Page 5 - KZN Business Sense - Vol6 No4 eBook

“CLAIMS CONSCIOUS” CONSTRUCTION,

CONTRACTORS ENGINEERING, LABOUR

AND COMMERCIAL LAW

A DOUBLE-EDGED SWORD PRACTICE

Peter Barnard, Partner, & Claudelle works. Employers typically This can lead to a legitimately Peter Barnard, He also deals extensively
Pretorius, Associate, Construction Law want construction projects to acrimonious relationship Partner with procurement related
Practice, Cox Yeats Attorneys be completed in the shortest between the contractor, issues. He typically represents
possible period and at the least consultant and client. contractors, subcontractors,
Y our company’s Contractors, in turn, aim to reality the procurement model consultants and developers
possible cost.
The underlying issue is in
in the built environment
reputation is crucial.
This is particularly construct at the minimum cost, used. Is the employer to industry, and specialises and
has extensive experience in
and where a project is delayed
blame for accepting a low or
true in the built environment or disrupted by the employer, reasonable bid? Or should the disputes arising out of and
industry, where a contractor’s they then seek fair and contractor take the blame for in connection with the four
reputation is just as important reasonable compensation for deliberately delivering a low main suites of contracts, being
as his track record. the Joint Building Contracts
the additional costs and time tender in the hope that they
Contractors hesitate to enforce incurred. can recoup costs by issuing a Committee (JBCC), New
their contractual rights, fearing Government is typically constant stream of claims? Engineering Contract (NEC),
the stigma of being labelled constrained to award contracts Either way, delivering claims General Conditions of Contract
‘claims conscious’, but their to the bidder that delivered the for every imaginable delay or for Construction Works (GCC)
very job is to ensure a company lowest priced compliant bid disruption will naturally result and International Federation of
makes a profit and as such it is along with the highest B-BBEE in distrust and stigma. Consulting Engineers (FIDIC-
imperative. Instead, more often score. This is referenced as the French acronym).
than not, contractors are so ‘lowest bid scenario’. Being labelled as ‘claims ETER BARNARD Peter is also member of the
concerned about this label that conscious’ can also result in is a Partner at Cox JBCC Drafting Committee. 
rather than enter a ‘paper war’ It cannot be denied that developers in the private sector PYeats within in the
or take a chance at upsetting contractors must be ‘claims seeking to steer clear from Construction, Engineering, T: +27 31 536 8514
the client, they opt to discuss conscious’ to survive in engaging with such contractors Labour and Commercial Law E: pbarnard@coxyeats.co.za
claims ‘informally’ rather than circumstances where the for fear that their budgets may Practice.
officially delivering them. winning bid is based on the be unduly exceeded.
lowest tendered price.
The reality is that claims not A developer is trying to
delivered timeously may see Any contractor who is not maximise his return and Claudelle Pretorius, LAUDELLE PRETORIUS
these ‘informal discussions’ claims conscious in the lowest achieve the best value for Associate is an Associate at
collapse, which in turn often bid scenario is a contractor who money, and generally speaking, CCox Yeats within the
leads to severe financial will go out of business very they will not – or should not Construction, Engineering,
hardship. quickly. This is inevitable as – take issue with paying for Labour and Commercial Law
the margins in this scenario services that are properly due.
In fact, being ‘claims are incredibly tight due to the Practice.
conscious’ is a good thing extent of competition. Any In conclusion, the issue is Claudelle likewise has
as it ensures contractors get delays or mistakes will result not whether the contractor considerable exposure and
everything that they are rightly in the job running at a loss, a has properly documented experience in disputes arising
entitled to. That being said, it is patently non-sustainable model. the reasons for delays and out of and in connection
crucial that claim situations are variations (‘claims conscious’), with the four main suites
handled in a non-adversarial The failure to deliver it is the fact that low profit of contracts. She also has
manner. reasonable claims timeously, or margin situations often result experience in various aspects
indeed at all, is later interpreted in claims that cannot always of Employment Law, with
Whilst delivering formal as inattention or negligence be fully substantiated by the emphasis on individual and
notices and claims may on the part of the contractor. contractor. collective labour law. 
notionally muddy a contractor’s Regardless, if properly drafted
good rapport with the client, and considered, contractual If the claims can, however,
the entitlement to deliver claims can be delivered in be fully and legitimately Tel: +27 31 835 3111
E: cpretorius@coxyeats.co.za
such notices and claims is an a persuasive manner, as substantiated, they should be
intrinsic term of the contract. delivered, and they should be
opposed to a confrontational awarded, regardless of whether
On the flip side, the client’s or adversarial manner – and no or not there will be a label of
ability to impose penalties on negative inferences should be ‘claims conscious’ attached to
the contractor who fails to drawn. the contractor.
complete work timeously is also Secondly, given the lowest
typically part of that agreement. bid scenario discussed above, If contractual notices and
Despite this, employers are not contractors may deliver claims are not delivered
labelled as ‘penalty conscious’. spurious or opportunistic timeously, the contractor
So why is there stigma claims to make up for lost forfeits those claims. It is
patently better to be labelled
attached to contractors who profits. The lower the offer ‘claims conscious’ than to suffer
deliver contractual notices and made, the harder it will fight to a loss. Ultimately, the decision
claims in order to claim what make a profit. Every mistake, lies with the contractor. 
they are contractually entitled clash or opportunity to claim
to? delays and seek additional
compensation will be made. www.coxyeats.co.za
The reason appears to be two-
fold.
Firstly, the word ‘claim’ in
itself captures the adversarial
nature of the construction
industry.
Claims arise due to the
very nature of construction

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