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Finding the Perfect Contract for Your Renovation (Part 2)

Posted by Brian Mahachi on Saturday, June 1, 2024 Under: Contracts


                                                 
                                                    Photo by Amy Hirschi on Unsplash


As highlighted in our previous post, standard forms of contract (model agreements) are a safer bet for homeowners and builders in comparison to bespoke contracts which may be drawn up to favour one party. Several building industry organisations have drawn up model agreements for use in the renovation or construction of homes. We give a brief introduction to a few of the options available below:

1.     Master Builders Association South Africa (MBSA)

Master Builders Association (MBSA) is a voluntary organisation for builders operating across South Africa. It has published two agreements which would be of interest to homeowners:

  •         House Building and Small contracts Agreement
  •         Agreement for Renovation and Refurbishment Works

The contracts cover the following important aspects:

  • ·       Obligations of the parties
  • ·       Defined contract period for construction
  • ·       Insurances
  • ·       Mechanism for dealing with delays and scope changes
  • ·       Payment milestones
  • ·       Period of builder’s liability for defects after completion
  • ·       Penalties for late completion by the builder
  • ·       Mechanism for dealing with disputes between builder and homeowner

The contracts are available for purchase from MBSA’s website.

 

2.    Joint Building Contracts Committee (JBCC)     

The joint building contracts committee (JBCC) is a committee formed in 1984 by various construction industry organisations. The first model agreement was published in 1991 and has been updated several times since then. In addition, JBCC have added a range of agreements to suite different circumstances.

 

  • ·       JBCC Small and Simple Works Agreement for simple projects with no agent involved
  • ·       JBCC Minor Work Agreement for simple projects where an agent is involved in managing the contract for the homeowner
  • ·       JBCC Principal Building Agreement for complex projects with agents involved

 

The JBCC agreements cover the following important aspects:

  • ·       Obligations of the parties
  • ·       Defined contract period for construction
  • ·       Insurances
  • ·       Mechanism for dealing with delays and scope changes
  • ·       Payment milestones
  • ·       Period of builder’s liability for defects after completion
  • ·       Penalties for late completion by the builder
  • ·       Mechanism for dealing with disputes between builder and homeowner

For ease of understanding, please note that the homeowner or client is referred to as the employer in JBCC agreements. The three agreements are described in more detail below:

 

 

2.1           Joint Building Contracts Committee (JBCC) Small and Simple Works Agreement

JBCC and South African Institute for Architecture (SAIA) have recognised that a need exists for an agreement for small and/or simple works, i.e. for works generally under R5m in value and with or without an agent such as an architect being appointed to administer the works. This will then be a suitable form of contract should a client want to directly deal with the contractor for small projects such as renovations to an existing dwelling. 

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2.2          Joint Building Contracts Committee (JBCC) Minor Works Agreement

The Minor Works Agreement (MWA) has been designed for use where the scope of works is minor and of simple content with an agent such as an architect appointed by the client to administer the contract. It is also considered suitable (but not limited) for use where the contractor is a small to medium enterprise and the employer is responsible for taking out the primary insurances related to the works.

 

The MWA is not designed and is not intended for use where the works are complex and the construction period is anticipated to be more than nine months. We would typically recommend this contract for projects with a value under R10million.

 

 

2.3 Joint Building Contracts Committee (JBCC) Principal Building Agreement Edition 6.2 (May 2018)

 

The builder assumes total responsibility for the design and construction of a project. The homeowner has limited involvement apart from providing the necessary funding. The advantage to the homeowner is that the builder sits with most of the risk and the final building costs are fairly certain. The principal building agreement is appropriate for larger projects in excess of R10million in value where the services of various agents are required.

 

3      Association of South African Quantity Surveyors (ASAQS) Form of Contract for Housing and Minor Works

ASAQS is a voluntary organisation for quantity surveyors in South Africa and they have also published a contract for housing and minor works. The contract has the following features:

  • ·       Guidelines for users
  • ·       Defined contract period for construction
  • ·       Duties of role players listed
  • ·       Mechanism for dealing with delays and scope changes
  • ·       Payment milestones
  • ·       Period of builder’s liability for defects after completion
  • ·       Penalties for late completion by the builder
  •      Mechanism for dealing with disputes

The contract is free to the public and is available for download from their website. There are other standard forms in use in the South Africa construction industry such as the General Conditions of Contract (GCC) however these typically apply to engineering and infrastructure projects so have not been covered in this post.

 

 

 

 

 

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