Cape Town – Major road projects around Cape Town have been delayed, because the contractors have either gone bankrupt or have severe cash-flow problems, the city announced on Friday.
“Seven capital projects in excess of R300m have been hampered due to the liquidation of two well-established contracting companies earlier this year, as well as the liquidation of four other companies last year,” Transport for Cape Town (TCT) said in a statement.
TCT was launched 18 months ago by the City to transform Cape Town’s current fragmented transport system into an integrated, multi-modal system.
On Friday, TCT said the liquidations had caused delays of up to four months in current construction projects, which had had a knock-on effect in the ensuing months.
Among projects affected are the rehabilitation of Weltevreden Parkway and roads in Kraaifontein, the rehabilitation of Main Road between Muizenberg and Clovelly, reconstruction of roads in Gugulethu and Manenberg and some non-motorised transport projects in Mitchells Plain and Kuils River.
TCT said the six recently-liquidated construction contractors were Darson Construction, Jansen Tarmac, Requad Civils, Vusela Construction, Toleni Construction and the sub-contractor Winlite.
It warned that another four contractors, which it did not name, had serious cash-flow problems.
Cape Town mayoral committee member Brett Herron said he was concerned about the number of contractors not performing as well as expected.
“However, the city will not relinquish the principle of awarding contracts to registered contractors inclusive of a broader pool of lesser known and deserving businesses that tick all the boxes,” said Herron.
“We adhere to rigorous due diligence processes when adjudicating and awarding tenders. A financial due diligence check is but one such a requirement.”
TCT said the contracts held by the liquidated companies could not be quickly terminated and replaced due to the complexities inherent in legally terminating contracts, the requirements of the Liquidation Act, and the time constraints associated with the procurement processes involved in the appointment of a replacement contractor.
TCT had “resorted to certain interventions” to minimise the effect of the liquidations on the finalisation of the capital projects and to prevent the ballooning of costs.
On May 15 this year, TCT’s total actual expenditure plus contractual commitments amounted to R1.2bn, or 79% of the capital budget for 2013/14.
However, in the current financial year TCT would be hampered in its efforts to make full use of the capital budget at its disposal due to factors beyond its control.
“In fact, TCT was on track up until January [this year], when numerous contractors began to experience severe financial problems, even with their original financial statements on appointment being in order.”