Although lockdown has eased from level 5 to level 3, the spread of COVID-19 in South Africa is accelerating, and normal progress of construction contracts is being adversely affected. Contractors and subcontractors are finding it increasingly difficult to meet their obligations not only due to labour disruptions, but also due to the delays in the supply of materials and products, and in some cases increased costs. This is having a significant impact on projects and is resulting in substantial delay claims which need to be processed in accordance with the signed Contract.
The building and construction industry in South Africa generally use one of the four Standard-Form Contracts (SfC) accepted by the Construction Industry Development Board (CIDB) for use by State-owned companies and by all private sector employers1:
FIDIC – French acronym for International Federation of Consulting Engineers, published in Switzerland in English and in French.
GCC – General Conditions of Contract for Construction Works, published in South Africa.
JBCC – The Joint Building Contracts Committee, published in South.
NEC – New Engineering Contract, published in the United Kingdom (also referred to as the Engineering and Construction Contract ECC).
Irrespective of the SfC each will have clauses covering an ‘exceptional event’, ‘extraordinary occurrence’ or ‘force majeure’ which was not reasonably foreseeable. The current global pandemic would fall into one of these categories1. These clauses will provide details on allowable extension of time, adjustment of the contract value, or even termination of agreement in some cases.
Contractors will have to consider whether the identified delay claim will entitle them to simply claim further time for completion, without penalty, or whether they will be entitled to claim their additional costs arising from the delay. This will be dependent on each contract form (SfC) and a careful consideration of any special conditions.2
Employers and contractors alike should closely evaluate their construction contracts to make the best possible decisions regarding their projects and implement strategies to mitigate cost and schedule disruptions as much as possible.
1 South African Building Contracts and the COVID 19 Global Pandemic; https://ecasa.co.za/member-support/south-african-building-contracts-and-the-covid-19-global-pandemic/
2 Covid-19 Lockdown – The impact on Construction Contract Claims; https://www.asaqs.co.za/news/498455/Covid-19-Lockdown–The-impact-on-Construction-Contract-Claims.htm