Constructing BB-BEE points, It has become harder. Construction Sector Codes repealed
Effects of the Construction Sector Codes being repealed
On the 17th of February 2016, a government gazette, No. 39703 was issued by the Department of Trade & Industry “DTI”, with clarity regarding the BB-BEE Construction Sector Codes being repealed.
The notice has the following ramifications;
- Entities operating in the construction sector will, (from the effective date of the notice) be measured using the Generic BB-BEE Codes,
- Somewhat stricter and different targets now need to be met by the sector participants,
- Many entities are finding it harder to maintain or increase their BB-BEE levels under the Generic BB-BEE Codes scorecard
To illustrate the ramifications mentioned above, I conducted a study that included an analysis of top construction companies in South Africa depicting the impact that the change in measurement criteria has on their BB-BEE levels.
A graph is attached in this article with points achieved by one of the leading construction companies based on the Construction Sector Codes and converted to the Generic Codes. The results are as follows.
- A score of 88.94 points achieved reflecting a Level 2 under the Construction Sector Codes,
- A score of 87.10 points achieved reflecting a Level 4 when converted to the Generic BB-BEE Codes,
- Ownership element has hardly been affected by the change in measurement ,
- The adjusted recognition for gender provided for in the sector, has since been replaced with a challenge to meet EAP targets for the entities’ employment profiles. Thus affecting the management control element (Employment Equity subsection),
- Skills development has come under scrutiny following the notion that mandatory training spend no longer counts, i.e OHS, First aid, hazardous training interventions etc,
- Supplier development has been introduced as an additional element, providing additional compliance requirements, also, a limit has been put on points awarded for paying sub-contractor early (maximum of 1.5 points)
I have always maintained that BEE is a process towards transformation, a business imperative, however challenging it may be to comply with, the sooner the entities adopt the generic codes, the closer they will march towards claiming their competitive advantages.