Construction World February 2019

MARKETPLACE

Civil contractor sentiment FALLS TO AN HISTORIC LOW After trending downwards since the beginning of 2017, general building confidence improved marginally from 30 to 34 index points. In contrast to the uptick in confidence, building activity slowed and tendering competition intensified.

I nsufficient demand for building work remained a key constraint. Ntando Skosana, Project Manager for Monitoring and Evaluation at the cidb remarked that, “Despite the improvement in sentiment, the building sector continued to suffer from a shortage of work.” In terms of the performance across grades, Skosana noted that “Building contractors in Grades 3 and 4 continued to struggle due to a further slowdown in building activity which weighed on sentiment.” Indeed, for Grades 3 and 4 confidence fell to a new record low of 26 and the building activity indicator deteriorated to its worst level on record. Although sentiment

among building contractors in Grades 5 and 6 as well as Grades 7 and 8 improved, it remained at depressing levels. In the Western Cape, building confidence has dropped by a cumulative 30 index points over the past two quarters and is now at 26. Skosana noted, “Building contractors in the Western Cape previously outperformed their provincial counterparts, but came under pressure in the third quarter. This continued into this quarter. Discouragingly, the outlook for this province does not look promising, as demand for new building work remains a key constraint.” In the final quarter of 2018, civil engineering contractor confidence improved

to 35 index points, from an all-time low of 27 in the previous quarter. However, Skosana pointed out that “Although there were minor improvements in some of the underlying indicators, it is important to note that the indicator measuring construction activity reached its worst level on record. This suggests that the industry is under pressure.” Sentiment ticked up across all grades. Despite this, confidence remained in negative territory (i.e. below 50) for all the grades. In contrast to the building industry, civil contractors in the Western Cape reported an improvement in confidence to 47, after registering an all-time low of 21 in the previous quarter. 

REQUIRING LEGAL INTERVENTION

The ‘construction mafia’, groups of people calling themselves a business forum and purporting to represent local communities, are plaguing the SA construction industry. MDA, a firm of attorneys specialising in the construction sector, has worked with several clients experiencing this intimidation. By Kelly Stannard, Associate at MDA Attorneys

How they operate The groups typically approach operational construction sites with violent threats and aggressive behaviour. They demand that a large percentage of the jobs on the project are awarded to them and that subcontractors are companies with which they are affiliated. The groups are becoming increasingly violent. Proactive moves by contractors We advise clients to consult with local community representatives on new projects and, as far as possible, to ensure the involvement of local suppliers. Despite doing so, they still experience violent individuals who threaten to burn down their site or even kill their staff should works continue without their demands being met. The agenda seems to have little to do with genuinely representing the local community. "Contractors are forced to shut down their sites for fear of their employees’ lives and destruction of their equipment, plant or the completed works. The police are called, but this only provides a temporary solution

as the group returns the following day. These circumstances leave contractor’s employees in constant limbo as to whether they can return to work or not and cause serious delays to the project, with grave financial consequences for the contractor and the employer. Despite, the construction mafia demonstrating a complete disregard for the law and rights of others, in MDA’s experience, the police will attempt to deal with the situation at the time violent behaviour is displayed but will not enforce any preventative action or make any arrests without a court order. Legal solution to threats and intimidation In several instances, MDA has advised clients to seek an urgent interdict. An interdict is a court order to stop or prevent someone from doing something. It comes into operation the moment it is granted by a court. A person who ignores an interdict can be arrested and committed to prison for contempt of court. An urgent interdict can be

obtained in a matter of days. It is important to act immediately to establish urgency and to ensure that the contractor has the contact details of those to whom they will serve the application. We advise keeping registers at all meetings with the ‘mafia’ leading up to launching the application which includes names and email addresses. An interdict in construction mafia circumstances would order that they may not approach or enter the site, threaten the lives of staff or prevent staff from working and further, that a sheriff must implement this, including employing the police to remove or detain perpetrators. The feedback that we have received from our clients is that the court order has been an effective deterrent despite the groups previously showing a flagrant disregard for the law. Disregarding a court order allows for arrests to be enforced immediately. Although an interdict may not be the best solution in all circumstances, it can work and is definitely worth considering in reducing the intimidating mafia tactics. 

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CONSTRUCTION WORLD FEBRUARY 2019