Minister says 75 companies have been removed from the register of contractors since June 2024, against only one in the preceding 22 years.
The gradings of construction companies are to come under increased scrutiny as part of a verification process to improve infrastructure delivery, protect public funds, promote fair competition and ensure contractors appointed by the state have the capacity to deliver.
Along with this, government departments are set to be fined up to R100 000 if they fail to comply with the Construction Industry Development Board (CIDB) Act and register construction projects from the advertisement of a tender through to completion or cancellation.
Changes to the CIDB regulations are also planned to ensure directors of companies on its register of contractors are in good standing.
This is aimed at closing a loophole where a director whose company has been removed from the register of companies simply registers a new company.
Minister of Public Works and Infrastructure Dean Macpherson said on Tuesday these reforms form part of a broader programme to strengthen procurement, improve oversight, accelerate enforcement and recover public funds that have been wasted.
“Our aim is to ensure that infrastructure spending translates into completed projects, functioning public facilities, economic opportunities and jobs.”
Macpherson said contractor verification is a central part of improving infrastructure delivery.
“We cannot fix the problems of non-performance if we do not first ensure that the companies entering the procurement system are who they claim to be.”
Important safeguard
Macpherson said the CIDB register of contractors is an important safeguard in public procurement by providing a framework for assessing the technical capability and financial capacity of construction businesses before they undertake work at different levels of value and complexity.
However, he stressed that this safeguard is only effective if the information submitted to the CIDB is accurate and can be independently verified.
He added that where documents are falsified, a contractor may secure a grading designation it has not genuinely earned and the consequences of this are serious.
“A legitimate contractor that has invested in developing its skills, building its track record and strengthening its financial position can be disadvantaged by a competitor that simply fabricates the evidence required to obtain the same grade.
“Government may then award work to a company that does not have the experience, resources or financial strength to deliver.
“This creates risks of delays, abandoned projects, financial losses and, in some circumstances, threats to the safety and quality of public infrastructure,” he said.
“Ultimately, it is ordinary South Africans who bear the cost when public infrastructure fails to materialise or has to be repaired because the work was not delivered to the required standard.”
Integrity
Macpherson said the integrity of the construction industry’s registration system must be protected and there is a need to identify fraudulent applications, verify claims before approvals are granted, and intervene when evidence of wrongdoing emerges.
He said the CIDB is strengthening its scrutiny of registration applications, particularly those involving higher-risk applications and higher grading designations.
This includes introducing an additional audit and verification layer into the registration process.
Macpherson said that where suspected fraud or forgery is established, administrative action must be accompanied by referrals to law enforcement authorities where appropriate.
“Removing a contractor from the register is an important regulatory intervention, but suspected criminal conduct must also be dealt with through the relevant legal processes,” he said.
Poor compliance by public sector
Macpherson said one of the most significant problems identified is poor compliance by public sector clients with their obligation to register construction projects on the CIDB’s register of projects.
“Under the CIDB Act, public sector clients are required to register construction projects from the advertisement of a tender through to completion or cancellation.
“Yet current compliance with this reporting requirement is below 30%. This is from our very own government departments,” he said.
“This needs urgent support and an all-of-government approach.”
Macpherson said that if public clients do not register their projects and report the relevant information, the CIDB cannot build a comprehensive, reliable picture of construction awards and project delivery across the country.
He said it also means the regulator is more dependent on documents submitted by contractors themselves, creating opportunities for fraudulent information to go undetected.
Macpherson said the objective is to establish a more complete, verified national database of construction projects and awards, making it easier to cross-check the information contractors submit against independently recorded evidence.
He said the department must also ensure that non-compliance by public institutions is addressed, just as it expects non-compliance by private contractors to have consequences.
CIDB CEO Bongani Dladla said the CIDB is doing a lot of capacitation of government departments to ensure they understand the regulations and how to comply with them. The next step now is to take them through an inquiry process.
Dladla said there are currently three cases where the CIDB can levy a fine of up to R100 000.
“Our aim, once we start levying those fines, which directly lands as wasteful and fruitless expenditure, is that we will get an improvement in compliance.”
Weeding out the bad apples
Macpherson said 75 companies have been removed from the register of contractors since June 2024 – against only one contractor being removed in the 22 years between 2002 and June 2024.
He said 13 construction companies were removed following a resolution by the CIDB board on 15 October 2026 after findings of misrepresentation in applications to upgrade their registration grades.
Macpherson said Moriel Infrastructure Group is one of the 13 companies removed from the register after an investigation into allegations it had misrepresented itself.
He said the investigation began long before a video surfaced on social media of an individual linked to the company threatening women in a Sandton restaurant.
It was part of the CIDB’s ongoing regulatory work, and was not initiated in response to the publicity surrounding the company.
South African National Roads Agency (Sanral) general manager for marketing and communications Vusi Mona said on Tuesday the findings of the CIDB’s investigation into the Moriel Infrastructure Group has a direct impact on the agency’s own investigation into the group.
Mona confirmed Moriel has done Sanral work and the agency will now follow a contract termination process with the group.
Renewed focus on ‘proper accountability’
Dladla attributed the increased number of companies removed from the CIDB’s register of companies to a renewed focus on having a proper accountability framework for the industry.
In many instances, cases were sent to the South African Police Service to investigate – but some were seen as “as harmless crimes in a sense when the full impact is quite significant”.
Dladla said the focus is now on what is within the CIDB regulations in order to hold people accountable.
He admitted that not requiring directors of companies on the register to be in good standing created a loophole for them to register a new company but confirmed that the CIDB sets the criteria for registration and plans to change the regulations to address this issue.
Source: Money Web