Housing in Southern Africa July 2016

Industry Buzz

J BCC, a non-profit company representing building own- ers, developers, professional consultants, general and specialist contractors, publishes, updates and promotes standardisation and good practice in the built environment. Putlitz says dispute and conflict on building sites are nothing newbut tend to increase during difficult trad- ing conditions, when all the parties involved are seeking to contain costs and survive building slumps. The fact that newand relatively unestablished sub-contractors are now increasingly present onbuilding sites canalso lead tomisunderstandings. He says that in some cases, the new companies feel intimidated and this is a recipe for conflict, which needs to be nipped in the bud. “The best way to address a conflict is at the outset through negotiation between the participants. Conflict can be destructive leading various parties involved in a building project to develop negative feelings toward each other, and spend energy on conflict that could be better applied to completing a project on time. It can also deepen differences, and lead groups into hostile positions. Yet most cases of conflict that the JBCC encounters could have been prevented by timeous preventative action,” says Putlitz. Some important guidelines to help reduce often expensive and time con- suming claims in building disputes: • Planning : A pro-active project manager should anticipate and avoid potential problems rather than rectify problems that have already occurred; The earlier a dispute, or potential dispute, in a building contract is dealt with the better the chances of an equitable and prompt solution, says Uwe Putlitz, CEO of the Joint Building Contracts Committee (JBCC). Conflict resolution on site

• Recognition : Recognising a poten- tial dispute timeously may enable a contractor or employer to time- ously take action to limit or avoid a claim or litigation; • Communication : Parties to an agreement and their agents must communicate freely, speedily and be able to refer to others for a prompt decision. Employers should recognise that their rep- resentatives may be reluctant to acknowledge a problemto conceal delays and/or additional costs. The contractor’s staff may similarly want toconceal apossibleproblem from their superiors. Both situa- tions will lead to confrontation, especially when the employer is presented with an unexpected claim near the end of the project. • Defining the consequences : The partiesmust deal with a (potential) problem as soon as it arises and reach consensus on the possible impact, extent, cost and plausible solutions; • Notification : If the contractor identifies a problemhe/she should immediately notify the employer or the employer’s representative. Failure to do so, by either party, could result in a claim and/or liti- gation. Each party must provide factual evidence to substantiate its position. A late or ill-prepared claim places both parties in a dif- ficult position by limiting possible options and/or resolutions; • Documentation : Themaintenance of current and accurate project records is critical throughout a project, particularly if a disagree- ment or a dispute should arise. Records should clearly show a logical cause-and-effect relation- ship between any unanticipated

events and its consequences to demonstrate the full effect of the events that occurred; • Contract Documents : The contract documents must be fair to both parties and specific to the project. Each party to an agreement must be provided with a copy of the contract documents. One-sided contracts promote disputes that often end in litigation; • Contract Instructions : The princi- pal agentmust administer the issue of contract instructions promptly in accordance with the provisions of the agreement, clearly defining the scope of employer-authorised additional work or omissions and the allocation of costs; • Impact of delays and time and money claims : The contractor must promptly assess the direct and indirect implications of a delay/disruption to the project completion dates and possible resultant cost implications. The contractor must also confirm that resources to undertake additional work are available without disrup- tion to the regular scope of work. The employer must recognise the contractor’s right to compensation and fair profit on any additional work; • Solution : The parties must co- operate to determine the most cost-effective method to deal with a particular problem, possibly by alternative solutions for which neither party should assume total responsibility. “Consensus and teamwork remain integral parts of the process to en- sure that project risks remain fairly allocated to both parties,” concludes Putlitz. For further information about JBCC go to www.jbcc.co.za ■

July 2016