Proposed new construction payment regulations to ease long payment disputes
The Department of Public Works’ new proposed regulations under the Construction Industry Development Board (CIDB) Act 2000 could pave the way for a more affordable and efficient resolution of disputes over nonpayment of contractors and subcontractors in the building and civil engineering industries.
The CIDB Prompt Payment Regulations and Adjudication Standard contained in the draft amendment, proposed necessary changes that would enable a fair resolution of payment disputes and provide contractors with a platform to take a more hardline stance in demanding timely payment for work done.
The new regulations prohibited “pay-when-paid” and withholding of payment clauses, allowed for the fair suspension of construction activities owing to nonpayment, entitled a party to charge interest on late payments and insist on regular payments within a defined time frame or strictly within 30 days of being invoiced.
The proposed changes would also introduce a mandatory statutory form of adjudication, which was a “fair, rapid and inexpensive” mechanism for resolving disputes.
“The new regulations will compel parties to resolve disputes through adjudication within 28 days. Importantly, the 28-day window may only be extended by 14 days in prescribed circumstances,” explained MDA Consulting director and adjudication practitioner Euan Massey.
The withholding of payment often resulted in the contractors financing the projects and delayed payments had a “destructive effect on the sustainable development of the industry; however, the amendments would now provide contractors with a statutory right to suspend work and to charge interest on late payments, MDA Consulting director and adjudication practitioner Vaughan Hattingh added.
A CIDB survey found that out of almost 900 construction projects, 43% of payments to contractors were made more than 30 days after invoicing.
Interested parties had around 60 days to comment on the proposed changes.
Comments
Announcements
What's On
Subscribe to improve your user experience...
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?
Receive 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)
➕
Recieve 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
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation