Guidelines for contractor assessment

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 Comment

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 is used as an indicator of the company’s ability to pay. The CSR has strengthened this criterion and 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 2 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 pre-qualification above $10 million the CSR may require audited financial statements to 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.

Pre-qualification criteria		Comment
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 is used as an indicator of the company’s ability to pay. The CSR has strengthened this criterion and 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 2 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 pre-qualification above $10 million the CSR may require audited financial statements to 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.