Are you working fast enough? Can the JBCC be terminated due to slow work?

The obligation for a Contractor to proceed with due diligence, regularity, and expedition is one of the material terms of the JBCC contract. Can the Employer terminate the JBCC agreement if a contractor fails to proceed with due diligence, and if so, what are some of the practical considerations that contractors and principal agents must take into account?

The 4.1 and 5.0 versions of JBCC contains some form of the following worded phrase (Clause 15.3) “On being given possession of the site the contractor shall commence the works within the period stated in the contract data and shall proceed continuously, industriously and with due skill and appropriate physical resources to bring the works to… (in the 4.1 version it says – with due skill, diligence, regularity and expedition and bring the works to…) Practical Completion…” (Own emphasis added).

In the 6.1 and 6.2 versions of JBCC, the following is said under clause 12.2.7: The contractor shall, on being given possession of the site commence the works and proceed with due diligence, regularity, expedition, skill and appropriate resources to bring the works to practical completion and to final completion. (Own emphasis added).

The word "shall" denotes a contractual obligation based on the wording of these clauses. As a result, we can accept that the agreement's intention is to impose an explicit obligation on the contractor. When a party fails to fulfill an obligation, we refer to that party as being in breach of the contract. For the sake of clarity, I have divided the obligation found in 12.2.7 into four parts as follows:

• There is an obligation on the contractor to commence with the works;
• there is an obligation on the contractor to proceed with due diligence, regularity and expedition;
• there is an obligation on the contractor to use due skill and appropriate resources;
• there is an obligation on the contractor to bring the works to practical and final completion stages

As a result, a Contractor who fails to proceed with due diligence, regularity, and expediency is in violation of this obligation and, as a result, is in breach of the agreement.

Can the JBCC be terminated due to slow work?

Parties can mutually choose to end a contractual relationship just as they enter into agreements by mutual consent. No party, however, is permitted to simply avoid liability by terminating a contract unilaterally. Our legal system allows for contract cancellation when there is a serious enough breach of contract to warrant such cancellation. The term "default that goes to the heart of the contract" is used by the courts (see Swartz and Son) (Pty Ltd v Wolmaransstad Town Council 1960).

Nonetheless, a termination may occur as a result of a contractual right (lex commissoria), and this principle is the same as termination as a result of a breach.

The JBCC agreement includes a termination clause. Accordingly the courts have agreed that it is not necessary for a party to prove that slow progress is a material term of the contract in order to establish breach. This lex commisoria is contained in clause 29.0, and under this clause, the Employer may terminate the agreement if the Contractor fails, for any reason, to proceed with the works in accordance with clause 12.2.7, which is the diligence, regularity, and expedition clause we discussed earlier.

The matter is thus settled. According to the plain wording of the JBCC: ?A contractor who fails to proceed with due diligence, regularity, and expediency is in breach of the contract.

Such a breach is not only serious enough for the Employer to cancel (a default that goes to the heart of the contract), but it is also an explicit right granted to the Employer by the agreement.

How is slow work measured / proven?

The issue that most readers will recognize here is the question of "what would constitute a contractor's proceeding or failure to proceed with due diligence, regularity, and expedition?"

Such an observation or conclusion could be considered subjective. Consider the contractor who, after being given access to a specific site, has begun mobilizing its resources and acquiring materials. In the background, it's frantically running around and diligently carrying out the work, despite the fact that it's not physically on site yet. Within the first month, a person walking by the site may casually remark that nothing is happening, and a Principal Agent may judge the entire spectacle as a blatant failure by the Contractor to proceed diligently with the work.

The reality is that the JBCC contract is not specific in this regard, which may lead to interpretational disputes.

Nevertheless, one of the ways in which slow progress can be demonstrated is through a dynamic CPM programme. Although there is no obligation on the Contractor to strictly adhere to a programme, it does not change the fact that non-adherence to the programme can become valid proof that the Contractor is not proceeding with due diligence.

The purpose of the programme, according to Finsen, is to demonstrate how the Contractor intends to comply with his obligation to proceed with due diligence and complete the work by the completion date. This is echoed by the JBCC in clauses 12.2.6 and 12.2.10, which require the contractor to prepare and submit a programme to the Principal Agent... in sufficient detail to allow the Principal Agent to monitor the progress of the works, as well as to update the programme on a regular basis to illustrate progress.

A programme therefore becomes a crucial component of this argument, as it becomes a statement by the Contractor not only how it plans to execute the work to reach completion, but also the tempo it intends to execute at, to reach completion and fulfil its obligation. Because the programme must adhere to 12.2.6 and 12.2.10 it becomes a critical tool to monitor progress, or the lack thereof.

As a consequence, a Contractor who appreciably fails to progress as per its submitted programme, can be deemed not to proceed with due diligence.

However, there is one important caveat to be aware of. As demonstrated by the principles on display in the case of MSC Depots (Pty) Ltd v WK Construction (Pty) Ltd, the mere existence of a delay by the contractor on his programme may not be enough to secure a breach that warrants termination.

In this case, the principal agent and employer claimed that the contractor violated clause 15.3 (the equivalent of clause 12.2.7 in an earlier JBCC version) due to numerous defects in workmanship that manifested themselves during the project. The contractor was accused of failing to proceed with due skill because the defects were so numerous.

However, the bench of learned judges determined that the JBCC contract allows for the correction of defects. As a result, a contractor is not in violation of clause 15.3 if he corrects such defects with due skill, regularity, and promptness. The mere existence of defects did not on its own constitute a breach of the Contractor’s obligations under clause 15.3.

The same principle can apply to working with due diligence. The mere fact that there are delays on a project, or that work is progressing slower than planned is not sufficient reason to warrant termination. Especially in light thereof that the Contractor has a right to claim extensions of time and also that the Contractor may have the ability to remedy such slow work effectively and promptly.

How to approach this issue practically?

Contractor’s must note that slow progress cannot be swept under the carpet indefinitely to prevent an Employer to exercise their rights.

Principal Agents must be careful when terminating the JBCC due to slow progress. When this is contemplated, the following principles are important to consider:

1. First, ensure that the Contractor's program can track progress and that the information in updates and forecasts is reliable and accurate. If necessary, seek professional assistance with this function.
2. Ask probing questions when work is not being done diligently, such as: is this due to the Contractor's own fault, are there outstanding EOT claims, if not and the delays are solely due to the Contractor, are there clear plans and strategies in place from the Contractor to recoup the time, is the Contractor working diligently to make up lost time? Formally record these discussions between the parties.
3. Where there is a clear lack of planning and diligence on the Contractor's part to recoup lost time, ensure that formal notifications about the breach are communicated and that the expectations and requirements to remedy the breach are clearly stipulated.
4. Seek expert advice on the current status of any recoupment plans to determine their viability and timeliness.

Where the Contractor clearly remains in breach, the process of termination can be followed.?However, termination of the agreement is a serious remedy with many pitfalls.?It’s always advisable to obtain the assistance of legal professionals when this remedy is contemplated.

Thanks for reading. I'm Kobus and I'm a PMI-accredited Scheduling Professional, claims consultant and expert witness in Arbitration and Adjudication proceedings where I've acted as both a Forensic Delay Analysis Expert and a JBCC Contract Expert. To schedule an appointment on any of our services, you can reach out to us?here.

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Reference – Any reference to the JBCC in this article refers to the JBCC Principal Building Agreement Edition 6.2, May 2018 unless otherwise stated.

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