Amended Construction Codes

Amended Construction Codes Amended Construction codes came into effect 1 December 2017 May not use Financials older than 12 months Options: Keep current BEE certificate on General Codes Re-verify same financial period on Amended Construction Code Verified on new financial period on Amended Construction Code

Role of Construction Sector Charter Council (CSCC) Monitor the implement the Construction Sector Codes Facilitate the achievements of sector empowerment targets. Sharing info with Construction Industry Provide guidance and best practice on the interpretation of Codes Liaison and reporting to the stakeholders on measurement of the construction sector code -BBBEE Advisory, DPW and the DTI. Creation of industry specific empowerment data

Public Sector Procurement A ME may NOT, in respect of public sector procurement, subcontract more than 25% of the value of a contract to another entity that does not have an equal or better BBBEE status level than the entity awarded the contract, unless the work is sub-contracted to an EME that has the capability to execute the work and the work is below the EME threshold. In such cases in respect of public sector procurement where more than 25% of the project costs flow to the other entity that does not have an equal or better B-BBEE status level, joint ventures or consortia should be formed with a combined scorecard for all entities in the joint venture or consortium.

JOINT VENTURE INITIATIVES Unincorporated JV s : compile a consolidated verification certificate. consolidate the scorecard points scored by each of the joint venture partners. points weighted according to their proportionate Economic Interest rights in the joint venture and added together for a combined score. BBBEEE RECOGNITION LEVELS Level 1 Contributor qualify for a score of 105 points; Level 2 Contributor qualify for a score of 97.5 points; Level 3 Contributor qualify for a score of 92.5 points; Level 4 Contributor qualify for a score of 85 points; Level 5 Contributor qualify for a score of 77.5 points; Level 6 Contributor qualifies for a score of 72.5 points.

Scope of Application Includes Built Environmental Professional (BEPs), Contractors (General Build) and the Material Suppliers / Retailers are clearly defined in the construction sector value chain. Construction Material Suppliers are measureable as Contractors If operates in more than one sector, report in terms of the scorecard for the sector in which the majority (>50%)of its core activities are located.

Turnover Thresholds EME QSE GEN BEPs Old R 0 1.5million R 1.5 11.5m R 11.5 m> Amended R 0 6million R 6 25m R 25 m> Contractors Old R 0 5million R 5 35m R 35 m> Amended R 0 10million R 10 50m 100% BO = BEEL1 51% BO = BEEL2 R 50 m> Suppliers Old R 0 5million R 5 35million R 35 m> Amended R 0 10million R 10 50million R 50 m>

Enhancement recognition levels Category Compliance Requirement Benefit Generics Comply with all Priority Elements Avoid Discounting QSEs At least TWO Priority elements Ownership + 1 other (SD/P &SD) Avoid Discounting EMEs 40% of QSE Skills Dev Avoid Discounting Exceptions BEPs < R1.8 million Does not have to comply with the QSE Skills Dev. NO DISCOUNTING Contract < R 3 million Does not have to comply with Above falls away if EME choses/elects enhancement recognition the QSE Skills Dev. NO DISCOUNTING Must commit to SD or ED

POINT STRUCTURE -Differences General Contractor BEP Elements Points Bonus Points Bonus Points Bonus Ownership 25 27 4 27 4 Management Control 19 18 4 18 4 Skills Development 20 5 21 5 29 5 Procurement & Supplier Development 40 4 34 4 27 3 Socio Economic Development 5 5 1 5 1 109 9 105 18 106 17 TOTALS 118 123 123

POINT STRUCTURE -QSE Amended Contractors & BEP Elements Points Bonus Points Bonus Ownership 25 27 3 Management Control 15 20 Skills Development 25 5 24 2 Enterprise & Supplier Development 30 3 29 Socio Economic Development 5 5 100 8 105 5 Grand Total 108 110

Procurement Recognition Levels Points LEVEL Level One 100 points 135% Level Two 95 but <100 125% Level Three 90 but <95 110% Level Four 80 but <90 100% Level Five 75 but <80 80% Level Six 70 but <75 60% Level Seven 55 but <70 50% Level Eight 40 but <55 10% Non-Compliant <40 0%

5 ELEMENTS

OWNERSHIP Priority element for both Generic and QSE s 2 targets: Years 1 to 3 and Year 4 and beyond Sub minimum requirements: Minimum of 40% of Net Value targets, based on time graduation factor Modified Flow Through Principle Cannot benefit from Exclusion principle >51% Black owned applied once in structure Only applied to Voting Rights & Economic Interest of Black people

OWNERSHIP BEP Ownership: >50% of ownership to be held by Registered Professionals Must be a member of Executive Management If above not met, only 50% of black ownership included If ownership held by holding Company, must also comply with the above If does not comply with the above no bonus points may be earned

Ownership Generic Contractor Indicator Description Weighting Points Targets Voting In hands of Black People 4.5 32.5% (35% yr 4) Rights In hands of Black Women 2 10% (14% yr 4) Economic interest of Black people 4.5 32.5% (35% yr 4) Economic interest of Black Women 2 10% (14% yr 4) Economic Any of the following: 3 10% (12% yr 4) Interest Black designated groups Realisation Points Black Employee Share Schemes Broad based ownership schemes Co-operatives New Black Entrants 5 5% Net Value 6 Time graduation factor Bonus Points Voting rights for Black people > 50% Voting rights for Black people >75% Voting rights for Black women > 50% 1 2 1 TOTAL POINTS 31

Ownership Generic BEP Indicator Description Weighting Points Targets Voting In hands of Black People 5.5 32.5% (35% yr 4) Rights In hands of Black Women 2 10% (14% yr 4) Economic interest of Black people 5.5 32.5% (35% yr 4) Economic interest of Black Women 2 10% (14% yr 4) Economic Any of the following: 3 10% (12% yr 4) Interest Black designated groups Realisation Points Black Employee Share Schemes Broad based ownership schemes Co-operatives New Black Entrants 5 5% Net Value 4 Time graduation factor Bonus Points Voting rights for Black people > 50% Voting rights for Black people >75% Voting rights for Black women > 50% 1 2 1 TOTAL POINTS 31

Indicator Description Weighting Points Targets Voting In hands of Black People 5.5 25% (30% yr 4) Rights In hands of Black Women 2 10% Economic Economic interest of Black people 5.5 25% (30% yr 4) Interest Economic interest of Black Women 2 10% Realisation Points Bonus Points Ownership QSE (Contractors & BEP) Economic interest of Black designated 7 10% (Cont) groups or New Entrants 5% (BEP) Net Value 5 Time based graduation factor Voting rights & economic interest for Black people Voting rights & economic interest for Black women 1.5 1.5 TOTAL POINTS 30 >40% >12.5%

EME s Affidavit BEE Certificate Contractors R0 R3 million R3m R10m BEP R0 R1,8 million R1,8m R6m

EME s In order to attain levels above EME need to: 1.Comply with 40% of QSE Skills Development expenditure target to avoid being discounted For < 100% Black owned EME to enhance their level, they may: 1.Be measured on QSE scorecard 2.Measure Skills Development, as per QSE scorecard but must earn full points 3.Measure Supplier Development expenditure and must earn full points If they comply with points 2 and 3 they may be enhanced by 2 levels

To Avoid Discounting Indicator Description Targets Skills Expenditure Spendon Learning programmes for Black people as % of leviableamount 1.5% Minimum spend for EME to avoid discounting 1.5% x 40% = 0.6%

Black Owned QSE s Total Turnover thresholds: Contractor: R10 m R50m BEP: R6 m R25m 100% Black owned = Level 1 >51% Black owned = Level 2 Both need to comply with min 40% of QSE Skills Development points to avoid discounting principle To enhance a level, need to earn full points for Skills Development or Procurement & Supplier Development All QSE s require a BEE certificate issued by Sanas Verification agency.

To Avoid Discounting Description Points Min Points Spendon Learning programmes for Black people as % of leviable amount Spend on Learning programmes for Black Mgt(Exec, Senior, Middle) as % of total Skills expenditure on Black people Spend on black disabled people as a % of total Skills expenditure on Black people 14 TOTAL POINTS 24 9.6 7 3

Management Control

MANAGEMENT CONTROL Combined 22 points vs 19 on General Codes Targets broken down into different race sub groups based on Provincial or National EAP targets for Generics only Sub race groups apply to Senior, Middle, Junior not Exec level Entities may combine levels if they do not distinguish between certain levels BEP s do not measure Junior Mgt Salary parities must be considered and justified No partial bonus points

Indicator Description Weighting Points Targets Board Voting rights of Black board members 3 50% Participation Voting rights of Black female board members 1 20% Black Executive Directors 2 50% Black Female Executive Directors 1 20% Bonus Points Exceed target for Black Exec above 1 >50% Other ExecMgt Management Control - Generic Contrators Exceed target for Black female Exec above 1 >20% Other Black Exec Mgtas a % of all other exec mgt(do not serve on board) Other Black Female Exec Mgtas a % of all other Exec mgt 2 60% 1 30% Senior Mgt Black employees in Senior Mgt 2 60% Black female employees in Senior Mgt 0.5 30%

Management Control Contin.. Indicator Description Weighting Points Targets Middle Mgt Black employees in Middle Mgt 1 75% Black female employees in Middle Mgt 0.5 30% Junior Mgt Black employees in Junior Mgt 1 88% Black female employees in Junior Mgt 0.5 35% Disabled Black employees with disabilities as a % of 0.5 2% Employees Black Professionals Bonus Points all office based employees Black professionally registered employees as % of all professionally registered employees Black employees that are youth as % of all employees using ARG TOTAL POINTS 22 2 50% 2 30%

Management Control -Generic BEP Indicator Description Weighting Points Targets Board Voting rights of Black board members 2.5 50% Participation Voting rights of Black female board members 1 20% Black Executive Directors 2.5 50% Black Female Executive Directors 1 20% Bonus Points Exceed target for Black Exec above 1 >50% Other ExecMgt Exceed target for Black female Exec above 1 >20% Other Black Exec Mgtas a % of all other exec mgt(do not serve on board) Other Black Female Exec Mgtas a % of all other exec mgt 2 60% 1 30% Senior Mgt Black employees in Senior Mgt 2 60% Black female employees in Senior Mgt 1 30%

Management Control - Generic BEP Indicator Description Weighting Points Targets Middle Mgt Black employees in Middle Mgt 1.5 75% Black female employees in Middle Mgt 1 30% Disabled Black employees with disabilities as a % of 0.5 2% Employees Black Professionals Bonus Points all office based employees Black professionally registered employees as % of all professionally registered employees Black employees that are youth as % of all employees using ARG TOTAL POINTS 22 2 50% 2 30%

Economically Active Population Sub-race groups by Gender have now been included in the measurement of Management Control EAP Statistics are published by STATS SA quarterly. It is a numerical representation by race and gender of people of working age within South Africa. Can be provincially based or at a national level depending on where the measured entity operates The EAP target apply to all the targets within Management Control except for Executive Management and Disabled persons Targets are capped therefore no extra points for exceeding targets

MALE EAP TARGETS: National FEMALE African 42.1% African 35.3% Coloured 5.4% Coloured 4.6% Indian 1.7% Indian 1.0% White 5.6% White 4.3% 54.8 45.2 EAP TARGETS: Provincial Male Female Province A C I W A C I W Total Western Cape 17.8% 25.6% 0.2% 7.8% 16.1% 22.5% 0.1% 7.0% 100.0% Eastern Cape 39.9% 7.7% 0.4% 5.7% 35.5% 5.5% 0.4% 4.8% 100.0% Northern Cape 28.0% 20.7% 0.1% 4.9% 24.2% 19.0% 0.0% 3.0% 100.0% Free State 47.1% 1.7% 0.2% 5.3% 40.4% 1.2% 0.1% 4.1% 100.0% KwaZulu-Natal 42.3% 1.3% 7.3% 3.3% 38.3% 0.8% 4.4% 2.3% 100.0% North West 52.2% 0.8% 0.2% 5.7% 37.7% 0.4% 0.0% 3.1% 100.0% Gauteng 42.5% 1.9% 1.5% 9.8% 34.2% 1.9% 0.9% 7.2% 100.0% Mpumalanga 47.8% 0.3% 0.5% 4.7% 42.9% 0.1% 0.1% 3.6% 100.0% Limpopo 54.5% 0.2% 0.5% 1.8% 41.3% 0.1% 0.2% 1.5% 100.0%

Management Control -QSE Indicator Description Weighting Points Executive Management Senior Middle Junior Mgt Black representation at Executive Management Black female representationat Executive Management Black representationat Senior & Middle Management Black Female representationat Senior & Middle Management Targets 5 50% 2 20% 6 20% 2 10% Black representation at Junior Mgt 4 40% Black Female Representation at Junior Mgt 1 20% Total Points 20 No EAP targets or ARG applied to QSE s

Disabled Persons Measure against office based employees Target is 2% of employees worth 0.5 points EAP targets are not applied Types of disabilities: o Long term or recurring Persists and is substantially limiting (if in the absence of reasonable accommodation by the employer, a person would be either totally unable to do a job or would be significantly limited in doing the job. o Impairment: Exclusions: Physical: partial or total loss of bodily function or body part Mental: clinically recognised condition affecting thought process, judgement, emotion o Impairments that can be easily controlled and corrected with no limiting effects.

Skills Development

SKILLS DEVELOPMENT 26 Points for Contractors and 34 for BEP s (vs 25 General Codes) Priority element ME s MUST submit and approve to Seta Workplace Skills Plan, Annual Training Report, Implementation of priority skills programme for black employees External training for unemployed black people included Trainee tracking tool developed for bonus points Skills Development spend may not be counted again under any other element Year 4 targets effective from Dec 2021 Sub minimum of 40% of points to avoid discounting

Skills Development Informal Training (Cat F & G) cannot represent > 35% of total expenditure. Category B, C and D programmes may include salary of learner for period of learning programme Mandatory sectorial training cannot be counted, which includes: Site, project or safety inductions; Toolbox talks; Operators re-certification.

Skills Development - Generic Description Contractors BEP Expenditure Points Targets Points Targets Spendon Learning programmes for Black people as % of leviableamount 4 2% 2.5% Yr3 3% yr5 7 2% 2.5% Yr3 3% yr5 Proportion of spend on Black people using ARG for: African Black Exec, Senior, Middle Mgt Junior Mgt Bursaries or Scholarships 2 2 1 2 EAP 15% 10% 15% 2 3 1 4 EAP 15% 10% 15%

Skills Development - Generic Description Contractors BEP Learnerships, Apprenticeship,Internships & Professional Registration Points Targets Points Targets No of Black people participating in Category A,B,C,D as % of total employees 3 2.5% 4 2.5% No of black employees registered as candidates with industry Professional registered bodiesas % of total of registered employees No of Black disabled people on Cat A,B,C or D programmes as % of Black office based learners 3 60% 4 60% 1 5% 1 5%

Skills Development - Generic Indicator Description Contrac BEP Mentorships Bonus Points Implementation of approved and verified Mentorship programme Points Targets Points Targets 3 Yes 3 Yes % of Black people absorpedby ME at end of Cat A,B,C or D programme 1 100% 1 100% No of Black employees completing Mentorship programme during last 3 yrsthat were promoted in measurement period as % of such employees No of Black employees who registered as a Professional as % of all employees who registered in Measured period 2 15% 2 60% 4 60% TOTAL POINTS 26 34

Skills Development QSE Indicator Description Points Targets Expenditure Spendon Learning programmes for Black people as % of leviableamount Spend on Learning programmes for Black Mgt (Exec, Senior, Middle) as % of total Skills expenditure on Black people Spend on black disabled people as a % of total Skills expenditure on Black people 14 1.5% 7 25% 3 3% Bonus Points No of Black peopleemployed at end of programme by ME and Industry No of Black employees registered as candidates or professional with Registered bodies as % of all registered employees. TOTAL POINTS 26 1 100% 1 50%

WHAT IS A LEARNERSHIP? A learnership is a work based learning programme that leads to an NQF registered qualification. Learnerships are directly relatedtoanoccupationorfieldofwork. Learnerships are managed by Sector Education and Training Authorities (SETAs) on behalf of the DHET. They were introduced by government to upskill learners and to prepare them for the workplace.

Cat Narrative Description A Institution-based theoretical instruction alone formally assessed by the institution B Institution-based theoretical instruction as well as some practical learning with an employer or in a simulated work environment formally assessed through the institution C Recognised or registered structured experiential learning in the workplace that is required after the achievement of a qualification formally assessed by a statutory occupational or professional body D Occupationally-directed instructional and work based learning programme that requires a formal contract formally assessed by an accredited body Delivery Mode Institutional instruction Mixed mode delivery with institutional instruction as well as supervised learning in an appropriate workplace or simulated work environment Structured learning in the workplace with mentoring or coaching Institutional instruction together with structured, supervised experiential learning in the workplace Skills Matrix Learning Site Institutions such as universities and colleges, schools, ABET providers Institutions such as universities and colleges, schools, ABET providers and workplace Workplace Learning Achievement Recognised theoretical knowledge resulting in the achievement of a degree, diploma or certificate issued by an accredited or registered formal institution of learning Theoretical knowledge and workplace experience with set requirements resulting in the achievement of a degree, diploma or certificate issued by an accredited or registered formal institution of learning Occupational or professional knowledge and experience formally recognised through registration or licensing Institution and workplace Theoretical knowledge and workplace learning, resulting in the achievement of a South African Qualifications Authority registered qualification, a certificate or other similar occupational or professional qualification issued by an accredited or registered formal institution of learning

Skills Matrix Cat Narrative Description Delivery Mode Learning Site Learning Achievement E Occupationally-directed instructional and work based learning programme that does not require a formal contract formally assessed by an accredited body F Occupationally-directed informal instructional programmes Structured, supervised experiential learning in the workplace which may include some institutional instruction Structured information sharing or direct instruction involving workshops, seminars and conferences and short courses Workplace and some institutional as well as ABET providers Institutions, conferences and meetings Credits awarded for registered unit standards Continuing professional development, Attendance certificates and credits against registered unit standards (in some instances) G Work-based informal programmes Informal training Workplace Increased understand of job or work context or improved performance or skills

Procurement & Supplier Development

PROCUREMENT & SUPPLIER DEVELOPMENT Combine Procurement & Supplier Development o o o o Procurement (19 points) Supplier Development (5 points) Supplier Development Contributions (10 points) Bonus points (4 points) No Enterprise Development Priority Element

PROCUREMENT & SUPPLIER DEVELOPMENT Sub-minimum targets to avoid discounting o o o Procurement (7.6/19 Contractors, 7.2/18 BEP) Supplier Development Programmes (2/5 Con, 1.6/4 BEP) Supplier Development Contributions (4/10 Con, 2 / 5 BEP)

Procurement & Supplier Development -Generic Description Procurement Spendwith all Empowering suppliers as a % of Total measured spend Contra ctors BEP Points Targets Points Target 6 80% 6 80% Spend with EME s 3 15% 3 20% Spend with QSE s 3 15% 2 10% Spend with >51% black owned suppliers 4 20% 4 20% Spend with >35% black women suppliers 3 12% 3 12% Bonus Points Spend with Black designated group suppliers that are > 51% black owned Spend with Black women owned suppliers that are > 51% black owned 3 20% 2 20% 1 8% 1 8%

Procurement & Supplier Development -Generic Description Contra ctors Supplier Development Programmes Points Targets Points Target Compliant Supplier and Contractor Development Programme Supplier Development Contributions Annual value of contributions as % of target 8 3% NPAT Annual value of contributions with 51% Black women owned entities as % of target BEP 5 CSC400 4 CSC400 2 20% of value of above Total Points 38 30 4 3% NPAT 1 20% of value of above

Procurement & Supplier Development - QSE Criteria Description Points Targets Preferential Procurement BEE Procurement spend from all Empowering suppliers as a percentage of Total Measured Procurement Spend 13 60% Supplier Development Contributions BEE Procurement spend from all Empowering suppliers that are at least 51% Black owned, as a % of TMPS BEE Procurement spend from all Empowering suppliers that are at least 35% Black Womenowned, as a % of TMPS Annual value of Supplier Development contributions as a percentage of the target TOTAL POINTS 29 5 17.5% 4 7.5% 7 1% NPAT

Total Measured Procurement Spend Inclusions: Cost of Sales Operational Expenses Capital Expenditure Labour brokers and independent contractors Intra group procurement Imports brought in due to price Exclusions: Purchases from suppliers enjoying Monopolistic positions Taxes, Salaries and Wages Pass through third party exclusions, recorded as an expense Depreciation Non discretionary spend where ME is forced to make use of a particular supplier due to tender requirements or client specs

Supplier Development Beneficiary At least 51% Black owned Latest Annual turnover does not exceed 30% of ME s turnover for the measured period. ME may not hold >20% interest in beneficiary Must employ min 3 permanent employees Must have valid tax certificate Valid affidavit or BBBEE Certificate

Supplier Development Programme Signed agreement between both parties Needs analysis of Beneficiary signed by both parties Supplier Development Plan: Min 3 Objectives Priority activities to address objectives Contributions made and value during measured period ESD Champion (Senior Manager)

Supplier Development Recognition Grant (100%) Loan (interest free 70% or interest bearing 50%) Mentoring and Training (70%) Discounts in addition to normal discounts (100%) Standing Guarantee (3% of amount) Professional Service at no cost or a discount (60%) Preferential payment terms (inv amt x15%) Overhead costs of employees supporting initiative (70%) Early payment terms limited to 75% of 10 points

Important facts about BEE certificates?

What to consider when collecting Certificates and Affidavits Affidavits Does it comply with the DTI s template Is it signed by the business owner Is it signed and stamped by a Commissioner of oath BEE Certificates Is it valid for the finanical period that is being measured Is it issued by a Sanas or IRBA accredited agency Is it issued under the correct Sector code

Empowering Supplier Status Statement issued by DTI on 28 Oct 2016: The recognition of empowering supplier status for the inaugural year of the Amended Codes of Good Practice, as determined by Paragraph 1(d) of Notice 444 of 2015, is hereby extended until further determination. All valid B -BBEE Verification Certificates, Exempt Micro Enterprise and relevant Qualifying Small Enterprise Sworn Affidavits and CIPC Certificates issued on or prior to 30 April 2016 will be automatically recognised as an Empowering Supplier until the date of expiry of that B -BBEE Verification Certificate, Sworn Affidavit or CIPC Certificate. (b) Any Entity measured on or after 1 May 2016 will automatically be recognised as an Empowering Supplier until a further notice is issued

Socio Economic Development

SOCIO-ECONOMIC DEVELOPMENT NPAT is calculated over 3 financial years preceding measurement period Measured period not included in calculation If loss over 3 years, use 1/3 of industry norms Allow for double counting on all contributions At least 75% of value must directly benefit Black people Contributions for Black disabled people enhanced by 1.25

SED Definition Monetary or Non monetary contributions implemented for communities, natural persons or groups where at least 75% of the beneficiaries are Black people. Objective of SED contributions is the promotion of sustainable access for the beneficiaries to the economy. Typical contributions include: o Development programmes for women youth disabled and people living in rural areas o Support of healthcare and HIV/AIDS programmes o Support for education programmes at primary, secondary and tertiary education level as well as bursaries and scholarships o Community training, skills development for unemployed people and adult basic education o Support of arts, cultural or sporting development programmes

Socio Economic Development -Generic Criteria Description Weighting Points Socio Enterprise Development Bonus Points Targets Value of SED contributions as % of target 4 1.25% NPAT Portion of contribution above on Communities with limited services Contribution towardsstructured SED projects Total Points 6 1 30% of target above 1 1.25% of NPAT

Socio Economic Development -QSE Criteria Description Weighting Points Socio Enterprise Development Bonus Points Targets Value of SED contributions as % of target 3 1% NPAT Portion of contribution above on Communities with limited services Total Points 5 2 50% of target above

SED Contributions Qualifying Contribution Type Contribution Amount Benefit Grants Full Grant amount 100% Direct Cost in supporting SED Verifiable Cost 100% Discounts in addition to norms Discount Amount 100% Overhead costs incurred in supporting SED Verifiable Cost 80% Human resource Capacity: Professional services rendered at no cost Commercial Hourly rate 80% Professional services rendered at a discount Value of discount 80% Time of employees of ME productively deployed Monthly salary/160 80%

SED Evidence Required SED Plan signed by ME and beneficiary Signed confirmation by beneficiary (or third party) confirming value of contribution Annual project impact analysis against targets Communities with Limited Services: < 65% of households have access to piped water OR < 85% of households have access to electricity In addition to above > 50% have average income in first 5 levels of income data table

Questions?