Construction Industry Contract and Legal Landscape: What Can We Expect for 2026?

Standard forms of contract are being updated to reshape how risk is allocated and managed across construction projects. Construction companies are increasingly required to embed robust risk management practices and adopt a more disciplined and sophisticated approach to contract management. This article sets out the contractual and legal landscape in the South African construction industry.

1. Standard Form Contract Updates

1.1 What to expect

The growing adoption of updated standard forms of contract during 2025 signals a clear trajectory toward greater contractual certainty and explicit risk allocation. Revised editions of GCC, JBCC, NEC and FIDIC are placing renewed emphasis on defined processes, strict notice requirements and clearly articulated rights and obligations.

A notable trend is the continued increasing importance of procedural compliance. Disputes are less likely to turn on general notions of fairness and more likely to focus on whether contractual mechanisms were invoked correctly and within prescribed timeframes projecting recent trends in this regard. Time-bar provisions, in particular, are becoming decisive.

Adjudication and arbitration continue to dominate as preferred dispute resolution mechanisms, with South African courts reinforcing party autonomy where these mechanisms have been contractually agreed.

1.2 What should you do?

Contractors must familiarise themselves thoroughly with the contracts they sign and treat them as essential operational handbooks rather than administrative documents. Key actions include:

• Understanding updates and differences across standard form agreements.
• Recognising that risk is no longer implicitly assumed but explicitly allocated in contract documents.
• Ensuring that accepted risks are adequately identified, priced and managed at tender stage.

2. A Shift Toward Proactive Contract Management

2.1 What to expect

The legal and financial consequences of poor contract management are becoming increasingly evident across the industry. A well-managed contract is now directly linked to project success and in many cases the commercial sustainability of construction businesses.

There is a heightened responsibility to strictly comply with contractual mechanisms, particularly in relation to:

• Suspension of works.
• Termination.
• Notices and claims for dela.
• Cost claims and variations.
• Time-bar provisions.
• Dispute resolution procedures.

Failure to follow prescribed processes can result in the forfeiture of otherwise legitimate entitlements.

2.2 What should you do?

Construction companies should invest more deliberately in:

• Training for project, commercial and site teams.
• Contract administration systems.
• Professional legal and dispute-resolution support (which is available through the Association’s Legal and Dispute Resolution Department).

Early risk identification, structured claims management and regular contract reviews should become standard practice. Crucially, contractual understanding must be translated into practical, day-to-day contract management processes on site.

3. Contract Price Adjustment Provisions (CPAP)

3.1 What to expect

CPAP remains a key mechanism for adjusting contract prices and typically covers materials, labour, plant and equipment, fuel and transport as well as a general cost component. Adjustments are calculated using a basket of indices which are primarily published by Statistics South Africa.

While headline inflation is forecast to remain relatively subdued, construction-specific inputs — particularly fuel, materials and logistics remain volatile and may increase at rates exceeding general CPI. Against this backdrop, coupled with growing emphasis on precise contract wording, CPAP provisions are especially significant for projects exceeding 12 months.

It is important to note that CPAP is one of several contractual price adjustment mechanisms and does not operate automatically.

3.2 What should you do?

CPAP must be understood as a risk-allocation mechanism, not a safety net. Contractors should:

• Confirm that CPAP is expressly provided for in the contract.
• Understand triggering requirements and procedural steps.
• Establish the correct base date and apply indices at the correct intervals.
• Recognise that CPAP does not cover all cost increases.

Accurate documentation and properly substantiated calculations are essential when submitting CPAP claims.

4. Public Procurement

4.1 What to expect

The Public Procurement Act, 2024 was assented to in July 2024 and aims to enhance transparency, integrity and accountability in public procurement. Its objectives include combating corruption, ensuring efficient use of public resources and advancing transformation and inclusive participation.

However, the Procurement Regulations required to operationalise the Act have not yet been promulgated. These regulations are currently being developed and is the subject of debate and scrutiny. The commencement date and practical implementation of the Act is currently uncertain.

4.2 What should you do?

Despite regulatory uncertainty, contractors should begin preparing now. The Act seeks to:

• Standardise procurement law across government.
• Strengthen oversight and anti-corruption safeguards.
• Promote transformation and economic inclusion.
• Introduce new compliance and reporting obligations.

Practical preparatory steps include:

• Developing procurement compliance checklists aligned to the Act’s objectives.
• Preparing for increased transparency and electronic procurement processes.
• Anticipating greater oversight, bid challenges and award disputes.
• Allowing for delays and legal uncertainty during the transition period.
  

5. The Housing Consumer Protection Act

5.1 What to expect

The Housing Consumer Protection Act, 2024 was assented to in January 2025 but has not yet come into effect. Once implemented, it significantly expands the scope of regulatory and warranty protection beyond new homes to include renovations, repairs, additions and extensions requiring approved building plans.

The Act also introduces duties for homebuilders, estate agents, conveyancers and financial institutions, with the aim of strengthening consumer protection – therefore there will be a wider range of parties required to comply with the Act.

As a result, contractors and developers who were previously exempt from NHBRC registration may now be required to register and comply with statutory obligations before commencing work.

5.2 What should you do?

In preparation for implementation, contractors should:

• Ensure your NHBRC registration is in place.
• Develop preliminary legislative compliance checklists to be finalised when further legislative clarity is available.
• Factor enrolment and compliance costs into tender pricing.
• Allow for regulatory lead times in programming and scheduling.
• Strengthen quality management systems and record-keeping practices.

Conclusion

In conclusion standard form contracts are becoming more exacting, CPAP provisions demand careful management, public procurement is entering a period of reform and expanded housing consumer protection will increase regulatory oversight. In this environment, success will depend less on informal practices and more on contractual literacy, proactive risk management, disciplined execution and regulatory compliance.

Bilaal Dawood | Head: Membership Services