South Africa: Construction Industry Development Regulations

Last Updated: 9 July 2015
Article by Nikita Lalla

Most Read Contributor in South Africa, November 2017

The Minister of Public Works has announced that he intends to amend the Construction Industry Development Regulations of 2004 (the Regulations), which were passed under the Construction Industry Development Board Act of 2000. The notification of the proposed amendment was published in the Government Gazette of 29 May 2015, and it gives interested persons a period of 60 days to submit written comments.

The proposed amendment deals with two issues. The first is headed 'Prompt Payment', and the second is headed 'Adjudication'. The proposed amendment is being done by way of a re-working of Part IV of the Regulations, with the existing Part IV being renamed Part IV A, and the new issues being headed Part IV B and Part IV C respectively. There's considerable detail in the proposed amendment and I'll simply be discussing the most important aspects in this article.

Prompt Payment (Part IV B)

The proposed amendment provides as follows:

  • Application: It applies to all construction work contracts, oral or written, private sector or public sector. It does, however, not apply to home building contracts contemplated in the Housing Consumer Protection Measures Act 1998.
  • Conditional payment: No construction work contract may require a payment to be conditional upon payment being received from a third party. There are, however, two exceptions - where business rescue proceedings have commenced in respect of the party that has to pay, and where that party has gone into insolvency.
  • Progress payments: Notwithstanding any contractual provision to the contrary, a party who has carried out construction work or supplied goods or services is entitled to progress payments. If the contract does not provide for regular intervals, a supplier can submit monthly invoices, or invoices reflecting work completed or goods or services delivered. The amount to which the party is entitled will be calculated in accordance with the terms of the contract or, if such terms don't exist, the value of the construction work or goods or services supplied. The value of the construction work or goods or services supplied will be calculated with reference to the contract price, prevailing rates or prices or, in the case of defects, the estimated cost of remedying the defect.
  • Date of payment: The date of payment will be the date provided for in the contract, which must be not later than 30 days of the submission of an invoice. In case of late payments, interest will be payable – the rate will be the repurchase rate determined by the Reserve Bank, plus 6%.
  • Withholding payment: No party can withhold payment without reasonable grounds, and without first giving notice of its intention to do so. The notice must specify the amount to be withheld and the reason why it is being withheld, and it must be given within five days of the invoice. If the party receiving the notice is not satisfied that notice has been correctly given, or with the reason given for withholding the amount, it can declare a dispute and refer that dispute to adjudication. Where the matter is referred to adjudication, neither party can withhold payment for work or goods that are not in dispute, or for any part of an invoice that is not in dispute. If an adjudicator decides that an amount must be paid, it must be paid within 10 days.
  • Suspending performance: In a case where payment is withheld without proper notice, the other party can suspend performance of its obligations (without prejudice to its other rights), although it must give the defaulting party seven days' notice of its intention to do so, together with its grounds for doing so. The right to suspend performance ceases once payment is made in full.
  • Validity: A failure to comply with these provisions does not render the contract invalid.
  • Exclusion: Any contractual provision that seeks to exclude these provisions is void.
  • Notices: Notices must be served in accordance with the agreement, but if there is no provision in the agreement any effective means can be used using the addressee's last known principal address, including email address.

Adjudication (Part IV C)

The proposed amendment provides as follows:

  • Referral to adjudication: Every construction work contract must provide for an adjudication procedure that's substantially in line with the proposed amendment – if it doesn't, the provisions of the proposed amendment will apply. A contract must do the following: grant each party the right to refer a matter to adjudication; provide a timetable leading to an adjudicator being appointed within seven days and a decision being handed down within 28 days, or whatever other period the parties agree on; allow the adjudicator to take the initiative in ascertaining facts and law.
  • Appointment of adjudicator: The Board will accredit adjudicator nominating bodies. An adjudicator will not be liable for anything done in good faith, and an objection to an adjudicator will not render the appointment or the decision invalid.
  • Powers and duties: The adjudicator must act impartially, avoid unnecessary expenditure, and apply the rules of natural justice. The adjudicator will have the authority to decide on matters of procedure, and they can require parties to provide documents, decide on the language of the proceedings, question the parties, make site visits, carry out tests, obtain expert evidence and impose deadlines. If a party fails to comply with any request or timetable, the adjudicator can do the following: proceed with the matter; draw such inferences as they see fit; make a decision on the information available; and impose a financial penalty on the non-compliant party.
  • Advisers: Parties can be assisted in adjudication proceedings by advisers, legally qualified or otherwise.
  • Confidentiality: An adjudicator is required to keep all information confidential.
  • Time limits: An adjudicator must hand down their decision within 28 days of the referral notice, or such further period as the parties may agree to. If the adjudicator fails to comply with these requirements, either party can serve a notice requesting the appointment of a new adjudicator.
  • Reasons: The adjudicator must provide reasons for their decision if required to do so by either party.
  • Effect of decision: The parties must give effect to the adjudicator's decision within a period of 10 days. The decision will be regarded as a 'liquid document' under the High Court Rules, which means that provisional sentence will be an option. Where the amount of money involved in the dispute falls within the jurisdiction of the Magistrate's Court, the decision is regarded as a 'certificate' as contemplated in the Magistrate's Court Act.
  • Arbitration and review: Any party who is dissatisfied with an adjudicator's decision has the right to refer the matter to arbitration or review – the decision remains binding whilst this takes place, but if the decision is overturned restitution will be available.

These amendments have important implications for all those involved in the construction industry.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions