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TOOLKIT 2006

INFRASTRUCTURE DELIVERY MANAGEMENT GUIDELINES

MODULE 5 – CONSTRUCTION
PROCUREMENT
Status: Final for Toolkit version 4.0

Developed by the Construction Industry Development Board in cooperation with National Treasury

Version 4-0
March 2006

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Module 5

Table of Contents
Module 5

TABLE OF FIGURES

Supporting Information, Templates and Examples

Schedule of Supporting Information

Schedule of Examples

1 Overview

1.1 Purpose of the module

2 An introduction to public procurement

2.1 What is procurement?

2.2 What are the commonly encountered categories of public construction procurement?
2.3 Public Procurement
2.3.1 Introduction
2.3.2Regulatory Framework for procurement
2.3.3Supply Chain Management
2.4 The procurement mandate of the Construction Industry Development Board
2.4.1 The prescripts of the Construction Industry Development Board
2.4.2Construction Procurement Best Practice Library
2.4.3 Register of contractors
2.4.4 Register of Projects

3 Implementing Construction Procurement in a Institution

3.1 The fundamentals of a construction procurement system

3.2 Construction Procurement processes
3.3 The Procurement System within an institution
3.4 Managing construction procurement
3.5 Managing construction procurement risks
3.6 Recommended approach to the various construction procurement activities
3.6.1 Activity 1: Establish what is to be procured
3.6.2 Activity 2: Decide on the procurement strategies
3.6.3 Activity 3: Solicit tender offers
3.6.4 Activity 4: Evaluate tender offers
3.6.5 Activity 5: Award contract
3.6.6 Activity 6: Administer contracts and confirm compliance with requirements
3.7 Applying the CIDB Registers to the procurement system

Annex A: Construction Procurement Best Practice Library

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TABLE OF FIGURES

Figure 1.0: Modular Footprint of Toolkit

Figure 2.1: The Regulatory Framework for Construction Procurement in South Africa
Figure 2.2: Standard methods for soliciting tender offers from the construction industry
Figure 2.3: Relationship between CIDB prescripts and the procurement regulatory framework
Figure 3.1: The components of a construction procurement system
Figure 3.2: Establishing a construction procurement system within an institution
Figure 3.3: Sample procurement control card

Supporting Information, Templates and Examples

All the supporting information in the form of Best Practice published by the Construction Industry Development
Board may be downloaded from the CIDB website www.cidb.org.za (See Construction Procurement Best Practice
Library).

Several of the annexures to these documents contain templates and examples.

Schedule of Supporting Information

Number Name Synopsis/purpose Current

revision
5S01 CIDB Standard for Prescript of the CIDB under National Treasury Government
Uniformity in Construction SCM Framework Regulation and extension of Gazette No.
Procurement the Construction Industry Development 29138, Board
Regulations. To promote uniformity and Notice 94 of
standardisation in procurement documentation 2006
and solicitation of tender offers.
5S02 CIDB Best Practice This practice guide identifies six main Edition 2.0
Guideline A1: The procurement activities that apply to all
Procurement Cycle construction procurements irrespective of their
(1001) categorisation as supplies, services and
engineering and construction works. It also
identifies the generic steps (sub-activities)
associated with such activities and the logical
points in the process where controls should be
introduced. The actions associated with these
activities and sub-activities are documented as
well as the inputs and outputs to each of the
actions in a logical framework.
The practice guide also presents the
recommended approach to performing the
various activities and sub-activities
5S03 CIDB Best Practice This practice guide provides guidelines on the Edition 4.0
Guideline A2: Applying the application of the CIDB’s Standard for
procurement prescripts of Uniformity in Construction. It also establishes
the CIDB in the Public the relationship between this standard and

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Number Name Synopsis/purpose Current

revision
Sector (1002) National Treasury’s Regulatory Framework for
Supply Chain Management. Guidance is also
provided on the establishment of a
procurement policy within an institution and the
manner in which procurement may be
managed and controlled.
5S04 CIDB Best Practice This practice guide provides guidance on the Edition 3.0
Guideline A3: Evaluating evaluation of tenders in accordance with the
tender offers (1003) provisions of the CIDB Standard for Uniformity
in Construction Procurement respect of the
seven steps identified in Practice Guide A1
associated with this activity. It also contains
proforma forms to evaluate tender offers and
an example of a tender evaluation report.
5S05 CIDB Best Practice This practice guide defines quality within the Edition 2.0
Guideline A4: Evaluating procurement context and reviews the
Quality in Tender requirements for evaluating quality in the
Submissions (1004) accordance with regulatory requirements and
the provisions of the CIDB Standard for
Uniformity in Construction Procurement for the
evaluation of quality. It furthermore provides
practical guidelines on the awarding of
preferences for quality, pre-qualification on the
basis of quality and the scoring of tender
submissions in terms of quality and price or
quality, price and preference.
5S06 CIDB Best Practice This practice guide outlines the main elements Edition 1.0
Guideline A5: Managing of the risk management process. It identifies
Construction Procurement the generic sources of construction related
Risks (1005) risks, presents a range of options for risk
allocation between the employer and the
contractor and discusses the question of
insurances. It also provides guidelines for the
management of risk.
5S07 CIDB Best Practice This practice guide outlines the processes Edition 3.0
Guideline A6: Applying the associated with the implementation of the
Registers to Construction register of contractors and the register of
Procurement (1006) projects in accordance with the provisions of
the Construction Industry Development
Regulations. It provides guidelines to
employers and their agents to comply with the
requirements of these regulations in their
procurements and describes the manner in
which requirements relating to contractor
grading designations may be incorporated in
procurement documents.
5S08 CIDB Best Practice This practice guide presents a range of policy Edition 1.0
Guideline B1: Formulating options and implementation methodologies that
and Implementing may be pursued in the formulation of
Preferential Procurement preferential procurement policies that are
Policies (1007) consistent with the provisions of the South
African regulatory regime. The guide
introduces the thinking behind preferential
procurement policies, the manner in which
such policies are implemented internationally
and the constraints to implementation within

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Number Name Synopsis/purpose Current

revision
South Africa. It interprets the Preferential
Procurement Policy Framework Act and related
regulations, identifies the methods by which
preferences may be applied, provides
guidelines as to how preferential procurement
policies may be formulated to satisfy legislative
requirements and contains examples of
preferential procurement policies that are
drafted in accordance with this practice guide.
5S09 CIDB Best Practice This practice guide provides a range of uniform Edition 1.0
Guideline B2: Methods and methods and procedures for implementing a
Procedures for wide range of policy themes in a consistent
Implementing Preferential manner. The guide presupposes that a
Procurement Policies preferential procurement policy is in place and
(1008) focuses on the capturing of preferencing
requirements in procurement documents. It
contains sample preferencing schedules,
clauses required to activate preferencing in the
Tender Data where use is made of the CIDB
Standard for Uniformity in Construction
Procurement, and data capture forms.
5S10 CIDB Best Practice This practice guide identifies the various types Edition 2.0
Guideline C1: Preparing of procurement documents and provides a
Procurement Documents uniform format for the drafting and compilation
(1009) of these documents. It also establishes a
practical approach to uniformity and
standardisation of procurement documents
within an organisation and makes
recommendations regarding the forms of
contracts which should be used. It also
contains a number of proforma component
documents to facilitate a uniform approach.
5S11 CIDB Best Practice This practice guide presents the fundamental Edition 2.0
Guideline C2: considerations in the selection of a form of
Choosing an appropriate contract for engineering and construction
Form of Contract for works. It presents an overview of three different
Engineering and series of forms of contracts and provides
Construction Works (1010) practical guidance of the selection of
appropriate forms of contract for an
organisation or for use in selected pricing and
contracting strategies.
5S12 CIDB Best Practice This practice guide provides an overview of Edition 2.0
Guideline C3: Adjudication what adjudication is, presents the principles
(1011) underpinning adjudication, reviews the
provisions for adjudication in standard forms of
contract (NEC, FIDIC and CIDB), outlines an
approach for the selection and use of
adjudicators, and provides sample clauses and
proforma agreements to be included in
procurement documents.
5S13 CIDB Best Practice This practice guide establishes acceptable Edition 1.0
Guideline D1: practices in respect conditions of subcontract.
Subcontracting Features of forms of subcontract which are
Arrangements (1012) unacceptable to the Employer and the
Contractor are identified and described. It also
recommends forms of subcontract which have

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Number Name Synopsis/purpose Current

revision
desirable features for use with the main
contracts identified in Practice Guide C2 and
reviews the legal considerations in the
engagement of labour only subcontractors.
5S14 CIDB Best Practice This practice guide identifies the reasons for Edition 1.0
Guideline D2: Joint Venture forming joint ventures, reviews requirements
Arrangements (1013) for the formation of joint ventures in response
to preferential procurement policies and
presents an overview of the typical content of a
joint venture agreement. It also identifies the
standard joint venture agreements forms that
are suitable for use or to serve as a basis for
the development of an agreement.
5S15 CIDB Code of Conduct This provides a guide and regulates the
behaviour of parties engaged in construction-
related procurement to establish the standards
of behaviour that participants may expect from
each other and against which their behaviour
can be measured.
5S16 CIDB Best Practice This practice guide outlines the principles for Edition 1.0
Guideline A7: The sustainable growth and a number of strategies
procurement of to promote the participation of smaller
professional services registered contractors in public contracts so
(1035) that they can grow and develop. The strengths
and weaknesses of each of these strategies
are discussed.
5S17 CIDB Best Practice This practice guide presents a range of policy Edition 1.0
Guideline A8: Procurement options and implementation methodologies that
measures to develop may be pursued in the formulation of
registered contractors. preferential procurement policies that are
(1036) consistent with the provisions of the South
African regulatory regime. The guide
introduces the thinking behind preferential
procurement policies, the manner in which
such policies are implemented internationally
and the constraints to implementation within
South Africa. It interprets the Preferential
Procurement Policy Framework Act and related
regulations, identifies the methods by which
preferences may be applied, provides
guidelines as to how preferential procurement
policies may be formulated to satisfy legislative
requirements and contains examples of
preferential procurement policies that are
drafted in accordance with this practice guide.
5S18 CIDB Practice Note 1 Scaling up delivery and accelerating Version 1
empowerment
5S19 CIDB Practice Note 2 Correcting arithmetical errors in tenders Versions 1

Schedule of Templates
Number Name Synopsis/purpose Current
revision

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5T01 Site Inspection and Provides a proforma for a typical site inspection 4-0
Clarification Meeting meeting held to clarify elements of the tender in
Minutes relation to the site conditions

Schedule of Examples

Number Name Synopsis/purpose Current

revision
5E01 Standardised Construction August 2006
Procurement Documents
for Engineering and
Construction Works
5E02 Standardised Construction August 2006
Procurement Documents
for Professional Services
5E03 Free State Provincial Provides an example of the guidance required August 2006
Government: Compiler’s in the preparation of a tender document
notes on the use of the
Standardised Construction
Procurement Documents
for Engineering and
Construction Works
5E04 Free State Provincial Provides an example of a standardised August 2006
Government: Standardised procurement document tailored for the public
Construction Procurement service
Documents for Engineering
and Construction Works

1 Overview

1.1 PURPOSE OF THE MODULE

Construction procurement is the process that creates, manages and fulfils contracts within the construction industry.
The purpose of this module is to:

Ÿ Briefly describe the regulatory framework for procurement in South Africa, and in particular that pertaining to
construction procurement

Ÿ Identify the core processes and major activities associated with construction procurements involving the
provision of supplies, services and engineering and construction works

Ÿ Describe the actions associated with the identified major construction procurement activities

Ÿ Identify published guidelines to enable the identified activities to be executed efficiently and effectively and
components of a construction procurement system

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Figure 1.0: Modular Footprint of Toolkit

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2 An introduction to public procurement

2.1 WHAT IS PROCUREMENT?

Procurement may be described as the process that creates, manages and fulfils contracts. Procurement is as
such concerned with establishing and documenting what is required; soliciting from the private sector tender offers
to provide supplies or services / to construct or maintain infrastructure / to undertake disposals; awarding contracts
to successful tenderers; monitoring that which was contracted to be provided is indeed provided; and paying
contractors for executing their contracts.

Public sector procurement falls within the supply chain management functions under acquisition management and
may involve activities such as:

Ÿ The provision of supplies, services or engineering and construction works or any combination thereof

Ÿ The disposal of moveable property

Ÿ The hiring or letting of anything

Ÿ The acquisition or granting of any rights

2.2 WHAT ARE THE COMMONLY ENCOUNTERED CATEGORIES OF PUBLIC CONSTRUCTION

PROCUREMENT?

Most public sector construction procurement activities focus on the provision of supplies, services engineering and
construction works and disposals. (See Table 2.1)

Table 2.1: Categories of Construction Procurement

CATEGORY OF DESCRIPTION
CONSTRUCTION
PROCUREMENT

Disposals The divestiture of public assets, by any means, including sale, rental, lease,
licenses, tenancies, franchises, auction or any combination thereof.

Engineering and The provision of a combination of supplies and services, arranged for the
construction works development, extension, installation, repair, maintenance, renewal, removal,
renovation, alteration, dismantling or demolition of structures, including building
and engineering infrastructure

Services The provision of labour or work, including knowledge-based expertise, carried out
by hand, or with the assistance of equipment and plant.

Supplies The provision of materials or commodities made available for purchase.

2.3 PUBLIC PROCUREMENT

2.3.1 INTRODUCTION

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Public procurement is directly related to service delivery. Institutions require services, supplies and / or engineering
and construction works in order to deliver the services that they are mandated by the state to provide. Disposals
are required to dispose of surplus and redundant supplies and assets.

2.3.2 REGULATORY FRAMEWORK FOR PROCUREMENT

The primary pieces of national legislation that govern procurement in South Africa are as listed in Table 2.2 (see
supporting document 5S03 CIDB Best Practice Guideline A#2, Applying the prescripts of the CIDB Act in the Public
Sector, for more detailed particulars). Figure 2.1 thereafter presents an overview of the regulatory framework for
procurement.

Table 2.2: Primary pieces of legislation that regulate procurement

ACT APPLICABILITY WHAT IT DOES IN RESPECT OF

PROCUREMENT / SUPPLY CHAIN
MANAGEMENT

Constitution of the Republic of All organs of state Provides procurement objectives and establishes
South Africa, 1996 (Act No 108 government’s policy for preferencing
of 1996)

Public Finance Management Act, All organs of state, Establishes broad framework within which
1999 (Act 1 of 1999) except in the local accounting officers / authorities must establish
sphere of government their procurement and provisioning system
(supply chain management)

Preferential Procurement Policy All organs of state Establishes the manner in which preferential
Framework Act, 2000 (Act No 5 (state owned procurement policies are to be implemented
of 2000) enterprises) at
discretion of Minister)

Local Government: Municipal Municipalities and Establishes a detailed regulatory framework for
Finance Management Act, 2003 municipal entities supply chain management.
(Act No 56 of 2003)

Local Government Municipal Local sphere of Establishes a framework for the establishment of
Systems Act, 2000 (Act No 32 of government service delivery agreements involving competitive
2000); and bidding processes
Broad-Based Black Economic
Empowerment Act, 2003 (Act
No. 53 of 2003)

Construction Industry All organs of state Establishes a means by which the Board
Development Board Act, 2000 involved in procurement
Can promote and implement policies,
(Act 38 of 2000) relating to the
programmes and projects aimed at procurement
construction industry.
reform, standardisation and uniformity in
procurement documentation, practices and
procedures within the framework of the
procurement policy of government.
Establishes a national register of contractors (and
if required, consultants and suppliers) to manage
public sector procurement risk

Broad-Based Black Economic Procurement provisions Establishes a code of good practice to inform the:
Empowerment Act, 2003 (Act apply to all organs of
Ÿ Development of qualification criteria for the

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ACT APPLICABILITY WHAT IT DOES IN RESPECT OF

PROCUREMENT / SUPPLY CHAIN
MANAGEMENT
No. 53 of 2003). state. issuing of licenses or concessions, the sale of
state owned enterprises and for entering into
partnerships with the private sector
Ÿ Development and implementation of a
preferential procurement policy.

The Promotion of Equality and The state and all Prohibits the state or any person from
the Prevention of Unfair persons (natural or discriminating unfairly against any person on the
Discrimination Act, 2000 (Act 4 juristic person) grounds of race or gender through the denial of
of 2000) access to contractual opportunities for rendering
services or by failing to take steps to reasonably
accommodate the needs of such persons

Prevention and Combating of Public and private Makes corruption and related activities an
Corrupt Activities Act, 2004. (Act sector offence.
No. 12 of 2004).
Establishment a Register in order to place
certain restrictions on persons and enterprises
convicted of corrupt activities relating to tenders
and contracts; and
Places a duty on certain persons holding a
position of authority to report certain corrupt
transactions.

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Figure 2.1: The Regulatory Framework for Construction Procurement in South Africa

2.3.3 SUPPLY CHAIN MANAGEMENT

Regulations relating to supply chain management issued in terms of the Public Finance Management Act and the
Local Government: Municipal Finance Management Act require accounting officers and accounting authorities to
which these Acts apply (see Figure 2.1) to implement within their institutions a supply chain management system
that provides for at least the following:

Ÿ Demand management (i.e. identify demand, establish requirements and determine needs)

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Ÿ Acquisition management (i.e. acquire supplies, services, and engineering and construction works; and take
delivery of supplies, project deliverables and engineering and construction works.)

Ÿ Logistics management (codify items, set inventory levels, place orders, receive and distribute, manage
stores / warehouses, expedite orders, manage transport and monitor supplier performance)

Ÿ Disposal management (i.e. undertake obsolescence planning, identify where all redundant material is kept or
located and the identify appropriate disposal strategies; dispose of surplus and redundant assets, materials and
equipment)

Ÿ Risk management (i.e. establish culture, processes and structures that are directed towards the effective
management of potential opportunities and adverse effects)

Ÿ Regular assessment of supply chain performance (i.e. monitoring processes and perform a retrospective
analysis to determine whether or not the proper process was followed and the desired objectives achieved)

The major activities associated with construction acquisition are:

Ÿ Acquire supplies, services, and engineering and construction works

Ÿ Take delivery of supplies, project deliverables and engineering and construction works

Supplies and services which are not available within an institution can be sourced from other institutions or
procured. Acquisition management as such deals with the decisions that have to be made in order to manage the
acquisition of the required supplies or services from within the institution, or through procurement thereof from the
open market. Accordingly, the options for acquisition are:

Ÿ Acquisition of redundant / obsolete material, goods and assets from other institutions

Ÿ Sourcing of expertise from other institutions;

Ÿ Utilisation of transversal contracts administered by others

Ÿ Public private partnerships

Ÿ Procurement from the private sector

2.4 THE PROCUREMENT MANDATE OF THE CONSTRUCTION INDUSTRY DEVELOPMENT

BOARD

2.4.1 THE PRESCRIPTS OF THE CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

Construction procurement (i.e. procurement in the construction industry[1], including the invitation, award and
management of contracts, which may involve services, supplies, works and disposals), apart from being regulated
in terms of general legislation governing public procurement, is also regulated through the following prescripts of
the Construction Industry Development Board Act (act 38 of 2000):

Ÿ CIDB Code of Conduct for the Parties engaged in Construction Procurement

Ÿ CIDB Standard for Uniformity in Construction Procurement

These prescripts are applicable to all organs of state i.e. all national and provincial departments, constitutional
institutions, public entities, municipalities and municipal entities.

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The CIDB Code of Conduct for the Parties engaged in Construction Procurement requires that the parties in any
public or private construction-related procurement in their dealings with each other:

1. Behave equitably, honestly and transparently

2. Discharge duties and obligations timeously and with integrity

3. Comply with all applicable legislation and associated regulations

4. Satisfy all relevant requirements established in procurement documents

5. Avoid conflicts of interest

6. Not maliciously or recklessly injure or attempt to injure the reputation of another party

The Code of Conduct establishes standards of behaviour between the parties in procurement that are consistent
with a procurement system that is fair, equitable, transparent, competitive and cost effective.

The Standard for Uniformity establishes minimum requirements that:

Ÿ Promote cost efficiencies through the adoption of a uniform structure for procurement documents and standard
component documents and generic and uniform solicitation procedures

Ÿ Provide transparent, fair and equitable procurement methods and procedures in critical areas in the solicitation
process

Ÿ Ensure that the forms of contract that are used are fair and equitable to the parties to a contract

Ÿ Enable risk, responsibilities and obligations to be clearly identified

As such, the Standard establishes minimum requirements for:

Ÿ The solicitation of tender offers

Ÿ The manner in which quality is to be incorporated in procurement documents

Ÿ The formatting and compilation of procurement documents

Ÿ The application of the register of contracts to public sector contracts

The Standard Conditions of Tender contained in the Standard impose obligations on the tenderer and require
employers to conduct the process of offer and acceptance in terms of a set of standard procedures. At the same
time, these conditions of tender integrate aspects of the Code of Conduct with the procurement process.

The Standard Conditions for Calling for Expressions of Interest contained in the Standard imposes similar
obligations on respondents and employers.

The Standard in addition establishes a number of generic procurement procedures and requires that all supplies,
services (including professional services) and works relating to the construction industry be solicited in accordance
with standard methods and within certain parameters. (See Figure 2.2).

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Figure 2.2: Standard methods for soliciting tender offers from the construction industry

The CIDB has in addition published construction procurement best practice guidelines (see www.cidb.org.za and
Annex A) which enable the Standard for Uniformity to be complied with.

Figure 2.3 illustrates the relationship between the CIDB prescripts and the South African regulatory framework for
procurement.

Accounting officers and accounting authorities need to take account of the CIDB prescripts in the development
of their procurement systems. (See Figures 2 and 4)

Figure 2.3: Relationship between CIDB prescripts and the procurement regulatory framework

2.4.2 CONSTRUCTION PROCUREMENT BEST PRACTICE LIBRARY

The CIDB has reviewed various documents relating to procurement and has declared in terms of the Act, certain
documents as best practice with regard to procurement guidelines, methods and contracts. The CIDB Procurement
Best Practice Library is listed in Annex A. It is not obligatory to adopt best practices.

2.4.3 REGISTER OF CONTRACTORS

The Construction Industry Development Board Act (Act 38 of 2000) requires the Board to establish a national
register of contractors, which:

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Ÿ Categorises contractors in a manner that facilitates public sector procurement

Ÿ Indicates the size and distribution of contractors operating within the construction industry

Ÿ Indicates the volume, nature and performance of contractors and target groups

Ÿ Promotes contractor development

Ÿ Is accessible to the private sector to facilitate private sector procurement

The legislation prohibits contractors who are not registered with the Board and in possession of a valid registration
certificate issued by the Board, from undertaking any public sector engineering and construction works contracts or
portion thereof awarded in terms of a competitive tendering or quotation procedure.

The register of contractors is intended to:

Ÿ Support risk management in the public tendering process

Ÿ Reduce the administrative burden associated with the award of contracts

Ÿ reduce tendering costs to both employers and contractors

Ÿ Enable effective access by the emerging sector to work and development opportunities

Ÿ Assess the performance of contractors in the execution of contracts and thus provide a performance record for
contractors

Ÿ Regulate contractor behaviour and promote minimum standards and best practice

Ÿ Store and provide data on the size and distribution of contractors operating within the industry and the volume,
nature, performance and development of contractors and target groups

Ÿ Enable access by the private sector and thus also facilitate private sector procurement

The legislation also requires that the Board, within a reasonable period after the establishment of the register of
contractors, establish a best practice contractor recognition scheme which:

Ÿ Enables organs of state to manage risk on complex contracting strategies

Ÿ Promotes contractor development in relation to best practice standards and guidelines published by the Board

The manner in which the register of contractors is to be applied in public contracts is fully described in 5S07 CIDB
Best Practice Guideline #A6, Applying the Registers to Construction Procurement.

2.4.4 REGISTER OF PROJECTS

The Construction Industry Development Board Act requires the Board to establish a register of projects to gather
information on the nature, value and distribution of projects. The regulations require that all public and private
sector engineering and construction works projects above a contract value determined by the Minister by Notice in
the Gazette must be registered with the Board[2]. The register of projects (or more correctly a register of contracts)
is intended to gather information on the nature, value and distribution of projects and to provide the basis for a best
practice project assessment scheme to promote the performance of public and private sector clients in the
development of the construction industry.

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The legislation furthermore requires that the Board, within a reasonable period after the establishment of the
register of projects, establish a best practice project assessment scheme to enable compliance with best practices
and standards published by the Board to be confirmed on projects above a prescribed tender value.

The manner in which employers register projects is fully described in 5S07 CIDB Best Practice Guideline #A6,
Applying the Registers to Construction Procurement.

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3 Implementing Construction Procurement in a Institution

3.1 THE FUNDAMENTALS OF A CONSTRUCTION PROCUREMENT SYSTEM

Procurement is by definition a process i.e. a succession of logically related actions occurring or performed in a
definite manner which culminates in the completion of a contract for the provision of engineering and construction
works, supplies or services or disposals. There are a finite range of methods and procedures associated with the
various procurement activities.

A construction procurement system[3] comprises processes which are underpinned by methods[4] and
procedures[5] which are informed and shaped by the policy[6] of the institution (see Figure 3.1) which must take
into account elements of supply chain management.

Figure 3.1: The components of a construction procurement system

The Toolkit approach to construction procurement is to develop a holistic construction procurement system and to
then identify which methods and procedures are best suited to particular categories of construction procurement.
This approach considerably simplifies matters and facilitates the training of officials and the understanding of an
institution’s senior management of construction procurement across the full spectrum of procurement.

3.2 CONSTRUCTION PROCUREMENT PROCESSES

The starting point in developing a construction procurement system is to identify procurement activities that
commence once the need for procurement is identified and end when the transaction is completed. The start of the
procurement process is to identify the need for procurement. This is normally identified under demand management
within supply chain management system. This should not be undertaken in isolation from the project
characteristics, client teams or infrastructure planning (see modules 2, 3 and 4).

The next step in procurement is to establish the steps that need to be taken to proceed from one activity to another.

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Thereafter a series of internal controls (procedural milestones) need to be identified and located within the steps
that are necessary to proceed from one activity to another.

Table 3.1 sets out the procurement steps and recommended internal controls associated with the major
procurement activities.

3.3 THE PROCUREMENT SYSTEM WITHIN AN INSTITUTION

Institutions must develop and document their procurement systems within the confines of the legislative framework
and government’s procurement policy outlined in 2.3. In doing so, they need to make various strategic choices
based on project requirements around a process which commences once the need for procurement is identified
and ends when the transaction is completed. This necessitates that implementation and preferential policies be
formulated, procurement directives and standard operating procedures and implementation guides be developed
and adopted. (See Figures 2.3 and 3.2)

The procurement system must in addition take account of and be consistent with the requirements established in
the CIDB’s Standard for Uniformity in Construction Procurement. Construction procurement processes, procedures
and methods are well documented in 5S02 CIDB Best Practice Guideline #A1, The Procurement Cycle, 5S04 Best
Practice Guide #A3, Evaluating tender offers, 5S07 CIDB Best Practice Guideline #A6, Applying the Registers to
Construction Procurement and 5S08 Practice Guide #B1, Formulating and Implementing Preferential Procurement
Policies and the various construction procurement standards published by Standards South Africa.

5S03 Best Practice Practice Guide #A2, Applying the procurement prescripts of the CIDB Act in the Public Sector,
provides guidelines on the application of the CIDB’s Standard for Uniformity in Construction. It also establishes the
relationship between this standard and regulations issued in terms of the Public Finance Management At of 1999
and the Local Government: Municipal Finance Management Act. Guidance is also provided on the establishment of
an implementation procurement policy within an institution and the manner in which procurement may be managed
and controlled.

The decisions required in construction procurement can be complex with many possible variations and choices,
dependant on the type of project. As far as possible uniform procurement processes should be adopted, in order to
streamline processes and avoid confusion between different procurement methods. However, it is essential that the
procurement should be appropriate to the type of project in order to reduce risks.

Table 3.1: Main construction procurement activities and associated steps and internal controls

ACTIVITY STEPS

# DESCRIPTION INPUTS PROCEDURAL MILESTONE

(CONTROL POINT)

1 Establish what 1. Prepare broad scope of work for

is to be procurement
procured
2. Estimate financial value of proposed
procurement

3 Obtain permission to start with the

procurement process

2 Decide on 1. Establish applicable preferential

procurement procurement policy

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ACTIVITY STEPS
strategies
2. Establish contract and pricing
strategy

3. Establish targeting strategy

4. Establish procurement procedure

5. Obtain approval for procurement

strategies that are to be adopted

3 Solicit tender 1. Prepare procurement documents

offers*

2. Obtain approval for procurement

documents

3. Confirm that budgets are in place

4. Invite contractors to submit tender

offers or expressions of interest#
Hold site inspection and clarification
meeting (see template 5T01)

5. Receive tender offers or expressions

of interest#

6. Evaluate expressions of interests #

7. Prepare evaluation report on short

listing process#

8. Confirm shortlist #

9. Invite tender offers from shortlist#

4 Evaluate tender 1. Open and record tender offers

offers* received

2. Determine whether or not tenders

offers are complete

3. Determine whether or not tender

offers are responsive

4. Evaluate tender submissions

5. Perform a risk analysis.

6. Prepare a tender evaluation report

7. Confirm recommendation contained

in the tender evaluation report.

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ACTIVITY STEPS

5 Award contract* 1. Notify successful tenderer and

unsuccessful tenderers of outcome

2. Compile contract document

3. Formally accept tender offer

4 Capture contract award data

6 Administer 1. Administer contract in accordance

contracts and with the terms and provisions of the
confirm contract
compliance with
requirements 2. Ensure compliance with requirements

3. Capture contract completion /

termination data

# Expressions of interest are only called for where the Nominated, Qualified Procedure and Proposal (Two stage
tendering) is used to populate electronic data bases, to pre-qualify tenderers or to submit technical proposals,
respectively. Accordingly, Steps 6 to 9 in Activity 3 (Solicit tender offers) will be omitted where the Negotiated,
Open, Quotation and Proposal (two stage tendering) procedures are used.

* Several of the steps within these activities will not be required where the Negotiated Procedure is used. It should
be noted that the negotiated procedure can be used to conclude contracts between institutions.

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Figure 3.2: Establishing a construction procurement system within an institution

3.4 MANAGING CONSTRUCTION PROCUREMENT

There are a number of procedural milestones that need to be attained for a procurement to proceed. These should
be signed off by those mandated in the institution's procurement policy to manage procurement. Ideally, a control
card along the lines of that illustrated in Figure 3.3 should be used for this purpose.

Procurement reference number: . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Title: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...

..........................................................................................

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....

Responsible official / agent: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Procedural milestone Responsible official

Signature Name Date

1.3 Obtain permission to start with the procurement process

2.5 Obtain approval for the procurement strategies that are

adopted

3.2 Obtain approval for procurement documents

3.3 Confirm that budgets are in place

3.8 Confirm shortlist

4.7 Confirm recommendation in tender evaluation report.

5.3 Formally accept tender offer

6.3 Capture contract completion / termination data

Figure 3.3: Sample procurement control card

The principal actions associated with each activity are well defined. Internal and external resources to undertake
steps associated with each activity should be assigned to each activity.

3.5 MANAGING CONSTRUCTION PROCUREMENT RISKS

Risk cannot be eradicated, but it can be managed identifying key risks, determining suitable actions to mitigate the
risk and to then monitor risk mitigation. In this respect, it is better to be proactive rather than reactive. Risks,
however, need to be identified, quantified and understood if they are to be managed.

Risk management is an iterative process comprising well‑defined steps which, taken in sequence, support better
decision‑making by contributing a greater insight into risks and their impacts. The risk management process can be
applied to any situation where an undesired or unexpected outcome could have significant impact or where
opportunities are identified. Decision makers need to know about possible outcomes and take steps to control their
impact.

Risk management is recognised as an integral part of good management practice. To be most effective, risk
management should become part of an institution’s culture. It should be integrated into the institution’s philosophy,
practices and business plans rather than be viewed or practiced as a separate program. When this integrated
approach is achieved, risk management becomes the business of everyone in the institution.

Risk management enables continual improvement in decision-making. It is as much about identifying opportunities
as avoiding or mitigating losses.

Supporting document 5S06 CIDB Best Practice Guideline CIDB #A5, Managing Construction Procurement Risks,
outlines a framework for establishing the context, identification, analysis, evaluation, treatment, monitoring and
communication of risk. This guideline examines construction related risk and provides guidelines for risk
management.

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3.6 RECOMMENDED APPROACH TO THE VARIOUS CONSTRUCTION PROCUREMENT

ACTIVITIES

3.6.1 ACTIVITY 1: ESTABLISH WHAT IS TO BE PROCURED

The actions associated with this activity are preparatory to any procurement and are intended to clarify what is to
be procured and establish the basic procurement parameters.

Table 3.2 sets out the sub-activities associated with activity 1, describes the main actions associated with this
activity and each sub-activity, the necessary input to and output from such actions and the dependencies between
sub-activities

Table 3.2: Sub-activities, related actions, inputs and outputs pertaining to activity 1: establishing what needs to be
procured

# ACTIVITY PRINCIPAL ACTION INPUT TO THE OUTPUT FROM

ACTION THE ACTION

1 Establish what is to Clarify what is to be procured Approved project Confirmation of

be procured scope what is to be
procured

1.1 Prepare broad Develop a title for procurement for the Approved project Broad scope of
scope of work for purposes of project identification and a scope work for
procurement broad scope of work procurement

1.2 Estimate financial Estimate the financial value of the Broad scope of Estimated value
value of proposed proposed contract for budgetary work for of procurement
procurement purposes, based on the broad scope of procurement
work.

1.3 Obtain permission Nominated official(s) makes a decision to Document Approval to

to start with the proceed / not to proceed with the containing title, proceed with the
procurement procurement based on the broad scope of broad scope of procurement
process work, financial estimates and availability work and
of funds. approximate
value of
procurement

Step 1.1: Prepare broad scope of work for procurement

Develop a title for the procurement for the purposes of project identification and a broad scope of work utilising the
headings provided in Table 3.3.

Step 1.2: Estimate financial value of proposed procurement

Estimate the financial value of the proposed contract for budgetary purposes based on the broad scope of work.
The estimate should include VAT, make allowances for currency fluctuations and provide for price escalation, where
appropriate. Provisions for uncertainties (risk provision) in assumptions and the like should also be made.

In order to justify the procurement it may also be necessary to undertake feasibility studies in order to establish the
financial viability of the procurement, perform benefit-cost analysis, establish whole life costs[7] (capital,
maintenance, management, operating and disposal) etc. It may also be necessary to establish the timing of the

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procurement in order to establish cash flow demands and to establish any related or hidden costs e.g. professional
or other services ancillary to the procurement, land costs, royalties, security etc.

It is important to establish a realistic ceiling price for the contract as tender offers received in excess of this amount
may cause the viability / value for money of the project to be reconsidered and may lead to the cancellation of
tenders.

Table 3.3: Outline of broad scope of work

CATEGORY OF HEADING GUIDANCE
CONSTRUCTION
PROCUREMENT

Construction Supplies Employer’s / purchaser’s Describe the employer’s / purchaser’s

objectives objectives for the supplies as
delivered.

Overview of the required Provide a short description of the

supplies supplies.

Extent of the supplies Provide a brief outline of the quantity,

duration and nature of the supplies.

Construction Services Client’s / employer’s Describe the client’s / employer’s

objectives objectives for the outcome of the
services

Description of the services Provide a short description of the

services and outline what the
contractor is to provide.

Extent of the services Provide a brief outline of the extent of

services and key deliverables, as
appropriate.

Engineering and construction Employer’s objectives Describe the employer’s objectives for
works the delivered end product or the
project.

Overview of the works Provide a short description of the

works, its purpose, etc.

Extent of the works Provide a brief outline of the scope of

works.
Ensure that all operations, particularly
those requiring special attention, are
listed.

Location of the works State the place where the works are
to be provided.

Step 1.3: Obtain permission to start with the procurement process

The person mandated in the institution’s procurement policy who has the necessary authority should be presented
with the broad scope of work and financial estimates in order to decide if the procurement should proceed. It may
also at this stage be prudent to reconfirm the need and justification for the procurement.

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A procurement reference number for use in procurement documents should be allocated for reference purposes
should permission be granted to proceed with the procurement.

It is a requirement of the Public Finance Management Act that all major capital projects must be evaluated prior to a
final decision being taken on the project.

3.6.2 ACTIVITY 2: DECIDE ON THE PROCUREMENT STRATEGIES

The actions associated with this activity are preparatory to any procurement and are strategic in nature. They are
intended to clarify how the procurement is to take place. They in effect plan the procurement process to achieve the
required outcome and may be regarded as a form of “business plan”.

Supporting document 5S18 CIDB Note 1, Scaling up delivery and accelerating empowerment, identifies systemic
problems in scaling up delivery and accelerating empowerment and outlines fresh approaches to procurement and
delivery, which focuses on changes in contracting strategies and the size and duration of contracts in a manner
which promotes accelerated empowerment.

In repetitive procurements or in specific programmes, it is possible to predetermine the options that will be used, in
which case, Activity 2 will fall away. (The procurement policy of an institution can set out the standard choices for
routine procurements)

Table 3.4 sets out the sub-activities associated with activity 2, describes the principal actions associated with this
activity and each sub-activity, the necessary input to and output from such actions and the dependencies between
sub-activities

Table 3.4: Sub-activities, related actions, inputs and outputs pertaining to activity 2: deciding on the procurement
strategy
# Activity Principal action Input to the Output from the
action action

2 Decide on Determine how the procurement is to take Approved scope Approved

procurement place of work procurement
strategies strategy

2.1 Establish Identify the specific goals which are to be Preferential Proposed
applicable pursued and establish likely outcomes Procurement specific goals
preferential and broad implementation procedures Policy for and preferencing
procurement policy which are consistent with the framework institution / arrangements
provided in the Act. programme

2.2 Establish contract Decide on an appropriate allocation of Procurement Proposed pricing

and pricing responsibilities and risks and the policy and and contracting
strategy methodology by which contractors are to institutional strategy.
be paid. capacity

2.3 Establish targeting Decide on the methodology that is to be Proposed Proposed

strategy used to implement preferencing. specific goals targeting
and preferencing strategy
arrangements

2.4 Establish Identify the process that will be followed to Procurement Proposed
procurement solicit tender offers and conclude a policy procurement
procedure contract. procedure

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2.5 Obtain approval for Nominated official(s) confirm selection of Document Approved
procurement strategies so that tender offers can be establishing procurement
strategies that are solicited. preferential strategies
to be adopted procurement
policy

Best value demands that procurement strategies be reviewed. Any change resulting from a review, in order to be
justified, must deliver better value. It must be recognised from the outset that there is no one ideal way to procure.
Each situation is different. There are, however, clear methods for choosing the appropriate or best way for a given
circumstance and a logical process which should be followed to confirm that decisions will indeed deliver best
practice. These decisions are to be recorded and assessed after the completion of each project.

Step 2.1: Establish applicable preferential procurement policy

Changes to the regulatory framework concerning preferential procurement and broad based black economic
empowerment are currently underway. These changes will need to be addressed once publications of the new
requirements have been made.

The starting point when implementing a preferential procurement policy within a specific procurement is in the first
instance to establish the preferential procurement policy that is applicable to the procurement. In most instances, it
will be that of the institution. Where the procurement forms part of a national or provincial programme, the
preferential procurement policy pertaining to the programme should be adopted, e.g. the preferential procurement
policy established in the National Housing Code must be pursued in project linked Greenfield housing subsidy
developments in engineering and construction works contracts.

In the event that an institution does not have a preferential procurement policy or there are no such policies
governing the programme within which the procurement falls, the institution needs to establish one in accordance
with the provisions of 5S08 Best Practice Guideline # B1, Formulating and implementing Preferential Procurement
Policies.

Where preferential procurement policies are in place, identify an appropriate theme and a specific goal within such
a scheme which is to be pursued (e.g. target groups, comprising enterprises or labour, goals relating to the internal
workings of enterprises, specific deliverables etc). This should be undertaken by considering the procurement in the
light of the objectives, targets and target groups contained in the preferential procurement policy and the desirable
policy outcomes and factors such as past experience, knowledge of the potential tenderers and an understanding
of the nature of the procurement.

Once the goals have been identified and documented, quantitative targets (likely outcomes of the preferencing
arrangements) and implementation procedures which are consistent with the framework provided in the Act need to
be identified. This should be done in relation to the procurement in question in order to arrive at the optimum
preferencing arrangements.

Step 2.2: Establish contract and pricing strategy

Decide on an appropriate allocation of responsibilities and risks and the methodology by which contractors are to
be paid. (See 5S06 Best Practice Guideline #A5, Managing construction procurement risk, 5S10 Best Practice
Guideline #C1, Preparing procurement documents, 5S11 Best Practice Guideline #C2, Choosing an appropriate
form of contract, and Module 4[8].) This decision can only be made after the risks associated with the procurement
have been identified and the availability of skills has been established, including those required to manage the
procurement.

Step 2.3: Establish targeting strategy

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Establish the appropriate targeting strategy i.e. decide on the implementation methodology that is to be pursued in
respect of a preferential procurement policy (see 5S08 Best Practice Guideline #B1, Formulating and implementing
preferential procurement policies and 5S09 Best Practice Guideline #B2, Methods and procedures for implementing
preferential procurement policies) and, in the case of construction works contracts, the manner in which the
participation and development of registered contractors is to be promoted (see 5S17 Best Practice Guideline #A8,
Procurement measures to develop registered contractors . Cognisance of the selected contracting and pricing
strategy should be taken in the selection of the targeting strategy as well the manner in which the target group
might be engaged as joint venture partners or subcontractors. (See 5S013 Best Practice Guideline D1,
Subcontracting Arrangements , and 5S014 Best Practice Guideline D2, Joint Venture Arrangements

The documented targeting strategy should in respect of the preferencing arrangements include exact definitions for
the specific goals, the method of preferencing, the number of preference points that will be provided in respect of
each specific goal and the manner in which the goals are to be measured, quantified and monitored for contract
compliance. If SANS 1914 resource standards are to be utilised, establish any weighting / target areas that are to
be nominated.

The implementation procedures must be consistent with the framework provided in the Preferential Procurement
Policy Framework Act (See 5S08 Best Practice Guideline #B1, Formulating and implementing preferential
procurement policies).

The documented strategy that in support of industry development promotes the participation and development of
registered contractors should indicate which of the following is to be employed:

Ÿ Unbundling projects into smaller contracts

Ÿ Offering preferences to contractors who undertake to enter into joint ventures with or subcontract portions of
the works to such contractors

Ÿ Implementing targeted development programmes to support potentially emerging contractors in accordance

with the provisions of the Construction Industry Development Regulations

Ÿ Requiring a prime contractor to subcontract defined portions of the works to such contractors in accordance
with the provisions of Annex I of the Standard for Uniformity for Construction Procurement

Ÿ Offering preferences in terms of a preferential procurement policy to a contractor registered in particular

contractor grading designations

Step 2.4: Establish construction procurement procedure

Establish and document the appropriate construction procurement procedure (see 5S01 CIDB Standard for
Uniformity in Construction Procurement), taking cognisance of the institution’s procurement policy (see 5S03 Best
Practice Guideline #A2, Applying the procurement prescripts of the CIDB in the Public Sector and 5S16 Best
Practice Guideline #A7, The procurement of professional services).

Step 2.5: Obtain approval for procurement strategies that are to be adopted

Motivate selected procurement strategies for the proposed procurement and obtain approval for the options
selected from those persons mandated in the institution's procurement policy.

Confirm that the institution has internal or external capacity and expertise to undertake the procurement for the
chosen procurement strategies. If not, recommend changes in selections.

Revise selections as necessary and obtain approval for procurement strategies.

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3.6.3 ACTIVITY 3: SOLICIT TENDER OFFERS

The actions associated with this activity must be conducted in accordance with the provisions of the CIDB Code of
Conduct for the Parties Engaged in Procurement.

Written reasons may have to be furnished to tenderers for administrative actions around issues pertaining to the
solicitation of tender offers. Administration of these actions should be done in accordance with the Promotion of
Administrative Justice Act[9].

Table 3.5 sets out the sub-activities associated with activity 3, describes the principal actions associated with this
activity and each sub-activity, the necessary input to and output from such actions and the dependencies between
sub-activities

Table 3.5: Sub-activities, related actions, inputs and outputs pertaining to activity 3: solicitation of tender offers
# Activity Principal action Input to the action Output from the
action

3 Solicit tender offers Solicit tender offers in terms of a set of Approved scope of Tender offers
procedures. work and
procurement strategy

3.1 Prepare Prepare pre-qualification and / or tender Approved scope of Procurement

procurement documents, as appropriate, that are work and documents
documents compatible with the approved procurement procurement strategy
strategies.

3.2 Obtain approval for Nominated official(s) review the procurement Procurement Approved
procurement document, identify sections, if any, that document procurement
documents require amendments or improvements, and document
grant the necessary approval.

3.3 Confirm that Nominated official(s) make sure that finance Document containing Permission to
budgets are in place is available for the procurement to take approximate value of solicit tender
place. procurement offers

3.4 Invite contractors to Advertise for tenders / identify contractor(s) Procurement Procurement
submit tender offers that are to be invited to submit tender offers document documents
or expressions of in accordance with the approved issued for
interest procurement procedure, issue procurement solicitation
documents, respond to requests for purposes
clarification, conduct clarification / site
Site Clarifcation
meetings, issue attendees with minutes of
minutes issued
such meetings, and issue addenda, as
(see template
relevant.
5T01)

3.5 Receive tender Ensure that arrangements are in place to Procurement Tender
offers or receive tender offers / expressions of document issued for submissions
expressions of interest and return unopened those that are solicitation purposes
interest received late, are delivered not in
accordance with instructions given to
tenderers or where only one tender is
received and it is decided to call for fresh
tenders.

3.6 Evaluate Open expressions of interest, record data Tender submissions Evaluated
expressions of relating to the submission and evaluate in expression of
interests accordance with undertakings made to interests
tenderers.

3.7 Prepare evaluation Prepare evaluation report and make Evaluated Evaluation Report
report on shortlisting recommendations in respect of actions to be expressions of
process taken, depending upon the procurement interest

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# Activity Principal action Input to the action Output from the

action
procedure that is adopted.

3.8 Confirm shortlist Nominated official(s) review evaluation Evaluation report Approved shortlist
report and ratify recommendations. of tenderers

3.9 Invite tender offers Invite tender offers from short list, respond to Approved shortlist of Procurement
from shortlist requests for clarifications by tenderers, tenderers documents
conduct clarification / site meetings, issue all issued to short
attendees with the minutes of such listed tenderers
meetings, and issue addenda to amend or
amplify the procurement documents, as
relevant. The Qualified or Proposal (two
stage tendering) procedure to be used
stipulating required timeframes.

Extract from Standard Conditions of Tender (See Annex F of CIDB Standard for Uniformity in Construction
Procurement)
Clause Heading Action

F.1.5.1 The Employer's rights to The employer may accept or reject any variation, deviation, tender
accept or reject any tender offer, or alternative tender offer, and may cancel the tender process
offer and reject all tender offers at any time before the formation of a
contract. The employer shall not accept or incur any liability to a
tenderer for such cancellation and rejection, but will give reasons for
such action upon written request to do so.
The employer may not subsequent to the cancellation or
F.1.5.2
abandonment of a tender process or the rejection of all responsive
tender offers re-issue a tender covering substantially the same
scope of work within a period of six months unless only one tender
was received and such tender was returned unopened to the
tenderer.

Step 3.1: Prepare procurement documents

Procurement documents comprise those documents required to:

Ÿ Pre-qualify respondents so that they may be invited to tender

Ÿ Solicit tender offers

Ÿ Establish the terms and conditions of the contract

Compile procurement documents for the calling for expressions of interest. Ensure that the Submission Data
contains a list of returnable documents.

Requirements for the preparation of procurement documents can be found in the CIDB’s Standard for
Uniformity in Construction Procurement. Guidance on the formatting and compilation of procurement
documents may be found in 5S03 Best Practice Guideline # A2, Applying the procurement prescripts of the
CIDB Act in the Public Sector, 5S10 Best Practice Guideline #C1, Preparing procurement documents and
SAICE Practice Manual #1, The use of South African National Standards in Construction Procurement. (See also
the CIDB’s Standardised Construction Procurement Documentation for Engineering and Construction Works
and Professional Services (5E01 and 5E02) which provides an example of a generic document compiled in
accordance with the provisions of the CIDB Standard for Uniformity in Construction Procurement[10])

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Extract from Standard Conditions for the Calling for Expressions of Interest (see Annex H of CIDB Standard
for Uniformity in Construction Procurement)
Clause Heading Action

H.1.2 Supporting The documents issued by the employer for the purpose of obtaining
documents expressions of interest are listed in the submission data.

Expressions of interest are only called for where the Nominated, Qualified Procedure and Proposal (Two stage
tendering) is used to populate electronic data bases, to pre-qualify tenderers or to submit technical proposals,
respectively. (See SANS 294). Where an electronic data base has already been populated, it is not necessary to
call for expressions of interest.

Select an appropriate form of contract for the procurement using the guidance contained in 5S10 Best Practice
Guideline #C1, Preparing procurement documentation, and 5S11 Best Practice Guideline #C2, Choosing an
appropriate form of contract for engineering and construction works, and prepare procurement documents in
accordance with the provisions of 5S10 Best Practice Guideline #C1, Preparing procurement documentation, and
SAICE Practice Manual #1, The use of South African National Standards in Construction Procurement, that are
compatible with the adopted procurement strategies. Ensure that the Tender Data contains a list of tender
documents.

Extract from Standard Conditions of Tender (see Annex F of CIDB Standard for Uniformity in Construction
Procurement)
Clause Heading Action

F.1.2 Tender documents The documents issued by the employer for the purpose of a tender
offer are listed in the tender data.

It must be stressed that procurement documents cannot be finalised until such time that:

Ÿ All the necessary studies and / or preliminary investigations, commensurate with the selected contract strategy
have been completed

Ÿ The bodies which need to be consulted in connection with the procurement, have been consulted

Ÿ The compatibility with other works has been established

Quality (functionality) criteria used in the evaluation of tender offers shall be developed in accordance with the
requirements of the CIDB Standard for Uniformity in Construction Procurement. 5S05 Best Practice Guideline #A4,
Evaluating quality in tender submissions, provides guidance in this regard.

Those tendering for a contract need to know the degree of risk that they are expected to take. The higher the risk,
the greater must be the financial provision in case the worst scenario occurs. Consequently, the higher the risk a
contractor assumes, the greater will be the tender value and hence the cost borne by the institution. Whereas
careful checking of the facts about existing circumstances will help to reduce the total risk, there will always be
elements of uncertainty outside the control of all parties to the contract.

Procurement documents must assign risks to each party so that they can make provision for managing them, either
by adding to the cost of the tender or by spreading the risk by means of acquiring insurance. (See 5S06 Best

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Practice Guideline #A5, Managing construction risk, and 5S11 Best Practice Guideline #C2, Choosing an
appropriate form of contract for engineering and construction contracts)

Even if all possible measures are taken to clarify what outcome is expected, there will always be risk attached to
the procurement processes. All likely or possible risks should be identified and explicitly assigned to a particular
party in procurement documents, failing which;

Ÿ High premiums will be placed on the finance required for procurement

Ÿ Tender prices will be unexpectedly high

The length of the contract needs to be carefully considered. Clearly, the length of contract needs to be matched to
the time-scale necessary to achieve the required outcome together with the level of investment and training
necessary. Contract periods vary with the type of work required. For term contracts where the contractor has to
provide significant “up-front” investment, periods of up to 15 years are not unusual. Indeed, where very significant
investment is required, periods of up to 25 years are adopted. A maintenance contract where investment is limited
to enabling the contractor to fulfil a contract is likely to be no more than three to four years in length.

For engineering and works contracts, the duration of the contract should match the reasonable rates of progress to
completion. A shorter contract length will result in higher costs which can only be justified if the institution has an
urgent need for an early completion and a distinct benefit can be shown for early delivery.

The failure to identify things that exist at the outset of the procurement frequently give rise to costly disputes
between the parties.

When applicable, the procurement documents should satisfy the requirements of donor funding agencies or
banking institutions. It should be noted in this regard that section 3(a) of the Reconstruction and Development
Programme Fund Act (Act 7 of 1994) requires that “the money of the fund shall be utilised in accordance with the
relevant technical assistance agreement.” Donor funding should further consider the conditions stipulated by the
donor.

Step 3.2: Obtain approval for procurement documents

The persons mandated in the institution’s procurement policy should review the procurement documents, identify
sections, if any, that requires amendments or improvements and grant the necessary approval.

Step 3.3: Confirm that budgets are in place

Those persons mandated as being responsible in the institution’s procurement policy should confirm that budgets
and availability of funds are in place so that the procurement may proceed.

Step 3.4: Invite contractors to submit tender offers or expressions of interest

With reference to the CIDB Standard for Uniformity in Construction Procurement, the institution should:

Ÿ Undertake the following depending upon the procurement procedure that is adopted:

Construction Procurement Actions to be followed

Procedure

Negotiated procedure Identify preferred bidder/sole source provider and request that a tender offer be
submitted.

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Construction Procurement Actions to be followed

Procedure

Nominated procedure Prepare calls for expression of interest to populate the data base if not already
populated.
Use software for electronic data base to identify contractors who are to be invited
to tender.

Open procedure Prepare tender advertisements

Advertise tenders / expressions of interest in appropriate media.

Proposal procedure using the Prepare advertisements for the submission of tenders (two envelope) and
two-envelope system / expressions of interest (two stage).
two-stage system
Advertise for proposals in appropriate media.

Qualified Procedure Prepare calls for expression of interest.

Advertise tenders / expressions of interest in appropriate media.

Quotation procedure* Invite tender offers, giving tenderers a minimum of three days to respond to
invitation, using one or more of the following methods:
i) posting a notice on a website;
ii) posting a notice on a demarcated notice board in a public area;
iii) placing an advertising in a local or national newspaper;
iv) inviting registered contractors from a data base registered in an appropriate
work category to submit quotations in a manner that over time all registered
contractors who have the requisite expertise have an opportunity to submit
tenders.

Shopping procedure* Obtain three written or verbal offers and confirm lowest offer in writing, if relevant.

*subject to threshold values

Ÿ Obtain contact particulars of entities that draw procurement documents and collect non-refundable deposits,
as appropriate

Ÿ Respond to requests for clarifications by tenderers.

Ÿ Conduct clarification / site meetings, as necessary, and issue all attendees with the minutes of such meetings

Ÿ If necessary, issue addenda to amend or amplify the procurement documents to each entity that drew
documents / attended any compulsory clarification / site meeting

Step 3.5: Receive tender offers or expressions of interest

Expressions of interest are only called for where:

Ÿ Electronic data bases need to be populated to enable the Nominated Procedure to be used

Ÿ Tenderers need to be pre-qualified and short listed to submit tender offers in terms of the Qualified Procedure

Ÿ Technical proposals are solicited in the first stage of the two stage Proposal Procedure

Ensure that arrangements are in place to receive tender offers / expressions of interest. Return tender offers, and
where appropriate expressions of interest, unopened if:

Ÿ Received after the closing time

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Ÿ The tender submission is received by a method other than the method prescribed in the procurement
documents

Ÿ Only one tender offer is received and it is decided to call for fresh tenders

Tenderers are required to in terms of the Standard Conditions of Tender/ Standard Conditions for the Calling for
Expressions of Interest to:

Ÿ Seal the original and each copy of the tender offer as separate packages marking the packages as
"ORIGINAL" and "COPY". Each package shall state on the outside the Employer's address and identification
details stated in the Tender Data, as well as the tenderer's name and contact address

Ÿ Seal the original tender offer and copy packages together in an outer package that states on the outside only
the Employer's address and identification details as stated in the Tender Data

Ÿ Accept that the Employer will not assume any responsibility for the misplacement or premature opening of the
tender offer if the outer package is not sealed and marked as stated

Step 3.6: Evaluate expressions of interests

This step must be omitted where the Open, Negotiated, Quotation and Proposal (two-envelope) procedures are
used. It must also be omitted in the Nominated Procedure where the electronic data base is populated.

Ÿ Open expressions of interest in public and in the presence of not less than two officials on the date prescribed
in the advertisement / bid documents, record the names of the entities making the submissions and
acknowledge receipt of the submissions

Ÿ Evaluate expressions of interest in accordance with the provisions of the Submission Data and, where relevant
the policy and operational procedures for electronic data bases or the guidance provided in 5S05 Best Practice
Guideline #A4, Evaluating quality in tender submissions

Step 3.7: Prepare evaluation report on short listing process

This step is only required in the Qualified and Proposal (two stage tendering) procedures.

Prepare evaluation report and make recommendations in respect of actions to be taken, depending upon the
procurement procedure that is adopted:

Procurement Procedure Actions

Nominated procedure Admit to electronic data base and confer preferred status in a specific category
if the tenderer is eligible for such status.

Qualified Procedure Make recommendations as to whether or not the tender is to be short listed.

Proposal procedure Evaluate technical proposals and make recommendations as to which

tenderers should be invited to submit financial proposals based on the revised
(Option 2: Two stage
procurement documents
tendering)

Step 3.8: Confirm short list

This step is only required in the Qualified and Proposal (two stage tendering) procedures.

Those persons mandated in the institution's procurement policy should review the evaluation report and ratify
recommendations.

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Step 3.9: Invite tender offers from short list

This step is only required in the Qualified and Proposal (two stage tendering) procedures.

Ÿ Invite tender offers from short list

Ÿ Respond to requests for clarifications by tenderers

Ÿ Conduct clarification / site meetings, as necessary, and issue all attendees with the minutes of such meetings

Ÿ If necessary, issue addenda to amend or amplify the procurement documents

Ÿ Timeframes should be stipulated

3.6.4 ACTIVITY 4: EVALUATE TENDER OFFERS

Tender offers must be evaluated in accordance with the parameters stated in the tender data

The actions associated with this activity must be conducted in accordance with the provisions of the Code of
Conduct for the parties engaged in construction procurement.

Written reasons may have to be furnished to tenderers for administrative actions around issues pertaining to the
evaluation of tender offers. Administration of these actions should be done in accordance with the Promotion of
Administrative Justice Act[11].

Table 3.6 sets out the sub-activities associated with activity 4, describes the principal actions associated with this
activity and each sub-activity, the necessary input to and output from such actions and the dependencies between
sub-activities.

Steps 4.1 to 4.6 pertaining to the evaluation of tender offers

Evaluate tender offers and prepare tender evaluation report in accordance with the provisions of 5S04 Best
Practice Guideline # A3, Evaluating tender offers. 5S19 CIDB Practice Note 2, Correcting arithmetical errors in
tenders, sets out the manner in which arithmetical corrections are to be made in the evaluation of tenders in
accordance with the CIDB Standard Conditions of Tender.

Step 4.7: Confirm recommendation contained in tender evaluation report

Those persons mandated in the institution's procurement policy should review the tender evaluation report and
ratify the recommendation for the award of the contract.

3.6.5 ACTIVITY 5: AWARD CONTRACT

The actions associated with this activity focus on the entering into a contract with the successful tenderer.

Table 3.8 sets out the sub-activities associated with activity 5, describes the principal actions associated with this
activity and each sub-activity, the necessary input to and output from such actions and the dependencies between
sub-activities

Step 5.1: Notify successful tenderer and unsuccessful tenderers of outcome

Notify in writing the successful and unsuccessful tenderer

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Step 5.2: Compile contract document

Assemble contract document from the relevant tender returnables and draft contract issued to tenderers, capturing
all the changes that were agreed to between the offer and acceptance in the Schedule attached to the Form of
Offer and Acceptance. (See 5S10 Best Practice Guideline #C1, Preparing procurement documentation, and SANS
10403).

The completion of the schedule attached to the Form of Offer and Acceptance not only contains a record of all
agreed deviations from the tender documents but also forms an audit trail of all agreed changes between offer and
acceptance.

Table 3.6: Sub-activities, related actions, inputs and outputs pertaining to activity 4: evaluation of tender offers
# Activity Principal action Input to the Output from the
action action

4 Evaluate tender Evaluate tender offers in terms of Tender Evaluated

offers undertakings and parameters established submissions tender offers
in procurement documents.

4.1 Open and record Open tender offers, in public in the Sealed tender Opened tender
tender offers presence of not less than two officials, submissions submissions
received and record pertinent details, authenticate
all pages of returnable documents, and
notify interested parties of pertinent
details if requested to do so.

4.2 Determine whether Compare tender submission against List Opened tender Complete
or not tenders of Returnable Documents contained in submissions tender
offers are complete the tender document and identify submissions
schedules and component documents
that have not been returned or are
incomplete e.g. signed documentation.
Request tenderers to complete
incomplete tender documents, within a
reasonable period of time, that are
required only for tender evaluation
purposes so that they are capable of
being evaluated, this must be in
compliance with the Conditions of
Tender. Record what is incomplete in
each tender submission.

4.3 Determine whether Confirm compliance with all the Complete Responsive
or not tender offers requirements of the procurement tender tender
are responsive documents, including eligibility criteria. If submission submissions
not, declare tender offers non-responsive
and record reasons for declaring a tender
to be non-responsive and disregard
such tender offers from further
consideration.

4.4 Evaluate tender Review financial offer and correct Responsive Tender offers
submissions discrepancies between totals and tender ranked in terms
calculations / summations, identify submissions of the
parameters included in the tender evaluation
submission that have a bearing on the
financial offer and reduce all tender
offers to a common base.
Judge the reasonableness of financial
offers and reject all tender offers with
unrealistic financial offers.
Evaluate tender submissions in
accordance with the tender evaluation
method adopted for the procurement.

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# Activity Principal action Input to the Output from the

action action

4.5 Perform a risk Perform a risk analysis on the tenderer Responsive Commercial risk
analysis ranked highest in terms of the tender tender exposure
evaluation and, if found to be submissions of
unsatisfactory, undertake an analysis on highest ranked
the next highest ranked tenderer and so tenderers
on until such time as a tenderer satisfies
the risk assessment, and recommend
this tenderer for the award of the
contract.

4.6 Prepare a tender Prepare a tender evaluation report which Tender Tender
evaluation report as a minimum contains the tender evaluation Evaluation
evaluation points awarded to each schedule and Report
tenderer, the reasons for eliminating commercial risk
tender offers and a recommendation for exposure
the award of the contract.

4.7 Confirm Nominated official(s) to review report and Tender Approved

recommendation ratify recommendations. evaluation tender
contained in the report evaluation
tender evaluation report
report.

Table 3.7: Sub-activities, related actions, inputs and outputs pertaining to activity 5: award contract
# Activity Principal action Input to the Output from the
action action

5 Award contract Enter into contract with the successful Approved Signed contract
tenderer. tender
evaluation
report

5.1 Notify successful Notify in writing the successful tenderer Approved Communication
tenderer and and unsuccessful tenderers tender to successful
unsuccessful evaluation and
tenderers of report unsuccessful
outcome tenderers

5.2 Compile contract Assemble contract document from the Procurement Contract
document relevant tender returnables and draft document and Document
contract issued to tenderers, capturing tender
all the changes that were agreed to submission
between the offer and acceptance.

5.3 Formally accept Confirm that the tenderer has provided Contract Signed contract
tender offer a valid, original tax clearance certificate document
issued by the South African Revenue
Services, formally accept the tender
offer in writing and issue contractor
with a signed copy of the contract.

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Step 5.3: Formally accept tender offer

Confirm that the tenderer has provided a valid, original tax clearance certificate issued by the South African
Revenue Services.

Extract from Standard Conditions of Tender (see Annex F of CIDB Standard for Uniformity in Construction
Procurement)
Clause Heading Action

F.3.16 Issue final contract Prepare and issue the final draft of contract documents to the
successful tenderer for acceptance as soon as possible after the
date of the employer's signing of the form of offer and acceptance
(including the schedule of deviations, if any). Only those documents
that the conditions of tender require the tenderer to submit, after
acceptance by the employer, shall be included.

F.3.17 Complete Adjudicator's Unless alternative arrangements have been agreed or otherwise
Contract provided for in the contract, arrange for both parties to complete
formalities for appointing the selected adjudicator at the same time
as the main contract is signed.

F3.18 Provide copies of the Provide to the successful tenderer the number of copies stated in
contracts the Tender Data of the signed copy of the contract as soon as
possible after completion and signing of the form of offer and
acceptance.

Formally accept the tender offer in writing and issue contractor with a signed copy of the contract.

It is sufficient to merely sign the acceptance portion of the Form of Offer and Acceptance to accept the tender offer.
(See Annex C of CIDB Standard for Uniformity in Construction Procurement).

The initialling of each page is not required by law to give effect to the contract. This practice, may, however, assist
in identifying the contract between the parties during the discovery phase of litigation proceedings.

Step 5.4: Capture contract award data

Capture the following in a data base for record purposes:

Ÿ The contract reference number

Ÿ A description of the work

Ÿ The contract price

Ÿ Preferences claimed

Ÿ Tender evaluation points awarded

Ÿ The price of the tender used for comparative purposes

Ÿ The name and address of the successful tenderer

Ÿ The reasons for awarding the contract to that tenderer

Ÿ The reasons why any tenderers were rejected

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Ÿ The procurement procedure used

3.6.6 ACTIVITY 6: ADMINISTER CONTRACTS AND CONFIRM COMPLIANCE WITH

REQUIREMENTS

The focus on the actions in this activity are on acting in terms of the contract and confirming that the procurement is
in accordance with all requirements.

Table 3.8 sets out the sub-activities associated with activity 6, describes the principal actions associated with this
activity and each sub-activity, the necessary input to and output from such actions and the dependencies between
sub-activities

Table 3.8: Sub-activities, related actions, inputs, outputs and dependencies pertaining to activity 6: administer
contract and confirm compliance with requirements
# Activity Principal action Input to the Output from the
action action

6 Administer Act in terms of the contract and Contract Contract

contracts and confirm that procurement is in document completed in
confirm accordance with all requirements. accordance with
compliance with requirements
requirements

6.1 Administer Administer the contract in Contract Compliance with

contract in accordance with its terms and document administrative
accordance with conditions and pay contractors provisions of the
the terms and within the time periods provided for contract
provisions of the in the contract so as to avoid
contract interest on late payments.

6.2 Ensure Monitor the contractor’s Contract Certified

compliance with performance to ensure that the document compliance with
requirements requisite quality standards are contract
attained and all requirements are requirements
satisfied and certify compliance
upon completion.

6.3 Capture contract Record, in a data base, key Termination / Recorded data
completion / performance indicators relating to completion
termination data time, cost and the attainment of report
specific goals associated with a
preferential procurement policy, or
if the contract is terminated or
cancelled, the reasons therefore.

Step 6.1: Administer contract in accordance with the terms and provisions of the contract

Ÿ Administer the contract in accordance with its terms and conditions within the agreed time frames. (See
Contract administration chapter of SAICE Practice Manual #2, Delivering construction projects using the design
by employer contracting strategy.)

Ÿ Pay contractors within the time periods provided for in the contract so as to avoid interest on late payments

Ÿ Resolve disputes in accordance with the provisions of the contract

Step 6.2: Ensure compliance with requirements

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Monitor the contractor’s performance to ensure that the requisite quality standards are attained and the
requirements are satisfied and certify compliance upon completion.

Step 6.3: Capture contract completion / termination data

Record key performance indicators relating to time, cost and the attainment of specific goals associated with a
preferential procurement policy, or if the contract is terminated or cancelled, record the reasons therefore.

This is an opportune time to review the procurement process. Such reviews should focus on:

Ÿ Whether the procurement satisfied the stated objectives

Ÿ Whether needs and expectations have changed such that the procurement documents should be modified

Ÿ Whether the procurement process itself could be improved

Ÿ How external factors such as legislation, regulations or standard component procurement documents have
changed

3.7 APPLYING THE CIDB REGISTERS TO THE PROCUREMENT SYSTEM

Table 3.9 identifies the actions required in applying the CIDB Construction Registers Service, if any, associated with
each of the procurement activities identified in Figure 3.1 .Greater detail is provided in the 5S07 CIDB Best Practice
Guideline A6, Applying the registers to construction procurement.

Employers are required to register with the CIDB using from CRS P1 (Application for an employer number and
authorisation of internet users.) All projects must be registered free of any charge on the CIDB’s website
www.cidb.org.za within one month from the date on which the contractors offer to perform a construction works
contract are accepted in writing.

Employers are required to advertise all their tenders on the CIDB’s I-Tender service i.e. a fully electronic national
information system located on the CIDB’s website. The information captured is then relayed to registered
contractors either by SMS (short text message) or e-mail. The adverts are placed in a searchable data base on the
CIDB website which is accessible to the public.

Employers are also required to notify the CIDB through its website of the cancellation / termination of any contracts
within these time frames.

Table 3.9: Applying the Registers in the procurement process

Activity Steps Actions associated with the register of

contractors

1 Establish 1.1 Prepare broad scope of Categorise procurement as engineering

what is to be work for procurement and construction works / services /
procured supplies or disposals.

1.2 Estimate financial value of Establish approximate contractor grading

proposed procurement requirement based on estimate of
contract value.

1.3 Obtain permission to start Nil

with the procurement
process

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Activity Steps Actions associated with the register of

contractors

2 Decide on 2.1 Establish applicable Make use of data in the register to

procurement preferential procurement develop, if necessary, procurement
strategies policy strategies around the supply of
contractors registered as having the
2.2 Establish contract and required contractor grading designation.
pricing strategy (See 5S17 Best Practice Guideline A8:
Procurement Measures to Develop
2.3 Establish targeting strategy Registered Contractors)

2.4 Establish procurement

procedure

2.5 Obtain approval for Nil

procurement strategies that
are to be adopted

3 Solicit tender 3.1 Prepare procurement Include clauses outlined in section 4 in

offers documents procurement documents

3.2 Obtain approval for

procurement documents
Nil
3.3 Confirm that budgets are in
place

3.4 Invite contractors to submit Include clauses as outlined in section 4 in

tender offers or expressions procurement documents.
of interest#
Advertise tenders / calls for expressions
of interest on the CIDB website.

3.5 Receive tender offers or

expressions of interest

3.6 Evaluate expressions of Declare all respondents as

interests non-responsive who have a contractor
grading designation less than that
required or, in the case of expressions of
interest, fail to obtain the requisite
registration 21 working days after the
closing date for submissions.

3.7 Prepare evaluation report

on shortlisting process

3.8 Confirm shortlist Confirm that all respondents are

registered and have a contractor grading
designation not less than that specified in
the call for expressions of interest.

3.9 Invite tender offers from

shortlist

4 Evaluate 4.1 Open and record tender Nil

tender offers offers received

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Activity Steps Actions associated with the register of

contractors

4.2 Determine whether or not

tenders offers are complete

4.3 Determine whether or not Declare all tenderers who have a

tender offers are responsive contractor grading designation less than
that required or fail to obtain the requisite
4.4 Evaluate tender registration prior to the evaluation of
submissions tender submissions as non-responsive.

4.5 Perform a risk analysis. Confirm that the tenderer has

demonstrated that-
(i) he or she has the resource capacity
specific to the contract concerned;
(ii) his or her capacity to perform the
construction works concerned will not
be unduly compromised on the award
of the contract concerned.

4.6 Prepare a tender evaluation Nil

report

4.7 Confirm recommendation Confirm registration of contractor (i.e.

contained in the tender check for debarment) and that his or her
evaluation report. contract grading designation is as
required.)

5 Award 5.1 Notify successful tenderer Nil

contract and unsuccessful tenderers
of outcome

5.2 Compile contract document

5.3 Formally accept tender offer

5.4 Capture contract award Register contract on Register of Projects

data within one calendar month of the date on
which a contractor’s offer to perform a
contract is accepted in writing.

6 Administer 6.1 Administer contract in

contracts and accordance with the terms
confirm and provisions of the
compliance contract
with
requirements 6.2 Ensure compliance with
requirements

6.3 Capture contract completion Notify the CIDB within one calendar
/ termination data month of cancelling / terminating the
contract.

Annex A: Construction Procurement Best Practice Library

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The standards, processes, procedures, methods and systems embodied in the following CIDB publications are
deemed desirable and appropriate by the Board:

Title Synopsis

Procurement procedures and practices

CIDB Best Practice This practice guide identifies six main procurement activities that apply to all
Guideline A1: The construction procurements irrespective of their categorisation as supplies,
Procurement Cycle services and engineering and construction works. It also identifies the generic
(1001) steps (sub-activities) associated with such activities and the logical points in the
process where controls should be introduced. The actions associated with
these activities and sub-activities are documented as well as the inputs and
outputs to each of the actions in a logical framework.
The practice guide also presents the recommended approach to performing the
various activities and sub-activities

CIDB Best Practice This practice guide provides guidelines on the application of the CIDB’s
Guideline A2: Applying Standard for Uniformity in Construction. It also establishes the relationship
the procurement between this standard and National Treasury’s Regulatory Framework for
prescripts of the CIDB Supply Chain Management . Guidance is also provided on the establishment of
in the Public Sector a procurement policy within an institution and the manner in which procurement
(1002) may be managed and controlled.

CIDB Best Practice This practice guide provides guidance on the evaluation of tenders in
Guideline A3: accordance with the provisions of the CIDB Standard for Uniformity in
Evaluating tender Construction Procurement respect of the seven steps identified in Practice
offers (1003) Guide A1 associated with this activity. It also contains proforma forms to
evaluate tender offers and an example of a tender evaluation report.

CIDB Best Practice This practice guide defines quality within the procurement context and reviews
Guideline A4: the requirements for evaluating quality in the accordance with regulatory
Evaluating Quality in requirements and the provisions of the CIDB Standard for Uniformity in
Tender Submissions Construction Procurement for the evaluation of quality. It furthermore provides
(1004) practical guidelines on the awarding of preferences for quality, pre-qualification
on the basis of quality and the scoring of tender submissions in terms of quality
and price or quality, price and preference.

CIDB Best Practice This practice guide outlines the main elements of the risk management
Guideline A5: process. It identifies the generic sources of construction related risks, presents
Managing Construction a range of options for risk allocation between the employer and the contractor
Procurement Risks and discusses the question of insurances. It also provides guidelines for the
(1005) management of risk.

CIDB Best Practice This practice guide outlines the processes associated with the implementation
Guideline A6: Applying of the register of contractors and the register of projects in accordance with the
the Registers to provisions of the Construction Industry Development Regulations. It provides
Construction guidelines to employers and their agents to comply with the requirements of
Procurement (1006) these regulations in their procurements and describes the manner in which
requirements relating to contractor grading designations may be incorporated in
procurement documents.

CIDB Best Practice This practice guide provides an overview of government’s policy regarding the
Guideline A7: The appointment of consultants and the provisions made in the CIDB Standard for
procurement of Uniformity for the procuring of professional services. It outlines procedures in
professional services respect of each of the methods contained in this standard and guidance on the
(1035) compilation of procurement documentation associated with professional service
contracts. It also establishes the relationship between the methodology
advocated by the standard and that promoted by National Treasury in their

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Supply Chain Management Practice Notes.

CIDB Best Practice This practice guide outlines the principles for sustainable growth and a number
Guideline A8: of strategies to promote the participation of smaller registered contractors in
Procurement public contracts so that they can grow and develop. The strengths and
measures to develop weaknesses of each of these strategies are discussed.
registered contractors.
(1036)

Preferencing arrangements

CIDB Best Practice This practice guide presents a range of policy options and implementation
Guideline B1: methodologies that may be pursued in the formulation of preferential
Formulating and procurement policies that are consistent with the provisions of the South African
Implementing regulatory regime. The guide introduces the thinking behind preferential
Preferential procurement policies, the manner in which such policies are implemented
Procurement Policies internationally and the constraints to implementation within South Africa. It
(1007) interprets the Preferential Procurement Policy Framework Act and related
regulations, identifies the methods by which preferences may be applied,
provides guidelines as to how preferential procurement policies may be
formulated to satisfy legislative requirements and contains examples of
preferential procurement policies that are drafted in accordance with this
practice guide.

CIDB Best Practice This practice guide provides a range of uniform methods and procedures for
Guideline B2: Methods implementing a wide range of policy themes in a consistent manner. The guide
and Procedures for presupposes that a preferential procurement policy is in place and focuses on
Implementing the capturing of preferencing requirements in procurement documents. It
Preferential contains sample preferencing schedules, clauses required to activate
Procurement Policies preferencing in the Tender Data where use is made of the CIDB Standard for
(1008) Uniformity in Construction Procurement, and data capture forms.

Procurement documentation

CIDB Best Practice This practice guide identifies the various types of procurement documents and
Guideline C1: provides a uniform format for the drafting and compilation of these documents.
Preparing It also establishes a practical approach to uniformity and standardisation of
Procurement procurement documents within an organisation and makes recommendations
Documents (1009) regarding the forms of contracts which should be used. It also contains a
number of proforma component documents to facilitate a uniform approach.

CIDB Best Practice This practice guide presents the fundamental considerations in the selection of
Guideline C2: a form of contract for engineering and construction works. It presents an
Choosing an overview of three different series of forms of contracts and provides practical
appropriate Form of guidance of the selection of appropriate forms of contract for an organisation or
Contract for for use in selected pricing and contracting strategies.
Engineering and
Construction Works
(1010)

CIDB Best Practice This practice guide provides an overview of what adjudication is, presents the
Guideline C3: principles underpinning adjudication, reviews the provisions for adjudication in
Adjudication (1011) standard forms of contract (NEC, FIDIC and CIDB), outlines an approach for
the selection and use of adjudicators, and provides sample clauses and
proforma agreements to be included in procurement documents.

Joint venture and subcontracting arrangements

CIDB Best Practice This practice guide establishes acceptable practices in respect conditions of
Guideline D1: subcontract. Features of forms of subcontract which are unacceptable to the
Subcontracting Employer and the Contractor are identified and described. It also recommends

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Arrangements (1012) forms of subcontract which have desirable features for use with the main
contracts identified in Practice Guide C2 and reviews the legal considerations in
the engagement of labour only subcontractors.

CIDB Best Practice This practice guide identifies the reasons for forming joint ventures, reviews
Guideline D2: Joint requirements for the formation of joint ventures in response to preferential
Venture Arrangements procurement policies and presents an overview of the typical content of a joint
(1013) venture agreement. It also identifies the standard joint venture agreements
forms that are suitable for use or to serve as a basis for the development of an
agreement.

The following publications are referenced in the abovementioned CIDB publications and as such form an integral
part of the provisions of these publications. They too contain desirable and appropriate standards, processes,
procedures, methods and systems endorsed by the focus group - and as such also constitute best practice.

Documents

Title Synopsis

CIDB Adjudication Procedure (1014) This document contains an adjudication procedure and an agreement
for the appointment by the parties of an adjudicator. It may be used in
any form of contract or subcontract.

CIDB Standard Professional Services This standard form of contract establishes the risks, liabilities and
Contract (1015) obligations of the parties to a professional service contract.

CIDB Subcontract For Labour Only This standard form of contract establishes the risks, liabilities and
Engineering and Construction Works obligations of the parties to a labour only subcontract involving
(1016) engineering and construction works.

CIDB Joint Venture Agreement (1017) This joint venture agreement establishes the basic agreement
between the joint venture partners and outlines the content of the
schedules that are necessary to make the agreement project specific.

CIDB General conditions of purchase This standard form of contract establishes the risks, liabilities and
(1018) obligations of the parties to very basic supply contracts.

CIDB Contract for the Supply and Delivery This standard form of contract establishes the risks, liabilities and
of Goods (1019) obligations of the parties to a simple supply contract.

CIDB Supply of Goods (Short Contract) This standard form of contract, based on the NEC system,
(1020) establishes the risks, liabilities and obligations of the parties to a
simple supply contract.

CIDB The Supply Contract (1021) This standard form of contract, based on the NEC system,
establishes the risks, liabilities and obligations of the parties to a
complex supply contract.

Practice Manuals published by the South African Institution of Civil Engineering

SAICE Practice Manual #1. The use of This practice manual provides comprehensive guidance on the use of
South African National Standards in SANS 294, SANS 10403, SANS 10396, and the SANS 1914, SANS
Construction Procurement 1921 and SANS 2001 families of standards in construction
procurement. It also provides guidance on the use of SABS 1200
where procurement documents are compiled using in accordance
with the provisions of SANS 10403.

SAICE Practice Manual #2: Delivering This practice manual presents an overview of a number of
construction projects using the design by contracting strategies that are commonly encountered in engineering
employer contracting strategy. and construction works contracts and fully describes the processes
and sub-processes associated with design by employer contracting
strategy. It also outlines the administrative processes associated with
FIDIC, GCC, NEC and JBCC forms of contract with this contracting

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Documents

Title Synopsis
strategy.

Standards published by Standards South Africa

SANS 294, Construction Procurement This standard provides processes, methods and procedures for the
processes, procedures and methods establishment within an organisation of a procurement system that is
fair, equitable, transparent, competitive and cost effective. It:
a) describes generic procurement processes around which an
organisation may develop its procurement system;
b) establishes minimum requirements for the conduct of an
organisation’s employees, agents, board members and office
bearers when engaging in procurement;
c) establishes the framework for the development of an
organisation’s procurement policy including any preferential
procurement policy;
d) establishes generic methods and procedures for procurements
including those pertaining to disposals; and
e) provides standard conditions of tender and conditions for
the calling for expressions of interest.

SANS 1914-1, Resource Standard for the These six standard targeted construction procurement standards:
Participation of targeted enterprises
a) describe the general requirements for engaging targeted
enterprises and / or targeted labour on a contract for the
SANS 1914-2, Resource Standard for provision of supplies, services or works, as relevant;
Participation of targeted partners in joint
ventures b) specify the contract participation goal (the value of a
percentage of the value of the contract which represents the
SANS 1914-3, Resource Standard for inputs of targeted enterprises and/or targeted labour in the
Participation of targeted enterprises and performance of the contract;
targeted partners in joint ventures c) set out the methods by which the contract participation
goal will be measured, quantified and verified in the
SANS 1914-4, Resource Standard for performance of the contract;
Participation of targeted enterprises and
targeted labour (local resources) d) describe the means by which:
i) progress towards the attainment of the contract
SANS 1914-5, Resource Standard for participation goal is to be monitored;
Participation of targeted labour
ii) compliance with requirements will be verified and
monitored; and
SANS 1914-6, Resource Standard for
Participation of targeted enterprises in iii) the contract participation goal will be adjusted to
concession contracts accommodate variations to the scope of the contract.

SANS 1921-1, Construction and This standard establishes general construction and management
Management Requirements for Works requirements, which are applicable in a wide range of engineering
Contracts: Part 1: General and construction works contracts

SANS 1921-3, Construction and This specification contains requirements for managing the fabrication
management requirements for works and erection of structural steelwork.
contracts, Part 3: Structural steelwork

SANS 10403, Formatting and Compilation This standard establishes at both prime and subcontract level:
of Construction Procurement Documents
a) a uniform format for the compilation of procurement documents
for supplies, services and engineering and construction works
contracts; and
b) the general principles for compiling procurement documents in
respect of supplies, services and engineering and construction
works.

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Documents

Title Synopsis

SANS 10396, Implementing Preferential This standard:

Procurement Policies Using Targeted
a) sets out the issues and principles which should be considered
Procurement Procedures
when formulating preferential procurement policies and
developing associated implementation mechanisms;
b) sets out the principles associated with the engagement of
targeted enterprises and targeted labour;
c) establishes a range of techniques and mechanisms which may
be used to provide a framework within which access to markets
for targeted enterprises and / or targeted labour can be provided
and goals relating to the engagement of such enterprises and /
or labour can be set, monitored and evaluated at both project
and programme level;
d) establishes targeting frameworks and strategies which can be
used with a number of different procurement regimes;
e) describes techniques for the monitoring and evaluation of the
outcomes of a preferential procurement policy;
f) provides guidance as to how targeted procurement procedures
can be activated in procurement documents; and
g) provides guidance on the design and implementation of
programmes associated with the implementation of a preferential
procurement policy.

Forms of Contract and Agreements

SAFCEC Joint venture agreement This joint venture agreement comprises the agreement itself and the
heads of agreement between the partners in a joint venture.

FIDIC Joint Venture Consortium This joint venture agreement is intended only for joint ventures
Agreement between professional service providers and is not suitable for use by
contractors

BIFSA Non-Nominated Subcontract for use

with the JBCC Series 2000 Principal
Building Agreement

BIFSA Standard Subcontract Agreement

1995 edition (Amended 2000), for use with
Principal Building Agreements other than
the JBCC Principal Building Agreement.

BIFSA Labour-only sub-contract

JBCC series 2000 Nominated / selected

These forms of subcontract establish the risks, liabilities and
Subcontract Agreement
obligations of the parties to a subcontract
JBCC series 2000 Engineering General
Conditions

NEC3 Engineering and Construction

Subcontract

NEC3 Engineering and Construction Short

Subcontract

SAFCEC General conditions of

subcontract (2003 edition)

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Title Synopsis

FIDIC Conditions of Contract for

Construction (“Red Book”)

FIDIC Conditions of Contract for Plant and

Design-Build (“Yellow Book”)

FIDIC Conditions of Contract for FIDIC

EPC/Turnkey Projects (“Silver Book”)

FIDIC Short Form of Contract (“Green

Book”) These forms of contract establish the risks, liabilities and obligations
of the parties to a contract
JBCC series 2000 Principal Building
Agreement

JBCC series 2000 Minor Works Agreement

NEC3 Engineering and Construction Short

Contract (ECSC)

NEC3 Engineering and Construction

Contract (ECC)

NEC3 - The Professional Services This form of contract establish the risks, liabilities and obligations of
Contract the parties to a professional services contract

NEC3 Term services contract This form of contract establish the risks, liabilities and obligations of
the parties to a professional services contract

SAICE General Conditions of Contract for This form of contract establishes the risks, liabilities and obligations
Construction Works (2004) of the parties to a contract.

[1] The Act defines “construction industry” as “the broad conglomeration of industries and sectors which add value in the
creation and maintenance of fixed assets within the built environment.”

[2] The Act defines a project as a construction works contract or a series of related construction work contracts. Thus every
prime or main contract within a project needs to be registered.
[3] A system is an organised scheme or plan of action or an orderly or regular procedure or method.
[4] A method is a documented systematically-ordered collection of rules or approaches.
[5] A procedure contains the formal steps to be taken in the performance of a specific task, which may be
evoked in the course of a process.
[6] Policy (within the legislative framework) established by a department establishes the manner in which
choices within a system must be exercised by that department.
[7] Life cycle costing is the concept of including acquisition, operating and disposal costs when evaluating
various alternatives (see module 3)
[8] SAICE Practice Manual #2, Delivering construction projects using the design by employer contracting
strategy also provides guidance.
[9] A tenderer has the right to ask for justifiable reasons for the rejection or acceptance of any offer.
[10] It is recommended that each institution develop standardised procurement documents around the CIDB
generic documents. (See examples 5E03 and 5E04 prepared for the Department of Public Works, Roads and
Transport, Free State Provincial Government,)
[11] A tenderer has the right to ask for justifiable reasons for the rejection or acceptance of any offer.

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