The special council has approved that the City of Cape Town pay R1.5 million and interest to a construction company following a decision by the adjudicator.
Council has given the City of Cape Town the green light to pay more than R100 000 in interest and R1.5 million owed to a contractor for the additional time when work was suspended due to weather conditions.
This after the adjudicator ordered the City to make payments to Burger & Wallace Construction two months ago.
A report tabled to the special council meeting on Thursday detailed that the company was appointed for the construction of stormwater and river infrastructure works in February 2025.
The company began work the following month on the project that was pencilled to end in June 2025.
Weather and site conditions delayed construction
The upgrade work was extended from July 2025 on a month-to-month basis for a period not exceeding six months or until a replacement contract was in place.
“However, due to exceptionally wet weather conditions and saturated site conditions, particularly given the nature of the works on the dam wall, construction activities were significantly impacted.
“Following engagement between the contractor, the Employer's Agent and the City, the works were suspended from August 9, 2025 until October 6, 2025. Practical completion was achieved on October 29, 2025, and the completion certificate was issued on December 5, 2025.”
The report said a dispute had arisen relating to the contractor's entitlement to additional time and costs associated with the suspension period.
The dispute was referred to adjudication with the contractor seeking compensation for additional time and associated costs arising from the suspension of the works while the City disputed the relief claimed.
City faces further interest if payment is delayed
The report also said the adjudicator dismissed the City's challenge to the validity and found that the suspension resulted from abnormal climatic conditions and adverse site conditions, rather than any breach by the contractor.
“The adjudicator further found that the contractor was entitled to additional time and associated costs arising from the suspension and directed the City to give effect to the Employer's Agent's rulings on claims 5 and 6.”
The City was ordered to pay the contractor R1.5m and interest from March 10, 2026.
“The Adjudicator expressly directed that effect be given to the decision without delay. Failure to implement the decision will result in the continued accrual of interest and may expose the City to enforcement proceedings and additional costs,” read the report.
Councillors differ over the payment
The report also noted the upgrade works were successfully completed and the interest did not arise from additional construction work.
“Settlement of the interest liability is necessary to comply with the adjudicator's decision, avoid further interest accumulation and limit the City's potential financial exposure,” read the report.
ANC councillor Petronella Heynes said the matter could have long been settled if the administration had adhered to the ruling of the adjudicator.
“We might have received the so-called much value for money, but having to waste much needed funds in this manner can't be good for such well-run municipalities,” Heynes said.
She also said the ANC always prioritised safety measures and promoted a conducive working environment for all.
“We call upon the project planner and project management to be considerate of all weather seasons to avoid such wasteful expenditure on things that could have been avoided from the planning phases of this project,” Heynes said.
DA councillor Ian Neilson said contracts were determined on the basis of general conditions that were entered into.
Neilson said flooding that occurred during the time of the upgrade works disrupted the project.
“The contractor had put forward some additional costs that they wanted covered, but our officials didn't just simply accept it. They pushed back, and again, correctly in terms of the contract, this went to adjudication. That's the way that the contract sets out to resolve these matters. The adjudicator ruled, and now we simply follow the decision of the adjudicator,” he said.
Neilson also said had the City paid the money earlier, it wouldn't have sat in a bank account and earned interest.
“In fact, there's interest gained either way. This is a very appropriate way decided by the adjudicator, and I propose that the Council adopt the recommendations,” he said.