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July 2016

Industry Buzz

J

BCC, a non-profit company

representing building own-

ers, developers, professional

consultants, general and specialist

contractors, publishes, updates and

promotes standardisation and good

practice in the built environment.

Putlitz says dispute and conflict

on building sites are nothing newbut

tend to increase during difficult trad-

ing conditions, when all the parties

involved are seeking to contain costs

and survive building slumps. The fact

that newand relatively unestablished

sub-contractors are now increasingly

present onbuilding sites canalso lead

tomisunderstandings. He says that in

some cases, the new companies feel

intimidated and this is a recipe for

conflict, which needs to be nipped

in the bud.

“The best way to address a conflict

is at the outset through negotiation

between the participants. Conflict

can be destructive leading various

parties involved in a building project

to develop negative feelings toward

each other, and spend energy on

conflict that could be better applied

to completing a project on time. It

can also deepen differences, and

lead groups into hostile positions.

Yet most cases of conflict that the

JBCC encounters could have been

prevented by timeous preventative

action,” says Putlitz.

Some important guidelines to help

reduce often expensive and time con-

suming claims in building disputes:

Planning

: A pro-active project

manager should anticipate and

avoid potential problems rather

than rectify problems that have

already occurred;

Recognition

: Recognising a poten-

tial dispute timeously may enable

a contractor or employer to time-

ously take action to limit or avoid

a claim or litigation;

Communication

: Parties to an

agreement and their agents must

communicate freely, speedily

and be able to refer to others for

a prompt decision. Employers

should recognise that their rep-

resentatives may be reluctant to

acknowledge a problemto conceal

delays and/or additional costs. The

contractor’s staff may similarly

want toconceal apossibleproblem

from their superiors. Both situa-

tions will lead to confrontation,

especially when the employer is

presented with an unexpected

claim near the end of the project.

Defining the consequences

: The

partiesmust deal with a (potential)

problem as soon as it arises and

reach consensus on the possible

impact, extent, cost and plausible

solutions;

Notification

: If the contractor

identifies a problemhe/she should

immediately notify the employer

or the employer’s representative.

Failure to do so, by either party,

could result in a claim and/or liti-

gation. Each party must provide

factual evidence to substantiate

its position. A late or ill-prepared

claim places both parties in a dif-

ficult position by limiting possible

options and/or resolutions;

Documentation

: Themaintenance

of current and accurate project

records is critical throughout a

project, particularly if a disagree-

ment or a dispute should arise.

Records should clearly show a

logical cause-and-effect relation-

ship between any unanticipated

events and its consequences to

demonstrate the full effect of the

events that occurred;

Contract Documents

: The contract

documents must be fair to both

parties and specific to the project.

Each party to an agreement must

be provided with a copy of the

contract documents. One-sided

contracts promote disputes that

often end in litigation;

Contract Instructions

: The princi-

pal agentmust administer the issue

of contract instructions promptly

in accordance with the provisions

of the agreement, clearly defining

the scope of employer-authorised

additional work or omissions and

the allocation of costs;

Impact of delays

and time and

money claims

: The contractor

must promptly assess the direct

and indirect implications of a

delay/disruption to the project

completion dates and possible

resultant cost implications. The

contractor must also confirm that

resources to undertake additional

work are available without disrup-

tion to the regular scope of work.

The employer must recognise the

contractor’s right to compensation

and fair profit on any additional

work;

Solution

: The parties must co-

operate to determine the most

cost-effective method to deal with

a particular problem, possibly by

alternative solutions for which

neither party should assume total

responsibility.

“Consensus and teamwork remain

integral parts of the process to en-

sure that project risks remain fairly

allocated to both parties,” concludes

Putlitz. For further information about

JBCC go to

www.jbcc.co.za

Conflict

resolution

on site

The earlier a dispute, or potential

dispute, in a building contract is

dealt with the better the chances

of an equitable and prompt

solution, says Uwe Putlitz, CEO

of the Joint Building Contracts

Committee (JBCC).