Executive Summary

Jump to section

• Overview & contents
• i. Important Notice
• 1. Executive Summary
• 2. The CIDB Grading Ladder
• 3. The Market in 2026
• 4. Strategy: Private Work First
• 5. SWOT and Competitive Position
• 6. The Working Capital Problem
• 7. Retention and Guarantees
• 8. Unit Economics of a Contract
• 9. The Five-Year Roadmap and Gates
• 10. Funding
• 11. Estimating and Contract Control
• 12. People and Plant
• 13. Compliance and Registrations
• 14. Financial Projections
• 15. Break-Even
• 16. Sensitivity and Scenarios
• 17. Risk Management
• 18. Implementation Timeline
• 19. Returns
• 20. Key Performance Indicators
• 21. Key Assumptions
• 22. Conclusion
• A. Appendix A: Consolidated Financial Summary
• B. Appendix B: Capital Schedules
• C. Appendix C: Funding and Debt Schedules
• D. Appendix D: Risk Register
• E. Appendix E: Glossary

1.1 The proposition

Sakhile Construction is a general building contractor. It registers at CIDB Grade 1GB in Year 1 and climbs to Grade 6GB by Year 5, growing turnover from R4.20 million to R52.00 million across eighteen contracts a year.

The founder contributes R3.20 million; a growth equity investor puts in R6.50 million at Year 3. The balance comes from asset finance and an invoice discounting facility advanced against certified payment certificates. Capital expenditure across the five years is R8.97 million — modest for the turnover, because equity in a construction business does not buy plant.

1.2 Four numbers that decide whether this business survives

• 18.5 per cent of turnover is tied up in working capital. At Year 5 that is R9.62 million — debtors, retention and uncertified work, less creditors. Equity in a construction business does not buy plant. It funds the gap between doing the work and being paid for it.
• 66 days is the cash conversion cycle. Materials are bought on 30 days or cash, wages are paid weekly, and public certificates are settled at 68 days against a statutory 30. Ten days of debtors at Year 5 volume is R1.42 million.
• One percentage point of gross margin is R520 000. Gross margin runs at 15.8 per cent rising to 18.7 per cent. In a business this thin, estimating accuracy is not an administrative function — it is the primary determinant of survival.
• R5.20 million is withheld as retention during Year 5, and R2.86 million is still outstanding at the year end. Ten per cent of every certificate, released half on practical completion and half after the defects liability period. That money is earned, invoiced and unavailable, sometimes for two years.

1.3 Headline numbers

1.4 Be honest about the return