Business problems facing potential emerging contractors in CIDB grades 5 to 7

Considering the vital part which the construction industry plays in the economy of South Africa, as well as the objectives of the reconstruction and development thereof, the failure of contractors, despite all the interventions to identify and eradicate the root of the problem, is a matter of great concern. In November 2000, the Construction Industry Development Board Act (2000) was promulgated which led to the inception of the cidb with a mandate to implement an integrated strategy for the reconstruction, growth and development of the construction industry. The matter of contractor development has been widely studied and investigated since the inception of the cidb in 2000. However, the purpose of this study was to focus on the business problems faced by Grade 5 to 7 CE / GB Potential Emerging Contractors, with regard to construction organisations that make the move from small to medium businesses. The intention was to contribute to the successful transition from small to medium businesses by means of structured initiatives. In order to achieve this, a new business strategy must be adopted. It was therefore necessary to extensively consider the surface and core competencies required for making the transition. Liquidity problems that the transition entails were explored, as well as contractor misconceptions with regard to contractor development. In the course of the study, unethical practices and entitlement issues experienced in the built environment and the effect of this on contractor success were explored. The study aimed to recommend a structured framework for co-ordination between assistance, mentorship, contractor needs, client departments, cidb NCDP best practice guidelines and the most important of all, self-empowerment. This study further endeavoured to find possible solutions regarding the assistance requirements, as well as self-empowering objectives for emerging contractors taking the challenging step from small to medium business and by implication, becoming sustainable contractor enterprises in Grades 6 to 8. Political imperatives need to be weighed against the high unemployment rate. The Gross Fixed Capital Formation (GFCF) indicates that there are not enough sustainable contracting opportunities to allocate to Contractor Development Programmes (CDPs). This is aggravated by the tendency that too many hopeful aspirant entrepreneurs, lacking construction surface and core competencies, are seeing the built environment as an easy industry to enter. Just less than 50% of cidb registered contractors exited the register of active contractors during the last ten years ending 2nd quarter 2015. 45% exited during the last five years. This indicates that there is a serious sustainability problem in the built environment. Considering the GFCF contractor opportunities there are too many cidb registered contractors. However, enterprise failure is not only an Emerging Contractor (EC) problem, but occurs across the board. A dangerous notion that the large national construction firms should no longer qualify for public contracts can have disastrous implications for an already embattled industry. Large national firms are the trend setters in the built environment, which coach the much needed construction surface and core competencies. If upgrading is the measure of success the current CDP statistics do not confirm that the strategic objectives of the National Contractor Development Programme (NCDP) are being achieved. All contractors, including black owned contractors, are faring substantially better than their EC counterparts participating in CDPs. Upgrading should carry less weight and sustainability and high performance should become the focus. A serious lack of construction surface and core competencies was identified. If contractor development is the objective the structure of the cidb grading system should be reviewed. It is recommended that the broad CDP hierarchical structure should streamlined and partly privatised to focus on the core strategic objective of contractor development