| 3.1 | The Amended Construction Sector Code is applicable to the B-BBEE compliance measurement of all entities that fall within the Construction Sector. |
| 3.2 | All Measured Entities falling within the scope of the Amended Construction Sector Code as set out in 3.1 above may only be measured for compliance in accordance with this Amended Construction Sector Code. |
| 3.2.1 | Where a Measured Entity operates in more than one sector or sub-sector (e.g. Contractor or BEP), whether it requires a single entity verification or a consolidated verification for it as a group; it will be required to report in terms of: |
| (a) | The scorecard for the sector or sub-sector in which the majority of its core activities (measured in terms of Annual Revenue) are located, and, |
| (b) | Should the majority of its core activities be in the construction field, the measured Entity may be evaluated in terms of the Amended Construction Sector scorecard should these activities conform to those described in the definitions of a Contractor or BEP in these codes. |
| 3.2.2 | Where the Measured Entity in 3.2.1 is the holding entity in a consolidated verification and any of its subsidiaries are subject to measurement in terms of a set of codes (sector or general) other than that which governs the Measured Entity, then such subsidiary will not be able to tender the consolidated verification certificate of the Measured Entity as its own, notwithstanding the fact that it formed part of the consolidated verification. The subsidiary will have to be measured in terms of the set of codes (sector or general) applicable to it based on its own core activities (measured in terms of annual Revenue). |
| 3.3 | The basis for measuring the B-BBEE compliance of an Entity in terms of paragraph 3.1 is: |
| 3.3.1 | Paragraph 4, in the case of an Exempted Micro-Enterprise or Start-up Enterprise; |
| 3.3.2 | The Large Enterprise Scorecard and QSE Scorecard, in the case of other Measured Entities. |
| 3.4 | For the avoidance of doubt, Construction Material Suppliers are measureable against the thresholds, targets, weightings and methodology applicable to Contractors as per the Construction Sector Code scorecards, except where the Measured Entity can prove compulsory legislative compliance and or licensing in another sector” change highlighted doesn’t make sense |
| 3.5 | The Amended Construction Sector Code is a relevant code of good practice for purpose of all activities listed in section 10 of the B-BBEE Act as amended and is a compulsory measurement tool for the Construction Sector. This means that construction sector related measured entities do not have a choice of measurement. |
| 3.6 | PRIORITY ELEMENTS, SUBMINIMUM AND DISCOUNTING PRINCIPLES |
| 3.6.1 | The priority Elements are as follows: |
| 3.6.1.1.1 | The sub-minimum requirement for Ownership is 40% of Net Value (40% of the 6 points for Contractors i.e 2.4 points, or 40% of the 4 points for BEP’s i.e. 1.6 points) based on the Time Based Graduation Factor. |
| 3.6.1.2 | Skills Development: |
| 3.6.1.2.1 | The sub-minimum requirements for Skills Development is 40% of the total weighting points (excluding bonus points) for Skills Development. |
| 3.6.1.3 | Preferential Procurement and Supplier Development: |
| 3.6.1.3.1 | The sub-minimum for Preferential Procurement and Supplier Development is 40% of the total weighting points (excluding bonus points) of each of the three broad categories, within the Preferential Procurement and Supplier Development element, namely ‘Preferential Procurement’, ‘Supplier Development Programmes’ and ‘Supplier Development Contributions’. For the avoidance of doubt, this means that a Measured Entity measureable in terms of the Large Enterprise Scorecard must achieve at least: |
| (i) | 7.6 points for Contractors and 7.2 points for BEPs under the Preferential Procurement category; |
| (ii) | 2 points for Contractors and 1.6 points for BEPs under the Supplier Development Programmes category; |
| (iii) | 4 points for Contractors and 2 points for BEPs under the Supplier Development Contributions category; |
| 3.6.1.4 | The principles in paragraph 3.6.1 above also apply to the determination of the 40% threshold for the QSE Scorecard when determining whether a QSE or EME’s (see par 3.6.2.4 below) B-BBEE Status is to be discounted or not. |
| 3.6.2 | COMPLIANCE TO PRIORITY ELEMENTS |
| 3.6.2.1 | A Large Enterprise is required to comply with all the Priority Elements; |
| 3.6.2.2 | A Qualifying Small Enterprise, that is measureable in terms of the QSE Scorecard, is required to comply with 2 Priority Elements i.e. Ownership as a compulsory element, and either Skills Development or Preferential Procurement and Supplier Development. |
| 3.6.2.3 | A Qualifying Small Enterprise, which qualifies for an automatic B-BBEE Status Level (one or two) as per paragraph 5.3 below, is required to comply with the QSE Skills Development element as a compulsary priority element to avoid discounting. |
| 3.6.2.4 | Save for the exceptions in par 3.6.2.4.1 and 3.6.2.4.2 below; an Exempted Micro Enterprise, that qualifies for an automatic B-BBEE Status Level (one, two, four or five) as per paragraph 4 below, is required to comply with at least 40% of the QSE Skills Development Expenditure Target in paragraph 1.1 of Statement CSC603 as a compulsory priority element to avoid discounting. |
| 3.6.2.4.1 | An Exempted Micro Enterprise (EME) with a total annual revenue of less than R1.8 million in the case of BEPs and less than R3 million in the case of Contractors are : |
| (A) | Not subject to the discounting principle and therefore do not have to comply with the QSE Skills Development element, and |
| (B) | Not required to have an authorised B-BBEE verification certificate, and may present an affidavit or a certificate issued by the Companies and Intellectual Property Commission (CIPC), in respect of their ownership and annual turnover. |
However, this exception falls away the moment such an EME elects to enhance its B-BBEE Status level by means of the mechanisms provided for in paragraphs 4.3.1.2 or 4.3.1.3. The exception will remain unavailble to such an EME in subsequent Measurement Periods notwithstanding its annual revenue.
| 3.6.2.4.2 | A Start-Up Enterprise is not subject to the discounting principle and therefore does not have to comply with any priority element. |
| 3.6.3 | DISCOUNTING PRINCIPLE EFFECT |
| 3.6.3.1 | Non-compliance with the 40% sub-minimum requirements of any of the priority elements, as per paragraph 3.6.2 above, will result in the following outcomes for both Large Enterprises, Qualifying Small Enterprises and Exempted Micro Enterprises that are subject to discounting; |
| 3.6.3.1.1 | The actual points scored by the Measured Entity and the consequent level that the Measured Entity would have achieved were it not for non-compliance with the 40% sub-minimum requirements will be recognised by the Verification Agency ( "the B-BBEE Status Level”); |
| 3.6.3.1.2 | Notwithstanding the recognition in 3.6.3.1.1 above, the Measured Entity’s B-BBEE Status Level and corresponding B-BBEE Recognition Level will then be discounted by one level down. Only the discounted B-BBEE Status Level and corresponding discounted B-BBEE Recognition Level may appear on the face of the B-BBEE certificate. |
| 3.7 | COMPLIANCE WITH EMPLOYMENT EQUITY ACT |
| 3.7.1 | The requirement to submit data to the Department of Labour under the Employment Equity Act 55 of 1998 as amended is not the same for all employers. |
| 3.7.2 | For the avoidance of doubt, compliance with the reporting requirements of the Employment Equity Act 55 of 1998 (As amended), is not a pre-requisite for claiming points under the Management Control element as long as the Measured Entity is able to submit sufficient evidence for verification purposes to support its claim under that element. |
