As South Africa gears up for trillions of rands of promised investments into infrastructure, hundreds of emerging construction companies are missing out on potentially game-changing public contracts, notes Roelof van den Berg, CEO of the Gap Infrastructure Corporation.
“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,” he says. “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.”
Van den Berg offers four insights on how new construction businesses can position themselves for future growth:
- Registering with relevant regulatory bodies
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, sub-contractors, labour-only contractors, and home builders, which fall under the purview of the National Home Building Council (NHBC).
Many emerging contractors delay their applications or submit incomplete forms, which can lead to weeks of setbacks, placing smaller businesses at a disadvantage.
Furthermore, construction companies must also register with the Companies and Intellectual Property Commission (CIPC), obtain a Tax Clearance Certificate from the South African Revenue Service (SARS), meet B-BBEE requirements, and secure a Letter of Good Standing under the Compensation of Occupational Injuries and Diseases Act (COIDA). They must also ensure workers are registered with the South African Council for the Project and Construction Management Professions (SACPCMP).
- Understanding the CIDB grading system and improving your rating
Depending on 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 a multi-million-rand projects successfully.
“After decades of diligent work on various contracts of varying sizes, GIC has achieved the highest grade, which means we can tender for any level of public or private project. Smaller firms can reach this level too with time, persistence, and thorough due diligence at every step,” says van den Berg.
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.”
- Including social responsibility essentials in tender applications
With growing recognition of the important role of corporate social responsibility in changing lives, 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.”
- Mitigating risks by subcontracting
For smaller contractors who lack the capacity for entire projects, van den Berg suggests sub-contracting with established firms. 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.”
Ultimately, van den Berg concludes, “South Africa’s infrastructure plans are ambitious, with plenty of opportunities for contractors to get in on the ground floor and build upward. With perseverance and strategic planning, emerging contractors can play a crucial role in building South Africa’s future.”
