BUSINESS AND TRAINING 11
NS 11.4.1 Give access to the subcontract works to the subcontractor and withhold an amount in payment advices until the total amount withheld is equal to ten per cent( 10 %) of the subcontract sum. The amount withheld shall be reduced at practical completion [ 19.0 ] to two and one half per cent( 2.5 %) of the subcontract sum and to zero per cent( 0 %) in the final payment advice [ 25.9 ] or NS 11.4.2 Terminate this subcontract agreement [ 29.1.1; 29.2 ]” DSA 11.4 Where the Subcontractor fails to provide the specified
Guarantee for Construction the Principal Contractor may:
DSA 11.4.1 Allow the subcontractor to commence work and withhold in interim payment advice statements to the subcontractor an amount until the amount withheld from each payment advice statement is equal to ten per cent( 10 %) of the subcontract sum. The amount withheld shall be reduced at practical completion [ 19.0 ] to two and one half per cent( 2.5 %) of the subcontract sum and to zero per cent( 0 %) in the final payment advice statement [ 25.9 ] or
DSA 11.4.2 Terminate this subcontract agreement [ 29.1.1; 29.2 ] Non-payment of claims using JBCC SfC and SfS: [ P25.14 and N25.13 ]
• SC must give five working days’ notice to PC to comply, failing which the SC may: o Suspend the( SC) works o Exercise the lien;( SC can rarely enforce a lien, only withhold compliance certificate) o Call up the payment guarantee( rarely provided)
Non-payment of claims using GCS o 18GCS-5.11.1 SC, after 14 days’ notice to PC, may suspend the works if PC failed to issue a payment certificate and / or make payment in full of a certified amount o 18GCS-5.11.5 Resume work within seven days of receipt of payment o 18GCS-6.10.6.2 Failure by Employer to pay by due date – PC + SC entitled to( prime overdraft) interest
( Sub) Contractor disputes correctness of the final account using JBCC SfC [ 25.16 ] and SfS: [ 25.15 + 16 ]
• The SC can withhold a Certificate of Compliance until paid in full- generally only applicable to the final payment when the subcontract works is complete and has been commissioned.
The JBCC N / S 2018 and the MBSA DSA 2018 include a similar clause reducing SC rights: NS 24.14:“ Where the employer has not paid the contractor in terms of an issued payment certificate to enable the contractor to meet his obligations the contractor, on presentation of an affidavit to the subcontractor, may defer payment for not more than thirty( 30) calendar days to resolve such non- or part payment.”
D 25.13:“ Where the employer has made a partial or no payment of the amount due in an issued payment certificate, the contractor may, on presentation of an affidavit to the subcontractor within five( 5) working days of the due date for payment to the subcontractor, defer
Unfair payment conditions create frustration.
payment to the subcontractor for not more than thirty( 30) calendar days. Where the principal agent has defaulted on issuing a payment certificate the contractor may, on presentation of an affidavit to the subcontractor within ten( 10) working days of the due date for issue of the payment certificate, defer payment to the subcontractor for not more than thirty( 30) calendar days”.
Note: The Subcontractor’ s contract is with the PC not the employer.
The CIDB Best Practice Guideline # D1( 1012) March 2004 Edition 1 Construction Procurement refers to in § 2.2 unacceptable forms of subcontract are those which contain provisions for:
• payment procedures based on a pay-when-paid, or pay-ifpaid, system
• a right of set-off( contra charges) in favour of the contractor not provided for in the law
• authoritarian rights given to the PC, or agent, with no recourse to independent adjudication in the event of a dispute arising
• a dispute resolution procedure which does not include inexpensive alternative dispute
• resolution( ADR) procedures and makes use only of formal proceedings such as arbitration, or litigation
• unreasonable retention percentages and periods of retention after completion; or
• conditions which are more onerous than those which exist in the principal contract
• 18GCS-6.10.6 Set-off
• 18GCS-6.10.6.1 PC or Employer deduct amount entitled by law on notice
Adjustment of the subcontract value using JBCC SfC [ P 26- ] and SfS: [ NS 26.0 ]
• It has been a JBCC principle that the Principal Agent controls the project finances on behalf of the employer in clauses NS 26.7-11. o
o
18GCS-6.3.1 If EA issues a variation order to the PC, PC must promptly notify SC of the VO 18GCS-6.4.1 PC shall calculate the value of each Subcontract VO o 18GCS-6.5.1 SC paid‘ dayworks’ per the‘ pricing data’
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May 2025 Volume 31 I Number 03 www. plumbingafrica. co. za