COC – Course of Construction: Minimising the risk of B-BBEE non-compliance

A pre-requisite to earning any points within the stipulations of the CSC300 code is the annual submission to CETA by 30th of April every year. Forget about this date and wave your B-BBEEE rating goodbye.

The following criteria must be fulfilled for the Measured Entity to receive points on the Skills Development Scorecard:

  • Workplace Skills Plan
  • An Annual Training Report
  • Pivotal Report which has been submitted to CETA (Construction Education & Training Authority)
  • Implementation of Priority Skills programme generally, and more specifically for Black People


According to the scorecard measurement principles of the Skills Development element, any measured entity has to achieve at least 40% of the total weighting points as directed by each sub-element of the Skills Development Scorecard.

These include mentorship participation, facilitating learnerships, internships, apprenticeships and professional registrations, as well as skills development expenditure for black people and adjusted gender recognition parameters according to the categories of the Learning Programme Matrix.

Let’s have a look at the revised codes relevant to the classification of measured entities, discounting principles and foreseen challenges in more detail:

  • Large Enterprises

For large industry players (Large Enterprises) compliance with all five priority elements will be compulsory, and Skills Development is viewed as a priority element for larger organisations in the construction sector. (page 41 of the Gazette)

The biggest risk here is that non-compliance to the threshold targets on any one of the five elements will result in the B-BBEE status being discounted by one or more levels depending on the compliance gap between actual and sub-minimum target points.

A prominent challenge for big business would be the potential disruption of services, production and manufacturing processes due to employee time spent in training and development activities and also for key staff involved in prescribed mentorship programmes.

  • Qualifying Small Enterprises (QSE’s)

A measurable Qualifying Small Enterprise has more manoeuvrability in terms of the QSE Scorecard with a compulsory element of Ownership and then the choice of another element which may or may not include Skills Development. (heads up for growing concerns, skills development is a much more nimble element where maximum points can be earned far easier than for instance preferential procurement and supplier development elements)

If a QSE qualifies for an automatic B-BBEE level 1 or 2 status, compliance to the Skills Development element is compulsory as to avoid discounting. The challenging issue this scenario is that the modified flow-through principle cannot be used; only the standard flow-through principle is allowed in this case. For an explanatory infographic regarding the differences between these principles click here.

Another spanner in the works for automatic qualifiers on level 2 due to 51% black ownership is that they will be discounted by one level if a 40% subminimum in terms of the Skills Development element is not met. This change forces QSE’s to still spend funds on Skills Development despite qualifying for Automatic B-BBEE levels.

  • Emerging Micro Enterprises (EME’s)

An EME with an annual turnover under 1.8 million for BEP’s and under 3 million for Contractors is not subjected to the discounting principles because they do not need to present B-BBEE verification certificates although proof of EME status is required.

Therefore, they are automatically released from being compliant to the QSE Skills Development Element as long as ownership percentages and annual turnover remains in the boundaries of EME classification. Kudos to Government for being considerate to ‘’small guys”.

However, as an Emerging Micro Enterprise (EME) with automatic B-BBEE status levels from 1 -4 the minimum expenditure target for Skills Development is 40% to avoid discounting action. (These are relevant to EME’s who choose to enhance their B-BBEE status levels)

A particular challenge for smaller construction companies who often find it difficult to achieve 30% black ownership is that they will be discounted from a level 5 to a level 6, by not obtaining a 40% subminimum in the skills development element. This means that their competitiveness in the market when bidding for tenders may be compromised significantly.

  • Start-Up Enterprises

Start-up enterprises are by no means exempted from strict scoring regulations. During the first twelve months of operations, a startup will be measured as an EME regardless of expected revenue if below ten million.

However, tendering on any contract with a value of higher than 10 million (below 50 million) would immediately push the company into a QSE qualification. Similarly, a startup will be measured against the Large Enterprise Scorecard if any tender is made with a deal value higher than 50 million.

Therefore, the Amended Code expects increased compliance standards from a legitimate start-up the moment it secures a high value contract. Obtaining the required Skills Development subminimum will then become increasingly difficult for construction industry start-ups. (Note to all start-ups: Ramp up your internship and learnership recruitment processes with our eRecruitment Solution)


Noteworthy changes to the Construction Sector Codes are concisely summarised in a recent SANAS publication. We have listed those that may have substantial impacts on future skills development strategies below:

  • Stepped targets have been put in place for Skills Development expenditure with immediate effect, at the end of year 3 and then again from year 5 onwards, which provides for a much-needed scope in medium and long-term planning, to ensure Skills Development compliance.
  • A welcome addition is the extra points being made available based on how and to whom the spend was allocated to, for example, African People, Black Management, Bursaries or Scholarships.
  • The Learning Programme Matrix specially adapted for the Construction Sector now includes Category A Learners as well.
  • Professional Registration Learnerships are capped at 5 years from now on, in terms of the maximum recognition period.
  • Three additional points may be earned for Approved and Verified Membership Programmes going forward.
  • A percentage change increase from 15% to 35% allows for additional informal training to be recognised in the construction sector. (specified in Categories F&G)
  • Mandatory construction industry training cannot be included in the skills spend of companies, and these are clearly defined as Site, Project and Safety Inductions, Toolbox Talks and Operator Re-Certification. Effectively all other training not forming part of these specific mandatory training mechanisms may now be claimed for under the Skills Development Element.

BEE strategies created for the construction industry should be more than just ticking the boxes and adhering to bare minimums. At BEE Analyst and Associates we are ready to assist your company in adapting and achieving compliancy under the Amended B-BBEE Construction Codes and further optimise your scorecard levels in the most cost-effective manner.

Foundational Changes: New Construction Sector B-BBEE Codes

The Amended Broad-Based Black Economic Empowerment (B-BBEE) Sector Codes for the Construction were gazetted by the Department of Trade and Industry (DTI) on 01 December 2017. If you have nothing else on the to-do list today other than ‘’watch cement dry’’ you are welcome to work your way through the 85-page document here. Otherwise, have a scroll through this blog instead.


Changes in the Construction Sector Codes apply to all entities that derive more than half of their revenue from construction-related activities. (An easy tip: if your business has anything to do with cement, bricks and plaster from manufacturing, to using, to positioning…you’re in the construction industry and these code amendments will have an impact on your company)

Formal differentiation by the Construction Sector Charter Council (CSCC) is as follows:

  • Material Suppliers, which constitutes manufacturers and suppliers of building material and equipment for the purpose of construction activities
  • Built Environment Professionals (BEPs), which includes all planning, design, and costing management entities in the construction industry
  • Contractors, which refers to any company providing project management and consultation services to the construction industry

These companies are required to submit their B-BBEE Certificates annually to the CSCC.

With no transition period provided to ease into the new lay of the land, construction industry players should take note of their verification validity first and foremost. All verifications signed off prior to the release date of the amendments will remain valid until the expiry date. However, B-BBEE verifications signed off following the publication date of the amended codes will have to be redone according to the new regulations.

The most noteworthy modification overall is the change to compulsory measurement where the ACSC (Amended Construction Sector Code) is deemed a holistic code of good practice for all activities listed in section 10 of the B-BBEE Act. In plain English: you do not have a choice of measurement going forward.


One of the primary elements affected by the amendments is Skills Development. Guess what; this is a good thing so no need to freak out about non-compliance yet.

Before contemplating the HOWs WHATs and WHEREs for hitting subminimum targets prescribed by this amended code series (CSC300), lets first summarise its purpose and general principles (page 39) in the bigger scheme of things. (aka for South Africa, your company, your employees and your community)

Principle 1: Aim to contribute towards achieving national economic growth and social development goals to create work opportunities and sustainable livelihoods for our population.

Principle 2: Promote skills and competence within the critical sectors of manufacturing and production which are mostly labour-intensive industries. Construction forms part of these critical sectors.

Principle 3: Support the creation, facilitation and implementation of Professional, Vocational, Technical and Academic Learning programmes. These are to be executed via Apprenticeships, Learnerships and Internships initiatives, that meet the criteria needs for economic growth and development.

Principle 4: Support active employment creation by strengthening the skills and human resource base within organisations by encouraging the support of skills development initiatives with an emphasis on skills and career path development mechanisms.


Apart from contributing to skills development and training of employees and individuals in the surrounding community (which in turn has a positive impact on quality standards within an organisation and upliftment of our national workforce), focussing efforts on compliance to Code CSC300 bring two quantifiable benefits to the table.

FIRSTLY, expenses incurred and recognised as Skills Development Expenditure allows for ‘’money back” into company treasury chests via tax rebates and grants.

Legitimate training expenses include:

  • Costs of training materials
  • Costs of trainers
  • Costs of training facilities including costs of catering
  • Scholarships and bursaries
  • Course fees
  • Accommodation and travel
  • Administration costs such as the organisation of training including, where appropriate, the cost for the Measured Entity of employing a skills development facilitator or a training manager
  • Funding and support of research at tertiary institutions aimed at improving the performance of the Construction Sector

SECONDLY, getting maximum points and bonus points from the skills development element is less complicated in comparison to other scorecard elements such as Ownership, Supplier Development or Preferential Procurement.

There is no such thing as a free lunch, but implementing smart training strategies will indeed make your money go further. For example, an R 1 700 000 expense may render points as if an R 6 700 000 training investment was made. (Read more about BEE aligned training initiatives here)


For each training programme listed and claimed for as part of a company’s B-BBEE verification submission, there must be a classification. The Learning Programme Matrix is an excellent ‘’cheat sheet’’ to easily ascertain to which Categories (A-G), every single training cent should be allocated.

Training Programmes can be matched to this matrix in accordance to Category, Narrative Description, Delivery Mode, Learning Site and Learning Outcome which simplifies the verification process and also assists in validating the level of success (return on training investment) of these programmes.

This matrix has also been adapted for the construction industry, and an updated version thereof can be viewed on page 41 of the Gazette.


To ensure that your skills development plan, goes according to plan (pun intended), we strongly advise that someone in the organisation actually reads the 85 pages as referred to earlier in this blog, preferably with a highlighter to take note of a few important amendments.

  • Demographics related to race and gender are applied with additional recognition for African employees especially from management level upwards
  • Calculation of training initiatives and expenditure for African staff is subject to adjusted recognition for gender and also in relation to management level in the organisational hierarchy
  • Mandatory sectoral training is categorised by site, project or safety inductions, toolbox talks and operator recertification
  • Training for Categories F & G may not exceed 35% of total skills development expenditure
  • Salaries may only be claimed for B, C, and D learnerships with recognition for Category C learners falling away after five years
  • External training of African individuals not forming part of staff headcount will also contribute to overall skills development scores

In our next blog, we will unpack classifications, targets, the compulsory scores to avoid discounting actions and the potential challenges these amended codes may pose to businesses operating in the construction sector for 2019 and beyond.