ECA(SA) CONTRACTUAL COMMITTEE COMMENTS ON THE JBCC CHANGES TO GUARANTEES

ECA(SA) CONTRACTUAL COMMITTEE COMMENTS ON THE JBCC CHANGES TO GUARANTEES

The Joint Building Contracts Committee (JBCC) Drafting Panel asked all the JBCC constituent members for comment on certain changes that they have proposed. Lucas Bowles, Regional Director for the East/South Cape says the ECA (SA) National Contractual Committee considered the views expressed by the JBCC Drafting Panel relating to the JBCC Guarantees and has responded to Uwe Putlitz, CEO of the Joint Building Contracts Committee (JBCC) as follows:

  • The ECA (SA) fully supports the introduction of a new clause in the JBCC contract document to provide for retention monies to be invested in an interest-bearing account, to be administered by FEM, for deposit and release based on a certificate issued by the principal agent.
  • The perception, now firmly established in the minds of principal contractors, is that retention monies belong to them.
  • Specialist subcontractors have, over many years, been prejudiced as a result of this unfair business practice.
  • Millions of Rands must have been forfeited by subcontractors in unpaid interest on retention monies held by principal contractors.
  • The ECA (SA) supports the suggestion to reduce the value of the performance guarantee from 10% to 7,5% of the contract sum, until practical completion.
  • We are also in agreement with suggestions to simplify the manner in which the ‘Variable’ and ‘Fixed’ Guarantees are to be reduced, and with the percentages proposed.
  • We support the idea that Guarantees be released at Final Completion and not as part of the Final Account.
  • Reducing the Guarantee or Retention by 50% at Practical Completion and releasing such monies at Final Completion is following the principle entrenched in the FIDIC, GCC Construction Works and NEC forms of contracts.
  • Historically subcontractors would have had to jump through the Completion and Final Account hoops before even asking for their money and the gatekeepers were the Principal Contractors themselves.
  • It is for this reason that the ECA (SA) welcomes this new approach to an age-old ‘tradition’, which has cost the industry a lot of money and results in frustration on the part of sub-contractors.

We sincerely trust that the changes as proposed by the Drafting Panel would find favour with the other stakeholders in our Industry and look forward to receiving an update on progress made in this regard.

More info: +27 (0)41 363 1990

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