative does not hold the required minimum formal qualifications.ANNUAL REPORT 2010/11

86Chart 14Highest Qualification: SupervisorStaff (%)100%90%80%70%60%50%40%30%20%10%B Tech +NDipForeman CertTrade TestNone / Other02 to 4 5 & 6A survey of Business Management courses for contractors completed in 2010/11, and requirements for Unit Standards in businessmanagement are also currently being finalised.cidb Standard for Construction Management System: To promote and recognise performance improvement by contractors in,typically, Grades 5 to 7, the cidb has developed a customised standard for Construction Management Systems (CMSs) basedon recognisable construction industry minimum standards covering:• Health and safety management• Quality management; and• Environmental management (covering air, water, land and waste).This cidb standard allows for expansion and conversion to meet ISO or OHSAS requirements in the future.In terms of the recommendations developed and endorsed by a Focus Group, once incorporated into the cidb Best PracticeContractor Recognition Scheme clients will be encouraged to procure work from contractors with cidb accredited ConstructionManagement Systems.A pilot project was initiated in 2010 in the Western Cape in which 15 contractors were enrolled to be trained and evaluated onthe cidb CMS standard over a one year period. The pilot is currently drawing to conclusion, and a similar pilot project is beinginitiated in Gauteng for 2011/12.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

87cidb Industry ESDAThe cidb in partnership with industry partners have established an Employment Skills Development Agency (ESDA) to provide workplacement opportunities to FET college learners to gain vital workplace experience. The cidb industry ESDA is currently rolling outa pilot project with 20 learners who have completed their National Certificate Vocational (NCV) Level 4 in Civil Engineering andBuilding Construction.The candidates are employed by the cidb industry ESDA and placed with construction companies for relevant practical exposureand coaching in bricklaying, plastering and concreting. The ESDA pays the learner stipend; provides personal protective clothingand basic tools for their respective trades. The cidb industry ESDA also takes care of the administrative burdens that come withtaking on interns. The ESDA also tracks their progress with the assistance of the on-site coach and FET lecturers.The ESDA will be integral to the roll-out of the Construction Skills Policy (see page 84)cidb Doctoral WorkshopA one day cidb doctoral workshop was held in Cape Town in October 2010, organised jointly by UCT and CPUT. The aimof the one-day workshop was to draw together students registered towards a research degree (typically PhD’s DTech andMSc and MTech) with their supervisors and for the students to present their work (in progress), focusing on deployed researchmethodologies but also on theoretical frameworks in use into their peers, supervisors and other academics. Five students fromfour universities presented their work.Very informative interactions were had between the cidb, academic staff and students regarding their research during theworkshop, and useful feedback was given to students regarding presentation skills and research methodology.It was also clear from the workshop that the base of experienced supervisors within the built environment community needs tobe grown, and suggestions are made to encourage active cross-university co-supervision – particularly to support academicsfrom previously disadvantaged institutions.ANNUAL REPORT 2010/11

88CORPORATE SERVICESThe Corporate Services unit of the cidb encompasses four separate units, namely:Human Resources, Information and Technology, Supply Chain Management andFinance.An overview of the status of these units during 2010/11 follows.Human Resources And Organisational ManagementOverview, Activities and ResponsibilitiesThe activities and responsibilities of the Human Resources (HR) unit are drivenfrom within the Corporate Services cluster, while a number of HR activities havebeen devolved to Business Units. Some of the HR activities handled by the unitinclude recruitment and selection, placement and induction, performancemanagement, employee relations, human resources planning as well as trainingand development.The organisational structure of the cidb groups various functions or activities togetherto avoid duplication and unintended overlaps. Below are different programmesand units that are supported by the HR overleaf department. It is on the basis ofthis cohesive structure that strategic decisions are taken at a centralised point thuscreating a systematic and effective flow of work in response to the organisation’slegislative mandate and strategic imperatives focus areas.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

89Programme Functional AreasCHIEF EXECUTIVE OFFICERPROGRAMMEMANAGER:GROWTH ANDCONTRACTORDEVELOPMENTPROGRAMMEMANAGER:CONSTRUCTIONINDUSTRYPERFORMANCEPROGRAMMEMANAGER:PROCUREMENTAND DELIVERYMANAGEMENTPROGRAMMEMANAGER:CONSTRUCTIONREGISTERSSERVICESCHIEF FINANCIALOFFICER:CORPORATESERVICESProgramme 1:Growth and Contractor DevelopmentFocus:Promotion of enterprise development, investment and spending as the basis for a stable, developing industry and theparticipation of the emerging sector.Programme 2:Construction Industry PerformanceFocus:Improved performance and best practice for an industry that delivers reliable value to clients, investors and end-users, informationon construction industry indicators to inform cidb strategy, policy makers and stakeholders.Programme 3:Procurement and Delivery ManagementFocus:Enhanced public sector construction procurement and infrastructure delivery management capability of public sector clientsenabling efficient and effective delivery of quality infrastructure to the public.Programme 4:Construction Registers ServiceFocus:Registration of contractors and both public and private sector projects;Regulation to effect improved performance and best practice by clients and suppliers.Programme 5:Office of the Chief Executive OfficerFocus:Overall strategic leadership and governance in support of the Board;Stakeholder consultations and communications.Programme 6:Corporate ServicesFocus:Financial management including registers fees;• Information technology;• Human resource management and administration;• Supply chain management.ANNUAL REPORT 2010/11

90Staff recruitmentThrough the human resource planning process, critical posts are given priority to ensure that posts do not remain vacant for toolong.During the period under review, cidb has made strides in ensuring that vacancies are filled timeously especially in areas whereoutgoing staff members had to be replaced. As at 31 March 2011, cidb had only eight vacant permanent positions which wereoccupied by temporary staff members.cidb has signed SLAs (Service Level Agreements) with all recruitment agencies on its database where rates have been negotiatedand set at an agreed minimum of 12% in respect of all the placements regardless of the level of the position that is to be filled.Staff ComplementFor the period under review, the total staff complement was 163 of which 139 were permanent employees while 24 wereemployees on fixed term contracts.Below is the breakdown of human capital across the organisation based on gender and race classifications:Representivity: (01/04/2010 – 31/03/2011)RACE FEMALE MALEAfrican 79 54Asian 1 3Coloured 7 10White 5 4TOTAL 92 71Staff Movement: (01/04/2010 – 31/03/2011)During the period under review, cidb experienced staff movement between programmes and at times where employees leftthe organisation. Below is a summary of the staff movement during the period in question.STAFFCOMPLEMENT31/03/2010CONTRACTTERMINATIONSCONVERSION(FTC – PERM)NEW STAFF31/03/11TOTAL AS AT31/03/2011Permanent 120 10 20 9 139Contract 43 5 20 6 24CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

91Job EvaluationAs one of the means to resolve anomalies relating to job levels and remuneration, cidb management approved that a JobEvaluation system be introduced to ensure that work of the same value is rewarded or remunerated at the same or equal payscale. This process started in December 2010 and will be completed in the following year. The intended outcome of this processis to ensure that all jobs are properly evaluated and linked to applicable pay scales.Human Resource DevelopmentFor the period under review, cidb continued on its commitment to train and develop its personnel in areas that require technicalskills as well as soft skills. Of the annual payroll budget, 1.92% was committed to Human Resources Development (HRD) asguided by employees PDPs as well as outcomes from staff performance assessments.Human Resources ChallengesThe cidb continues to experience challenges in terms of attracting and retaining human resources with specialised skills andcapabilities. During the period under review, some of the human resources challenges experienced were:• Staff attraction: Good candidates not keen to respond to job adverts whilst others reject offers; and• Staff retention: resignation by key personnel to join other organisations that have better incentives schemes.Employment Equitycidb’s commitment to Employment Equity continues to yield positive results. Not only are women in the majority, 41% ofsupervisory and managerial positions at cidb are currently occupied by women while black women represent 81% of the totalnumber of women employed by the cidb.cidb has a total number of 39 managers and supervisors six of which occupy senior positions in the organisation and 16 of themare women as per below breakdown:MANAGERS AND SUPERVISORSRACE MALE FEMALEAfrican 18 16Indian 3 1White 3 -Coloured 2 -Below is the Employment Equity status of the cidb as at 31 March 2011 per Occupational Level:OCCUPATIONAL LEVELS MALE FEMALE FOREIGNERS TOTALA C I W A C I W MALES FEMALESTop Management 2 0 2 1 0 0 1 0 0 0 6Snr. Management 1 1 0 0 2 0 0 0 0 0 4Professionally qualified andexperienced specialists and midmanagement.Skilled technical and academicallyqualified workers, juniormanagement, supervisors, foremenand superintendents.31 2 4 2 35 3 0 0 0 0 77Semi-skilled 19 3 1 1 36 4 0 5 0 2 71Unskilled 1 0 0 0 4 0 0 0 0 0 5TOTAL PERMANENT 54 6 7 4 77 7 1 5 0 2 163Temp Employees 6 1 0 0 2 0 0 0 0 0 9TOTAL 60 7 7 4 79 7 1 5 0 2 172People with disabilities 0 0 0 0 0 0 0 0 0 0 0ANNUAL REPORT 2010/11

92Employee Relations and Disciplinary MattersDuring the period under review, the cidb had to address issues relating to allegations of improper conduct by some of staffmembers. The table below shows a summary of steps taken by it’s management to address the alleged misconduct.Steps taken to address misconductPROGRAMMEWRITTENWARNINGPRECAUTIONARYSUSPENSIONSUPLIFTEDSUSPENSIONSDISCIPLINARYHEARINGS INPROGRESSDISMISSALSConstruction Registers Services 4 5 1 1Corporate Services 1 - - -Staff against whom disciplinary actions have been takenEMPLOYEE RANK PROGRAMME NATURE OF MISCONDUCT SANCTIONCall Centre Agent Construction Registers Services Absent without permission Written WarningAssessor Construction Registers Services Absent without permission Written WarningAdmin. Clerk Construction Registers Services Absent without permission Written WarningCall Centre Agent Construction Registers Services Absent without permission Written WarningGeneral Office Assistant Corporate Services Absent without permission Written WarningOccupational Health and Safetycidb management continues to encourage staff members to adopt a positive attitude towards the fight against HIV / AIDS andtowards those persons who are infected and affected by HIV / AIDS pandemic.During the year under review, the following steps were taken to address occupational risk and exposure to HIV / AIDS:• Awareness campaigns (distribution of banners and information booklets to all cidb centres and head office)• Continuous supply of protective materials (condoms) which are placed at strategic points for staff• Review of HIV / AIDS policy by Occupational Health & Safety Committee.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

93INFORMATION AND TECHNOLOGYThe Information and Technology unit is committed to continuous improvement and providing a service that fully supports andenhances the delivery of the various business units within the cidb. A strong focus on business alignment and improvement ofprocesses is the driving factor of the unit and will continue to ensure the delivery of successful services and solutions.The IT unit is successfully delivering and supporting information systems infrastructure, custom built applications and “off the shelf”products for nine provinces from a single location in Gauteng. The forward looking approach ensures all solutions are scalable,easy to maintain and flexible to adapt to the changing environment both internally and externally. The uptime of measured,critical services was in excess of 99% for the year.The following highlights governance reviews and improvements that have taken place during the period;• A risk assessment exercise has been completed and linked to the various capabilities within the unit; this is being monitoredand maintained on an on-going basis.• The cidb’s capability requirements have been reviewed and fully documented and initiatives for improving the IT unit’sservice delivery are continuously being implemented.• A King III readiness review has been completed and the cidb is sufficiently providing governance within the guidelines ofKing III, additional recommended improvements will be reviewed and implementation will be done where appropriate inthe coming year.• Follow up audits, relating to the past three financial years, on both external and internal audit work have been completedand the required controls have been implemented satisfactorily.• Various Software Development Lifecycle reviews have taken place and recommendations have been implemented and willcontinue to provide improved delivery of solutions to business and external stakeholders.• The IT unit’s project management framework has been finalised and has shown a marked improvement in delivery ofsolutions on time and within budget.These reviews and initiative undertaken have allowed the IT unit to implement further improvements and will continue to supportthe unit in delivering a quality service within business expectations on a regular basis.The planning and procurement phases for the rewrite of the EDMS and CRS applications have been completed and theproject is now underway. The delivery of the project, which is expected to meet the requirements of the business and relevantstakeholders, is envisaged to take place in the following financial year.There has been improved system security, monitoring and disaster recovery solutions implemented and these will continue to bereviewed and improved on during the coming year.ANNUAL REPORT 2010/11

94Supply Chain Management (SCM)The Supply Chain Management unit became fully operational during the 2008/09 financial year and continues to grow fromstrength to strength. The control environment continues to improve significantly, with all the critical positions filled accordingly,and the structures within the Supply Chain Management process functioning effectively throughout the year.The cidb has in its endeavour to comply with the King III Report, Treasury Regulations, Preferential Procurement Policy FrameworkAct and Public Finance Management Act, developed a comprehensive Supply Chain Management Policy that supports BroadBased Black Economic Empowerment. The policy is reviewed annually to incorporate the changes and legislations pertaining toBroad Based Black Economic Empowerment that are pronounced regularly.The unit ensures that the cidb procures goods and services in a manner that is consistent with fairness, equitability, transparencyand cost effectiveness by adhering to the relevant legislations, implementing efficient and effective procurement practices inan integrated manner across all elements of the supply chain and develop appropriate systems that would give effect to theprinciples of fair dealings and providing cidb with the best value for money whilst improving service delivery.The cidb discharges its procurement duties through the following main structures:• The Supply Chain Management function• The Bid Specification Committee• The Bid evaluation Committee; and• The Bid Adjudication Committee.All these structures are kept independent of each other in line with maintaining adequate segregation of duties and in order touphold the main keystones of good governance.Bid Adjudication CommitteeThe Bid Adjudication Committee (BAC) was effective throughout the year. The committee is a permanent structure, withmembership rotated on an annual basis. The committee has a cross functional representation with diversely qualified officialswho have adequate supply chain and construction related experience. These individuals also hold senior positions in theirrespective programmes. The committee is guided by the terms of reference aligned to the SCM policies that specify their codeof conduct amongst other things. All BAC members are required to disclose their interest prior to any evaluation meeting.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

95Bid Evaluation CommitteeThe Bid Evaluation Committee (BEC) oversees the evaluation of all procurement services above R30,000.00 and presents adetailed report for adjudication to the BAC. cidb’s BEC is kept as a floating structure to allow specialist participation.Irregular ExpenditureThe Supply Chain Management unit maintains a register of all irregular expenditure and actions taken in line with NationalTreasury Practice Note 4 of 2008/2009. All relevant disclosure requirements have been complied with as reported in the cidb’sAnnual Financial Statements.ExpenditureThe cidb will endeavour to promote Broad Based Black Economic Empowerment in its sourcing and related spend withoutcompromising quality. Of the total spend of R 37,894,912 (2009/10: R 37,715,836) for the 2010/11 financial year, 31% (2009/10:30%) was spent on historically disadvantaged individuals, with 20% (2009/10: 7%) of which was spent on women ownership.9% (2009/10: 8%) of the total spent went to related parties. cidb intends growing the HDI spent to 50% within the next two years.SCM ProjectsProjects during the yearSCM embarked on a clean-up project in an effort to identify all irregular expenditure incurred during the financial year whichproject focused at conducting the review of the supply chain management process. The project was successfully completedand all irregular expenditure has been disclosed in the Annual Financial Statements.The cidb supplier database project which is aimed at updating the supplier information on our system has also been completedwith success and is working effectively. Through this system, all prospective and existing service providers will now be given anequal opportunity and assurance that the SCM processes are fair, transparent, cost-effective, competitive and equitable.Upcoming projectsTraining of SCM officials and staff: This is targeted for the 2011/2012 financial year to ensure that the supply chain unit is operatingat its peak in all aspects of the supply chain. Workshops will be conducted during the year to ensure that all officials involved in theSCM process are fully aware of the procedures and processes in order to minimise irregular expenditure within the organisation.Supplier performance: The purpose of this is to monitor supplier performance against the agreed service level agreementand make sure public funds are spent wisely on suppliers that will add value for money to the organisation. It aims to improveperformance of all parties involved in the contract by measuring supplier’s ability to comply with and or preferably exceed theircontractual obligation.SCM automation: Automating the supply chain management process will help the personnel in the unit to execute theirresponsibilities in an effective and efficient manner. The SCM is of the view that once procurement module is in place, it willscale down most of the work that are performed manually and reduce the risk of non-compliance and errors.ANNUAL REPORT 2010/11

CONSTRUCTION INDUSTRY DEVELOPMENT BOARD96

97ACCOUNTING AUTHORITY’S REPORTFOR THE YEAR ENDED 31 MARCH 2011ANNUAL REPORT 2010/11

98ACCOUNTING AUTHORITY’S REPORTfor the year ended 31 March 2011NATURE OF BUSINESSThe Construction Industry Development Board (cidb) is a Schedule 3A public entity established in terms of the cidb Act, 2000 toprovide strategic leadership to stakeholders to stimulate sustainable growth, reform and improvement of the construction sectorand the industry’s enhanced role in the country’s economy, as well as regulate the industry. The cidb is under the ExecutiveAuthority of the Department of Public Works.OBJECTIVES AND TARGETSThe objectives and targets of the cidb are summarised in the organisation’s Strategic Plan, Business Plan and the performancesummary. In terms of the external strategic context the activities of the cidb were focused on Public Sector Procurement reformand Delivery Management, facilitating training and fast tracking Contractor Development, Infrastructure Delivery Skills as wellas improved stakeholder relations. The capacitation of public sector clients continued on an “as required” basis. Public sectordelivery has been enhanced through the Infrastructure Delivery Improvement Programme (IDIP) that is run in partnership withthe National Treasury and the DBSA. The National Contractor Development Programme (NCDP), a contractor developmentframework, was identified as a national priority. It was supported by the establishment of the Steering Committee between thecidb and the National Department of Public Works. Already, the cidb has worked with the provincial departments of Public Worksto acquire their statistics on contractor development, an activity that was difficult to accomplish in the past.The cidb /industry ESDA (Employment Skills Development Agency) was kick-started through a pilot phase using internal resources.The first group of learners was inducted and placed with various companies in the industry. The absorption capacity of thisinitiative will depend on funding. During the year under review, the cidb appointed Wits University and NMMU (Nelson MandelaMetropolitan University) as its Centres of Excellence to drive the research agenda and improve academic excellence. Again thishas been achieved with limited resources from the cidb.There was a further delay with the construction of the permanent Construction Contact Centre (CCC) office in the North Westprovince, the last one to be officially opened. The North West CCC will continue to operate from the current temporary premises.The official opening will now be in the financial year 2011/12. The cidb Register of Professional Service Providers (RoPSP) couldnot be implemented as previously envisaged but the Board approved that this register be implemented as a pilot from the year2011/12. The implementation plan will be finalised and rolled out during the year 2011/12.The National Stakeholder Forum was successfully held in October 2010. It was supported by the Provincial Stakeholder Workshopsin six provinces by the end of March 2011. The remaining provinces were KwaZulu-Natal (KZN), Limpopo and the Free State. TheKZN workshop was re-scheduled to April 2011 due to other commitments by the provincial Department of Public Works. Also, thecidb cohosted the international 2010 Construction Summit with the CIOB (Chartered Institute of Building) in May 2010.The Best Practice Schemes have progressed further in that the piloting of the prioritised components has moved to the finalstages with participants. The pilot outcomes will inform how and when the next stages of implementation will be developed.CONSTRUCTION INDUSTRY DEVELOPMENT BOARDThe review of the registration criteria was concluded and the proposed amendments to the regulations are ready for submissionto the Minister to publish for public comments and further processing. This will see many changes aimed at improving theregistration process being implemented. The initial phase of the registration software rewrite has been started in a project that willcreate a new platform for the Registers Programme over the next three years.In terms of corporate governance, the term of the 3rd Board of the cidb ended on 12 December 2010. The Board appointmentprocess was finalised in April 2011, with the first meeting scheduled for 30 May 2011. During the period from 13 December2010 to 31 March 2011 the CEO acted as Accounting Authority, based on the PFMA Section 49(2)(b), a position that the Ministerconcurred with during the period under review.

99ACCOUNTING AUTHORITY’S REPORTfor the year ended 31 March 2011FINANCIAL PERFORMANCEThe Register of Contractors’ previous growth momentum has levelled off in the current year. During the year under reviewactual total revenue raised amounted to R45.1m. Of this revenue, R21.4m was realised from annual fees of new contractorregistrations, upgrades and renewals, the balance of R23.6m was generated from administration fees and other related income(all classified as “the rest”). All compliant applications were processed and communication requesting outstanding informationwas sent out for non-compliant applications.Refunds of annual fees become due to contractors who qualify for grades lower than that applied for, and also for applicationsthat are not processed due to non-compliance by contractors. The cidb managed to process refunds amounting to R3.9m. Inorder to action any refunds cidb prompts contractors by sending refund request forms for contractors to complete. This is donein order to ensure that refunds are processed to correct and up to date banking accounts.Total revenue budget was exceeded by R8.8m of which R6.8m relates to registers revenue and the balance is for interest andother revenue.The surplus for the year amounts to R10.0m and accumulated reserves total R52.6m. Of the accumulated surpluses, R1.2m willbe utilised for the future amortisation of the lease rentals on the office building and the balance will be used mainly to fund thedevelopment of the EDMS and Registration systems, special projects such as communication, research & development, greenstar rating, contractor development and fraud prevention.Cash and cash equivalents balance for the year amount to R80.8m.EVENTS SUBSEQUENT TO STATEMENT OF FINANCIAL POSITION DATENo events took place between the year-end date (31 March 2011) and the date on which the financial statements were signedthat were sufficiently material to warrant disclosure to interested parties.AUDIT COMMITTEEThe Audit Committee consists of external members and two Board members. The external members, namely Ms Shelley Thomas(Chairperson), Victor Nondabula and Bryan Chaplog (resigned in August 2010 and replaced by Nala Mhlongo in January2011), are supported by two Board members: Messrs Marten Govender and Lwandile Kona both their terms of office expired inDecember 2010. A new rotation system was adopted during the current period whereby the current members of the committeeare replaced in a staggered approach over the next three years in order to ensure continuity within the committee. The charterhas been amended accordingly in this regard. The committee meets at least twice per annum as per its approved terms ofreference.Appointed by the Board from 1 July 2007, the Committee met ten times in the current year, five of the meetings were specialmeetings. The Audit Committee is chaired by an independent chartered accountant who is neither an executive nor a Boardmember of the cidb. Committee meetings are attended by members of the Auditor-General’s office and the internal auditors.INTERNAL AUDIT UNITThe internal audit unit is outsourced to KPMG Chartered Accountants. Their function is mandated by the Audit Committee. Theinternal audit unit measures and evaluates the effectiveness and application of policies, procedures, systems and processesdesigned to fulfil the requirements of the risk management policy, and general compliance with governance principles,regulation and the safeguarding of assets. In the year under review internal audit focused on the Construction Registers Service(CRS), Finance, IT and Human Resources.ANNUAL REPORT 2010/11

100ACCOUNTING AUTHORITY’S REPORTfor the year ended 31 March 2011REMUNERATION COMMITTEEThe Remuneration Committee comprises three Board members appointed by the Board, namely Ms Nyeleti CharmaineMakhubele (Chairperson), Messrs Nazir Alli and Cannon Noyana. This committee is tasked with the evaluation and review of humanresource strategy and operations. The committee’s terms of reference include considering and making recommendations tothe Board on matters relating to general staff policy, remuneration, bonuses, review of service contracts and other benefits. TheRemuneration Committee also evaluated and approved staff salaries during the current period and its term of office came toan end in December 2010. The evaluation of performance bonuses for the period ending 31 March 2011 was conducted bythe Leadership and approved by the CEO as the standing Accounting Authority while the Board was still being appointed.PROPERTY, PLANT AND EQUIPMENTThe cidb continues to implement the policy as prescribed by GRAP 17 relating to the assessing of useful life and residual value ofproperty, plant and equipment. Residual values and useful life are assessed at the end of each financial year. There has beenno change in the policy relating to the use of property, plant and equipment.MATERIALITY FRAMEWORKThe cidb in line with the Public Finance Management Act has updated its materiality framework. The framework has beenpresented to the Board for their approval.RISK ASSESSMENT AND INTERNAL CONTROLSThe cidb endeavours to minimise risk by ensuring that appropriate systems, policies, personnel and controls are in placethroughout the organisation. A risk assessment exercise was performed during 2009/2010 financial year to identify areas of riskand to map appropriate controls over the past financial year. The process was facilitated by the Risk and Governance managerand was aimed to determine the material risks to which the cidb was exposed and to evaluate the strategy for managing theserisks. The cidb relied on the outsourced internal audit function and external auditors for independent appraisal of the adequacyand effectiveness of the internal controls. The Audit and Risk Committees, with extensive input by the internal and externalauditors, played a role in assisting management to assess the adequacy and effectiveness of the accounting system, recordsand internal control.ENTITY DOMICILE AND LEGAL FORMBlock N & R, SABS CampusNo 2 Dr. Lategan RoadGroenkloof, 0027PretoriaBusiness Address and Registered Office:P.O Box 2107Brooklyn Square0075CONSTRUCTION INDUSTRY DEVELOPMENT BOARDWebsite address: www. cidb.org.zaTelephone: (012) 482 7200Fax: 086 680 8569Ronnie KhozaCEODate: 28 July 2011Bafana NdendwaBoard ChairpersonDate: 28 July 2011

101REPORT OF THE AUDIT COMMITTEEfor the year ended 31 March 2011We are pleased to present our report for the financial year ended 31 March 2011.Audit Committee Members and AttendanceThe audit committee consists of the members listed hereunder and meets at least two times per annum as per its approvedterms of reference. Special meetings of the Audit Committee may be convened as required. During the current year fiveordinary and five special meetings were held. The purpose the five special audit committee meetings was to evaluate andappoint the Internal Auditors.Name of MemberNumber of Meetings attendedShelley Thomas (Chairperson) 10Bryan Chaplog 7Victor Nondabula 9Marten Govender 8Lwandile Kona 5Nala Mhlongo 2Mr Lwandile Kona and Mr Marten Govender’s term as committee members expired in December 2010 as a result of their term asBoard members expiring. In terms of the entity’s rotation policy, Mr Bryan Chaplog’s retired as a member of the audit committee.Mr Nala Mhlongo was appointed to the Audit Committee in January 2011.The External Auditors, the Chief Executive Officer, Internal Auditors as well as the Chief Financial Officer have a standing invitationto Audit Committee meetings and have attended most of the meetings during the year under review.The Audit Committee comprises five members, all of whom are from the private sector and two of whom are members of theBoard.Audit Committee ResponsibilityThe Audit Committee reports that it has complied with its responsibilities arising from Treasury Regulations 27.1.7 and 27.1.10(b)and (c) issued in terms of the Public Finance Management Act 1 of 1999, as amended by Act 29 of 1999.The Audit Committee also reports that it has adopted appropriate formal terms of reference as its audit committee charter, hasregulated its affairs in compliance with this charter and has discharged all its responsibilities as contained therein.The report on performance informationWhilst the Board has additional responsibility as required by Section 55(2)(a) of the PFMA to ensure that the annual report andaudited financial statements fairly present its performance against predetermined objectives, it is the Audit Committee’s opinionthat performance information is appropriately reported.The effectiveness of internal controlDuring the year under review internal controls were predominantly effective. However internal control weaknesses were identifiedin supply chain management. The opinion of the Auditor General was however an unqualified audit opinion.There will be continued focus on internal control including assets, revenue and month end processes. There will also be increasedfocus on performance information systems and controls.ANNUAL REPORT 2010/11

102REPORT OF THE AUDIT COMMITTEEfor the year ended 31 March 2011The quality of management and monthly/quarterly reports submitted in terms of the PFMAThe Audit Committee has reviewed and commented on the content and quality of monthly and quarterly reports prepared andissued by the Board during the year under review and provided input if any was required.Internal AuditThe Board has outsourced the internal audit function to a private firm of chartered accountants and the areas covered werein terms of a three year rolling plan. The Audit Committee has reviewed the adequacy of the coverage and, subject to certaindeviations, is satisfied therewith.Evaluation of Financial StatementsThe Audit Committee has:• reviewed and discussed the audited annual financial statements to be included in the annual report with the Auditor-General and the Accounting Officer;• reviewed the Auditor-General’s management letter and management’s response thereto;• reviewed the accounting policies and practices;• reviewed the significant adjustments resulting from the audit.The Audit Committee concurs and accepts the Auditor-General’s conclusions on the annual financial statements and is of theopinion that the audited annual financial statements be accepted and read together with the report of the Auditor-General.Shelley ThomasChairperson of the Audit CommitteeCONSTRUCTION INDUSTRY DEVELOPMENT BOARD

103STATEMENT OF RESPONSIBILITY AND GOING CONCERNSTATEMENT OF RESPONSIBILITY FOR ANNUAL FINANCIAL STATEMENT FOR A GOING CONCERNAt the time of preparation of Annual Financial Statements for the period under review, the Board members believed that thecidb will be a going concern in the foreseeable future. For this reason they continue to adopt a going concern basis in thepreparation of these Annual Financial Statements.RESPONSIBILITY FOR ANNUAL FINANCIAL STATEMENTSThe members of the Board are responsible for the preparation of the Annual Financial Statements.APPROVAL OF cidb ANNUAL FINANCIAL STATEMENTSThe Annual Financial Statements for the year ended 31 March 2011, set out on pages 108 to 139, have been approved by theBoard in terms of section 51(1) (f) of the Public Finance Management Act (PFMA), No 1 of 1999 on 31 May 2011. However thefinancial statements were materially revised as a result of the audit findings and the final approved financial statements weresigned on 28 July 2011 on behalf of the Board by:Ronnie KhozaCEOBafana NdendwaBoard ChairpersonDate: 28 July 2011Date: 28 July 2011ANNUAL REPORT 2010/11

104REPORT OF THE AUDITOR-GENERALto Parliament on the Financial Statements of theConstruction Industry Development Board for the year ended 31 March 2011REPORT ON THE FINANCIAL STATEMENTSIntroduction1. I have audited the accompanying financial statements of the Construction Industry Development Board, which comprisethe statement of financial position as at 31 March 2011, and the statement of financial performance, statement of changesin net assets and statement of cash flows for the year then ended, a summary of significant accounting policies and otherexplanatory information as set out on pages 108 to 139.Accounting authority’s responsibility for the financial statements2. The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordancewith the South African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and the requirementsof the Public Finance Management Act of South Africa, 1999 (Act No.1 of 1999) (PFMA), and for such internal controlas management determines necessary to enable the preparation of financial statements that are free from materialmisstatement, whether due to fraud or error.Auditor-General’s responsibility3. As required by section 188 of the Constitution of the Republic of South Africa, 1996 (Act No. 108 of 1996) and, section 4of the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA), my responsibility is to express an opinion on thesefinancial statements based on my audit.4. I conducted my audit in accordance with International Standards on Auditing and General Notice 1111 of 2010 issued inGovernment Gazette 33872 of 15 December 2010. Those standards require that I comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.5. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of materialmisstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considersinternal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectivenessof the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements.6. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.OpinionCONSTRUCTION INDUSTRY DEVELOPMENT BOARD7. In my opinion, the financial statements present fairly, in all material respects, the financial position of the ConstructionIndustry Development Board as at 31 March 2011, and its financial performance and cash flows for the year then ended inaccordance with SA Standards of GRAP and the requirements of the PFMA.Emphasis of matters8. I draw attention to the matters below. My opinion is not modified in respect of these matters:

105REPORT OF THE AUDITOR-GENERALto Parliament on the Financial Statements of theConstruction Industry Development Board for the year ended 31 March 2011Fruitless and wasteful expenditure9. As disclosed in note 16.1 to the annual financial statements, fruitless and wasteful expenditure to the amount of R262 152was incurred.Irregular expenditure10. As disclosed in note 16.2 to the annual financial statements, irregular expenditure to the amount of R9 265 765 was incurredin the current year as the correct procurement processes had not been followed.REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS11. In accordance with the PAA and in terms of General Notice 1111 of 2010, issued in Government Gazette 33872 of15 December 2010, I include below my findings on the annual performance report as set out on pages 20 to 39 andmaterial non-compliance with laws and regulations applicable to the public entity.Predetermined objectivesUsefulness of information12. The reported performance information was deficient in respect of the following criteria:• Consistency: The reported objectives, indicators and targets are not consistent with the approved strategic plan.• Measurability: The indicators are not well defined and verifiable, and targets are not specific and measurable.13. The following audit findings relate to the above criteria:• Reported performance against predetermined objectives is not consistent with the approved strategic plan.• For the selected programmes, 72% of the planned and reported targets were not specific in clearly identifying the natureand the required level of performance.• For the selected programmes, 44% of the planned and reported targets were not measurable in identifying the requiredperformance.• For the selected programmes, 53% of the planned and reported indicators were not clear, as unambiguous data definitionswere not available to allow for data to be collected consistently.• For the selected programmes valid performance management processes and systems that produce actual performanceagainst the planned indicators do not exist for 36% of the indicators.Reliability of information14. The reported performance information was deficient in respect of the following criteria:• Validity: The reported performance did not occur and does not pertain to the entity.• Accuracy: The amounts, numbers and other data relating to reported actual performance have not been recorded andreported appropriately.ANNUAL REPORT 2010/11

106REPORT OF THE AUDITOR-GENERALto Parliament on the Financial Statements of theConstruction Industry Development Board for the year ended 31 March 201115. The following audit findings relate to the above criteria:• For the selected programmes the accuracy and validity of 25% of the reported targets could not be established as sufficientappropriate audit evidence or relevant source documentation could not be provided.Compliance with laws and regulationsAnnual financial statements16. The accounting authority submitted financial statements for auditing that were not prepared in all material aspects inaccordance with generally recognised accounting practice as required by section 55(1) (b) of the PFMA. The materialmisstatements identified by the AGSA with regard to the disclosure of irregular expenditure, operating lease commitmentsand the reconciliation of budget to surplus note was subsequently corrected.Procurement and Contract Management17. Goods and services with a transaction value of between R10 000 and R500 000 were procured without inviting at least threewritten price quotations from prospective suppliers, as per the requirement of Practice Note 8 of 2007-08 issued in terms ofsection 76(4)(c) of the PFMA.18. Goods and services with a transaction value of more than R500 000 were procured without inviting competitive bids fromprospective suppliers, as per the requirement of Practice Note 8 of 2007-08 issued in terms of section 76(4)(c) of the PFMA.19. Goods and services with a transaction value of more than R1 000 000 were procured without inviting competitive bids fromprospective suppliers, as per the requirement of Practice Note 8 of 2007-08 issued in terms of section 76(4)(c) of the PFMA.No letter was sent to the relevant Treasury or to the Auditor-General, within 10 days, as per the requirements of Practice Note6 of 2007-08 issued in term of section 76(4)(c) of the PFMA.Expenditure management20. The accounting authority did not take effective and appropriate steps to prevent irregular and fruitless and wastefulexpenditure as per the requirements of section 51 (1 )(b) of the PFMA.INTERNAL CONTROL21. ln accordance with the PAA and in terms of General notice 1111 of 2010, issued in Government Gazette 33872 of 15December 2010, I considered internal control relevant to my audit, but not for the purpose of expressing an opinion onthe effectiveness of internal control. The matters reported below are limited to the significant deficiencies that resulted inthe basis for my opinion, the findings on the annual performance report and the findings on compliance with laws andregulations included in this report.CONSTRUCTION INDUSTRY DEVELOPMENT BOARDLeadership22. The accounting authority did not exercise effective oversight in ensuring that the planning and monitoring of performanceinformation were aligned to National Treasury’s Framework for Managing Programme Performance. Furthermore the cidb didnot have sufficient monitoring controls to ensure compliance with Supply Chain Management legislation.

107REPORT OF THE AUDITOR-GENERALto Parliament on the Financial Statements of theConstruction Industry Development Board for the year ended 31 March 2011Financial and performance management23. The financial statements and other information to be included in the annual report are not adequately reviewed forcompleteness and accuracy prior to its submission for audit purposes.Pretoria31 July 2011ANNUAL REPORT 2010/11

108ANNUAL FINANCIAL STATEMENTSas at 31 March 2011CONTENTSPAGEStatement of financial position 109Statement of financial performance 110Statement of changes in net assets 111Cash flow statement 112Notes to the financial statements 113 -139The Annual Financial Statements were approved by the Accounting Authority and the Chief Executive Officer and are signedbelow:Ronnie KhozaCEOBafana NdendwaBoard ChairpersonDate: 28 July 2011Date: 28 July 2011CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

109STATEMENT OF FINANCIAL POSITIONas at 31 March 2011ASSETS2011 2010NOTES R RCURRENT ASSETS 83 686 629 66 740 755Cash and cash equivalents 2 80 811 763 62 313 159Receivables : exchange transactions 3 1 682 109 1 118 822Operating lease asset 4 1 192 757 3 308 774NON-CURRENT ASSETS 14 764 827 15 827 805Property, plant and equipment 5 12 617 297 13 083 841Intangible assets 6 2 147 530 1 551 207Operating lease asset 4 - 1 192 757TOTAL ASSETS 98 451 456 82 568 560LIABILITIESCURRENT LIABILITIES 45 744 200 39 575 264Payables: exchange transactions 8 19 085 819 15 261 849Income received in advance 9 26 336 614 24 030 828Finance lease liability 10 321 768 282 587NON-CURRENT LIABILITIES 90 134 411 902Finance lease liability 10 90 134 411 902TOTAL LIABILITIES 45 834 334 39 987 166NET ASSETS 52 617 122 42 581 394REPRESENTED BY:Accumulated Surpluses 11 52 617 122 42 581 394ANNUAL REPORT 2010/11

110STATEMENT OF FINANCIAL PERFORMANCEfor the year ended 31 March 20112011 2010NOTES R RREVENUENon exchange transactionsGrants received 12, 30.1 63 665 000 59 269 000Exchange transactions 50 046 576 50 846 841Registers revenue 13 45 073 460 47 059 809Finance income 14 4 131 542 3 733 289Other income 15 841 574 53 743TOTAL REVENUE 113 711 576 110 115 841EXPENDITUREAdministrative expenses 17 (9 672 160) (7 738 124)Staff costs 18 (52 867 578) (44 285 120)Marketing costs 19 (2 898 103) (2 432 705)Audit fees 20 (1 469 479) (1 476 977)Other operating expenses 21 (36 694 166) (32 997 386)Finance costs 22 (74 360) (108 803)TOTAL EXPENDITURE (103 675 846) (89 039 115)SURPLUS FOR THE YEAR 10 035 730 21 076 726CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

111STATEMENT OF CHANGES IN NET ASSETSfor the year ended 31 March 2011NOTESRBalance at 31 March 2009 21 519 880Prior year adjustment 23 (15 214)Balance at 31 March 2009 as restated 21 504 666Surplus for the period 21 076 726Surplus for the period as previously stated 21 026 367Prior year adjustment 23 50 359Balance at 31 March 2010 as restated 42 581 392Surplus for the period 10 035 730Balance at 31 March 2011 52 617 122ANNUAL REPORT 2010/11

112CASH FLOW STATEMENTSfor the year ended 31 March 2011CASH FLOWS FROM OPERATING ACTIVITIES2011 2010NOTES R ROperating activitiesReceipts 24 112 324 941 107 067 752Registers income 47 818 367 47 745 009Grants received 63 665 000 59 269 000Other receipts 841 574 53 743Payments 25 (94 861 421) (82 000 955)Compensation to employees 18 (52 867 578) (44 285 120)Payments to suppliers and other (41 993 843) (37 715 834)Cash generated from operations 26 17 463 520 25 066 797Finance income 15 4 131 542 3 733 289Finance costs 22 (74 360) (108 803)Net cash inflow from operating activities 21 520 703 28 691 283CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment 5,1 (1 736 641) (1 596 562)Purchase of intangible assets 6,1 (1 002 872) (331 326)Net cash outflow from investing activities (2 739 513) (1 927 888)CASH FLOWS FROM FINANCING ACTIVITIESFinance lease repaid (282 586) (248 144)Net increase in cash and cash equivalents 18 498 604 26 515 25Cash and cash equivalents at beginning of the year 62 313 159 35 797 908Cash and cash equivalents at end of the year 2 80 811 763 62 313 159CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

113ACCOUNTING POLICIES1. ACCOUNTING POLICIES1.1. BASIS OF PREPARATIONThe Annual Financial Statements have been prepared in accordance with Generally Recognised Accounting Practice (GRAP),issued by the Accounting Standards Board in accordance with Section 89 of the Public Finance Management Act (Act No. 1 of1999).The Annual Financial Statements have been prepared on the historical cost basis unless otherwise indicated.The principle accounting policies adopted in the preparation of these financial statements are set out below.Assets, liabilities, revenues and expenses have not been offset except where offsetting is required or permitted by a Standard ofGRAP.The principle accounting policies are applied consistently with those used to present the previous year’s financial statements,unless explicitly stated. The details of any changes in principle accounting policies are explained in the relevant policy.The principle accounting policies for material transactions, events or conditions not covered by the GRAP reporting framework,as detailed above, have been developed in accordance with paragraphs 7, 11 and 12 of GRAP 3 and the hierarchy approvedin Directive 5 issued by the Accounting Standards Board.The following GRAP Standards have been issued but are not yet effective and have not been early adopted by the ConstructionIndustry Development Board:GRAP 21: Impairment of non-cash-generating assets (effective date 1 April 2012)GRAP 23: Revenue from non-exchange transactions (taxes and transfers) (effective date 1 April 2012)GRAP 24: Presentation of Budget Information in Financial Statements (effective date 1 April 2012)GRAP 25: Employee Benefits (not yet announced)GRAP 26: Impairment of cash-generating Assets (effective date 1 April 2012)GRAP 103: Heritage Assets (effective date 1 April 2012)GRAP 104: Financial Instruments (not yet announced)IGRAP 2: Changes in Existing Decommissioning, Restoration and Similar Liabilities (effective date 1 April 2011)IGRAP 3: Determining whether an Arrangement contains a lease (effective date 1 April 2011)IGRAP 4: Rights to interests arising from decommissioning, restoration and environmental rehabilitation funds (effective date1 April 2011)IGRAP 7: The limit on a defined benefit asset, minimum funding requirements and their interaction (not yet announced)IGRAP 10: Assets received from customers (effective date 1 April 2011)IGRAP 13: Operating leases - Incentives (effective date 1 April 2011)IGRAP 15: Revenue - Barter transactions involving advertising services (effective date 1 April 2011)GRAP 18: Segment Reporting (not yet announced)IGRAP 5: Applying the restatement approach under the standard of GRAP on financial reporting in hyperinflationary economies(effective date 1 April 2011)IGRAP 6: Loyalty Programmes (effective date 1 April 2011)IGRAP 8: Agreements for the construction of assets from exchange transactions (effective date 1 April 2011)GRAP 9: Distributions of non-cash assets to owners (effective date 1 April 2011)GRAP 14: Evaluating the substance of transactions involving the legal form of a lease (effective date 1 April 2011)ANNUAL REPORT 2010/11

114ACCOUNTING POLICIES(continued)1.2. PRESENTATION CURRENCYThe financial statements are presented in South African Rand, which is the functional currency of the entity, and are rounded offto the nearest Rand.1.3. GOING CONCERN ASSUMPTIONThese Annual Financial Statements have been prepared on the assumption that the entity will continue to operate as a goingconcern for at least the next 12 months.1.4. COMPARATIVE INFORMATIONWhen the presentation or classification of items in the Annual Financial Statements is amended, prior period comparativeamounts are restated. The nature and reason for the reclassification is disclosed. Where accounting errors have been identifiedin the current year, the correction is made retrospectively as far as is practicable, and the prior year comparatives are restatedaccordingly. Where there has been a change in accounting policy in the current year, the adjustment is made retrospectivelyas far as is practicable, and the prior year comparatives are restated accordingly.1.5. PROPERTY, PLANT AND EQUIPMENTAn asset of property, plant and equipment is recorded on receipt of the item at cost. Cost of an asset is defined as the totalcost of acquisition.An asset is recognised when it is probable that there will be an inflow of future economic benefits associated with it and its costor fair value can be measured reliably.All property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Suchcost includes the cost of replacing a portion of equipment only when it is probable that future economic benefits associated withthe item will flow to the entity and the cost of the item can be measured reliably. Subsequent costs and additions are includedin the asset’s carrying amount or are recognised as a separate asset, as appropriate. All other repairs and maintenance arecharged to the statement of financial performance during the financial period in which they are incurred. All property andequipment are depreciated. Depreciation of property, plant and equipment begins when it is available for use, ie when it is inthe location and condition necessary for it to be capable of operating in the manner intended by management. Depreciationceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognised. Property,plant and equipment are depreciated on the straight-line basis to write of the cost of each asset to its residual value over itsestimated useful life.CONSTRUCTION INDUSTRY DEVELOPMENT BOARDThe depreciation rates applicable to each category of property, plant and equipment are as follows:Computer equipment8 years to 12 yearsOffice equipment8 years to 12 yearsFurniture and fittings10 years to 14 yearsThe residual values and the useful lives of property, plant and equipment are reviewed at each balance sheet date and, ifexpectations differ from the previous estimates, the changes are accounted for as a change in an accounting estimate inaccordance with standard of GRAP.An item of property, plant and equipment is scrapped upon disposal or when no future economic benefits and service potentialare expected from its use or disposal. Any surplus or deficit arising on scrapping of the assets (calculated as the differencebetween the net disposal proceeds and the carrying amount of the asset) is included in the statement of financial performancein the year the asset is derecognised.

115ACCOUNTING POLICIES(continued)1.5. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)Surpluses and deficits on disposal of property, plant and equipment are determined by reference to their carrying amount andare taken into account in determining operating surplus.1.5.1 Impairment of Property, Plant and EquipmentAt each financial position date or more frequently where events or changes in circumstances dictate; indicators of impairmentof property and equipment are assessed. If there is an indication of impairment, a review is performed which includes acomparison of the carrying amount of the asset with its recoverable amount which is the higher of the asset’s or the cashgeneratingunit’s fair value less costs to sell, and its value in use. Fair value less costs to sell is calculated by reference to theamount at which the asset could be disposed of in a binding sale agreement in an arm’s length transaction evidenced by anactive market or recent transactions for similar assets. Value in use is calculated by discounting the expected future cash flowsobtained as a result of the asset’s continued use, including those resulting from its ultimate disposal, at a market based discountrate on a pre-tax basis.Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreasedor no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverableamount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amountthat would have been determined, net of depreciation or amortisation, if no impairment had been recognised.The carrying values of property, plant and equipment are written down by the amount of any impairment and this loss isrecognised in the statement of financial performance in the period in which it occurs.Repairs and maintenance are charged to the statement of financial performance during the financial period in which they areincurred.1.6. INTANGIBLE ASSETSAn intangible asset is recorded on receipt of the item at cost. Cost of an asset is defined as the total cost of acquisition .An intangible asset is recognised when it is probable that there will be an inflow of future economic benefits or service potentialassociated with it and its cost or fair value can be measured reliably.Costs associated with developing or maintaining computer software programmes are recognised as an expense when incurredin the statement of financial performance. Costs that are directly associated with the production of identifiable and uniquesoftware products controlled by the Construction Industry Development Board, and that will probably generate economicbenefits and service potential exceeding costs beyond one year, are recognised as intangible assets.The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at each reportingdate and any changes are recognised as a change in accounting estimate in the Statement of Financial Performance.Amortisation is charged so as to write off the cost or valuation of intangible assets over their estimated useful lives using thestraight line method. Amortisation commences when the asset is available for use, ie when it is in the location and conditionnecessary for it to be capable of operating in the manner intended by management. Amortisation ceases at the earlier of thedate that the asset is classified as held for sale and the date that the asset is derecognised. The annual amortisation rates arebased on the following estimated average asset lives:Computer software5 years to 10 yearsANNUAL REPORT 2010/11

116ACCOUNTING POLICIES(continued)1.6. INTANGIBLE ASSETS (CONTINUED)The entity tests intangible assets with finite useful lives for impairment where there is an indication that an asset may be impaired.An assessment of whether there is an indication of possible impairment is done at each reporting date. Where the carryingamount of an item of an intangible asset is greater than the estimated recoverable amount (or recoverable service amount),it is written down immediately to its recoverable amount (or recoverable service amount) and an impairment loss is charged tothe Statement of Financial Performance.A previously recognised impairment loss is reversed when there is an indication that it may no longer exist or may have decreased,however not to an amount higher than the carrying amount that would have been determined (net of amortisation) had noimpairment been recognised in prior years.1.7. TRADE AND OTHER RECEIVABLESTrade and other receivables are categorised as financial assets: loans and receivables and are initially recognised at fair valueand subsequently carried at amortised cost. Amortised cost refers to the initial carrying amount, plus interest, less repaymentsand impairments. An estimate is made for doubtful receivables based on a review of all outstanding amounts at year-end.Impairments are determined by discounting expected future cash flows to their present value. Amounts that are receivablewithin 12 months from the reporting date are classified as current.An impairment of trade receivables is accounted for by reducing the carrying amount of trade receivables through the use ofan allowance account, and the amount of the loss is recognised in the Statement of Financial Performance within operatingexpenses. When a trade receivable is uncollectible, it is written off in the Statement of Financial Performance . Subsequentrecoveries of amounts previously written off are recognised as income in the Statement of Financial Performance.1.8. TRADE PAYABLESFinancial liabilities consist of trade payables. They are categorised as financial liabilities held at amortised cost, are initiallyrecognised at fair value and subsequently measured at amortised cost which is the initial carrying amount, less repayments, plusinterest.1.9. CASH AND CASH EQUIVALENTSCash includes cash on hand (including petty cash) and cash with banks (including call deposits). Cash equivalents are shorttermhighly liquid investments, readily convertible into known amounts of cash, which are held with registered banking institutionswith maturities of three months or less and are subject to an insignificant risk of change in value. For the purposes of the cashflow statement, cash and cash equivalents comprise cash on hand, deposits held on call with banks. The entity categorises cashand cash equivalents as financial assets: loans and receivables.1.10. IRREGULAR, FRUITLESS AND WASTEFUL EXPENDITURECONSTRUCTION INDUSTRY DEVELOPMENT BOARDIrregular expenditure means expenditure incurred in contravention of, or not in accordance with, a requirement of any applicablelegislation, including the PFMA.Fruitless and wasteful expenditure means expenditure that was made in vain and would have been avoided had reasonablecare been exercised.All irregular and fruitless and wasteful expenditure is charged against the respective class of expenditure in the period in whichthey are incurred and disclosed in a note in the period that it is identified.

117ACCOUNTING POLICIES(continued)1.11. REVENUE RECOGNITION1.11.1 Revenue from non-exchange transactionsRevenue from non-exchange transactions refers to transactions where Construction Industry Development Board receivedrevenue from another entity without directly giving approximately equal value in exchange. Revenue from non-exchangetransactions is generally recognised to the extent that the related receipt or receivable qualifies for recognition as an asset andthere is no liability to repay the amount.Revenue takes the form of grants from the Department of Public Works and is received on a quarterly basis and raised as revenueon receipt.1.11.2 Revenue from exchange transactionsRevenue from exchange transactions refers to revenue that accrued to the Construction Industry Development Board directlyin return for services rendered, the fair value of which approximates the consideration received or receivable. Revenue fromexchange transactions is measured at the fair value of the consideration received or receivable and is recognised when it isprobable that future economic benefits or service potential will flow to the Construction Industry Development Board and thesebenefits can be measured reliably.The Construction Industry Development Board receives income by way of registration of contractors in accordance withthe Construction Industry Development Board Act, Act 38 of 2000. Due to the nature of the registration of contractors, theConstruction Industry Development Board only recognises this income once a contractor has been assessed with the exceptionof administration fees. Revenue from administration fees is recognised once an application has been received by ConstructionIndustry Development Board and is based on the grade applied for.1.12. FINANCE INCOMEInterest income is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable.1.13 LEASED ASSETSFinance leases refers to a contract that transfers the substantial risks, rewards, rights and obligations incident to ownership tothe lessee and is recorded as a purchase of equipment by means of long-term borrowing. All other leases are classified asoperating leases.1.13.1 Operating Leases – expenseLease payments under an operating lease are recognised as an expense on a straight-line basis over the term of the relevantlease.1.14. Financial INSTRUMENTS1.14.1 Financial AssetsFinancial assets are initially measured at a fair value plus transaction cost. However, transaction costs in respect of financialassets classified as at fair value are expensed in the statement of financial performance.ANNUAL REPORT 2010/11

118ACCOUNTING POLICIES(continued)1.14. Financial Instruments (continued)1.14.1 Financial Assets (continued)- Cash and cash equivalentsCash and cash equivalents are subsequently measured at armortised cost.- Interest receivedInterest is recognised on the time apportion basis using the effective rate applicable over the period of investment.1.14.2 Financial LiabilitiesFinancial liabilities are initially measured as at fair value plus transaction costs. However, transaction costs in respect of financialliabilities as at fair value through profit or loss are expensed. Recognised on the statement of financial position include trade andother payables.Financial liabilities that are not designated on initial recognition as financial liabilities at fair value through profit or loss aremeasured at amortised cost.Financial liabilities that are designated on initial recognition as financial liabilities at fair value through profit or loss are measuredat fair value, with changes in fair value being recognised in profit or loss.1.15. Accrual for Leave PayEmployee entitlements to annual leave are recognised when they accrue to employees. An accrual, based on total cost tocompany, is raised for the estimated liabilities as a result of services rendered by employees.1.16. Employee BENEFITSEmployee benefits comprise of leave entitlements, and performance bonuses.There are no post-retirement benefits currently with the Construction Industry Development Board.1.17. Provisions, contingent assets and contingent LIABILITIESProvisions are recognised when Construction Industry Development Board has a present obligation as a result of past event,when it is probable that an outflow of resources embodying economic benefits or service potential will be required to settling theobligation when a reliable estimate can be made of the obligationCONSTRUCTION INDUSTRY DEVELOPMENT BOARDThe amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation at thereporting date.Where the effect of time value of money is material, the amount of a provision is the present value of the expenditures expectedto be required to settle the obligation.The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific tothe liability.

119ACCOUNTING POLICIES(continued)1.17. Provisions, contingent assets and contingent liabilities (continued)Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, thereimbursement is recognised when, and only when, it is virtually certain that reimbursement will be received if ConstructionIndustry Development Board settles the obligation. The reimbursement is treated as a separate asset. The amount recognisedfor the reimbursement does not exceed the amount of the provision.Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is nolonger probable that an outflow of resources embodying economic benefits or services potential will be required, to settle theobligation.Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. Thisincrease is recognised as an interest expense.Provision is used only for expenditures for which the provision was originally recognised.Provisions are not recognised for future operating losses.If the Construction Industry Development Board has a contract that is onerous, the present obligation (net of recoveries) underthe contract is recognised and measured as a provision.Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed unless the possibility of an inflow/outflow of resources embodying economic benefits is remote.1.18. Related partiesConstruction Industry Development Board operates in an economic sector currently dominated by entities directly or indirectlyowned by the South African Government. As a consequence of the constitutional independence of the three spheres ofgovernment in South Africa, only entities within the national sphere of government are considered to be related parties.Key management is defined as being individuals with the authority and responsibility for planning, directing and controlling theactivities of Construction Industry Development Board, including those charged with the governance of the entity in accordancewith legislation in instances where they are required to perform such functions. Construction Industry Development Board regardsall individuals at senior management per the definition of the financial reporting standard.Close members of the family of key management personnel are considered to be those family members who may be expectedto influence, or be influenced by, management in their dealings with Construction Industry Development Board.Only transactions with related parties not at arm’s length or not in the ordinary course of business are disclosed.1.19. Cash flow STATEMENTThe cash flow statement is prepared on the direct method.1.20. Significant Judgments and ESTIMATESThe preparation of Annual Financial Statements requires the use of estimates and assumptions that affect the reported amountsof assets and liabilities and disclosure of contingents assets and liabilities at the date of the financial statements and the reportedamounts of revenue and expense during the reporting periods. Although these estimates are based on management’s bestknowledge of current events and actions that Construction Industry Development Board may undertake in the future, actualresults ultimately may differ from those estimates.ANNUAL REPORT 2010/11

120ACCOUNTING POLICIES(continued)1.20. Significant Judgments and EstimateS (continued)The presentation of the results of operations, financial position and cash flows in the financial statements of the ConstructionIndustry Development Board is dependant upon and sensitive to the accounting policies, assumptions and estimates that areused as a basis for the preparation of these financial statements. Management has made certain judgments in the process ofapplying the accounting policies. These, together with the key assumptions concerning the future, and other key resources ofthe estimation uncertainty at the financial position date, are discussed below:- Property,Plant and EquipmentThe useful lives of assets are based on management’s estimation. Management considers the impact of changes in technology,customer service requirements, availability of funding to determine the optimum useful life expectation of each individual itemof property and equipment. The estimation of residual values of assets is also based on management’s judgment whether theassets will be sold and what their condition will be at that time.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

121NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 20112. CASH AND CASH EQUIVALENTS2011 2010RRCash and cash equivalents consist of cash on handand balances with bank including investments in call accounts.Cash and cash equivalents included in the cash flow statementcomprise the following balance sheet amounts:Bank 1 641 770 991 212Cash on hand 14 343 8 960Investments 79 155 650 61 312 98780 811 763 62 313 1593. RECEIVABLES: EXCHANGE TRANSACTIONSTrade receivables 506 803 1 328 187Add : Reversal of bad debts provision 456 491 -Less : Provision for bad debts (216 013) (456 491)747 281 871 696Prepayments 934 828 247 1261 682 109 1 118 8224. OPERATING LEASE ASSETLease improvements: Current 1 192 757 3 308 774: Non-Current - 1 192 7571 192 757 4 501 531Operating lease asset are in respect of a lease agreement entered into with SABS, for the occupation of office buildings, wherebycidb undertook to renovate the office buildings and in return future lease rentals will be offset against the total cost of renovationsover 3,5 years. The lease period is five years. Refer to Note 27.2.ANNUAL REPORT 2010/11

122NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 20115. PROPERTY, PLANT AND EQUIPMENTYear ended 31 March 20112011 2010Cost Accumulated Carrying Cost Accumulated CarryingDepreciation Value Depreciation ValueR R R R R RComputer equipment 8 970 884 (3 501 000) 5 469 884 8 016 221 (2 691 153) 5 325 068Furniture and fittings 5 126 007 (1 882 531) 3 243 476 4 896 022 (1 485 862) 3 410 160Office equipment 5 622 241 (2 019 115) 3 603 126 5 305 811 (1 519 473) 3 786 338Office equipment leased 1 307 320 (1 006 509) 300 811 1 307 320 (745 045) 562 27521 026 452 (8 409 155) 12 617 297 19 525 374 (6 441 533) 13 083 8415.1 Carrying values of property, plant and equipment can be reconciled as follows:2011Opening Additions Write-offs Depreciation CarryingbalanceamountR R R R RComputer equipment 5 325 068 1 083 103 (65 158) (873 129) 5 469 884Furniture and fittings 3 410 160 240 888 (4 773) (402 799) 3 243 476Office equipment 3 786 338 412 650 (37 418) (558 444) 3 603 126Office equipment leased 562 275 - - (261 464) 300 81113 083 841 1 736 641 (107 349) (2 095 836) 12 617 2972010Opening Additions Write-offs Depreciation CarryingbalanceamountR R R R RComputer equipment 6 308 818 391 962 (502 038) (873 674) 5 325 068Furniture and fittings 3 299 015 602 920 (96 272) (395 503) 3 410 160Office equipment 3 910 382 601 680 (188 764) (536 960) 3 786 338Office equipment leased 823 739 - - (261 464) 562 27514 341 954 1 596 562 (787 074) (2 067 601) 13 083 841CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

123NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 20116. INTANGIBLE ASSETSYear ended 31 March 20112011 2010Cost Accumulated Carrying Cost Accumulated CarryingDepreciation Value Depreciation ValueR R R R R RComputer software 3 719 951 (1 572 421) 2 147 530 2 717 079 (1 165 872) 1 551 2073 719 951 (1 572 421) 2 147 530 2 717 079 (1 165 872) 1 551 2076.1 Carrying values of property, plant and equipment can be reconciled as follows:2011Opening Additions Write-offs Depreciation CarryingbalanceamountR R R R RComputer software 1 551 207 1 002 872 - (406 549) 2 147 5301 551 207 1 002 872 - (406 549) 2 147 5302010Opening Additions Write-offs Depreciation CarryingbalanceamountR R R R RComputer software 1 677 656 331 326 (38 536) (419 239) 1 551 2071 677 656 331 326 (38 536) (419 239) 1 551 2077. Change in Accounting EstimateDuring the current financial period, management revised the estimated useful lives of computer equipment and office equipmentto twelve years, furniture and fittings to fourteen years and computer software to ten years. In prior periods, management hadestimated the useful lives of computer equipment and office equipment to be eight years, computer software to be five yearsand that of furniture and fittings to be ten years. The revision of these assets’ useful lives has been treated as a change in estimatein line with GRAP 3. This has resulted in adjustments to the current depreciation of R 76,055.65.ANNUAL REPORT 2010/11

124NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 20118. PAYABLES: EXCHANGE TRANSACTIONS2011 2010RRTrade and other payables 13 569 853 10 060 535- Trade payables 7 141 058 4 489 150- Accruals 5 097 995 4 362 577- Accrual for leave pay 1 330 800 1 208 808Unallocated deposits 5 515 966 5 201 31419 085 819 15 261 8499. INCOME RECEIVED IN ADVANCEContractors not assessed (work in progress) 26 336 614 24 030 82810. FINANCE LEASE OBLIGATION26 336 614 24 030 828Minimun lease payments due- within one year 356 947 356 947- in second to fifth year inclusive 92 408 449 355449 355 806 302Less: Future finance charges 37 453 111 813Present value of minimum lease payments 411 902 694 489Non-current liabilities 90 134 411 902Current liabilities 321 768 282 587411 902 694 489cidb leases the photocopying machines on the finance lease, the average lease term is five years and the average effectiveborrowing rate of 13%. The organisation’s obligations under finance leases are secured by the lessor’s charge over the leasedassets. Refer to Note 5CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

125NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 201111. CONTINGENT LIABILITIESSections 53(3) of the PFMA states that a public entity may not accumulate surpluses unless prior written approval of the NationalTreasury has been obtained. The approval of accumulated surpluses for the period ending 31 March 2010, to be rolled over tothe following financial year was obtained after comparative year end. At the time of reporting the approval for the period ending31 March 2011 were not yet obtained.2011 2010RRLiable to:National Treasury 52 617 122 42 581 39412. TRANSFERS AND SUBSIDIESGrants received 63 665 000 59 269 00013.REGISTERS REVENUEAnnual fees 21 424 664 24 681 523Assessment fees 23 072 141 21 966 783Contractor fines 576 655 411 50345 073 460 47 059 80914. FINANCE INCOMEInterest on- cash and bank deposits 4 131 542 3 733 2894 131 542 3 733 28915. OTHER INCOMEProceeds on insurance claims 40 228 52 093Sponsorship received 341 500 -Reversal of provision for bad debts 456 491 -Sundry income 3 355 1 650841 574 53 743ANNUAL REPORT 2010/11

126NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 201116. IRREGULAR, FRUITLESS AND WASTEFUL EXPENDITURE2011 2010RRComponents16.1 Fruitless and wasteful expenditureBad debts written off * 45 580 70 976Cell phone airtime paid for stolen cell phone 13 913 -Storage fees paid in excess of the agreed limit 202 659 -262 152 70 976*Erroneous refunds relating to periods prior to September 2007. Subsequent to September 2007 controls were put in place toprevent these errors from occurring.16.2 Irregular EXPENDITURE16.2.1. Reconciliation of irregular expenditureOpening balance 1 717 210 621 834Add: Irregular expenditure - current year 9 265 765 1 095 37610 982 975 1 717 210Less: Amount condoned (10 982 975) -Amount not condoned - 1 717 21016.2.2. Details of irregular expenditure not recoverableINCIDENT DISCIPLINARY STEPS TAKEN/CRIMINAL PROCEEDINGS R RFive year lease notinitially approved by theNationalTreasuryTransactions wherenotice was not given toTreasury andAuditor GeneralNo disciplinary action required against any staff member. Thiswas subsequently confirmed by National Treasury that, therewas no impropriety in the transaction which requires action tobe taken against anybody. The condonation was granted byNational Treasury.Written warning has been issued against the responsible staffmember. No losses were incurred by the cidb as a result of thisexpenditure.1 335 728 978 7812 266 283 -CONSTRUCTION INDUSTRY DEVELOPMENT BOARDExtensions ofcontractsNo disciplinary action required against any staff member. Thesecontracts relate to old tenders, before the establishment of theSCM unit. The responsible staff members have left the employmentof the cidb. Extensions were in line with business needswhile tenders were being processed. New tenders awarded inMay 20115 286 944 738 4298 888 955 1 717 210

127NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 201116.2.3. Details of irregular expenditures under investigationsINCIDENT DISCIPLINARY STEPS TAKEN/CRIMINAL PROCEEDINGS R RAppointments made on the basisof the cidb’s framework agreementstructure.Transactions procured withoutobtaining three quotationsMatter still under investigation 1 297 571 -Matter still under investigation 796 449 -2 094 020 -17. ADMINISTRATIVE EXPENSES2011 2010NOTES R RFees for services- Board members 258 542 322 112- Audit committee fees 599 053 462 825Legal fees 182 472 29 072Provision for bad debts 216 012 456 491Bad debts written off 332 741 138 489Entertainment 2 500 588Stationery and printing 3 270 251 2 535 978Venues and facilities 2 072 381 1 251 886Bank charges 351 048 364 811Training and staff development 2 387 160 2 175 8719 672 160 7 738 12418. STAFF COSTSBasic salaries - Executives 33 5 866 230 5 379 105- Other 29 42 716 081 34 461 782Performance award - Executives 33 393 433 413 394- Other 29 2 812 428 1 957 030Temporary staff 859 616 1 710 693Leave payment 29 219 790 363 11652 867 578 44 285 12019. MARKETING COSTSAdvertising 2 898 103 2 432 7052 898 103 2 432 705ANNUAL REPORT 2010/11

128NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 201120. AUDIT FEES2011 2010RRExternal audit fees 714 147 757 489Internal audit fees 755 332 719 4881 469 479 1 476 97721. OTHER OPERATING EXPENSESConsultants, contractors and special services 15 520 121 12 748 406Insurance 816 437 435 984Membership fees 32 826 584 177Security 657 076 567 785Maintenance, repairs and running costs 1 807 416 1 537 808-Property and buildings 27 246 27 576-Computer equipment and consumables 1 116 182 871 693-Other maintenance, repairs and running costs 663 988 638 539Depreciation 2 095 836 2 066 204Amortisation 406 549 419 239Loss on assets written off 107 375 776 652Municipal services 757 610 955 313Sponsorship 1 905 702 237 753Travel and subsistence 4 301 038 4 095 992Courier and delivery charges 554 280 514 740Communication costs 3 476 917 3 884 393Rentals 4 254 984 4 172 939-Property and buildings 3 377 961 2 894 322-Furniture and fittings 893 332 1 288 109-Office equipment (17 509) (11 762)-Other rentals 1 200 2 27036 694 166 32 997 38622. FINANCE COSTSInterest expense-Finance lease 74 360 108 80374 360 108 803CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

129NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 201123. Prior period errorsProperty, Plant and Equipment23.1 Assets incorrectly written-off in the prior YEARIn the comparative year, cidb incorrectly wrote off assets that were located in the current financial year. The assets have beenincluded in the current financial year’s fixed asset register. The comparative figures have been adjusted to correct the error.23.2 Accumulated depreciation of leased asset were incorrectly DISCLOSEDIn the comparative year, cidb incorrectly disclosed the accumulated depreciation of office equipment leased. The error havebeen corrected in the current financial year and comparatives adjusted accordingly.Effect on the statement of financial positionRecognise assets (cost)Computer Furniture Office Office Computer TotalEquipment and Fittings equipment equipment SoftwareleasedR R R R R RBalance per the prior year auditedfinancial statements at 31 March 2009 8 643 717 4 454 053 4 999 721 1 307 320 2 495 963 21 900 774Correction of error 23.1 - - - - - -Correction of error 23.2 - - - - - -Restated balance at 31 March 2009 8 643 717 4 454 053 4 999 720 1 307 320 2 495 963 21 900 773Balance per the prior year auditedfinancial statements at 31 March 2010 8 016 221 4 882 839 5 239 161 1 307 320 2 717 079 22 162 619Correction of error 23.1 - 13 183 66 650 - - 79 833Correction of error 23.2 - - - - - -Restated balance at 31 March 2010 8 016 221 4 896 022 5 305 811 1 307 320 2 717 079 22 242 452ANNUAL REPORT 2010/11

130NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 201123. Prior period errors (continued)23.2 Accumulated depreciation of leased asset were incorrectly disclosed (continued)Recognise assets(accumulated depreciation)Computer Furniture Office Office Computer TotalEquipment and Fittings equipment equipment SoftwareleasedR R R R R RBalance per the prior year auditedfinancial statements at 31 March 2009 2 334 899 1 161 170 1 133 563 468 367 818 309 5 916 308Correction of error 23.1 - - - - - -Correction of error 23.2 - - - 15 214 - 15 214Restated balance at 31 March 2009 2 334 899 1 161 170 1 133 563 483 581 818 309 5 931 522Balance per the prior year auditedfinancial statements at 31 March 2010 2 691 153 1 478 811 1 497 048 729 832 1 165 872 7 562 716Correction of error 23.1 - 7 051 22 425 - - 29 476Correction of error 23.2 - - - 15 214 - 15 214Restated balance at 31 March 2010 2 691 153 1 485 862 1 519 473 745 046 1 165 872 7 607 406Restated carrying amounts- 31 March 2010 5 325 068 3 410 160 3 786 338 562 274 1 551 207 14 635 046Effect on accumulated surpluses– 31 March 2009 (15 214)Effect on accumulated surpluses– 31 March 2010 35 14323.3 Permanent staff incorrectly disclosed as temporary staff.CONSTRUCTION INDUSTRY DEVELOPMENT BOARDcidb incorrectly disclosed permanent staff relating to construction contact centres under temporary staff in the prior years. Theerror has been corrected in the current financial year for comparability.23.4 Operating lease commitments incorrectly disclosedcidb incorrectly disclosed the operating lease commitment in the previous financial year. The amount that was suppose to bedisclosed in the current financial year were disclosed in the prior year. The error had been corrected in the current financial yearand prior year figures adjusted accordingly.

131NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 20112011 2010RR24. CASH RECEIPTS FROM STAKEHOLDERSRevenue per statement of Financial Performance 113 711 576 110 115 841Finance income (4 131 542) (3 733 289)Movement in receivables 2 744 907 685 201112 324 941 107 067 75325. CASH PAID TO STAKEHOLDERS, SUPPLIERS AND EMPLOYEESExpenses per statement of Financial Performance 103 675 846 89 039 115Movement in payables (6 130 305) (3 667 264)Finance cost (74 360) (108 803)Scrapping of assets (107 375) (776 652)Depreciation, amortisation and Impairment (2 502 385) (2 485 443)94 861 421 82 000 95526. RECONCILIATION OF SURPLUS TO CASH GENERATED BY OPERATIONSOperating surplus 10 035 730 21 076 726Adjustment for item not affecting the movement of cash- Depreciation, amortisation and Impairment 2 502 385 2 485 443- Finance cost 74 360 108 803- Finance income (4 131 542) (3 733 289)- Loss on disposal of assets 107 375 776 652Operating surplus before working capital changes 8 588 308 20 714 333Working capital changes 8 875 212 4 352 465(Increase) / decrease in accounts receivable and lease improvements 2 744 907 685 201Increase / (decrease) in accounts payables 6 130 305 3 667 264Cash generated from operations 17 463 520 25 066 79727.1 COMMITMENTSAmounts approved and contracted- outstanding contractual obligations at year-end 57 235 036 16 076 18827.2 OPERATING LEASE COMMITMENTSThe future minimum lease payments undernon-cancellable operating lease are as follows:- within one year 3 573 475 3 308 773- in second to fifth year inclusive 4 901 379 8 474 8548 474 854 11 783 627ANNUAL REPORT 2010/11

132NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 201128. INCOME TAX EXEMPTIONThe cidb is exempt from Income Tax in terms of section 10 (1) (cA) (i) of the Income Tax Act29. EMPLOYEE BENEFITS2011 2010RRAll employees are employed on a contract basis on a cost to Board packageand are not entitled to any other benefits.Salaries 42 716 081 25 976 014Leave entitlement 219 790 363 116Performance bonus 2 812 428 1 957 03045 748 299 28 296 16030. RELATED PARTIES30.1 Department of Public WorksThe following is a summary of transactions with DPW:Statement of financial performance amounts during the year:Transfer from Department of Public Works 63 665 000 59 269 00030.2 Provincial departments of Public WorksThe cidb has entered into an arrangement with the Provincial department of Public Works whereby the departments will provideoffice space for the cidb operations for free. The cidb operates out of the following provincial offices:- Eastern Cape Department of Roads and Public Works- Western Cape Department of Transport and Public Works- KwaZulu-Natal Department of Public Works- Free State Department of Police, Roads and Transport- Mpumalanga Department of Public Works- Limpopo Department of Public Works- North West Department of Public Works, Roads and Transport- Northern Cape Regional Department of Roads and Public Works30.3 Green Building Council of South AfricaThe cidb donated an amount of R1,482,000 to the council during the financial year under review. Although the council is not partof the government but it is a related party to the cidb in that one of cidb’s senior manager is a Board member of the council.CONSTRUCTION INDUSTRY DEVELOPMENT BOARD30.4 Sponsorships received2011 2010RRThe cidb received the following sponsorships from the fellow public sector entities:- Department of Public Works 110 000 150 000- Industrial Development Corporation 30 000 30 000- COEGA Development Corporation 20 000 -- Department of Communication - 30 000- Department of Housing - 85 000- Independent Development Trust - 1 250- Small Enterprise Development Agency 20 000 -- Chris Hani Disctrict Municipality 50 000 -

133NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 201131. FINANCIAL RISK MANAGEMENTThe main risks arising from the cidb’s financial instruments are market risk, liquidity risk and credit risk.Credit riskThe cidb trades only with recognised, creditworthy third parties. It is the cidb’s policy that all customers who wish to trade on creditterms are subject to credit verification procedures. In addition, receivables balances are monitored on an ongoing basis with theresult that the cidb’s exposure to bad debts is not significant. The maximum exposure is the carrying amounts as disclosed in Note5. There is no significant concentration of credit risk within the cidb.With respect to credit risk arising from the other financial assets of the cidb, which comprise cash and cash equivalents, the cidb’sexposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of theseinstruments. The cidb’s cash and cash equivalents are placed with high credit quality financial institutions therefore, the credit riskwith respect to cash and cash equivalents is limited.Exposure to credit riskThe maximum exposure to credit risk at the reporting date from financial assets was:2011 2010RRCash and cash equivalents 80 811 763 62 313 159Other receivables 1 682 109 1 118 822Total 82 493 872 63 431 981Concentration of credit riskThe following table provides information regarding the credit quality of assets which may expose the cidb to credit risk2011NEITHERPAST DUENOR IMPAIREDRPAST DUE BUT NOTIMPAIRED – LESSTHAN 2 MONTHSRPAST DUE BUT NOTIMPAIRED – MORETHAN 2 MONTHSRCARRYING VALUERCash and cash equivalents 80 811 763 80 811 763Other receivables 1 682 109 1 682 1092010NEITHERPAST DUENOR IMPAIREDRPAST DUE BUT NOTIMPAIRED – LESSTHAN 2 MONTHSRPAST DUE BUT NOTIMPAIRED – MORETHAN 2 MONTHSRCARRYING VALUERCash and cash equivalents 62 313 159 62 313 159Other receivables 118 160 1 000 662 1 118 822ANNUAL REPORT 2010/11

134NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 201131. FINANCIAL RISK MANAGEMENT (CONTINUED)The maximum exposure to credit risk for financial assets at the reporting date by credit rating category was as follows:2011 AAA UNRATEDRRCash and cash equivalents 80 811 763Other receivables 1 682 1092010 AAA UNRATEDRRCash and cash equivalents 62 313 159Other receivables 1 118 822Market riskMarket risk is the risk that changes in market prices, such as the interest rate will affect the value of the financial assets of thecidb.Interest rate riskThe cidb is exposed to interest rate changes in respect of returns on its investments with financial institutions and interest payableon finance leases contracted with outside parties.The cidb’s exposure to interest risk is managed by investing, on a short term basis, in current accounts and the call accounts.Sensitivity AnalysisA Change in the market interest rate at the reporting date would have increased/ (decreased) the surplus for the year by theamounts below:31/3/2011 CHANGE IN INVESTMENTSINCREASE/(DECREASE)IN NET SURPLUS FOR THE YEARUPWARDCHANGERDOWNWARDCHANGERCONSTRUCTION INDUSTRY DEVELOPMENT BOARDCash and cash equivalents 1% 80 811 763 (808 118)31/3/2010Cash and cash equivalents 1% 62 313 159 (623 132)

137NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 201132. RECONCILIATION OF BUDGET SURPLUS2011 2010RRNet surplus/deficit per statement of financial performance 10 035 730 21 076 726Adjustment for:- Depreciation, amortisation and Impairment 2 502 385 2 485 443- Provision for bad debts 216 012 456 491- Bad debts written off 332 741 138 489- Reversal of bad debts provision (456 491) -- Amortisation of prepayment 3 307 619 3 063 679- Loss on disposal of assets 107 375 776 652Over recovery of revenue (9 354 576) (14 533 840)Revenue per budget 104 357 000 95 582 000- Transfer and subsidies 63 665 000 59 269 000- Registers income 38 272 000 34 113 000- Finance income 2 420 000 2 200 000Revenue per statement of financial performance (113 711 576) (110 115 840)- Transfer and subsidies (63 665 000) (59 269 000)- Registers income (45 073 460) (47 059 809)- Finance income (4 131 542) (3 733 289)- Other income (841 574) (53 743)Under utilisation of expenditure (6 690 796) (13 463 640)Expenditure per budget (104 357 000) (95 582 000)- Administrative expenses (26 251 827) (27 587 068)- Staff cost (56 019 352) (49 402 131)- Equipment - (3 070 000)- Professional services (22 085 821) (15 522 801)Expenditure per statement of financial performance 97 666 204 82 118 360- Administrative expenses 29 278 505 23 819 598- Staff cost 52 867 578 44 285 120- Equipment - 1 265 235- Professional services 15 520 121 12 748 406Net surplus/deficit per approved budget - -ANNUAL REPORT 2010/11

138NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 201133. Directors’ Emoluments31 March 2011No. of Meetings Fees as member Salary Travel Performance TotalName Sched. Other Sched. Other allowance bonusBoard CommitteeChairperson R Nkado 4 21 14 968 54 727 40 600 110 295Deputy chairpersonRisk Com CA Rose 4 7 12 716 22 253 82 774 117 743Member G Strydom 1 0 2 909 - 25 324 28 233Member G Steele 3 2 8 727 5 818 19 887 34 432Member L Mchunu # 3 0 - - - -Mem/Aud Com L Kona 5 6 14 545 14 727 7 632 36 904Member ST Bogosing 4 4 11 636 6 000 15 116 32 752Member N Alli # 2 0 - - - -Member M Mabuza # 4 0 - - - -Mem/Aud Com/Risk Com M Govender 5 13 12 545 32 727 130 810 176 082Member S Ngebulana 2 0 5 818 - - 5 818Member N Makhubele 5 0 - - 38 094 38 094Member M Noyana 3 1 8 727 727 6 974 16 42892 591 136 979 367 211 596 781Remuneration CommitteeChairperson N Makhubele 1 0 - - - -Member N Alli 0 0 - - - -Member M Noyana 1 0 2 909 - - 2 9092 909 - - 2 909Audit CommitteeChairperson S Thomas 10 23 167 520 48 162 5 942 221 624Member V Nondabula 9 4 143 568 7 976 4 910 156 454Member B Chaplog * 7 0 111 664 - 1 188 112 852Member N Mhlongo ^ 2 0 31 904 - 600 32 504454 656 56 138 - 12 641 - 523 435Risk CommitteeMember V Nondabula 4 0 63 808 - 1 637 65 445Member N Mhlongo ^ 1 0 9 573 - 600 10 17373 381 - - 2 237 - 75 618CONSTRUCTION INDUSTRY DEVELOPMENT BOARDExecutivesChief Executive Officer R Khoza 1 143 430 91 474 1 234 904Chief Financial Officer P Mongwenyana 929 373 78 067 1 007 440Growth & Contractor Dev. G Naidoo 920 304 73 624 993 928Constr. Industry Perform. R Milford 1 024 239 90 133 1 114 372Procurement & Delivery I Thumbiran 921 300 75 547 996 847Contractor Registers Service E Moola 927 584 76 062 1 003 646- - 5 866 230 - 484 907 6 351 137Totals emoluments March 2011 1 075 284 249 255 5 866 230 394 729 484 907 8 070 406Totals emoluments March 2010 530 982 216 987 5 379 105 445 649 413 394 6 986 118* Bryan Chaplog resigned from audit committee on 31 August 2010^ Nala Mhlongo joined the audit committee on 03 January 2011# Lungile Mchunu, Nazir Alli and Mandla Mabuza are not entlitled to remuneration as they are public servants

139NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 201134. World Cup Expenditure2011 2010Quantity R Quantity RBafana Bafana Supporter T-shirts 214 78 190 - -TV Plasma Screens “42” 2 4 400 - -82 590 -The cidb incurred the above expenditure to acquire cidb-branded soccer shirts in Bafana Bafana colours to show support tothe national team and to adapt the event for team building purposes.In addition, two TV Plasma screens “42” were rented for the duration of the World Cup for staff members.ANNUAL REPORT 2010/11

CONSTRUCTION INDUSTRY DEVELOPMENT BOARD140

141ANNUAL REPORT 2010/11

CONSTRUCTION INDUSTRY DEVELOPMENT BOARD142

W: www.cidb.org.zaE: cidb@cidb.org.zaT: +27 12 482 7200 or +27 86 100 cidbF: +27 12 349 8986 or +27 86 681 9995Fraud Hotline: 0800 112 432PO Box 2107, Brooklyn Square, 0075Block N&R, SABS Campus, 2 Dr Lategan Rd, Groenkloof, Pretoria, South Africa