New legislation – know the CIOB Act!
Traditionally, the construction industry has been one of the least regulated industries as far as the statutory framework is concerned within which the industry operates. Several pieces of legislation have historically been important to the industry, such as the Arbitration Act 42 of 1966 and the Conventional Penalties Act 15 of 1962. The Occupational Health and Safety Act and, of course, the National Building Regulations provided a general framework in respect of health and safety issues.
The establishment of the Construction Industry Development Board (CIDB), in terms of the CIDB Act 36 of 2000, created a statutory body aimed at providing strategic leadership to stake- holders; promoting sustainable growth; improving best practice. procurement and delivery management; and developing methods for monitoring and regulating the performance and registration of projects and contractors in the construction industry.
The CIDB reports to the Minister of Public Works and comprises public and private individuals appointed by the minister on the basis of individual knowledge and expertise. The CIDB Act makes provision for a public sector register of contractors, categorising contractors to facilitate public sector procurement and promote contractor development. More recently the register of projects, also provided under the Act, intends to gather information on the nature, value and distribution of projects, and provides a basis for a best practice project assessment scheme to promote the performance of public and private sector clients in the development of the construction industry.
All construction contracts above the prescribed tender value are recorded in the register of projects: R200 000 for the public sector and R3-million for the private sector – both including VAT.
The CIDB published a code of conduct for all parties involved in construction procurement in terms of Board Notice 127 in Government Gazette 25656 on October31, 2003. It aims to foster good corporate governance in construction and applies to all parties involved in public and private sector procurement – development, extension, installation, repair, maintenance, renewal, removal, renovation, alteration, dismantling or demolition of a fixed asset, including building and engineering infrastructure. It also extends to work associated with supplies, services and engineering and construction works and disposals. Accordingly, the Code of Conduct applies to agents, contractors, employers, employees, representatives, subcontractors and tenderers.
Among others, this Code of Conduct requires parties in any private or public construction-related procurement to ‘behave equitably, honestly and transparently; avoid all conflicts of interest and not maliciously or recklessly injure or attempt to injure the reputation of another party”.
Section 29 of the Act provides for enforcement of the Code of Conduct. The CIDB may convene an enquiry into any breach of the Code of Conduct and may subpoena any party to appear personally at an enquiry. The Board may then sanction those who breach the Code of Conduct by issuing a warning or fine, referring the matter to the South African Police Services or, where a breach in respect of an official is concerned, to the accounting officer for action in terms of the Public Service Act, It may also deregister contractors for a period of time.
On June 9, 2004, under Government Gazette Notice 692 in the Gazette 26427, the CIDB regulations in terms of Section 33 of the CIDB Act were published. Failing to comply with these regulations could lead to a Fine not exceeding R100 000, which may be applicable to breaches such as supplying the CIDB with false information to mislead the Board; failing to register a project in terms of the regulations; or awarding a construction works contract contrary to the regulations.
The construction regulations apply to all sectors of the industry, both public and private, and impose obligations in areas where traditionally they would not have existed. For example, a client must now prepare a health and safety specification for the construction work and provide it to any principal contractor making a bid or appointed to perform construction work. The client is required to provide the principal contractor with any information which might affect the health and safety of any person carrying out construction work— Regulation 4(1)(a) and (b).
The client must now appoint each principal contractor in writing and take reasonable steps to ensure that each principal contractor’s health and safety plan is implemented and maintained on the construction site. This will require periodic audits at intervals mutually agreed between client and principal contractor at least every month — Regulation 4(1)(c).
The client must stop any contractor from executing construction work not in accordance with the principal contractor’s health and safety plan or which poses a threat to people’s health and safety, and ensure that, where design or construction is changed, sufficient health and safety information and appropriate resources are made available to the principal contractor to execute the works safely — Regulation 4(1)(e) and (f).
A client must also ensure that potential principal contractors (tenderers) have provided for the cost of health and safety measures during the construction process; discuss and negotiate the content of a principal contractor’s health and safety plan with the principal contractor; and finally approve the health and safety plan for implementation – Regulation 4(2) and (3).
These types of onerous impositions on clients require them to venture into areas where traditionally they have had no responsibility — the contractor had to ensure compliance with relevant legislation, particularly that it works safely.
Employers who fail to comply with these regulations may well find an inspector placing a stop order notice on the site and fines may also be imposed, albeit relatively small.
While the intention of the legislation is sound, its implementation and, particularly its policing, are almost nonexistent. The situation is akin to the law relating to cell phones in cars. Everybody knows you should not use them but every second driver has his hand glued to his ear while driving.
In a developing country such as ours and with the need to motivate and encourage emerging contractors, it’s not helpful to have a plethora of unenforceable legislation moving traditional responsibilities into areas without expertise. Unfortunately, these regulations are here to stay and we’ll probably see more statutory controls enacted in the future. Clearly, an opportunity exists for an organisation to develop the necessary skills required by the Act and to begin providing these services to employers. Whether any real benefit will be achieved by this legislation remains to be seen but, in my view, these regulations are poorly considered, have little in the way of ‘teeth’ to encourage people to comply and it will be the rare exception rather than the rule, which will trigger a sanction. No doubt, we will continue to see government being reactive to situations involving collapse and injury rather than proactive as is contemplated by this legislation.
Chris Binnington is the Managing Director of Binnington Copeland & Associates.
THE CIVIL ENGINEERING CONTRACTOR JULY 2006