Renewable energy contractual challenges
BUSINESS AND TRAINING
17
By
Uwe Putlitz
The recurring theme in this column has been dispute avoidance because of a breach of a building contract – and this month , I look at how the concepts of ‘ renewable energy ’ and ‘ dispute avoidance ’ meet .
The Occupational Health and Safety Act ( 85 of 1993 ) 2014 , the Construction Regulations ( as revised ) ( CR 2014 ) and to some extent , the 2008 National Building Regulations and Building Standards Act ( 103 of 1977 ) ( as revised ) ( NBR ), require the designer ( be it the architect or the electrical engineer ) to interpret the client ’ s brief ; to consider and evaluate possible design solutions , including the choice of materials and / or assemblies , and how these are made , transported to site , installed and maintained and ultimately disassembled and recycled or safely disposed of . The scenario changes slightly if the project is a new building or an existing structure that may require extensive work to support modern technology .
Risk management It is not unusual for contractors to be appointed on a design , supply and install ( and sometimes maintain ) basis – then coordination with the remainder of the design team is crucial to fully integrate such designs . The designer in this scenario must comply with CR 2014 ( and Part ‘ O ’ of the NBR ) and must be able to provide proof of professional indemnity insurance to the client .
The professional team and the client as employer of the principal contractor and subcontractors must assess the risks to each of the parties as the concept becomes a design that is executed and finally put into operation . Note that the issuing of a Certificate of Compliance for electrical work falls under the Occupational Health and Safety Act ( 85 of 1993 ) Section 7 .
If a subcontractor is appointed to undertake design this must be coordinated with the remainder of the project design by the architect , or the principal consultant ( if appointed ), or the principal agent , or the contract administrator , depending on the title used in the standard-form ( sub ) contracts ( SfC / SfS ).
All standard-form ( sub ) contracts ( SfC / SfS ) include broadly similar requirements to comply with the laws of the country , to execute the specified work within a given time period , and so on , in return for payment of the contract sum in instalments as the work progresses , and to provide for the issue of instructions by the contract administrator dealing with the execution of the works ; and permit the contractors to submit claims for the revision of the date of practical completion and / or the adjustment of the contract value where the conditions to execute the works may have changed .
Another aspect of risk management is the provision of contract works insurance ( CWI ) as well as ‘ supplementary ,’ ‘ removal of lateral support ’ and ‘ public liability ’ insurances as required in all SfCs . The work of subcontractors falls under the CWI . The SfCs in common use differ if the employer or the principal contractor is responsible for insuring the works . Regardless of who insures the project , it is important to confirm that all aspects of the works have been insured .
Renewable energy components A broker experienced in the construction industry insurances should always be consulted to specify the appropriate insurance cover in the tender documents . The insured value may be influenced by the introduction of ‘ renewable energy components ’ ( including the correct installation of photo-voltaic panels to suit the location e . g ., likelihood of condensation , hail , freezing ), with unknown installation and performance characteristics . The industry preferred option is for the employer to be the insured party , who pays the premiums and is the beneficiary of any claim payments . ( Note that most Organs of State require the contractor to insure the works ).
Uwe Putlitz is a registered professional Architect and Construction Project Manager , a Fellow of the Royal Institute of Chartered Surveyors ( RICS ) and is a visiting lecturer at the School of Construction Economics and Management at the University of the Witwatersrand . Having recently retired as the Chief Executive Officer of the Joint Building Contracts Committee ( JBCC ), he specialises in the avoidance of construction disputes by way of lectures , technical articles dealing with aspects of contract administration for various industry publications arising from the use of Standard-form Contracts including the Federation Internationale des Ingenieurs-Conseils ( FIDIC ), the General Conditions of Contract ( GCC ), JBCC or the New Engineering Contract ( NEC ) to find an acceptable settlement without resorting to legal processes , where possible . info @ buildstrat . co . za
The Joint Building Contracts Committee ( JBCC ) and PROCSA ( the professional services agreement – PSC ) state that the contractor , subcontractor , and professional consultants remain liable for their work for five years from the date of final completion ( abuse excluded ) – thus risk management is an important aspect of every project . The PSC also refers to the professional indemnity insurance , the insured value , and the limits of liability in the event of a claim .
The introduction of renewable energy components may result in contractual claims including , inter alia :
○ Delays due to late or incomplete documentation .
○ Instructions on how to deal with ‘ new ’ technology .
○ Delays in delivery of renewable energy components .
○ Difficulties to install renewable energy components – fixing panels to a roof , cables that do not bend easily !
○ Late acceptance of a ( sub ) contractor ’ s design .
August 2022 Volume 28 I Number 6 www . plumbingafrica . co . za