10 BUSINESS AND TRAINING
Standard form subcontracts – Part 2
by Uwe Putlitz
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 Standardform 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 Parties must
continue to perform their obligations notwithstanding any disagreement or dispute that may exist between them ."
Uwe Putlitz continues his deep dive into standard form subcontracts in the second part of this two-part series .
Last month we began our journey into understanding standard form subcontracts . In the conclusion of this series , we will pick up where we left off and start by taking a look at damages / penalties .
Damages | Penalties : a .
Where the Subcontractor fails to meet the agreed dates for Interim or Practical and Final Completion of the Works as a whole , or a Section thereof , the Contractor may be entitled to recover damages . b . The subcontractor may : I . if delayed by the PCr and other subcontractors ,
II . recover damages from all other contractors ; be liable to the PCr for damages where the ( revised ) date for Interim or Practical Completion of the Subcontract works as a whole , or a Section thereof , is not achieved .
Note : Only JBCC contracts differentiate between ‘ Penalties ’ applicable in the relationship between the Employer and the PCr and ( proven ) ‘ damages ’ in the relationship between the Contractor and the Subcontractor . The Subcontractor may recover ( proven ) damages from the PCr and / or other subcontractors who have caused delay or damage and expense to the Subcontractor .
Note : FIDIC contracts refer to ‘ delay damages ’ = per day not exceeding the amount stated in the CD .
Note : GCC contracts refer to ‘ penalty for delay ’ = per day not exceeding the amount stated in the CD . Note : NEC contracts refer to ‘ damages ’= per day
Payment a . not exceeding the amount stated in the CD .
Payment criteria should be recorded in the Contract Data of all SfS – defining the interval and / or the due dates for payment b .
c .
d .
e . applicable until the final payment is made . Some SfS provide a Payment Certificate proforma , others list ‘ items ’ to be included in a Payment Certificate ; The various SfC refers to the payment of Subcontractors by the PCr within a defined period subject to satisfactory performance and the submission of a substantiated claim by the due date i . t . o . the SfS ; The PCr must timeously coordinate the payment claims from all Subcontractors and submit these with his regular claim to the CA / PA for payment by the Employer by the date stipulated in the SfC ; The PCr must make payment to all Subcontractors ( and suppliers ) within the period stipulated in the SfC . Failure to do so is a breach of the SfS ; The Subcontractor is entitled to interest ( at the rate recorded in the SfC-CD or SfS-CD ) on the outstanding balance from the due date for payment until the actual date of payment .
If JBCC SfC is used : a . the CA / PA must issue a ‘ recovery statement ’ to the PCr with every Payment Certificate showing set-off transactions between the Parties ; b . the PA must issue a ‘ payment notification ’
c . to each Subcontractor with every Payment Certificate to record the amount included for the Subcontractor in the current Payment Certificate due to the PCr ; the PCr must with every ‘ Payment Advice ’ issue a ‘ Subcontract Recovery Statement ’ to each Subcontractor showing set-off transactions between the Parties ; [ JBCC terminology ]. Note : Subcontractors - JBCC terminology : 1 . the amount in a ‘ Payment Notification ’ and a ‘ Payment Advice ’ may differ , shown in the ‘ Subcontract Recovery Statement ’ “ with reasons ”;
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