Playing with a Stacked Deck – The Contractor vs The Construction Industry in South Africa

As if things were not bad enough for the South African construction industry, along came a global pandemic of biblical proportions. It stuck a blade into the industry's last exposed parts that were not already injured and bloodied.

The term “kicking a man when he is down” comes to mind, but for more than one reason in this case. Not only because COVID19 kicked the South African construction industry in the groin with blinding force, after the industry had already slipped off the tightrope and caught its naughty bits on the cord. Also, because as the sector struggles to recover there will be an inevitable return to the “us” v “them” culture that plagues the industry. Employers, with high-priced legal support, will be more than happy to hang contractors out to dry, in order to minimize their losses.

So where does that leave contractors: in a dispute, as is so often the case? A dispute referred to an appointing body, where the vast majority of dispute resolvers hail for the opposite side of the table. Few Contractors can afford high priced attorneys and even higher priced advocates. Yet, in the construction dispute resolution environment in South Africa, to have a dispute heard will likely cost well in excess of the total value in dispute in legal representatives and dispute resolvers fees alone. Many contractors have had bad experiences with dispute resolution. They realize that they are playing with a stacked deck. What the industry as a whole does not recognize, is the sheer scale of the damage done to the South African construction industry by this flawed system and the redundant culture behind it.

Very often contractors spend their last pennies struggling to keep up with employers who have a hugely disparate financial standing. Quite simply, contractors are muscled off the ball during disputes, by legal costs and the legal shenanigans of questionably ethical legal advisors. For many years this has been the case in South Africa. It has become a self-perpetuating phenomenon that has been driven ever more in recent years, by its own effects. Construction disputes have decimated the industry, eating through the supply chain like; given the current circumstances, the synonym, like "a highly contagious virus", seems apt.

This has added to the many afflictions already affecting the industry, causing massive shrinkage in construction output and a general decline in the sector. This has resulted in more disputes presided over by more and more “them” dispute resolvers. These arbitrators, adjudicators, mediators are competing for appointments; appointments that influential legal representatives, who are often directors or board members of the appointing bodies, are perceived to have sway over. This leads again to disproportionate findings against contractors, further cutting away as the valuable supply chain, degrading the quality and capabilities of the contractor side of the table. This cycle continues on, driven by corporate culture and the instinctive self-preservation that instructs one, perhaps subconsciously, not to bite the hand that feeds.

Industry stakeholders may read this and write it off as the ramblings of a contractor-centric author. That is because parties sometimes need to get into the trenches to see the damage and to recognize the cause of the injury. Even then, when certain factions have been part of the problem for such an extended period, it becomes more and more difficult for them to appreciate or to even comprehend the damage, let alone its cause.

Wise men such a Sir Michael Latham and Sir John Egan identified and amplified the destructive nature of the “us” v “them” culture in the construction industry many years ago. They initiated successful measures to prevent the negative effects of this dated philosophy. They spread their hard-gained knowledge globally. In South Africa, we have elected not to pay attention. Our professionals, our dispute resolvers, our employers, have habitually seen themselves as being too far above the fray to consider that they need to adjust their behavior. This is not to universally disparage all that act in these professions in South Africa. Years of intensive research found that most industry professionals are oblivious to their predilections and bias.

That is why it remains important that industry participants "learn" to honestly and effectively assess their partiality with respect to corporate and professional culture. Ignoring the issue and taking no assertive action to correct negative behavior will result in the continued deterioration of an already decimated industry. In the United Kingdom the problem required years of state intervention and extensive legislation to correct. These intercessions dragged UK construction industry back from the brink of the abyss. In South Africa, we have neither the will nor inclination of the state to act, nor the time to wait for such action.

The construction sector will be central to South Africa’s post-pandemic recovery. It offers an opportunity to re-build a broken industry. However, if industry leaders and playmakers fail again to take heed and to apply measures to correct the industry’s discordant culture, the country’s once thriving, world-class sector may be just another regrettable victim of COVID19 and its consequences. Another fatality due to pre-existing conditions.