Guidelines for contractor assessment

Overview

The Construction Supplier Register assesses all applicants for contractor pre-qualification against the pre-qualification criteria outlined below.


The comments have been provided to help applicants to understand why the criteria are used, and to indicate some of the processes used to conduct assessments.

Before proceeding with your application for pre-qualification you should be certain that you meet or exceed the pre-qualification criteria outlined below.

If you have any questions regarding pre-qualification please contact us.

 

Pre-qualification criteria

Occupational Health & Safety management

Contractors must complete the Construction Supplier Register's OH&S checklist and provide documentary evidence of a satisfactory organisation-specific OH&S system. Based on the evidence provided, the Construction Supplier Register will obtain a report on the contractor's OH&S system from an independent OH&S assessor. Contractors must meet or exceed all of the OH&S criteria to be pre-qualified.

Industrial relations management

Contractors must complete the Industrial Relations Self-assessment checklist. Where requested by the CSR, the contractor must provide suitable evidence of Industrial Relations management system elements.

Financial criteria

Turnover

The level of construction-related turnover is used to help determine the maximum project size (in $ terms) for which a contractor should be pre-qualified.

The financial pre-qualification level is usually limited to 50% of the contractor's average annual construction-related turnover. For lower levels of financial pre-qualification this ratio may increase towards 100%.

Tangible Net Worth (TNW)

Tangible Net Worth must be positive and the ratio of TNW to construction-related turnover is preferred to be 1:25 or less. At higher levels of pre-qualification (above $5 million), the TNW ratio is expected to be met or exceeded.

Paid Up Capital

The level of Paid Up Capital is viewed as an indicator to the company's commitment to its business.

Profitability

Profitability is used as an indicator of the management capability and success of the company.

Working Capital

Working Capital (WC) must be positive and is used as an indicator of the company's ability to pay. The CSR prefers Working Capital to be 10% or more of construction-related turnover. At higher levels of pre-qualification (above $5 million) the Working Capital ratio is expected to be met or exceeded.

Payment history

The Construction Supplier Register talks to trade supplier, sub-contractors and other referees to determine the contractor’s payment history.

Consistently late payment is an indicator of potential financial difficulty.

Credit standing

A credit assessment is carried out by an independent credit rating agency.

The credit report helps the Construction Supplier Register to determine the best pre-qualification level.

Financial statements

A minimum of two years trading is preferred.

All financial statements provided in support of the application must be prepared in accordance with Australian Accounting Standards, and must be signed by the preparing accountant and the director(s) of the applicant company.

For levels of pre-qualification (between $10 to $15 million) audited financial statements may be required.

For pre-qualification at or above $15 million audited financial statements must be provided.

Building practitioner registration

A principal or director must be registered with the Victorian Building Practitioners Board in an appropriate category for commercial and/or domestic construction.

Past work history

The applicant must provide evidence of successfully completed projects of a similar size and complexity to the pre-qualification categories being sought.

The Construction Supplier Register interviews project referees to verify project information and to evaluate performance.