Read more
Public infrastructure spending over three years will exceed the R1 trillion mark.
Picture: iStock
Finance Minister Enoch Godongwana announced on Wednesday during his third budget speech that the National Treasury has earmarked R1 trillion for infrastructure investment.
This could mean that many construction companies in South Africa will get a chance to bid to play a role in the upcoming infrastructure transformation.
Roelof van den Berg, CEO of the Gap Infrastructure Corporation, said the government’s multibillion-rand infrastructure plans could create significant opportunities, but only for businesses that understand how to navigate the complexities of the tendering process.
“We’re seeing too many capable small contractors fail within their first few years, not because they lack skills or technical expertise, but because they’re unprepared for public tender requirements in order to win projects.”
ALSO READ: R1.3tn for infrastructure: Can SA deliver?
Four tips to apply for tenders
Van den Berg offers four insights into how new construction businesses can position themselves for future growth:
1. Registering with relevant regulatory bodies
He said public sector projects require registration with several government departments and agencies before applying for tenders.
“The first critical registration is with the Construction Industry Development Board (CIDB), without which no contractor can apply for a public tender.
“Some exclusions apply, including joint ventures, subcontractors, labour-only contractors and home builders, which fall under the purview of the National Home Building Council (NHBC).”
He noted that many emerging contractors delay their applications or submit incomplete forms, which can lead to weeks of setbacks and disadvantage smaller businesses.
2. Understanding the CIDB grading system and improving your rating
Van den Berg added that, depending on its size and track record, a contractor might be excluded from larger public projects, with top contracts reserved for the highest-rated companies.
“CIDB Grade 1 has no criteria besides registration, but limits participation to projects below R500 000. Grades 2 through 9 demand that specific financial and performance metrics be met.
“Grade 2 companies can tender for projects of up to a million rand, but must show proof of completing a R130 000 project in the past five years. Grade 8 contractors can apply for R200 million projects, while Grade 9 companies have no cap – but both must have completed multimillion-rand projects successfully.”
He advises treating each project as a stepping stone. “Carefully and consistently maintain detailed records of timelines, costs, safety compliance and client feedback. Even tracking missteps can guide you to improve over the long term.”
ALSO READ: Public-private partnership: key to infrastructure transformation
3. Including social responsibility essentials in tender applications
He added that with growing recognition of the important role of corporate social responsibility in changing lives, the government is increasingly seeking contractors who share the aim of improving community well-being.
“You’re far more likely to secure a tender if you can demonstrate how your involvement will contribute additional value in terms of upliftment or protecting local ecosystems.”
He recommends committing to employing and training community members or contributing to development programmes, depending on capacity and budgets. “Even smaller-scale initiatives can make a difference in a real and impactful way on the lives of others.”
4. Mitigating risks by subcontracting
“For smaller contractors who lack the capacity for entire projects, van den Berg suggests subcontracting with established firms.”
He said this allows new or lower-graded businesses to handle parts of the work without taking on unmanageable risk while benefiting from the principal contractor’s guidance.
“Working under an established brand is one of the best ways to learn the ropes. You can see how they manage timelines, compliance processes and stakeholder relationships, and apply that knowledge to your own business to help you move up the CIDB ranks.”
Minister welcomes investment
Minister of Public Works and Infrastructure Dean Macpherson welcomed the news of the investment. “Infrastructure investment remains one of the most effective ways to achieve the government of national unity’s (GNU’s) goal to grow the economy and create jobs.
“As the department of public works and Infrastructure, together with Infrastructure South Africa (ISA), we stand ready to play our part in achieving this goal. By working together we are building a better South Africa.”
Job recreation
Godongwana, while delivering his third budget speech on Wednesday in Cape Town, said infrastructure is a rich source of jobs in construction, engineering and related industries across a range of skill levels.
“It is for these reasons that infrastructure is the fourth pillar of the growth strategy. This budget demonstrates our resolve to change the composition of spending from consumption to investment.
“Allocations towards capital payments remain the fastest-growing area of spending by economic classification. Public infrastructure spending over three years will exceed the R1 trillion mark.”
NOW READ: Budget 3.0: Fuel levy replaced VAT hike but is it the better option?
Download our app
