SCHOOL OF CIVIL ENGINEERING, SURVEYING AND CONSTRUCTION

PROPERTY DEVELOPMENT PROGRAMME

CONSTRUCTION CONTRACTS
EXAMINATION - NOVEMBER 2006

SUBJECT, COURSE AND CODE: Construction Contracts – ENPD3CC

DURATION: 3 HOURS TOTAL MARKS: 170 marks

INTERNAL EXAMINERS: Mrs. N. Harinarain & Mr. D. Letchmiah

EXTERNAL EXAMINER: Prof. J. J Verster

INSTRUCTIONS:

1. This paper is made up of 2 parts and 6 questions.

2. ALL questions are to be answered.

3. This is an open book examination.

4. All answers must be completed on this booklet.

5. Ensure that your student number is clearly written on the front cover.

6. University examination rules apply.

STUDENT NUMBER: ________________________

SEAT NUMBER: ________________________

Part A Part B

Question 1 2 3 4 5 6 Total

Mark

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PART A – CONTRACTS

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PART B – AFFIRMATIVE
PROCUREMENT

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QUESTION 5 – MULTIPLE CHOICE QUESTIONS – AFFIRMATIVE PROCUREMENT
[30 Marks]
Circle the correct answer

5.1 The attainment of socio-economic objectives through public sector procurement is primarily
regulated by:
A. The Public Finance Management Act
B. Broad-Based Black Economic Empowerment Act
C. The Preferential Procurement Policy Framework Act
D. The Construction Industry Development Board Act
E. All of the above

5.2 A black women owned business can score tender adjudication points in both categories of black
equity and women equity if applicable:
A. True
B. False

5.3 Value for money in the new public procurement environment is defined as a balance between
price and social objectives
A. True
B. False

5.4 Which contractual relationship should be used as a targeting strategy to best promote a
meaningfully share in ownership, control, management, responsibilities, risks and profits:
A. Nominated sub-contract
B. Joint Venture
C. Development contract
D. Labour only contract
E. None of the above

5.5 Preference points for tender adjudication of a project estimated at R499 000,00 is based on the
following price/development objectives:
A. 80/20
B. 20/80
C. 90/10
D. 10/90
E. None of the above

5.6 Which of the following is NOT considered to be included under the definition of historically
disadvantaged individuals (HDIs)?
A. Black persons
B. Women
C. Affirmable business enterprises
D. Disabled persons
E. None of the above

5.7 Preference claims for HDI equity ownership will NOT be considered for:
A. Black Owned Company
B. Black Empowered Close Corporation
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 C. Public Company
D. White Woman Owned Enterprise
E. All of the above

5.8 Which of the following represents all the Constitutional requirements for good governance in
procurement?
A. Fair, equitable, competitive and efficient
B. Fair, equitable, transparent, competitive and cost effective
C. Fair, equitable, effective, competitive and low risk
D. Fair, equitable, transparent and preferential
E. None of the above

5.9 The role of the Construction Industry Development Board (CIDB) in promoting Uniformity in
Construction is confined to preferential procurement only:
A. True
B. False

5.10 The Preferential Procurement Policy cannot satisfy the requirements of public sector accountability
in terms of a verifiable and auditable system:
A. True
B. False

5.11 Reduction of fronting and abuse of the preferential procurement policy is dependant on:
A. An effective monitoring and reporting system
B. Implementation of time and quality management
C. Amending the points scoring system
D. Promoting employee empowerment
E. None of the above

5.12 In terms of CIDB Contractor registration, a structural steel contractor with a capability to undertake
a R2million contract will have the following contractor grading designation:
A. 4GB
B. 1SL
C. 2CE
D. 4SL
E. None of the above

5.13 Preference points for tender adjudication of a project estimated at R25million is based on the
80/20 points scoring formula:
A. True
B. False

5.14 Contractors, in terms of CIDB requirements, have the choice of either CIDB contractor
registration
or BBBEE Construction Charter Scorecard status in order to undertake public sector contracts.
A. True
B. False

5.15 The application of the Preferential Procurement Policy Framework Act is mandatory
in the:
A. Private Sector

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 B. Public Sector
C. Private and Public Sectors
D. Public Companies
E. All of the above

5.16 Price preferencing, correctly applied, should not guarantee work/contracts for the targeted group:
A. True
B. False

5.17 The role of the CIDB is to implement contractor registration only:

A. True
B. False

5.18 Which of the following is not a criterion for CIDB contractor registration?
A. Financial Capability
B. Black Empowerment
C. Works Capability
D. Annual Turnover
E. All of the above

5.19 In terms of the narrow-based BEE definitions, a business entity that is owned, managed and
controlled by at least 25.1% black persons is classified as:
A. Black Influenced Enterprise
B. Black Enterprise
C. Black Empowered Enterprise
D. Black Engendered Enterprise
E. None of the above

5.20 Which of the following differentiates the Built Environment Professionals (BEPs) in the
Construction Sector Scorecard:
A. Ownership and Control
B. Employment Equity and Skills Development
C. Ownership and Enterprise Development
D. Skills Development and Enterprise Development
E. None of the above

5.21 The BBBEE status of a construction enterprise with a scorecard of 68,5% will be classified as:
A. A Level 9 Contributor
B. A Level 2 Contributor
C. A Level 4 Contributor
D. A Level 5 Contributor
E. None of the above

5.22 Which of the following is NOT a sub-element of Ownership in the Construction Sector Scorecard?
A. Economic Interest
B. Realisation Points
C. Executive Management
D. Voting Rights
E. All of the above

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5.23 The only objective of the Broad-Based Black Economic Empowerment Act is to promote black
business ownership and control.
A. True
B. False

5.24 CIDB Contractor registration is voluntary for public sector contracts:

A. True
B. False

5.25 The 90/10 points scoring system can result in a potential direct price premium of:
A. 11,1%
B. 10,0%
C. 12,5%
D. 25,0%
E. None of the above

5.26 A business enterprise with no equity ownership by black persons can only be a Level 9 Contributor
in terms of the Construction Sector Scorecard.
A. True
B. False

5.27 Which of the following is NOT a core component/element of the BBBEE Charters?
A. Employment Equity
B. Enterprise Development
C. Corporate Social Investment
D. Contractor Registration
E. None of the above

5.28 Targeted procurement cannot be used as a mechanism to promote job creation:

A. True
B. False

5.29 The Preferential Procurement Policy Framework Act does NOT make provision for goals
associated with the Reconstruction and Development Plan (RDP).
A. True
B. False

5.30 A construction business with a CIDB contractor grading designation of “4GB” will be allowed to
undertake a public sector contract valued at:
A. R 4 million
B. R4.5 million
C. R2 million
D. R3.5 million
E. All of the above

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QUESTION 6 – AFFIRMATIVE PROCUREMENT [20 Marks]

6.1. A tendering entity has the following ownership profile:

i. Black male equity ownership 25%

ii. Black women equity ownership 30%
iii. White women equity ownership 20%
iv. Disabled black women equity ownership 10%
v. Disabled white male equity ownership 5%
vi. Non HDI equity ownership 10%
100%

The points scoring tender criteria using the 80/20 preferential procurement system is as follows:

a) Price 80 points
b) HDI equity ownership:
 Black equity 10 points
 Women equity 6 points 20 points
 Disability equity 4 points
100 points

Using the following formula, calculate the number of points for equity ownership and complete the
table below:
EP
NEP = NOP X 100
Where

NEP = Points awarded for equity ownership by an HDI

NOP = The maximum number of points awarded for equity ownership by an HDI in the
specific category.

EP = The percentage of equity ownership by an HDI in the specific category within

the business enterprise.

POINTS FOR EQUITY OWNERSHIP

Black Equity ownership …………….points

Women Equity ownership …………….points

Disability Equity ownership …………….points

TOTAL POINTS …………….points

(5 marks)
6.2. A tender for a school estimated at R20 million had the following tender adjudication criteria.
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 a) Price 90 points
b) HDI equity ownership:
 Black equity 6 points
 Women equity 3 points 10 points
 Disability equity 1 points
100 points

Three tenders were received with the following price / equity ownership details:

EQUITY OWNERSHIP PROFILE

TENDERER PRICE DISABLED DISABLED
BLACK BLACK WHITE NON TOTAL
WHITE BLACK
MALE FEMALE FEMALE HDI EQUITY
FEMALE MALE

A R17.5m 25% - 25% - - 50% 100%

B R19.8m - 60% 30% 10% - - 100%

C R20.7m 50% 30% 10% 5% 5% - 100%

Using the applicable formulae, calculate the tender adjudication points for each tenderer as per the table
below:

POINTS SCORED FOR:

BLACK WOMEN DISABILITY

TENDERER PRICE TOTAL POINTS
EQUITY EQUITY EQUITY

(10 marks)

6.3.1. Using the table below calculate the score for each of the Construction Charter elements based on
the summarised information provided by Speed Builders.
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CRITERIA WEIGHTING TARGET ACTUAL LEVEL OF SCORE
(%) SPEED BUILDERS
(%)
Ownership 25 20 10
Control 10 40 20
Employment Equity 10 40 25
Skills Development 15 1.5 0.5
Preferential Procurement 20 70 45
Enterprise Development 15 5 2
CSI 5 0.25 0.15
Overall Score 100

(4 marks)

6.3.2 State the BBBEE status of Speed Builders in terms of the construction Charter Scorecard.

Answer: _______________________________________________ (1 mark)

(5 marks)

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