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 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
Sadly, from reports in local and
international media, SCs everywhere complain primarily about unfair payment conditions imposed on them
Subcontractor payment‘ Difficulties’ Part 2
by
Uwe Putlitz
Uwe Putlitz helps us unravel the intricacies of subcontractors’ rights and obligations. This is part 2 of a two-part series
Subcontractors( SC), by virtue of their appointment, are‘ subservient’ to the Principal Contractor( PC). The title‘ subcontractor’ is misleading as most SCs render specialised services typically comprising more than 80 % of the value of the works. The SC is an integral member of the PC’ s team and should be treated as such. Sadly, from reports in local and international media, SCs everywhere complain primarily about unfair payment conditions imposed on them, often in conflict with industry best practice and the contractual conditions agreed between the parties.
Ensure you are familiar with and understand the respective rights and obligations in the Standardform Contract( SfC) used to appoint the PC and the Standard-form Subcontract( SfS) used to appoint you as the SC.
After the award of a tender
• Comply with all contractual obligations to timeously give notice( in writing), to submit regular payment claims, submit contractual claims as they arise, and insist on a written( contractor’ s) instruction to implement changes.
• Claims for payment when using JBCC SfC and SfS: [ 25.1- 25.13 ] o SC submits claim to PC by due date
( verified by the relevant consultant, where appointed) o All SC claims are incorporated in the PC’ s claim to Principal Agent( PA) o PA issues a Payment Certificate and Recovery Statement by the due date to the PC and the Employer, and o Concurrently issues a Payment Notification to each NS and SS( of amount paid to PC) o PC issues a Payment Advice and a Subcontract Recovery Statement to each NS and SS o
Employer pays PC within 14 days, PC pays subcontractors within a further 7 days
• The MBSA DSA provides no equivalent payment audit trail
• Claims for payment when using GCS o 18GCS-6.10.1 SC submit monthly claim seven days before PC submits his monthly statement o 18GCS-6.10.4 PC pay SC within seven days of receipt of payment o 18GCS-6.10.9 Within 14 days of Final Approval Certificate submit SC Final Statement(‘ final account’). EA issue to employer within 14 days Final Payment Certificate, to pay < 28 days; o 18GCS-6.10.5 Retention – half paid on SC Certificate of Completion o 18GCS-6.10.5 If no SC defects liability period is specified, pay 100 % in SC Final Approval Certificate o 18GCS-6.11 If variations exceeding 15 %( 6.3 instructed by EA, 10.1 assessed claims, re-measurement, but excluding 6.8 adjustment in rates, provisional sums and prime cost items, daywork charges) results increase / decrease to the subcontract sum( excluding contingencies) the subcontract sum shall be adjusted as agreed between the parties
‘ Retention’ – Both the NSSA and DSA in clause 11 refer to: The term‘ retention’ is not used on its own in the JBCC or the MBSA documents, but is applied as normal practice instead of on failure to provide a Guarantee for Construction- similar wording used:
“ NS 1.4 Where the subcontractor fails to provide the specified guarantee for construction the contractor may:
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