Financial Data
Updated 26 Sep 2017


Tighten up because it’s tough(er) to build in the city

If you’re a service provider to the City of Johannesburg (COJ), or you’d like to become one in the future, you’ll want to take note of a new clause that’s come into effect. 


Pritesh Ruthun, 02 July 2017  Share  0 comments  Print


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Johannesburg mayor (and entrepreneur), Herman Mashaba, says: “We are looking at the overall infrastructure of the city. We are looking at all the services and infrastructure.”

Seems like there is no better time to be one of COJ’s service providers, right? But, if you build infrastructure for the city, you better prepare to commit to service excellence – or it will pull the plug on your operations very swiftly.

Related: 4 Things you must have in place when starting a new construction company


TAKE NOTE

“The City of Johannesburg has announced measures to crack down on non-performing construction companies and said it plans to go after those who do not deliver,” the Times Media Group reports.


City of Jo’burg and its state of (de)construction

“New city contracts will include a clause that allows for early termination if standards are not met‚” says Funzela Ngobeni‚ a member of the City of Jo’burg’s mayoral committee for development planning.

The decision (to terminate contractors at will) was made after the Johannesburg Development Agency (JDA) ended contracts with companies for four recent construction projects:

  1. Nancefield transit development project
  2. Langlaagte pharmacy depot project
  3. Thoko Ngoma Clinic
  4. Rabie Ridge Sports Centre. 

“I am delighted to announce that a new special clause allowing for early termination of contracts has been incorporated into the City of Jo’burg’s new set of standard construction tender contracts‚” Ngobeni says.

Good news for them, bad news for you?

Urban -Construction -concept

“During investigations‚ it was found that issues related to cash-flow‚ which affected production and the quality of work‚ were evident in all four projects. It became clear that the contractors over-stretched their resources‚ and in many instances‚ used money allocated to JDA to cross-fund other projects,” Ngobeni explains.

This is a challenge for construction and infrastructure development firms in trying times. But the mayor’s representative says that should contractors fail to reach milestones as per their timelines set:

“The new clause will be implemented to terminate any contractual agreements.”

Related: 4 Cost-effective (construction) safety tools you can buy second-hand

Ngobeni adds that the projects already put on hold were due to be delivered between September and November 2016‚ but the contractors failed to do so. Times Media reports that costs had escalated by at least R49 million due to poor quality of work. New contractors, however, took over and are expected to finish the projects in August 2017.

“It needs to be stated that there is a need to review industry-based contracts. This will mean that contractual performance and terms of termination based on specific project timelines will become a reality‚” Ngobeni adds.

This is the certainty you might face

“The JDA‚ through its legal team‚ is in the process of recovering all the associated costs from the individual contractors,” Ngobeni says. The city’s department and the JDA are working to now recover lost time in the implementation of projects.

If you can’t deliver on stipulated timelines, it might affect your ability to secure work from the City of Jo’burg in the future. Now’s the right time to refine your systems and processes. So, if you can’t deliver within timeframes based on staff constraints, be realistic and factor it into your timelines. 


CONSIDER THIS

“I’m going to work with the private sector, to turn the inner City of Johannesburg into a construction site,” says Herman Mashaba. So, while there’s work for you out there, you need to be able to deliver on time if you want to keep the work coming for years to come.

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Pritesh Ruthun


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