BUSINESS AND TRAINING
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• The contract should be an original hardcopy or e-document without alterations ( all alterations must be listed in an appendix ) remembering that the tenderer can object if any changes are unfair , for example , payment may be set at 120 days .
• Some contracts refer to an ‘ extended defects liability period ’ – there is a maximum period of one year on such a liability period .
• Check that non-payment by the employer to the contractor is not passed to the subcontractor . The contract is between the employer and the contractor for delivery of the compete project . The employer is probably aware that subcontractors perform some of the work but has no interest in that contractual relationship . Contractors often argue that the employer has not paid therefore he cannot pay the subcontractor . The subcontractor ’ s contract is with the contractor and that includes the obligation to pay the subcontractor in full by the due date .
• If the employer is an Organ of State or a State-Owned Company , some unique conditions may apply , so this must be carefully checked .
• Ensure that the contract is signed and that you have a complete copy of all contract documents .
• Consider the parties to the contract , the reputation of the employer and the principal contractor and , based on your previous experience in the industry , if there is any likelihood that you may not get paid .
• Take note of any statutory restrictions .
• Guarantees may have to be provided if specified , and are an undertaking by one party to provide money to make good onnon-performance by the other party – typically issued by a bank or an insurance company subject to a pro-rata investment or premium payment .
• Note if a performance guarantee must be provided , as this would incur extra costs .
• Is it necessary to provide an ‘ advance payment guarantee ’ to secure money to pay deposits ( if foreign suppliers are used )?
• What are the chances of the employer or the principal contractor providing a payment guarantee to you ?
• If retention applies , what percentage would apply and when would it be repaid ?
• How likely is it that the retention may never be paid by the contractor ? An escrow account may solve the repayment of retention , but this would result in extra costs .
• Insurances : Are there any insurance obligations relating to the project , which are separate from the insurances required to operate your business ?
Personality issues Are you aware of any persons , obligations , goods , or activities that may cause personality clashes and / or disagreements ? If personality clashes are likely , it is advisable not to tender as another project may be a pleasure to work on and earn a profit .
Dispute resolution Consider any provisions stipulated in the Standard-form Contract that would apply should a disagreement or dispute arise .
Any dispute resolution options should refer to negotiation between the parties . If negotiations are not successful , they should be referred for mediation ; and if that ’ s not successful , this should be referred for adjudication . Avoid arbitration if possible and resist litigation as it can be lengthy and very expensive !
Follow the instructions contained in the Standard-form Contract or the Guarantees if any issues arise . It ’ s always desirable to talk before acting , and if you need to act , you need to have a record of almost everything that has occurred during the lifespan of a contract
With all that said , being a contractor can be a very rewarding career when projects are completed successfully . A project is only complete when the paperwork is done , without spending time and energy on dispute resolution . PA
February 2022 Volume 27 I Number 12 www . plumbingafrica . co . za