SA construction sector to get new payment regulations
The Construction Industry Development Board Prompt Payment Regulations are expected to change the way the South African construction sector carries out its business and will help regulate construction works in both public and private sectors.
The proposed laws appeared in the Government Gazette dated May 29 2015 (in Notice 482 of 2015) inviting public inputs and comment and are expected to be implemented this year. The much awaited regulations come after similar interventions in Singapore, the UK, Hong Kong, Australia, New Zealand and Malaysia. The motive is to address challenges affecting infrastructure development by enabling cash flow to actually flow. Similar international interventions have solved problems relating to non-payment of contractors and subcontractors in the civil engineering and building industries.
The continuous and consistent cash flow during the life cycle of a construction project between the employer and the main contractor, and the main contractor and the subcontractors, is guaranteed under the proposed prompt payment regulations. It introduces a new system of compulsory adjudication as a step in dispute resolution as well as legalising pay when paid clauses, a statutory right to stop works in case of non-payment and a system to manage the withholding of payments due.
Hattingh says delays in payment and disputes that are not handled effectively and expeditiously have a negative effect on the sustainable growth and development of the construction industry.