The proposal is contained in a report called Improving Site Conditions, published last week by the institute.
CIOB chief executive Chris Blythe said the scheme made political sense for the government, particularly for incoming construction minister Nigel Griffiths, who is also small businesses minister.
There are big votes in this. Dodgy builders are the biggest complaint
Chris Blythe, CIOB chief executive
Blythe said: "There are big votes in this for the government. Overwhelming public opinion backed up by trading standards sees dodgy builders as the biggest source of complaint. As small business minister Griffiths could do something useful to help tackle this problem."
The report questioned whether self-regulation worked. It said: "One suggestion is for greater enforcement through legislation, perhaps using the same framework as the Construction (Design and Management) Regulations, but applied to site conditions. This would communicate to those responsible for sites that poor conditions will not be tolerated."
The industry should have a licensing system similar to that for cars, said the report. "Every car on the road is licensed. It tells you nothing about the driver or how safe the car is but it can be traced. Should contractors be licensed? Every site would then display a licence number." The report suggested such a scheme could be policed by bodies such as the Construction Industry Training Body or trading standards officers.