Construction Charter

Aveng regards its responsibility to help bring about the empowerment of previously disadvantaged South Africans as integral to being a model corporate citizen and a truly South African company. The group endorses government led initiatives in this arena and wholeheartedly supports the development of the construction sector charter. Aveng will continue to proactively engage in the ongoing process to formalise the charter as a code of practice and will vigorously support the implementation of the charter in the sector.

The objectives of the construction sector charter reflected below are closely aligned to those of the Aveng group. The charter objectives are:

  • The transformation and growth of the sector;
  • The improvement in the competitiveness and efficiency of the sector;
  • The aim to achieve a substantial change in the racial and gender composition of the ownership, control and management within the sector;
  • To address the critical skills shortage and skills development with a specific focus on women;
  • To enhance entrepreneurial development and sustainable development of Black Economic Empowered (BEE) Small, Medium and Micro Enterprise (SMME) construction companies through strategic partnerships;
  • To bring an end to the malpractice of fronting in the industry.

Objectives are aimed at promoting a vibrant, competitive and sustainable construction sector in South Africa.

The construction sector charter was signed by all industry stakeholders and the Minister of Public Works, the late Ms Stella Sigcau on 17 March 2006.

The charter applies to all stakeholders in the creation, expansion and/or maintenance of fixed assets related to residential or non-residential buildings, infrastructure or other form of construction works in South Africa.

The charter consists of the charter document and scorecard. The scorecard consists of three focal areas broken down into seven elements. These comprise the seven pillars of Broad Based Economic Empowerment as shown below.

“Aveng will continue to proactively engage in the ongoing process to formalise the charter as a code of practice and will vigorously support the implementation of the charter in the sector.”

In the scorecard each of these seven elements is subdivided into subelements, each with its own weighting. Targets have been agreed for each sub-element. These targets are seven year targets and where appropriate interim four year targets have been agreed.

Aveng has historically been proactive in its approach to broad based empowerment and accordingly finds the South African operations of Grinaker-LTA and Trident Steel well placed with regard to their Broad Based Black Economic Empowerment (BBBEE) credentials.

If one considers the various elements of the scorecard, commencing with ownership, the BEE deal finalised on 11 February 2005, whilst falling slightly short in some areas with respect to the charter targets, is well aligned to the charter imperatives. It is a broad based arrangement which more than adequately addresses both the economic interest and voting rights requirements of the charter.

The control section of the scorecard focuses on the composition of the board and executive management both from a black people and black women perspective. The employment equity section focuses on senior, middle and junior management from the same perspective. Whilst significant progress has been made in these areas, the level of black people and especially black women at all levels in the organisation is below the four and seven year targets set by the charter. This will continue to receive the requisite focus and attention.

The skills development section of the scorecard focuses on the total training spend, skills and management training for black people and black women, total learnerships, learnerships for black people, black women, and designated groups, bursaries for black people and mentorship. Skills development in the group has been a strong suit of the operations historically and is generally well aligned to the needs of the sector as defined in the scorecard. Skills development is the key to future sustainability and accordingly will receive a greater focus in the periods ahead.

The procurement section of the scorecard measures the discretionary spend of the Grinaker- LTA and Trident operations in South Africa. This section of the scorecard is designed to drive BBBEE development in other sectors. Currently the group gives preference to BBBEE enterprises in accordance with the requirements of the Preferential Procurement Policy Framework Act No. 5 of 2000 (PPPFA) regulations. To assist suppliers to evaluate their BBBEE credentials and facilitate their understanding of interventions required to improve and develop their BBBEE status, the group has developed an online evaluation process. In turn this facilitates procurement preferencing and evaluation. In giving preference, Aveng will not compromise on standards or service. The current BBBEE procurement spend falls short of the charter seven year target. This is anticipated to improve rapidly as the online process gains momentum and as suppliers to the group embrace BBBEE.

The enterprise development section of the scorecard focuses on the promotion of sustainable development through a co-ordinated development of black enterprises which is not limited to SMMEs. Aveng believes that it can continue to add significant value in this arena as it has successfully done in the past. This will include the appropriate mentorship, training and skills transfer to the enterprises to be developed. The focus will be on quality and not quantity of enterprise development to ensure that the new enterprises are sustainable and develop into significant businesses over time.

Corporate Social Investment (CSI) in the scorecard can be both sector specific or general. The group undertakes significant CSI initiatives as detailed in the sustainability report. It is anticipated that when all the initiatives are collated and measured that the group will probably meet the seven year charter target.

In order to verify the BBBEE status of the Grinaker-LTA and Trident Steel companies, Aveng has undertaken a detailed review of verification agencies (no agencies are currently accredited by the Department of Trade and Industry (dti) and has selected a preferred partner to undertake the initial evaluations. This process commenced in August 2006. Interim evaluations are also being conducted internally to enable Aveng to review progress made to date and set appropriate targets. This will then be augmented by the work undertaken by the verification agency. Once verification agencies have been accredited by the dti and the South African National Accreditation System (SANAS) they will be in a position to issue a BEE compliance certificate valid for twelve months.

“The focus will be on quality and not quantity of enterprise development to ensure that the new enterprises are sustainable and develop into significant businesses over time.”
In order for the construction sector charter to become a code and be legally binding in terms of section 9 of the BBBEE Act No. 53 of 2003 on all organs of state (including central government, provincial government, municipalities, public entities, public business enterprises and Public Finance Management Act Schedule II and III companies) and at private sector clients operating within the built environment. The following process has to be concluded by the Charter Grouping Integrated Management Committee and various government departments:

  • Submit application for section 12 of the BBBEE Act No. 53 of 2003 approval of charter to the Department of Public Works (DPW). This was completed in July 2006.
  • A section 12 approval implies that the construction sector charter is binding on all stakeholders in the construction sector as defined in the construction sector charter.
  • dti to approve construction sector charter in terms of section 12 of the Act.
  • Develop and distribute circular to ensure construction sector charter is used as soon as practically possible in BBBEE tender requirements.
  • Undertake a third party review of construction sector charter.
  • Develop charter council constitution.
  • Submit application for section 9 of the BBBEE Act No. 53 of 2003 approval of the construction sector charter to the dti.
  • A section 9 approval, as noted above implies that the construction sector charter becomes a code and is legally binding on the sector and all organs of state.
  • Approval and gazetting by dti of the code.