https://www.engineeringnews.co.za
Building|Business|Construction|Contractor|Flow|Gold|Risk Management|SECURITY|Contracting|Flow
Building|Business|Construction|Contractor|Flow|Gold|Risk Management|SECURITY|Contracting|Flow
building|business|construction|contractor|flow-company|gold|risk-management|security|contracting|flow-industry-term

MBA North warns against unethical contractual practices

14th October 2022

By: Irma Venter

Creamer Media Senior Deputy Editor

     

Font size: - +

The Master Builders Association (MBA) North has issued a practice note for its members aimed at helping them fight back against what it calls unethical contractual practices that have become prevalent in the industry. 

MBA North executive director Mohau Mphomela says the association has noted with concern that a growing number of its members are finding themselves in trouble owing to unethical contractual practices forced on them by some professionals and employers.

“When you start to see contractors and subcontractors who have been in business for decades having to go into business rescue, then it’s clear there is something wrong,” he says.

“We convened a meeting with some of our leading members – contractors and subcontractors – to hear from them what challenges they were facing when it comes to contracts. The practice note is the fruit of that meeting.”

The note provides guidance about best practice when it comes to contracting for both contractors and subcontractors.

Brad Boertje, a construction risk management consultant and alternative dispute resolution practitioner for the MBA North, says that standard industry contracts, such as Joint Building Contracts Committee (JBCC) contracts, are the gold standard and should be followed to the letter. 

These standard contracts should ideally not be amended, but, if amendments are made, they need to be agreed to by both parties and not one-directionally imposed by the developer or principal agent.

It is also vital that contractors and subcontractors take the time to populate the contract with all the relevant data. If a dispute arises later, an incomplete contract could prejudice the contractor, says Boertje.

The contract should be the full and complete record of all parties’ obligations to each other, he adds.

Contractors should not accede to requests to take on out-of-scope work on the promise that they will be “looked after” at a later stage – only to find that the client will not honour that payment. 

The JBCC contracts are necessary because the Common Law does not cater for issues specific to the construction industry, says Boertje.

Another challenge is the issuing of incorrect payment certificates, or the non-issue of payment certificates. 

Boertje cautions that “negative” payment certificates have become common, but they  often do not reflect an accurate certification of the works.

“Contractors often find themselves having to litigate to get their money, which greatly impacts their cash flow.”

Construction or performance guarantees are yet another area where contractors are experiencing issues. 

Boertje points out that contractors have the right to choose the kind of security they wish to offer. 

He advises that construction guarantees are preferred to retentions. In the latter case, if the main contractor runs into business difficulties, the subcontractor may find that his or her retention is at major risk of being released.

“Because business conditions are so tough, contractors and subcontractors often find themselves being forced to condone unethical contractual practices, and then find themselves in trouble,” notes Mphomela.

“Yet they find it hard to fight back for fear of being precluded from future tenders. 

“As an association, the time has come to say enough is enough. We must present a united front to demand adherence to ethical practices – to the benefit of all stakeholders.”

 

Edited by Creamer Media Reporter

Comments

Showroom

Yale Lifting Solutions
Yale Lifting Solutions

Yale Lifting Solutions is a leading supplier of lifting and material handling equipment in Southern Africa. Yale offers a wide range of quality...

VISIT SHOWROOM 
John Thompson
John Thompson

John Thompson, the leader in energy and environmental solutions through value engineering and innovation, provides the following: design, engineer,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Photo of Martin Creamer
On-The-Air (26/04/2024)
26th April 2024 By: Martin Creamer

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.105 0.172s - 160pq - 2rq
Subscribe Now