Gundo Maswime

CONSTRUCTION
CONTRACT
MANAGEMENT AND
ADMINISTRATION
WHY CONTRACT MANAGEMEMENT?
Financial liability related to future events
Who pays if the project costs more than what is estimated?
How do we deal with the cost of unexpected changes of scope ?
SOLUTION - Standard contracts
 What is a
contract

A contract in law is an agreement entered

into voluntarily, usually by two parties,
each of whom intends to create one or
more legal obligations between them.
 There must be an offer and acceptance
FOR A It must be lawful
CONTRACT TO Legal capacity to contract
BE VALID It must be Understandable
It must be Signed
 Legal Framework for construction contract
management and administration
ACTS OF PARLIAMENT
• Municipal Finance Management Act (MFMA)
• Preferential Procurement Policy Framework Act (PPPFA)
• Public Finance Management Act (PFMA)
• Government Immovable Asset Management Act (GIAMA)
STANDARD CONTRACTS
• General Conditions of Contracts (GCC)
• Joint Building Construction Contracts (JBCC)
• New Engineering Contracts (NEC 3)
Relationship between risk, flexibility and pricing strategy

A carefully prepared
bill of quantities
remains the preferred
pricing option for
major construction
contracts in the public
sector
Latent defects
 CONTRACT
Is it in the IDP – Budget - SDBIP
ADMINISTRATION

The administration Bid Process (PPPFA)

process
Procurement Strategies

Handover process

Project structures -
Public consultation records
Acts and regulations that impact procurement
• The Constitution Section 217 – Equitable, fair, competitive, cost
effective, Transparent, May provide for preferences.
• PFMA – Accounting officers must have an appropriate procurement
system in place
• MFMA – Who must sit in which committee
• Construction Industry Development Board Act –Standard for
Uniformity
 • Scope of work
KEY ELEMENTS • Commencement date
OF GCC part 1 • Due completion date
of 5 • Contract price (Value in JBCC) vs Contract Sum
• “P”s and “G”s now called General Items
• Adverse physical conditions
 ENGINEER
Suspension of works,
Variation orders, Acceleration of work,
Termination of Contract
KEY ELEMENTS
OF GCC part 2
CONTRACTOR
of 5 Execution and completion of works

SUBCONTRACTING
No Subcontracting whole contract
Contractor’s employees
 • Commencement of contract vs commencement of works
(guarantees, retention, bank rating cert, H&S file)
• Access to site
• Float (Time available – Time necessary)
KEY ELEMENTS • Penalties for delay

OF GCC part 3
of 5 CONTRACTOR
Execution and completion of works

SUBCONTRACTING
No Subcontracting whole contract
Contractor’s employees
Acess to site
 • VARIATION ORDERS (exceeding 15%)
KEY ELEMENTS • DAYWORKS
PROVISIONAL SUMS
OF GCC part 4 •
• PRIME COST SUM
of 5 • RATES ADJUSTMENTS
• DEFECT LIABILITY
• RISK
• Risk should e
carried by the by
the party that is
in a position to
best control such
risk.

• Protection of
works
KEY ELEMENTS • Termination of contract
OF GCC part 5 • Dissatisfaction claims
of 5 • Entitlement claims
• Arbitration