Friday, December 12, 2008

Seasons Greetings from the Kwazulu Natal Master Builders Association


The Kwazulu Natal Master Builders Association would like to take this opportunity to wish our Staff, our Members and our Suppliers, Seasons Greetings. We trust you have all managed to weather the current global economic storm and that you already have your eyes set on a prosperous 2009.

The blogging team will be taking a break from today, but you can expect regular updates to resume on the 12th January 2009.

A reminder that our Offices and the Exhibition Centre will be closing at 4pm on the 23th of December and will re-open again on the 5th January 2009. If you are going to be on the roads over the Festive Season, please drive carefully.

Brandon Abdinor
Executive Director

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Thursday, December 11, 2008

Legal Check - Part 5 "Form Work and Support Work"


The "Legal Check" series will assist Members to do a quick, yet accurate legal check, to see if there is compliance with the requirements, as prescribed in the Occupational Health and Safety Act, 85 of 1993.

The items featured in this series, are those that are the main contributors to accidents in the Construction Industry.

Part 5 "Form Work and Support Work" - Construction Regulation 10

1. Competent person appointed in writing to supervise form work and support work.

2. Competent person appointed to examine and inspect form work and support work.

3. Inspected daily, before, during and after placement of load.

4. Up to date register available on site.

Competent person - means a person having the knowledge, training, experience and qualifications specific to the work or task being performed.

Look out for Part 6 "Lifting Machinery and equipment", which will be featured next year.

Neels Nortje
Health and Safety Manager

For back copies of the "Legal Check" series click on the Health and Safety label on this blog.

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Wednesday, December 10, 2008

Health Warning - Cholera


As many of you may be aware, there has been an outbreak of Cholera in Zimbabwe. Reports have started filtering in this week, suggesting that some areas of South Africa may also be effected. Although these reports are unsubstantiated, we thought it may be useful to provide some general information about Cholera to you and your Employees.

WHAT IS CHOLERA?

It is an acute intestinal infection caused by the consumption of food or water contaminated with the Bacterium, Vibrio Cholorae. It is normally prevalent in countries without safe water and proper sanitation, where the disease can spread very rapidly.

WHAT ARE THE SYMPTOMS OF CHOLERA?

Some people contracting Cholera may not show symptoms. However, one in 20 experience:
  • SEVERE, DIARRHOEA CAUSED BY THE INFECTION OF THE INTESTINE AND DEATH WITHIN HOURS
  • NAUSEA AND VOMITING
  • MUSCLE CRAMPS
  • DEHYDRATION – Signs of Cholera Deyhdration include, Irritability. lethargy, sunken eyes, dry mouth, extreme thirst, little or no urine output, low blood pressure, irregular heartbeat
  • SHOCK
Signs and symptoms in children. Children generally have the same symptoms as adults, but could also experience:
  • Extreme drowsiness or even coma
  • Fever
  • Convulsions
CAN CHOLERA BE TREATED?

Cholera can be simply and successfully treated by immediate replacement of the fluids and salts lost through diarrhea. Prevention, however, is better than cure. The following guidelines were sourced online (Wikipedia.com):
  • Sterilization: Proper disposal and treatment of the germ infected fecal waste produced by cholera victims (and all clothing and bedding that come in contact with it) is of primary importance. All materials (such as clothing and bedding) that come in contact with cholera patients should be sterilized in hot water using chlorine bleach if possible. Hands that touch cholera patients or their clothing and bedding should be thoroughly cleaned and sterilized.
  • Sources: Warnings about cholera contamination posted around contaminated water sources with directions on how to decontaminate the water. Don't drink surface water.
  • Water purification: All water used for drinking, washing, or cooking should be sterilized by boiling or chlorination in any area where cholera may be present. Boiling, filtering, and chlorination of water kill the bacteria produced by cholera patients and prevent infections from spreading. Water filtration, chlorination, and boiling are by far the most effective means of halting transmission. Cloth filters, though very basic, have significantly reduced the occurrence of cholera when used in poor villages in Bangladesh that rely on untreated surface water.
Marion Mclauchlan
Reception

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ABET - Adult Basic Education and Training


We have been approached by 2 training companies, who have obtained funding from CETA for ABET (Adult Basic Education and Training).

ABET, not only enhances workplace skills, by enabling workers to undertake things that literate persons may take for granted (e.g. reading instructions), but also improves the everyday lives of people unable to read, write or do simple arithmetic.

It is hard to imagine the difficulties one may face, by for example, not being able to count one's change, read a bus timetable or read the instructions on medicine bottles.

Members wanting more information or who wish to take advantage of the offer, should please contact us by no later that the 15th January 2009.

Bruce Lyle
Membership Services Manager

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National Credit Act


The National Credit Act came into being to stamp out reckless lending and predatory practices. Credit providers must consider not only the credit worthiness of a client but also whether they can afford to service the debt.. At the time of applying for a loan, the credit provider must do an assessment to determine whether the client can repay the loan, whether the client understands and appreciates the risks, costs and obligations under the credit agreement, and whether the granting of the loan will lead to the client becoming over-indebted.

Should any of your employees /acquaintances find themselves to be over-indebted and not able to meet their debt obligations timeously, they must be encouraged to contact a NCR approved debt counsellor in order to have their debts restructured.

Eileen Beckett
Loan Facilitator

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Tuesday, December 9, 2008

Tax Incentives - Research & Developement


In terms of Section 11D of the Income Tax Act there are 2 types of tax incentives available, in respect of research & developement(R&D) expenditure incurred in the pursuit of certain qualified activities.

Qualified activities must be scientific or technical in nature and intended to be used by the taxpayer in the production of income.

These incentives are:
  • A deduction of 150% of the expense of qualified R&D activities
  • An accelerated allowance in respect of assets (including buildings) used for qualified R&D activities. In terms of this incentive 50% of the asset's cost may be claimed in the first year of use of the asset and thereafter 30% for the second year and 20% for the third year.
Members who may be involved in R&D should remind their accountants of the attractive incentives provided for in the Act. The above is a very brief outline of the incentives available. Members should ensure that professional tax advice is received before claiming R&D the incentives.

Greg Beykirch
Finance Manager

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Monday, December 8, 2008

Create a Website to Promote your Business (Part 1)

Photo Credit: rickvidallon (Flickr.com)

One of the most inexpensive and effective ways of promoting your business in difficult times, is by creating a Website. This task may seem very daunting at first, but understanding the following, should settle the nerves.

Where do I start?

The first step is deciding on what your Website Objectives are. These could include, one or more of the following:
  • Online Brochure of Products and Services
  • Tool to publish Company News
  • Lead Generation
  • Quote Generation
What are the Standard Elements that I should include in my website?

Once you have decided on the objectives for your new website, you need to tailor the content around these goals. Although it is ultimately desirable to distinguish yourself by having a unique website, there are certain page elements that are considered mandatory. These include the following:
  • Home Page - For a small site, this is the page that most people will open first when visiting your Website. The page should load fast, clearly identify who you are, state your Unique Selling Proposition and direct the visitor to where you want them to go - e.g.View Company Portfolio, Browse Client Testimonials, Look at Pictures of Previous Projects Completed or Complete the 'Contact Us' form.
  • About Us Page - Prospects want to know who they are dealing with. Use this page to give a detailed breakdown of all the people involved in your business - including individual and team photographs goes a long way towards breaking the digital barrier and contributes to your site and business credibility.
  • Company Portfolio - Use this page to set out what you do, where you do it and how you do it. Rather than simply listing product/service features here, try and identify unique selling points (USP's) and translate them into reasons why prospects would benefit by selecting your Company. Your USP could be price, service, experience or a unique construction method/product.
  • Client Testimonials - Converting online prospects to customers, involves building credibility. There are many ways of doing this and the end product is usually the cumulative result of all of these. However, one method stands head and shoulders above the others - Client Testimonials. This is the online version of 'Word of Mouth' advertising, and is still considered one of the best ways of advertising your product/service.
  • Contact Us - Once prospects have browsed your site, you want to enable them to contact you quickly and easily. You should include the following communication channels on the website; Telephone, Fax, Cell and Email. To prevent yourself being subjected to endless spam emails, the latter (Email) should ideally be in the form of a contact form, rather than simply listing the email address on the page. You should also include your physical address on this page as this also reassures clients.
Lookout for the rest of this series of posts, where we will be answering the following questions:
  • Can I design the website myself or should I get a professional to develop the site for me?
  • How do I choose a Web Designer?
  • How much will I pay for my Website?
  • What is a Content Management System (CMS)?
  • My Website is up - Now What?
  • How do I market my Website Online?
Gary Amstutz
Online and Commercial Manager

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Friday, December 5, 2008

Useful Links - Building Industry Related Legislation


If you need access to any Building Industry related Legislation, click here. This page contains a compendium of very useful legislation and is well worth looking at, as it contains almost all the Acts of Parliament you may need to refer to.

Bruce Lyle
Membership Services Manager

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Legal Check - Part 4 "Hazard Identification and Risk Assessments"


The "Legal Check" series will assist Members to do a quick, yet accurate legal check, to see if there is compliance with the requirements, as prescribed in the Occupational Health and Safety Act, 85 of 1993.

The items featured in this series, are those that are the main contributors to accidents in the Construction Industry.

Part 4 "Hazard Identification and Risk Assessments" - Construction Regulation 7

1. Competent person appointed in writing to cause a risk assessment to be performed.

2. Risk assessment to form part of the health and safety plan.

3. Documented plan to include safe work procedures.

4. Monitoring and review plan.

5. Training and instruction of all employees.

Competent person - means a person having the knowledge, training, experience and qualifications specific to the work or task being performed.

Look out for Part 5 "Form Work and Support Work", which will be featured next week.

Neels Nortje
Health and Safety Manager

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Thursday, December 4, 2008

Monthly Roundup - South Coast Division

Ray Basson (Chairman) received the inaugural
'Most Committed Member' Award

This year, the South Coast Divisional Members really started participating in the various Master Builders activities, which were organized by the new Manaba office.

The general meetings and the year end function were very well attended and our bigger Associate Members did not hesistate to assist with the sponsorship of our year end function. Once again, we really appreciate your contribution.

The 35% growth in membership over the past few months, clearly indicates that there is a need for business to have the backup of a recognized body like the Kwazulu Natal Master Builders Association.

Hans has now settled in well into the new office and has become very busy fielding enquiries from Members. These enquiries are generally about the various services offered by the Master Builders Association and specifically about the Safety services offered. Several quotes for safety consultancy work have already been sent to Members, who would like to make use of this great service offering at subsidized rates.

Hans has already drafted schedules for all the activities planned for 2009. A more detailed schedule will be available early next year, but for now you can look forward to the following:
  • An MBA golf day on 24 April 2009 at the Port Shepstone Country Club where some sponsors already indicated their support
  • A Tennis day at the Hibberdene tennis club.
On behalf of the Master Builders Association office in Westville and Hans at the Manaba office, we want to wish you and your loved ones a Merry Christmas and a prosperous New Year. May you all enjoy the rest during the Builders Holidays and for those of you are experiencing their busiest time of year, we hope you will have a good season.

Hans Stols
South Coast Divisional Manager

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Employment Law - Dispute of Rights v Dispute of Interest


In the case of Polokwane Local Municipality vs SALGB & Others (2008) 8 BLLR 783 this issue was brought to light.

The facts of this case were that the employee had been employed since 1992 as a Chief Clerk. In 1999 she applied to have her post upgraded due to the fact that there had been a gradual addition of her responsibilities to her post over the years. A more senior post was created one of the requirements of which was a B. Com degree which the employee did not have. Although she was shortlisted for the position it was awarded to someone else.

The employee then objected that the employer had failed to upgrade her position and it had failed to pay her an allowance for performing duties allocated to the higher position. The arbitrating commissioner agreed with the employee and held that the employee had committed an unfair labour practice.

The matter was however taken on review to the Labour Court which set aside the commissioner's findings. The court drew the distinction between a dispute of right and a dispute of interest. A dispute of right concerns the infringement, application of or interpretation of an existing rights contained in a contract of employment. A dispute of interest however involves the formulation of new rights such as higher wages. Disputes of rights are resolved by adjudication whereas disputes of interest are resolved by means of negotiation and industrial action if necessary.

The court found that in demanding that her position be upgraded the employee was seeking to create a new right through adjudication. The commissioner did not therefore have the jurisdiction to arbitrate the matter.

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Wednesday, December 3, 2008

Monthly Roundup - Midlands Division


The Midlands Division of the Kwazulu Natal Master Builders Association has been through some exciting times, as we approach the end of 2008. Big Storms in November brought the end to our “Big Old” Leopard tree which was uprooted, but by an act of a 'greater one', missed our building by less than a metre. Some weeks later, we are slowly getting to the “root” of the problem and we will have all things back to normal soon.

The main drive over the last couple of months has been to improve or increase our range of services to Members. In the Midlands Division, we have implemented Safety Consulting. This is a paid service that assists members with their legal compliance, through the compilation of documentation and the implementation of various systems. The major benefit to the member, is that this is done at a significantly reduced rate. This enables the company to save, where they would normally make use of an outside consultant.

The next step in increasing our range of services to the Members in the Midlands, will be to launch a NHBRC Courier service through the Midlands Office in Pietermaritzburg. The project, which will be launched early next year, will enable Members to submit their NHBRC paperwork through our office and then we will courier this to Westville who will submit this to the NHBRC office in Durban. Members will therfore no longer need to travel to Durban to submit paperwork for houses they are building. We anticipate that this is going to be a great success and will go a long way towards increasing membership in this region.

As stated earlier our main drive is to improve or increase services to our Members. Therefore, if you have any suggestions that will help us achieve this objective, we ask you to contact us. For any other queries or questions, please feel free to contact me anytime.

Gareth Roberts
Midlands Divisional Manager

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Pension Funds - Changes to the Pension Funds Act


The Pensions Industry is undergoing a bit of a shake-up, and the State is undertaking a review of The whole industry with a view to introducing a National Social Security Fund.

The introduction of this Fund could take several years, so in the meantime, some much needed changes to the Pension Funds Act have been promulgated (on 30.9.2008).

Beneficiary Funds

Previously, the trustees could pay a death benefit to an inter vivos trust for the benefit of the dependants of the deceased member. Now this will be possible only where such trust was already nominated by the member, or where a major beneficiary agrees to this course of action.

Otherwise, payment to a Beneficiary Fund is a new option. These are similar to inter vivos trusts but are registered under the Pension Funds Act, and not at the office of the Master of the High Court.

Other changes

Section 37C of the Act now allows payment of a death benefit to the Caregiver of a dependant.

Regarding divorce orders, section 37D now introduces the “clean break” principle. This means That the Fund must give the non-member spouse a choice as to whether she/he wishes to receive a cash payment (taxable) or rather to save tax and transfer her/his benefit to another Fund (for example to a Retirement Annuity Fund).

The non-member spouse then has 120 days to make this choice, and the Fund must make actual payment/transfer within a further 60 days.

For divorces after 1.3.2009, each party will be taxed separately, in contrast to the present position where the member is primarily liable for the tax, although he/she may reclaim the non-member’s pro rata share of the tax from such non-member.

Ranking of deductions is also now prescribed: A housing loan/guarantee deduction comes first, followed by a maintenance order, followed by a divorce order.

There is no doubt that many more changes to the pension law may be expected in the run up to the introduction of a National Fund. What is clear is that existing vested rights will be protected, and that private savings through company pension funds and personal RA Funds will continue to be encouraged.

Clive Hill
Financial Services Manager

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Tuesday, December 2, 2008

Kwazulu Natal Master Builders - Midlands Division Braai



The first informal braai was held at our Pietermaritzburg branch office on 1 December. It is intended to hold these every 2 months so that members have an opportunity, not only to network, but also to have fun!

We will ensure that someone from the Westville office will attend each time, as this type of function is a valuable source of feedback. The braais will start at 5pm and the dress code is “come as you are”. Members are urged to attend these functions and any prospective members, are also most welcome.

Bruce Lyle
Membership Services Manager

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Monday, December 1, 2008

Master Builders Xmas Party



The Kwazulu Natal Master Builders Association, recently held it's Annual Christmas Lunch, at it's main premises in Westville. The event was held in the Atrium, one of Four Conference Venues in the Master Builders Building, and was perfectly co-ordinated by Debbie Gowar, our Conference Manager.

The speeches were kept short and staff were encouraged to let their hair down and interact with colleagues they knew and some that were new to them. This year, the NHBRC inspectors were also invited to attended the function, which led to an even livelier atmosphere.

One of the most noteworthy moments of the afternoon, was the handing over of the Long Service Awards. The Association recognises that it's staff play a pivotal role in achieving goals and it was therefore encouraging to see so many long service awards being presented. We would again like to congratulate the following staff members who received Long Service Awards:
  • Glynis Kleinhans - 5 Years
  • Neels Nortje - 10 Years
  • Petros Mtambo - 20 Years
As you can see from the Web Album above, the function was a great success and an ideal opportunity for the Association to thank Staff Members for all the hard work that they have put in this year. We can't wait for next year!!

Brandon Abdinor
Executive Director

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Friday, November 28, 2008

Risks of Late Pension / Provident Fund Contributions ( RETIREMENT FUNDS )


The Association is aware that certain Employers are in arrears with their contributions to the Retirement Funds, that we administer.

These Employers are advised that they could be placing themselves at considerable risk in terms of the Insured Benefits which are contained in the Retirement Fund elements of the scheme.

If contributions are not up to date and an employee dies suddenly, the Insurance Company will refuse to pay the benefits which otherwise would have been due, e.g. the death benefit, a minimum of two year’s pay and the funeral benefit.

The Employer would then be liable to the deceased employee’s estate for these benefits, which would be due in terms of the contract of employment. The due date for receipt of contributions for the Insured Benefit component of the Retirement Funds, is 7 days after the relevant month end.

The costs could run into many thousands of rands and it would be impossible to pay the premiums in arrears as this would constitute fraud. In addition, Employers are advised that they are obliged to pay interest on overdue contributions.

The requirements of Section 13A of the Pension Funds Act, are quite clear on the penalties that the Administrator must impose on the Employers that pay contributions for their employees late. i.e. by latest, the 7th (seventh) of the next month. If payment has not been received after a 60 day period, the Employer has to be reported to the Financial Services Board. If after 90 days the contributions are still outstanding, the Employer has to be reported to the Public Prosecutor, and charged accordingly.

It is on record that an Employer in the Security Industry, has been jailed for non compliance with Section 13A of the Pension Funds Act.

Employers are advised to ensure that they do not expose themselves to these unnecessary risks.

R.S. Pengelly
Employee Benefits Manager

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Consumer Complaints about MBA Members


We are entering an age of savvy consumers who are increasingly demanding satisfactory service, and who know what to do when they don't receive it. Legislation (such as the Consumer Protection Act) and other mechanisms are also coming to light and the purveyors of shoddy products had better beware! Remedial action and reimbursement can be expensive, and damage to reputation even more so.

The building industry is no different and contractors are under tremendous pressure to deliver quality workmanship, and to fix matters quickly and effectively when something does go wrong. And rightly so.

92% of members have indicated that membership of the KZN Master Builders' Association gives them credibility with clients and potential clients. This is good news from a group marketing point of view. It also means that the Association has to vigilantly guard this perception and the collective reputation of its members.

When a complaint about a member is received, the Association will investigate the matter. Prompt co-operation from the member in question is required in order that the consumer's unhappiness does not escalate. If the workmanship, or any other conduct, is found to be below standard, the member will be expected to rectify the matter. Failure to co-operate will result in the disciplinary process being invoked, which may in turn lead to expulsion.

This vigilance is needed for the benefit of the membership as a whole. If left unaddressed or unresolved, complaints about members will result in ALL members' reputations being tarnished, and that needs to be avoided. Happy clients ultimately mean happy members.

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Thursday, November 27, 2008

Legal Check - Part 3 "Working at Height"


The "Legal Check" series will assist Members to do a quick, yet accurate legal check, to see if there is compliance with the requirements, as prescribed in the Occupational Health and Safety Act, 85 of 1993.

The items featured in this series, are those that are the main contributors to accidents in the Construction Industry.

Part 3 "Working at Height" - Construction Regulation 8

1. Competent person appointed in writing to Develop a Fall Protection Plan and ensure implementation and regular updating

2. Fall Protection Plan includes Training, Inspections, Tests and Maintenance of fall protection equipment

3. Medical Certificates of Fitness of key persons working at elevated positions

Competent person - means a person having the knowledge, training, experience and qualifications specific to the work or task being performed.

Look out for Part 4 "Hazard Identification and Risk Assessments", which will be featured next week.

Neels Nortje
Health and Safety Manager

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Wednesday, November 26, 2008

Focus on MBA Staff - Marion McLauchlan


When phoning the Association offices in Westville – the friendly efficient voice that usually answers the switchboard is Marion McLauchlan, our Receptionist. Marion joined the Association in October 2002. Her core function at the Association is answering the switchboard, opening and distributing all incoming mail and selling stationery contract documents.

Marion is widowed, but was married to a delightful Scotsman for 30 years and has two great kids. Her son is married and lives in London, and her daughter and son in-law have recently returned to Durban after living abroad for a number of years. She is thoroughly enjoying having them back.

Hobbies
Camping and generally being outdoors

Passionate
About the preservation of nature and our environment

Favorite piece of clothing
Black leather jacket

Car
1998 Ford Fiesta

Drink
A good bottle of Rose wine

Most Memorable Holiday

Trips to Australia

Office Manager
Shelly Kupferman

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Negligence and Vicarious Liability

Photo Credit: Net Efekt from Flickr.com

Vicarious Liability

In our law a person may be liable for the negligent acts or omissions of another. This is known as vicarious liability.

This type of liability may arise where an employer instructs the employee to commit the negligent act. An employer may also be liable in circumstances where he allows a wrongful act to be done by his employee, when in a position to have prevented it.

Employers are liable to third parties, where employees commit wrongful acts during the course and scope of their employment. This applies even where the employer expressly prohibits the act of negligence.

Course and Scope of Employment
An employee is said to have acted during the course and scope of his employment, where the negligent act was committed by the employee in the exercise of the functions for which he was employed. For example where someone is employed as a delivery driver his employer will be liable for the employees negligent driving while he is attending to deliveries.

For there to be vicarious liability the relationship must be one of master and servant i.e. The employee must be subject to the employer's instructions as to the work to be done and the manner in which it is to be carried out.

Agent and subcontractors do not usually attract vicarious liability to their principals or main contractors. The reason for this is that agents and subcontractors do not fall under the direct control of their principals or main contractors.

Employers may be vicariously liable even for unlawful acts committed by the employee provided always that the acts were committed during the course and scope of the employee's employment.

Where however an employee completely abandons his duties and attends to his own affairs there is no vicarious liability. This also applies where an employee embarks on a 'frolic of his own'. In deciding whether the deviation from duty is sufficient to absolve the employer from liability the courts will take the surrounding circumstances into account with the overriding consideration being whether or not the employee was acting within the course and scope of his employment.

For example an employee giving a lift to a friend is clearly acting outside of the scope of his employment and the employer will not be liable should the employee's negligent driving result in injury to his friend. On the other hand where a driver deviates from an authorised route to purchase refreshments, the employer will be liable for any damage caused by the employee's negligence while doing so.

Bruce Lyle
Membership Services Manager

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Tuesday, November 25, 2008

Interest Rates Coming Down?


Taylor's Rule estimates what the prime interest rate should be. Currently it estimates it should be 14.5% as apposed to 15.5%.


Here's to hoping that the reserve bank reduces prime at it's next meeting in December 2008. With inflation expected to decrease in 2009, coupled with political motivations, prime is expected to decrease in 2009.

Hopefully this will spur the economy in general, and construction in particular. For details of Taylor's Rule, published by Cees Bruggemans, Chief Economist at FNB, click here.

Greg Beykirch
Finance Manager

South Coast Year End Function



WHAT A FUNCTION!!! The South Coast Division held their Year End Function on the 21 November 2008, at the Edwardian Hotel in Port Edward. As always the spirit and atmosphere amongst the South Coast Members was like that of a family reunion, as we dined and danced the night away.

The venue added to the glamour of the event and we were particularly pleased to have negotiated a special overnight tariff from the Hotel, for those members who really wanted to make it a special evening out.

The call for the men to change their daily Khaki’s for a jacket and tie was heeded in most instances, and the men looked very respectable alongside their ladies, who of course always looked stunning. Ladies, as always, your contribution makes the function the success it was. WELL DONE LADIES!!!

When we made the reservation, 140 people indicated that they would be attending and in the end, about 130 attended the function. I have already received extremely positive feedback from those that attended the event.

Our sponsors contributed a total of R17,000, which went a long way towards subsidizing the cost of the function for our Members. We would like to give special thanks to the following sponsors:
  • Blue Gold
  • Port Shepstone Quarries
  • Nu form
  • Federated Timbers Manaba
  • On Tap
  • Form Scaff
  • NPC
As always the Year End Function is the highlight of our proceedings for the year and I have already started looking for a suitable venue for next year. I will be giving you regular updates during the year.

I was pleased to be able to present a Certificate and Floating Trophy to the most active and committed Member during the passed year. This year's winner was Ray Basson, who has been incredibly supportive and assisted me in finding my feet and settling in to the new office.

Ron Underwood, the previous Divisional Manager, was unfortunately unable to attend the event, but sent through his apologies and wished all Members a most enjoyable event.

Hans Stols
Divisional Manager South Coast
039 317 4078 082 85 393 85


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Monday, November 24, 2008

Office Closure - Christmas Lunch


PLEASE NOTE!

The office in Essex Terrace, Westville will be closed from 12:30 p.m. on Friday, 28 November 2008 for our Christmas Lunch.

Should you need to purchase any Contract Documents or other Stationery Items or queries please do so before this time.

The Exhibition Centre will be open as normal the whole of Friday.

Marion McLauchlan
Receptionist

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Built Environment Professions Bill withdrawn


The newly appointed Public Works Minister, Geoff Doidge, announced last week that the controversial Built Environment Professions Bill, has been withdrawn. The Minister cited technical and legal reasons for the withdrawal of the Bill.

For those who have fought against the introduction of this Bill, this is a bitter-sweet victory, as this is only a temporary reprieve.

However, it will offer the opportunity for stakeholders to make further recommendations to the Draft Bill in line with Industry requirements.

For more information on this see:
Gary Amstutz
Commercial and Online Manager

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Master Builders Fishing Day 2008


A wonderful time was had by those who attended the annual fishing day on Saturday the 15th November 2008. Our chartered boat, a 40 foot Rodman set off on a glorious morning from Wilson's Wharf, Durban harbour at 5am but when we got to open sea we found ourselves in the teeth of a 15 knot wind with the sea “on its head”.

While steaming South to 'Toti where the best fishing spots are some of the party were at odds with the motion of the boat. Our Chairman discovered that he was not the seasoned sailor that he thought he was! Fishing was confined to bottom fishing with some really nice slingers and reds being caught. Unfortunately fishing was hampered by weather conditions preventing proper anchoring of the boat.

We enjoyed a really fabulous lunch as Charlie Crofts where everyone tucked into our catch which was prepared for us by the chef.

First prize was won by Trevor Brookes of JT Ross for the 5kg “Sweetlips” he caught. Dudley Chihota from Grinaker won the second prize for being the most enthusiastic fisherman on board and Kiran Haemraj won the “Wally of the Day” award for his serious lapse of common sense - he puked INTO the wind!

Thanks go to our skipper and deckhand Davey and Andy for being so obliging and capable. Thanks also to Michelle for her great organisation of the day.

Bruce Lyle
Membership Services Manager

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Friday, November 21, 2008

OHS Forum Meeting - FREE Attendance



You are invited to attend the Association’s fourth Occupational Health and Safety Forum Meeting. This is an initiative from our Association’s OHS Safety Committee which is offered to members free of charge on a bi-monthly basis.

The Association holds closed bi-monthly OHS Meetings with selective representatives from our members. Directly after these closed meetings an open forum meeting follows for all interested members and associated persons. At these open forums, feedback from the OHS committee meeting will be given and input will be taken from members, following which will be various occupational health and safety construction related presentations and product updates.

The forum can be advertised among members and be seen as an expanded membership service.

For the next open forum meeting we have secured the following presenters:

TOPICS:

Ruan Kidson, Safety Manager, Moses Mabhida Stadium
“General Rigging and Tower Crane Safety”

and

Craig Wylie, Branch Manager, ER24 Durban
“Legal Requirements for Medical Ordinances on Site and the Advantages of a Paramedic on Site”

Who will benefit from attending these forum meetings?

Contracts Directors
Contracts Managers
Construction OHS Professionals
Foreman and Supervisors
Site Clerks
Safety Representatives
DoL Inspectors
Any person that has an interest in Construction OHS

DATE: 8 December 2008
TIME: 14:00
VENUE: Master Builders KZN, Board Room
COST: FREE
RSVP: Essential, with Lynda at 031 266 7070 or lynda@masterbuild.co.za

The meeting should conclude at approximately 16:00 and will be followed by sponsored snacks and drinks it is therefore essential to RSVP.

Neels Nortje
Health and Safety Manager

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Thursday, November 20, 2008

Legal Check - Part 2 "Excavations"

The "Legal Check" series will assist Members to do a quick, yet accurate legal check, to see if there is compliance with the requirements, as prescribed in the Occupational Health and Safety Act, 85 of 1993. The items featured in this series, are those that are the main contributors to accidents in the Construction Industry.

Part 2 "Excavations" - Construction Regulation 11

1. Competent person appointed in writing to examine and inspect all excavations
2. Method statement developed by a competent person where explosives are used
3. Excavations inspected before every shift, after rain, after blasting, ground fall and after damage
4. Register up to date and available on site

Competent person - means a person having the knowledge, training, experience and qualifications specific to the work or task being performed.

Look out for Part 3 "Working at Height", which will be featured next week.

Neels Nortje
Health and Safety Manager

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Conference Facilities at the Kwazulu Natal Master Builders Association

Photo Credit: sujathafan on Flickr.com

Did you know that the Kwazulu Natal Master Builders Association has a full range of Conference Facilities at it's Westville Office (Durban). The building is centrally situated at 40 Essex Terrace, right next to the M13, and is only a 15 minute drive from just about anywhere in Durban (including the Airport).

The Conference Facilities are run by a dedicated conference co-ordinator, Debbie Gowar (Tel: 031 266 7070). She is ably assisted by Muzi and Ruth, who are both there to make sure that your conference or event, runs smoothly. A comprehensive range of audio visual equipment, flip charts, data projectors, overhead projectors and slide projectors is available.

There are several catering packages available, that range from a simple tea/coffee service, to a full sit-down meal. Additional casual staff, barmen and waiters can be arranged to suit your requirements.

The following dedicated rooms are available and can cater for anything from a small meeting or arbitration hearing, to a large conference with up to 150 delegates:

The Boardroom / The Ante Room

Elegantly styled in hardwoods and co-ordinated soft furnishings, the Boardroom accommodates 150 delegates cinema style or 80 delegates classroom style together with a raised dais for a panel of 5.

The Boardroom boasts a bar, airconditioning and a public address system and can be divided by a sophisticated soundproof partitioning system to provide a smaller venue with an adjoining Ante Room. With the soundproof partition in place, the Boardroom seats 44 delegates' classroom style.

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The Lecture Room

Furnished with oak desks, the airconditioned Lecture Room accommodates up to 24 delegates in a variety of styles and is equipped with wall-mounted flexirail and a white board.

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The Atrium

The Atrium is ideal for a variety of functions such as breakfasts, lunches, dinners and social events and has full bar facilities. It has a transparent roof, which allows for natural lighting.

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The Rautenbach Room

Modern airconditioned room seating 48 delegates classroom style and 60 cinema style. Equipped with screen and a flexi rail on the wall which supports a white board and flipchart.

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For more information about the Conference Facilities at the Master Builders Association, or to book your next event, contact Debbie Gowar - Tel: 031 266 7070

Gary Amstutz
Commercial and Online Manager

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Wednesday, November 19, 2008

Provisional Tax changes for Feb 2009


A provisional taxpayer is someone (or company, CC or trust) who (or which) earns income other than a salary. SARS collects tax on salaries by means of the Pay as You Earn (PAYE) system, which was copied from the UK tax system years ago. But other income escapes the PAYE system, so SARS devised the provisional system, where you pay provisional tax every 6 months on estimated income for the past 6 months.

You are then supposed to pay any shortfall by means of a 3rd provisional tax payment by 31st August each year. Currently if you don’t pay this, you simply pay interest on any tax you should have paid, but there are no penalties.

The one factor in favour of the taxpayer is that this estimate is currently based on your last tax assessment (which could be some years in the past, if you are in arrears or if SARS is taking its time in assessing you).

It was therefore possible for a taxpayer to defer his or her actual tax liability, which was the problem the current provisional system sought to address.

SARS has plans to make this estimating process more accurate by imposing a penalty of 20% on the tax due on any difference between the estimate made and 80% of the actual taxable income assessed by SARS after you submit your tax return. So you have a 20% leeway in your estimate.

In a nutshell, this means that you will have to keep very accurate records of income and expenditure, right up to mid February, and then you will have to sit down and work out what your taxable income is likely to be for that tax year, even if the tax year has not yet ended. You won’t be able to take your time between March and September to make your estimates and pay any outstanding provisional tax by way of the 3rd provisional tax payment.

The fear is that if this legislation is passed, the accountants and tax advisors, who usually take many months to produce the annual financial statements and tax returns, will be swamped by clients wanting them to produce accurate figures of income and deductions before the tax year has ended - -a clearly impossible task.

The only way is to prepare records beforehand, say up to end December, and to extrapolate figures for January and February.

SARS’s actions do not accord with its own timeframe in issuing returns and processing them, and could well be in conflict with the Taxpayers’ Charter.

Clive Hill
Financial Services

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SMS - Falls within the Legal Definition of an Electronic Communication


According to media reports a Court recently found that an SMS is a data message and falls within the definition of an electronic communication. It is a valid and effective means of concluding an agreement or contract. The fact that it is digital and not a hard copy does not detract from its legal status. Digital methods of communication are accordingly legally on a par with their hard copy paper counterparts.

In the case of Jafta v Ezemvelo KZN Wildlife the organisation (Ezemvelo KZN Wildlife) e-mailed an offer of employment to Jafta. The offer was linked to a time limit. Jafta tried to respond by sending an e-mail accepting the offer but in true IT style his laptop malfunctioned. With the deadline looming he then reverted to an internet café. Unbeknown to Jafta he was trumped by a glitch in the internet and his e-mail vanished in cyberspace.

Not having heard from Jafta an outgoing employee of Ezemvelo sent Jafta an urgent SMS urging him to reply. Jafta responded by SMS that he had done so earlier in the day by means of e-mail and that he had accepted the offer of employment. The outgoing employee then assumed that the e-mail that Jafta had sent from the internet café, which had gone astray, had been captured in the Ezemvelo systems and left the organisation without informing them about the SMS sent by Jafta.

Wildlife not having supposedly heard from Jafta Wildlife then employed the next suitable candidate. Jafta took Ezemvelo to Court and won. It is accordingly essential that organisations keep track of all digital communications. Records of e-mails and SMS’s should be kept for reference purposes should the need arise.

Pieter Rautenbach
Projects Facilitator

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Tuesday, November 18, 2008

Minister holds Construction Safety Summit


The Department of Labour held a Construction Safety Summit in Gauteng on 11 November 2008.

The summit was spearheaded by the Minister of Labour, Mr. Mdladlana. The Minister’s message was loud and clear - “enough is enough”

The need for the summit came as a result of the spate of construction fatalities experienced in South Africa of late. The current situation is that two construction workers are killed every week. Representatives of Organized Business, Organized Labour and Government as well as representatives from the Construction Industry were given the opportunity to address the more than 600 delegates that attended the summit.

Our Association's Health and Safety Manager Neels Nortje, who was recently appointed to the Minister’s Occupational Health and Safety Advisory Council (ACOHS), addressed the summit on behalf of Business Unity South Africa (BUSA). It was clear that all parties present had the same objective: Reduce the unexceptionally high rate of fatalities in the construction industry.

Minister Mdladlana gave the closing address and assured the delegates that the Department of Labour is going to take a firm stance against culprits. Those that are not complying with the Occupational Health and Safety Act and Construction Regulations will be brought to book.

Neels Nortje
Health and Safety Manager

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Monday, November 17, 2008

The Electricity Crisis and the Construction Industry in South Africa

Photo Credit: Harraz from Flickr.com

Background and the Forum - Early in 2008 it was announced that Eskom had placed a moratorium on the provision of quotations for new construction projects for a period of 6 months up until the end of May 2008. This moratorium was in respect of all developments requiring an electricity supply exceeding 100 kVa.

The Construction Industry has been meeting with Eskom in this regard at the Electricity Crisis Forum facilitated by Master Builders South Africa (MBSA). The forum is being attended by a range of role players in the construction value chain including developers and other clients, architects, quantity surveyors, engineers, contractors and subcontractors.

Uncertainty around obtaining new electricity supply - Eskom has announced that the process of quoting is now continuing. Quotations would be issued which would reflect the cost of providing new supply and the time frames within which new supply would be provided.

Eskom stressed that this did not mean that construction activity would automatically resume as normal in that certain projects may only be allocated supply a considerable time into the future.

There is considerable uncertainty regarding the criteria for developments to receive supply, Eskom has reached a conclusion that it is not in a position to unilaterally take the decisions as to which projects would receive electricity or not, and has referred this process to government,

This process, as with all of the previous aspects of this crisis, needs to be transparent, clear and well publicised to avoid prejudice as far as possible.

The forum therefore calls all relevant role-players to engage on these and relevant matters to ensure that information is available to those who need it.

Brandon Abdinor
Executive Director

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Friday, November 14, 2008

Construction Industry Development Board (CIDB)

All contractors must register with the CIDB in terms of the CIDB Act in order to perform construction projects for the public sector. A grading system which takes into account both financial and works capability is used for purposes of determining the size of contract a contractor may undertake.

We are aware that there have been frustrations in getting registered with the CIDB. Recently a meeting was held with a senior official from the Durban branch of the CIDB and it is acknowledged that there have been problems in the past. We have been assured however that the process time for registrations has been greatly improved. Applications are now screened locally prior to submission to the CIDB head office in Pretoria and the process now takes about 21 days from date of receipt thereof.

Complaints have also been received that some contractors seem to have achieved gradings well above their capability. Should any member have any such concern they are urged to send the relevant information to us and we will take the matter up on their behalf. All such information will be held in the strictest of confidence.

The CIDB’s website is http://www.cidb.org.za/ which is both helpful and informative.

Bruce Lyle
Membership Services Manager

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Thursday, November 13, 2008

IT - Open Source Software


Computers have recently come down in price and these days one can buy a powerful one for about R3000.00. Usually the cost of the Windows operating system and Microsoft software has to be added to this which increases the total cost by a considerable amount. Most people are however unaware that they need not buy any software at all.

There is another operating system called Linux which is completely free and works very well indeed. It is stable, reliable, installs easily and is not meant only for computer “nerds” as is commonly thought.

Mark Shuttleworth's Ubuntu Foundation will send you a free CD which will install the Linux operating system on just about any computer. Along with it comes almost everything you will need including an email program and Open Office which is a suite of programs including a word processor, a spreadsheet program (useful for estimating) and a database program.

For those nervous about migrating from Windows, Open Office can open and run your MS Word files and Excel spreadsheets without it being necessary to learn anything new. Both operating systems can be run on the same computer.

Have a look at www.ubuntu.com where you can find out more and order a free CD. There is a 3 - 4 week waiting period but if you are impatient you can also download the software directly. The number of large organisations that are moving across to Linux is growing steadily.

Bruce Lyle
Membership Services Manager

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Grounds for the review of the approval of building plans


Should a Building Control Officer fail to invite representations from adjoining owners regarding the impact of a proposed building interested persons may apply to court for an order to set aside the approval of the plans and the review thereof.

The grounds for such an application may include the irregular appointment of the Building Control Officer, the building plans fail to comply with the National Building Regulations or relevant town planning scheme, the buildings are likely to disfigure the area, lower the values of surrounding properties, constitute a danger to the public or be unsightly or objectionable.

In terms of the Promotion of Administrative Justice Act such an application should be brought within a reasonable time but no later than 180 days after exhausting all internal remedies with the local authority. The objection to the approval of plans should be lodged within 21 days after notification of such approval.

Bruce Lyle
Membership Services Manager

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Legal Check - Part 1 "Scaffolding"


This is the first of a multi part "Legal Check" series that will assist Members to do a quick, yet accurate legal check, to see if there is compliance with the requirements, as prescribed in the Occupational Health and Safety Act, 85 of 1993. The items that we will feature, are those that are the main contributors to accidents in the Construction Industry.

Part 1 "Scaffolding" - Construction Regulation 14

1. Competent person appointed in writing to supervise all Scaffold Work
2. Competent person appointed in writing as a Scaffold Team Leader
3. Competent person appointed in writing as a Scaffold Erector
4. Competent person appointed in writing as a Scaffold Inspector
5. Scaffolding inspected weekly, after inclement weather and after alterations
6. Register up to date
7. Scaffold erected, maintained and dismantled in terms of SANS 10085

Competent person - means a person having the knowledge, training, experince and qualifications specific to the work or task being performed.

Look out for Part 2 "Excavations", which will be featured next week

Neels Nortje
Health and Safety Manager

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Focus on MBA Staff - Rob Pengelly | Benefits Manager


Rob joined the Association in November 2001 as the Benefits Manager. At the time of Rob joining, the Association was administering the Provident Fund and running the Stamp Scheme. A few months later the Association started administering two additional funds, KZN and Midlands Retirement Fund. Rob played an intricate role in managing and implementing the administering of these new Funds.

Rob is married to Lynda, who is also employed by the Association and has 2 daughters and 4 grandchildren.

Prior to joining the Association Rob was Factory Manager at Lion Match for 19 years. Upon leaving he went into the Real Estate business for five years. After leaving the Real Estate Industry, Rob was enticed back into industry, joining Pinewood Timbers (a Moxwood subsiduary) as Factory Manager until joining KZN MBA 7 years ago.

Hobbies: Ornithology & Woodwork
Pet hates: Inconsiderate Drivers
Pet likes: Family
Favorite foods: Seafood
Most Memorable Holiday: England with Lyn a couple of years back. Seeing old college friends and looking up family history.

Shelly Kupferman
Office Manager

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Wednesday, November 12, 2008

SACPCMP - Non Renewal List

The South African Council for Project and Construction Management Professions (SACPCMP) published an advertisement in the Sundays Times on the 9th November 2008, in which registered persons who were in default with their annual registration fees. A list of defaulters was published on their website (Click here to view) and defaulters were warned that they may risk cancellation of their registration.

Registered persons who do not have written confirmation of good standing with the Council must contact the Administrative Office (011 318 3402), within two weeks of the notice published. It appears as if there are some unallocated payments, so if you have paid, contact the Council to confirm proof of payment.

The rules relating to the payment of the 2009 annual fee, for registered persons with the SACPCMP, have just been Gazetted (No. 31583 - 14th November 2008). Professionals will pay R1602.61 and Candidates will pay R1183.74. Further information regarding additional fees, is available in the Government Gazette.

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The right of an adjoining owner regarding the approval of plans


Since 1999 there has been confusion regarding a neighbour's right to a hearing prior to the approval of plans but the matter seems to have been settled when on 13 June 2008 the Constitutional Court in the Azeem Hassan Walele vs The City of Cape Town case (CCT 64/07 (2008) ZACC 11) handed down its judgement.

In this case Dr Walele noticed that his neighbour had received permission to erect a four storey building next to his property. It was held that the purpose of the recommendations of the Building Control Officer was to furnish the local authority with the grounds upon which his decision was based, thus enabling the decision makers to apply their minds independently to the matter.

The mere pro forma endorsement and signature of the Building Control Officer did not therefore constitute a recommendation and did not provide a sufficient basis for the independent decision required of the decision-maker. On this basis the approval of the plans was set aside and the matter referred to the City for re-consideration.

The Court however did not agree with the applicant's contention that the owners of neighbouring properties have a right or a legitimate expectation to receive a hearing prior to the approval of a neighbour's building plans.

Bruce Lyle
Membership Services Manager

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Tuesday, November 11, 2008

2008 Income Tax Returns And eFiling

SARS has launched an advertising campaign encouraging employers to allow employees to access eFiling from the employer's office Internet to file their 2008 Income Tax Returns.

Think carefully:
  • It could be disruptive to normal business operations.
  • What are your obligations when an employer leaves your employment and SARS has your electronic address to communicate with these ex employees? From past experience, it's not easy to change communication channels with SARS if you are not the taxpayer.
Greg Beykirch
Finance Manager

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Monday, November 10, 2008

The Custom of the Builders Holiday


The custom of the annual Builders Holiday, whether by statute or voluntary, is well entrenched in South Africa. The shut-down period normally commences on the Friday following 16 December and would continue to the commencement of the first full working week after New Year’s day (1 January).

Historically, the Building Industry in South Africa has made considerable use of migrant labour and to the lesser extent itinerant labour. The Western Cape for example during the long ‘apartheid’ years was a so-called coloured preferential area.

Influx control was also stringently applied which meant that it was logical for the Building Industry to close down during the Christmas/New Year period to allow these employees to return to the then homelands or reserves while at the same time taking their paid leave entitlement.

The writers first official contact with the Building Industry occurred during 1963/4 in Durban when he attended the Annual General Meeting held during March 1964 of the then Durban Master Builders Association which was held in the St. Johns Ambulance Hall. The legendary Mark Lipshitz, who was the only person ever to be President of both the Builders and Civils Federation, was in the chair.

The meeting which was well attended also discussed whether the annual shut-down period should be legislated for or not. The debate got heated at times and I recall the late Walter Ridl who was a proponent of a legislated shut-down period vehemently stating, “the men need a break to go and plant their seeds”! This solicited some wag to respond to great acclaim “Walter should know all about that!”. It was well known in the industry that Walter and his wife Flo had 11 children.

Currently there is no longer a legislated builders holiday in Kwa Zulu Natal. Old habits do not die and unofficially the custom still applies. Whether legislated or voluntary it should be noted that the Industry has always remained flexible to provide essential and emergency services during the so-called shut-down period.

Pieter Rautenbach
Projects Facilitator

(Editors Note: The dates for the Building Holidays this year are from Friday the 12th December 2008, to Monday the 12th January 2009)

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Green Rating for Buildings


South Africa's Green Building Council recently launched a system of rating buildings according to their "greenness, or impact on the environment. Called Green Star SA, the system takes a range of factors into consideration including energy, water, materials and waste management.

The idea behind the system is to start mitigating the negative environmental impact of buildings and the way in which they are constructed and managed. It is designed to be used by clients, consultants and contractors to objectively measure the impact of their projects and activities and obtain recognition for environmentally friendly interventions.

There is already evidence that greener buildings can contribute positively to productivity, long term profitability and lower carbon emissions.

For ten reasons why we need green buildings, go to: http://www.carbonsmart.com:80/carboncopy/2008/11/top-ten-reasons-why-we-need-green-buildings.html

Master Builders KZN will keep you updated about developments in this regard.

Brandon Abdinor
Executive Director

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Friday, November 7, 2008

Time Consuming Office Meetings

Meetings can be very time consuming and disruptive to normal business operations. Set out below are a few pointers to running meaningful meetings:
  • Always prepare an agenda to be distributed before the meeting
  • Stick to the agenda
  • Adjourn the meeting if anyone is not prepared
  • Only invite people to the meeting who can contribute
  • Set a time limit for the meeting and monitor the time
  • Hand outs should be limited to 2 pages where possible
  • Presentations should not exceed 10 minutes as people have short attention spans.
  • Meetings should not exceed one to one and a half hours without a break
  • Give everyone a chance to contribute
  • Document decisions taken and follow up the implementation thereof
Greg Beykirch
Finance Manager

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Thursday, November 6, 2008

Master Builders KZN Annual Golf Day - 2008


The Association's annual golf day was held on 03 November 2008 at the Durban Country Club. Despite windy and rainy conditions the day was enjoyed by the 88 golfers that took part.

Nearest to the pin on the 2nd was Stephan Oosthuizen, nearest to the pin on the 12th was Ross Urquhart and longest drive on the 14th was Francois Louw.

The winning team with a score of 80 was Dixon and Byrne cc. Colin Cozens, the Association's Vice President handed the 72 year old DULUX CUP over to Gary Weddle, Peter Dalton Kevin Byrne and Roy Meaker.

Neels Nortje
Health and Safety Manager

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Sneak Preview - New MBA office for Zululand


As many of you may already know, the MBA has purchased premises in Empangeni, which will soon be home to the Zululand Divisional Office. The Building, situated at 89 Rex Henderson Road, used to be Dr. Du Toit's Surgery.

Manie and Neil will be moving into the Building shortly and an extensive renovation program is already underway, which should be completed early in the New Year.

For those that do not know, Manie had a very serious Motor Vehicle Accident on the 8th October. He was badly injured and his car was written off. We would like to take this opportunity to welcome Manie back and wish him a speedy recovery!

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Wednesday, November 5, 2008

The Role of the Building Control Officer


In terms of the National Building Regulations and Building Standards Act a local authority must appoint a building control officer. Such an officer must hold a senior certificate or equivalent and have undergone 3 years tertiary education in one of the recognised building related disciplines e.g. quantity surveying, building science etc. The Act also provides that the Minister may appoint a person not having these qualifications.

The main function of the Building Control Officer is to make recommendations to the local authority regarding the submissions of any building plans, specifications and related documents and where a fire protection plan is required, include a report from the local chief fire officer.

In terms of Section 7 of the Act the local authority may approve plans only after receiving and considering the recommendations made by the Building Control Officer. Failure to do so may render the decision to pass the plans liable to be set aside.

Bruce Lyle
Membership Services Manager

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Tuesday, November 4, 2008

Tax Law changes 2008 - Retirement Annuity Funds

In my last blog post I examined the changes to the definition in section 1 of the Income Tax Act of ‘pension funds’. The same changes will apply to provident funds. As a reminder, when you retire from a pension fund, you can commute (ie reduce to a lump sum) up to one-third of the total annuities to which you are entitled. This will amount to one-third of the money actually available to you at date of retirement.

You have to use the balance of two-thirds to purchase a regular monthly pension for life. In a future blog I will discuss the many options open to a retiree in purchasing this pension. When you retire from a provident fund, on the other hand, you can take 100% of the amount available in a lump sum.

A Retirement Annuity Fund (commonly known as an ‘RA Fund’) is really a one-person private pension fund, not linked to employment or to an employer. There are many advantages to contributing to an RA, not least income tax advantages, and these will form the subject of a future blog post. In the meantime, however, you need to be aware of the proposed changes to the definition of RA Fund. Some of these are quite radical.

For example, where a member dies prior to retirement, leaving no dependents, and has also failed to nominate a beneficiary (or nominee) to receive the benefits he/she would have received had he/she reached retirement, the Act presently does not allow for the money to be paid to his/her deceased estate. This will now be permitted.

On death prior to retirement, there is presently a complicated formula to arrive at the amount of the maximum lump sum available. This will be replaced by the same ‘one-third’ of fund value which applies on retirement. If your fund value is less than R7000, you may withdraw the full amount prior to age 55, which is the earliest retirement date for a member of an RA.

In terms of the proposals, regardless of your fund value, if you emigrate you may also withdraw your funds prior to retirement, provided you are prepared to pay income tax on that withdrawal benefit. No transfer to another fund abroad will be allowed, and only a cash withdrawal benefit may be taken. By ‘emigrate’ is meant an official emigration in terms of which you complete the relevant State forms, you apply for the appointment of an authorised dealer to control your blocked assets, you pay CGT on the deemed sale of your assets and receive the SARS clearance certificate.

If you avoid these hassles by simply relocating, which is what most people do, you cannot withdraw your RA monies, but must wait until age 55 to retire and then take the one-third lump sum and us the two-thirds to purchase a pension, which has to be paid into your SA bank account. From here you can remit it offshore, subject to any exchange control rules pertaining at that time. Hopefully by the time you come to retire these would have been totally removed.

If the total amount in your fund is less than R75 000, then on retirement or death, you or your executor may commute the total fund value.

In case you need or wish to keep working beyond normal retirement age, the present maximum age of 70 years will be scrapped. Possibly some age restriction will be imposed in the fund rules or by SARS in its General Notes to funds.

Retirement reform is long overdue, and these changes go some way in this process, but rest assured, there will be many more to come in the future. The comforting factor is that the State is supportive of individuals’ efforts to make provision for their own retirement, and rewards them handsomely through a very generous tax dispensation, which is one of the most generous to be found in any country in the world which has pension provisions.

Clive Hill
Financial Services Manager

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