State’s approach to construction mafia is ‘contradictory’

Aveng group CEO Sean Flanagan believes by shifting the risk to contractors Sanral will find it difficult to find contractors for projects. Is Sanral contradicting national governments efforts to deal with the "construction mafia"? Is Sanral risking alienating contractors?

 State’s approach to construction mafia is ‘contradictory’

Aveng group CEO Sean Flanagan said the “noises” being made by the government to deal with this issue are “the right noises but there is a need to see the implementation of law and order”.

“We have got a long way to go to see policy and words turn into real actions.

“The worrying thing is that we have SOEs [state-owned enterprises] now believing the way to manage these risks is simply to pass it all to the contractor.

He added that Sanral could face difficulty finding contractors for projects because it is trying to force all the risk onto them.

Organised crime

It was reported last month that moves are afoot to rein in the disruption of construction sites by the ‘construction mafia’ or business forums, through the use of the Prevention of Organised Crime Act (Poca).

President Cyril Ramaphosa stressed in his State of the Nation Address on February 13 that investment and growth require a safe, stable and crime-free environment, adding that he has prioritised government’s response to the growing problem of criminal groups that extort money from construction and other businesses.

“Specialised units – bringing together [the] Saps [South African Police Service] and the National Prosecuting Authority – are mandated to combat these crimes of economic disruption,” he said.

Construction and technology law specialist MDA Attorneys warned last month that amendments to Sanral’s standard contract will make it much more difficult for contractors to deal with disruptions related to the construction mafia.

Read: 

Sanral engineering executive Louw Kannemeyer said on Tuesday there is no contradiction between Sanral contracts and government’s plans to deal with the disruptions at construction sites and business forums.

Aim is for clarity and consistency, says Sanral

“The purpose of the changes to Sanral contracts was to provide contractors with clear guidance on the contractual processes that need to be followed to obtain relief, for delays resulting from work stoppages as a force majeure event under the Fidic [International Federation of Consulting Engineers] conditions of contract.

“This also ensures consistency on how these events are mitigated from one contract to the next,” he said.

Force majeure

A joint venture (JV) between Aveng Grinaker-LTA and European-based Strabag won a R1.6 billion tender in August 2017 to build the Mtentu Bridge as part of the N2 Wild Coast Road project.

Aveng said in February last year the JV had lawfully terminated the contract following a force majeure event after civil unrest, commotion, protests and threats of harm resulted in the JV being denied access to the site and the ability to safely continue the execution of the project.

However, Sanral CEO Skhumbuzo Macozoma claimed the JV abandoned the contract, with the North Gauteng High Court in March last year ruling that Sanral could claim damages for the contract.

Aveng is appealing this court ruling, with Flanagan confirming on Tuesday that it is still waiting for a court date for the appeal to be heard.

To read full story click here