Committee concerned by lack of contracts in construction

The lack of awareness among smaller and so-called emerging building contractors in the civil engineering and construction industry about protecting their interests through proper contract documentation is alarming, says the Joint Building Contracts Committee (JBCC).

“At least 100 000 people are involved in building contracts in the South African construction sector every year – but the majority know very little of the contracts in common use or the legal procedures to be followed during the course of a building project,” says JBCC CEO Uwe Putlitz.

He adds that many emerging contractors lack communication and administrative skills, in addition to technical skills and knowledge regarding the use of labour-saving equipment. This is due to the low standards of qualifications required to work in this field, as a result of insufficient education offered in maths and science in high schools and the lack of relevant degrees at tertiary institutions, highlights Putlitz.

He notes that subcontractors are often exploited by main contractors, particularly regarding payments, which are often late, not paid in full or not even paid at all. This kind of practice is risky when smaller builders that are employed as subcontractors in a struggling sector of the local economy have to survive.

The situation is exacerbated by too few subcontractors or emerging contractors working on a project without having had their appointment – and working operations – formally ratified through a contract, he notes. “To make matters worse, many subcontractors or emerging contractors tend to read whatever form of contract they hold only [in the event of] a crisis . . . on site.”

Putlitz highlights that the JBCC recognises that the contractual needs of the now significantly increased number of small builders and subcontractors operating in South Africa differ substantially from those of about 20 years ago when there were fewer emerging contractors.

JBCC Agreements

The JBCC has started to simplify the use of language and the style of writing considerably since the 2014 editions of the JBCC Agreement.

Future editions will include improvements in choice of wording, with more subclauses instead of long clauses that could confuse the smaller operator, and simplified text layout.

“[I]f a JBCC Agreement is in place, the main and smaller contractors – as well as the principal agent – involved in a building project merely have to follow the content of the agreement’s clauses within the stipulated time limits to avoid disputes,” notes Putlitz.

He adds that far too many of these parties regard contract administration as time consuming and consider compliance with statutory and contractual provisions a nuisance and serious threat to their company’s productivity. Therefore, important contractual obligations, such as inspections on site, record keeping and the issuing of instructions and various certificates, tend to be neglected.

Additionally, indecisive and dictatorial employers and their principal agents can also cause increasing strife at a building project. Although JBCC Agreements form a binding contract between all the parties involved, too many employers – after the agreement has been signed – make changes that are unfair to contractors. This leads to the contractors, in turn, imposing totally unfair performance and payment conditions on subcontractors.

Therefore, the organisation concentrates on the unintended, but inevitable, consequences of such changes to the original agreement at its JBCC training seminars. An employer might think the change to an agreement is minimal, but the repercussions are often far reaching for the rest of the construction team.

The disputes and stress on site that follow such unexpected late changes to agreements negatively affect performance, which could have been avoided if provisions in the contract had been followed by all parties.
The JBCC presents 10 to 12 training seminars in most of South Africa’s main centres – twice yearly in Cape Town, Johannesburg and Durban, and yearly in smaller centres. The JBCC also presents in-house seminars, tailoring the content to suit the user, which, for example, focuses on clauses relevant to contractors, subcontractors or property developers.

The current constituents of the JBCC include the Association of Construction Project Managers, the Association of South African Quantity Surveyors, Consulting Engineers South Africa, building and construction industry representative association Master Builders South Africa, the Institute of Landscape Architecture in South Africa, national organisation the South African Black Technical and Allied Trades Association and representative body the South African Property Owners Association.

Further, JBCC publications are sold in hard copy by constituents’ regional offices. These vendors buy stock from the JBCC head office, in Johannesburg, at wholesale price. JBCC publications can also be bought in electronic format through the JBCC website, enabling users to complete contract-specific information without changing the contract text.

JBCC documents are used throughout Africa, mostly in the old Commonwealth countries where English is fairly widely spoken and, to a lesser extent, where South African developers, consultants and/or contractors are involved.