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 Administrative Procedures                                                                           

An administrative procedure refers to the various types of legal requirements you are expected to fulfil prior to or after implementation of your business. Similar to any other types of business undertakings a business in the construction sector should also fulfil administrative and legal requirements.
 

a)  Decide on legal form and start registration process

As indicated in Part I of the toolkit, there are about six alternative forms of business organisations. Choose the business form based on the following criteria:

• Ease of registration;

• Number of owners and financial capacities;

• Financial responsibility of owners;

• Degree of freedom in decision-making.

Once you decided on the form of business organisation to establish, you can start the process of registering the business and securing a license/work permit. The different legal requirements as well as relevant registration forms are also annexed to this toolkit.

b)  Staff contracts

If you come to the decision that you as an entrepreneur miss important know-how / competences or cannot cope with the high demand in your product, you should consider employing personnel.

You should be able to recruit the best available skilled candidate. You can organise your hiring efforts by approaching it as a five-step process. These are:

Organising and planning: before starting recruitment; you first need to decide on the salary range and minimum level of skills.  Place vacancy advertisements through the possible existing channels. In the meantime prepare interview guidelines and selection criteria;

Interviewing: Based on interview guidelines, invite candidates for an interview. If necessary, you can also screen candidates through written exams;

Select competent candidate(s) based on the pre-set criteria;

Conclude staff contracts, write letters of employment provide orientation to the newly contracted employee(s) about your business and give a written job description. At this stage it will be good if you consider a probation period of at least 15 days.

Plan for a strong 'first week at work' test to make sure that your new staff is doing the job  according to your expectation. Sometimes you may also need on-the-job training for  new staff.

Contents of staff contract should comply with the existing labour proclamation. The contract between you and the staff may have the following contents:

• Responsibilities of the employee;

• Responsibilities of the employer;

• Employee’s rights;

• Employer’s rights;

• Performance evaluation standards for technical skill and workplace ethics;

• Starting salary, benefits, safety measures at workplace and promotion;

• Working days, working hours and holidays;

• Annual leave and sick leave;

• Starting date.

c.  Follow taxation procedures

Taxation issues are discussed in detail in Part I of the toolkit. The different types of taxes such as income tax, business profit tax, value-added tax and turnover tax are defined and their corresponding schedules are also indicated in Part I.
 

d.  Contractual agreements

Government funded projects are implemented as per the Standard Conditions of Contract for Construction of civil Works Project (December 1994). The following terms are important regarding a contract in the construction sector for civil works:

Work: What the contract requires the contractor to construct, install and hand over to the employer, as defined in the contract data.

Contract: Legal agreement between the employer and the contractor to execute, complete and maintain the construction of civil works. 

Offer: Proposal expressing the willingness of the applicant (one who takes initiative to declare his intention to the other) to enter into a contractual agreement, regarding a particular thing. An offer can be verbal or in writing. A valid offer is an offer that is certain, communicated and unconditional.

Employer: Party who employs the contractor to carry out the works.

Contractor: Person or corporate body whose bid has been accepted by the employer.

Contractor's bid: Completed bidding document submitted by the contractor to the employer.

Contract price: Price stated in the letter of acceptance and thereafter as adjusted in accordance with the provisions of the contract.

Day work: Varied work input subject to payments on a time basis for the contractor's employees and equipment, in addition to payments for associated materials and plant.

Defect: Any part of the works not completed in accordance with the contract.

Initial contract price: Contract price listed in the employer's letter of acceptance.

Plant: Any integral part of the works that shall have a mechanical, electrical, chemical or biological function.

Site: Area defined as such in the contract data.

Sub-contractor: Person or corporate body who has a contact with the contractor to carry out part of the work in the contract, which includes work on the site.

Adjudicator: Person appointed jointly by the employer and the contractor to resolve disputes in the first instance.

Bill of quantities: List containing items for the construction, installation, testing and commissioning to be done by the contractor. The Bill of Quantities is used to calculate the contract price. The contractor is paid for the quantity of the work done at the rate in the Bill of Quantities for each item.

Retention: Proportion of money the employer retains from the contractor's payment as per the statement in the contract until completion of the assignment.

Hand-over: Hand-over of the sites by the contractor to the employer upon completion of the work. Usually, the employer issues a certificate of completion to the contractor. 

Contractual agreement for sub-contracting and joint ventures

According to the Ethiopian Civil Code, Article 1675, a contract is an agreement where two or more persons create, vary or extinguish obligations of a proprietary nature. Based on this article, it is possible for two or more parties to enter into a binding agreement for sub-contracting and joint venture activities. Once it is concluded, a legal contract involves an obligation, which is a legally binding undertaking. Obligations can be classified in bilateral and multilateral agreements.

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Business plan  I  Cost calculation  I  Financing  I  Administration  I  Marketing
Supply and Infrastructure  I  Product development  I  Business management