CONTRACTUAL ARRANGEMENTS

Contractual Arrangements and Construction Industry Procedures: Contractual and Procedural Relationships

Contractual Arrangements and Construction Industry Procedures: Contractual and Procedural Relationships

Introduction

The technical requirement to complete, execute and/or perform every little task or material being incorporated in the construction projects. It will add intelligence to the construction drawings; specify common standards, deviations accepted, materials accepted and the required testing for all materials. Usually, specifications are composed by referencing construction standards and codes.

Most of these studies have been aimed at identifying the immediate as well as the root causes of project delays. A common theme from these studies is that project uncertainty and complexity provide a major challenge to the time management capabilities of the parties and their professional advisers and that, for many projects, delay is inevitable (Atiyah, 2009, 47).

The construction schedule is an important piece of the document. In this part, the contracting office will know how and when the project will be completed. Sometimes, construction contracts will require updated schedules throughout the construction progress, and might form part of the monthly, or agreed term, application for payments.

Activity 1: Case Study

Question 1: Discuss the contractual implications of the decisions taken at the site meeting.

From the client's point of view, it appears an attractive proposition - the consultant is responsible for the design work of all disciplines, and the client need only pursue one party for redress. In the same way that a contractor is responsible for the work of its sub-contractors, the consultant is responsible for the work of its sub-consultants. On the other hand, there can be problems:

Terms of the main contract and sub-contracts: Negotiating the terms of the consultant's and sub-consultants' contracts could be far from straightforward. The consultant will want to ensure that its sub-consultants (of which there could be several) are engaged on back-to-back terms, otherwise there is a clear risk of the consultant being left exposed. Therefore negotiation of the sub-consultancy agreements needs to keep pace with that of the main agreement. The consultant should not commit itself, until it is sure that the sub-consultants are prepared to accept appropriate terms.

Breakdown of all items being incorporated in the construction project. This is usually the base of the application for payment. It can be detailed per item or in a lump sum form, not specifying individual items.

Project planning and communication: Thought needs to be given to how the project will be run. In the absence of a direct contractual link with the sub-consultants, the client will have to (and should) conduct all communications with the sub-consultants through the consultant. Thus, the consultant will have to undertake a co-ordination and management role and its fee should adequately reflect this fact.

Insolvency of the consultant: The obvious disadvantage for the client is the possibility of the consultant going out of business - at a stroke, the client loses the whole design team.

Collateral warranties: To protect against this, the client might seek to obtain collateral warranties with step-in rights from the sub-consultants, although doing this does to some extent dilute ...