AN INVESTIGATION INTO AND EVALUATION OF THE COST REIMBURSABLE BASIS FOR BUILDING CONTRACTS. (AFRIKAANS TEXT)

The rate of inflation which has remained in double figures since 1974, the higher cost of money, the increased competition amongst businessmen and the urgent establishment of strategic facilities have begun to exert more pressure on the building industry in the Republic of South Africa to accelerate the whole building process.

Building projects have increased progressively in complexity and are often coupled with other substantial undefinable or unquantifiable risks. A strong probability exists that the influence of these circumstances causes unnecessary high building cost for the building public.

Certain strategic choices by the employer regarding the organisational method, the type of contract and the tender procedure are necessary for the execution of a project. In the light of the aforementioned circumstances, the cost reimbursable basis for building contracts is proposed as a worthwhile alternative in certain cases.

The proposed basis comprises a whole family of contracts of which the main characteristic is that the payment to the contractor consists of the reimbursement of "direct cost" by the employer plus a fee for overheads and profit.

The selection of a contractor forms an integral part of the proposal and therefore this important matter also receives attention. In most conventional contracts the tender amount plays a decisive role and it is often the only criterium used to select a contractor. Attention is drawn to the fact that other attributes could sometimes be of equal or more importance and that it is thus desirable that these attributes be taken into account when selecting a contractor.

The additional responsibilities which are placed on the shoulders of the professional team with the use of the cost reimbursable building contract are identified and the functions of the quantity surveyor in particular are examined.

By making use of the utility theory and hypothetical case studies and by performing ex post facto research on available data on tenders, the conclusion is reached that the cost reimbursable basis for building contracts establishes a viable and meaningful contractual relationship which is especially suitable for use under certain circumstances, but possibly also for use on building projects generally.