The GCC 2015 revision remains widely unpublicised, but there are a few key changes that can have a large impact on the negotiation power of contractors when doing business in the construction industry.
The upgrade to the contract, which is largely used by state-owned entities, was necessary due to the fact that there were a number of grey areas that needed clarification. GCC Course Leader at Alusani Skills & Training Network®, Steve du Toit, says that the most significant revision to the contract is a clause that gives contractors the right to suspend work on current projects if they are not paid.
“This is a major breakthrough in contract agreements. In the past, contractors were never able to suspend work on an ongoing project, regardless of whether a payment certificate was issued or not, but now this right has been formally carried over to the GCC 2015,” says du Toit, who has practiced as an attorney for over two decades and has defended individual contractors, clients and large construction companies in legal cases pertaining to construction and building projects.
du Toit says that a combination of two factors contribute to ongoing misunderstanding of contractors’ rights with regards to non-payment.
“The first factor is that contractors simply don’t always know what their rights are and they have to deal with the issue of non-payment both professionally and legally. Secondly, those who understand their rights are often reluctant to enforce them because they don’t want to upset the relationship with the client, engineer or principal agent. This is understandable seeing as it could impact future contract opportunities down the line,” explains du Toit.
Instead of opting to sit back, wait and hope the issue will resolve itself (in other words that a contractor will get paid at some point down the line); the revision enables contractors to be more proactive.
“Thanks to the latest GCC revision, it isn’t a case of ceasing works in order to demand payment, which many contractors would be hesitant to do. The GCC 2015 contract enables contractors to put forward a case that shows you are unable to work because you don’t have the capital to continue to fund the project without payment. This makes it much easier for contractors to enforce their rights and continue doing business in a way that makes it financially feasible for everyone involved in the project,” says du Toit.