ISO 10845-7:2011

Overview

ISO 10845-7:2011 - "Construction procurement - Part 7: Participation of local enterprises and labour in contracts" sets out a measurable way to promote local economic benefit in construction and engineering procurement. The standard defines a Contract Participation Goal (CPG) as a key performance indicator (KPI) for the engagement of local (targeted) enterprises and labour on a contract, and describes how a CPG is calculated, measured and verified during contract performance.

Key topics and technical requirements

• Contract Participation Goal (CPG): Expressed as a percentage of the contract amount, the CPG equals wages/allowances for targeted labour plus the value of goods/services procured from targeted enterprises (exclusive of VAT/sales tax).
• Two targeting strategies:
  • Targeting strategy A - ties the CPG to the tendered contract value and can include tender evaluation points for proposed CPGs and minimum contractual CPG requirements.
  • Targeting strategy B - links CPG measurement to final contract value and/or financial incentives for attainment.
• Methods to achieve CPG: Two main methods are defined:
  • Method 1: Contractor qualifies as a targeted enterprise (and at least 50% of wages/allowances paid to employees on the contract must be to targeted labour); subcontracting to targeted enterprises is also allowed.
  • Method 2: Contractor engages targeted labour and/or subcontracts commercially useful functions to targeted enterprises, or a combination of both.
• Verification, records and reporting: The standard specifies documentation, monthly submission of supporting records, certification of credits and procedures for verifying targeted enterprise status.
• Implementation and remedies: Includes requirements for a CPG implementation plan (Annex C), letters of undertaking (Annex D), examples (Annex E), tender evaluation schedules and sanctions for non‑compliance.

Practical applications and users

ISO 10845-7:2011 is intended for:

• Employers and procuring authorities who want to embed local participation targets in procurement documents and tender evaluations.
• Contractors and subcontractors required to plan, record and demonstrate local hiring and local sourcing performance against contractual CPGs.
• Procurement officers, contract managers and auditors who need standardized methods to quantify, monitor and verify local content and labour outcomes. Practical uses include setting socially responsible procurement targets, promoting local job creation, measuring supplier development outcomes, and incorporating local participation into tender scoring or incentive schemes.

Related standards

• ISO 10845 series (Construction procurement): Parts 1–8. Relevant adjacent parts include:
  • ISO 10845-1 (processes, methods and procedures)
  • ISO 10845-5 (participation of targeted enterprises)
  • ISO 10845-6/8 (joint ventures / targeted labour)

Keywords: ISO 10845-7:2011, construction procurement, contract participation goal, CPG, targeted labour, local enterprises, procurement KPI, targeting strategy A, targeting strategy B.