The Joint Building Contracts Committee (“JBCC”), which was formalised in 1997 with the registration of a Non Profit Company, has issued a long awaited revised edition of its standard form contract suite.

INTRODUCTION

The recent Construction Industry Regulatory Board (“CIDB”) regulations, international industry trends as well as critical insights into the shortcomings with the older Series 2000, 2007 edition have necessitated the “reconstruction” of a new standard form.

So what is the JBCC and what are the meaningful difference between the old (series 2000, 2007 edition ) and the new(2014) editions?

“Construction contracts have evolved into standard contract forms, not only because of their advantages of familiarity and the prohibitive cost of customisation but also to provide certainty on the nature of the transaction between parties on a project specific basis; in effect, to minimise transaction costs”[1]

The JBCC committee compiles current contract documentation with 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.

The contract forms are compiled in the interests of standardisation and portray the consensus concerning good practice and an equitable distribution of contractual risk. The primary documentation is supported by a set of standard forms that simplify the administration. [2]

The JBCC Principal Building Agreement … in South Africa is widely used for the procurement of a diverse range of construction projects. It is used by both occasional (inexpert) and expert (repeat build) clients. Its wide acceptance has readily made the document an industry          standard for construction procurement in South Africa.”[3]

The Principal Building Agreement is the cornerstone of the JBCC Suite and is made up of sections starting with the definitions of all the primary elements and phrases.  The next sections are sequenced as closely as possible to the project execution sequence.

Whilst they may in a number of respects look the same, the exercise of comparing the versions is one in which you will learn that the differences are in fact legion. Most of the elements and concepts are similar, but they are located and framed differently in numerous respects. This article seeks to identify but a few of the key changes and is by no means exhaustive.

GENERAL STRUCTURE

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PPRECIABLE DIFFERENCES

The duties of the employer and the contractor are greatly expanded in the new version and more logically sequenced whereas before they had been placed in a variety of provisions throughout the agreement. This centralises key obligations in a more user-friendly format.

The insurance provisions are more streamlined and consolidated.

The security provisions are also more logically formulated and now:

  • specify the substitution of guarantees where these expire (time frames are given);
  • clearly articulate the manner of treatment of advance payment guarantees:

the amount of the JBCC guarantee for Advance Payment may be reduced by the amount repaid by the contractor as certified by the principal agent in payment certificates.  If the advanced payment is not repaid by the date a certificate of practical completion is 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.

Redundant concepts have been removed – for instance, the reference to domestic subcontractors.

Force Majeure has been introduced as a new concept in the JBCC with the circumstances of Force Majeure being removed from “Works Risk” and the introduction of a new clause 8.5.6 of the Agreement which now obliges the contractor to notify the principal agent of any force majeure events.

Completion phases have now been significantly enhanced.

Under the old JBCC the phases of completion were as follows:

  • PRACTICAL COMPLETION – Inspection; certificate issued or list (rinse wash repeat).
  • WORKS COMPLETION – Seven days later: Inspection; certificate issued or list (rinse wash repeat).
  • DEFECTS LIABILITY – 90 days from works completion certification (or deemed works completion).
  • FINAL COMPLETION – Inspection, certificate issued or list (rinse wash repeat).
  • LATENT DEFECTS LIABILITY PERIOD – Starts on day one of construction period and ends five years after final completion is deemed or certified.

Under the new JBCC:

  • No more works completion stage (ie Step 2 is removed): there is reference to “Interim Completion” (18) however this clause has only been retained as it applies in the JBCC N/S Subcontract Agreement and applies for clause matching purposes;
  • Defects liability and final completion have been rolled into one;
  • Instructions may now be given to the contractor by the principle agent during the defects liability period to minimise inconvenience at the end of the defect liability period (21.2).
  • Inspection is to be undertaken by the contractor not less than ten days before the end of the defects liability period and thereafter (instead of at the expiry of the defects liability period) – thereafter begins the process of assessment, lists if any, and the issue of the final completion certificate.

SECTIONAL COMPLETION

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THE ACCOUNTING SIDE

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DISPUTE RESOLUTION

  • If a matter which went to adjudication subsequently goes to arbitration, it is now expressly recorded that the arbitration shall not be construed as a review or appeal from any 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 to enforce pending the outcome of the arbitration). This would entail (if you did not wish the determination to take effect) that a party would have to approach court for an interdict on the implementation of the determination pending the outcome of the arbitration.
  • Mediation is suggested as an alternative form of dispute resolution in both versions, but in the new version, the terms governing the manner and conduct of the referral to mediation, are not prescriptive.

The new CIDB regulations make the adjudication step mandatory in public contracts – this is in line with international practice, so parties cannot, as they had in the past, remove the adjudication provisions in the Contract Data provisions.