SA construction contractors under siege

The construction sector was in steep decline before the Covid-19 lockdown and few businesses have the cash reserves to be sustainable. According to MDA Attorneys, construction and technology law specialist, the most pressing concerns for contractors are surviving the lockdown and navigating the impact of ‘construction mafia’, where work is halted by local business groups demanding work or financial reward.  This emerged in online gatherings hosted by MDA, with over 1000 South African construction sector participants.

Civil construction sites re-opened under level 4 restrictions after a full five-week lockdown, followed by all compliant sites under level 3 restrictions earlier this month. But as activity levels drop, the impact of Covid-19 on the construction sector is devastating.

Clarity under contract

“There are four contract forms recommended by the Construction Industry Development Board (CIDB) for all construction work in South Africa, so the focus was for contractors to be clear on what relief options are available, if any. The online MDA Lockdown Series was oversubscribed,” says Ian Massey, MDA Attorneys consultant.

Taking cost recovery action is crucial for contractors during the Covid-19 where contracts make provision for it. Contractors were advised to submit required notices timeously, keep detailed records and ensure that they are signed off by the relevant responsible person. The speedy submission of certificates for payment was advised.

Work stoppages related to ‘construction mafia’ problems have been widely reported, yet Massey says that the issue is adequately dealt with in only one of the four standard contract forms. “Construction companies have also not fared well under the eyes of the law. Some of the outcomes of matters referred to our courts where civil unrest has affected the work, have not gone well for the contractors. These court precedents are used as arguments against contractors making claims for cost and time,” he says.

Skills development under threat

Skills development and training is one of the casualties of the construction sector’s steady decline over the past few years. Says Massey, “Construction companies are not the large employers they once were and a large portion of construction work is now carried out by labour-only subcontractors. As a result, there is less emphasis on employee development and available training services have become unaffordable for many.”

Massey says that MDA Attorneys has met with various industry representative bodies over the past year to explore viable training alternatives. “Perhaps one unintended positive consequence of the Covid-19 lockdown could be online training that meets the needs of the industry and those of service providers,” he says.

The MDA Lockdown webinars were supported by South African Forum of Civil Engineering Contractors (SAFCEC), the Master Builders Association and South African Institution of Civil Engineering (SAICE).