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CAASA NEWSLETTER MAY 2024   The motivation behind this monthly newsletter is to provide better and more frequent communication to CAASA members, and to solicit suggestions and responses to the contents. We need input from you to ensure that the content of this newsletter, our webinars and annual conference remain both topical and relevant. CONTENTS: What makes a successful project CAASA Update Recent Court cases Firstly my apologies for the non-existent April newsletter. I was travelling over most of April and early May and simply ran out of time. WHAT MAKES A SUCCESSFUL PROJECT The construction industry is rife with significant project cost and time overruns, not just on major projects which we often read about, but across the board.  Open any newspaper and you will read on a daily basis of projects that have gone wrong through poor budgeting, no or little planning, ill-defined scope, skills shortages, non-payment, corruption and collusion. How do we measure project success? It means different things for various stakeholders. Completed on time and within budget World class safety High project quality Strong community participation Flawless project startup These are hardly rocket science. However they are interrelated, not independent.  Ask any project team and they will reply “obviously this is what we want to achieve” However when the project comes under pressure some of these goals become competing interests and fall away. Inevitably if a project is late and delay damages imposed, quality and safety take a back seat in the need to finish and stem the bleeding. Extended working hours, bringing on additional resources not familiar with the project, unproductive and defective work and a breakdown in controls and standards all contribute to this.    So if these 5 factors are the outcome what fundamental elements need to be in place to achieve these. Well defined scope of work -minimal changes Accurate planning and programming – actual productivities Sensible pricing, realistic rate build ups and acceptable margins Properly detailed specifications and contract documentation Design developed in parallel with cost planning Competent professional teams Good leadership Clear, achievable project objectives Healthy project cashflow, timeous payments Satisfactory subcontractor and supplier payments Satisfactory profit margins All parties have detailed knowledge of contract documents and contractual obligations Good communications, sound relationship management, proactive participation and co-operation Positive community support As can be gathered from the above list the more time spent up front on the various activities by all parties, the greater the chance of success. We all know of the Pareto, or 80/20 principle. However in construction we have the 70/30 principle. 70% of the contributing factors as to whether a project is a success or failure are determined prior to the signing of the contract.   By this stage the price and programme are settled. The terms and conditions of contract and the parties’ obligations become inviolable.  After this the only area  a party can truly try to control is its own performance. So if it is not rocket science, and we all acknowledge that the more work done up front the better, then why do we still see unrealistic programmes and budgets, undefined scopes of work, poorly drafted tender enquiries and one sided conditions of contract?    Because, under the current system, the parties do not begin to discuss the project until after the tender has closed, and even only after the contract award. It is too late to start collaborating then. As a result the parties will always have conflicting interests. The employer wants the project built to his time frame and budget. The engineer’s incentive is to provide information that satisfies the employer  and gets the project approved. He gains nothing by pointing out the budget and programme are not realistic. The contractor needs work and if he believes there is scope to enhance his tender price he will bid a low value and strive to be compensated through pricing the inevitable cope changes. So we continue to perpetuate bad projects. It is time for a national dialogue on project delivery. To simply confine the lessons learned from Kusile and Medupi to the dustbin does the industry a disservice. Both these projects were billions of rand over budget and years late. What will we do differently next time?    Remember - there is never a good time to sign a bad deal. CAASA UPDATE We are excited about our next training session to be held on Friday 5th July from 9h00 – 12h00. We have provisionally titled the session “Adjudication Conundrums” (with apologies to the AoA.) Often in adjudication we are confronted with challenges – points in limine, counter claims, a non-participating party, multiple disputes bundled into one referral, etc. Members are welcome to submit other vexing topics for discussion on the day. In addition we want to know what you want out of adjudication? And what are you not getting/have you been let down by adjudication? The intention is to make this session both in person and on line.  Further details will be forthcoming shortly, but please diarise the date and time in the interim. CAASA AGM In terms of our constitution the AGM and the appointment of new office bearers and Exco members must be held within 6 months of the end of our financial year which was 29 February 2024. We will shortly be calling for nominations to serve on the CAASA Executive Committee.   RECENT COURT CASES Given the current state of the industry it is hardly surprising that we are seeing increased challenges to the calling of a Performance Bond, be it by the applicable contractor or bond provider. 3 recent court  cases are highlighted, two of which deal with enforcement and the third which turns on the Principal Agent issuing both Practical Completion and Works Completion Certificates under a JBCC contract. Hollard v  Wameschsi & Niemand Infinity v Inkonka and Vedanth IDT v Lombard and Group Five    Any comments, suggestions or proposals please forward to secretary@adjudicators.co.za