1.

Introduction Firms serve to keep in check the transaction costs arising from the self-interested motivations of individuals (Kogut and Zander, 1992). According to the neoclassical theory of perfect competition, Slater (1997) states that firms do exist so as to combine labor and capital to produce an end product. He further clarifies that the firms objective is to maximize profit, which is accomplished by setting output at the point where marginal cost equals marginal revenue. Slater (1997) further explains the fact that the firm size is constrained by the technological and later managerial scale factors. However, particular characteristics that involve firms include the types of grades of construction firms (figures produced by the national council for construction show that there are three groups of grades); registration requirement for each grade (this shows that contractor must provide the construction industry development board with track records of work previously done); the minimum capital for each grade and the minimum project cost that each of the grades should participate in. Based on a report document from the National Council for Construction (NCC), this report examines these characteristics of firms and shows the possible ways and conditions under which construction firms may register with the National Council for Construction (NCC). 2.0 Types of grades of construction firm According to the document of registration of contractors, provided by the National Council for Construction, there exist six grades. These are characterized into five different categories indicating construction activity these include; category B( for General Housing and Building); category C( for General Civil Engineering Works); category R( for General Roads and Earthworks; category M( for General Mining Purposes) and category E( for Electrical and Telecommunications). These categories will be discussed in the lastly in terms of project costs. 3.0 registration requirements For any contractor to apply for any of the first four grades, it is required that proof of sufficient past experience be provided for the category applied for. This requires copies of all certificates attached to be certified true copies and where applicable must be translated into English language. These certificates include: the company registration certificate-this should consist of a close corporation or certificate of incorporation for a propriety company.

Original and valid tax clearance certificate-this ensures the company name and registration number on tax clearance is corresponding with the company name.

Registration requirement further calls for proof of payment of administration fees, a proof of the company bank account, certificates and CVs for key professionals, certificates for technical staff, certificates or references for artisans, NAPSA registration, workers compensation registration, a PACRA computer printout, proof of asset ownership, proof of payment of the annual fee as well as a signed declaration. Nonetheless, grades from four to six are reserved for emerging, small to medium scale local contractors. Next we will show in illustration the minimum capital for each grade. 4.0 Minimum capital for each grade As earlier stated above, there is a minimum capital for each grade. This can be structured in two categories, one for foreign companies or firms and the second for the Zambian companies or firms. The Illustrations below show the various costs attached or minimum capital for the two categories aforementioned. Capital requirement for foreign company or firm CLASSIFICATION GRADE APPLICATION FORM APPLICATION FEE ANNUAL REGISTRATION FEE 1 FREE K50,000 K100,000 2 FREE K37,500 K75,000 3 FREE K25,000 K50,000

capital requirement for Zambian companies or firms CLASSIFICATION GRADE APPLICATION FORM APPLICATION FEE ANNUAL REGISTRATION FEE 1 FREE K400 K15,500 2 FREE K250 K11,625 3 FREE K200 K7,750 4 FREE K150 K1,875 5 FREE K100 K937.5 6 FREE K50 K625

All the fees shown above are required to be paid directly to the National Council for Construction. Finally, we will see the minimum project costs that each grade should participate in, a table shall be provided to further clarify this. 5.0 minimum project cost As stated earlier, each of the grades is liable to a minimum project cost. As projects get larger and more complex, clients also demand increasingly high standards of delivery as stated by Pheng and Teo (2004). Therefore, different grades incur certain minimum project costs that will be highlighted in the table below on guidelines for various classifications.

Classification grade Maximum annual turnover in any one year during the past years Fixed and movable assets Tender values Category B Category C Category R Category M Category E 1

1 Greater than k25bn

2 K15bn to k25bn

3 K10bn to k15bn

4 k2bn to k10bn

5 K0.5bn to k1bn

Greater than k5bn

Greater than k2.5bn 2 K25bn K25bn 150bn K2bn K25bn 3

Greater than k1.0bn 4

Greater than k0.5bn

Greater than k0.1bn 5 K3.5bn K3.5bn K3.5bn K3.5bn K3.5bn 6 K1bn K1bn K1bn K1bn K1bn

unlimited Unlimited Unlimited Unlimited unlimited

K10bn K10bn K50bn K10bn K10bn

K5bn K5bn K10bn K5bn K5bn

6.0 CONCLUSION It can be seen from the information provided by the National Council for Construction that in order for firms start operation, they need to meet the registration requirements discussed in the early chapter, need to categorize the grade in which the firm will want to operate, meet the minimum capital for each grade as well as the minimum project cost that each of the grades should participate in.

REFERENCES Organization science August 1992 vol.3 No.3 383-397 Journal of the Academy of Marketing Science, volume 2, No.2, pages 162-167 Journal of management in Engineering, ASCE, January, 2004