DOES THE JBCC SERIES 2000 PRINCIPAL BUILDING AGREEMENT PROVIDE FOR INCREASED COSTS OF LABOUR AND MATERIALS TO BE RECOVERED ON A ‘FIXED PRICE’ CONTRACT?

Many contracts today are described as "fixed price contracts" meaning that the contract value is not subject to adjustment for price increases using the Contract Price Adjustment Provisions (CPAP (Haylett formula) or other such methods and that the Contractor has allowed for such increases in his tender offer.

But what if the contract is delayed by the action or inaction of the Employer or his Agents, the construction period is extended and as a result the Contractor suffers added expense due to rising costs of materials and/or labour?

Can the Contractor recover these expenses?

The answer lies in clauses 32.5 and 32.6 of the JBCC Principal Building Agreement.

The Contractor is entitled to recover expense and loss under the provisions of clause 32.5 where the circumstances causing the expense and loss are the same ones which caused the delay.

For example:

- Failure to give possession of the site to the Contractor on the date
- Issuing contract instructions
- Issuing contract instructions late
- Default by the Employer which causes a nominated or selected Sub-Contractor to suspend work or cancel
- Delays caused by direct Contractors

Any claim for the recovery of such expense and loss has to be made in terms of clause 32.6 which contains important time barring provisions.

The Contractor is required to give written notice to the Principal Agent within forty (40) working days from becoming aware or from when he ought reasonably to have become aware of any expense or loss in terms of clause 32.5. If he does not do this, then no compensation will be made and his claim will be rejected.

Once this notice has been given, the time bar provisions have been satisfied.

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