10 BUSINESS AND TRAINING
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 ), the JBCC or the New Engineering Contract ( NEC ) to find an acceptable settlement without resorting to legal processes , where possible . More info : info @ buildstrat . co . za
The relationship between the subcontractor , the contractor and the employer . Part 2
By
Uwe Putlitz
In the second part , Uwe looks at the scenario regarding appointment of specialist skills ( subcontractor ), the possible problem areas and the innovation by banks titled ESCROW .
Escrow Escrow is a holding account created by a purchaser of a service ( the client or employer in the building construction industry ) and a supplier ( a consultant or a contractor or subcontractor in the building construction industry ) to hold money in a trust until a specified service has been provided or completed , as agreed between the parties when the escrow account is initiated . The bank is then instructed by the purchaser or an authorised agent to release the tender or certified amount by electronic payment into the beneficiary ’ s account – payment is made by EFT at a specified time in the morning and afternoon on business days .
The account is secured on a separate fraud protection platform , earns no interest and attracts a service charge on a sliding scale , paid by either party or shared by agreement .
The service charge is said to be competitive with those charged by commercial providers of guarantees .
Operating an escrow account requires the deposit of a rolling sum of money to suit the anticipated cashflow of a project – thus the service provider is protected , the project is simpler to initiate and administer than payment guarantees , in the event of a claim by permitting almost instantaneous payment .
An interesting scenario Subcontractors are often appointed for their specialist skills – either during the design phase as a nominated subcontractor or afterwards by the principal contractor typically as a selected subcontractor . An interesting scenario arises when the principal contractor submits a claim for revision of the date for practical completion and or an adjustment of the contract value because the “ subcontractor ’ s design was late .
“ Ensure timeous compliance with all statutory regulations .”
Here , several scenarios must be considered :
• It is less likely that this applies to a nominated subcontractor appointed during the design phase .
• A nominated or a selected subcontractor may have been appointed for the design , supply and installation of a trade for which a provisional sum was allowed in the Bill of Quantities
• The professional team or the principal contractor must consider when to call for tenders for such work in accordance with the contractor ’ s execution programme
• When submitting a delay or cost claim , in terms of the current programme the principal contractor must consider the following answers to the questions the principal agent would ask :
○ Was the subcontract tender advertised or due to be awarded : on time , or late ?
○ Was the appointment of the subcontractor : ahead of programme , on time , or late ?
○ When was the subcontractor design due : on time , or late ?
○ When was the subcontractor design received : on time , or late ?
○ When was the subcontractor design accepted : on time , or late ?
○ When was the subcontractor design installed : on time , or late ?
The principal agent must decide :
• If a delay is due to the subcontractor being appointed late but completing the design in the allocated period , or that the principal contractor was late to appoint the subcontractor
• If the subcontractor was appointed on time but submitted the design after the allocated period to delay the works , or was late without delaying the works as a whole
• If the subcontractor was appointed on time and submitted the design timeously , but was prevented from executing or installing his works by the principal contractor being late or by other subcontractors preventing him from executing or installing his works
www . plumbingafrica . co . za @ plumbingonline @ plumbingonline @ PlumbingAfricaOnline October 2023 Volume 29 I Number 8