Small contractors face biggest risks

The Master Builders Association (MBA) North has warned that contractors – particularly small and mid-sized ones – face growing business risk when embarking on new projects due to issues such as contracts that are heavily amended to favour large contractors and delayed payment or non-payment.

Mohau Mphomela, the executive director of MBA North, said contractors risk ruin due to contract fine print.

“JBCC [Joint Building Contracts Committee] and Master Builders contracts are designed to create a fair and standardised business environment, and to ensure that all parties are protected. Unauthorised amendments to these documents, especially payment clauses, should be immediately flagged and reported to the Master Builder Regional Associations, ASAQS and SAPOA,” he said.

Wanda Merrington, the director at medium-sized subcontractor Combined Flooring, says efforts have been made over the years to make the environment fairer for small and medium-sized subcontractors, but that there are still serious challenges facing them.

“The small subcontractor, in particular, may not have the cash flow and resources to wait months for payment by the main contractor, or have the cash to take legal action in the event of non-payment or a dispute,” Merrington said.

“In many cases, they don’t receive subcontracts documents, or they receive contracts with many amendments. They don’t challenge the exclusions and clauses that have been altered because they may need the work.

“They may also not keep themselves up to date with the contract data and extensions of time on completion dates and lose out on timeous cash flow as a result.”

A major contractor, who prefers not to be named, said: “Although there are many unscrupulous contractors out there implementing many unethical practices, I can only talk from our position, which I believe to be a balanced view.

“Unfortunately, we are in an environment where all these restrictions are being imposed onto main contractors from tender stage, clients are imposing 45 to 60-day payment terms.”

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