ASSOCIATIONS
INCORPORATING COLD CHAIN
payment. “If you can’t have a proper
cash flow, you can’t run a company,” said
one contractor. Another said that if they
didn’t have Africa work, they would’ve
been forced to close their doors by now.
This all is making suppliers nervous, which
means equipment is no longer given on
account and the subbies can’t get cover
for it. Which means they have to take out
loans and buy equipment for which they
will only get paid months later…
One of the problems is that the Joint
Building Contracts Committee (JBCC)
contract only favours the main contractor.
This was later refined as the contract
does aim to protect the sub-contractor
but the problem comes in with the
extra addendums they are forced to
sign. “We need to stand our ground as
subbies and not accept changed terms
and addendums,” said one contractor.
“We need to make sure we only sign
the standard JBCC contract. All these
addendums lead to extra costs and
increased risk.”
The challenge is that it costs a lot of
money to take the legal route and take
on large construction companies. Most
sub-contractors can’t afford this. This
is partially due to the fact that they’re
working on such tight margins already.
This ties into the fact that the main
building contractor often goes in lean in
terms of price to get the contract. Then, to
make a profit, they try to recover the costs
by manipulating the sub-contractors and
John Parry getting things started and leading the discussion.
40
www.coldlinkafrica.co.za
adding in extra costs for things like rubble
removal and security. One company even
went so far as to try and split up the whole
electricity bill between the subbies! Then of
course there are all the penalties they try
and catch the subbies on to make that 5%
back that they under-tendered on.
The main culprit seems to be the
quantity surveyors. They are reprinting
old JBCC contracts that are already
out of print and insist on sub-contractors
signing this and other potentially risking
addendums. Because everyone is
desperate for work, they sign these, and
later often get themselves in hot water
when they find themselves unprotected.
But there were general complaints that
everything starts with the top down and
in the end, the subbies sit with all the risk.
Even the consultants are passing the buck
to the contractors who now have to take
responsibility when something goes wrong
on site – even if it was a design flaw and
not an installation flaw.
There was a complaint about younger
engineers not knowing what they are
doing and making mistakes which have
to be absorbed by the contractors.
Never mind the issue with there being
no standard way of measuring a bill of
quantities. There is too short a time to
tender and the consultants does a very
general document which the subbies then
have to complete.
So, what can be done? It seems that
the number one thing is to make sure your
paperwork is in order from day one. Don’t
sign any addendums and cross out new
terms that weren’t in the original tender
document.
There was a suggestion for a training
workshop for contractors to help them
better manage and understand the
paperwork side to help identify what to
look out for and how to mitigate risk.
Someone also suggested that this be
taken up at a higher level with the Master
Builders Association and to also try and
get legislation in place to protect sub-
contractors and to protect them from
being taken advantage of to this extent.
Another good suggestion was that the
money never gets paid to the builder to
pay the sub-contractors in the first place.
At the start of a project, it should rather be
paid into a trust, which then directly pays
the sub-contractors after the project has
been completed.
It was a very interactive and productive
meeting with a lot of great suggestions.
Everyone was very motivated to try and
find a solution or at least a way forward.
The next step is to involve other
industries and get the sub-contractors
to stick together – something which
SARACCA will look into. SARACCA has
also promised to involve a contracts
lawyer and other subject experts to
host a workshop to assist contractors in
protecting themselves.
The industry is taking action! Watch this
space. CLA
COLD LINK AFRICA •
SEPTEMBER 2019