Too early to determine causes, financial impacts of M1 bridge collapse – M&R

22nd October 2015

By: Terence Creamer

Creamer Media Editor

  

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Construction group Murray & Roberts (M&R) reported on Thursday that it had applied to the Department of Labour (DoL) to regain access to the site of the M1 bridge-structure collapse and that it was also in discussions with its client, the Johannesburg Development Agency (JDA), on how best to proceed with the R130-million development linking Alexandra to Sandton.

However, CEO Henry Laas stressed that the immediate focus remained on supporting the families of the two individuals who were killed when the support structure failed on October 14, as well as those who were injured. Nineteen victims were hospitalised after the incident, eight of whom were still in hospital as of October 22.

Speaking during a market-update call, Laas said it remained premature to speculate on the possible cause or causes of the collapse, noting the various investigations were currently in progress, including an internal M&R inquiry.

He would also not be drawn on a possible timeframe for the conclusion of the investigations, noting that the DoL was yet to announce whether it would proceed on the basis of a Section 31 or Section 32 inquiry under the Occupational Health and Safety Act. Should it proceed as a Section 32 public inquiry, M&R anticipated that the process would continue over a period of months.

The Engineering Council of South Africa (ECSA) was also conducting its own investigation into whether ECSA-registered professional engineers were involved in the projects and whether they might have been in breach of its code of conduct. Should a breach be confirmed, various sanctions were possible, including deregistration.

Two professional engineers in the civil-engineering discipline had been appointed by ECSA to conduct a preliminary investigation and compile a report for tabling at the council’s October 29 investigation committee meeting.

Laas said the M&R engineers involved in the pedestrian-bridge project remained in the employ of the company and were part of the investigation processes.

The JSE-listed group had been in contact with its insurance brokers and underwriters following the incident and was satisfied that it was “well covered”. But financial director Cobus Bester said it was too early to make a determination as to the full financial impact of the collapse.

“In theory, you pay only the excess, but in practice there are some costs that are not covered by insurance,” Bester said, adding that those additional legal fees would only become visible once the causes of the incident had been determined.

Bester expected to offer better insight into any possible provisions that might need to be raised during the group’s interim results presentation in December.

It was unlikely, however, to be a “black swan event” for the group, as the provisions should be small when compared with recent ones relating to the Gautrain contract or the Gorgon Pioneer material offloading facility, in Australia.

Laas confirmed that M&R had applied for permission from the DoL to access the site so as to remove the collapsed steel structures and store them for investigative purposes. It had also applied to regain access to the broader project site, which covered an area well beyond the M1 highway site.

It had already held discussions with JDA on what other activities could be pursued should the DoL lift its current restrictions governing the project.

“The contract value was R130-million over a two year period. So if we get the go-ahead to start in the next couple of weeks . . . we will most probably end up being four or five months late on the project. We have not agreed with the client what the consequences are – there are obviously limits to liability within the contract so it’s difficult to say what the impact will be,” Bester said.

M&R was not taking any action against Form-Scaff, the company that supplied the support structure, with Laas again stressing the need for the investigation to run its course before any liability could be determined.

Edited by Creamer Media Reporter

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