Too many building contracts are read only when one or more of the parties involved encounters difficulties. Uwe Putlitz, CEO of the Joint Building Contracts Committee (JBCC), says most of the contractual queries received by JBCC relate to changes to the specified works, the consequent revision of the construction period, partial or late payment, and ultimately, the termination of the contractor’s appointment.
“This, sadly, is usually the time when the building contract is read – for the first time – so that the disadvantaged party can look for a solution to his or her problems. JBCC repeatedly advises its clients that the pre-contract phase of a project, when the employer is about to initiate the project, is the time to ask the really vital questions,” says Uwe.
Some of the points the developer or property-owner must decide on include business decisions such as where to locate a project, bearing in mind aspects such as transport nodes, environmental and other statutory criteria. Making decisions between new or refurbished buildings, the type of buildings, and the methods of construction and operational standards must be clearly defined. The employer must also make sure that sufficient funds are available for the proposed project before a designer is appointed.
“All of these criteria must be captured in project charter or definition or similar document issued under the auspices of an authorised person such as the CEO of the employer organisation or a project manager with delegated authority. Dispute avoidance starts with the initial definition of the project so it must be decided at the outset if a standard building contract or a bespoke agreement – in which all potential risks are clearly defined and apportioned between the contracting parties – should be the contractual document,” concludes Uwe.
For more information, contact the JBCC on Tel: +27 (11) 482 3102 or via www.jbcc.co.za.