Supplier Development for Construction Sector
How Construction Companies could effectively implement the Preferential Procurement and Supplier Development Element and achieve maximum points on the Scorecard.
The BBBEE Construction Sector Code, which came into effect in November 2017 stipulates that companies in the Sector must spend a calculated percentage on the Preferential Procurement and Supplier Development Element (PPSD) as well as implementing a deliberate skills transfer programme for their suppliers.
It must also be noted that “PSSD” is categorised as a “Priority Element” with a “sub-minimum of 40% of the total weighting points (excluding bonus points) of each of the three broad categories, namely ‘Preferential Procurement’, ‘Supplier Development Programmes’ and ‘Supplier Development Contributions”.
In essence, it means that a company must score a minimum of 40% of the total points afforded otherwise all its points achieved for this element will amount to zero.
The implementation of the PPSD element affords a business the single highest score on the Scorecard and it could graduate from a Level 6 B-BBEE Score to that of a Level One Contributor Status on condition that the minimum requirement for this and other similar elements have also been met as stipulated.
In essence, the PPSD is also an element for which the spend must occur prior to the end of the previous financial year before it could be included in the B-BBEE Audit.
For most companies, the end of this month would be the period on which its spend will be audited and a large number of them will lose points on the Scorecard if these “interventions” are not implemented prior to 28 February 2018.
The other big difference between the Construction Sector Code and that of its counterparts, is that Preferential Procurement and Supplier Development element does not provide for arbitrary Enterprise Development as it is in the case of the Amended Generic Codes of Good Practice, but restricts companies to only develop their own suppliers and not any other business it does not procure from.
Since the Code is highly prescriptive of what must be done it becomes critical that companies gain a full understanding of the “Preferential Procurement and Supplier Development directives” to properly plan its interventions to score maximum points under this element.
A failure to properly implement this element could lead to a company being penalised with up to 6 Contributor Levels on their Scorecard.
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