Prompt Payments –The Lifeline of our Industry

    Construction Industry South Africa

    We held an urgent meeting to address the plight of non-payment specifically to sub-contractors where cash flow, and timely, correct payments were discussed.

    The notice of the meeting went out following an article published on prompt payment regulations (https://www.iol.co.za/business-report/companies/builders-engage-treasury-on-debt-woes-12781291) that went out to all members. We had a response from 13 sub-contractors who attended.

    The matter of non or delayed payments is an issue that has been highlighted as a focal point for the Association in 2018, one that we take very seriously as it is the lifeline of our industry.

    A meeting was held with the Chief Procurement Officer of the National Treasury, where the Association confirmed a current outstanding amount about R5 billion to the members of the Master Builders South Africa (MBSA).  National Treasury has requested that the MBSA determine the outstanding amounts, for Government to budget accordingly in the next financial year for these outstanding matters.

    The MBA North has therefore currently two projects that are running in parallel: firstly, to assist the Federation (MBSA) to obtain clarity in the amounts that are outstanding by government to the main contractors (or those doing business with government); secondly to enquire into the amounts outstanding to sub-contractors by main contractors.

    This will include collective representation to either contractors or clients, who are delaying payments or not honouring their agreements.

    Major concerns were raised by members in the subcontractor meeting that resulted in the resolutions below being reached for action by the Association.  As MBA North we undertake to represent our members and find solutions to their challenges. However, we also urge members to come forward and communicate with us, and give us a mandate and adequate representation when we tackle these matters.

    Meeting Resolutions:

    4.1.      The MBA North, together with MBSA should address Treasury on matters of the circulars that have been issued as well as the lack of action on emails through the 30-day payment hotline that has been created.

    4.2.      Awareness must be created with members about the channels available to them regarding non-payment or delayed payment by government.  This relates to www.tendernet.co.za.

    4.3.      The MBA North must contact the owners of www.tendernet.co.za to determine the action plan of the website, to ensure that the parties involved are kept accountable.

    4.4.      The Subcontractor Committee of the MBA North must be resuscitated, with four meetings held per year.  This committee meeting must be open for all subcontractors and suppliers to bring forward their complaints and requests to the Association;

    4.5.      The MBA North must obtain from its members information on those contractors that are not conforming to prompt payment requirements.  The MBA North will then send letters to those contractors to inform them of their non-payment, recognition will be given to those contractors who are in fact paying on time.

    4.6.      An awareness campaign must run on the dispute resolution processes and the recourse instruments that are available to members. An adjudication clause must be created, that can be written in as standard into MBA North members’ tender requirements.

    4.7.      The promotion of protection of subcontractors’ retentions must take place.  This must be taken up with the Professional teams (i.e. ASAQS) FEM Retention fund facility to be circulated and marketed to MBA North Members.

    4.8.      The MBA North must request that the JBCC should write in suppliers into the JBCC Suite of agreements that are currently being drafted.

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