A lack of realism about important components of a building project is often the cause of major disputes and problems in the completion of a contract, says Uwe Putlitz, CEO of the Joint Building Contracts Committee (JBCC).
JBCC is a non-profit company that represents building owners and developers, professional consultants, and general and specialist contractors who all provide input for the compilation of JBCC Agreements (contracts) that portray the consensus view of the committee’s constituent members.
Putlitz says building contracts are often drawn up without allowing for:
Realistic implementation programmes
“This lack of realism could start with the client/developer and, in an economic environment where offers of work are seldom turned down, pie-in-the-sky dreaming filters right down to the most menial sub-contractors,” Putlitz contends.
“Human nature tends to be optimistic when it comes to costing. But you never hear of a contract being completed at a substantially lower cost than budget. It’s usually the other way around – with a vengeance. That’s why building contracts should always have room for a Plan B. Putting out fires and investigating alternatives while a contractor is already on site, only help to add fuel on the budget fire.
“When it comes to implementation, realism is often totally missing when it comes to completion dates. Forty years ago, Sol Kerzner – with his breakneck Sun City project - set the tone in SA for what is now commonly known as ‘fast track construction’. Fast track has become even faster now that contractors are struggling in a heavily competitive building industry, agreeing to time restraints they would have laughed at in the past. The result of unrealistic implementation programmes is simple: disputes – costly ones, at that. I would wager the fast track concept is still being generally applied right now in the Sandton CBD where towering new corporate palaces appear virtually overnight,” Putlitz states.
He says the almost obscene rush to complete building programmes tends to detour past detailed pre-construction studies that would eliminate nasty and expensive ‘surprises’ as the project evolves. “The need for speed could also mean that vital aspects of a project hinge on assumptions, and that essential input from expert consultants on, say, the method of construction for a particular project, as well as equipment to be used, are not even considered. Potential contract scope changes and alternative construction solutions that could rescue a wayward project are conspicuous by their absence when a client demands speed.”
Putlitz believes developers/clients are inclined to approach projects on personal assumptions - or ‘gut feels’ – without realising that it takes a lot of pre-planning and work to make an idea feasible. “The client will almost certainly have to deal with serious contractual disputes if he or she rushes in and overlooks key aspects such as raw materials, transport, involvement of the local community, patent rights, timeous access to critical finance, and the location of a building site. Those are just a few potential problem areas,” he cautions.