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BUIL 1286 Procurement Contract Law & Practice

University:

  • Unit No: BUIL 1286
  • Level: High school
  • Pages: 13 / Words 3171
  • Paper Type: Assignment
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  • Downloads: 22

INTRODUCTION

A mutually and legally binding agreement between the parties in relation to any construction project is known as construction contract. The parties in construction contract refers to the owners and contractors (Hughes, Champion and Murdoch, 1990). It is a vital part of the project as it outlines the scope of work, duration of the project, duties of the parties involved, deliverables and the remedies of each contracting parties. In UK, tradition and collaborative contract are the two essential types of contracts having their own distinct approach in case of any dispute (Chappell, 2020). The essay will provide explanation of the significant changes to the design due to any unforeseen ground conditions and the need to comply with the present building regulations. Further, the provisions applicable in case of site closure for three works due to the adverse weather conditions will be provided. Lastly, a vital deformation of the retaining wall due to the failure of the section of formwork will be provided.

MAIN BODY

Scenario 1: Fundamental Design Change Due to Unforeseen Ground Conditions and Adherence to Building Regulations

Design and its suitability for site conditions are a crucial aspect of any construction project. But, sometimes, unexpected ground conditions, such as the presence of contaminated soil, poor bearing capacity of the soil, or other factors, obliterates the current design and require modifications in the design (Charlson, 2020). This usually depends upon the kind of contract.

Traditional Contracts – In such contracts, contractor typically accomplishes the work as per the prepared design by the architect or the client. If such conditions as poor ground condition are found, the contractor would usually have a right to claim for an Extension of Time (EOT) and additional costs according to the provisions of the contract for variations and unforeseen events.

It was stated in JCT Standard Building Contract, 2016 that the contractor will be required to issue a written notice to the client and substantiate the conditions of the ground (Lupton, 2019).

Figure 1 What is a JCT contract

Figure 1: What is a JCT contract?

The Clause 4.21 of the JCT SBC states that the contractor shall be allowed to make variation due to the change in the ground condition necessitated. The client shall bear the increased costs resulting from this variation. Furthermore, the terms of JCT also entitle a contractor to have an EOT for taking the extra time it will require in addressing the change if it can prove that the circumstances were unforeseen and caused delays (Zain-Alabdeen and Rasheed, 2022).

However, the issue of conforming to building regulations brings a more complex issue to the table (Osborne, 2006). If changes to the foundation design were necessitated by changes to the regulatory framework, it is possible that the client will bear the cost of added expenses incurred in order to meet those requirements. Again, where such requirements are not anticipated at the start of the project, the risk allocation provisions of the contract will state whether the customer or the contractor bears the costs.

Collaborative contracts: In this contract, the focus in the collaborative NEC4 (New Engineering Contract) is based on cooperation and joint solving of problems (Eggleston, 2019). This is because with the emphasis that the NEC4 has towards early warning, both the contractor and client are also stimulated to act collectively for mitigation purposes (Hide, 2010).

 Figure 2 What is Procurement Contract in Project Management

Figure 2: What is Procurement Contract in Project Management?

A modification in design because of ground conditions that were not anticipated would give early warning and would force the parties to work together in seeking a solution rather than placing the accountability for the change on one party.

Clause 61.3 of the NEC4 contract states that the contractor is allowed to defer to a quotation for the variation in design, which includes EOT and additional costs (Hughes, 2018). The contractor, according to NEC4, has to demonstrate that the unpredicted ground situations could not have been reasonably foreseen, and that the variation is needed for compliance with the current building regulations (Hughes, 2024).

This approach would likely provide a collaborative effort by both parties to reduce costs and discuss the matter of cost-effectiveness to try to minimize the impact to the overall project. Thus, it might allow for a softer approach to cost-sharing and regulation compliance responsibility with a less likely chance of disputes arising.

In both types of contracts, the claim for extra costs or time incurred because of unforeseen conditions should be in compliance with the Housing Grants, Construction and Regeneration Act, 1996. This Act requires that a construction contract must contain a procedure for determining disputes about variations and rights to payment. These entitlements would come under the Act provisions concerning adjudication, such as rights to payment for additional costs related to design changes resulting from unforeseen conditions (Zain-Alabdeen and Rasheed, 2023).

In case of Walter Lilly & Company Ltd. V Mackay and Another [2012] EWHC 1773 (TCC) the court held that any variation in design should be governed by the contractual provisions. Also, the court stated that any variation which led to the change in design, then contractor is liable to receive additional payment and if the changes are significant, then extension of time should be granted (El-Adaway et al., 2016).

Recommendations on Entitlements and Remedies: In a traditional contract, a contractor is entitled to EOT and to further recompense due to additional design costs in regard to changing ground conditions and the regulation of building (Ward, 2008). In the case of the collaborative contract, there may be both joint involvements required by the parties towards dealing with the change with likely outcomes amicably, thereby offering cost-effectiveness to one's advantage. In both cases, compliance with statutory requirements like the Housing Grants, Construction and Regeneration Act 1996 is very crucial to ensure proper dispute resolution.

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Scenario 2: Site Closure Due to Bad Weather

Bad weather, such as heavy rain or extreme temperatures, might force a site to close and even stop construction. There are provisions in both forms of contracts for dealing with disruption, but the approach is different in each.

In the case of a traditional contract, bad weather would normally be construed as either a force majeure or an excusable delay depending on the particular clauses in the contract. In JCT 2016 SBC, adverse weather is usually found in the list of relevant events (Clause 2.30), and therefore the contractor is entitled to an extension of time. Evidence will be required from the contractor showing the weather conditions and how these actually affected the project schedule.

However, the contractor generally cannot claim the additional occurred cost until it is specified in the contract. In case the cost aggravated due to the bad weather then only the contractor would be able to recover the additional cost with the help of variation that the change in weather caused the work to get delayed (Klakegg, 2013).

Collaborative Contracts: In collaborative contract NEC4, adverse weather condition management is done through the provision on early warning under the clause 15. In the contract NEC4, the contractor shall be liable to give an early notice if he thinks that bad weather will postpone the project. In that case, both parties shall have discussions on how to manage that delay and reduce its impacts.

Figure 3 The importance of 3 Core NEC Time Clauses when submitting a programme 2022 

Figure 3: The importance of 3 Core NEC Time Clauses when submitting a programme, 2022

In addition to an EOT under NEC4, the contractor is also entitled. The main difference in both circumstances is that there will be a mutual requirement from both parties to work out and determine potential mitigation (e.g., work alternatives that can be accomplished within the adverse conditions) so there is also an added chance to share any increased cost in case of a settlement over this situation (Mohammed, 2020).

The Local Democracy, Economic Development and Construction Act, 2009 offers further guidance on payment issues particularly in cases where delays are caused by third parties such as adverse weather conditions. In cases of a dispute over entitlement to EOT or cost claims, the adjudication procedure under the Housing Grants, Construction and Regeneration Act 1996 may be used to determine the issue.

The court, in case of, London Borough of Merton v Leach (Stanley Hugh) Ltd 1985 32 BLR 51 held that the applicability of excusable delay based on adverse weather conditions. The case is important in that clear contract requirements concerning weather-related postponements have to be provided with appropriate notice and evidence from the party affected.

Guidance notes on entitlements and remedies This is a traditional contract by itself. The contractor will always be entitled to an EOT because of adverse weather; entitlements towards additional costs will only result if the contract provides there in writing (Ter Haar, Laney and Levine, 2016). In a collaborative contract, both parties can go hand in hand in discussing the delay and can carry half-and-half of the burden should additional costs arise.

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Scenario 3: Significant deformation of retaining wall caused by collapse of formwork

Another issue is where formwork fails, causing severe deformation of the retaining wall. The reaction in both traditional and collaborative contracts would vary greatly depending on the way in which risks and responsibilities were allocated.

Traditional contracts – The contractor is normally responsible under a traditional contract for ensuring the work is done to the proper standard. If the failure of form-work was a due to the contractor’s error, then it could result in liability for the cost of repairs and any resultant delay. The client could give notice of default, and the contractor would probably be liable to make good the defect at their expense, including any delays and costs.

In case, if the delay caused was outside the control of contractor or the error caused was because of the Force Majeure, then the contractor can claim extension of time (Wright and Fergusson, 2008). However, a failure of formwork might be more likely to be blamed on the contractor.

Collaborative contracts – In a collaborative contract, such as NEC4, the emphasis would be placed on identifying the cause of failure collaboratively (Rowlinson, 2018). Should the contractor's workmanship be the cause of the failure, the contractor would take up the repairs. However, the two parties would work in concert to achieve the modification work, thus likely to reduce delays and costs. The collaborative approach could also include going over the design and construction procedure to look for areas of improvement that can avoid future failures.

According to the Construction Contracts (England and Wales) Regulations, 1998, the contractor is bound to rectify the defects in the work (Coulson and Hon. 2020). The case of London Borough of Merton v. Stanley Hugh Leach Ltd [1985] 1 All ER 1221 provides an example of a contractor being liable for defective workmanship and the outcome of breach of contract terms.

Advisory on Entitlements and Remedies: In case of traditional contractor, contractor has the liability in case of any delay or the repair resulting from the failure of work (Hughes and Waterhouse, 2024). On the other hand, in collaborative contract, the parties of the contract would collaborate to resolve the issue, possibly sharing liability and costs, depending on the cause.

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CONCLUSION

From the above essay it can be concluded that, any type of contract in construction contracts, whether traditional or collaborative tends to affect the project against any disruption, change in design or managing the unforeseen events. In the case of a traditional contract, the focus would fall on clear contractual obligations as well as risk allocation. Special remedies are provided for any specific situation, such as extension of time and payment of variations. In the case of a collaborative contract, cooperation and co-solutioning result in flexible outcomes and shared management of risks. This requires knowledge of the legal frameworks in place, specifically those in the Housing Grants, Construction and Regeneration Act 1996 and NEC4 provisions, to understand entitlements and remedies under each.

REFERENCES

Books and Journals

  • Chappell, D. (2020) Construction Contracts, Routledge eBooks, [online] Available at: < https://doi.org/10.1201/9781003080930 >.
  • Charlson, J. (2020) Briefing: Brexit and UK construction law: past, present and future, Proceedings of the Institution of Civil Engineers - Management Procurement and Law, 174(1), pp. 3–6, [online] Available at: < https://doi.org/10.1680/jmapl.20.00016 >.
  • Coulson, R. Hon. L. J. (2020) The Scheme for Construction Contracts (England and Wales) Regulations 1998, SI 1998/649, In Oxford University Press eBooks, pp. 608–616, [online] Available at: < https://doi.org/10.1093/oso/9780198822110.005.0002 >.
  • Eggleston, B. (2019) The NEC4 Engineering and Construction Contract: A Commentary, [online] Available at: < https://www.amazon.com/NEC4-Engineering-Construction-Contract-Commentary/dp/1119478758 >.
  • El-Adaway, I., Fawzy, S., Ahmed, M. and White, R. (2016) Administering Extension of Time under National and International Standard Forms of Contracts: A Contractor’s Perspective, Journal of Legal Affairs and Dispute Resolution in Engineering and Construction, 8(2), [online] Available at: < https://doi.org/10.1061/(asce)la.1943-4170.0000182 >.
  • Hide, G. (2010) Managing a programme under the NEC3 ECC contract, Proceedings of the Institution of Civil Engineers - Management Procurement and Law, 163(3), pp. 111–119, [online] Available at: < https://doi.org/10.1680/mpal.2010.163.3.111 >.
  • Hughes, K. (2018) Understanding the NEC4 ECC Contract, Routledge eBooks, [online] Available at: < https://doi.org/10.1201/9781351014359 >.
  • Hughes, K. (2024) Understanding the NEC4 ECC Contract, [online] Available at: < https://doi.org/10.1201/9781032691220 >.
  • Hughes, K. and Waterhouse, P. (2024) Understanding the NEC4 Term Service Contract, [online] Available at: < https://doi.org/10.1201/9781003463771 >.
  • Hughes, W., Champion, R. and Murdoch, J. (1990) Construction Contracts: law and management, [online] Available at: < http://ci.nii.ac.jp/ncid/BB19241386 >.
  • Klakegg, O. J. (2013) Modern Construction Management, Construction Management and Economics, 31(12), pp. 1215–1217, [online] Available at: < https://doi.org/10.1080/01446193.2013.867519 >.
  • Lupton, S. (2019) Guide to JCT Standard Building Contract 2016, RIBA Publishing eBooks, [online] Available at: < https://doi.org/10.4324/9780429345999 >.
  • Mohammed, T. (2020) The NEC4 Engineering and Construction Contract and related Architects’ forms, In Routledge eBooks, pp. 215–220, [online] Available at: < https://doi.org/10.4324/9780429279546-21 >.
  • Osborne, D. (2006) Effect of conditions precedent on building contracts, Journal of Building Appraisal, 2(3), pp. 188–192, [online] Available at: < https://doi.org/10.1057/palgrave.jba.2950040 >.
  • Rowlinson, M. (2018) A Practical Guide to the NEC4 Engineering and Construction Contract, [online] Available at: < https://doi.org/10.1002/9781119522560 >.
  • Ter Haar, R., Laney, A. and Levine, M. (2016) Construction Insurance and UK Construction Contracts, Routledge eBooks, [online] Available at: < https://doi.org/10.4324/9781315712857 >.
  • Ward, I. C. (2008) The Potential Impact of the New (UK) Building Regulations on the Provision of Natural Ventilation in Dwellings - A Case Study of Low Energy Social Housing, International Journal of Ventilation, 7(1), pp. 77–88, [online] Available at: < https://doi.org/10.1080/14733315.2008.11683801 >.
  • Wright, J. N. and Fergusson, W. (2008) Benefits of the NEC ECC form of contract: A New Zealand case study, International Journal of Project Management, 27(3), pp. 243–249, [online] Available at: < https://doi.org/10.1016/j.ijproman.2008.03.005 >.
  • Zain-Alabdeen, W. and Rasheed, S. ‎M. (2023) Comparison of Dispute Resolution Provisions between the Joint Contract Tribunal and the Iraqi Standard Bidding Document, Journal of Engineering, 29(2), pp. 92–98, [online] Available at: < https://doi.org/10.31026/j.eng.2023.02.06 >.
  • Zain-Alabdeen, W. R. and Rasheed, S. M. (2022) Comparison of time extension provisions between the Joint Contracts Tribunal and Iraqi Standard Bidding Document, Journal of the Mechanical Behavior of Materials, 31(1), pp. 580–586, [online] Available at: < https://doi.org/10.1515/jmbm-2022-0063 >.

TABLE OF FIGURES

The importance of 3 Core NEC Time Clauses when submitting a programme, 2022, ONLINE AVAILABLE AT < https://www.big-dada.co.uk/2022/01/27/3-core-nec-time-clauses/>

What is Procurement Contract in Project Management? 2024, ONLINE AVAILABE AT

< https://www.geeksforgeeks.org/what-is-procurement-contract-in-project-management/ >

What is a JCT contract? 2019, ONLINE AVAILABLE AT < https://www.myerson.co.uk/news-insights-and-events/construction-basics-a-guide-to-the-jct-building-contracts >

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