13.3 Health and Safety Procurement & Cost Management
Key Takeaways
The client must include the health and safety specification in the tender documents (CR 5(1)(f)) and ensure that tenderers have made adequate provision for the cost of health and safety measures (CR 5(1)(g)).
The principal contractor has matching duties towards its contractors: give tenderers the relevant specification sections, check their health and safety provision, appoint only competent and resourced contractors in good COIDA standing, and appoint each in writing (CR 7(1)(c)(i)-(v)).
A health and safety bill of quantities with measurable items lets tenderers price safety separately and lets the client pay for safety work actually done, rather than an unexplained lump sum.
Design changes that need extra safety resources must be supported with information and resources by the client (CR 5(1)(r) and 5(2)) and by the principal contractor towards its contractors (CR 7(1)(c)(ix)).
The cost of incidents goes far beyond insured costs: uninsured costs such as lost time, investigation, delays, damage, legal costs and reputation are usually much larger, which is the business case for funding prevention.
1. Why Procurement Matters for Safety
Many site hazards are created or removed when contracts are let. If tenderers are not told about the hazards, are not paid for safety measures, or are selected on price alone, the cheapest bidder may be the one who plans to cut safety. The SACPCMP therefore lists Health and Safety Procurement Management and Health and Safety Cost Management as core knowledge areas, and its scope of services gives the CHSM functions at the tender and procurement stage as well as during construction.
2. Client Duties at Tender Stage
Construction Regulation 5(1) requires the client to:
- (a) prepare a baseline risk assessment;
- (b) prepare a suitable, documented and coherent site-specific health and safety specification based on it;
- (f) include the health and safety specification in the tender documents;
- (g) ensure that potential principal contractors submitting tenders have made adequate provision for the cost of health and safety measures;
- (h) ensure that the principal contractor to be appointed has the necessary competencies and resources to carry out the work safely;
- (j) ensure before work starts that every principal contractor is registered and in good standing with the Compensation Fund or a licensed compensation insurer; and
- (k) appoint every principal contractor in writing.
3. Principal Contractor Duties When Appointing Contractors
CR 7(1)(c) gives the principal contractor equivalent duties towards its contractors. On appointing any other contractor, it must:
- (i) provide tendering contractors with the relevant sections of the health and safety specification for their work;
- (ii) ensure that potential contractors have made sufficient provision for health and safety measures in their tenders;
- (iii) appoint no contractor unless reasonably satisfied that it has the necessary competencies and resources to perform the work safely;
- (iv) ensure before work starts that every contractor is registered and in good standing with the Compensation Fund or a licensed insurer; and
- (v) appoint each contractor in writing for its part of the project.
The same duty flows down the chain: a contractor who sub-lets work must ensure that its own subcontractors meet these requirements.
4. Evaluating Tenderers' Health and Safety Provision
A defensible tender evaluation for health and safety typically checks:
- Priced health and safety items: are the specification's requirements priced, and are the amounts realistic for the scope, duration and risk? A zero or token figure for scaffolding inspections, edge protection or a full-time safety officer is a warning sign.
- Competence and resources: the proposed construction manager, supervisors and safety officer, their SACPCMP registration where required, plant and equipment, and the availability of competent persons for appointments such as fall protection planning, scaffolding and excavation supervision.
- Track record: injury statistics with stated definitions and bases, prohibition notices, prosecutions, and references.
- Method and planning: a preliminary health and safety plan or method statements for the highest-risk activities.
- COIDA standing: a valid letter of good standing.
Price and health and safety must be evaluated together. A tender that is much cheaper because it omits safety measures does not meet CR 5(1)(g) or CR 7(1)(c)(ii).
5. The Health and Safety Bill of Quantities
A common way to make tenderers price safety is a health and safety bill of quantities (BoQ), either as a separate section or as items within the preliminaries. Typical items include:
- time-related items: CHSM or CHSO, first aiders, safety representatives' training, medical surveillance, induction, office and welfare facilities;
- fixed items: preparing the health and safety plan and file, the fall protection plan, the emergency plan and the construction work permit documentation;
- quantity-related items: metres of edge protection, square metres of safety netting, number of signs, barricading for excavations, PPE for a given number of workers;
- provisional sums for specialist services such as occupational hygiene surveys or approved inspection authority work.
Measurable items help the client's agent certify payment only for safety work actually provided, and make it clear which party carries which cost. Health and safety items must not be treated as easy savings when the project is under budget pressure.
6. Controlling Health and Safety Costs During Construction
During construction the CHSM, with the quantity surveyor:
- tracks health and safety expenditure against the priced items;
- confirms that items certified for payment were actually provided, for example that edge protection is on every slab edge before it is paid;
- identifies variations that change risk. When the client changes the design or construction, it must make sufficient health and safety information and appropriate resources available to the principal contractor (CR 5(1)(r)), and when the client requires additional work because of a design change or construction error caused by the client, it must ensure sufficient safety information and additional resources (CR 5(2)). The principal contractor has the same duty towards its contractors (CR 7(1)(c)(ix));
- prevents safety budgets being cut to recover programme or cost overruns, because the duties do not change when the budget does.
7. The Cost of Incidents
Incidents cost far more than the visible insured amounts. Direct (insured) costs include COIDA medical costs and compensation and property insurance claims. Indirect (uninsured) costs include:
- lost working time of the injured worker, colleagues and supervisors;
- investigation time, legal advice, section 32 inquiries and possible prosecution;
- work stoppages, prohibition notices and delays, with penalties under the contract;
- damaged plant, materials and work that must be redone;
- replacement and training of workers;
- increased COIDA assessments where the Fund applies merit-rated assessments, higher insurance premiums, and lost tender opportunities because of a poor record; and
- damage to reputation and staff morale.
The "iceberg" model describes the uninsured costs as several times larger than the insured costs. This is the business case for spending on prevention, which the CHSM should express in terms management understands: programme protection, cost certainty and reputation.
8. Procurement of Goods and Services
Health and safety also depends on what is bought:
- Plant and equipment: specify guarding, ROPS and FOPS where needed, reversing alarms, load indicators and current inspection certificates; verify lifting machinery examination records under the Driven Machinery Regulations.
- PPE: buy to the relevant SANS standards, in the right sizes, including for women workers; the employer may not charge employees for PPE (section 23 of the OHS Act).
- Chemicals: require safety data sheets before purchase approval, and prefer less hazardous products.
- Services: hire scaffolding, formwork, crane and drone services only from providers who can show competence, insurance and the required approvals.
A pre-approved supplier list, health and safety clauses in purchase orders, and inspection on delivery turn these requirements into routine practice.
During tender evaluation, the lowest bidder for a principal contractor appointment has priced the health and safety section of the bill of quantities at R1 000 in total for an 18-month, multi-storey project, while other bidders priced between R2.4 million and R3.1 million. The client's quantity surveyor recommends awarding to the lowest bidder. What should the client's agent advise?
Award to the lowest bidder provided it signs a Section 37(2) agreement, which removes the client's procurement duties.
Award to the lowest bidder and deduct the safety items from the contract, because the OHS Act will compel the contractor to comply anyway.
Award to the lowest bidder, because health and safety costs are the contractor's own business risk and the client has no duty to check them.
Not as it stands: CR 5(1)(g) requires adequate provision for health and safety costs, so clarify or reject the pricing.
Midway through a project, the client redesigns a roof from a pitched structure to a large flat roof with rooftop plant, increasing the work at height and crane lifts. The principal contractor asks who must provide the additional health and safety information and resources. What do the Construction Regulations say?
The client must make sufficient health and safety information and appropriate resources available to the principal contractor when it changes the design (CR 5(1)(r) and 5(2)), and the principal contractor must do the same for affected contractors (CR 7(1)(c)(ix)).
No one, because the existing fall protection plan automatically covers any design change.
The designer alone must pay for the extra safety measures, because CR 6 makes designers liable for all construction costs.
The principal contractor carries all extra costs, because the original tender price was fixed.
A contractor's managing director says a recent fall from a scaffold 'cost nothing' because COIDA paid the medical costs and compensation. Which response best reflects health and safety cost management?
Explain that uninsured costs such as lost time, investigation and legal costs, stoppages and contract delays, damage, rework, replacement workers and reputation are typically several times the insured costs.
Agree, provided the injured worker returns to work within 30 days, after which no further costs can arise.
Explain that the only extra cost is the COIDA fine, which is fixed at R5 000 per injury.
Agree, because COIDA covers all financial consequences of workplace injuries, including delays and legal costs.
Sections you finish are checked off in the contents.