South Africa's construction industry is preparing for change with last week’s release of the General Conditions of Contract (GCC) 2025, which aims to improve how construction projects are managed and disputes are resolved.
Construction law specialists MDA Attorneys say that the new GCC contract from the South African Institution of Civil Engineering (SAICE) brings changes that could catch contractors and employers off guard if they're not properly prepared.
Michelle Kerr, a director of MDA Attorneys, says, "The GCC is widely used in South African construction projects, so these changes are relevant to many players in the industry who choose GCC 2025 as a standard form contract. Some of the new provisions that have been introduced could have serious financial consequences for those who don't understand them."
Kerr unpacks the new GCC 2025 and its potential implications.
Perhaps the most comprehensive changes relate to how disputes are handled. The new system introduces a two-stage claims process, giving contractors more time to prepare detailed claims. However, it also gives stricter deadlines for the employer’s agent to rule on claims, introducing an automatic rejection of claims if responses aren't provided on time by the employer’s agent.
"The dispute process is becoming more structured but also more complex," notes Kerr. "Parties will need to be much more disciplined about meeting deadlines and following procedures."
Another significant new provision means that parties who fail to comply with adjudication decisions will lose their right to challenge those decisions in subsequent proceedings until they've complied. This change is designed to strengthen the enforcement of adjudicator’s decisions.
The grounds for terminating contracts have also been expanded to include failure to comply with an adjudicator’s decision.
The changes reflect lessons learned from recent challenges, including the COVID-19 pandemic, with provisions covering government-declared states of emergency and disaster as valid reasons for project delays.
"These updates show SAICE has been listening to industry feedback and addressing real-world problems," says Kerr. "However, the devil is in the details and will determine how these provisions will work in practice."
With the GCC 2025 expected to become the standard for many new projects, industry players are advised to familiarise themselves with the changes and consider updating their internal processes accordingly.
"The key is preparation," concludes Kerr. "Companies that understand these changes and adapt their procedures will have a significant advantage over those caught unprepared."
