The landscape contractual environment in South Africa

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Chapter 2 Review of related literature

Introduction

This review of literature is focussed on the landscape contractual environment in South Africa and selected other countries with the view to identify contractual and landscape issues of relevance to the problem and its stated hypotheses. The forms of construction contract generally used in South Africa are analysed to determine their suitability for use in landscape contracts or subcontracts.

The landscape contractual environment in South Africa

Introduction

In the Green Paper on their Public Sector Procurement Reform policy the South African Department of Public Works (DPW, 1997) noted:
There is little uniformity in contract documentation and delivery systems in South Africa. In works contracts the tendency is to follow the recommendations laid down by professional associations and learned societies and to utilise standard industry documents and systems and to adapt them to suit the need, style and culture of the organisation calling for bids.
The Construction Industry Status Report of 2002, prepared by the Council for Scientific and Industrial Research (CSIR) for the Department of Public Works (DPW, 2002:28), emphasises the need for the construction industry to adhere to modern forms of contract in order to promote procurement process reform in South Africa. In the report the CSIR noted (DPW, 2002:30) that although there may be a perception of an increase in the use of standard forms of contract by the public sector, only a few such branches of government are using them. They find that local governments in particular regularly amend standard forms of contract to suit their own needs.
In response to this Procurement Reform policy, and in order to promote new industry capacity and to assist the emerging sector, the CID FG 6 (DPW, 2000a:1) calls for the simplification of contract documents, specifically for persons whose mother tongue is not English. It also refers to the needed streamlining of payment procedures and surety arrangements as well as the constant review of contract documentation to remove any conditions that may be seen to be barriers to increased participation. They further note (ibid) that:
The current approach of having, probably, as many standard forms of contract as there are disciplines in the industry, together with a considerable number of in-house, bespoke forms of contract, neither makes for efficient nor does it enable a focussed approach to skills training necessary for development and growth.

CIDB and other contract criteria

The CID FG 6, which was the precursor to the CIDB, considers acceptable forms of construction contract to be those that:

• do not contain unreasonable provisions that could unfairly prejudice the interests of any contracting party,
• completely separate the conditions of tender from the conditions of contract thus permitting the utilisation of standard formats,

• • are not tailor-made to suit particular technical specifications or methods of measurement and valuation,
  • provide for an interrelated management system that clearly defines roles and responsibilities of all persons involved,
  • in which the Client’s representative, identified in the contract, is fully empowered to act on the client’s behalf,
  • permit the appropriate allocation of risks for individual projects, with each risk allocated to the party best able to manage, estimate and carry it,
  • clearly set out the period within which interim payments must be made to all participants, failing which they will have automatic right to compensation by the payment of interest at a sufficiently high rate to deter slow payment,
  • provide reasonable flexibility to accommodate both public body and private industry administrative practices. Such flexibility would permit, within limits, the selection of, inter alia, different periods allowed for payment, levels of surety, retention percentages, penalties, defects correction periods, limitations of liability for latent defects and contract insurance provisions,
  • encourage the role players to take all possible steps to avoid conflict, whilst providing for speedy dispute resolution by a pre- determined impartial dispute resolution procedure should conflict arise,
  • contain provisions for both interim and final dispute resolution by an independent person(s) which are not prejudicial to either party, and
  • stipulate formal contractual relationships between the contractor and all subcontractors, whether nominated, selected or domestic, which provide for fair and equitable conditions of subcontract.

(DPW, 2000a:2-4)

With regard to the previous point, it is worth noting that the CID FG 6 (DPW, 1999:1) has prepared a guideline document entitled Fair conditions of subcontract that has as its aim the identification of problems usually encountered in subcontracting and proposing best practice measures. Problems described as such are:

• • • Subcontractors having very little negotiating power with principal contractors due to the “next job syndrome”.
    • Non-payment by the principal
    • Victimization by the principal
    • “Hawking” of prices submitted to principal contractors by them to obtain lower prices from
    • The use by principal contractors of subcontractors’ monies as an interest-free overdraft
    • Principal contractors representing the subcontractors’ interests at forums and
    • Unreasonable retention percentages and periods of retention after In this regard landscape subcontractors run a bigger risk than most other subcontractors, especially if there was no provision made for landscape maintenance during the defects liability period.

In addition to the “essential criteria” above, the CID FG 6 (DPW, 1999:1) considers the following criteria for contracts to be desirable that:

• • • may be used across the full range of engineering and building disciplines and commonly encountered strategies by any client,
    • encourage co-operative attitudes with shared financial motivation to meet such This should result in a general objective to achieve “win-win” solutions to problems that may arise during the course of the project,
    • permit and encourage the application of partnering techniques between the client and contractor but in a manner that preserves contractual protection of rights,
  • • use clear and unambiguous language, are not unnecessarily complex and contain guidance notes where necessary,
    • encourage the client to avoid changes to pre-planned works information. However, where variations do occur, the contract should facilitate for these to be priced in advance of implementation,
    • contain appropriate provision for assessing interim payments by methods other than just monthly valuations,
    • provide for designs to be carried out by either party to a pre- determined extent, either by the employer through his agents or by the contractor,
    • provide for standard subcontract agreements and other related documents that are compatible with the main contract, and
    • contain appropriate provision to enable work that cannot be adequately described or specified at the time tenders are called for, to be readily executed and paid for when such work can be adequately

 The CID FG 6 recognises that while in practice it may not be possible to achieve all the above essential and desired criteria in any one single contract, it should not preclude drafters of contracts from striving to do so.
As a result of this policy, and in order to comply with the provisions of the Best Practice Guideline #C2: Choosing an appropriate form of contract for engineering and construction works, the CID FG 6 (CIDB, 2004a:2) recommended that:
The public sector should procure engineering and construction works in terms of a limited range of standard and approved procurement documents…” and that only the following forms of contract be used:

• • • FIDIC,
  • • GCC 2004 (incorporating the Committee of Land Transport Organisations (COLTO) General Conditions of Contract of 1998),
    • JBCC Series 2000, and the
    • NEC (incorporating the Engineering and Construction Contract, ECC).

The CIDB (2004a:11-12) identified the following factors to be taken into account when selecting an appropriate form of contract:

• • • The complexity of the works,
    • management capacity, capabilities and expectations of the parties and their agents,
    • requirements for specific contracting and pricing strategies, such as:
  • • Construction management,
    • Design by employer,
    • Management contract,
    • Design and build,
    • Develop and construct,
    • Activity schedules,
    • Bills of quantities,
    • Cost reimbursable,
    • Target cost; and
    • Partnering,
    • requirements relating to:
    • the assignment/management of risk,
    • back to back contracts for the engagement of all types of subcontractors, and
    • the management of cost and time overruns,
    • the ability and capacity within the employer body to handle different administrative procedures for building and civil engineering contracts (e.g. the use of the JBCC on building contracts and the GCC or FIDIC on civil engineering contracts),
    • training requirements, and
    • standardisation on a single system capable of handling any discipline and any contracting strategy in a single document in respect of engineering and construction works and all other procurements, i.e. supplies, professional services, and term services in a series of documents, that are based on a common philosophy, terminology and management

The CIDB (2004a:2) concludes by stating:
There is no doubt that the reduction in the prolific number of forms of contract in use in South Africa to the aforementioned four series of documents will assist in eliminating many of the inefficiencies and losses associated with having to interpret the many varied approaches used to establish the risks, liabilities and obligations of the parties to a contract and the administration procedures associated therewith.
 It is worth noting that the work done by the CID FG 6 has led to the development of SANS 10403:2003 by the StanSA Technical Committee for Construction Standards. This standard establishes a format for the compilation of procurement documents for civil engineering activities and sets out the general principles for compiling the procurement documents (SANS, 2003).

The JBCC Series 2000 publications

Background to the JBCC Series 2000 suite of documents

The Royal Institute of British Architect’s building agreement was used at the beginning of the twentieth century for building construction works in South Africa. The South African Joint Study Committee, constituted from representatives from the South African Institute of Architects, the South African Chapter of Quantity Surveyors and the then Building Industries Federation of South Africa realised the need for a form of contract that was more representative of the interests of all parties involved in building projects in South Africa and in 1984 the JBCC was convened as a first step to achieve that goal. The JBCC represents most of the major professional and contracting bodies in the building industry in South Africa, and at the start of 2006 was constituted from representatives of:

• • • the Association of South African Project Managers (ASAPM),
    • the Association of South African Quantity Surveyors (ASAQS),
    • the Master Builders South Africa (MBSA),
    • the South African Association of Consulting Engineers (SAACE),
    • the South African Institute of Architects (SAIA),
    • the South African Property Owners Association (SAPOA), and
    • the Specialist Engineering Contractors Committee (SECC).

Significantly none of the landscape related professional or contracting bodies, such as ILASA, representing the professional landscape architects or SALI, representing the landscape contractors, were neither nor are currently represented and it is considered one of the objectives of this study (refer to Items 1.8.2 and 1.8.3) to provide some guidelines to the JBCC to make provision for the specific requirements of landscape related contracts and subcontracts.
The JBCC PBA and the JBCC N/S Subcontract Agreement were first published in 1991 and were replaced by the Series 2000 published in 1998. The JBCC Series 2000 makes provision for it to be used for private and public sector projects by taking into account the specific contractual needs of the State (such as insurance, notice periods and time bars).

Preface 
Copyright notice 
Acknowledgements 
Abstract 
Ekserp 
Table of contents 
List of tables 
List of figures 
Abbreviations 
Chapter 1 Introduction 
1.1 The problem and its setting
1.2 Statement of the main problem
1.3 Statement of the sub-problems
1.4 Hypotheses
1.5 Delimitations
1.6 Definition of terms
1.7 Assumptions
1.8 Goals and objectives
1.9 Research methodology
1.9.1 Introduction
1.9.2 The research approach: Positivism versus Interpretivism
1.9.3 Qualitative research approaches
1.9.4 Qualitative research paradigm applicable to this study
1.9.5 Quantitative research
1.9.6 The survey questionnaire
1.9.7 The researcher’s expertise to comment on the research topic
1.9.8 Summary of the research design
1.10 Importance of the study
1.11 Conclusions
Chapter 2 Review of related literature 
2.1 Introduction
2.2 The landscape contractual environment in South Africa
2.2.1 Introduction
2.2.2 CIDB and other contract criteria
2.2.3 The JBCC Series 2000 publications
2.2.4 The GCC for Works of Civil Engineering Construction
2.2.5 The COLTO General Conditions of Contract
2.2.6 The FIDIC Conditions of Contract for Works of Civil Engineering Construction.
2.2.7 The NEC suite of contracts
2.2.8 The SALI standard agreement for the landscape industry
2.3 Landscape industry forms of contract used internationally
2.3.1 Introduction
2.3.2 United Kingdom
2.4 Conclusions
Chapter 3 Pertinent issues for landscaping contracts 
3.1 Introduction
3.1.1 The main contract
3.1.2 Standard forms of contract
3.1.3 The purpose or objective of a contract
3.1.4 What constitutes risk on a contract?
3.1.5 Contractual rights and obligations
3.1.6 Stages of work and associated maintenance
3.1.7 The subcontract
3.1.8 Risks in subcontracting
3.2. Pre-main landscape contracts
3.2.1 Introduction
3.2.2 Growing contracts
3.2.3 Conservation contracts
3.3. In-main landscape contracts
3.3.1 Direct contracts between the employer and landscape contractor
3.3.2 Landscape subcontracts
3.3.3 Domestic landscape subcontracts
3.4. Post-main landscape contracts
3.4.1 Introduction
3.4.2 Post-main landscape contract format
3.4.3 Landscape maintenance contract specification items to be addressed
3.5 Conclusions
Chapter 4 The survey, data and data interpretation 
4.1 Introduction
4.2 The survey
4.3 Specific treatment of the main problem and sub-problems
4.4 The data and their interpretation
4.5 Conclusions
Chapter 5 Summary, conclusions and recommendations 
5.1 Summary of the research
5.2 Findings and conclusions
5.3 Recommendations based on the conclusions
5.4 Recommendations for further studies
References 
Addenda 
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