Construction Industry Development Board (CIDB) grading is a mandatory requirement for contractors bidding on construction tenders in South Africa.
BizFunding helps businesses across all CIDB grades access the funding they need to fulfil tenders successfully.
What is CIDB grading?
CIDB grading is a classification system from one to nine, with nine being the highest and one the lowest.
It determines the maximum value and type of tenders a contractor is capable of executing within a specific class of works.
A contractor’s grade is based on its financial capabilities and track record.
Class of works is represented by two letters – GB for general building, CE for civil engineering, ME for mechanical engineering.
For example, a civil engineering contractor that recently completed a R1.5 million project would be assigned a CIDB grading of Grade 5CE.
At that level, the business would be considered for tenders valued of up to R10 million.
Why CIDB grading matters for tender opportunities
Grading is determined by two factors – your company’s track record over the past five years, and the funds available to fulfil a new project.
The higher the grade, the greater the value threshold is of prospective tenders.
According to the CIDB website, there are no qualifying criteria for grade 1 certification.
Grading levels, maximum tender values, and the largest tender fulfilled over the past five years (representing track record) are:
| Grade 1 | R500,000 | – |
| Grade 2 | R1 million | R130,000 |
| Grade 3 | R3 million | R450,000 |
| Grade 4 | R6 million | R900,000 |
| Grade 5 | R10 million | R1.5 million |
| Grade 6 | R20 million | R3 million |
| Grade 7 | R60 million | R9 million |
| Grade 8 | R200 million | R30 million |
| Grade 9 | No limit | R90 million |
By upgrading your CIDB level, your business is ensured access to more lucrative tender opportunities.
The catch-22 of upgrading your CIDB grade
To upgrade your CIDB level, you must improve your track record by completing projects of higher value.
For example, a shift from grade 5 to grade 6 is dependent on the successful fulfilment of a R3 million contract.
That requires funding, which many contractors don’t have readily available.
Without sufficient funding, contractors effectively become stranded in their current CIDB grade and are unable to leverage the benefits of more lucrative government tenders.
Financial records and turnover requirements
To ensure your business has the capabilities to fulfil a tender of specific value, the CIDB looks at two factors – the “best” annual turnover of the preceding two years, and available capital.
Only contractors with grades from 3 and up must comply with the capital requirements.
They are:
| CIDB grade | annual turnover | available funding |
| 3 | R1 million | R100,000 |
| 4 | R2 million | R200,000 |
| 5 | R3.250 million | R650,000 |
| 6 | R6.5 million | R1.3 million |
| 7 | R20 million | R4 million |
| 8 | R65 million | R13 million |
| 9 | R200 million | R40 million |
Business financials and funding guarantees are required to support all CIDB registrations.
How tender funding enables CIDB progression
Access to working capital is the single most important factor driving CIDB upgrades.
Funding directly contributes to your company’s financial and work capability, allowing you to take on larger projects that would otherwise be out of reach.
Strategic growth: using tender funding to reach higher CIDB grades
Tender funding is the key to strategic growth.
It fuels the engine that drives the financial and practical capabilities required by contractors to progress from one CIDB level to the next.
How BizFunding supports contractors at every CIDB level
BizFunding provides short-term end-to-end tender funding to construction companies in South Africa.
We cover all project-related costs, and work closely with contractors throughout the project lifecycle.
Our partner-based funding model guarantees quality execution of tenders, from planning to completion.
Costs are reclaimed once final payments have been made.
We offer funding for construction companies in South Africa. Call BizFunding now on 010 157 2499 or apply for funding online. Give your construction business the chance to improve its CIDB grading.
