guide to completion, valuation, certification and payment · pdf fileexplanatory notes and...

GUIDE TO COMPLETION, VALUATION, CERTIFICATION AND PAYMENT

EXPLANATORY NOTES AND INSTRUCTIONS !Introduction !This composite and updated guide includes earlier publications by the JBCC® as a desktop reference manual for consultants and contractors alike. This guide seeks to simplify the tendering for and the administration of building agreements and to avoid/minimise disagreements arising from poor contract administration - in the interests of standardisation of documentation and good practice in the building industry.

The JBCC® accepts no liability for loss, damage or expense incurred as a result of information provided in good faith in this guide

How this document is structured

Definitions: This is a composite collection of definitions used in the three JBCC® Agreements. There may be minor variations in some definitions as the wording, for example, in the Principal Building Agreement may not totally match that in the Minor Works Agreement albeit the intent is the same

Contract Data: The 2014 edition of JBCC® Agreements introduced a single ‘contract data’ to be completed by the principal agent to invite tenders, and to be completed by the contractor as the form of tender / offer

Completed ‘contract data for the Principal Building Agreement, (similar for the N/S Subcontract Agreement and the Minor Works Agreement) are included to illustrate how these forms must be used

Completed ‘agreement’ form on appointment of a (sub)contractor = the last page of each of the agreements, signed by the parties as a record of the project data for the Principal Building Agreement, (similar for the N/S Subcontract Agreement and the Minor Works Agreement)

Completed ‘waiver of the contractor’s lien’ and ‘certificate of site possession” forms follow

The ‘completion’ process is described in five stages with completed certificates of interim, practical and final completion of the works as a whole or in sections. The concept of ‘latent liability’ of the contractor is explained in detail

Aspects of the ‘payment’ process are described in notes and illustrated with completed payment and related certificates supplemented by the calculation of interest and the administration of the various ‘securities’ !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

©JBCC® Guide to Completion, Valuation, Certification and Payment - Edition 6.1, March 2014

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1. DEFINITIONS !Only key definitions used in JBCC® agreements are repeated for ease of reference; - there may be minor differences in wording !A word or phrase in bold type in a JBCC® Agreement or this Guide shall have the meaning assigned to it in these definitions. A word or phrase not in bold type shall be interpreted in the context of its usage !

Numbers, generally preceded by “in terms of”, indicate references to clause numbers [0.0] in that document Headings of clauses are for reference purposes only and shall not be used in the interpretation of such clauses

ADJUSTMENT AMOUNT: The amount calculated in terms of the applicable adjustment formula using the tax exclusive method – applicable in the CPAP guide !

AGENT: The entity dealing with specific aspects of the works appointed by the employer or delegated by the principal agent

AGREEMENT: The JBCC® Principal Building Agreement, the JBCC® Nominated/Selected Subcontract Agreement or the JBCC® Minor Works Agreement and the respective completed JBCC® contract data, or the corresponding JBCC® Public Sector Agreements and the respective completed JBCC® contract data !BASE MONTH: The calendar month during which tenders closed – applicable in the CPAP guide !BILLS OF QUANTITIES: The document drawn up in accordance with the measuring system [CD]

BUDGETARY ALLOWANCE: An amount included in the contract sum for work intended for execution by the contractor, the extent of which is identified but not detailed !

BUDGETARY ALLOWANCE: An amount included in the n/s subcontract sum for work intended for execution by the subcontractor the extent of which is identified but not detailed !CALENDAR DAYS: Twenty four (24) hour days commencing at midnight (00:00) which include Saturdays, Sundays, proclaimed public holidays and recorded annual builders’ holiday periods [CD] !CERTIFICATE of FINAL COMPLETION: A certificate issued by the principal agent to the contractor with a copy to the employer stating the date on which final completion of the works, or of a section thereof, was achieved !CERTIFICATE of INTERIM COMPLETION: A certificate issued by the contractor to the subcontractor stating the date on which interim completion of the n/s subcontract works, or a section thereof, was achieved !CERTIFICATE of PRACTICAL COMPLETION: A certificate issued by the principal agent to the contractor with a copy to the employer stating the date on which practical completion of the works, or of a section thereof, was achieved !CONSTRUCTION EQUIPMENT: Equipment and/or plant provided by or belonging to the contractor and/or the subcontractor used during the construction period !CONSTRUCTION INFORMATION: All information issued by the principal agent and/or agents including the contract documents, specifications, drawings, schedules, notices and contract instructions required for the execution of the works !CONSTRUCTION PERIOD: The period commencing on the intended date [CD] of possession of the site by the contractor and ending on the date of practical completion (Private Sector Agreement only) !CONSTRUCTION PERIOD: The period commencing on the date of the letter of appointment to the contractor and ending on the date of practical completion (Public Sector Agreement only) !CONTRACT DATA: The document listing the contract variables ![CD]: The notation used where project specific information is recorded in the contract data !CONTRACT DOCUMENTS: This agreement, the contract drawings, the priced document and other identified documents [CD] !CONTRACT DRAWINGS: The drawings listed on which the accepted tender or the negotiated amount was based [CD] !

CONTRACT INSTRUCTION: A written instruction issued by or under the authority of the principal agent to the contractor, which may include drawings and other construction information

CONTRACT MINUTES: A comprehensive set of minutes prepared by the principal agent in which all pertinent

contractual information that arises at meetings is progressively recorded (defined in MWA, applicable to all agreements)


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CONTRACT PRICE ADJUSTMENT: Provision used for the adjustment of the contract value [CD] (using information published monthly by Statistics South Africa) !CONTRACT SUM: The accepted tender amount, inclusive of tax, that is not subject to adjustment [CD] !CONTRACT VALUE: A monetary value initially equal to the contract sum that is subject to adjustment in terms of the agreement

CONTRACTOR: The party [CD] contracting with the employer for the execution of the works (PBA + MWA only)

CONTRACTOR: The party contracting with the subcontractor for the execution of n/s subcontract works [CD] (NSSA only) !CONTRACTUAL DATE FOR COMPLETION: The actual date for practical completion of the works or any revision of the initial contractual date for practical completion in terms of the agreement, whichever occurs first, provided that if no revision is granted, it shall mean the initial contractual completion date (used in CPAP guide) !CPAP: The Contract Price Adjustment Provisions used for the adjustment of fluctuations in the cost of labour, plant, materials and goods that are required to construct the works (used in CPAP guide) !DAMAGES: Proven financial loss claimed or awarded to compensate the contractor where the subcontractor has not completed the subcontract works in accordance with the contract documents !DEFECT: Any aspect of materials and workmanship forming part of the works that does not conform to the contract documents !DEFECT: Any aspect of materials and workmanship forming part of the n/s subcontract works that does not conform to the n/s subcontract documents !DIRECT CONTRACTOR: An entity appointed under separate agreement by the employer to do work on site prior to practical completion [CD] !

EMPLOYER: The party [CD] contracting with the contractor for the execution of the works !FINAL ACCOUNT: The document prepared by the principal agent that reflects the final contract value of the works at final completion or termination !FINAL COMPLETION: The stage of completion of the works as certified by the principal agent as being free of defects !FINAL PAYMENT CERTIFICATE: The certificate issued by the principal agent after the issue of the certificate of final completion after the final account has been agreed, or deemed to have been agreed !FORCE MAJEURE: An exceptional event or circumstance that: !(a) could not have been reasonably foreseen (b) is beyond the control of the parties, and (c) could not reasonably have been avoided or overcome !Such an event may include but is not limited to:

• Acts of war (declared or not), invasion, and hostile acts of foreign enemies • Insurrection, rebellion, revolution, military or usurped power, war (whether declared or not), terrorism • Civil commotion, disorder, riots, strike, lockout by persons other than the contractor’s employees or his

subcontractors • Sonic shock waves caused by aircraft or other aerial devices, and ionising or radioactive contamination • Explosive materials, except where attributable to the contractor’s use of such technology • Natural catastrophes including earthquakes, floods, hurricanes, or volcanic activity !

FREE ISSUE: Materials and goods provided at no cost to the contractor and/or the subcontractor by the employer for inclusion in the works whether stored on or off the site or in transit [CD] !GUARANTEE for ADVANCE PAYMENT: A security in terms of the JBCC® Security for Advance Payment form obtained by the contractor from an institution approved by the employer [CD] !GUARANTEE for DEPOSIT: A security in terms of the JBCC® Security for Deposit form obtained by the contractor from an institution approved by the employer [CD] (used in the MWA only) !GUARANTEE for CONSTRUCTION: A security in terms of the JBCC® Security for Construction form obtained by the contractor from an institution approved by the employer [CD] !GUARANTEE for PAYMENT: A security in terms of the JBCC® Security for Payment form obtained by the employer from an institution approved by the contractor [CD]


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INDEX: A work group index published in a Stats SA Statistical Release P0151 or any index calculated from a selected set of sub-indices (used in the CPAP guide) !INTEREST: The bank rate applicable from time to time to registered banks borrowing money from the Central or Reserve Bank of the country [CD]. The ruling bank rate on the first calendar day of each month shall be used in calculating the interest due for such month (Private Sector Agreements) !Or … !INTEREST: The interest rate in terms of legislation applicable to organs of state (Public Sector Agreements) !INTERIM COMPLETION: The state of completion where the n/s subcontract works, or a section thereof, is substantially complete as certified by the contractor (JBCC® Nominated/Selected Subcontract Agreement) !

JBCC®: The Joint Building Contracts Committee® NPC !LATENT DEFECT: A defect that a reasonable inspection of the (n/s subcontract) works by the principal agent and/or agents would not have revealed !

LAW: The law of the country [CD] !LIST for COMPLETION: A list issued by the principal agent where practical completion has been certified, listing defects and/or outstanding work to be completed !LIST for FINAL COMPLETION: An updated list for completion issued by the principal agent after the inspection of the works for final completion, where final completion has not been achieved, listing defects and/or outstanding work to be completed to achieve final completion

LIST for INTERIM COMPLETION: A list issued by the contractor after the inspection of the n/s subcontract

works for interim completion, where interim completion has not been certified, listing outstanding work and/or defects to be completed to achieve interim completion (JBCC® Nominated/Selected Subcontract Agreement)

LIST for PRACTICAL COMPLETION: A comprehensive and conclusive list issued by the principal agent after

the inspection of the works for practical completion, where practical completion has not been achieved, listing the defects and/or outstanding work to be completed to achieve practical completion !MATERIALS AND GOODS: Unfixed materials, goods and/or items fabricated for inclusion in the works whether stored on or off the site or in transit !MORA INTEREST: The rate of interest payable prescribed in law from time to time [CD] where performance, which is due and enforceable, has not been paid on or before a determined date !NOTICE: A communication issued by either party, the principal agent and/or agents to the other party or any agent to, inter alia, record an event, request for outstanding information and/or where suspension and/or resumption of the (n/s subcontract) works, or termination of the agreement is contemplated !N/S SUBCONTRACT AGREEMENT: The JBCC® Nominated/Selected Subcontract Agreement and the completed JBCC® contract data, between the contractor and the subcontractor used in conjunction with the JBCC® Principal Building Agreement ! N/S SUBCONTRACT BILLS OF QUANTITIES: The document drawn up in accordance with the measuring system [CD] showing the make-up of the n/s subcontract sum !N/S SUBCONTRACT CONSTRUCTION INFORMATION: All information issued by the principal agent and or agents including specifications, drawings, notices and contractor’s instructions required for the execution of the n/s subcontract works !N/S SUBCONTRACT CONSTRUCTION PERIOD: The period commencing on the intended date [CD] of access to the site according to the programme and ending on the date of interim completion !N/S SUBCONTRACT DATA: The document listing the subcontract variables !N/S SUBCONTRACT DOCUMENTS: This n/s subcontract agreement, the n/s subcontract drawings, the n/s subcontract priced document and other identified documents [CD] !N/S SUBCONTRACT DRAWINGS: The drawings listed on which the tender is based [CD]

N/S SUBCONTRACT FINAL ACCOUNT: The document, prepared by the principal agent, which reflects the

final n/s subcontract value of the n/s subcontract works at final completion or termination !N/S SUBCONTRACT PAYMENT ADVICE: A document issued at regular intervals [CD] by the contractor stating the amount due and payable by the contractor to the subcontractor or vice versa using the JBCC ® N/S Subcontract Payment Advice format !


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N/S SUBCONTRACT PAYMENT NOTIFICATION: A document issued with each payment certificate by the principal agent stating the amount due and payable by the contractor to the subcontractor or vice versa using the JBCC® N/S Subcontract Payment Notification format

N/S SUBCONTRACT PRICED DOCUMENT: N/S subcontract bills of quantities, schedule of rates or other

documents appropriate to this n/s subcontract agreement [CD] ! N/S SUBCONTRACT PROGRAMME: A diagrammatic representation of the planned execution of units of work or

activities indicating the dates for commencement and completion as prepared by the subcontractor in conformity with the contractor’s programme !

N/S SUBCONTRACT RECOVERY STATEMENT: The statement prepared at regular intervals by the contractor using the JBCC® N/S Subcontract Recovery Statement format !

N/S SUBCONTRACT GUARANTEE for ADVANCE PAYMENT: A security in terms of the JBCC® Security for Advance Payment form obtained by the subcontractor from an institution approved by the employer [CD] !

N/S SUBCONTRACT GUARANTEE for CONSTRUCTION: A security in terms of the JBCC® Security for Construction form obtained by the subcontractor from an institution approved by the contractor [CD] !

N/S SUBCONTRACT GUARANTEE for PAYMENT: A security in terms of the JBCC® Security for Payment form obtained by the contractor from an institution approved by the subcontractor [CD]

N/S SUBCONTRACT SUM: The accepted tender amount, inclusive of tax, that is not subject to adjustment [CD] ! N/S SUBCONTRACT VALUE: A monetary value initially equal to the n/s subcontract sum and that is subject to

adjustment in terms of this n/s subcontract agreement !N/S SUBCONTRACT WORKS: The extent of work to be executed by the subcontractor described in the n/s subcontract documents and contractor’s instructions, which includes free issue, and materials and goods. Work or installations to be executed by direct contractors and others responsible to the employer are excluded [CD] !

PARTY: The employer or the contractor and “parties” shall refer to both of them PARTY: The contractor or the subcontractor and “parties” shall refer to both of them !PAYMENT CERTIFICATE: A certificate issued at regular agreed intervals [CD] by the principal agent to the parties certifying the amount due and payable in terms of the JBCC® Payment Certificate format ! PENALTY: The stipulated amount per calendar day [CD] payable by the contractor to the employer where the date or the revised date for practical completion, whichever is the later, has not been met !

PRACTICAL COMPLETION: The stage of completion as certified by the principal agent where the works or a section thereof has been completed free of patent defects other than minor defects identified in the list for completion and can be used for the intended purpose [CD] !PRELIMINARIES: The priced items listed in the preliminaries document with any additions, alterations or modifications thereof incorporated in the (n/s subcontract) contract documents !PRICED DOCUMENT: Bills of quantities, schedule of rates or other documents appropriate to this agreement [CD]

PRIME COST AMOUNT: An amount included in the (n/s subcontract) contract sum for the delivered cost of materials and goods obtained from a supplier as instructed by the principal agent !

PRINCIPAL AGENT: The entity [CD] appointed by the employer with full authority and obligation to act in terms of this agreement

PROGRAMME: A diagrammatic representation of the planned execution of units of work or activities indicating

the dates for commencement and completion prepared and maintained by the contractor PROGRAMME: A diagrammatic representation by the contractor of the planned execution of units of work or

activities by the contractor and subcontractors indicating the dates for commencement and completion PROVISIONAL SUM: An amount included in the contract sum for the supply and installation of work by a

subcontractor !RECOVERY STATEMENT: The statement prepared and issued in conjunction with each payment certificate by the principal agent in terms of the JBCC® Recovery Statement format !RETENTION: The security selected by the contractor as a payment reduction from the value certified in a payment certificate !RETURNABLES: Documents listed [CD] to be provided by the tenderer on notice from the employer


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!SCHEDULE: The listed variables applicable to the preliminaries !SECTION: An identified portion of the works for which practical completion is required by a date earlier than that required for the works as a whole [CD] !SECURITY: A monetary guarantee provided by the employer to the contractor, or the contractor to the employer in terms of this agreement [CD] from which either party may recover expense and loss in the event of default ! SECURITY: A monetary guarantee provided by the contractor to the subcontractor, or the subcontractor to the contractor in terms of this agreement [CD] from which either party may recover expense and loss in the event of default ! SHOP DRAWINGS: Drawings, diagrams, designs, illustrations, schedules, performance charts, brochures, setting out drawings, shop details and other data which are prepared by the contractor, subcontractor, manufacturer, supplier or distributor which illustrate manufacturing details and methods of execution of work (used in the ASAQS Preliminaries) !SITE: The land or place where the works is to be executed [CD] !STATS SA: Statistics South Africa as the provider of the indices used for CPAP (used in the CPAP guide) !

STATUS REPORT: A report compiled by the principal agent and/or agents in the event of termination of the agreement, or where the works has been suspended due to a force majeure event, or in the event of termination of the n/s subcontract agreement by the contractor, to record the state of completion or otherwise of the works or the n/s subcontract works, as the case may be. Such status report may include marked up drawings and photographs

SUBCONTRACTOR: A nominated or a selected subcontractor appointed in terms of the n/s subcontract agreement by the contractor in accordance with a contract instruction for the supply and installation of work for which a provisional sum has been included in the contract sum [CD] !SUSPENSION: The temporary cessation of the (n/s subcontract) works by the contractor (subcontractor) !

TAX: Value-added tax or any other tax, duty or levy applicable by law !VALUATION PERIOD: The contractual period between two payment certificates or the period from acceptance of tender up to the first payment certificate issued (used in the CPAP guide) !WORK COMPLETED IN TIME: The work value executed up to the contractual date for completion, and … !WORK COMPLETED LATE: The work value executed after the contractual date for completion (used in the CPAP guide) !WORK GROUP: A “grouping” of work descriptions that are more commonly undertaken by a particular recognised “tradesman”, or that is generally recognised in the construction industry as sharing common characteristics, and for which an index is available, or is determined by a means that is acceptable to both the employer and contractor (used in the CPAP guide) !WORK VALUE: The value of work executed that qualifies for adjustment in terms of these provisions – (used in the CPAP guide) !WORKING DAYS: Calendar days which exclude Saturdays, Sundays, proclaimed public holidays and recorded annual builders’ holiday periods [CD]

WORKS: The extent of work to be executed by the contractor described in the contract documents and contract instructions, which includes free issue, and materials and goods. Work or installations to be executed by direct contractors and others responsible to the employer are excluded [CD] !!!!!!!!


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Copyright reserved JBCC® Principal Building Agreement Edition 6.1 March 2014 CONTRACT DATA

Preface

JBCC® Constituents

Association of South African Quantity Surveyors

South African Black Technical and Allied Careers Organisation

Application of JBCC® Contract Documents

Warning

The Joint Building Contracts Committee® NPC (JBCC®) is representative of building owners and developers, professionalconsultants and general and specialist contractors who contribute their knowledge and experiences to the compilation ofJBCC® documents. JBCC® documents portray the consensus view of the constituent members and are published in theinterests of standardisation and good practice with an equitable distribution of contractual risk. The constituents are:

Association of Construction Project Managers

Consulting Engineers South AfricaMaster Builders South Africa

South African Institute of ArchitectsSouth African Property Owners Association

Specialist Engineering Contractors Committee

This contract data contains unique requirements applicable to the project and variables referred to in the JBCC® PrincipalBuilding Agreement. The information provided in this document by the principal agent is complete and accurate at the time ofcalling for tenders. Where additional information becomes available, all tenderers will be informed in writing. Reference toclause numbers in the JBCC® Principal Building Agreement are shown in [square brackets] in this contract data eg [3.2.1].Spaces requiring information must be filled in, or marked as ‘not applicable’ but not left blank. This contract data, whencompleted and submitted by the contractor, becomes the form of tender. Where the contractor is appointed, the contractdocuments comprise the signed JBCC® Principal Building Agreement, this completed contract data, the priced document,drawings and other listed documents

The definitions contained in the JBCC® Principal Building Agreement apply to this document. A word or phrase in bold typein the text shall bear the meaning assigned to it in the definitions of such Agreement. Where a word or phrase is not in boldtype it shall bear the meaning consistent with the context of its use

The JBCC® Principal Building Agreement, the JBCC® Nominated / Selected Subcontract Agreement and respectiveContract Data Edition 6.1 have been coordinated with JBCC® Certificates and other support documents. Forms fromprevious editions are not compatible with Edition 6.1

© Copyright Reserved The name ‘Joint Building Contracts Committee®’, the abbreviation JBCC®, the product eJBCC® and the JBCC logo areregistered trademarks. The Joint Building Contracts Committee® claims authorship of this work in terms of the Copyright ActNo 98 of 1978 as amended. All rights are reserved. No part of this publication may be reproduced, stored in any retrievalsystem, or transmitted, in any form or by any means, without the prior written permission of the Joint Building ContractsCommittee® NPC. Unauthorised reproduction of the work is an infringement of the copyright and judicial proceedings canand will be instituted to obtain relief and the recovery of damages

used in conjunction with the

JBCC® Principal Building AgreementEdition 6.1 - published March 2014

CONTRACT DATA

8


A

A1

A 2 Works description

A 3 Site description

A 4 Employer

Name

Business-eg: public company

Business registration number VAT/GST

Contact person Mobile

E-mail

Registered street address

Postal address 0070

Telephone Fax

A 5 Principal agent

Name

Practice registration number VAT/GST


E-mail


Postal address

Telephone Fax

4 567 890 123

+27823456789

Not applicable

Wizzard Sharpe

Existing offices converted into flats, existing 6 storey reinforced concrete structure retained, partition and external walls demolished,new installation of electrical and plumbing services, external and internal walls and finishes, refurbishment of existing (2) lifts.Prepare street level sapce for future retail. There is no basement. Space behind the building to store construction materials etc. The building will not be occupied during the construction period

40 Mozart Street, Symphony Village

PO Box 999, Symphony Village Code

+27 12 345 67 89

Project name

Erf No /Township Erf 345 Symphony Village

Whatever Local Authority

9 Dvorak Street, Symphony Village

[email protected]

Local authority

Partnership

1 234 567 890

Cosy Flats

Professional Rehab

Code

TENDER INFORMATION

Street address

9


A 6 Agent

Name



E-mail


Postal address

Telephone Fax

A 7 Agent

Name



E-mail


Postal address

Telephone Fax

A 8 Agent

Name



E-mail


Postal address

Telephone Fax

A 9 Agent

Name



E-mail


Postal address

Telephone Fax

Code

Code

Code

Code

10


B CONTRACT DATA

Clause references apply to the JBCC® Principal Building Agreement Edition 6.1 (PBA) published March 2014Only clauses in the PBA requiring the provision of information [CD] are quoted below

2.02.1/25.15 Law of the country applicable to the project

5.05.15.5 (3)

yes / no?yes / no?

Marked ?ABCD-------

MarkedFGHIJKLM\NOPQR

Contract drawings - description

Description Notes

Not applicable

JBCC® PBA Contract Data Ed 6.1 - March 2014

Plan Site

Plan Level 2-5

201?-1?-1?

201?-1?-1?

20002101 aPlan Street

Revision

2102

South Africa

Priced bills of quantities (BoQ)

Three

Law, regulations and notices

Signed contract documents held by the principal agent, or EmployerContract documents

Priced document

Number of copies of documents issued free to the contractor copies

b201?-1?-1?b

2701

Not applicableNot applicable

Detail: Kitchen d

2014

Numberb

2301 a

25001 a

201?-1?-1?201?-1?-1?

2401 a2402

2201 c

ElevationsDetail: Bath room

201?-1?-1?

a

201?-1?-1?

2601

Plan Level 6

201?-1?-1?a

Schedule: Windows

Schedule: Finishes

Contract documents comprising …

Building Plan approvalNot applicable

JBCC® Principal Building Agreement Ed 6.1 - March 2014

Lump sum priced document, or

System/method of measurement

YesNo

SA Standard System Rev ? 2013

Sections 4,5,6201?-1?-1?

Not applicable

2103 a

Not applicable

Date

BoQ Ref PR 002/dated 201?-0?-0?

201?-1?-1?

aPlan roofSections 1, 2,3

201?-1?-1?2202201?-1?-1?

NOTE: If insufficient space, please see annexure:-

Not applicable


Schedule: Doors 201?-1?-1?

11


6.06.3

10.0yes Obligation Currency

%

employer ZAROther:

Currency

contractor ZARcontractorcontractor ZARcontractor ZARcontractor

- Other: contractor

or…no Currency

%

Other:

11.0 Security11.1.1-5 yes / no? yes

12.0 Duties of the parties = employer = site

9.2.7

12.1.2 Premises occupied - yes/no? identify area?

12.1.3

Supplementary Insurance (incl CWI extensions)every claim

By the employer in the joint names of the parties, yes/no ?

per CWI

Allowance for professional fees and escalation of the insured value at 25% pa, or ? %

The contractor shall provide a Guarantee for Construction to the employer>D11.2-3

10 000.00

23.0%not applicablenot applicableEmployer owned surrounding property (care,custody, control or worked on)

not applicable

Amount

By the contractor in the joint names of the parties, yes/no ?

Free issue material at new replacement value

not applicable

- Supplementary Insurance

Policy deductibles

- Public Liability

not applicable

- Works / free issue Policy deductibles

- Employer owned surrounding properties

Insurances

Public Liability Insurance (each and every claim OR unlimited for the period)

Insured amountcontract sum

10 000.00

Free issue material at new replacement value, added to CWI, where applicable

Insured amount

10 000 000

Public Liability Insurance (each and every claim OR unlimited / value ?)

Employer's agents

- Removal of Lateral Support

Contract Works Insurance (CWI) (including materials and goods, temporary works)

Contract Works Insurance (CWI) (including materials and goods, temporary works) contract sum

10 000.00

Allowance for professional fees and escalation of the insured value at 25% pa, or ? %

Removal of Lateral Support Insurance

Relevant natural features to be retained / relocated / removed

Supplementary Insurance (incl CWI extensions) per CWI

Description of interests of agents in the project other than professional services, if applicable Not applicable

Yes

No

not applicable

10 000 000.00

Alterations & additions to existing premises?

12


12.1.4

12.1.5

12.1.6

12.1.7

12.1.12

14.014.1.414.1.414.1.414.1.414.1.4

16.0 Direct contractorsEmployer to define extent of work by a direct contractor [12.1.2]

16.116.116.1

19/20/24

19.0 8

19/20/2419/20/2419/20/2419/20/2419/20/24

Penalty amount per calendar day

6000.00201?1?-1?

Inspection = working days

Date for practical completion yyyymmdd

Specialisation:Specialisation:

Specialisation:Specialisation:Specialisation:

Practical completion / penalty for late completion

not applicablenot applicablenot applicable

OR …only one option can apply !

Practical completion of the works as a whole

Specialisation:Specialisation:

not applicable

not applicable

Due date / yyyymmdd

Possesion of the site - intended date 201?-0?-0?

not applicable

Nominated subcontractors

Areas the contractor may not occupy?

Description of free issue by employer

(Attach separate page for multiple items)

Penalty Currency

Practical completion of the works in sections: 3Practical completion of the works in sections: 4Practical completion of the works in sections: 5

ZAR

not applicable

Statutory and/or other notices to be complied with by the contractor before possession of site can be given

not applicable

Construction permit issued by DoL

Existing, to be upgradedUtilities connections - location

not applicable

not applicable

Practical completion of the works in sections: 1Practical completion of the works in sections: 2


Specialisation:




13


19.0 Practical completion19.1.1 Items that do not have to be complete to achieve practical completion

19.1.1 Criteria to achieve practical completion (the BoQ may contain a more detailed description)

25.025.0

25.2 n/a25.3.2 Materials and goods off site - paid subject to ... no

25.3.4/26.9.5 Contract price adjustment provisions

30.030.6.1

PaymentSouth African Rand

fixed price

Dispute resolution

Landscaping

Per Specification

Method?


Alternative Dispute Resolution nominating body Association of Arbitrators (South Africa)

Currency: ZARIssue of regular payment certificates on date@month seventh

Guarantee for Advance Payment provided ?

or… day of week



14


Changes made to JBCC® documentation

C TENDER CLOSING

Tender closing: date 12:00

Tender closing: place

SUBMISSION ADDRESS

Delivered in electronic format? yes / no? No E-mail address

Alternate offer considered ? yes / no? No Only if original tender submitted yes / no? No

D TENDERER'S SELECTION (to be completed by the tenderer)

11.0 Securities11.1.2 Yes11.1.3 No

11.1.4

Purpose Currency

11.4 yesCurrency ZAR

19.0from … until …from … until …from … until …from … until …from … until …from … until …

yes/no ?

Obligation

Design Rehab offices

Amount(where the contractor requests the employer to pay an advance for materials and goods)

Tender closing: time

Guarantee for Advance Payment Provided by the contractor yes/no ?

Note: The amendments contained herein or in the single referenced Annexure constitute the only amendments to the standard JBCC Agreement that will apply. No other amendments shall be of any force or effect.”

Guarantee for Construction (variable)

201?-2?-2?

Nil

123 Hayden Street, Symphony Village

Contractor's annual holiday period - year 3 not applicable not applicableContractor's 'other' holiday period - year 3 not applicable not applicable

Contractor's annual holiday period - year 1

not applicablenot applicable

or Guarantee for Construction (fixed)



Amount 150 000.00

Contractor's holiday periods during the construction period ?

not applicable

Guarantee for Payment yes/no ?

not applicable

If specified, contractor's choice yes/no ?If specified, contractor's choice

Contractor's 'other' holiday period - year 1

not applicable

201?-3?-3? 201?-3?-3?

not applicable

Contractor's annual holiday period - year 2Contractor's 'other' holiday period - year 2 not applicable

Provided by the employer

15


26.0 Payment / Adjustment of Preliminaries

Option A no

Or … Or …Option B

yes

Adjustment of preliminaries [26.9.4]Option A

yes

Or … Or …Option B

no

Notes1

2

3

4

5 Annexures … marked

ABC

An amount agreed by the principal agent and the contractor in terms of the Bills ofQuantities or the priced document to identify an initial establishment charge / a monthlycharge / and a final disestablishment charge

- An amount which shall not be varied

-An amount varied in proportion to the construction period as compared to the initialconstruction period (excluding revisions to the construction period to which the contractor is not entitled) to adjustment of the contract value in terms of the agreement

Not applicableNot applicableNot applicable

Any provision in this agreement that may confer any benefit or right in favour of any subcontractor shall bebinding on the parties and be capable of acceptance by such subcontractor at any time

The contractor shall within 15 working days of the date of possesion of the site provide the principal agent with a detailed breakdown of preliminaries amounts for the works as a whole, or per section where applicable, including administative and supervisory staff charges and for the use of construction equipment in terms of the programme.

The contractor shall provide a breakdown of charges (incuding tax) within 15 working days of the date of acceptance of tender and, where applicable, an apportionment of preliminaries per section

For the adjustment of preliminaries both the contract sum and the contract value (includingtax) shall exclude the amount of preliminaries, all contingency sum(s) and any provision for Cost Price Adjustment Provisions:-

The tender shall remain in full legal force for forty five (45) calendar days from the closing date of the tender.The tenderer accepts liabilty for damages that may be suffered by the employer should the tender validityperiod not be honoured

Where such information is not provided the following subdivision shall be deemed to apply:- 10% of the amount shall not be varied

The lowest or any offer will not necessarily be accepted by the employer - nor need reasons be given for such a decision

By submission of this tender to the employer the tenderer offers and agrees to execute and complete the works and remedy any defects in conformity with the specification for the tender sum stated - to be paid in instalmentsas work is completed

- An amount varied in proportion to the contract value as compared to the contract sum

- 75% varied in proportion to the revised construction period compared to the initialconstruction period …

Where the contractor does not indicate option 'A' or option 'B' - option 'A' shall apply

- 15% varied in proportion of the contract value to the contract sum

Where the contractor does not indicate option 'A' or option 'B' - option 'A' shall apply

Payment of preliminariesAssessed by principal agent, an amount pro rated to the value of the works executed in thesame ratio as the preliminaries to the contract sum, (including tax); shall exclude the amountof preliminaries, all contingency sum(s) and any allowance for CPAP

16


CurrencyTenderer's work excluding tax ZAR amount

Tax … at percentage 14% ZAR amount

Total TENDER SUM inclusive of tax ZAR amount

Tender sum in words

(print) TENDERER Capacity Date Location

WITNESS print name Capacity Date Location

Name

Business-eg: public company

Business registration number VAT/GST


E-mail


Postal address 0070

Telephone Fax

+2788 999 1234

+27863456789

Miaauw Sleepalot

6 543 210

4 567 890 321

+2712 345 67 89

1 234 567

CC

Purrfect Builers

22 Strauss Crescent, Symphony Village

TENDERER'S DETAILS

PO Box 345 Symphony Village Code

SIGNATURE

7 459 259.40

[email protected]

who, by its SIGNATURE warrants authority thereto

Seven million, four hunderd and fifty nine thousand two hundred and fifty nine Rand and forty cents

916 049.40

TENDER SUM COMPILATION

17

Copyright reserved JBCC® Principal Building Agreement Edition 6.01– March 2014

Page 32 of 32 Pages

AGREEMENT This agreement, the completed contract data and the listed documents [CD] comprise the entire contract between the parties. Any provision in this agreement that may confer a right or benefit on a subcontractor shall be binding on the parties and be capable of acceptance by such subcontractor at any time. No representations, terms, conditions or warranties not contained in this agreement shall be binding on the parties. No agreement or addendum varying, adding to, deleting or terminating this agreement including this clause shall be effective unless reduced to writing and signed by the parties The contracting parties The parties Employer Contractor

Business name Professional Placements Purrfect Builders cc

Business type Partnership Close Corporation

Business registration 1 234 567 890 1994 / 012 345 / 23

Tax number (VAT/GST) Value Added Tax 4 567 890 Value Added Tax 4 987 654

Contact Person Lone Sharpe Pieter Veldhuizen

ID Number 000000 0000 000 000000 0000 000

Address: Building name Not applicable Not applicable

Address: Street 40 Mozart Street 22 Strauss Close

Address: Suburb Not applicable Not applicable

Address: City Symphony Village Symphony Village

Address: PO Box 456 444

Address: Post Office Symphony Village Symphony Village

Address: Province Neverland Neverland

Address: Country South Africa South Africa

E-mail [email protected] [email protected]

Telephone +2711 234 56 78 +2711234 12 34

Mobile phone +2766 234 56 78 +2777 234 56 78

Fax Not applicable +2786 121 22 33

Project name Cosy Flats

Project location Erf 346 – 9 Dvorak Street, Symphony Village – Neverland – South Africa

Currency South Arican Rand (ZAR)

Accepted contract sum including tax ZAR 6 980 739.84 only

Accepted contract sum in words

Six million nine hundred and eighty thousand seven hundred and thirty nine Rand and eighty four cents

Signed – who by signature hereto warrants authority

Signed - date 201?-11-11 201?-11-11

Signed - location Symphony Village Symphony Village

Signed - witness

Name of witness Peter Trustworthy Hans Skelm

18

Principal Building Agreement

Minor Works Agreement

PROJECT DETAILS

Works

Site

Employer

Contractor

Principal Agent

Agent

Note: A professional Land Surveyor may be appointed to perform this function

The following particulars of the site were pointed out to the contractor by the agent

Contractor's Representative: Name Signature Date

Contractor Signed at

Employer('s representative): Name Signature Date

for use with the …Certificate of Site Possession

Offices to Flats conversion

Professional Placements

New World Contracts


Edition used ?

Edition used ? Ed 5.1 March 2014

Symphony Village

Survey plan with GPS coordinates and levels above mean sea level

NW corner GPS: S25˚ 23.096’ E30˚ 32.395’

Erf 346 Symphony Village

Millenium Design - George Best

New World Contracts

Manhole Dvorak Street

Star Surveys - Peter Straight

JBCC® PBA or MWA CERTIFICATE OF SITE POSSESSION © March 2014

Pegs

Benchmark

Other features

Information attached hereto:

This certificate records the hand-over of the site to the contractor for the purpose of constructing the works in terms of the agreement. A copy of this certificate shall be provided to the contractor

Name and address of the principal agent's practice

Fig tree south east corner to be preserved

®

19

COMPLETION !!INTRODUCTION !All JBCC® agreements follow the same procedures to achieve Interim, Practical and Final Completion. The procedures described in the JBCC® agreements to achieve each of the three degrees of completion must be applied strictly to minimise disagreements later. Other than payment, completion is the most important aspect of the agreement and therefore no “short cuts” should be taken in certifying any of the degrees of completion. The procedures and time bars applying to completion and to payment must be strictly adhered to by the principal agent and be observed by the parties !!2.0 INTERIM COMPLETION (in terms of the JBCC® N/S Subcontract Agreement only) !!2.1 PURPOSE !The contractor generally requires the work of all subcontractors to be completed before the date of practical completion to permit the timeous commissioning of services and general cleaning of the site before relinquishing possession of the site/works to the employer !Note: Stage completion: The contractor and the subcontractor may agree which aspects of the n/s subcontract works must be completed before interim completion can be achieved in a particular project (only applies in the NSSA) !2.2 SUBCONTRACT CONSTRUCTION PERIOD AND PROGRAMME !▪ The n/s subcontract construction period set by the principal agent in the pre-tender information and stated in the n/

s subcontract data ▪ Where the contractor has been appointed at the time of calling for the subcontract tender, the principal agent must

consult the contractor in setting the date for interim completion. The contractor and the subcontractor must agree the n/s subcontract programme in harmony with the works as a whole

▪ The parties may agree to vary the start of the n/s subcontract programme and the intended date of interim completion !

2.3 ACHIEVEMENT OF STAGE COMPLETIONS AND INTERIM COMPLETION !▪ Criteria for stage completions must be set at the start of the n/s subcontract construction period to avoid possible

disputes later ▪ The contractor must inform the principal agent if the assistance of an appointed specialist agent will be required for

the inspection for achievement of interim completion ▪ On achievement of interim completion the responsibility for the n/s subcontract works passes to the contractor.

This does not relieve the subcontractor of his responsibility in respect of defective or incomplete work !2.4 DAMAGES !▪ The subcontractor may be liable for damages to the contractor for the late achievement of interim completion. The

subcontractor must be allowed sufficient time to achieve stage and/or interim completion set by the contractor ▪ Where the subcontractor is prevented from fulfilling obligations due to default of the contractor, other subcontractors

or a direct contractor, the subcontractor shall be entitled to damages. Adjustments to the subcontractor’s completion dates are not dependant on the contractor obtaining similar adjustments in terms of the agreement with the employer

▪ The calculation of damages must be shown in the n/s subcontract recovery statement - see page 62 !!!!!!!!!!!!!!!!!!!!©JBCC® Guide to Completion, Valuation, Certification and Payment - Edition 6.1, March 2014

20

CONSTRUCTION PERIOD = Private Sector

DATE -‐ Tend

er award

DATE -‐ Site possession

DATE -‐ comple6

on PRA

CTICAL

DATE -‐ expiry L D L P

DATE -‐ expiry PRE

SCRIPTION

In com

mon

law -‐ prescrip6o

n runs fo

r three years from th

e date th

at a defect

was noted

and

repo

rted

to th

e contractor

DATE -‐ comple6

on INTERIM

DATE -‐ comple6

on FINAL

CONTRACT VALIDITY PERIOD

5 year LDLP

AEer 'prac6cal comple6on' the works can be used for the intended purpose by the employer, subject to the issue of an "occupa6on cer6ficate" by the local authority

Interim Comple6on applies only in the N/S Subcontract Agreement

90day DLP

CONSTRUCTION PERIOD = Public Sector

AEer prac6cal comple6on the contractor is not obliged to execute any further contract instruc6ons except those rela6ng to the comple6on of outstanding work

The intended date for prac6cal comple6on may be revised by the principal agent

Where the (revised) date for prac6cal comple6on is not met, the contractor may be liable for penal6es to the employer

Comple6on stages in JBCC building agreements

3 years

21

Contractor

Subcontractor

N/S subcontract works

Site

The contractor certifies that interim completion for:

(Clause 18) the n/s subcontract works as a whole yes / no ? no

or

(Clause 20.3.1) section # of 'Name' not applicable

was achieved on … Date 201?-01-31

Date

Name and address of the contractor


6 Storeys

Certificate of lnterim CompletionIssued in terms of clause 18.0 or clause 20.3.1 of the N/S Subcontract Agreement Edition 6.1 © March 2014

New World Contracts

Starlight Ceilings

JBCC® PBA Edition 6.1 CERTIFICATE OF INTERIM COMPLETION © March 2014

NOTE: The subcontractor remains liable for defects until final completion. Where practical completion has been certified

the Defects Liability Period ends ninety (90) calendar days from the date of practical completion

subject to clause 21 (final completion)

201?-01-31

Storeys 2-4

Signed by the contractor who certifies that the n/s subcontract works has been completed in accordance with the specified criteria for interim completion on the date stated, irrespective of the date of signature of this certificate

Drywall partitioning and suspended ceilings

®

22

CONSTRUCTION PERIOD = Private Sector

DATE -‐ Tend

er award


DATE -‐ comple6

on PRA

CTICAL



SCRIPTION

In com

mon

law -‐ prescrip6o

n runs fo


e date th

at a defect

was noted

and

repo

rted

to th

e contractor

DATE -‐ comple6

on INTERIM

DATE -‐ comple6

on FINAL


5 year LDLP

AEer 'prac6cal comple6on' the works can be used for the intended purpose by the employer, subject to the issue of an "occupa6on cer6ficate" by the local authority

Interim Comple6on applies only in the N/S Subcontract Agreement

90day DLP

CONSTRUCTION PERIOD = Public Sector

AEer prac6cal comple6on the contractor is not obliged to execute any further contract instruc6ons except those rela6ng to the comple6on of outstanding work

The intended date for prac6cal comple6on may be revised by the principal agent

Where the (revised) date for prac6cal comple6on is not met, the contractor may be liable for penal6es to the employer

Comple6on stages in JBCC building agreements

3 years

23

3.0 PRACTICAL COMPLETION !3.1 PURPOSE !▪ The principal agent must specify in appropriate detail in the contract data at tender stage what quality of work and

degree of completion the contractor has to produce to achieve practical completion to limit subjective interpretation thereof. This will vary from one project to another depending on the nature and purpose of the building

▪ The professional consultants and the team of contractors have been appointed to provide the employer with a building that “... can effectively be used for the intended purpose…” Achievement of practical completion is the most important of the various completions required in terms of the agreement !

3.2 CONSTRUCTION PERIOD !▪ The principal agent at the tender stage determines and specifies in the contract data the construction period and

the intended date for practical completion of the whole works, or the intended dates for practical completion where the works is to be completed in sections - but not both!

• During the construction period the principal agent must “inspect the works, or a section thereof, at appropriate intervals to give the contractor interpretations and direction on the standard of work and the state of completion of the works required of the contractor to achieve practical completion”… and likewise for work by subcontractors

• Any such interpretations and direction given to the contractor may not be construed as approval of any work or component inspected by the principal agent !

3.3 ACHIEVEMENT OF PRACTICAL COMPLETION !• The principal agent at the tender stage determines and specifies in the contract data the period required to inspect

the works and to issue the list for practical completion, then the “certificate of practical completion” and finally the list for completion

• “The contractor shall inspect the works to satisfy himself that the specified degree of completion of the works has been achieved” and give timeous notice to the principal agent to inspect the works on or before the anticipated date of practical completion

• The contractor must make provision in his programme (possibly as a sub-programme for the 3-4 weeks before the date for practical completion) for the inspection period required by the principal agent. The principal agent may require reasonable notice of the date(s) when the contractor intends such inspection to take place

• The principal agent and other specialist agents must decide during such inspections if the works is “... substantially complete and can effectively be used for the purpose intended ...”

• Where the degree of completion of the works does not comply with the specifications, the principal agent must forthwith issue a single “comprehensive and conclusive list for practical completion recording the defects and/or outstanding work to be completed to achieve practical completion. The principal agent may not add to this list for practical completion once it has been issued but he can issue a contract instruction at any time where, for example, a water pipe bursts that must be repaired without delay

• The principal agent can issue an ‘updated’ list for practical completion that excludes remedied defects • Where the degree of completion of the works complies with the specifications, the principal agent must issue the

certificate of practical completion and a list for completion • Whilst other appointed agents may assist in such inspections the issue of the certificate of practical completion is

solely the responsibility of the principal agent • Where the principal agent does not issue the (updated) list for practical completion or the certificate of practical

completion within five (5) working days of such inspection, the contractor may give notice to the principal agent to comply within a further five (5) working days - failing which practical completion will be deemed to have occurred on expiry date of such notice

• After certification of practical completion the employer may impose the penalties stated in the contract data (from the specified or revised date for practical completion until the actual date of practical completion when possession of the site is relinquished to the employer by the contractor). Similarly, the contractor may be entitled to recover damages from a subcontractor or vice versa

• The issue of the certificate of practical completion may not occur before the specified/revised date for practical completion, unless agreed by the parties, as the contractor’s obligation is to hand over the works on the date for practical completion and not earlier

• The principal agent must issue a certificate of practical completion (and later a certificate of final completion) to the contractor for each defined section. The certificate for the last section is for the whole works. Thus multiple completion dates are applicable to product warranties, the defects liability period and the latent defects liability period !

3.4 CONSEQUENCES !On achievement of practical completion: ▪ The (legal) responsibility for the works passes to the employer ▪ The employer is entitled to possession of the works and site ▪ The contractor is not obliged to carry out any contract instruction for additional works ▪ The principal agent must issue a list for completion ▪ The contractor is no longer liable for penalties (may apply before the date of practical completion) ▪ The principal agent must prepare the final account within ninety (90) calendar days ▪ The value of the Guarantee for Construction (variable) reduces to 4% of the contract sum ▪ The Guarantee for Construction (fixed) expires and the payment reduction reduces to 2,5% of the contract sum ▪ The Guarantee for Payment remains valid unto the final payment has been made by the employer ▪ The contractor becomes entitled to compensatory interest (PBA only) !


24

C's CONSTRUCTION PERIOD = Private Sector

DATE -‐ Tend

er award


DATE -‐ comple6

on PRA

CTICAL



SCRIPTION

DATE -‐ comple6

on INTERIM

DATE -‐ comple6

on FINAL


5 year LDLP

Note: Issue Cer6ficate of Prac6cal Comple6on -‐ employer occupies works, penalty liability ends, contract works insurance > building insurance, value of securi6es reduces

PA in tender documents specifies start + dura6on of construc6on period + comple6on criteria

90day DLP

C's CONSTRUCTION PERIOD = Public Sector

Note: PA + C + SC resolve final account

C no6ce to PA to inspect for PC

Prac%cal Comple%on applicable in the JBCC Principal Building and Minor Works Agreements

Note: C fixes items on list for comple6on

PA inspects works, issues List forPrac6cal Comple6on, and if ready, issues Cer6ficate of Prac6cal Comple6on and List for Comple6on

PA/agents direct standard of work+ quality of finish required

PA assesses penal6es

C claim revision of date of PC

PA assesses 6me + money claims

25

Employer

Contractor

Works

Site

The principal agent certifies that final completion for:

(Clause 21) the works as a whole yes / no ? yes

or

(Clause 20) section # n/a of 'Name' not applicable


Date 201?-02-02+5years

Date

Principal Building Agreement Edition 6.1 © March 2014Issued in terms of clause 20.0 or clause 21.0 of the

Signed by the principal agent who, as agent for the employer, certifies that the works has been completed in accordance with the specified criteria for final completion on the date stated, irrespective of the date of signature of this certificate

Certificate of Final Completion


New World Contracts



n/a

JBCC® PBA Edition 6.1 CERTIFICATE OF FINAL COMPLETION © March 2014

Where Final Completion is certified the Latent Defects Liability Period

ends 5 years from the date of Final Completion


201?-02-02

®

26

Employer

Contractor

Works

Site

The principal agent certifies that practical completion for:

(Clause 19) the works as a whole yes / no ? no

or

(Clause 20) section # of 'Name' not applicable


Date 201?-04-30

Date

Certificate of Practical CompletionIssued in terms of clause 19.0 or clause 20.0 of the Principal Building Agreement Edition 6.1 © March 2014


New World Contracts

JBCC® PBA Edition 6.1 CERTIFICATE OF PRACTICAL COMPLETION © March 2014

201?-02-02

Where practical completion has been certified the Defects Liability Period ends ninety (90) calendar days

from the date of practical completion subject to clause 21 (final completion)




8 StoreysStoreys 2-4

Signed by the principal agent who, as agent for the employer, certifies that the works has been completed in accordance with the specified criteria for practical completion on the date stated, irrespective of the date of signature of this certificate

®

27

!!4.0 FINAL COMPLETION !4.1 PURPOSE !The definition of final completion requires the principal agent to certify “... the stage of completion of the works to be free of defects…” The issued certificate of final completion is “…conclusive as to the sufficiency of the works and that the contractor’s obligations have been fulfilled other than for latent defects” !4.2 ACHIEVEMENT OF FINAL COMPLETION !▪ The defects liability period (DLP) automatically comes into force on the calendar day following the date of practical

completion and ends at midnight ninety (90) calendar days from that date … or when defects on the list for final completion have been satisfactorily completed (but not before expiry of the ninety (90) calendar day DLP)

▪ The contractor must “… rectify all items on the list for completion at least ten (10) working days before the expiry of the DLP and give notice to the principal agent to inspect the works within five (5) working days of receipt of such notice”. The principal agent must, within reason, inspect the whole of the works for latent defects that may have become patent during the DLP and not just identified items on the list for completion

▪ The principal agent must forthwith issue to the contractor a list for final completion incorporating the list for completion and any latent defects that may have become patent to rectify to achieve final completion. The contractor must give the principal agent notice to inspect rectified items until all defects have been rectified to the satisfaction of the principal agent

▪ Note: Where the employer takes possession of the site/works before practical completion has been certified – the principal agent must issue the certificate of practical completion forthwith (specifying the date when possession of the site/works was relinquished by the contractor) and issue the list for completion of items to be rectified by the contractor within thirty (30) calendar days

• Where the principal agent does not issue the (updated) list for final completion or the certificate of final completion within five (5) working days of such inspection, the contractor may give notice to the principal agent to comply within a further five (5) working days - failing which final completion will be deemed to have occurred on expiry date of such notice !

4.3 CONSEQUENCES !On achievement of final completion: ▪ The contractor’s obligations in terms of the agreement have been fulfilled ▪ The contractor’s public liability in relation to the works ceases ▪ The value of the Guarantee for Construction (variable) reduces to 2% of the contract sum until the final payment ▪ All subcontractor’s guarantees, warranties or indemnities are deemed to be ceded to the employer ▪ The balance of the contractor’s latent defects liability period is determined (see section 6.0) ▪ The final payment certificate can now be issued !!5.0 SECTIONAL COMPLETION !5.1 PURPOSE !Projects may have to be completed in sections - as separate buildings or by storey. Each section must be clearly defined with due consideration for common areas, provision of services, safe access by the employer and continued access by the contractor to complete the works. Sectional completions should be avoided where each section cannot be defined as a homogeneous unit and where there is no reasonable continuity of work for the contractor !Note: The contract works insurance must be effected by the employer to prevent conflict that may arise from multiple practical completions possibly insured by different insurers. Securities, guarantees, warranties and the like should only be provided for the works as a whole and not for individual sections !5.2 ACHIEVEMENT OF SECTIONAL FINAL COMPLETION !Where sectional completions are required - each section (other than the last section) must be treated as unique for completion purposes. Thus each section requires: ▪ A certificate of interim completion for each subcontractor ▪ A certificate of practical completion ▪ A certificate of final completion (other than the last section) !5.3 CONSEQUENCES !Payment is always made for the works as a whole - never for a section - by issuing the following documents: ▪ A (monthly) interim payment certificate ▪ A (monthly) recovery statement ▪ A (monthly) payment notification to each subcontractor ▪ A final account ▪ A final payment certificate ▪ A certificate of final completion for the works as a whole incorporating the last section !


28

CONSTR. PERIOD = Private

DATE -‐ Tend

er award


DATE -‐ comple6

on PRA

CTICAL



SCRIPTION

DATE -‐ comple6

on INTERIM

DATE -‐ comple6

on FINAL


5 year LDLP

Note: C's public liability period ends Value of securi6es reduces NSSA warran6es ceded to E

90C-day DLP

CONSTR. PERIOD = Public

Note: PA + C + SC resolve final account including outstanding 6me and money claims, penal6es

C rec6fies items on List for Comple6on to suit occupants

Final Comple-on applicable in the JBCC Principal Building and Minor Works Agreements

PA inspects works, issues List for Final Comple6on (updated List for Comple6on) done? issues Cer6ficate of Final Comple6on

C > no6ce PA to inspect before expiry of 90C-‐day DLP

Final Account agreed, PA issues Final Payment Cer6ficate

29

!!6.0 LATENT DEFECTS LIABILITY PERIOD !6.1 PURPOSE !In common law the liability of the contractor (and of agents described in the professional appointment agreement) to the employer for latent defects is open ended and will only expire with the demolition of the building - clearly an untenable situation. In all JBCC® agreements the latent defects liability period (LDLP) of the contractor is restricted to a period of five (5) years from the certified date of final completion or the date of termination by the contractor or where execution of the works has become impossible:- !▪ The definition of a “latent defect” relies on the definition of “defect”. Thus the latent defect definition becomes “... any

aspect of the works which ... includes an imperfection that impairs the structure, composition or function of the works ... which a reasonable inspection ... would not have revealed before the issue of the list for final completion”, and “defects which may appear up to the date of final completion shall be addressed...." !

▪ This definition does not specify how a defect that becomes apparent after final completion is to be dealt with. Where this occurs, the employer must give notice to the contractor to remedy the defect within the LDLP. Failure by the contractor to do so entitles the employer to employ another contractor to remedy the patent defect(s) and to claim such expense from the contractor. The obligation to remedy a defect is clear in common law and in the Consumer Protection Act !

▪ The “period“ is defined: “The latent defects liability period shall commence at the start of the construction period and end five years from the date of final completion”. The time period is clear where the works reaches final completion !

▪ If final completion is not achieved - where the agreement is terminated prior to the achievement of final completion the termination clauses apply. The final account must be prepared, and on acceptance by the parties, the final payment certificate must be issued by the principal agent. Final completion will be deemed to have occurred on the date of acceptance of the final account but no certificate of final completion is issued in terms of the agreement. The five year period applies (contractor default) or no period is applicable (employer default) !

▪ The “liability” aspect - The contractor shall make good all defects that appear up to the date of expiry of the LDLP. Where termination of this agreement occurs before the date of final completion, the LDLP shall end five (5) years from the date of termination [29.10] for the completed portion of the works only, !

or !▪ Where termination of this agreement occurs before the date of final completion on the date of termination where

execution of the works has become impossible due to circumstances beyond the control of either party, or on the date of termination by the contractor due to default by the employer !

▪ The liability of the principal and other agents is determined by the terms of their conditions of appointment and not those of the building contract !

6.2 PRESCRIPTION PERIOD !All defects as defined in terms of the agreement are subject to a prescription period determined by law. In South Africa this period is three (3) years. The prescription period commences from the date on which the employer (principal agent) becomes aware of a defect and notifies the contractor forthwith !The LDLP is not extended by the prescription period – but the obligation on the contractor to remedy an identified and notified defect only remains – and this may extend beyond the five (5) year LDLP !!!!!!!!!!!!!!!!!!


30

CONSTR. PERIOD = Private

DATE -‐ Tend

er award


DATE -‐ comple6

on PRA

CTICAL



SCRIPTION

DATE -‐ comple6

on INTERIM

DATE -‐ comple6

on FINAL


5 year LDLP90C-day DLP

CONSTR. PERIOD = Public

Latent Defects Liability Period applicable to all JBCC Building Agreements


SCRIPTION

In com

mon

law -‐ prescrip6o

n runs fo


e date th

at a defect

was noted

and

repo

rted

to th

e contractor

3 years

LATENT DEFECTS LIABILITY PERIOD

31

!PAYMENT !INTRODUCTION !All JBCC® agreements follow the same payment procedures that must be applied strictly to minimise disagreements later. “Payment” is probably the most ‘sensitive’ aspect of the agreement and therefore no “short cuts” should be taken in certifying amounts due to the contractor or a subcontractor, and occasionally due to the employer! The procedures and time bars applying to valuation and certification as well as to payment must be applied by the principal agent and be observed by the parties !!7.0 INTERIM PAYMENT !7.1 PREPARATION !The following contract data clauses have a direct bearing on the preparation for valuation, certification and payment:- !Pre-Tender Information ▪ Employer details ▪ Principal Agent details (Only the principal agent is authorised to certify payment) ▪ Works description ▪ Law of the agreement ▪ Criteria for practical completion ▪ Site description ▪ Payment (or not!) for materials and goods (unfixed on site, off site or in transit) ▪ Completion - per section or the works as a whole ▪ Penalty - per section or the works as a whole ▪ Contract Price Adjustments – method used ▪ Changes, if any, to the provisions of the JBCC® agreement !Post Tender Information ▪ Contractor details ▪ The accepted contract sum that becomes the base amount of the contract value in terms of the agreement ▪ The latest day of the month for the issue of an interim payment certificate ▪ The preliminaries amounts payment option selected in terms of the tender ▪ The preliminaries amounts adjustment option selected in terms of the tender ▪ The security option selected in terms of the tender !7.2 THE INTERIM PAYMENT CYCLE (See diagram opposite) !Setting the Cycle !▪ The principal agent records the date of issue of the interim payment certificate in the contract data ▪ The contractor and subcontractors must cooperate with the principal agent to submit payment claims in terms of the

defined payment cycle ▪ The employer must pay the contractor within fourteen (14) calendar days of the date of issue of a payment

certificate ▪ The contractor must pay each subcontractor within twenty one (21) calendar days of the date of issue of a payment

certificate ▪ The contractor must pay the employer within twenty one (21) calendar days of the date of issue of a payment

certificate !Valuation and certification !The principal agent shall issue a payment certificate by the defined date [CD] in the agreed payment cycle - based on the valuation of completed work provided by the contractor or, where not provided, assessed by the principal agent (and/or the quantity surveyor where appointed) !The principal agent shall issue a payment certificate in every payment cycle comprising a fair estimate of work executed and of materials and goods to the contractor with a copy to the employer, and

To the contractor A summary of amounts due to each n/s subcontractor A Recovery Statement to the contractor !

To each n/s subcontractor A N/S Subcontract Payment Notification showing the amount included in the contractor‘s payment certificate !

And the contractor shall issue to each subcontractor A N/S Subcontract Recovery Statement A N/S Subcontract Payment Advice !!


32

1st 7th 21st

Subcontractorssubmit / agree

claims to Contractor

Period agreed PA & C & SC's

28th

Contract Data Issue cer.ficate

14 C-day E payment window 7 C-day C pay

Contract Data E pays C

Contract Data C pays SC's

ValuationClaims


Contractorsubmit / agree

claims to Principal Agent

(QS +) Principal Agent agree valuaCon and issue PaymentCerCficate and Recovery Stmnt,

Payment NoCficaCon

Contractorissues to SC NS Recovery Stmt and

Payment Advice

Contractorpays

Subcontractors

Subcontractorssubmit / agree

claims to Contractor


Claims

Contractorsubmit / agree

claims to Principal Agent

Interim payment cycle applicable to all JBCC Building Agreements

33

!8.0 SECURITY PROVIDED BY THE CONTRACTOR !!8.1 GUARANTEE for CONSTRUCTION (VARIABLE) !▪ The default value of the security is set at the maximum guaranteed sum not to exceed ten per cent (10%) of the

contract sum ▪ The security reduces to not more than six per cent (6%) once 50%+ of the contract sum has been certified ▪ After practical completion the value reduces to not more than four per cent (4%) of the contract sum ▪ After final completion the value reduces to not more than two per cent (2%) of the contract sum ▪ The security expires on payment of the amount due to the contractor in the final payment certificate. Where

payment is due to the employer the security expires on settlement of such amount !8.2 GUARANTEE for CONSTRUCTION (FIXED and PAYMENT REDUCTION) !▪ The default value of the security is set at the maximum guaranteed sum not to exceed five per cent (5%) of the

contract sum. ▪ The value of the works to be certified that does not exceed the contract sum is adjusted to 95% of such value up to

practical completion ▪ Where the value of the works increases during construction the 95% limit of the contract sum will be achieved prior to

practical completion ▪ The contract value of the works that exceeds the contract sum plus any CPAP adjustments is certified in full ▪ On achievement of practical completion the fixed portion of the security expires ▪ On achievement of practical completion the value of the works to be certified is adjusted to 97,5% ▪ 100% of the contract value is certified in the final payment certificate !Note: The payment reduction has two possible negative impacts. These are:

* No interest is payable on the reduction * A negative cash flow results where payment to n/s subcontractors is certified in full !

8.3 VARIABLE CONSTRUCTION GUARANTEE (MINOR WORKS AGREEMENT) !▪ As 8.1 but the security is set at the maximum guaranteed sum not to exceed six per cent (6%) of the contract sum. No

reduction of value occurs before practical completion ▪ When practical completion is achieved the value reduces to not more than four per cent (4%) of the contract sum ▪ When final completion is achieved the value reduces to not more than two per cent (2%) of the contract sum !Note: (Applicable to 8.1, 8.2 and 8.3) The security has an expiry date. This must be specified in the tender documents.

Such expiry date should be set at least six months after the anticipated date for practical completion. Where the contract is likely to continue beyond this date the employer may instruct the contractor to have such period extended by the guarantor – who may choose to reissue such a security for the balance of the works only

Note: (Applicable to 8.1, 8.2 and 8.3) Where the contract value exceeds the contract sum by more than 10% such security must be reissued to suit the increased (sub)contract value !

8.4 RETENTION – MINOR WORKS AGREEMENT !▪ Retention, as a payment reduction of the value of the completed works to be certified is set at eight per cent (8%) to a

maximum of four per cent (4%) of such value to practical completion – the four per cent (4%) limit will be reached long before practical completion

▪ The retention reduces to two per cent (2%) after practical completion ▪ No retention is deducted in the final payment certificate !Note Where an amount certified in a payment certificate is in favour of the employer [0.0] the retention [0.0] is increased

by that amount * No interest is paid on the retention held by the employer * The contractor must appreciate that the retention is “at risk” in the hands of the employer !

8.5 PUBLIC SECTOR !▪ Guarantee for construction (fixed) – similar to the private sector; the five (5) per cent cash deposit is dealt with as

above ▪ Guarantee for Construction (variable) – similar to the private sector !! !!!!!!!!!


34

COMPARISON OF GUARANTEE FORM - CLAUSES !

Note: Standard Bank – subject to … * 1st continuing covering mortgage bond; Confirm pay demand not exceed aggregate value…; The contractor must waive lien; Pay original works only; Sufficient balance of guaranteed amount to complete works; Final payment only if works complete to specified standard; payout may not be used to pay tax, interest, or materials and goods off site; The guarantor’s liability reduces pro rata; Guaranteed amount = 0 at final completion !

Guarantee for Payment NSSA Guarantee for Payment

Guarantee for Advance Payment

Guarantee for Construction Variable (PBA) (NSSA)

Guarantee for Construction Fixed (PBA) (NSSA)

Who provides Employer > Contractor Contractor > Subcontractor

Contractor > Employer Subcontractor > Employer

Contractor > Employer Subcontractor > Contractor

Who benefits Contractor / Subcontractor Employer to recover ‘loan’ Employer

Contract sum incl Tax yes No = sum of ‘items’ yes yes

Sections? Not applicable Not applicable Not applicable

Documents required PA: Interim Pay Certificate PA: Interim Pay Certificate PA>E+C: Recovery Stmnt, Interim Pay Cert, Final Pay Cert

PA: Final Pay Certificate PA: Recovery Statement PA>E+C: Prac Completion / Final Completion Certificate

C: Payment Advice C>SC: Interim Pay Advice, PA: Final Pay Advice

C: Final Pay Advice PA>SC+C: Interim + Final Pay Notification

Expiry date Intended completion date + 6 months

Intended completion date + 6 months Intended completion + 6 months

Payment … Advance payment … 1.0 Construction ‘Variable’ 2.0 Construction ‘Fixed’

Guaranteed aggregate sum yes yes (multiple ‘products’) yes 5% fxd expires @ Prac Compl

Recoupment 1.1 Number of months 10% > 50% Contract Sum

Recoupment 1.1 ‘Start’ month Then 6% until Prac Compl 5% retention until Prac Compl

Recoupment 1.1 Amount/month Then 4% until Final Compl 3% retention until Final Compl

Pay remainder of diminishing balance/expire on last payment

Then 2% until Final Pay Crt 1% retention to Final Pay Cert

Guarantor obligations 1.1 Guarantor obligations 2.1 Guarantor obligations 3.1 Guarantor obligations

Beneficiary procedures 1.2 Payment of money only 2.2 Payment of money only 3.2 Payment of money only

2.1 C notice to E Cert not paid / may call up security 4.1 E notice to C Cert not paid / E may call up security

2.2 No payment, C notifies G to pay C incl Pay Certificate 4.2 1st Demand by E to G at G’s office, copy to C

4.3 Copy of Payment Certificate entitles E to cash

Guarantor’s procedures 3.0 G to pay C 3.0 G to pay E3.1 1st

E, no pay cert <7cD = G 3.1 1st

R, no pay cert <7cD = G3.2 1st

G, copy to E, at G’s office no pay cert issued after 1notice – C requires payment

3.2 1st

G at office <7cD, E call for pay’t of SfAP

3.3 Copy of Pay cert + Rec Stmnt

4.0 G pays E SfAP amount 5.0 G pays E sum/balance

4.1 Agreement cancelled Recipient default 5.1 Agreement cancelled C’s default + notice to cancel

4.2 Agreement cancelled Recipient prov sequestration / liquidation + court order

5.2 Prov sequestration +/ or liquidation granted +court order

Maximum payout 4.0 Aggregate of payments not exceed SfC amount

5.0 Aggregate of payments not exceed SfAP amount 6.0 Liability limited per clauses 1 or 2

Guarantor an insurance company

5.0 G =insurer, C submit recon of money used, pay back balance + interest

7.0 G=insurer, E reconcile expense + pay’ received, refund surplus + (prime) interest

6.0 G pay < 7cD of receipt of 1st written demand

6.0 G pay < 7cD of receipt of 1st written demand 8.0 G pay <7cD of 1

Physical addresses 8.0 G physical address 8.0 G physical address 10.0 G physical address

Security ‘not negotiable’, ‘not transferable’, return original on expiry

9.0 SfAP not negotiable or transferable, expire on date or full pay’t / return original form

9.0 SfAP not negotiable or transferable, expire on date or full pay’t / return original form

11.0 CG not negotiable or transferable, expire on date, or full pay’t of CG amount

Liquid document 10.0 SfP = liquid document 10.0 SfAP = liquid document 12.0 SfC = liquid document

Provisional sentence 11.0 SfP in RSA - refer to High Court

13.0 SfC in RSA - refer to High Court


35

Principal Building Agreement Minor Works Agreement

Contractor

Employer

Works

Site

This done and signed at

Name of Signatory

ContractorStreet Address

Code 0101

Postal AddressCode 0101

E-mail

Fax

For and on behalf of the contractor who by signature hereto warrants such authorisation

Waiver of the Contractor's Lien

9 Dvorak Street, Symphony Village ..

AGREEMENT


New World Contracts

for use with the …

Offices to Flats Conversion

+27271234567

The contractor waives in favour of the employer any lien or right of retention that is or may be held in respect of the works to be executed on the site

This waiver shall only come into effect on provision by the employer of a security for payment in fulfilment of obligations in terms of the identified agreement


New World Contracts

Mobile

201?-02-02


[email protected]

Peter World

Edition used ?

Edition used ?

Ed 6.1 March 2014

JBCC® PBA or MWA Waiver of Lien © March 2014

Symphony Village

CEOCapacity

Date

Signature of Witness

+27721234567

Telephonenot applicable

®

36

For use with the JBCC® Principal Building Agreement state edition /date

Guarantor:

Physical address:

Guarantor's signatory 1: Capacity


Employer:

Contractor:

Principal Agent:

Works:

Site:

Name of Signatory:

Contract Sum: Accepted amount inclusive of tax Currency

… amount in words:

Guaranteed Sum: Currency


Security for Construction Expiry date

Sections Last section

1.0 GUARANTEE for CONSTRUCTION (Variable)

1.1

GUARANTOR’S LIABILITY PERIOD OF LIABILITY

1.1.1

Amount in words:

1.1.2

Amount in words:

1.1.3

Total number / not applicable

The maximum aggregate amount

From and including the day after the date of the aforesaid interimpayment certificate and up to and including the date of issue of the onlyCertificate of Practical Completion or last Certificate of PracticalCompletion where there are sections

Reducing to the Guaranteed Sum (not exceeding 6.0 % of thecontract sum) in the amount of:

Where a Guarantee for Construction (Variable) in terms of the Agreement has been selected this clause 1.0 and 3.0 to 13.0 shall apply.The Guarantor’s liability shall be limited to the diminishing amounts of the Guaranteed Sum as follows:-‐

Reducing to the Guaranteed Sum (not exceeding 4.0% of thecontract sum) in the amount of:

From and including the day after the date of the applicable Certificate ofPractical Completion and up to and including the date of issue of the onlyCertificate of Final Completion or the last Certifcate of Final Completionwhere there are sections

(insert variable or fixed)

Guarantee for Construction

GUARANTOR DETAILS

From and including the date of issue of this Guarantee for Constructionand up to and including the date of issue of the interim paymentcertificate certifying in excess of 50% of the contract sum

Maximum Guaranteed Sum (not exceeding 10.0% of the contractsum) in the amount of:

AGREEMENT DETAILS

Principal Agent issues 'JBCC® format Interim Payment Certificates, the Final Payment Certificate, the Certificate of Practical Completion andthe Certificate of Final Completion

®

37

Amount in words:

1.1.4

Amount in words:

1.2

2.0 GUARANTEE for CONSTRUCTION (Fixed)

2.1


Amount in words:

3.0 The Guarantor acknowledges that:-‐

3.1

3.2 Its obligation under this Guarantee for Construction is restricted to the payment of money

3.3

4.0

4.1

4.2

4.3

5.0

5.1

5.2

6.0

7.0

Reference to a recovery statement or an Interim or Final Payment Certificate, or a Certificate(s) of Practical or Final Completion shallmean such certificate issued by the Principal Agent

The Guarantor's liability limits set out in 1.1.1 to 1.1.4 shall apply in respect of any claim received by the Guarantor during the Security validity

Where a Guarantee for Construction (Fixed) in terms of the Agreement has been selected this clause 2.0 and 3.0 to 13.0 shall apply. The Guarantor’sliability shall be limited to the amount of the Guaranteed Sum as follows:-‐

The Agreement has been terminated due to the Contractor's default and that the Security for Construction is called up in terms of5.0. The demand notice shall enclose a copy of the notice of termination; or

A provisional sequestration or liquidation court order has been granted against the Contractor and that the Guarantee forConstruction is called up in terms of 5.0. The demand notice shall enclose a copy of the court order

The aggregate amount of payment to be made by the Guarantor in terms of 4.0 and 5.0 shall not exceed the Guarantor's maximum liability in termsof 1.0 or 2.0

A copy of a first written demand notice issued by the Employer to the Contractor stating that payment of a sum certified by thePrincipal Agent in an interim or Final Payment Certificate has not been made in terms of the Agreement and failing such paymentwithin seven (7) calendar days, the Employer intends to call upon the Guarantor to make payment in terms of 4.2


Any reference in this Guarantee for Construction to the Agreement is made for the purpose of convenience and shall not beconstrued as any intention to create an accessory obligation or any intention to create a suretyship

Maximum Guaranteed Sum (not exceeding 5,0% ofthe contract sum) in the amount of:

From and including the date of issue of this Guarantee for Constructionand up to and including the date of the only Certificate of PracticalCompletion or the last Certificate of Practical Completion where there aresections, whereafter this Guarantee for Construction shall expire

From and including the day after the date of the applicable Certificate ofFinal Completion and up to and including the date of issue of the FinalPayment Certificate where payment is due to the Contractor, whereafterthis Guarantee for Construction shall expire. Where the Final PaymentCertificate reflects payment due to the Employer this Guarantee forConstruction shall expire upon payment of the full amount certified

Where the Guarantor is a registered insurer and has made payment in terms of 5.0, the Employer shall within one hundred and eighty (180)calendar days of receipt of payment submit an expense account to the Guarantor showing how all monies received in terms of the Guarantee forConstruction have been expended, or will be expended, and shall refund to the Guarantor any surplus amount. All monies refunded to theGuarantor in terms of this Guarantee for Construction shall bear interest at the prime overdraft rate of the Employer’s bank compounded monthlyand calculated from the date of payment by the Guarantor to the Employer until the date of refund

Subject to the Guarantor’s maximum liability referred to in clauses 1.0 or 2.0 , the Guarantor hereby undertakes to pay the Employer the sumcertified upon receipt of the documents identified in 4.1 to 4.3:-‐

Subject to the Guarantor’s maximum liability referred to in 1.0 or 2.0 , the Guarantor undertakes to pay the Employer the Guaranteed Sum or thefull outstanding balance upon receipt of a first written demand notice from the Employer to the Guarantor at the Guarantor's physical addresscalling up this Guarantee for Construction stating that:-‐

A copy of the applicable payment certificate which entitles the Employer to receive payment in terms of the Agreement of the sum certified in 4.0

Afirst written demand notice issued by the Employer to the Guarantor at the Guarantor’s physical address with a copy to theContractor stating that a period of seven (7) calendar days has elapsed since the issue of the first written demand notice in terms of4.1 and that the sum certified has not been paid to date. The Employer herewith calls up this Guarantee for Construction anddemands payment of the sum certified from the Guarantor

38

8.0

9.0

10.0

11.0

12.0

13.0

Signed at Date

Guarantor’s Signatory 1 Guarantor’s Signatory 2

Witness Witness

Guarantor’s seal or stamp

JBCC® Guarantee for Construction PBA 6.0 © March 2014

Payment by the Guarantor in terms of 4.0 or 5.0 shall be made within seven (7) calendar days upon receipt of the first written demand notice to theGuarantor

The Guarantor chooses the physical address stated above for all transactions in relation to this security

This Guarantee for Construction is neither negotiable nor transferable and shall expire in terms of either 1.1.4 or 2.1, or on payment in full of theGuaranteed Sum or on the Security expiry date, whichever is the earlier, where after no claims will be considered by the Guarantor. The originalGuarantee for Construction form shall be returned to the Guarantor after it has expired

This Guarantee for Construction, with the required demand notices in terms of 4.0 or 5.0, shall be regarded as a liquid document for the purpose ofobtaining a court order

Where this Guarantee for Construction is issued in the Republic of South Africa the Guarantor hereby consents to the jurisdiction of a court in the areawhere the project is located

The Employer shall have the absolute right to arrange his affairs with the Contractor in any manner which the Employer deems fit and the Guarantorshall not have the right to claim his release from this Guarantee for Construction on account of any conduct alleged to be prejudicial to the

39

For use with the JBCC® NSSA Subcontract Agreement state edition /date

Guarantor:

Physical address:



Contractor:

Subcontractor:

Principal Agent:

Works:

Site:

Name of Signatory:

Contract Sum: Currency




Security for Construction Expiry date

Sections Last section

1.0 GUARANTEE for CONSTRUCTION (Variable)

1.1


1.1.1

Amount in words:

1.1.2

Amount in words:

1.1.3

Principal Agent issues

'JBCC® format Interim Payment Advices, the Final Payment Advice

'JBCC® format Interim Payment Certifiates, the Final Payment Certificate, the Certificate(s) of Practical Completionand the Certificate(s) of Final Completion

Reducing to the Guaranteed Sum (not exceeding 4.0% of thesubcontract sum) in the amount of:

From and including the day after the date of the applicable Certificate ofPractical Completion and up to and including the date of issue of the onlyCertificate of Final Completion or the last Certifcate of Final Completionwhere there are sections

Where a NSSA Guarantee for Construction (Variable) in terms of the Agreement has been selected this clause 1.0 and 3.0 to 13.0 shall apply. TheGuarantor’s liability shall be limited to the diminishing amounts of the Guaranteed Sum as follows:-‐

Maximum Guaranteed Sum (not exceeding 10.0% of thesubcontract sum) in the amount of:

From and including the date of issue of this NSSA Guarantee forConstruction and up to and including the date of issue of the interimpayment advices certifying in excess of 50% of the contract sum

Reducing to the Guaranteed Sum (not exceeding 6.0 % of thesubcontract sum) in the amount of:

From and including the day after the date of the aforesaid interimpayment advice and up to and including the date of issue of the onlyCertificate of Practical Completion or last Certificate of PracticalCompletion where there are sections

Contractor issues

The maximum aggregate amount

(insert variable or fixed)

AGREEMENT DETAILS

Total number / not applicable

Accepted amount inclusive of tax

NSSA Guarantee for Construction

GUARANTOR DETAILS

®

40

Amount in words:

1.1.4

Amount in words:

1.2

2.0 SECURITY for CONSTRUCTION (Fixed)

2.1


Amount in words:


3.1

3.2 Its obligation under this NSSA Guarantee for Construction is restricted to the payment of money

3.3

4.0

4.1

4.2

4.3

5.0

5.1

5.2

6.0

7.0

Subject to the Guarantor’s maximum liability referred to in 1.0 or 2.0 , the Guarantor undertakes to pay the Contractor the Guaranteed Sum or thefull outstanding balance upon receipt of a first written demand notice from the Contractor to the Guarantor at the Guarantor's physical addresscalling up this NSSA Guarantee for Construction stating that:-‐

The Agreement has been terminated due to the Subcontractor's default and that the NSSA Guarantee for Construction is called up interms of 5.0. The demand notice shall enclose a copy of the notice of termination; or

A provisional sequestration or liquidation court order has been granted against the Subcontractor and that the NSSA Guarantee forConstruction is called up in terms of 5.0. The demand notice shall enclose a copy of the court order

The aggregate amount of payments to be made by the Guarantor in terms of 4.0 and 5.0 shall not exceed the Guarantor's maximum liability in termsof 1.0 or 2.0

Where the Guarantor is a registered insurer the Contractor shall within one hundred and twenty (120) calendar days of receipt of payment submitan expense account to the Guarantor showing how all monies received in terms of the NSSA Guarantee for Construction have been expended, orwill be expended, and shall refund to the Guarantor any surplus amount. All monies refunded to the Guarantor in terms of this NSSA Guarantee forConstruction shall bear interest at the prime overdraft rate of the Contractor’s bank compounded monthly and calculated from the date payment atthe prime overdraft rate of the Contractor’s bank compounded monthly and calculated from the date of payment by the Guarantor to theContractor until the date of refund

Any reference in this NSSA Guarantee for Construction to the Agreement is made for the purpose of convenience and shall not beconstrued as any intention to create an accessory obligation or any intention to create a suretyship

Subject to the Guarantor’s maximum liability referred to in clauses 1.0 or 2.0, the Guarantor undertakes to pay the Contractor the sum certified onreceipt of the documents identified in 4.1 to 4.3:-‐

A copy of the applicable payment advice which entitles the Contractor to receive payment in terms of the Agreement of the sum certified in 4.0

A copy of a first written demand notice issued by the Contractor to the Subcontractor stating that payment of a sum certified by the Principal Agent in an interim or Final Payment Certificate has not been made in terms of the Agreement and failing such payment within seven (7) calendar days, the Contractor intends to call upon the Guarantor to make payment in terms of 4.2

A first written demand notice issued by the Contractor to the Guarantor at the Guarantor’s physical address with a copy to theSubcontractor stating that a period of seven (7) calendar days has elapsed since the issue of the first written demand notice in termsof 4.1 and that the sum certified has not been paid to date. The Contractor herewith calls up this Guarantee for Construction anddemands payment of the sum certified from the Guarantor

Reference to a recovery statement or a interim or final Payment Advice shall mean such advice issued by the ContractorReference to a recovery statement or an Interim or Final Payment Certificate, or a Certificate(s) of Practical or Final Completion shallmean such certificate issued by the Principal Agent

The Guarantor's liability limits set out in 1.1.1 to 1.1.4 shall apply in respect of any claim received by the Guarantor during the Security validity period

Where a NSSA Guarantee for Construction (Fixed) in terms of the Agreement has been selected this clause 2.0 and 3.0 to 13.0 shall apply. TheGuarantor’s liability shall be limited to the amount of the Guaranteed Sum as follows:-‐

Maximum Guaranteed Sum (not exceeding 5,0% ofthe subcontract sum) in the amount of:

From and including the date of issue of this NSSA Guarantee forConstruction and up to and including the date of the only Certificate ofPractical Completion or the last Certificate of Practical Completion wherethere are sections, whereafter this NSSA Guarantee for Construction shallexpire

Reducing to the Guaranteed Sum (not exceeding 2.0% of thesubcontract sum) in the amount of:

From and including the day after the date of the applicable Certificate ofFinal Completion and up to and including the date of issue of the FinalPayment Advice where payment is due to the Subcontractor, whereafterthis NSSA Guarantee for Construction shall expire. Where the FinalPayment Certificate reflects payment due to the Contractor this NSSAGuarantee for Construction shall expire upon payment of the full amountcertified

41

8.0

9.0

10.0

11.0

12.0

13.0

Signed at Date


Witness Witness


JBCC® Guarantee for Construction NSSA 6.0 © March 2014

The Contractor shall have the absolute right to arrange his affairs with the Subcontractor in any manner which the Contractor deems fit and theGuarantor shall not have the right to claim his release from this NSSA Guarantee for Construction on account of any conduct alleged to be prejudicialto the Guarantor

The Guarantor chooses the physical address stated above for all transactions in connection with this Security

This NSSA Guarantee for Construction is neither negotiable nor transferable and shall expire in terms of either 1.1.4 or 2.1, or payment in full of theGuaranteed Sum or on the Security expiry date, whichever is the earlier, whereafter no claims will be considered by the Guarantor. The originalNSSA Guarantee for Construction form shall be returned to the Guarantor after it has expired

This NSSA Guarantee for Construction, with the required demand notices in terms of 4.0 or 5.0, shall be regarded as a liquid document for thepurpose of obtaining a court order

Where this NSSA Guarantee for Payment is issued in the Republic of South Africa the Guarantor hereby consents to the jurisdiction of a court in thearea where the project is located

Payment by the Guarantor in terms of 4.0 or 5.0 shall be made within seven (7) calendar days upon receipt of the first written demand notice to theGuarantor

42

For use with the JBCC® Minor Works Agreement state edition /date

GUARANTOR DETAILS

Guarantor:

Physical address:



Employer:

Contractor:

Principal Agent:

Works:

Site:

Name of Signatory:



Guaranteed Sum: The maximum aggregate amount Currency


Security expiry date:

AGREEMENT DETAILS

1.0


1.1.1

Amount in words:

1.1.2

Amount in words:

1.1.3

Amount in words:

Agent issues

From and including the day after the date of the Certificate ofFinal Completion and up to and including the date of issue of theFinal Payment Certificate where payment is due to theContractor, whereupon this MWA Guarantee for Constructionshall expire. Where the Final Payment Certificate reflectspayment due to the Employer, this MWA Guarantee forConstruction shall expire on payment of the full amount certified

JBCC® format Payment Certificates, Final Payment Certificate, Certificate of Practical Completion andCertificate of Final Completion

From and including the day after the date of the Certificate ofPractical Completion and up to and including the date of theCertificate of Final Completion

Maximum Guaranteed Sum (not exceeding 6.0% of the contractsum) in the amount of:


From and including the date of issue of this MWA Guarantee forConstruction and up to and including the date of practicalcompletion

MWA Guarantee for Construction (variable)

The Guarantor’s liability shall be limited to the diminishing amounts of the Guaranteed Sum as follows:


®

43

2.0

3.0 The Guarantor hereby acknowledges that:

3.1

3.2

3.3

4.0

4.1

4.2

4.3

5.0

5.1

5.2

6.0

7.0

8.0

9.0

10.0

11.0

12.0

13.0

Signed at Date


Witness Witness


JBCC Guarantee for Construction MWA © March 2014

The Guarantor chooses the physical address as stated above for all purposes in connection herewith

Payment by the Guarantor in terms of 4.0 or 5.0 shall be made within seven (7) calendar days upon receipt of the first written demandnotice to the Guarantor

The Employer shall have the absolute right to arrange his affairs with the Contractor in any manner which the Employer deems fit and theGuarantor shall not have the right to claim his release from this MWA Guarantee for Construction on account of any conduct alleged to beprejudicial to the Guarantor

Reference to a Certificate of Practical Completion or to a Certificate of Final Completion shall mean such certificate as issuedby the Agent

Where the Guarantor is a registered insurer and has made payment in terms of 5.0, the Employer shall within one hundred and twenty (120)calendar days of receipt of payment submit an expense account to the Guarantor showing how all monies received in terms of this MWAGuarantee for Construction have been expended or will be expended, and shall refund to the Guarantor any resulting surplus. All moniesrefunded to the Guarantor in terms of this MWA Guarantee for Construction shall bear interest at the prime overdraft rate of the Employer’s bank compounded monthly and calculated from the date payment at the prime overdraft rate of the Employer’s bank compounded monthlyand calculated from the date of payment by the Guarantor to the Employer until the date of refund

The Guarantor's liability limits set out in clauses 1.1 to 1.3 shall apply in respect of any claim received by the Guarantor during the securityvalidity period

Subject to the Guarantor’s maximum liability referred to in 1.0, the Guarantor hereby undertakes to pay the Employer the sum certifiedupon receipt of the documents identified in 4.1 to 4.3:

Subject to the Guarantor’s maximum liability referred to in 1.0, the Guarantor undertakes to pay the Employer the Guaranteed Sum or thefull outstanding balance upon receipt of a first written demand from the Employer to the Guarantor at the Guarantor's physical addresscalling up this MWA Guarantee for Construction stating that:

The Agreement has been terminated due to the Contractor's default and that the MWA Guarantee for Construction is calledup in terms of 5.0. The demand notice shall enclose a copy of the notice of termination; or called up in terms of 5.0. Thedemand notice shall enclose a copy of the notice of termination; or

Any reference in this MWA Guarantee to the Agreement is made for the purpose of convenience and shall not be construedas any intention whatsoever to create an accessory obligation or any intention whatsoever to create a suretyship

Its obligation under this Security is restricted to the payment of money

This MWA Guarantee for Construction, with the required demand notices in terms of 4.0 or 5.0, shall be regarded as a liquid document forthe purpose of obtaining a court order

A copy of a first written demand notice issued by the Employer to the Contractor stating that payment of a sum certified bythe Principal Agent has not been made in terms of the Agreement and failing such payment within seven (7) calendar days,the Employer intends to call upon the Guarantor to make payment in terms of 4.2

A first written demand notice issued by the Employer to the Guarantor at the Guarantor’s physical address with a copy to theContractor stating that a period of seven (7) calendar days has elapsed since the date of issue of the first written demandnotice in terms of 4.1 and that the sum certified has still not been paid to date. The Employer herewith calls up this MWAGuarantee for Construction and demands payment of the sum certified from the Guarantor

A copy of the applicable payment certificate which entitles the Employer to receive payment in terms of the Agreement of the sum certified

It is recorded that the aggregate amount of payments required to be made by the Guarantor in terms of 4.0 and 5.0 shall not exceed theGuarantor's maximum liability in terms of 1.0

A provisional sequestration or liquidation court order has been granted against the Contractor and that the MWA Guarantee for Construction is called up in terms of 5.0. The demand notice shall enclose a copy of the court order

Where this MWA Guarantee for Construction is issued in the Republic of South Africa the Guarantor hereby consents to the jurisdiction of acourt in the area where the project is located

This MWA Guarantee for Construction is neither negotiable nor transferable and shall expire in terms of either 1.3, or payment in full of theGuaranteed Sum or on the Guarantee expiry date, whichever is the earlier, where after no claims will be considered by the Guarantor. Theoriginal of this MWA Guarantee for Construction form shall be returned to the Guarantor after it has expired

44

For use with the JBCC® Principal Building Agreement state edition /date

Guarantor:

Physical address:



Employer:

Contractor:

Principal Agent:

Works:

Site:







1.1

1.2

1.3

2.0

2.1

2.2

2.3

3.0

Guarantee for Payment

GUARANTOR DETAILS AND DEFINITIONS

AGREEMENT DETAILSPrincipal Agent issues JBCC® format Interim Payment Certificates and a Final Payment Certificate

Any reference in this Guarantee for Payment to the Agreement is made for the purpose of convenience and shall not be construedas any intention to create an accessory obligation or any intention to create a suretyship

Its obligation under this Guarantee for Payment is restricted to the payment of money

Reference to a Certificate of Practical Completion or to a Certificate of Final Completion shall mean such certificate issued by thePrincipal Agent

Subject to the Guarantor’s maximum liability in terms of the Guaranteed Sum, the Guarantor undertakes to pay the Contractor the sumcertified upon receipt of the documents identified in 2.1 to 2.3:-‐

A copy of a first written demand notice issued by the Contractor to the Employer stating that payment of a sum certified by thePrincipal Agent has not been made in terms of the Agreement and failing such payment within seven (7) calendar days, theContractor intends to call upon the Guarantor to make payment in terms of 2.2

A first written demand notice issued by the Contractor to the Guarantor at the Guarantor's physical address with a copy to theEmployer stating that a period of seven (7) calendar days has elapsed since the date of issue of the first written demand notice interms of 2.1 and that the sum certified has not been paid to date. The Contractor herewith calls up this Guarantee for Payment anddemands payment of the sum certified from the Guarantor

A copy of the payment certificate which entitles the Contractor to receive payment in terms of the Agreement of the sum certified in 2.0

Subject to the Guarantor’s maximum liability in terms of the Guaranteed Sum, the Guarantor hereby undertakes to pay the Contractor the demanded sum upon the receipt of the documents identified in 3.1 and 3.2:-‐

®

45

3.1

3.2

4.0

5.0

6.0

7.0

8.0 The Guarantor chooses the physical address stated above for all transactions in connection with this Security

9.0

10.0

11.0

Signed at Date


Witness Witness


JBCC® Guarantee for Payment PBA / MWA © March 2014

A copy of a first written demand notice issued by the Contractor to the Employer stating that the Contractor demands the issue of apayment certificate and failing such issue within seven (7) calendar days, the Contractor intends to call upon the Guarantor to makepayment in terms of 3.2 of the demanded sum as set out in the demand

A first written demand notice issued by the Contractor to the Guarantor at the Guarantor's physical address with a copy to theEmployer stating that a period of seven (7) calendar days has elapsed since the issue of a first written demand notice in terms of 3.1and that a payment certificate has still not been issued. The Contractor herewith calls up this Guarantee for Payment and demandspayment of the demanded sum from the Guarantor

The aggregate amount of payments to be made by the Guarantor in terms of 2.0 and 3.0 shall not exceed the Guaranteed Sum

Where the Guarantor is a registered insurer and has made payment in terms of 3.0, the Contractor shall within one hundred and eighty(180) calendar days of receipt of payment submit an expense account to the Guarantor showing how all monies received in terms of theGuarantee for Payment have been expended, or will be expended, and shall refund to the Guarantor any surplus amount. All moniesrefunded to the Guarantor in terms of this Guarantee for Payment shall bear interest at the prime overdraft rate of the Contractor’s bankcompounded monthly and calculated from the date of payment by the Guarantor to the Contractor until the date of refund

The Guarantor shall make payment in terms of 2.0 or 3.0 within seven (7) calendar days of receipt of the first written demand notice to theGuarantor

The Contractor shall have the absolute right to arrange his affairs with the Employer in any manner which he deems fit and the Guarantorshall not have the right to claim his release on account of any conduct alleged to be prejudicial to the Guarantor

This Guarantee for Payment is neither negotiable nor transferable and shall expire upon payment of the final payment certificate in termsof the Agreement or on payment in full of the Guaranteed Sum or on the Security expiry date, whichever is the earlier, whereafter noclaims will be considered by the Guarantor. The original Guarantee for Payment form shall be returned to the Guarantor after it has expired

This Guarantee for Payment, with the required demand notices in terms of 2.0 or 3.0, shall be regarded as a liquid document for thepurpose of obtaining a court order

Where this Guarantee for Payment is issued in the Republic of South Africa the Guarantor hereby consents to the jurisdiction of a court in the area where the project is located

46

For use with the JBCC® NSSA Subcontract Agreement state edition /date

Guarantor:

Physical address:



Employer:

Contractor:

Subcontractor:

Principal Agent:

N/S Works:

Site:

Subcontract Sum: Accepted amount inclusive of tax Currency






1.1

1.2

1.3

2.0

2.1

2.1.1

2.1.2

2.1.3

2.1.4

NSSA Guarantee for Payment

GUARANTOR DETAILS

AGREEMENT DETAILSContractor issues

Any reference in this NSSA Guarantee for Payment to the Agreement is made for the purpose of convenience and shall not beconstrued as any intention to create an accessory obligation or any intention to create a suretyship

Its obligation under this NSSA Guarantee for Payment is restricted to the payment of money

Reference to a Payment Advice or a final Payment Advice shall mean such advice issued by the Contractor

The Contractor has received timeous payment from the Employer and has failed to make payment to the Subcontractorwithin seven (7) calendar days after due date for payment to the Contractor by the Employer; or

A copy of a first written demand notice issued by the Subcontractor to the Contractor stating that payment of a sum certified in thepayment advice statement has not been made in terms of the Agreement and that:-‐

The Contractor has failed to notify the Subcontractor of payment default by the Employer and has failed to make payment tothe Subcontractor within seven (7) calendar days after due date for payment to the Contractor by the Employer; or

The Contractor has received late payment from the Employer and has failed to make payment to the Subcontractor withinseven (7) calendar days of the Contractor receiving payment from the Employer; or

The Contractor has failed to pay to the Subcontractor within thirty (30) calendar days after the due date for payment to theContractor by the Employer and failing payment of the sum certified by the Contractor in the payment advice statementwithin seven (7) calendar days, the Subcontractor intends to call upon the Guarantor to make payment in terms of 2.2

JBCC® format Payment Advice and a Final Payment Advice

Subject to the Guarantor’s maximum liability in terms of the Guaranteed Sum, the Guarantor undertakes to pay the Subcontractor the sumcertified upon receipt of the documents identified in 2.1 to 2.3:-‐

®

47

2.2

2.3

3.0

3.1

3.2

4.0

5.0

6.0

7.0


9.0

10.0

11.0

Signed at Date


Witness Witness


JBCC® Guarantee for Payment NSSA © March 2014

Where this NSSA Guarantee for Payment is issued in the Republic of South Africa the Guarantor hereby consents to the jurisdiction of acourt in the area where the project is located

A copy of a first written demand notice issued by the Subcontractor to the Contractor stating that the Subcontractor demands theissue of a payment advice statement and failing such issue within seven (7) calendar days, the Subcontractor intends to call upon theGuarantor to make payment in terms of 3.2 of the sum as set out in the demand

Subject to the Guarantor’s maximum liability in terms of the Guaranteed Sum, the Guarantor hereby undertakes to pay the Subcontractorthe demanded sum upon the receipt of the documents identified in 3.1 and 3.2:-‐

A first written demand notice issued by the Subcontractor to the Guarantor at the Guarantor's physical address with a copy to theContractor stating that a period of seven (7) calendar days has elapsed since date of issue of the the first written demand notice interms of 2.1 and that the sum certified has not been paid to date. The Subcontractor herewith calls up this NSSA Guarantee forPayment and demands payment of the sum certified from the Guarantor

The aggregate amount of payments to be made by the Guarantor in terms of 2.0 and 3.0 shall not exceed the Guaranteed Sum

Where the Guarantor is a registered insurer the Subcontractor shall within one hundred and twenty (120) calendar days of receipt ofpayment submit an expense account to the Guarantor showing how all monies received in terms of the NSSA Guarantee for Payment havebeen expended, or will be expended, and shall refund to the Guarantor any surplus amount. All monies refunded to the Guarantor in termsof this NSSA Guarantee for Payment shall bear interest at the prime overdraft rate of the Subcontractor’s bank compounded monthly andcalculated from the date of payment by the Guarantor to the Subcontractor until the date of refund

A written demand notice issued by the Subcontractor to the Guarantor at the Guarantor's physical address with a copy to theContractor stating that a period of seven (7) calendar days has elapsed since the issue of a first written demand notice in terms of3.1 and that a payment advice statement has not been issued. The Subcontractor herewith calls up this NSSA Guarantee for Paymentand demands payment of the sum as set out in the demand from the Guarantor

A copy of the payment advice statement issued by the Contractor and which entitles the Subcontractor to receive payment of thesum certified in 2.0


The Subcontractor shall have the absolute right to arrange his affairs with the Contractor in any manner which he deems fit and theGuarantor shall not have the right to claim his release on account of any conduct alleged to be prejudicial to the Guarantor

This NSSA Guarantee for Payment, with the required demand notices in terms of 2.0 or 3.0, shall be regarded as a liquid document for thepurpose of obtaining a court order

This NSSA Guarantee for Payment is neither negotiable nor transferable and shall expire upon payment of the final payment advice in termsof the Agreement or on payment in full of the Guaranteed Sum or on the Security expiry date, whichever is the earlier, whereafter no claimswill be considered by the Guarantor. The original NSSA Guarantee for Payment form shall be returned to the Guarantor after it has expired

48

!9.0 CONTRACTUAL CLAIMS – also applicable to insurance and security clauses, may apply on termination !9.1 DEFINITION !Claim – a formal request for compensation by either contracting party, evaluated by the principal agent (provided notice of a potential claim is given and the substantiated claim is submitted within the prescribed periods) !Dispute - an unresolved disagreement between the contacting parties (or a claim) involving an independent entity to guide the process or to adjudicate such claim – not the principal agent! !9.2 PROCESS – (SUB)CONTRACTOR !Give notice of a potential (time) claim P6.0 Cl 23.1-3; Cl 23.4.2= 20 W-days; N6.0 Cl 23.1-3; Cl 23.4.2= 20 W-days Give notice of a potential (money) claim P6.0 Cl 26.1-4; Cl 26.5= 20 W-days; N6.0 Cl 26.1-4; Cl 26.5= 20 W-days Other clauses (M5.0 Cl 17.3) 2.1 (M 2.1) Non compliance with the law 6.2 (M 5.4) Agents not appointed 6.5 (M 5.5) Replacement agent not appointed 7.0 (M 7.0) Acceptance of a design by a specialist subcontractor 10.3-7/12.1.7 (M 8.3) Insurances not effected 12.1.2-6 (M12.0) Site restrictions / possession of site 12.1.8 (M10.1.10) make payment (regular + advance) 12.1.11 (M10.1.13) supply free issue to the (sub)contractor 14.6 - default of a nominated subcontractor 16.1.3 ((M13.0) default of a direct contractor 17.1 (M14.0) PA not issue a contract instruction 19.3 (M15.4) PA not issue a certificate of practical completion 25.12 (M19.10) partial / non-payment of an issued payment certificate 28 (M19.10.1) Suspension + resumption of work = payment/insurance/security The (sub)contractor gives notice to the employer (contractor) and/or the principal agent to inter alia consider the event / evaluate design and execution options etc to complete the project within the construction period and budget !contractor submits a substantiated (time) claim P6.0 Cl 23.1-3; 23.4.2= Cl 23.5= 40 W-days M5.0 Cl 17.1-3 subcontractor submits a substantiated (time) claim N6.0 Cl 23.1-3; 23.4.2= Cl 23.5= 20 W-days contractor submits a substantiated (money) claim P6.0 Cl 26.1-4; 26.5= Cl 26.6= 40 W-days M5.0 Cl 20.4-5 subcontractor submits a substantiated (money) claim N6.0 Cl 26.1-4; 26.5= Cl 26.6= 15 W-days !The contractor motivates the claim using site records, if applicable – stating briefly:- ▪ The ‘problem’ (refer to “records”) ▪ The root cause – identify events / entities responsible for act / omission ▪ Single / multiple events > identify dominant cause (isolate + quantify the effect of each cause) ▪ Separate events due to the (sub)contractor’s inefficiency from employer obligations ▪ The effect - on the (revised) date for practical completion … events that impact directly on scheduled completion

date ▪ The effect - adjustment of the contract value ▪ Options explored – preventative measures ▪ Effect on (original) critical path on revised programme ▪ Other consequences !Refer to the programme: ▪ Delayed site handover / instructions to stop-and-resume work ▪ Late specification / delivery of materials / facilities / samples / free issue or similar ▪ Suspension = employer default ▪ Agents respond late / (not) issue a contract instruction ▪ Late acceptance of design ▪ Late appointment of nominated subcontractors / direct contractors ▪ Delayed tests / results ▪ Weather … show direct effect on works ▪ Force majeure ▪ Highlight issues an experienced contractor would not anticipated

o Scope: Instruction to vary quantity / quality / sequence of work o Discrepancies in documentation o Work requiring additional equipment / safety etc o Faulty free issue o Site information - Assumptions not realised o Adverse physical conditions (excavations + foundations) o Natural occurrences – fossils etc o Omissions

Note: Where the employer occupies the works before practical completion some of the criteria listed may apply !


49

!9.3 PROCESS – PRINCIPAL AGENT !▪ PA may request additional information where the submission is not clear / ask for a quotation ▪ PA (Cl 23.0 and 26.0) must grant in full, reduce or refuse a claim and determine the revised date for practical

completion and adjust the contract value with reasons using essentially the same headings … ▪ No decision by the PA within specified time period, the contractor may give notice of a disagreement (Cl 30.1) !▪ Note: The construction period in an existing agreement can not be shortened by issuing a contract

instruction – this implies ‘acceleration’ with the associated reprogramming, reallocating resources etc – for which the contractor must be compensated

▪ Note: Reprogramming the works as a result of contract instructions may not necessarily lengthen the construction period but may require other / additional resources attracting additional costs !

▪ The PA may certify partial payment for a claim in an interim payment certificate for resolved items !▪ The PA may create a ‘final account‘ for the event – and pay such amount in full, in an interim payment certificate !!….. work as a team! !9.4 PRELIMINARIES ! Where a project is divided into sections for completion at different times before the date for practical completion for

the works as a whole the parties should agree an allocation of preliminaries per section to facilitate valuation of payment certificates and calculation of adjustments to the contract value later !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


50

!10.0 STATUS REPORT !10.1 DEFINITION (repeated)

A report compiled by the principal agent and/or agents (and the [sub]contractor) in the event of termination of the agreement, or where the works has been suspended due to a force majeure event, or in the event of termination of the n/s subcontract agreement by the contractor, to record the state of completion or otherwise of the works or the n/s subcontract works, as the case may be. Such status report may include marked up drawings and photographs !

10.2 BACKGROUND The concept has been hidden away in previous editions of JBBC® agreements under the interpretation heading of duties to be carried out in writing. In practice it is an essential administration tool where status of an agreement changes where: ▪ The employer sells a project and another employer takes over to record work done, payments earned and

items not completed ▪ Either party terminates the agreement ▪ Both parties decide to terminate an agreement !

10.3 PROCESS The principal agent in cooperation with other agents and the contractor and subcontractors assemble all information pertaining to the project. The information required is similar to the requirements to submit a claim (§ 9.0) !

Determine: !▪ The nature of the change of status of the project = termination, sale of the project, or other reason(s) ▪ The effective date when the status of the project changed ▪ Immediate actions – stop work but make the site safe in terms of the Health and Safety requirements, and / ▪ or suspend work until the status of the work can be assessed and quantified to produce the final account !!Assess progress:- !▪ Is the contractor on time in terms of the programme? ▪ Is the contractor entitled to a revision of the date for practical completion? ▪ If yes - why?:-

▪ The ‘problem’ (refer to “records”) ▪ The root cause – identify events / entities responsible for act / omission ▪ Single / multiple events > identify dominant cause (isolate + quantify the effect of each cause) ▪ Delayed site handover / instructions to stop-and-resume work ▪ Late specification / delivery of materials / facilities / samples / free issue or similar ▪ Separate events due to the (sub)contractor ’s inefficiency from employer obligations ▪ Agents respond late / (not) issue a contract instruction ▪ Late acceptance of design ▪ Late appointment of nominated subcontractors / direct contractors ▪ Delayed tests / results ▪ Weather … show direct effect on works ▪ Force majeure ▪ Highlight issues an experienced contractor would not anticipated

▪ Scope / instruction to vary quantity / quality / sequence of work ▪ Discrepancies in documentation ▪ Work requiring additional equipment / safety etc ▪ Faulty free issue ▪ Site information - Assumptions not realised ▪ Adverse physical conditions (excavations + foundations) ▪ Natural occurrences – fossils etc ▪ Omissions !

Assess payments / criteria for adjustment of the contract value:

▪ Compare interim payments up to the date of the status report with draft final account ▪ Identify expense and/or loss the contractor may have incurred ▪ Options explored – preventative measures … additional security or safety requirements ▪ Other consequences … penalties / damages that may apply !!

Additional information: Mark up drawings to highlight completed work / defective work / work that may be late in terms of the programme Provide photographs (with a date) of virtually everything – may be needed later if disagreements arise !!!


51

!11.0 INTEREST CALCULATIONS (compensatory and default interest) !11.1 PRACTICAL COMPLETION

▪ **Compensatory interest only applies to payment certificates issued 31 calendar days after practical completion in the PBA only!

▪ Default interest applies to late payment of any payment certificate - applicable to the PBA, NSSA and MWA !11.2. FINAL COMPLETION

▪ At least 3 interim payment certificates must be issued before the issue of the final payment certificate !11.3 PAYMENT CERTIFICATE 11

▪ The first payment certificate after practical completion (say 15 calendar days) attracts no compensatory interest

▪ The employer makes payment of the certified amount !11.4 PAYMENT CERTIFICATE 12

▪ Compensatory interest over 15+30 = 45 calendar days included in payment certificate shown in the recovery statement

▪ The employer makes payment of the certified amount !11.5 PAYMENT CERTIFICATE 13

▪ Compensatory interest for 75 calendar days included ▪ The employer pays certificate number 13 twenty one (21) calendar days after issue date. The first fourteen

(14) calendar days is the employer’s “payment window”. The further seven (7) calendar days attracts default interest

▪ Should the employer pay the certified amount + the default interest i.e. the “debt due” no further default interest applies

▪ Should the employer pay only the certified amount further default interest of 2 calendar days would apply to the “unpaid balance” and must be included in the next recovery statement

▪ With the employer’s concurrence, the default interest on the “unpaid balance” should be calculated up to the next expected payment date viz 9+7 = 16 calendar days thereby extinguishing the default !

11.6 PAYMENT CERTIFICATE 14 ▪ The employer meets payment requirements without 11.5 inclusion ▪ Should 9.5 not have been applied the “unpaid balance” default interest as per 11.5 would again apply !

11.7 PAYMENT CERTIFICATE 15 ▪ Should final completion and acceptance of the final account not be achieved in ninety (90) calendar days

further interim payment certificates must be issued to maintain the “payment cycle” ▪ The final payment certificate also attracts compensatory interest (PBA only). Should the final payment

certificate be paid late default interest is due and is recoverable by the contractor as a debt !11.8 COMPENSATORY INTEREST CALCULATION

Assumptions: • Interest rate (Repo/Bank rate- February 2014) = 5.5% (see interest definition) • Net amount certified = 20 000.00 • Certificate No 12 issued after Practical Completion = 45 calendar days Calculation: 20 000 x 5.5% x 45 / 365 = 135.62 !

11.9 DEFAULT INTEREST CALCULATION Assumptions: • Interest rate (Repo + 6.0%) = 5.5% + 6.0% (see interest definition) • Certificate No 3 payment due = 91 200.00 • Payment made after Certificate issue date = 21 calendar days • Employer (21-14) calendar day default pay period = 7 calendar days (see 11.5.2 above) • Balance of payment cycle = 9 calendar days • Next Employer payment (expected) = 14 calendar days Calculation: 91 200 x 11.5% x 7 / 365 = 201.14 * Assuming the employer makes payment of the certificate amount only: Add: 201.14 x 11.5% x 9 / 365 = 0.57 (see 11.5.4 above) Total default interest due at end of payment cycle = 201.71 * Additional interest to expected employer payment date Add: 201.71 x 11.5% x 14 / 365 = 1.02 (see 11.5.5 above) Total default interest paid = 202.73 !

11.10 COMPENSATORY AND DEFAULT INTEREST – ASSUMPTIONS !1 Each payment certificate issued reflects an amount in favour of the contractor 2 The contractor's “payment cycle'' is a constant 30 calendar days = same day(date) every month stated [CD] 3 Default periods given are for demonstration purposes only ** Compensatory interest only applies in the JBCC® Principal Building Agreement !


52

DATE -‐ comple6

on PRA

CTICAL

DATE -‐ comple6

on FINAL

Payment cycle30 calendar days



C11

C13

C12

C14

Pay within 14 C days




if paid late = Def interest

compensatory interest



compensatory interest


30+15 = 45 C days

30+30+15 = 75 C days

Compensatory and default interest calcula-ons applicable to JBCC Building Agreements

ONLY applicable to PBA

ONLY applicable to PBA


53

!12.0 RECOVERY STATEMENT (PBA) !12.1 PURPOSE !The recovery statement deals with financial transactions between the employer and the contractor that do not affect the contract value and are therefore not part of the valuation of work in progress or the final account. Such transactions can occur at any time during the construction period. The amounts due to either party are determined by the principal agent on a monthly basis, and are included in the payment certificate issued at that time. Documentation substantiating the amounts due must accompany the recovery statement. By dealing with these transactions as they occur and not at the end of the contract considerable administrative frustration is avoided !12.2 THE STATEMENT !Column A Total Amount to be recovered

All amounts as determined by the principal agent are accounted for on an accumulative basis !Column B Less Previously recovered

Previously determined accumulative amounts are accounted for !Column C Recovered this Period

The difference between the column A and B subtotal amounts are carried to the referenced item in the payment certificate !

12.3 AMOUNTS DUE TO THE EMPLOYER !There are ten conditions not related to the contract value that the employer may recover from the contractor. These are:

▪ The first seven (1.1.1-7) are grouped together as they impact on the tax on the certified contract value ▪ Penalties due (1.2) are accounted for before tax but are separated for clarity purposes ▪ Default interest (1.3.1) is tax neutral and is accounted for after tax ▪ Advance payment recoupment (1.3.2) is accounted for after tax !

12.4 AMOUNTS DUE TO THE CONTRACTOR !There are only four conditions that the contractor may recover from the employer. These are:

▪ Compensatory (2.1.1) and default interest (2.1.2) amounts, which are both tax neutral, and accounted for after tax

▪ Advance payment received (2.1.3) is accounted for after tax ▪ Damages (2.2) are accounted for before tax !

12.5 IMPORTANT NOTES !A recovery statement must be issued simultaneously with each payment certificate

▪ All recovery amounts are dealt with on a “before tax” basis - where applicable tax is added in the payment certificate

▪ Each amount to be recovered is identified by a payment certificate reference line - only the amount in column C is transferred to that location !

12.6 ADVANCE PAYMENT ADMINISTRATION See Page 66 !!!!!!!!!!!!!!!!!!!!!!!!


54

Certificate No: PA certificate 11

Principal Building Agreement Edition 6.1 © March 2014 Date of Certificate: 201?-02-07

The following amounts, detailed in supplementary documentation where required, are recovered in the current Payment Certificate

A B CTOTAL AMOUNT LESS PREVIOUS RECOVERY

TO BE RECOVERED RECOVERY THIS PERIOD

1.0 AMOUNTS DUE TO THE EMPLOYER

1.1.1 Effecting insurances, or paying charges [27.2.2] 0.00 0.00

1.1.2 Work executed by others [27.2.3] 0.00 0.00

1.1.3 Termination of a n/s subcontract agreement [ 27.2.8] 0.00 0.00

1.1.4 Contractor not paying the employer an amount due [27.2.5 ] 0.00 0.00

1.1.5 Termination of the agreement [ 27.2.6] 0.00 0.00

1.1.6 Default by the contractor [27.2.9] 0.00 0.00

1.1.7 Direct payments to a subcontractor [27.2.8] 10 000.00 10 000.00

Subtotal of 1.1 [10.1] 10 000.00 10 000.00 0.00

1.2 Penalties levied [27.1.1] [10.2] 0.00 0.00

Subtotal of 1.2 [10.1] 0.00 0.00 0.00

1.3.1 Default interest [27.1.2; 27.2.5; 25.8] 0.00 0.00

1.3.2 Recoupment from contractor of an advance payment [ 27.2.4] 40 000.00 0.00

Subtotal of 1.3 [13.1] 40 000.00 0.00 40 000.00

2.0 AMOUNTS DUE TO THE CONTRACTOR

2.1.1 Compensatory interest [27.1.4] 0.00 0.00

2.1.2 Default interest [27.1.5] 648.85 0.00

2.1.3 Advance payment made [27.1.7] 350 000.00 200 000.00

Subtotal of 2.1 [13.2] 350 648.85 200 000.00 150 648.85

2.2 Damages [27.1.6] [10.3] 0.00 0.00 0.00

Currency ZAR Note: all amounts exclude tax

Signature Date: 201?-02-07

Name and address of the principal agent's practiceJBCC® PBA Edition 6.1 RECOVERY STATEMENT © March 2014

Recovery Statementissued in terms of Clause 27.0 of the

Employer

Contractor

Works

Site

Signed by the principal agent who, as agent for the employer, certifies that the amounts stated above are included in the current payment certificate

®

55

!13.0 INTERIM PAYMENT CERTIFICATE (PBA) !13.1 PURPOSE !An amount of money that is due and payable by the employer to the contractor or vice versa is ‘certified’ in a payment certificate issued by the principal agent. Liquidity is conferred where the employer (the debtor), by the signature of the principal agent, acknowledges his indebtedness to the contractor for a determined sum of money. The wording must be correct – specifying the employer, principal agent and the contractor and the payment amount that is due to the contractor. Payment due to the employer is provided for in the agreement and the payment certificate form but is not a liquid document! !13.2 THE PAYMENT CERTIFICATE !Column A Contract Sum The contract sum i.t.o. the agreement remains fixed for the duration of the contract !Column B Current Contract Value The totals of Columns A and B give an immediate comparison between the contract

sum and contract value at the time of issue of the payment certificate. The quantity surveyor, where appointed, determines the adjustments to the contract value for approval by the principal agent !

Column C Current Valuation The principal agent (or the quantity surveyor) determines the valuation !Column D Current Certification The principal agent certifies the current valuation amounts and items of expense and/or

loss detailed in the recovery statement as well as tax on the applicable items !1.0 Value of work executed The valuation must be “a reasonable estimate of the work executed” without it being “work satisfactorily completed”. The principal agent must act impartiality to verify (or

modify) the quantity surveyor’s valuation before certifying such amount !2.1-2 Materials on and off site Materials and goods on and off site may be included in the valuation

Note: Projects financed by a financial institution generally exclude payment of unfixed materials leaving the employer short of money to make payment of an issued payment certificate. The principal agent must record in the contract data if unfixed materials (on or off site) will be paid, or not, where included in a payment certificate A Guarantee for Advance Payment may cover some such materials and will reduce the employer’s additional risk (see Recovery Statement) Transfer of ownership of materials off site may be difficult to prove in law

3.0 SUB TOTAL !4.0 Security adjustment Applies where the contractor has chosen the security (fixed) to which payment

reduction provisions apply, or is in default by not providing such security and the employer elects to apply the payment reduction option !

5.0 Net contract sum The amount reflected in Column B is the same as the amount in Column A !6.0 Authorised adjustments … Authorised adjustments to date are included [B 6.0], excluding anticipated adjustments !7.0 Provision for ‘contract price adjustments’ included in [A 7.0], updated in [B7.0], if included in a valuation [C+D 7.0] !8.0 TOTAL AMOUNT CERTIFIED … in [D 8.0] !9.0 Less Amount certified in the previous payment certificate … [D 9.0] !10.0 NET AMOUNT CERTIFIED The net resultant portion of the contract value certified in this payment certificate !11.1-3 Recovery Statement Adjustment of amounts due to/by the contractor that attract tax !12.0 SUB TOTAL The summed total of the previous items !13.0 Tax The subtotal 12.0 is pre-tax. The tax percentage must be filled in and calculated If this subtotal is negative, tax will not apply !14.1-6 Recovery Statement Amounts that do not attract tax = interest and advance payment amounts (loans) !15.0 TOTAL The total of the contract sum and the comparative variable current contract value !16.0 CERTIFIED AMOUNT DUE FOR PAYMENT Identify the currency / receiving party / amount due !17.0 Contract sum execution Where the contractor has provided a Guarantee for Construction (variable) the

percentage of the contract sum that has been executed must be determined. The completion status must be indicated as it affects all the security options !!


56

Certificate No: 11

Principal Building Agreement Edition 6.1 © March 2014 Interim or Final interim

Issue Date 201?-02-07 Payment due date 201?-02-21

A B C DCONTRACT SUM CURRENT CURRENT CURRENT

CONTRACT VALUE VALUATION CERTIFICATION

1.0 Value of the works executed [25.3.1] 270 000.00

2.1 Materials on site [25.3.2] 20 000.00

2.2 Materials off site [25.3.2] 0.00

3.0 SUB TOTAL 290 000.00

4.0 Security adjustments applicable [11.3.2; 25.3.4] If applicable, state % 0.0 % 0.00 290 000.00

5.0 Net contract sum 2 420 000.00 2 420 000.00

6.0 Authorised adjustments to contract value [26.0] 100 000.00

7.0 Contract Price Adjustments [25.3.4] 80 000.00 80 000.00 10 000.00 10 000.00

8.0 TOTAL AMOUNT CERTIFIED (excluding tax) 300 000.00

9.0 Less Previous amount certified [25.3.6] (excluding tax) (120 000.00)

10.0 NET AMOUNT CERTIFIED (excluding tax) 180 000.00

11.1 Less Expense and loss payable to the employer [Recovery Statement 1.1] (excluding tax) 0.00

11.2 Less Penalties levied and payable to the employer [Recovery Statement 1.2] (excluding tax) 0.00

11.3 Add Damages payable to the contractor [Recovery Statement 2.2] (excluding tax) 0.00

12.0 SUB TOTAL 2 500 000.00 2 600 000.00 (excluding tax) 180 000.00

13.0 Add Tax on 11.0 [25.3.8] 14 % 350 000.00 364 000.00 25 200.00

14.1 Less Default interest payable to the employer [Recovery Statement 1.3] (excluding tax) 0.00

14.2 Less Recoupment from contractor of an advance payment [Recovery Statement 1.3.2] (excluding tax) (40 000.00)

14.3 Add Compensatory interest payable to the contractor [Recovery Statement 2.1.1] (excluding tax) 0.00

14.4 Add Default interest payable to the contractor [Recovery Statement 2.1.2] (excluding tax) 648.85

14.5 Add Advance payment made to the contractor [Recovery Statement 2.1.3] (excluding tax) 150 000.00

14.6 Add Tax exempt items (salvaged materials used in the works) [25.3.10] (excluding tax) 0.00

15.0 TOTAL 2 850 000.00 2 964 000.00

16.0 Currency ZAR CERTIFIED AMOUNT DUE FOR PAYMENT to the Contractor / Employer Contractor 315 848.85

17.0 (D8.0/A12.0*100) 12.0 %

Security statusMark each box as appropriate < 50% ✔ > 50% ✖ Practical Completion ✖ Final Completion ✖



Erf ? ?? Ville, Greater ? Town

Employer

Contractor

Works

Certificate for Paymentissued in terms of Clause 25 of the

ABC Developments

DEF Construction

XYZ Project

Site

Valuation Date 201?-02-05

Contract sum execution (Security for Construction- variable - only)

JBCC® PBA Edition 6.1 PAYMENT CERTIFICATE © March 2014

Signed by the principal agent who, as agent for the employer, certifies that the positive or negative amount stated in D 16.0 is due and payable by the date stated, irrespective of the date of signature of this certificate

®

57

!14.0 PAYMENT CERTIFICATE NOTIFICATION (PBA) !14.1 PURPOSE !The payment certificate notification informs the n/s subcontractor of a subcontract amount included in the total amount certified to the contractor (or employer) in the current payment certificate. Any adjustment made to such amount due to the security provided by the contractor is not applicable to the payment due to the subcontractor. The contractor must certify the full amount due to the subcontractor and make any adjustment in terms of the security provided by the subcontractor. The NOTE on the payment notification form details this condition !14.2 THE PAYMENT CERTIFICATE NOTIFICATION Column A Subcontract Sum The subcontract sum i.t.o the agreement remains fixed for the duration of the

subcontract !Column B Current SC Value The totals of Columns A and B give an immediate comparison between the subcontract

sum and the subcontract value at the date of issue of the payment certificate. The quantity surveyor, where appointed, determines the adjustments to the subcontract value for approval by the principal agent !

Column C Current Valuation The principal agent or quantity surveyor, where appointed, determines the valuation !Column D Current Certification The principal agent notifies the subcontractor of the current subcontract valuation

amounts certified to the contractor together with any adjustment i.t.o. the security provided by the contractor, the previous gross subcontract amount certified as well as tax on the net subcontract amount certified !

1.0 Value of work executed The principal agent inserts the value of work included in the current payment certificate !2.1-2 Materials on and off site The principal agent inserts the value of items included in the current payment

certificate !3.0 SUB TOTAL !4.0 Security adjustment The principal agent notifies the subcontractor of adjustments made to the valuation of items included in the current payment certificate (if applicable) to comply with the

contractor’s security provision in terms of the principal agreement 5.0 Net contract sum The amount reflected in Column B is the same as the amount in Column A !6.0 Authorised adjustments … Authorised adjustments to date are included [B 6.0], excluding anticipated adjustments !7.0 Provision for ‘contract price adjustments’ included in [A 7.0], updated in [B7.0], if included in a valuation [C+D 7.0] !8.0 TOTAL AMOUNT CERTIFIED … in [D 8.0] !9.0 Less Amount certified in the previous payment certificate … [D 9.0] !10.0 NET AMOUNT CERTIFIED The amount of the n/s subcontract value that has been certified in the current payment

certificate. This amount may differ in the contractor’s payment advice due to adjustments the contractor may be entitled to make in terms of the subcontractor’s security or the n/s subcontract recovery statement !

11.0 Tax The subtotal 10.0 is pre-tax. The tax percentage must be filled in and calculated If this subtotal is negative, tax will not apply !12.1-2 SC Recovery Statement Amounts that affect the subcontractor’s income or expenditure, that are tax neutral !13.0 TOTAL The total of the subcontract sum and the comparative variable current subcontract

value !14.0 AMOUNT DUE FOR PAYMENT Identify the currency / receiving party / amount due !15.0 Subcontract sum execution Where the subcontractor has provided a Guarantee for Construction (variable) the

percentage of the subcontract sum that has been executed must be determined. The completion status must be indicated as it affects all the security options for the works as a whole in terms of practical completion and final completion !Note: The principal agent is not responsible for and is not involved in determining any of the recovery amounts nor for determining whether the security provided by the subcontractor varies the amount due !


58

11

Principal Building Agreement Edition 6.1 © March 2014 interim

Date of issue A B C DN/S CONTRACT SUM CURRENT N/S CURRENT CURRENT

Payment Certificate CONTRACT VALUE VALUATION CERTIFICATION

1.0 Value of Work executed [25.3.1]

2.1 Materials on site [25.3.2]

2.2 Materials off site [25.3.2]

3.0 SUB TOTAL

4.0 Security Adjustments [14.7.1, 31.8] If applicable, state % 0.0% % 20 000.00

5.0 Net n/s subcontract sum 600 000.00 600 000.00

6.0 Adjustments to n/s subcontract value [26.0] 0.00

7.0 Contract Price Adjustments [25.3.4] 0.00 0.00 0.00

8.0 TOTAL AMOUNT CERTIFIED 20 000.00

9.0 Less Previous gross amount certified [25.3.6] 0.00

10.0 SUB TOTAL 600 000.00 600 000.00 20 000.00

11.0 Add Tax on 11.0 [25.3.8] 14 % 84 000.00 84 000.00 2 800.00

12.1 Less Interest / Advance Payment Recoupment [27.1.7] 0.00

12.2 Add Interest / Advance Payment Made [27.2.4] 150 000.00

13.0 TOTAL 684 000.00 684 000.00

14.0 Currency ZAR AMOUNT DUE FOR PAYMENT to the Subcontractor / Contractor 172 800.00

15.0 (D8.0/A10.0*100) 3.3 %

Contractor completion status Practical Completion ✖ Final Completion ✖

Signature Date:

Name and address of the principal agent's practiceJBCC® PBA Edition 6.1 PAYMENT CERTIFICATE NOTIFICATION © March 2014

Notification No:

Interim or Final

Subcontractor's Payment Certificate Notification

Signed by the principal agent who, as agent for the employer, certifies that the amount stated in D 15.0 is included in the current payment certificate

12 000.00

(excluding tax)

Contractor

Subcontractor

N/S Works

(excluding tax)

20 000.00

0.00

N/S Contract Sum execution % (Security for Construction - variable- only)

8 000.00

Subcontractor

issued in terms of Clause 25.4.3 of the

(excluding tax)

(excluding tax)

(excluding tax)

Site

0.00

201?-02-07

Note: The payment certificate identified above has been issued to the contractor that includes an amount due for payment to or by the named subcontractor. Where applicable, the adjusted amount certified is in terms of the security provided by the contractor. This adjustment may or may not affect the amount certified to the subcontractor. No account is taken of other amounts that may be due between the parties. The compilation of the certified amount is set out below

201?-02-07

No 11

0.00

®

59

!15.0 RECOVERY STATEMENT (NSSA) !15.1 PURPOSE !The n/s subcontract recovery statement deals with expenses and losses suffered by the contractor or the subcontractor that do not affect the n/s subcontract value and that are not part of the valuation of the work in progress nor the n/s subcontract final account. Such expenses and losses can occur at any time during the n/s subcontract construction period. The amounts as are determined by the contractor on a monthly basis and are included in the interim or the final subcontractor’s payment advice issued at that time !Documentation substantiating the amounts due must accompany the n/s subcontract recovery statement !By dealing with such expenses and losses as they occur and not at the end of the contract considerable administrative frustration is avoided and the parties are correctly compensated for such expenses and losses incurred !15.2 THE STATEMENT !Column A Total Amount to be recovered

All amounts as determined by the contractor are accounted for on an accumulative basis !Column B Less Previously recovered

Previously determined amounts are accounted for !Column C Recovered this Period

The difference between the column A and B subtotal amounts are carried to the referenced item in the n/s subcontractor’s payment advice !

15.3 AMOUNTS DUE TO THE CONTRACTOR !There are eight conditions for which the contractor is entitled to recovery from the subcontractor. These are: ▪ The first six (1.1.1-6) are grouped together as they all impact on the tax calculated on the certified n/s subcontract

value ▪ The remaining two items, default interest (1.2.1) and advance payment recoupment (1.2.2), are accounted for after tax

(not on old form) !15.4 AMOUNTS DUE TO THE SUBCONTRACTOR !There are five conditions for which the subcontractor is entitled to recovery from the contractor. These are: ▪ Damages (2.1.1) and non-contract variations (2.1.2) are accounted for before tax ▪ {Compensatory interest (2.2.1) =discontinued}, default interest (2.2.2) and advance payments made

These amounts are tax neutral and are accounted for after tax !15.5 IMPORTANT NOTES !▪ The n/s subcontract recovery statement must be issued simultaneously with each n/s subcontractor’s payment

advice ▪ All recovery amounts exclude tax as this is dealt with in the n/s subcontractor’s payment advice ▪ Each item to be recovered is identified by a n/s subcontractor’s payment advice location reference with only the

amount in column C being transferred to that location !15.6 ADVANCE PAYMENT ADMINISTRATION See Page 66 !!!!!!!!!!!!!!!!!!!!!


60

Advice No: PA certificate 11

N/S Subcontract Agreement Edition 6.1 © March 2014 Date of Advice: 201?-02-08

A B C

Payment Certificate/payment due 11 201?-02-21 TOTAL TO BE LESS PREVIOUS RECOVERY RECOVERED RECOVERY THIS PERIOD

1.0 AMOUNTS DUE TO THE CONTRACTOR

1.1.1 Effecting insurances, or paying charges [27.2.2] 0.00

1.1.2 Work executed by other parties [27.2.3] 2 500.00

1.1.3 Damages [27.1.1; 27.2.8] 0.00

1.1.4 Termination of the n/s subcontract agreement [ 27.2.6] 0.00

1.1.5 Default by the subcontractor [27.2.10] 0.00

1.1.6 Additional cost of scaffolding [27.2.9] 0.00

Subtotal of 1.1 [10.1] 2 500.00 2 500.00

1.2.1 Default interest [27.1.5] 0.00

1.2.2 Recoupment of Advance Payment [27.2.4] 0.00

Subtotal of 1.2 [13.1] 0.00 0.00

2.0 AMOUNTS DUE TO THE SUBCONTRACTOR

2.1.1 Damages [27.1.6] 0.00

2.1.2 Non-contract variations [27.1.8] 12 000.00

Subtotal of 2.1 [10.2] 12 000.00 12 000.00

2.2.1 Compensatory interest = not applicable

2.2.2 Default interest [27.1.5] 0.00

2.2.3 Advance payments granted [27.1.7] 150 000.00

Subtotal of 2.2 [13.2] 150 000.00 150 000.00

Currency ZAR Note: all amounts exclude tax


Name and address of contractorJBCC® NSSA Edition 6.1 RECOVERY STATEMENT © March 2014

0.00

0.00

0.00

Contractor

Signed by the contractor who certifies that amounts stated above are included in the current n/s subcontract payment advice

Subcontractor's Recovery Statement

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Subontractor

N/S Works

Site

issued in terms of Clause 27.0 of the

0.00

0.00

The following amounts, detailed in separate documents, are to be recovered in the stated Payment Advice

0.00

0.00

0.00

0.00

®

61

!!16.0 PAYMENT ADVICE STATEMENT (NSSA) !16.1 PURPOSE !The amount of money that is due and payable by the contractor to the subcontractor or vice versa is ‘certified’ in a n/s subcontractor’s payment advice issued by the contractor. Liquidity is conferred where the contractor (the debtor) acknowledges his indebtedness to the subcontractor for a determined sum of money. The wording must be correct – specifying the contractor and the subcontractor and the payment amount that is due to the subcontractor !Payment due to the employer is provided for in the agreement and the payment certificate form but is not a liquid document! !16.2 THE PAYMENT ADVICE STATEMENT !Column A Contract Sum The n/s subcontract sum in terms of the agreement remains fixed for the duration of the subcontract !Column B Current Contract Value The totals of Columns A and B give an immediate comparison between the n/s

subcontract sum and the n/s subcontract value at the date of issue of the n/s subcontractor’s payment advice. !

Column C Current Valuation The contractor incorporates the valuation provided by the principal agent in the statement issued in terms of the Principal Building Agreement !

Column D Current Certification The contractor certifies the current valuation amounts and items of expense and/or loss detailed in the n/s subcontract recovery statement as well as tax on applicable items !

1.0 Value of work executed The contractor incorporates the valuation provided by the principal agent in the statement issued in terms of the Principal Building Agreement. The contractor has no authority to reduce or vary such valuation !

2.1-2 Materials on and off site The subcontractor’s materials on and off site are to be included where they are certified in the payment certificate !3.0 SUB TOTAL !4.0 Security adjustment Applies only where the subcontractor has chosen the security (fixed) to which payment reduction provisions apply, or is in default by not providing such security and the contractor elects to apply the payment reduction option 5.0 Net subcontract sum The amount reflected in Column B is the same as the amount in Column A !6.0 Authorised adjustments … Authorised adjustments determined by the principal agent to date are included [B 6.0], excluding anticipated adjustments !7.0 Provision for ‘contract price adjustments’ included in [A 7.0], updated in [B7.0], if included in a valuation [C+D 7.0] !8.0 GROSS AMOUNT CERTIFIED … in [D 8.0] !9.0 Less Amount certified in the previous payment advice statement … [D 9.0] !10.0 NET AMOUNT CERTIFIED The net resultant portion of the n/s subcontract value certified in this n/s subcontractor’s n/s payment advice statement !11.1-2 Recovery Statement Amounts that affect the subcontractor’s income or expenditure, that are tax neutral !12.0 SUB TOTAL The summed total of the previous items !13.0 Tax The subtotal 12.0 is pre-tax. The tax percentage must be filled in and calculated If this subtotal is negative, tax will not apply !14.1-2 Recovery Statement Amounts that do not attract tax = interest and advance payment amounts. !15.0 TOTAL The total of the n/s subcontract sum and the comparative variable current n/s subcontract value !16.0 CERTIFIED AMOUNT DUE FOR PAYMENT Identify the currency / receiving party / amount due !17.0 Contract sum execution Where the subcontractor has provided a Guarantee for Construction (variable) the

percentage of the n/s subcontract sum that has been executed must be determined. The completion status must be indicated as it affects all the security options !


62

Advice No: PA certificate 11

N/S Subcontract Agreement Edition 6.1 © March 2014 Date: 201?-02-08

Valuation date A B C DN/S CONTRACT SUM CURRENT N/S CURRENT CURRENT

Payment due date CONTRACT VALUE VALUATION CERTIFICATION

1.0 Value of Work executed [25.3.1] 14 000.00



3.0 SUB TOTAL 20 000.00

4.0 Security Adjustments [14.7.1, 25.3.3] no / if yes, percentage? 90.0 % (2 000.00) 18 000.00

5.0 Net contract sum 600 000.00 600 000.00

6.0 Adjustments to contract value [26.0] 0.00

7.0 Contract Price Adjustments [26.7.6] 0.00 0.00 0.00 0.00

8.0 GROSS AMOUNT CERTIFIED (excluding tax) 18 000.00

9.0 Less Previous gross amount certified [25.3.6] (excluding tax) 0.00


11.1 Less Expense and loss [Recovery Statement 1.1] (excluding tax) (2 500.00)

11.2 Add Amounts due [Recovery Statement 2.1] (excluding tax) 12 000.00

12.0 SUB TOTAL 600 000.00 600 000.00 (excluding tax) 27 500.00

13.0 Add Tax on 11.0 [25.3.8] 14 % 84 000.00 84 000.00 3 850.00

14.1 Less Interest / Advance Payment Recoupment [Recovery Statement 1.2] (excluding tax) 0.00

14.2 Add Interest / Advance Payment Made [Recovery Statement 2.2] (excluding tax) 150 000.00

15.0 TOTAL 684 000.00 684 000.00

16.0 Currency ZAR AMOUNT DUE FOR PAYMENT to the subcontractor / contractor Subcontractor 181 350.00

17.0 (D8.0/A12.0*100) 3.0 %

Contractor completion status < 50% ✔ > 50% ✖ Practical Completion ✖ Final Completion ✖


Name and address of contractor JBCC® NSSA Edition 6.1 NSA PAYMENT ADVICE © March 2014

Subcontractor's Payment AdviceIssued in terms of Clause 25.3 of the

201?-02-05

201?-02-21

Signed by the contractor who certifies that the amount stated is due and payable to the named subcontractor

N/S Contract sum execution % (Security for Construction- variable - only)

Contractor

Subcontractor

N/S Works

Site

®

63

!!17.0 PAYMENT CERTIFICATE (MWA) !17.1 PURPOSE !An amount of money that is due and payable by the employer to the contractor or vice versa is ‘certified’ in a payment certificate issued by the principal agent. Liquidity is conferred where the employer (the debtor), by the signature of the principal agent, acknowledges his indebtedness to the contractor for a determined sum of money. The wording must be correct – specifying the employer, principal agent and the contractor and the payment amount that is due to the contractor !Payment due to the employer is provided for in the agreement and the payment certificate form but is not a liquid document! !17.2 THE PAYMENT CERTIFICATE !Column A Contract Sum The contract sum i.t.o. the agreement remains fixed for the duration of the contract !Column B Current Contract Value The totals of Columns A and B give an immediate comparison between the contract

sum and contract value at the time of issue of the payment !Column C Current Valuation The principal agent determines the valuation of the works !Column D Current Certification The principal agent certifies the current valuation amounts and items of expense and/or loss {detailed in the recovery statement} as well as tax on the applicable items !1.0 Value of work executed The valuation must be “a reasonable estimate of the work executed” without it being

“work satisfactorily completed”. The principal agent must act impartiality {to verify (or modify) the quantity surveyor’s valuation before certifying such amount} !

2.1-2 Materials on and off site Materials and goods on and off site may be included in the valuation Note: Projects financed by a financial institution generally exclude payment of unfixed materials leaving the employer short of money to make payment of an issued payment certificate. The principal agent must record in the contract data if unfixed materials (on or off site) will be paid, or not, where included in a payment certificate A Guarantee for Deposit may cover some such materials and will reduce the employer’s additional risk {see Recovery Statement} Transfer of ownership of materials off site may be difficult to prove in law !

3.0 SUBTOTAL The total of the previous items !4.0 Security adjustment Applies where the contractor is in default by not providing a specified security and the employer elects to apply the payment reduction option !5.0 Net contract sum The amount reflected in Column B is the same as the amount in Column A !6.0 Authorised adjustments … Authorised adjustments to date are included [B 6.0], excluding anticipated adjustments !7.0 TOTAL AMOUNT CERTIFIED … in [D 7.0] !8.0 Less Amount certified in the previous payment certificate … [D 8.0] !9.0 NET AMOUNT CERTIFIED The net resultant portion of the contract value certified in this payment certificate !10.1-3 (Recovery Statement) Amounts that affect the contractor’s income or expenditure, that are tax neutral !11.0 SUB TOTAL The summed total of the previous items !12.0 Tax The subtotal 11.0 is pre-tax. The tax percentage must be filled in and calculated If this subtotal is negative, tax will not apply !13.1-4 (Recovery Statement) Amounts that do not attract tax = interest and advance payment amounts.

Any deposit paid by the employer for the purchase of materials must also be included !14.0 TOTAL The total of the contract sum and the comparative variable current contract value !15.0 CERTIFIED AMOUNT DUE FOR PAYMENT Identify the currency / receiving party / amount due !16.0 Contract sum execution Where the contractor has provided a Guarantee for Construction (variable) the

percentage of the contract sum that has been executed must be determined. The completion status must be indicated as it affects all the security options !!


64

Certificate No: 3

Minor Works Agreement Edition 5.1 © March 2014 Interim or Final interim

Issue Date 201?-02-07 Payment due date 201?-02-21

A B C DCONTRACT SUM CURRENT CURRENT CURRENT

CONTRACT VALUE VALUATION CERTIFICATION

1.0 Value of the works executed [19.3.1] 485 000.00



3.0 SUB TOTAL 510 000.00

4.0 Security adjustments applicable [8.3.1; 19.3.3] If applicable, state % 4.0 % (20 400.00) 489 600.00

5.0 Net contract sum 840 000.00 840 000.00

6.0 Authorised adjustments to contract value [20.0] 60 000.00

7.0 TOTAL AMOUNT CERTIFIED (excluding tax) 489 600.00

8.0 Less Previous amount certified [19.3.5] (excluding tax) (302 100.00)


10.1 Less Expense and loss payable to the employer [Recovery Statement 1.1] (excluding tax) (30 500.00)

10.2 Less Penalties levied and payable to the employer [Recovery Statement 1.2] (excluding tax) 0.00

10.3 Add Damages payable to the contractor [Recovery Statement 2.2] (excluding tax) 0.00

11.0 SUB TOTAL 840 000.00 900 000.00 (excluding tax) 157 000.00

12.0 Add Tax on 11.0 [25.3.8] 14 % 117 600.00 126 000.00 21 980.00

13.1 Less Recoupment from contractor of a deposit [Recovery Statement 1.3.2] (excluding tax) 0.00

13.2 Add Default interest payable to the contractor [Recovery Statement 2.2.1] (excluding tax) 0.00

13.3 Add Deposit amounts paid to the contractor [Recovery Statement 2.1.2] (excluding tax) 0.00

13.4 Add Tax exempt items (salvaged materials used in the works) [18.3.10] (excluding tax) 0.00

14.0 TOTAL 957 600.00 1 026 000.00

15.0 Currency ZAR CERTIFIED AMOUNT DUE FOR PAYMENT to the Contractor / Employer Contractor 178 980.0

16.0 (C3.0/A11.0*100) 60.7 %

Security statusMark each box as appropriate < 50% ✖ > 50% ✔ Practical Completion ✖ Final Completion ✖



Valuation Date 201?-02-05

Contract sum execution (Variable construction guarantee only)

JBCC® MWA Edition 5.1 PAYMENT CERTIFICATE © March 2014

Signed by the principal agent who, as agent for the employer, certifies that the positive or negative amount stated in D 15.0 is due and payable by the date stated, irrespective of the date of signature of this certificate

Employer

Contractor

Certificate for PaymentIssued in terms of Clause 18 of the

Works

Site

®

65

!!18.0 PROMPT PAYMENT regulations + application !18.1 BACKGROUND !

In South Africa the Construction Industry Development Board (CIDB) submitted draft regulations during 2012 to the Minister of Public Works consisting, amongst others, of Part IV C entitled “Prompt Payment” and Part IV D entitled “Adjudication” including a standard of adjudication (the “standard”) advising that the draft regulations be promulgated by the Minister as regulations in terms of the Section 33(i) of the CIDB Act 38 of 2000 Effective date: TBC !

18.2 PURPOSE ! Applies to building contracts in the private and the public sector To ensure that all contractors get paid by the due date for work completed !

Applies in the relationship between the employer and the contractor Applies in the relationship between the contractor as employer and each subcontractor !Payment terms are recorded in the agreement and /or the contract data between the parties !Reasons for not paying the full amount in the stipulated time period may include: ▪ Quality of work is disputed ▪ Quantity of work completed is disputed !Note: An interim payment certificate is a fair approximation of the quantum of work produced but does not warrant acceptance of the quality of such work on the date of issue by the principal agent of an interim payment certificate !Where the employer disputes the amount certified in a payment certificate: ▪ The employer must give notice to the contractor within five (5) working days with reasons why such

payment such be reduced or withheld. ▪ If the contractor accepts such representation, the undisputed amount must be paid within the ‘contractual’

period for payment ▪ Where the contractor does not accept such representation either party must refer the matter to adjudication

with five (5) working days. The adjudicator must make his/her determination within a further five (5) working days

▪ The adjudicator’s determination becomes immediately binding on the parties (refer to court cases) ▪ Where the employer withholds payment without reason and without following the notice procedure, the

contractor may give notice of his/her intention to suspend the works should payment not be received in full before expiry of the notice period

▪ The works remain suspended until payment has been received ▪ The principal agent must revise the date for practical completion and adjust the contract value to include

expense and loss incurred by the contractor during the period of suspension ▪ Should payment not be received before expiry of the 2nd notice period, the contractor may give notice to

terminate the works forthwith on expiry of such notice …and be entitled to recover damages !The same applies in the relationship between contractor as employer and each subcontractor !Applies to all JBCC® agreements !Clause 25.11 in the JBCC® N/S Subcontract Agreement Edition 6.1 March 2014 will no longer apply !!!!!!!!!!!!!!!!!!


66

!19.0 ADVANCE PAYMENT !19.1 PURPOSE !The Guarantee for Advance Payment (a Guarantee for Deposit in the MWA) is a financial instrument to enable the employer to make an advance payment (a loan) to the contractor or the subcontractor for materials or equipment to be ordered in advance of their requirement on site. Such goods can not be included in a payment certificate as “value of work executed” !Some form of collateral will be required by the institution providing such a security !A “transfer of ownership” may be considered to be a legally unenforceable substitute !19.2 ADMINISTRATION !19.2.1 All advance payment (deposit) transactions are dealt with in the applicable recovery statement (Minor Works

generally in the payment certificate) !19.2.2 No “direct payments” or recoupment of an advance payment (deposit) may bypass the payment certificate to

ensure that all financial transactions pertaining to the agreement are accounted for in the various payment forms !19.2.3 Interest or other charges related to the Guarantee for Advance Payment (deposit) must be agreed directly

between the parties --- They are not part of the contract sum nor the contract value! !19.2.4 A Guarantee for Advance Payment (deposit) should not be demanded for materials off site that adequately fall

within the provisions of a Guarantee for Construction provided by the contractor or n/s subcontractor !19.2.5 ‘Advance payments’ (deposit) are a form of loan and therefore do not attract tax !19.2.6 Note: The end Current Certification balances with the end Total Net Payment !19.2.7 The employer is entitled to call up the Guarantee for Advance Payment (deposit) should the contractor or a

subcontractor default in the repayment of such ‘loan’ at any stage !19.2.8 Advance Payment Life Cycle Table !!The following tables set out the typical cash flow of an advance payment to either or both the contractor and a subcontractor !!

!!!

Security information Contractor Subcontractor

Recipient’s Net Contract Value (excl Tax) 2 00 000 600 000

Advance payment required 200 000 150 000

Recoupment period (months) 5 3

Recoupment start month M3 M5

Recoupment monthly payment 40 000 50 000

Payment Certificate M1 M2 M3 M4 M5 M6 M7 M8 Total Contract ValueValuation: Contractor 40 000 120 000 280 000 500 000 800 000 1 200 000 1 700 000 2 000 000

N/S 0 0 20 000 70 000 240 000 480 000 570 000 600 000

Certified: Contractor 0 -40 000 -120 000 -280 000 -500 000 -800 000 -1 200 000 -1 700 000

N/S 0 0 0 -20 000 -70 000 -240 000 -480 000 -570 000

Current certification 40 000 80 000 180 000 270 000 470 000 640 000 590 000 330 000 2 600 000

Add Tax at 14% 5 600 11 200 25 200 37 800 65 800 89 600 82 600 46 200 364 000

Gross certification 45 600 91 200 205 200 307 800 535 800 729 600 672 600 376 200 2 964 000

Advance/ recoupment C 200 000 0 -40 000 -40 000 -40 000 -40 000 -40 000 0

Advance/recoupment N/S 0 0 150 000 0 -50 000 -50 000 -50 000 0

Total net payments 245 600 91 200 315 200 267 800 445 800 639 600 582 600 376 200 2 964 000


67

For use with JBCC® Principal Building Agreement state edition /date

For use withJBCC® NSSA Subcontract Agreement state edition /date

Capacity

Capacity

Currency

1.0

1.1

Recoupment period (no. of months)

Recoupment period commencement (start month)

Monthly recoupment (amount)

1.2

1.2.1 The guaranteed Advance Payment sum on receipt thereof by the Recipient

1.2.2

1.2.3

2.0

2.1

2.2

Guarantor's signatory 1:

After the deduction of the last scheduled recoupment payment or on settlement of the full outstanding balance thisGuarantee for Advance Payment shall expire

GUARANTEE FOR ADVANCE PAYMENT

The particulars of the recoupment of the guaranteed Advance Payment sum are set out in the following schedule:-‐

Note: Where the recoupment amounts and/or periods are irregulara schedule of recoupment amounts and dates must be attached

Any reference in this Guarantee for Advance Payment to the Agreement is made for the purpose of convenience and shall not beconstrued as any intention to create an accessory obligation or any intention to create a suretyship

Its obligation under this Guarantee for Advance Payment is restricted to the payment of money

The full outstanding balance after the deduction of each recoupment made in terms of the monthly payment certificate asstated in 1.1

Guarantee for Advance Payment

Guaranteed Advance Payment Sum (maximum aggregate amount)

AGREEMENT DETAILS

Principal Agent issues JBCC® format Interim Payment Certificates, interim Recovery Statements

The Guarantor acknowledges that:-‐

The Guarantor’s liability shall be limited to the outstanding diminishing amounts of the guaranteed Advance Payment sum asfollows:-‐

Site:

Contractor:

Contractor:



GUARANTOR DETAILS

Physical address;

Guarantor:

Guarantor's signatory 2:

Employer:

Recipient:

Principal Agent:

Works:

®

68

2.3

3.0

3.1

3.2

3.3

4.0

4.1

4.2

5.0

6.0

7.0


9.0

10.0

Signed at Date


Witness Witness


JBCC® Guarantee for Advance Payment © March 2014

The Employer shall have the absolute right to arrange his affairs with the Recipient in any manner which the Employer deems fit and theGuarantor shall not have the right to claim his release from this Guarantee for Advance Payment on account of any conduct alleged to beprejudicial to the Guarantor

Subject to the Guarantor’s maximum liability referred to in 1.0 the Guarantor undertakes to pay the Employer the sum certified on receiptof the documents identified in 3.1 to 3.3:-‐

A copy of the recovery statement and payment certificate which entitles the Employer to receive payment in terms of theAgreement of the sum certified in 3.0

This Guarantee for Advance Payment, with the required demand notices in terms of 3.0 or 4.0, shall be regarded as a liquid document forthe purpose of obtaining a court order

Subject to the Guarantor’s maximum liability referred to in 1.0 the Guarantor undertakes to pay the Employer the guaranteed AdvancePayment sum or the full outstanding balance upon receipt of a first written demand notice from the Employer to the Guarantor at theGuarantor's physical address calling up this Guarantee for Advance Payment stating that:-‐

The Agreement has been terminated due to the Recipient's default and that the Guarantee for Advance Payment is called up interms of 4.0. The demand notice shall enclose a copy of the notice of termination; or

A provisional sequestration or liquidation court order has been granted against the Recipient and that the Guarantee for AdvancePayment is called up in terms of 4.0. The demand notice shall enclose a copy of the court order

The aggregate amount of payments to be made by the Guarantor in terms of 3.0 and 4.0 shall not exceed the Guarantor's maximum liability in terms of 1.0

This Guarantee for Advance Payment is neither negotiable nor transferable and shall expire upon payment of the final payment certificatein terms of the Agreement or on payment in full of the guaranteed Advanced Payment Sum or on the expiry date of the Security, whicheveris the earlier, whereafter no claims will be considered by the Guarantor. The original Guarantee for Advance Payment form shall bereturned to the Guarantor after it has expired

Payment by the Guarantor in terms of 3.0 or 4.0 shall be made within seven (7) calendar days on receipt of the first written demand noticeto the Guarantor

Reference to a recovery statement or a Payment Certificate shall mean such certificate issued by the Principal Agent

A copy of a first written demand notice issued by the Employer to the Recipient stating that payment of a sum certified by thePrincipal Agent has not been made in terms of the Agreement and failing such payment within seven (7) calendar days, theEmployer intends to call upon the Guarantor to make payment in terms of 3.2

A first written demand notice issued by the Employer to the Guarantor at the Guarantor’s physical address with a copy to theRecipient stating that a period of seven (7) calendar days has elapsed since the issue of the first written demand notice in terms of3.1 and that the sum certified has not been paid to date. The Employer herewith calls up this Guarantee for Advance Payment anddemands payment of the sum certified from the Guarantor

69

For use with the JBCC® Minor Works Agreement state edition /date

Guarantor:

Physical address:



Employer:

Recipient:

Contractor / Subcontractor:

Principal Agent:

Works:

Site:

Currency



1.0

1.1

Recoupment period (no. of months)

Recoupment period commencement (start month)

Monthly recoupment (amount)

1.2

1.2.1 The guaranteed deposit amount on receipt thereof by the Recipient

1.2.2

1.2.3

2.0

2.1

2.2

2.3 Reference to a recovery statement or a Payment Certificate shall mean such certificate issued by the Principal Agent

MWA Guarantee for Deposit

GUARANTOR DETAILS

Guaranteed deposit amount;

AGREEMENT DETAILSPrincipal Agent issues JBCC® format Payment Certificate, Recovery Statement

SECURITY for DEPOSIT

The particulars of the recoupment of the guaranteed deposit amount are set out in the following schedule:

Note: Where the recoupment amounts and/or periods are irregulara schedule of recoupment amounts and dates is to be attached

The Guarantor’s liability shall be limited to the outstanding diminishing amounts of the guaranteed deposit amount as follows:

The full outstanding balance after the deduction of each recoupment made in terms of the monthly payment certificate asstated in 1.1

After the deduction of the last scheduled recoupment payment or on settlement of the full outstanding balance this MWAGuarantee for Deposit shall expire

The Guarantor acknowledges that:-‐

Any reference in this Guarantee for Deposit to the Agreement is made for the purpose of convenience and shall not be construed asany intention to create an accessory obligation or any intention to create a suretyship

Its obligation under this MWA Guarantee for Deposit is restricted to the payment of money

®

70

3.0

3.1

3.2

3.3

4.0

4.1

4.2

5.0

6.0

7.0


9.0

10.0

Signed at Date


Witness Witness


JBCC® MWA Guarantee for Deposit © Macrh 2014

Subject to the Guarantor’s maximum liability referred to in 1.0 the Guarantor hereby undertakes to pay the Employer the sum certifiedupon receipt of the documents identified in 3.1 to 3.3:-‐

A copy of a first written demand notice issued by the Employer to the Recipient stating that payment of a sum certified by thePrincipal Agent has not been made in terms of the Agreement and failing such payment within seven (7) calendar days, theEmployer intends to call upon the Guarantor to make payment in terms of 3.2

A first written demand notice issued by the Employer to the Guarantor at the Guarantor’s physical address with a copy to theRecipient stating that a period of seven (7) calendar days has elapsed since the issue of the first written demand notice in terms of3.1 and that the sum certified has still not been paid to date. The Employer herewith calls up this Guarantee for Deposit anddemands payment of the sum certified from the Guarantor

A copy of the recovery statement and payment certificate which entitles the Employer to receive payment in terms of theAgreement of the sum certified in 3.0

Subject to the Guarantor’s maximum liability referred to in 1.0 the Guarantor undertakes to pay the Employer the guaranteed deposit sumor the full outstanding balance upon receipt of a first written demand notice from the Employer to the Guarantor at the Guarantor'sphysical address calling up this MWA Guarantee for Deposit stating that:-‐

The Agreement has been terminated due to the Recipient's default and that the MWA Guarantee for Deposit is called up in terms of4.0. The demand shall enclose a copy of the notice of termination; or

A provisional sequestration or liquidation court order has been granted against the Recipient and that the MWA Guarantee forDeposit is called up in terms of 4.0. The demand shall enclose a copy of the court order

The aggregate amount of payments to be made by the Guarantor in terms of 3.0 and 4.0 shall not exceed the Guarantor's maximum liability in terms of 1.0


The Employer shall have the absolute right to arrange his affairs with the Recipient in any manner which the Employer deems fit and theGuarantor shall not have the right to claim his release from this MWA Guarantee for Deposit on account of any conduct alleged to beprejudicial to the Guarantor

This MWA Guarantee for Deposit is neither negotiable nor transferable and shall expire upon payment of the final payment certificate interms of the Agreement or on payment in full of the guaranteed deposit amount or on the expiry date of the Security, whichever is theearlier, whereafter no claims will be considered by the Guarantor. The original MWA Guarantee for Deposit form shall be returned to theGuarantor after it has expired

This MWA Guarantee for Deposit, with the required demand notices in terms of 3.0 or 4.0, shall be regarded as a liquid document for thepurpose of obtaining a court order

71

!CALCULATING THE FLUCTUATION OF COSTS (ESCALATION) !The calculation and payment of fluctuations is an integral part of interim valuations. Fluctuations are referred to as Contract Price Adjustment Provisions (CPAP) in the built environment. The most commonly applied formula for calculating CPAP for building contracts in South Africa was (originally known as) the Haylett Formula. Please refer to the CPAP indices application Manual and the Work Groups Composition and weighting of sub-indices ! The indices are calculated and compiled by Statistics SA and are available from their webpage free of charge:- !

www.statssa.gov.za/publications/mystats.asp?myfavpubl=1&myfavpubln=P0151 ! The weighting of the indices are also useful when analysing unit rates ! The formula: A = 0.85 V (Ie/Io-1) ! Where: A = the amount of adjustment 0.85 = a constant which provides for a 15% non-adjustable element V = the work value for adjustment in such work group and the valuation period Ie = the value of the index applicable to such work group and the valuation period which

shall be the value for the month Io = the value of the index applicable to such work group for the base month !The formula is applied to the net amount certified for every workgroup. The net amount is determined by deducting the amount previously certified from the accumulative amount for the current month for each workgroup. The base month index (Io) remains constant throughout the contract for each workgroup. The only time where this would not be the case is when work is undertaken at a different time than that of the initial tender. An example would be an item that was included in the tender as a provisional sum and that is tendered at a later stage than the main contract. The current month index (Ie) moves along month by month according to the date of the certificate !The format according to which the escalation is calculated resembles that of the detail of the certificate and also starts off with the cumulative total for each workgroup less the amount previously certified to obtain the amount that needs to be adjusted. It is important to realise that the result arrived at is no longer a cumulative amount and therefore the adjustments of all the certificates need to be added together to obtain a cumulative amount for inclusion in the valuation The indices are obtained from the P0151 publication and the monthly indices and inserted into the sheet as illustrated below; ! Assume the following:- Tender date: November 2009 Date of Certificate no 1: January 2010

" Note that the adjustment for workgroup 114 reinforcement is negative. This indicates the cost of reinforcement has decreased since the date of tender. The next certificate would be as follows !

PROJECT: NEW WAREHOUSECERTIFICATE NO: CERTIFICATE NO. 1 (ONE)DATE: 20 JANUARY 2010

WORK- DESCRIPTION ACCUMULATIVE PREVIOUSLY NET AMOUNT BASE CURRENT ADJUSTMENTGROUP VALUE CERTIFIED TO BE MONTH MONTH

CERTIFIED ADJUSTEDV Io Ie A

104 Earthworks 100 000.00 0.00 100 000.00 352.7 353.7 241.00 110 Concrete 60 000.00 0.00 60 000.00 464.9 477.3 1 360.29 111 Formwork 45 000.00 0.00 45 000.00 371.1 374.3 329.83 114 Reinforcement 50 000.00 0.00 50 000.00 472.8 462.6 (916.88) 116 Brick and Blockwork 120 000.00 0.00 120 000.00 427.3 439.8 2 983.85 190 Preliminaries 200 000.00 0.00 200 000.00 374.3 375.3 454.18

575 000.00 0.00 575 000.00 4 452.28

TOTAL CERTIFICATES NO 1 to _____ 0.00CURRENT CERTIFICATE

TOTAL TO DATE 4 452.28

ESCALATION CALCULATIONS


72

http://www.statssa.gov.za/publications/mystats.asp?myfavpubl=1&myfavpubln=P0151

" Figure 21: Calculating fluctuations (escalation)

There may be instances where the value of work is based on information that does not stem from the same time as the tender - for instance items that were included in the tender documentation as cost price items and that are adjusted to the correct cost according to invoices that are to be submitted as soon as the work the pertain to is executed. Such an event can be handled in two ways - either these values can be grouped together in a total that is not subject to escalation, or the rates may be de-escalated back to the same base month as the tender and then included with the other work and escalated together with the other work. To de-escalate a value the inverse of the formula must be applied Assume the value of the tiling at current value is R 10 000 Current index (Ie) for January 2010 for tiling is 361.2; Base index (Io) for November 2009 for tiling is 360.4 ! 1 . Adjusted (de-escalated) amount = V x [1+ 0.85 (Ie/Io -1)] = R 10 000 x 1 / [1+0.85(361.2/360.4-1)] = R 10 000 x 1/[1+0.0019] = R 10 000 x 0.9981 = R 9 981 !It is important during the final account stage to double check that the indices used to calculate the fluctuations are correct in all the certificates. The indices prepared by Statistics SA are issued on a monthly basis. When the CPAP is calculated and the indices for the current month are not available the latest available indices are used. Should any of the indices be incorrect the specific month’s calculations must be redone as well as all subsequent calculations to correct the cumulative value for the CPAP !! Source: University of Pretoria – Department of Construction Economics – lecture notes

PROJECT: NEW WAREHOUSECERTIFICATE NO: CERTIFICATE NO. 2 (TWO)DATE: 20 FEBRUARY 2010

WORK- DESCRIPTION ACCUMULATIVE PREVIOUSLY NET AMOUNT BASE CURRENT ADJUSTMENTGROUP VALUE CERTIFIED TO BE MONTH MONTH

CERTIFIED ADJUSTEDV Io Ie A

104 Earthworks 100 000.00 100 000.00 - 352.7 353.7 - 110 Concrete 80 000.00 60 000.00 20 000.00 464.9 477.3 453.43 111 Formwork 60 000.00 45 000.00 15 000.00 371.1 374.3 109.94 114 Reinforcement 75 000.00 50 000.00 25 000.00 472.8 462.6 (458.44) 116 Brick and Blockwork 180 000.00 120 000.00 60 000.00 427.3 439.8 1 491.93 190 Preliminaries 300 000.00 200 000.00 100 000.00 374.3 375.3 227.09

795 000.00 575 000.00 220 000.00 1 823.95

TOTAL CERTIFICATES NO 1 to 1 4 452.28CURRENT CERTIFICATE 1 823.95

TOTAL TO DATE 6 276.23

ESCALATION CALCULATIONS


73