OUT WITH THE OLD

By Jennifer Smit, Director

LEGAL BRIEF
OCTOBER 2015 The contract forms are compiled in the interests of standardisation
and portray the consensus concerning good practice and
The Joint Building Contracts Committee (“JBCC”), which was an equitable distribution of contractual risk. The primary
formalised in 1997 with the registration of a Non-Profit Company, documentation is supported by a set of standard forms that simplify
has issued a long awaited revised edition of its standard form the administration. 2
contract suite.
The JBCC Principal Building Agreement … in South Africa is widely used
INTRODUCTION for the procurement of a diverse range of construction projects. It is
The recent Construction Industry Regulatory Board (“CIDB”) used by both occasional (inexpert) and expert (repeat build) clients. Its
regulations, international industry trends as well as critical insights wide acceptance has readily made the document an industry standard
into the shortcomings with the older Series 2000, 2007 edition have for construction procurement in South Africa.” 3
necessitated the “reconstruction” of a new standard form.
The Principal Building Agreement is the cornerstone of the JBCC Suite
So what is the JBCC and what are the meaningful difference between and is made up of sections starting with the definitions of all the
the old (series 2000, 2007 edition) and the new(2014) editions? primary elements and phrases. The next sections are sequenced as
closely as possible to the project execution sequence.
“Construction contracts have evolved into standard contract forms,
not only because of their advantages of familiarity and the prohibitive Whilst they may in a number of respects look the same, the exercise
cost of customisation but also to provide certainty on the nature of the of comparing the versions is one in which you will learn that the
transaction between parties on a project specific basis; in effect, to differences are in fact legion. Most of the elements and concepts
minimise transaction costs” 1 are similar, but they are located and framed differently in numerous
respects. This article seeks to identify but a few of the key changes
The JBCC committee compiles current contract documentation with and is by no means exhaustive.
an equitable distribution of contractual risk in the building industry.
The suite, which is regularly revised, is approved by the CIDB and
is used by national and provincial state sectors. The 2014 suite of
documents has recently been submitted to the CIDB for approval.

1. CLIENT STRATEGIC OBJECTIVES: THE IMPACT OF CHOICE OF CONSTRUCTION CONTRACT ON PROJECT

DELIVERY by PETER RICHARDS, PAUL BOWEN, DAVID ROOT AND AKINTOLA AKINTOYE - Published in 2. JBCC website
Construction Law Journal No. 7 (2005) at page 2 3. CLIENT STRATEGIC OBJECTIVES” Supra at page 4
GENERAL STRUCTURE Redundant concepts have been removed - for instance, the reference to
domestic subcontractors.
2000 (ED 5 – JULY 2007) 2014 (ED 6.1)
Force Majeure has been introduced as a new concept in the JBCC with
The Agreement is divided into The Agreement is divided into the circumstances of Force Majeure being removed from “Works Risk”
seven sections comprising 40 seven sections comprising 30 and the introduction of a new clause 8.5.6 of the Agreement which
clauses. clauses – more streamlined. now obliges the contractor to notify the principal agent of any force
majeure events.
Starting with the definitions of Content is structured as
all the primary elements and a checklist to administer Completion phases have now been significantly enhanced.
phrases. The next sections are the execution of the works
ordered as closely as possible to and to minimise potential Under the old JBCC the phases of completion were as follows:
the project execution sequence. disagreement.
> PRACTICAL COMPLETION - Inspection; certificate issued or list
This edition introduces a single (rinse wash repeat).
‘Contract Data’ to be completed
by the principal agent to invite > WORKS COMPLETION - Seven days later: Inspection; certificate
tenders, and to be completed by issued or list (rinse wash repeat).
the contractor as the form of > DEFECTS LIABILITY - 90 days from works completion certification
tender / offer. (or deemed works completion).

> FINAL COMPLETION - Inspection, certificate issued or list (rinse

wash repeat).

> LATENT DEFECTS LIABILITY PERIOD - Starts on day one of

APPRECIABLE DIFFERENCES construction period and ends five years after final completion is
deemed or certified.
The duties of the employer and the contractor are greatly expanded in
the new version and more logically sequenced whereas before they had Under the new JBCC:
been placed in a variety of provisions throughout the agreement. This
centralises key obligations in a more user-friendly format. > No more works completion stage (ie Step 2 is removed): there is
reference to “Interim Completion” (18) however this clause has only
The insurance provisions are more streamlined and consolidated. been retained as it applies in the JBCC N/S Subcontract Agreement
and applies for clause matching purposes;
The security provisions are also more logically formulated and now:
> Defects liability and final completion have been rolled into one;
> specify the substitution of guarantees where these expire (time
frames are given); > Instructions may now be given to the contractor by the principle
agent during the defects liability period to minimise
> clearly articulate the manner of treatment of advance payment
inconvenience at the end of the defect liability period (21.2).
guarantees:
> Inspection is to be undertaken by the contractor not less than
“the amount of the JBCC guarantee for Advance Payment may be
ten days before the end of the defects liability period and
reduced by the amount repaid by the contractor as certified by the
thereafter (instead of at the expiry of the defects liability period) –
principal agent in payment certificates. If the advanced payment
thereafter begins the process of assessment, lists if any, and the issue
is not repaid by the date a certificate of practical completion is
of the final completion certificate.
issued or practical completion is deemed achieved, or by the date
of termination by the employer due to contractor default, the
entire outstanding amount shall immediately become due and
payable.” and

> Contain a provision at clause 11.10 which specifies the waiver by

the contractor of his lien in the event of a guarantee for payment
being provided by the employer, whereas before, this had to be
specified in the Contract Data.
SECTIONAL COMPLETION Once the value of materials Values certified for materials
and supplies is certified, those and goods will only become
goods immediately become the the property of the employer
2000 (ED 5 – JULY 2007) 2014 (ED 6.1) property of the employer and against payment of the
The works as a whole, the Terms applying to the works as may not be removed without amount so certified.
following documents had to be a whole apply to each section. written confirmation from the
issued by the principal agent: principal agent – no mention is
The principal agent is required
made of payment being required.
1. Interim payment certificates; to issue:
Payment due by the employer Payment due by the employer
2. Recovery statements; 1. A certificate of practical within 14 days of certification. within seven days of
completion for each section; certification.
3. Final account; and Where no certificate is issued Where no payment or partial
4. Final payment certificates; or employer does not pay, payment on a certified
2. A certificate of final
and contractor had to give 3 days’ amount, may suspend on 5
completion for each section
notice to suspend work. days’ notice
5. Certificates of final indicating if it is for the
For Adjustments to the contract For Adjustments to the
completion. last section to reach final
value, the contractor had 40 contract value, the contractor
completion.
working days from knowledge now only has 20 working
And, the following documents
of the expense or loss giving rise days from knowledge of the
had to be issued for each
to the claim to raise a claim for expense or loss giving rise to
section:
compensation (32.6). the claim to raise a claim for
1. A certificate of practical compensation (26.5).
completion;

2. A certificate of works DISPUTE RESOLUTION

completion; and
>> If a matter which went to adjudication subsequently goes to
A certificate of final completion. arbitration, it is now expressly recorded that the arbitration
shall not be construed as a review or appeal from any
THE ACCOUNTING SIDE adjudicator’s determination. Any such determination of the
adjudicator will remain in force until overturned (which is
consistent with international approach which entails your ability
2000 (ED 5 – JULY 2007) 2014 (ED 6.1)
to enforce pending the outcome of the arbitration). This would
Interim payment certificates The contractor is required to
entail (if you did not wish the determination to take effect)
issued by the principal agent assist the principal agent in
monthly – contractor must assist preparing cash flow statements that a party would have to approach court for an interdict on the
the principal agent by providing and payment valuations and implementation of the determination pending the outcome of
all relevant payment claim produce documents which the arbitration.
documents and information. quantify work done - payment
certificates are then issued >> Mediation is suggested as an alternative form of dispute resolution
“regularly” by the principal in both versions, but in the new version, the terms governing the
agent. manner and conduct of the referral to mediation, are not
There is a payment certificate It seems there is no due date prescriptive.
required by the day of the month for a first certificate required
>> The new CIDB regulations make the adjudication step mandatory in
stated in the contract, from until there is value to pay out.
inception even if for a nil or public contracts - this is in line with international practice, so
negative amount. parties cannot, as they had in the past, remove the adjudication
provisions in the Contract Data provisions.

Legal notice: Nothing in this publication should be construed as legal advice from any lawyer or this firm. Readers are
advised to consult professional legal advisors for guidance on legislation which may affect their businesses.

© 2015 Werksmans Incorporated trading as Werksmans Attorneys. All rights reserved.

ABOUT THE AUTHOR

JENNIFER SMIT Title: Director

Office: Johannesburg
Direct line: +27 (0)11 535 8447
Email: jasmit@werksmans.com

Jennifer Smit has been with Werksmans Attorneys since 2007. She has wide-ranging experience
in commercial litigation and dispute resolution and is currently a director in the firm’s Insolvency,
Business Rescue & Restructuring practice as well as the Construction & Engineering practice.

Jennifer specialises in liquidations, compromises and business rescue proceedings and has
extensive experience in property disputes, interdicts, leases, sales, general contractual disputes
as well as construction and engineering disputes and advice in relation to the FIDIC and JBCC
contract forms.

Jennifer was awarded a BA LLB from Rhodes University in 2002. Her academic achievements are
extensive and include being on the Dean’s List for Outstanding Academic Achievement for three
years running at Rhodes and being awarded a Georgia Rotary Student Program Scholarship to
study in the United States for a year.

Most recently, Jennifer completed the AIPSA Insolvency diploma course cum laude at the
University of Johannesburg (2011).

Keep us close
The Corporate & Commercial Law Firm
www.werksmans.com
A member of the LEX Africa legal network

ABOUT Established in the early 1900s, Werksmans Attorneys is a leading South African corporate and commercial law
firm serving multinationals, listed companies, financial institutions, entrepreneurs and government.

WERKSMANS Operating in Gauteng and the Western Cape, and connected to an extensive African legal network through
LEX Africa, the firm’s reputation is built on the combined experience of Werksmans and Jan S. de Villiers, which
ATTORNEYS merged in 2009.

LEX Africa was established in 1993 as the first and largest African legal network and offers huge potential for
Werksmans’ clients as it provides a gateway to Africa to companies seeking to do business on the continent.
Each LEX Africa member firm specialises in corporate and commercial law and dispute resolution combined
with intimate knowledge of the local customs, business practices, cultures and languages of each country.

With a formidable track record in mergers and acquisitions, banking and finance, and commercial litigation and
dispute resolution, Werksmans is distinguished by the people, clients and work that it attracts and retains.

Werksmans’ more than 180 lawyers are a powerful team of independent-minded individuals who share a
common service ethos. The firm’s success is built on a solid foundation of insightful and innovative deal
structuring and legal advice, a keen ability to understand business and economic imperatives and a strong focus
on achieving the best legal outcome for clients.