CONSTRUCTION & ENGINEERING SEMINAR

13 OCTOBER, 2015

JBCC – OUT WITH THE OLD

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STANDARD FORM CONTRACTS

“Construction contracts have evolved into standard contract forms, not only because of their advantages of familiarity and the prohibitive cost of customisation but also to provide certainty on the nature of the transaction between parties on a project specific basis; in effect, to minimise transaction costs”

Source:CLIENT STRATEGIC OBJECTIVES: THE IMPACT OF CHOICE OF CONSTRUCTION CONTRACT ON PROJECT DELIVERY by PETER RICHARDS, PAUL BOWEN, DAVID ROOT AND AKINTOLA AKINTOYE - Published in Construction Law Journal No. 7 (2005) at page 2

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JBCC

> The Joint Building Contracts Committee, "JBCC”, was formalised in 1997 with the registration of a Non Profit Company.

> The committee concentrates on the compilation of current contract documentation with an equitable distribution of contractual risk in the building industry. The suite is approved by the CIDB (The Construction Industry Development Board) and is used by national and provincial state sectors.

> Regular revisions to the JBCC contract documentation suite ensure that documentation remains current.

From the JBCC website

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JBCC PURPOSE AND USAGE > The standard forms are compiled in the interests of standardisation and

portray the consensus concerning good practice and an equitable distribution of contractual risk.

> The primary documentation is supported by a set of standard forms that simplify the administration.

> The 2014 suite of documents has been submitted to the CIDB for approval for use by most of the State sectors.

Source: JBCC website

“the JBCC Principal Building Agreement (1998) in South Africa is widely used for the procurement of a diverse range of construction projects. It is used by both occasional (inexpert) and expert (repeat build) clients. Its wide acceptance has readily made the document an industry standard for construction procurement in South Africa.”

Source:CLIENT STRATEGIC OBJECTIVES: THE IMPACT OF CHOICE OF CONSTRUCTION CONTRACT ON PROJECT DELIVERY by PETER RICHARDS, PAUL BOWEN, DAVID ROOT AND AKINTOLA AKINTOYE - Published in Construction Law Journal No. 7 (2005) at page 4

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PRINCIPAL BUILDING AGREEMENT (PBA)

> The cornerstone of the JBCC Suite.

> The Agreement is made up of sections starting with the definitions of all the primary elements and phrases.

> The next sections are ordered as closely as possible to the project execution sequence.

> The Agreement is designed to be used with or without bills of quantities and requires the associated Contract Data forms to be completed.

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APPEARANCES CAN BE DECEIVING

> Whilst they may in a number of respects look the same, the exercise of comparing the versions is one in which you will learn that the differences are in fact legion.

> The cards have been shuffled.

> Most of the elements are similar, but they are located differently.

> Consider the terms independently, and then take advice if necessary.

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COMPARATIVE STRUCTURE

2000 (Ed 5 – July 2007)> The Agreement is divided into

seven sections comprising 40 clauses.

> Starting with the definitions of all the primary elements and phrases. The next sections are ordered as closely as possible to the project execution sequence.

> The Agreement is signed between the employer and the contractor - in conjunction with the Contract Data in which all contract variables are recorded.

> The Agreement is designed to be used with or without bills of quantities and requires the associated Contract Data forms to be completed.

2014 (Ed 6.1)> The Agreement is divided into

seven sections comprising 30 clauses – more streamlined.

> Content is structured as a checklist to administer the execution of the works and to minimise potential disagreement.

> The Agreement is signed between the employer and the contractor - in conjunction with the Contract Data in which all contract variables are recorded.

> This edition introduces a single ‘contract data’ to be completed by the principal agent to invite tenders, and to be completed by the contractor as the form of tender / offer.

> The Agreement is suitable for all building contracts and may be used with a Bill of Quantities, or a Schedule of Rates and drawings.

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OLD NEW

OUT

OUT

REFORMULATED

REFORMATTED

REFORMULATED

NEW

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APPRECIABLE DIFFERENCES

> The duties of the employer and the contractor are greatly expanded in the new version and more logically sequenced – not placed in a variety of provisions throughout the agreement as they had been making for a clearer articulation.

> The insurance provisions are more streamlined/consolidated.

> The security provisions are also more logically formulated.

> Redundant concepts removed.

> Completion phases enhanced.

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INDEMNITIES UNDER THE NEW JBCC

More limited and explicit:

Clause 9.2.5 where the employer indemnifies the contractor harmless against claims arising from:

OLD: 9.2.5 the right of the employer to have the works or any part thereof executed at the site;

NEW:9.2.5 proceeding with the works on instructions from the employer without the employer obtaining the required permission under the law in terms of the agreement.

SEE ALSO 9.2.6 where the employer indemnifies the contractor from claims arising from:

“interference of any servitude or other right not depicted in construction information issued to the contractor that is the unavoidable result of the execution of the works including the weakening of or interference with the support of land and property adjacent to or within the site unless resulting from any negligent act or omission by the contractor or his subcontractors. Should such an event occur, the contractor shall forthwith give notice to the principal agent.”

AND NEW 9.2.10 where the employer indemnifies the contractor from claims arising from:

"advance payments certified and paid by the contractors to subcontractors" form part of the employer indemnification.

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WORKS RISK & FORCE MAJEURE> Works risk insofar as the contractor's liability is concerned has effectively been increased under the

new agreement.

> The old JBCC made provision for the contractor not being liable for damages arising from:

> war, whether declared or not, invasion and hostile acts of foreign enemies;

> rebellion, insurrection, revolution, terrorism, military or usurped power or civil war;

> civil commotion, riot, strike, lockout or disorder by persons other than the contractor's personnel and other employees or his subcontractors;

> confiscation, nationalisation or requisition by any public or local authority; and

> sonic shock waves caused by aircraft to other aerial devices and ionising radiation or contamination except where attributable to the contractor's use of such technology.

> The above categories have, however, been incorporated into a new definition for “Force Majeure” which had not hitherto had a place in the old JBCC agreement.

> Clause 8.5.6 of the Agreement now entails the contractor's obligation to notify the principal agent of any force majeure events.

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SECURITY

The provisions relating to security now:

1. specify the substitution of guarantees where these expire (time frames are given);

2. clearly articulate the manner of treatment of advance payment guarantees:

"the amount of the JBCC guarantee for Advance Payment may be reduced by the amount repaid by the contractor as certified by the principal agent in payment certificates. If the advanced payment is not repaid by the date a certificate of practical completion is issued or practical completion is deemed achieved, or by the date of termination by the employer due to contractor default, the entire outstanding amount shall immediately become due and payable."; and

3. Contains a provision at clause 11.10 which specifies the waiver by the contractor of his lien in the event of a guarantee for payment being provided by the employer, whereas before, this had to be specified in the Contract Data.

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SETTING OUT

> Where the contractor has been provided with incorrect setting out information, the contractor is now entitled to revision of the date for practical completion and/or an adjustment of the contract value (clause 13.2.3).

> The contractor is required to immediately suspend affected work to an appropriate extent where undocumented services, natural features, articles of value or relics are uncovered on site and give notice to the principal agent who shall issue a contract instruction on how to proceed with the works. Any relics or other articles found on the site shall remain the property of the employer.

Neither of these provisions were contained in the old agreement.

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SUBCONTRACTORS

THESE REMAIN BROADLY THE SAME

> Nominated Subcontractors: selected by the Principal Agent, the contractor bears contractual responsibility for subcontractor work, no parity of contract between the subcontractor and the Employer unless subcontractor fails due to employer or principal agent breach.

> Selected Subcontractors: selected by the Contractor in consultation with the Principal Agent, otherwise in all other respects similar to subcontractor save that if the subcontractor defaults, the contractor has an election to termination – contractor retains a control/relationship with the subcontractor.

> Direct Contractors: contracting directly with the Employer – no contractual nexus between contractor and direct contractor.

REFERENCE TO DOMESTIC SUBCONTRACTORS HAS BEEN REMOVED.

> In our experience, this was seldom if ever used, - it is unclear what the term “domestic contractor” entailed and why it was even there.

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COMPLETION PHASES IN OLD JBCC

> PRACTICAL COMPLETION

> Inspection; certificate issued or list (rinse wash repeat).

> WORKS COMPLETION

> Seven days later: Inspection; certificate issued or list (rinse wash repeat).

> DEFECTS LIABILITY

> 90 days from works completion certification (or deemed works completion).

> FINAL COMPLETION

> Inspection, certificate issued or list (rinse wash repeat).

> LATENT DEFECTS LIABILITY PERIOD

> Starts on day one of construction period and ends five years after final completion is deemed or certified.

17Source: JBCC Free Form Printing complete guide available on JBCC website

COMPLETION PHASES IN NEW JBCC

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NOTABLE CHANGES IN THE WORKS EXECUTION AND COMPLETION SPACE> No more works completion stage: there is reference to

“Interim Completion” (18) however this clause has only been retained as it applies in the JBCC N/S Subcontract Agreement and applies for clause matching purposes.

> Defects liability and final completion rolled into one.

> Contemplation of instructions to contractor by principle agent during the defects liability period to minimise inconvenience at the end of the defect liability period (21.2).

> Inspection is to be undertaken by the contractor not less than ten days before the end of the defects liability period and thereafter (instead of at the expiry of the defects liability period) – thereafter begins the process of assessment, lists if any, and the issue of the final completion certificate.

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NOTABLE CHANGES IN THE WORKS EXECUTION AND COMPLETION SPACE CONT. The revision of the date for practical completion will not entail an adjustment on contract value in certain circumstances.

NOTE: in the old contract, these circumstances included default of a nominated subcontractor, in circumstances where the contractor had taken reasonable steps to avoid or reduce such delay.

THIS HAS BEEN REMOVED, SO WATCH YOUR NOMINATED SUBCONTRACTORS – THEY CAN COST YOU MONEY WHERE THEY DEFAULT AND YOU ACT REASONABLY.

In the previous version, if a contractor failed to submit a request for a revised completion date within 40 days of the cause of the delay ceasing, the contractor is deemed to have forfeited that claim – in the new version, it must be submitted within 40 days or such reasonably extended period(s) the principal agent might allow – the principal agent in other words has a discretion to admit a late claim.

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SECTIONAL COMPLETION SIGNIFICANTLY SIMPLIFIED> BEFORE

The works as a whole, the following documents had to be issued by the principal agent:

1. Interim payment certificates;

2. Recovery statements;

3. Final account;

4. Final payment certificates; and

5. Certificates of final completion.

And, the following documents had to be issued for each section:

6. A certificate of practical completion;

7. A certificate of works completion; and

8. A certificate of final completion.

> AFTERTerms applying to the works as a whole apply to each section.The principal agent is required to issue:1. A certificate of practical

completion for each section; and

2. A certificate of final completion for each section indicating if it is for the last section to reach final completion.

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THE ACCOUNTING SIDEBEFORE

> Interim payment certificates issued by the principal agent monthly – contractor must assist the principal agent by providing all relevant payment claim documents and information.

> There is a payment certificate required by the day of the month stated in the contract, from inception even if nil or negative.

> Arguable, the value of materials and supplies certified immediately become the property of the employer and can’t be removed without written confirmation from the principal agent – no mention is made of payment.

> Payment due by the employer within 14 days of certification.

> Where no certificate is issued or employer does not pay, contractor had to give three days notice to suspend work.

> For Adjustments to the contract value, you had 40 working days from knowledge of the expense or loss giving rise to the claim to raise a claim for compensation (32.6).

AFTER

> The contractor to assist the principal agent in preparing cash flow statements and payment valuations and produce documents which quantify work done - payment certificates are then issued “regularly” by the principal agent.

> It seems there is no due date for a first certificate required until there is value to pay out.

> Values certified for materials and goods will only become the property of the employer against payment of the amount so certified.

> Payment due by the employer within seven days of certification.

> Where no payment or partial payment on a certified amount, may suspend on five days notice.

> NB - For Adjustments to the contract value, you now only have 20 working days from knowledge of the expense or loss giving rise to the claim to raise a claim for compensation (26.5).

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DISPUTE RESOLUTION

> Contractor can no longer suspend the works where the employer or principal agent fails to give possession of the site – this makes sense – this does however give rise to a ground for termination.

> If a matter which went to adjudication subsequently goes to arbitration, it is now expressly recorded that the arbitration shall not be construed as a review or appeal from any adjudicator’s determination and that any such determination of the adjudicator will remain in force until overturned (which is consistent with International approach which entails your ability to enforce pending the outcome of the arbitration) – this would entail (if you did not wish the determination to take effect) that a party would have to approach court for an interdict on the implementation of the determination pending the outcome of the arbitration.

> Mediation is suggested as an alternative form of dispute resolution in both versions, but in the new version, the terms governing the manner and conduct of the referral to mediation, are not prescriptive.

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GENERAL CONSIDERATIONS

Surprisingly, business rescue is not a concept which appears to come into the ambit of consideration of this template which is quite unusual considering that it can play a major role in business in South Africa these days

THE JBCC is structured such that

> The division of roles and responsibilities between the construction client and the contractor contemplates a strict separation of process between design and specification, and the activities related to construction. The construction client is responsible for the former and the building contractor is accountable for the latter;

Transactional behaviour is regulated by a provision for penalties for delayed/non-performance, and a procedure for the resolution of conflict based on third-party determination.

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> The contract is thus premised on an arms-length adversarial supply relationship whereby one party (aided by his professional advisors) seeks to define the building that is to be delivered) with the other party required to deliver the building so described (in the drawings, specifications and bills of quantities).

> The mechanism for reimbursement requires interim payments to be made to the contractor at regular intervals against actual work progress, irrespective of whether the criteria for overall project success is being fully met or not.

> The employer’s principal agent, who enjoys wide powers of administration under the Agreement, bears no responsibility for process or project outcome under its terms.

> Taken together, one may question whether the wide market acceptance that the Agreement enjoys is at all justified given the clear limit of its applicability.

Source:CLIENT STRATEGIC OBJECTIVES: THE IMPACT OF CHOICE OF CONSTRUCTION CONTRACT ON PROJECT DELIVERY by PETER RICHARDS, PAUL BOWEN, DAVID ROOT AND AKINTOLA AKINTOYE - Published in Construction Law Journal No. 7 (2005) at page 4-5

GENERAL CONSIDERATIONS

THE CONSTRUCTION INDUSTRY DEVELOPMENT BOARD ACT

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CONSTRUCTION INDUSTRY DEVELOPMENT BOARD ACT NO 38 OF 2000> Date of commencement – 1 December 2000

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ESTABLISHES THE CONSTRUCTION INDUSTRY DEVELOPMENT BOARD> Objects of the Board include:

> to determine and establish best practices;

> to promote best practice through certain programmes;

> to promote uniform application of policy wrt construction in all spheres of government;

> to promote and establish uniform standards and ethical standards re construction contracts; and

> to promote standardisation of the procurement process.

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PROMOTES BEST PRACTICE

> In order to promote best practice, the Board must:

> publish best practice standards and guidelines in Government Gazette; and

> establish/maintain register of projects and best practice assessment scheme.

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REGISTER OF CONTRACTORS

> The Board must keep and maintain a register of CONTRACTORS registered with the Board (section 17(1)).

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CRIMINAL OFFENCE

> Contractor may not do construction works for public sector contracts awarded in terms of competitive tender unless he is registered with the Board (section 18(1)).

> Contravention of the aforementioned is a criminal offence and is subject to a fine of up to 10% of the value of the contract (section 18(2)).

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BEST PRACTICE CONTRACTOR RECOGNITION SCHEME> The Board must establish a best practice contractor

recognition scheme which:

> enables organs of state to manage risk; and

> promotes contractor development wrt best practice standards and guidelines.

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REGISTER OF PROJECTS

> The Board must keep a register of projects specifying nature, value and distribution of projects.

> All construction contracts above a certain tender value must be recorded in this register (section 22).

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BEST PRACTICE PROJECT ASSESSMENT SCHEME> The Board must identify best practices and establish a best

practice project assessment scheme.

> Every client engaging in a best practice assessment scheme must pay a prescribed percentage of the contract sum to the Board when awarding contracts (section 23).

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ENFORCEMENT OF CODE OF CONDUCT (SECTION 29)> The Board may convene an inquiry into a breach of the code

of conduct.

> Persons may be subpoenaed to appear at inquiry/produce documentation.

> Board may seize and copy documents.

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WHAT IS THE CIDB

> CIDB is a statutory body appointed in terms of the Construction Industry Development Board Act 38 of 2000 (“the CIDB Act”).

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REGISTER OF CONTRACTORS

> Process and forms – See CIDB website.> Legislative requirements – See section 16 and 18 of the CIDB

Act.> Section 16 – National public sector register which categorize

contractors to facilitate public sector procurement. > Section 18 - A contractor may not undertake, carry out or

complete any construction works or portion thereof for public sector contracts, awarded in terms of competitive tender or quotation, unless he or she is registered with the Board and holds a valid registration certificate issued by the Board.

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PROCEDURE FOR REGISTRATION OF GRADING DESIGNATION 1> CIPC documents.

> Original Tax Clearance Certificate.

> No need for proof of financial capability or record of projects.

> Only authorised to tender for contract R 200 000 or less.

> NOTE – Criticised for allowing “inappropriate entrants” into the market. No checks and balances.

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PROCEDURE FOR REGISTRATION GRADING DESIGNATION 2 TO 9> Documents - CIPC documents; ID copies; work permits; Proof of

Payment; Original Tax Clearance Certificate; Previous Contracts (5 years); Financial statements- Grade 5 and higher; VAT Returns for the past two years for entities who do not have audited financial statements AND are applying for contractor designation 3 or 4; Sponsorships.

> Appropriately qualified person be appointed to evaluate every application - known as Assessor.

> 21 working days to decide on category and to register contractor.

> Assessor may register applicant for lower grading than applied for – contractor may request reasons and seek review.

> Note – Board must determine whether contractor can be classified as “potentially emerging enterprise”.

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EXEMPTIONS

> NHBRC Contractors – if only construction of homes.

> Labour and Supplies only Contractors.

> Private Sector Contractors – if do work only for the private sector.

> Joint Ventures - If all JV partners are registered, JV need not register.

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CLASSES OF CONSTRUCTION WORKS (SCHEDULE 3)> CE - Civil Engineering> EP - Electrical Engineering (infrastructure)> EB - Electrical Engineering (building)> GB - General Building> ME - Mechanical Engineering> SW - Specialist Works – Note subset of designations

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GRADING DESIGNATIONS

> The grading indicate the size of contracts a contractor is capable of undertaking within specified categories of construction works, including contractor’s financial capability.

> Financial Capability -> minimum average bi-annual turnover;> largest construction works contract by value – over five

year period;> Available capital – Net Asset Value plus sponsorships.

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> Works Capability:

> Number of qualified full time personnel;

> Track record in Works capability over five years.

> Contractor may be registered for more than one class of works, but only one grading in respect of particular class.

> CIDB board may verify information and may call for more information.

> All supporting documents to be in English.

> Contractor may apply to amend grading status.

GRADING DESIGNATIONS CONT.

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Contractor Grading Designation Maximum Contract

Value1 R 200 0002 R 500 0003 R 1,500 0004 R 3,000 0005 R 5,000 0006 R 10,000 0007 R 30,000 0008 R 100,000 0009 Unlimited

GRADING CATEGORIES

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FOREIGN ENTERPRISES

> Monetary values are based on the exchange rate in ZAR in respect of latest financial statements AND value of construction works completed on the date of completion.

> VAT or similar taxation to be included.

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POTENTIALLY EMERGING CONTRACTORS> The Act and regulations provides for contractors to be

registered as “potentially emerging enterprise” - an enterprise which is owned, managed and controlled by previously disadvantaged persons.

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EMPLOYER DUTIES

> Provide status report to board of registered projects e.g. practical completion.

> Notify board of any litigation or arbitration within one calendar month.

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SUSPENSION

> Non-payment of arrears in excess of 90 days.

> Failure to submit original tax clearance certificate.

> Contractor may be removed from register.

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PRELIMINARY INVESTIGATION OF COMPLAINT OR SUSPICION (CODE OF CONDUCT)> Code of Conduct applies to all construction related

procurement, namely public and private.

> Any complaint from person aggrieved by action or omission in terms of code of conduct must be investigated.

> Board must investigate if reasonable grounds to suspect that person has acted contrary to or omitted to act in terms of code of conduct.

> Board may hold formal inquiry. Acquittal or conviction on criminal charge not bar to proceedings under Regulations.

> Note: We recommend consultation with legal representatives. Details of code of conduct not covered by this presentation.

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OFFENCES

> Supplies false information to CIDB board to mislead board.

> Fails to comply with these Regulations or register a project.

> Award a construction works contract contrary to these regulations.

> Liability – Fine not exceeding R100,000.

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EMPLOYER OR PRINCIPAL LIABLE

> Employer or Principal will be liable if proven employee or agent’s actions was breach of code of conduct or regulations, unless employer or principal can prove on balance of probabilities that they had no reason to believe that employee or agent failed to discharge their duties. Belief must be reasonable – Test objective.

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POTENTIALLY EMERGING CONTRACTORS> Benefit - May be awarded contracts in higher designation

than that registered in, provided that the employer -

> is satisfied that the enterprise has the potential to develop and qualify to be registered in that higher grade;

> ensures that financial management or other support is provided to that contractor to enable the contractor to successfully execute that contract.

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PROPOSED AMENDMENTS TO REGULATIONS> Proposed amendments have been published for public

comment.

> Amendments would influence contractual freedom.

> Considered to be very beneficial to construction industry.

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PROMPT PAYMENT

> Applies to written and oral contracts in private and public sectors.

> Prohibition - prohibits policy of “paid when paid” - Contract may not provide that payment to contractor, service provider or supplier is conditional on payment from a third party.

> Exclusions – If Payer is under business rescue or insolvent.

> Any person who carried out construction works, supplied goods or services under construction contract is entitled to progress payments.

> If contract silent on regular payment intervals, contractor or supplier may submit monthly invoices in relation to completed works or services or goods delivered. Invoices becomes due and payable within 30 days and attract interest at Reserve Bank repurchase rate, plus 6%.

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NOTICE OF INTENTION TO WITHHOLD PAYMENT > A contracting party may not withhold payment unless –

> notice of intention to withhold payment given;

> there is a reasonable ground, in terms of the contract, on which the withholding is justified.

> Notice must –

> specify amount proposed to withhold;

> specify each ground of withholding;

> be given within five days from date of receipt of invoice.

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NOTICE TO SUSPEND PERFORMANCE

> Contractor may suspend performance when due payment is not paid.

> Right to suspend may only be exercised after notice of intention to suspend given – 7 days notice period.

> Right to suspend cease when payment made.

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PROHIBITION AND VALIDITY OF CONTRACT > Any provision in a contract that seeks to exclude or waive the

regulations will be null and void.

> However, failure to comply with Part IV B (prompt payment) does not render contract invalid.

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ADJUDICATION

> Every contract must provide for adjudication procedure substantially compliant with these regulations. If not or oral agreement then provisions of Part IV C automatically applies.

> Any dispute between the parties must be referred to adjudication.

> Every contract must –

> Enable party to give notice at any time of intention to refer dispute for adjudication.

> Provide for time table to ensure adjudicator appointed within 7 days.

> Require adjudicator to reach decision within 28 days from date of referral. May not extend beyond 42 days even if agreed.

> Enable adjudicator to play inquisitorial role on the facts and the law.

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> Party not satisfied with adjudication may refer the dispute to arbitration in terms of Arbitration Act or take decision on review in terms of PAJA.

> Party must comply with adjudicator decision despite an intention to arbitrate or review the decision.

> Restitution permitted if adjudicator decision overturned.

ADJUDICATION CONT.

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APPOINTMENT OF THE ADJUDICATOR

> Board to accredit an adjudicator nominating body/bodies AND appointment to be made in terms of the Standard for Adjudication.

> Adjudicator is exempted from liability, unless the act or omission is in bad faith.

> Objection to appointment does not render it invalid or any decisions.

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POWERS AND DUTIES OF ADJUDICATOR

> Must act impartially, avoid unnecessary costs and adhere to rules of natural justice.

> Must decide on procedure.

> May – request disclosure of documents; decide the language to be used in proceedings; meet and question parties and their representatives; site visits; appoint experts and issue any directions relating to conduct.

> Parties must comply with any request or direction.

> May if party fails to comply with request or direction - continue with adjudication, draw inferences, apply discretion based on information OR impose financial penalty.

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ADVISOR’S AND CONFIDENTIALITY

> Any party may be assisted by or represented by advisors (legal or otherwise).

> Where oral evidence or representations are considered by adjudicator a party may only have one representative, unless permitted otherwise by adjudicator.

> No document or information may be disclosed if indicated to be confidential.

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DECISION MAKING TIME PERIOD

> Decision to be made within 28 days after referral notice OR such further period – not exceeding 42 days.

> The 42 day limit may only be extended if the parties agree AND where the adjudicator undertakes multiple adjudications under the same contract.

> Failure by adjudicator to make decision within time periods provided, any of the parties may issue new referral notice.

> Immediate compliance with adjudicator decision.

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MANNER IN WHICH ADJUDICATOR MUST MAKE DECISION > Consider all relevant information and provide reasons if

requested by any of the parties.

> Review any decision taken by contracting party, or certificate (unless contract states certificate is final).

> Decide who must pay what and what interest (see above Reserve Bank provision).

> Correct decision to remove clerical error – to be made within five days of main decision.

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EFFECT OF ADJUDICATOR'S DECISION

> Constitutes a liquid document or where adjudicator made order for payment of money it is a liquidated amount of money for purposes of summary judgement.

> Where decision involves amount under Magistrate’s Court monetary jurisdiction (currently R 300k) and not paid within 30 days, the decision is a certificate under section 57 (2) (c) of Magistrate’s Court Act and clerk of court must enter decision as a judgement.

> Warrant of execution may then be applied for.

> NOTE – Regulations do not apply to any contract entered into before commencement date of regulations.

CODE OF CONDUCT, BEST PRACTICES AND STANDARDS

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CODE OF CONDUCT FOR ALL PARTIES (31 OCTOBER 2003)> Applies to the various parties involved in public and private

procurement re a fixed asset, including the agent, contractor, employer, employee, representative, sub-contractor and tenderer. It inter alia entails the following:

> behave equitably, honestly and transparently;

> discharge duties/obligations timeously and with integrity;

> comply with all applicable legislation/regulations;

> satisfy all relevant requirements in procurement documents;

> avoid conflicts of interest; and

> not maliciously or recklessly injure or attempt to injure the reputation of another.

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BEST PRACTICE LABOUR-BASED METHOD AND TECHNOLOGIES FOR EMPLOYMENT INTENSIVE CONSTRUCTION WORKS (11 MARCH 2005)

> Methods for implementing labour-based methods in construction works/projects.

> Labour-based construction methods.

> Labour-based methods for materials manufacture.

> Labour-based construction technologies.

> See Best Practice Guideline 4-1 to 4-9 (see CIDB documents 1022 to 1034)

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CONSTRUCTION PROCUREMENT BEST PRACTICE 2006> See CIDB Library

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STANDARD FOR UNIFORMITY IN CONSTRUCTION PROCUREMENT

> FIDIC Red Book

> FIDIC Yellow Book

> FIDIC Silver Book

> Contract for Supply and Delivery of Goods (CIDB)

> GCC for Construction Works (SAICE)

> JBCC Series Principal Building Agreement

> JBCC Series Minor Works Agreement

> NEC3 Engineering and Construction Short Contract

> NEC3 Engineering and Construction Contract

> NEC3 Professional Services Contract

> NEC3 Term Services Contract

> FIDIC Green Book

> Standard Professional Services Contract (CIDB)

> Supply of Goods (Short Contract) (CIDB)

> General Conditions of Service (CIDB)

This standard references the following:

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BEST PRACTICE: GREEN BUILDING CERTIFICATION (1 APRIL 2011)> Identifies the “Green Star South Africa Office Version 1” as a

best practice to be followed in the design of office buildings.

> Available on http://www.gbcsa.org.za.

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ESTABLISHMENT OF REGISTER OF PROJECTS (21 APRIL 2011)> The Board instructs National and Provincial Departments,

Municipalities and Public Entities delivering infrastructure, to register all construction contracts awarded through a tender process during the 2009/2010 and 2010/2011 financial years.

> The Board may conduct random compliance audits.

> Failure to comply with the above may result in naming and shaming.

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STANDARD FOR INDIRECT TARGETING FOR ENTERPRISE DEVELOPMENT (29 JANUARY 2013)> The contractor must engage “targeted enterprises” in

performance of contract: at least 5% of contract participation goal (CPG) is to be achieved.

> Each targeted enterprise must complete a targeted enterprise declaration affidavit.

> Progress reports detailing interim values of the contract participation goal (CPG) must be tabled.

> Sanctions for non-compliance to be set out in the contract.

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TARGETED ENTERPRISES

> These include:

> a CIDB registered contractor;

> an entity in which the contractor does NOT have an equity holding exceeding 20%;

> an entity which:

> employs at least three permanent employees;

> is 50% more black owned; or

> is 30% or more black women owned.

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STANDARD FOR CONTRACTOR PERFORMANCE REPORTS FOR USE ON CONSTRUCTION WORKS CONTRACTS (GRADES 2 TO 9) (23 AUGUST 2013)> This best practice standard provides for a uniform and

consistent method of assessment of the performance of a contractor wrt certain project parameters.

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BEST PRACTICE CONTRACTOR RECOGNITION SCHEME: BEST PRACTICE: CONSTRUCTION MANAGEMENT SYSTEMS (14 AUGUST 2015)> The Board has identified the following as best practices for

contractor enterprises in grades 5 to 9:

> certifications to:

> SANS ISO 9001 Quality Management System;

> SANS ISO 14001 Environment Management Systems; and

> SANS OHSAS 18001 Occupational Health and Safety Management System;

> certification to SANS 1393 Construction Management System.

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STANDARD FOR DEVELOPING SKILLS THROUGH INFRASTRUCTURE CONTRACTS (23 AUGUST 2013)> This best practice standard for developing skills through

infrastructure contracts standard establishes a minimum contract skills development goal which is to be achieved in the performance of a contract wrt the provision of different types of workplace opportunities linked to work associated with a contract which culminates in or leads to:

> a part or full occupational qualification registered on the NQF;

> a trade qualification leading to a listed trade;

> a national diploma registered on the NQF;

> registration in a professional category by one of the professional bodies listed in the standard.

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BEST PRACTICE RECOGNITION SCHEME: IMPLEMENTATION (25 JUNE 2015)> The Board identifies best practices for:

> competence standard for contractors;

> construction management systems;

> specification for a fraud and corruption management system; and

> standard for contractor performance reports.

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BEST PRACTICE SPECIFICATION FOR A FRAUD AND CORRUPTION AND MANAGEMENT SYSTEM (7 AUGUST 2015)

> The Board identifies certification to BS10500 Specification for an Anti-Bribery Management System (ABMS) as a best practice for Grade 9 enterprises.

COMPETENCE STANDARD FOR CONTRACTORS (7 AUGUST 2015)

> This standard establishes the competencies of a contractor, which need to reside with the owner and/or key nominated representatives of the contractor.

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STANDARD FOR CONTRACTOR PERFORMANCE REPORTS FOR USE ON CONSTRUCTION WORKS CONTRACTS (GRADE 1) (7 AUGUST 2015)

> This best practice standard for contractor performance reports for use on constructions works (Grade 1) provides for a uniform and consistent method of assessment of the performance of a contractor.

THANK YOUJason SmitT: 011 535 8359E: jasonsmit@werksmans.comLegal notice: Nothing in this presentation should be construed as formal legal advice from any lawyer or this firm. Readers are advised to consult professional legal advisors for guidance on legislation which may affect their businesses.

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