The Department of Public Works’ draft Prompt Payment regulation has been described as a “lifeline for survival” for the construction industry with the potential to significantly change the dynamic of projects.

The Construction Industry Development Board (CIDB) Prompt Payment Regulations and Adjudication Standard, contained in the draft amendment, proposes changes that would enable a “fair and speedy” resolution of payment disputes and provide contractors with unprecedented legal recourse to demand timely payment for completed work.

A CIDB survey found that 43% of payments to contractors were made more than 30 days after invoicing.

The new proposed Security of Payment regulations prohibits the policy of “pay-when-paid” and the withholding of payment, and allows for the fair suspension of construction activities owing to non-payment.

It also entitles a contractor to charge interest on late payments, and insist on regular payments within a defined time frame, or strictly within 30 days of being invoiced.

The proposed changes also incorporate a mandatory statutory form of adjudication – a “fair, rapid and inexpensive” mechanism.

In essence, parties would under the new legislation be compelled to resolve disputes through adjudication within 28 days, extended by 14 days only in prescribed circumstances.

Calling for the support of the industry

The Master Builders Association North is urging all players in the construction industry to immediately register their strong support for this proposed amendment to current legislation.

Charl Venter, current president of MBA North and director of the Pretoria contracting firm, J.C. Van der Linde & Venter Projects, comments:

“The proposed new legislation is a lifeline for survival, something MBA North has been seeking for almost 16 years. If legislated, the new rulings will have a huge impact on the construction industry in which it has almost become the norm for a contractor to finance projects in the public as well as private sector.

“Hopefully, the new legislation will ensure that local, provincial and national government, as well as private developers’ finances are in place before any construction work is started,” Venter adds

Interested parties have until July 28 this year to comment on the amendment to the Construction Industry Development Board (CIDB) Act 2000, published in the Government Gazette on May 29, 2015.

Comment on the new proposed legislation should be directed to MBA North at email wesley@mbanorth.co.za or directly to the Department of Public Works at gugu.mgwebi@dpw.gov.za before July 28 this year.