The Gauteng Master Builders Association (GMBA) reports that it has started an initiative to introduce legislation that will protect South African building contractors against late payment and nonpayment.
A Master Builders South Africa (MBSA) task team, led by GMBA executive director Colin de Kock, is currently working towards the establishment of security-of-payment legislation in South Africa.
De Kock says that this follows the GMBA’s successful motion for the promulgation of security-of-payment legislation in South Africa, at the 2009 MBSA congress.
“For many years, the livelihood of main contractors and subcontractors has been threatened by erratic or poor payments for building contracts. Subcontractors are also often subjected to poor payment by main contractors,” he says.
He adds that contractors need to be protected and should have some recourse. “The introduction of such legislation is long overdue and is an unequivocal answer to this challenge,” he says.
Further, De Kock explains that the global economic crisis has had a negative impact on the industry and has led to contractors and subcontractors struggling to receive payments on time.
“In many cases, this has led to GMBA members countrywide, already hampered by the economic downturn, having to shut down their businesses, as smaller companies, such as tilers, plumbers and emerging contractors, cannot survive if they are not paid on time,” he explains.
The proposed legislation aims to provide a quick and inexpen- sive way for contractors to obtain a court order to be paid or to recover money owed to them. It will also provide subcontractors with protection against contractors who fail to meet their commitments. The task team will report back to the MBSA on the progress made regarding the new legislation at the yearly congress, in Windhoek, in September, and hopes that the legislation will be in place in two to three years.
He notes that security-of-payment legislation operates successfully in many overseas countries, including Australia, New Zealand and the UK.
De Kock explains that the task team is currently in the process of developing a structured business case for the legislation, before it can be presented to government.
“We are currently reviewing international legislation pro- cesses and we will extract viable parts from these to assist in compiling a structured document that can be presented to government in the next four to five months,” he adds.
De Kock says that there has been positive response and strong support from members throughout the country.
Meanwhile, De Kock says that tenders for construction work need to be well specified and should clearly and unambiguously state what is included and excluded in the bid.
“A properly specified tender benefits all parties involved in a building contract. The tender is as important as, and forms part of, the building contract,” he says.
He suggests that a check list be used to assess if a tender is adequately specified.
“Any additions or omissions to the contract must be agreed on before execution of the particular work and this must be stipulated in the tender documents, as well as in the contract,” concludes De Kock.