The Master Builders Association (MBA) North says that the ongoing trend of main contractors delaying or defaulting payment of their sub-contractors is a symptom of the deteriorating health of the construction industry.

The association is calling on industry players to enter into a dialogue to address the issue or risk more job losses and bankruptcies.

Real stories

According to Nico Maas of Gauteng Piling, a member of the MBA North, his company has seen a steady increase in non-payment by principal contractors over the past seven years.

“Because of non-payment, my company has lost approximately R9 million in profits and has outstanding debts of R11 million at this point. We’re a small company with 22 permanent employees – our very survival is threatened.”

Yellow Dot Coatings’ Christo van der Merwe adds that while non-payment by principal contractors and clients has increased, the company still has to pay its labourers monthly and its suppliers on 30 days.

Seeking solutions

Both Maas and Van der Merwe believe that a solution could be for project funds to be held in a trust or project-specific account so that they can be quickly released once each project phase is certified complete by an independent third party.

“I also believe that sub-contractors should be preferential creditors when a company is liquidated”, adds Maas.

An industry in trouble

MBA North’s Enwee Human points out, that smaller companies cannot grow their businesses and may even be contracting if they are consistently not paid.

Most unfair of all, the most poorly paid workers are affected most as their jobs are the first to go and they do not have the resources to withstand delayed payments.

“We need to sit down as an industry and work out strategies to solve these challenges. It is to nobody’s benefit if companies, big or large, are hamstrung – the country will not get the infrastructure it needs and we will not create jobs. Our industry is in trouble, and we must take action.”