Do not amend that JBCC Contract!
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Areas: Southern Africa, Northern Cape, Western Cape, Cape Winelands, Free State, Gauteng, North West Province, Limpopo, Mpumalanga, Natal
Professional Contractors are facing growing cash flow challenges and untenable contractual conditions, with margins slashed to between 1% and 2% – significantly lower than in the past.
Taking on and managing more Risk
It is evident in the past couple of years, that clients have started to push more risk onto contractors. This is evident in terms of what is being seen within the industry. Once you start changing conditions and not following through on a set standard. The change becomes the norm. Unfortunately these changes many times affects quality work including SAN standards. This is evident from more and more cases that is being seen within the industry.
Self named contractors
With this issue a new systemic problem has developed (Self named Contractors). Clients opt to go for cheaper quotes totally unaware of the issues that this is going to generate them. Notably after such builds an inspector is brought in. But with the self named builder either pulling a disappearing act. Or the Project Manager leaving the country.
Do not amend the JBCC Contract
There are reasons the JBCC Contract has been drawn in the manner for how it has been drawn up. If a client want to amend the contract. You have the right to refuse to take the work on.
However you also have the opportunity to provide information to that client. This leads the statement towards the question of understanding your legal liabilities and to correctly assist the client to understand the conditions of why the contract has been drawn up in the fist place in the manner it has been drawn up for!
Developers and construction professionals have seen a shrinking market, and rising interest rates, with few viable projects on the map. Therefore as noted contractual risk is being unbalanced by some contractors to keep their workers going in the hope there will be a change with the next tender. This however never seem to happen, because this is evident in the industry.
How this affects can affect other construction disciplines (Ripple effects)
So how does or can this affect the industry. Typically one has to look at the main contractor that is taking on the job and obtaining different sub contractors under them. (Helicopter view - Looking from above) See each discipline as a silo interconnecting on site. With their own issues as described.
The assessment on this includes the following risk outlook but the list is not exhaustive. Worst case scenarios is depicted and showcased with current market trends.
Engineers, not coming onto site not being utilized to their full potential or visiting the site to over inspect on conditions. Not inspecting structural stability conditions.
Quantity Surveyor, not being utilized to their full potential, key part of their role will be to liaise with a range of other teams working on the project, helping it to stay on track.
Electricians the back bone of South Africa (Already plagued by other contractors) attempting to perform their high risk duties and activities. To a certain degree it is known that the electrical industry is a well knit community of respectable trades people however the utilization of respectable trades people is being affected by the main contractors not utilizing the JBCC Contract to to full effect.
Competent plumbers, has realized that by only focusing on client issues they obtain a better turn over. Then there are self named plumbers that is subcontracted in under contract that does not even fully comprehend their own legal liabilities and that might not have the proper commercial credentials in place.
Gas installers. For some their main markets has changed from installations to the supply of LPG Gas. However, the supply of gas as commodity is the akin to that of electrical. Both hazardous to the health and safety of clients and clients own legal liability concerns. The same issues applies. Self named gas contractors entering the market.
Compounding these issues is not just societal pressures, but also different aspects within the South African construction industries.
The spiral needs to stop the sooner the better. Clients should understand the following aspects. Manipulation and bully tactics will lead to proven professionals and contractors to decline tender opportunities or they will hike their prices up. The JBCC Contract is there for a reason. Rather use it smartly.
If these issues are not addressed more contractors will go into liquidation, more project delays will become apparent. Quality issues is already being noticed between experienced and new skills entering into the market.
It is showing, and more and more issues is being noticed throughout South Africa. Experience and knowledge of subject matter experts is being lost and experienced trades people within companies that close is leaving for greener pastures abroad.
Also Read: How to build with SAPAC
Do not change that JBCC Contract
The JBCC Contract (Joint Building Construction Committee) is a fair just contract for all parties involved with it.
JBCC contracts should not even be considered to be amended, but, if amendments are made, they need to be agreed to by both parties, with changes not imposed by the developer or principal agent.
The industry must stand together as a collective on this issue!
Professionals and Contractors should be treated more fairly, this includes the clients as well. Including the different teams that is involved on a project including their employees. This ensures the site operations is fair, honest and transparent with Trust that matters and in place.
Everyone in the construction industry should take a very hard concrete look at the ten to coming fifteen years. The changes is evident and cracks are showing, if we do not band together as a collective the entire industry will fold, and following behind it will be the secondary markets that service professionals and contractors.
The information contained herein reflects the views and opinions of the author(s) or source(s) quoted and does not necessarily represent the official policy or position of any other individual, organization, or entity, including but not limited to SAPAC Partners, its stakeholders, affiliates, or any related parties. This information should not be construed as professional or legal advice.
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