Who carries the risk for safety and security on site due to the actions of the Construction Mafia in terms of the GCC Ed. 2010?

WHAT IS THE CONSTRUCTION MAFIA:

Every person working in the construction industry today has heard the term “Construction Mafia”, but who are we actually referring to when we use this term?

The term refers to “community forums” usually consisting of community members or leaders who come together for the purpose of making demands to the parties on the project, with or without threats of disruption attached. Generally, it is demanded that members of the local community are appointed as contractors, sub-contractors or simply that they are to be used as labour on these projects.

The basis for their demands can be found in the provisions contained in the Preferential Procurement Policy Framework Act and its associated regulations, promulgated in 2017 which is aimed at providing contractors and sub-contractors from previously disadvantaged demographics in the local communities wherein the project will be carried out with opportunities to supply the main contractor with supplies and a local workforce.

These provisions apply to projects where the Employer is a public entity or a governmental department and essentially authorise the local municipalities and public entities executing a project to insist that the main contractor or tenderer utilises a demarcated portion of the project value to sub-contract to the local workforce in an attempt to uplift local communities.

When implemented without the tactics of violence and intimidation, these community forums play an important role in advocating for and protecting the legitimate interests of the local communities. Oftentimes going so far as to aid in mediating between the Contractor and the workforce and ensuring the efficient and effective delivery of the project. However, this is not the norm, as these forums with unfortunate regularity, turn to violence and intimidation when their demands are not met by the role players on site. These tactics can, and often do lead to, clashes between police and security personnel on site, which can endanger the safety of the construction works and the individuals legitimately on site.

In the context of this article we will look at the following:

1. Would the current and potential future disruption and violence by the so-called construction mafia fall within the definition of the ‘excepted risk’ in terms of the General Conditions of Contract for Construction Works Ed. 2010 (‘GCC’), which would then make such disruption a risk for which the Employer is responsible; and

2. If the potential disruption by the so-called construction mafia does fall within the definition of an ‘excepted risk’, is the Employer responsible to pay for additional security costs in order to mitigate the potential risk of stoppage to the execution of the works which such a disruption may cause?

RISK AND LIABILITY IN TERMS OF THE GCC ED. 2010:

The guiding principle in apportioning risks under the GCC agreement is that the Employer will be liable for any risks which cannot be reasonably anticipated by a reasonable Contractor at tender stage. This then suggests that the Contractor will be liable for carrying any risks which could reasonably be foreseen at the tender stage while the Employer must accept the liability for risks that the Contractor cannot assess better than the Employer. Risks over which neither party has control should be carried by the Employer due to the fact that if the Contractor is expected to carry these risks, the Contractor will make provision for same in its rates in prices, which would result in the Employer in any event carrying the costs of such risk, despite the fact that they may not materialise. These are the ‘excepted risks’ in the GCC 2010.

CLAUSE 8 [PROTECTION AND CARE OF THE WORKS] OF THE GCC 2010:

Clause 8.1.11 of the GCC 2010 places the obligation on the Contractor to protect the Works properly and indemnifies the Employer against any liability out of the Contractor’s non-compliance with his obligation to protect the works. Protection of the works in terms of clause 8.1 relates to the Health and Safety plan and risks under the control of the Contractor. The GCC 2010 management guide states that the Health and Safety Plan must address the identified hazards and provide for safe working environment/procedures. 

When considering the extent of the measures that must be taken, the law considers the following guidelines, same which also make up the test for negligence in terms of the reasonable man test involving the ‘foreseeable harm’:

• The extent/degree of the risk;
• The gravity of the possible consequences that arise;
• The effectiveness of the preventative measures;
• The burden of eliminating the risk/harm.

In terms of Cl 8.2.1, the Contractor is under the obligation to take full responsibility for the care of the works, materials and all Plant[…], from any damage or physical loss from any cause not only those under the control of the Contractor but also the excepted (Employer’s) risks, from the date of site handover to completion.

Included in the excepted risks in term of Cl 8.3.1.4 are “strike, riot, commotion, disorder, violent demonstrations, sabotage or any form of civil disturbance (whether lawful or not) which is not attributable to any action or inaction of the employees of the Contractor or his Subcontractors,”

These terms are not defined in the GCC and therefore we turn to the SASRIA insurance policy for further guidance as to what these terms refer to. Generally, SASRIA will compensate you for loss, or damage to property of the insured […] caused by:

1. Any riot;
2. Strike; or
3. Public disorder; or
4. Any act or activity which is calculated or directed to bring about a riot, strike or public disorder

Any acts of intimidation and disturbance experienced by the Contractor as result of the actions of a construction mafia may fall into the SASRIA definition of a riot or at least an activity which is calculated or directed to bring about a riot.

Cl 8.2.2.2 of the GCC further provides that “If there is any damage to the Works […] arising from any of the excepted risks the Contractor shall if ordered by the Engineer, repair and make good same and the cost shall be valued and paid in accordance with 6.4”. Accordingly, since these risks lie with the Employer, if there is any damage to the Works due to any of the above occurrences, the Engineer would be obliged to order the contractor to repair and make good the damage. In terms of this clause the Contractor would be entitled to put in a claim for a variation order in terms of clause 6.4 of the GCC.

CONCLUSION:

Taking the above into consideration, unless otherwise provided for in the agreement, the Employer would be liable for any of the risk relating to security and protection of the works, given the facts and the reality of this risk in South Africa. Furthermore, the agreement creates pockets of risk which either directly or indirectly bind the Employer for payment of said risks either prior to the conclusion of the agreement or through other claim procedures in the contract.

Given the unabated reality of the construction mafia within the South African Construction Industry, it has become imperative for parties to construction projects to consider all elements of safety and security before commencing work on site, possibly even before conclusion of the construction agreement, in an attempt to avoid costly destruction and delays along the lifespan of the project. Parties are advised to ensure that they consult an insurance advisor to ensure that they are properly insured for any and all negative eventualities. It is further advised that the parties agree at the outset whether they foresee a need for additional and extraordinarily robust security measures to be put in place on the project and who should be responsible for the costs in relation to same.