Mbsa

domestic subcontract agreement january 2008 edition pdf

The following documents for use on different types of building projects are available from us. Complete this form and we shall contact you with all the details. By Brad Boertje, Construction Risk Management Consultant and ADR Practitioner for the Master Builders Association (MBA) North When you use any contract, and especially older versions of
standard-form ones, it pays to be aware of the risks and to know what to look out for. In South Africa, most building contracts use the Joint Building Contracts Committee (JBCC) and Master Builders South Africa (MBSA) standard-form contracts. The bodies that publish these agreements release new editions from time to time. These new editions are
issued to correct inconsistences in the text which tend to emerge only once the agreements are put to use in real life, and to update the provisions to cater for changing market trends and the contracting environment in general. Unfortunately, many contractors and subcontractors continue to use older versions of standard-form agreements, probably
because those are what they have on file. In fact, some of these versions are so old that they can’t even be purchased, and copies of copies have to be used. One example of a subcontract that required updating is the MBSA 2008 domestic subcontract agreement. In this version of the agreement, cash retention is catered for as a form of security by
stipulating that, where a construction guarantee is not in operation, the contractor can “14.7.1 – allow the subcontractor to commence the subcontract works and withhold payment from the subcontractor until the amount withheld is equal in value to ten per cent (10%) of the subcontract sum”. On a strict interpretation of the clause, the
subcontractor is not due any progress payments until such time as more than 10% of the subcontract sum has been certified for payment. This already places a cashflow burden on the subcontractor, but there is a further anomaly in that this version of the agreement does not stipulate how retention is to be released as progress milestones are
achieved. This anomaly was fixed in the 2014 version of the agreement. The updated agreement stipulates that retention reduces to 2.5% of the subcontract sum at practical completion, and gets fully released with the issue of the final subcontract payment advice. This change was carried through into the 2018 version. Using the 2008 version of this
agreement leaves a void – and leads to arguments later – with the subcontractor having no contractual provision to rely on when demanding a reduction or release of retention held by the contractor. Retention is calculated on the subcontract sum and not the subcontract value. It’s vital to understand the difference between the two, and that means
unpicking some jargon. The subcontract sum is derived from the contract sum (or tender/ appointment value), and never varies, while the contract or subcontract value is adjusted to accommodate changes, variation orders and the like. The subcontract value is invariably more than the subcontract sum, and some contractors try to take 10% retention
of the contract value, as it’s the greater of the two – something that subcontractors often do not pick up until it’s too late! In my view, using a guarantee as a form of security makes much more sense because it preserves the subcontractor’s cash and reduces exposure to contingent risks such as the main contractor going into liquidation or business
rescue. My advice is that when using older versions of standard-form agreements, both parties need to agree to certain mandatory amendments to cater for situations such as the one described above. But, if possible, use the latest version. Make sure you use the correct version of the sub-contract agreement The MBSA domestic subcontract
agreement is designed to be used with a specific JBCC principal building agreement (“the PBA”). Whilst a domestic subcontractor cannot dictate what version of the PBA is in operation, it is important to make sure the compatible subcontract agreement is used. The January 2008 MBSA subcontract is compatible with the July 2007 JBCC® PBA. The
March 2014 MBSA subcontract is compatible with the March 2014 JBCC® PBA. The May 2018 MBSA subcontract is compatible with the May 2018 JBCC® PBA. The different versions are not interchangeable. Complete the contract data! More often than not, I find that no attention has been given to the contract data or variables. The standard-form
agreements cannot cater for every eventuality of a construction contract as there are a lot of variables – programme, penalties, insurances etc – which are specific to a particular project. It is therefore absolutely essential that the contract data is accurately and completely populated and agreed. In various editions of the standard-form agreements,
this section is also known as the “Variables” or the “Schedule”. Some versions of the JBCC® agreements have a separate contract document for the contract data. In conclusion, pay attention when signing a subcontract, agree to amendments where necessary, get the contract data fully completed and make sure you are using the correct edition. Page
1 of 14 jbcc March 2014 ACCORDS 1 2 3 4 5 6 7 Manuals available on jbcc 2014 Contract documents of jbccs Synopsis of significant modifications jbcc PBA 2007 2014 Tender Procedure Comment on Special Clauses Contract Data 1 1 2 6 6 6 6 13 1 1. TEXT BOOKS On this date (March 2016) There is only one manual that has been published. It`s jbcc
2014 AND ALL THAT , by JR (Jim) Garner. This book discusses the three agreements published by jbcc (see below) and the MBSA 2014 Domestic Subcontract Agreement . The book contains a clause-by-clause analysis of each of these agreements, a summary of the main changes made by the jbcc 2007 and MBSA 2008 agreements. It contains copies
of the 2014 agreements and contract data documents, advice and comments on possible changes, seventy standard letters to be used with the Main Building Agreement (PBA) and sections on related topics such as the Construction Industry Development Council. 6 The deadline, from the date of certification, was extended from 7 to 14 calendar days
page 4 from 14 31 and 34 N/S 32 and 34 40 25 and 26 N/S 26 and 30. The date of the subcontractor is also 7 calendar days later, but still 7 days after the payment of the contractor. The concept of late interest has been changed to mean an interest rate 6% higher per annum at the fixed interest rate (3% above the policy rate). This change is due to
the fact that the previous regime led to a default rate below the 2012-13 low interest rate policy rate. This has led to late payments, which is the opposite of the objective. The new base ensures that the standard rate remains significantly higher than a premium. The N/S agreement reduced from 90 to 30 calendar days the period at which the
contractor can defer payment to a n/s subcontractor in the event of a late payment by the employer. 5 The provisions relating to the completion of the work were introduced in the 1998 edition and adapted by successive previous editions, but never worked well. Insurance provisions were grouped into a single clause, as were termination clauses. The
request for a completed practical completion list without additional elements will be clarified. The time required by the senior agent for the inspection must be recorded in the contract data. A significant change has been made to the extension clause. In the edition, there is a time bar for the time allowed to declare the intent to declare the right and
with respect to the time allowed for the presentation of the detailed and assessed right. In the edition, the second timeline has been deleted, although an authorized time is indicated for submitting the detailed claim. Another notable change is that the delay of a designated subcontractor has been moved from the category for which an extension of
time, but not the adjustment of the market value, has been deferred to the category that includes the correction of the market value. 3 Instead of the current 40 clauses, there are only 30 clauses left. The non-variation clause is now in the language of the agreement has been adapted to a number of places to give more security. For example, the
program update is now cancelled regularly and not on an ongoing basis, as in the edition, to eliminate any suggestion that the contractor must be present every day in a program update process. Notification provisions have been amended. The most important thing is that the delivery date is now considered, not as in distribution and fax, is no longer
an authorized means of notification. The clause provides that a party`s non-compliance with its rights does not constitute a waiver or influence on that party`s rights. A new provision has been introduced to ensure that the agreement prevails over other contractual documents in the event of a conflict. Standard Forms of ContractMaster Builders
South Africa has developed a number of useful model agreements for a variety of applications. The use of Master Builders South Africa contract documents is not restricted to members of Master Builders Associations and the documents are available to members of the public.There are advantages and disadvantages of using standard form building
contracts. In South Africa, there are several standard form construction contracts developed by the JBCC, Master Builders South Africa and other industry bodies. Below is a summary of benefits of using standard form construction contracts in any construction project, which include the following: Contract terms are generally well understood by
parties involved in the project due to wide use of these standard form of construction contracts in the industry; The cost of contracting is reduced by eliminating the need for custom contracts for individual tenders; Exploitative practices by unscrupulous professionals and clients /employers are reduced; Save time and speeds up the bidding and
contracting process by eliminating the scope for elongated negotiations; Reduces disputes and un/necessary litigation while providing alternati ve dispute resolution mechanisms in the event of a dispute; Easy to use and understand as users become familiar with the terms of standard contracts of the industry; Consistency in contracts means less room
for deviation from the terms set out in the contract. It prevents contractors from making any changes to the contract without informing their clients; Over time, standard form contracts establish a body of case laws that can be referred to by parties in the case of a dispute. This benefits the entire industry. For advice on the appropriate standard form
construction contract for any project and to determine whether a contractor is a member of an Association affiliated to Master Builders South Africa, please contact the local Master Builders Associations. Users of contract documents are advised that, although amendments and alterations are sometimes made to model agreements, such amendments
are not recommended. If amendments or alterations have to be made they should be listed under the relevant clauses in the agreement and should be carefully assessed by all parties, specifically the effect of the amendments or alterations on the rest of the agreement. The following Standard Forms of Contract for use on different types of building
projects are available from any of the Master Builders Associations. House Building & Small Contracts Agreement, March 2005 Edition Suitable for use with or without an Agent Domestic Subcontract Agreement, March 2014 Edition Intended for use in conjunction with the JBCC Principal Building Agreement Edition 6.1 – March 2014 Labour Only
Subcontract, February 2006 Edition Intended for use in cases where the Contractor supplies all materials to the Labour Only Subcontractor Agreement for Renovation and Refurbishment Work to Existing Premises, February 2006 Edition Recommended for use where an existing building is to be repaired, renovated or refurbished
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