Cold Link Africa September 2019 | Page 40

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