Evaluation of archival documents

Archival documents consisted of an evaluation of prevalent forms of contract adopted by the research case studies. These included:

• JBCC Series 2000 (N/S Subcontractor Agreement) - a contract suite which consists of the Principal Building Agreement, Nominated/Selected Subcontract Agreement and the Preliminaries which collectively constitute the terms and conditions of the agreement between contracting parties (Othman & Harinarain, 2011: 7).

• NEC3 family of standard contract - an integrated and multidiscipline set of contracts for Engineering and construction projects covering both construction activity and professional services (CIDB, 2005: 9).

These forms of contract are considered standard accepted forms of contract deemed to govern relationships in South African construction industry. Standard form of contract refers to the general conditions of a contract in a standard form organised by an organisation independent of the contracting parties, which is intended to be used by various parties for a number and types of construction contracts of a particular type (Loots & Charrett, 2009: 31). The terms of a construction contract are required to cover certain aspects of construction activity to ensure that contracting parties’ interest is protected. There are certain areas within a contract that require clear and concise interpretation. Godwin (2012: 10-11) highlighted the following areas:

• Identification of the parties to the contract: who (or what legal entity) exactly is the contractor, and who (or what) is the employer.

• Identification of the work or services to be provided: in which documents or sets of documents are these defined? What priority of contract documents should be agreed upon

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in the event of inconsistencies between the contract documents (often highly complex and various)?

• How is the employer to ensure that what is provided complies with the contract? Clear provision has to be made for inspection of the works, before they are covered up and generally throughout the project; for the rectification of defects, both during the works and after they are taken over. Crucially, provision needs to be made for suitable testing of the works, to ensure that performance and other requirements for the structure are satisfied; and a clear procedure and timetable for taking over and acceptance of the work by the employer must be spelled out.

• Whatever the contract, the time or times at which the contractor is expected to complete must be defined. This will include the date of commencement of the works or services; the requirements for the programme (what it should show and how it is to be revised and updated); provision for progress reports and monitoring of progress throughout the project; the contract completion date for the work or sections and the consequences of delay beyond that date for which no extension of time is granted.

• Price and payment: the price and, more generally, the basis of payment of the contractor (fixed price, re-measurements or other basis) must be defined. The amount and timing of payment (on achieving milestones in a payment schedule, for example, or monthly or other periodic payments), and the procedures for applying for and obtaining payments (employer to pay on engineer’s certificate for delayed payment and their entitlement to advance payments).

• Responsibility for damage to the works and injury to persons needs to be defined, including obligations to insure; as does intellectual property rights and ownership of plant, equipment and materials used or intended for the works.

• Environmental and social matters need to be covered, such as labour protection and compliance with local anti-pollution regulations.

• The consequence of any failure to perform a party’s obligations needs to be spelled out. These include delay damages but cover other defaults. The parties’ rights to suspend the works or terminate the contract in the event of default by the other (and also the availability or termination or suspension by the employer for ‘convenience’, or otherwise than for contractor default) need to be specified.

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• Security for performance of the parties’ obligations, including retention and performance guarantees and bonds, needs to be defined.

• The effect of ‘force majeure’ or exceptional and overwhelming events preventing performance for which neither party is responsible should be defined. When can a party be excused performance in such an event, for how long and with what effect?

• So-called ‘boilerplate’ or standard clauses need to be completed. These cover such matters as the governing law of the contract, the agreed language of the contract and the notice provisions of the contract (whether all notices need to be in writing, for example, or whether they can be given by e-mail)

• Also important are procedures for one or the other party to make a claim against the other, and how claims may be determined when made. How are disputes to be resolved; what steps, if any, need to be taken before formal and binding process, such as court or arbitration, is resorted to?

Moreover, these selected contracts are expected to be in compliance with the abovementioned requirements in order to be approved by the CIDB. A main feature of these contract suite is a “subcontracting” clause that govern subcontracted work. Table 6.9 summarises the subcontracting feature of the JBCC Series 2000 and NEC3.

Table 6.9: Subcontracting feature of JBCC series 2000 and NEC3 Standard form of

contract

Commentary

JBCC series 2000 PBA Provision is made for nominated subcontractor and selected subcontractors i.e. subcontractors appointed by the principal agent in consultation with the contractor. The contractor is liable as if he or she had not subcontracted where the subcontractor is selected. The contractor is not liable in certain respects where the subcontractor is nominated. Back to back forms of subcontract are provided to facilitate the appointment of contractors

NEC3 family of standard contracts

Contractor liable as if he or she had not subcontracted. No provision for nominated subcontracts. Back to back NEC Engineering and Construction Subcontract (ECS) or the NEC3 Engineering and Construction Short Contract are provided. The Engineering and Construction Short Contract (ECSS) can also be used as a back to back subcontract

Source: CIDB (2005: 7, 10)

6.4 SUMMARY

The data obtained from the convergence of the three data instruments involving 31 participants’ members of various construction teams were presented. A detailed analysis using an abbreviated approach to content analysis of the chief data source, interview protocol,

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enabled a thorough inspection into the data obtained. The next chapter will focus on the discussions and findings from the research analysis in relation to the research questions and objectives that were formulated in Chapter 1.

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CHAPTER SEVEN

DISCUSSION

7.1. INTRODUCTION

Chapter 7 discusses the primary findings of the study from the research analysis process of the previous chapter. The findings are further discussed in relation to the research questions and objectives set out at the beginning of the study. This chapter thus seek to ascertain whether the defined research problem and subsequent objectives have been accomplished. The ensuing primary findings relate to the research questions established during the initial phase of the study outlined in Chapter 1. Accordingly these findings are generated from the convergence of two data sources namely, archival documents and interviews.

7.2. Research question 1

What is the nature of collaborative practice in construction?

The response to research question one is found in both theme 1 and 4 discussed in Chapter 6. These themes cover:

• Theme 1: on site operational governance, and • Theme 4: nature of operational structures.

The participants were unanimous in attributing the nature of their relationship as one of mutual dependency as well as adversarial when challenges arose. The majority of participants felt that the environment they worked in afforded them a measure of transparency and gave them the freedom to express themselves. Main contractor representatives complied with an open door policy that encouraged subcontractors to propose innovative solutions as well as problems they encountered on site. However, one project manager (main contractor representative) cautioned against being too transparent and preferred sharing information on a need-to-know basis. Some supply and install subcontractors were given a measure of independence. This however did not reassure them of trust on the main contractor’s part but was perceived as nonchalant attitude towards their presence on site. Numerous factors impacted the type of relationship between project participants, which centred on communication and frequency of project collaborations. The most preferred mode of communication was face-to-face; asynchronous collaboration and synchronous distributed collaboration. The frequency of communication however, was determined by two factors,

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namely familiarity of the team leaders (foremen and subcontractor relationship) and duration of participant in the current project collaboration. Main contractor representative stated that subcontractors and suppliers whom they had worked with before on other projects were trusted and therefore did not require constant communication or supervision as both sides were familiar with the required standards of quality and efficiency. This proved successful as some of the subcontractors were given added tasks to complete on behalf of the main contractor. Subcontractors who had occupied the construction site the longest seem to have developed an understanding of the work ethics and cultures that persisted on site. While participants who had joined the construction site on a later period struggled to establish a working system. This was true on both sides of the collaboration (main contractor representatives and subcontractors). For example, one main contractor representative had only been on the current project for a week (20 months into a 36-month project). He displayed an authoritative presence which most of the subcontractors did not approve which led to a troubled relationship plagued by constant communication characterised by hostile and unforgiving nature. On one project, subcontractors felt side-lined by the main contractor and their representatives. The modes of communication did not seem to yield the desired outcomes thus making both sides lose trust and respect for each other. Commonality raised among all participants was the fact that the main contractor’s decision to act in “good faith” was welcomed by all parties involved as it allowed integrity to develop among the construction team. Information sharing by the main contractor representatives encouraged a relaxed, conducive environment as participants were assured that work assigned was completed in the manner in which was instructed.

7.3. Research question 2

How do contractors apply collaboration in a supply chain?

The response to research question two is found in four themes discussed in Chapter 6. There themes cover:

• Theme 5: integration strategies adopted for supply chain contributors; • Theme 7: legal compliance vs partnership obligations;

• Theme 8: functional composition of supply chain contributors; and

• Theme 12: construction industry regulation and their impact on social and production practices.

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The application of collaboration in a supply chain is guarded by standard forms of contract, which includes the JBCC series 2000 and NEC 3 family contract. Both these forms of contract include provisions for subcontracting work. The main contractor would organise their relationship with the subcontractor (domestic or nominated) as if they had not subcontracted. Thus main contractor representatives maintained managerial roles while the subcontractors were in charge of production.

The manner in which subcontractors/suppliers were appointed influenced how subcontractors were assigned to tasks and whether they could occupy and maintain leadership structures. Two of the construction projects investigated had additional clauses imposed upon the main contractor, with an addition of 3 individual professionals who operated sites under the same clause. This client-imposed clause required the main contractor to allocate 30% of the contract sum to the appointment of local SMMEs (subcontractors and suppliers). A much needed intervention to improve the community, this however meant that new-entrants were included in the collaboration tasking the main contractor with added responsibilities. To alleviate these responsibilities, designated roles and project-tailored responsibilities were assigned to members of the SC. Subcontractors who had a long-standing relationship with the main contractor were allocated added relationships of managing new subcontractors who had little or no experience in the trade.

The simple nature of material and equipment suppliers meant no formal agreement was required to govern the partnership. As such, main contractors appointed suppliers on a negotiated quotation system. This relationship was easy to maintain as suppliers engaged with a specific buying department from the main contractor.

The majority of subcontracted work included wet trades (labour only) and supply and installation subcontractors. For this reasons, main contractor representatives served on supervisory capacities enabling subcontractors to coordinate their employees free of interruptions from the main contractor. Subcontractors who lacked adequate understanding of basic site practices were allocated to work on tasks that would later be finished by subcontractors with more experience. Therefore, one trade comprised of a number of subcontractors undertaking the same work. This reassured the main contractor of quality in work executed. This also allowed subcontractors to work as a team in a conducive environment.

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Noteworthy is one contracts manager who opted to use a custom-made contract form which incorporated some of the conventional contracts but omitted some clauses he deemed unnecessary for the project undertaken. The contracts manger justified this approach by alluding to the unrealistic nature of standard forms of contracts which bound the main contractor in a partnership he was not satisfied with. Moreover, the participant preferred the use of other regulatory body guidelines (NHBRC manuals) as binding obligation between them and the subcontractor as this council was tasked with signing off on subcontracted work on behalf of the client.

Client representatives were also incorporated into the supply chain especially on specialist trades to ensure accuracy in installing and operating of equipment. Subcontractors were then provided with first-hand instruction and advice from stakeholders who represented the client enabling a successful execution of work and trust among SC contributors.

7.4. Research question 3

What are the impediments that contracting is currently facing with regards to collaboration? The response to research question three is found four themes discussed in Chapter 6. These themes cover:

• Theme 2: impediments to site practice and operational structures;

• Theme 9: impact of project scope on operation governance and structure; • Theme 10: perceived effects of recruitment strategy; and

• Theme 11: impact of project client legislation on supply chain structure.

The biggest challenge faced by the main contractor and their representatives, is subcontractors lack of technical skills. This issue is most prevalent among new subcontractors, particularly those under the client-imposed clause of allocating 30% of contract sum to local SMMEs. Most of these local SMMEs lack experience in technical, administrative and managerial skills required of subcontractors. Local SMMEs do not dispute this fact but insist that their inclusion is compulsory if they are to benefit the community as well as improve their skills. Furthermore, subcontractors lack the needed funding and material resources to carry out work even among labour-only subcontractors. New entrants also possess little or no insight to the administrative side of construction and business. Issues such as payment of employees, payment agreements between them and the main contractor have time and again caused problems among collaborators. Failure to moderate the number of subcontractor employees has resulted in a high surplus of employees and minimum funds

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available for remuneration. This has thus resulted in protests, project delays and at times rework of trades for poor quality work.

The incompatibility in work ethics presents numerous challenges to collaboration. The experience of the main contractor in project undertakings has developed a more structured, efficient method of executing work which subcontractors with very little experience fail to display. Main contractor representatives displayed a willingness to exert themselves to cover any delays while subcontractors were perceived as “lazy, taking too many toilet breaks”. Because of the inconsistent work ethics, certain subcontractors are discriminated against and subjected to insubordination, an act main contractor representatives feel justified in displaying such an attitude.

The participants’ refusal to label their collaboration as one of trust and honesty further indicates that among construction team members, confidence is lacking thus hindering any progress in building long lasting relationships.

Participants alluded to a predestined culture of insubordination steered on by main contractors who feel that subcontractors are easily disposable or replaceable. While both parties do not dispute it, main contractor representatives find it inevitable part of construction that works in their favour. Subcontractors are thus justified in their pessimistic overall view of the collaboration. They therefore display an indifference to instructions given by the main contractor representatives and focus more on financial benefits than building relationships. Reporting structures in a collaboration are perceived as problematic to some degree. One representative of the main contractor indicated that working with an external team as opposed to in-house teams delayed tasks completion. This is because the foreman would have to discuss issues encountered with subcontractor employees with their employer which could entail waiting for the subcontractor to deal with their employee before further work can be done.

The project scope seemed to play a significant role in how collaboration was practiced. It was found that on a very reputable, expensive project, main contractors were more interested in completing the project at all cost even side-lining, subjugating or terminating any relationship with subcontractor who failed to adhere to the same level of commitment as the main contractor. Main contractors in such situations thus placed less interest in building relationships and enforced a dictatorship form of collaboration. Project specific needs further

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strain the relationship between main contractor and subcontractors as quality, cost effectiveness is valued over subcontractor willingness to engage in a tasks.

Client-imposed clauses, such as a penalty on the main contractor if they fail to adhere to the client terms, greatly affect the main contractor/subcontractor relationship. Restriction on extension of time put the main contractor in a difficult spot where at times requires them to give out warnings and intentions to terminate their relationship with non-performing subcontractors, thus putting added pressure and resentment from the subcontractors. Government clients impose social responsibilities on main contractors, while requiring them to produce a high quality, cost effective product, they are tasked with inadequate assistance of local subcontractors which might very well compromise their performance.

The strategies with which subcontractors are appointed pose a challenge. If subcontractors are appointed by means of a client imposed clause over an adjudicated tender process, main contractors tend to develop a negative view of the partnership. Main contractors are known to use unconventional recruitment methods, such as including subcontractor-priced documents on behalf of the main contractor with the verbal assurance that upon tender award the subcontractor would be included in the project. At times this works in both parties favour, however some subcontractor display a casual attitude towards tasks that have been assigned as they feel they deserve to be included in the project whether they perform or not.

7.5. Research question 4

How could impediments to collaborative practices be addressed in South Africa?

The response to research question four is found in theme 13 discussed in Chapter 6. This theme cover: remedial measures to enable successful supply chain integration

Participants proffered various remedial measures that could eradicate the challenges faced and improve collaboration between them. Government intervention was proposed by both