Getting Started In AEC As a Class 8 Contractor (NCA)

This is the lowest class or category in National Construction Authority (NCA) application. Essential it’s the entry level contractor position, that require minimal startup costs and education requirement, a Certificate or Diploma in related construction and building majors.  For building Contractors, the project limit in terms of cost is 10 million shillings. All other relevant registration details can be found on NCA website, also provide below:

Qualification as a contractor in Kenya

  1. Register with Registrar of Companies:
  • Registers a companyas a limited liability, sole proprietorship or as a partnership company.
  • All the directors must also forward their CVs to the National Construction Authority.
  • Valid PIN, VAT and Income Tax compliance certificates, and Bank Account:
  • A Certificate of Registration is issued on registration as a contractor in Kenya.
  1. Registration fees

Local contractors in Kenya will be required to pay a fee of Ksh. 10,000 – 50,000 depending on category in order to register. License renewal costs are valued at between Ksh. 5,000 and Ksh. 10,000.

Getting started: as a Contractor/ Developer in Kenya. (Class 8)

The total project scope that can be handled in a year is 10 million shillings. What’s is this size in terms of buildings? Assuming a construction cost of 2,500/= per sft and a 3 bedroom house to be about 1,200 sft, then the cost of one house shall be at 3 million shillings, which means that a class 8 contractor should have the capacity to build 3 to 4 houses in a year. These are realist expectation and quite achievable in Kenyan standard.

Assuming that the houses are sold at 4 million shillings at the end of the year, then the contractor or developer can realize a profit of about 500,000/= per house, which translates to 1.5 to 2.0 million shillings per year or 125,000/= to 170,000/= per month. This is not bad money for a beginner in real estate investment. Assuming that the houses to be built shall be townhouses on 2500 sft plot, then you need at least 10,000 sft (1/4 acre) of land to begin with. Expansion and growth will be made through repeating the cycles and improving on production, among other things.

For specialty Contractor, the limit cost is 5 million shillings. Specialty may be in Plumbing, Electrical, Mechanical, Concrete, Interlocking blocks, Framing, Carpentry, Landscaping, Welding and Fabrication, Roofing, Floor Installation and Repair, Foundation Repair, Termite and Pest Control in Buildings, Deck and Home improvement and so on. Essential, its being a sub-contractor.

Assuming that a sub-contract job costs anywhere between 100,000/= to 250,000/=, then it means that a specialty contactor should have the capacity to engage at least 20 to 50 project annually or 2 to 4 project per month.

Business infrastructure and assets will include among others:

Office, Telephone line, Websites and Social media, Internet, Computers, Company truck, Employees 3 to 5, Professional network supports with other professionals like architects, engineers, project managers, other contractors and sub-contractors and material suppliers, Construction Equipment etc.

Employees and Estimates Wage Bill:

You will need at least: the Manager, Assistant Manager, Secretary, Helper (worker 1), Helper (Worker 2). Estimate monthly wage bill can be something like 25,000/=, 20,000/=, 15,000/=, 10,000/= respectively. Which arises to about 80,000/= to 100,000/= as a monthly wage bill. In respect to this, you will need at least 3 to 6 months of the wage bill somewhere in case you run in slow business periods.

Core Activities:

Identify the core activity of the company, that which you specialize in or makes the majority of your income. This can be, Material Supply, Construction, Renovation, Home Improvement, Architectural and/or Engineering Services etc.

Additional Services:

Identify additional services that may earn you some income, despite the core activity that you do. For example, Landscaping or Site improvement, Waste disposal or Site cleaning, Soil hauling, Carpentry and Joinery, Facade enhancement, Kitchen and Bath Remodeling etc.

Know your Accounting Cycle:

Know how to plan around the year, to align your accounting cycle with the government tax return and budget preparation. Also, this will help you plan your yearly or seasonal advertisement and promotions and be prepared well with inventory and supplies when you need then.

Consult Professional Help when needed:

It’s important to consult help occasionally to ensure that you are progressing in the right direction. This can be an account auditing, business technology improvement or upgrade, new equipment or software, recruiting new employees or partners, relocation to another area or expansion to attract a wider client base etc. Keeping up with social media professional web platforms can be helpful in keeping you current with times.

There are some Facebook AEC platform that can be of help like: AEC in Kenya-Getting Started, KENYA ARCHITECTS- PIN UP BOARD, Ujenzi Today, Construction Materials, AIBD/America Institute of Building Design, Users of Chief Architect, Construction Management UoN Chapter, and ARCHITECTS CORNER, Chartered Institute of Architectural Technologist in Kenya, Interlocking Soil Blocks, Builders and Co-Creators, AAK, BORASQ, NCA, AIA, NARCB, among others.

That is how you get started as a Class 8 Contractor in Kenya.

 

Reference Materials

https://constructionreviewonline.com/2015/06/registration-of-contractors-in-kenya-national-construction-authority/

http://nca.go.ke/down/application_forms.pdf

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