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CONSTRUCTION CONTRACTS

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Construction Contracts. Provides, based on what is known at the time of contract, for what is ultimately Deliverable, by When and at what Price; Deals with a – PowerPoint PPT presentation

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Title: CONSTRUCTION CONTRACTS

1
CONSTRUCTION CONTRACTS

2014

2
Contracts
It is not the beauty of a building you should
look at its the
construction of the foundation that will stand
the
test of time. -
Unknown
3
Construction Contracts

Provides, based on what is known at the time of
contract, for what is ultimately Deliverable, by
When and at what Price
Deals with a relationship (not necessarily
founded on good faith, mutual cooperation and
trust) just as much as it deals with the
Deliverable.
Defines or restricts the extent to which the
common law would otherwise govern the
relationship.
Defines the relationship - it is not a mere
formality in the process.

4
Construction Contracts

The Deliverable To define the Deliverable, with
the degree of accuracy possible at the time, and
to allow the Deliverable to evolve in a
controlled manner
The Price To define the Price of the Deliverable
based on what is known and what ought to be
reasonably foreseeable to an experienced
contractor at the time, and to provide for the
Price to change in a controlled manner

5
Construction Contracts

The When To define the Time for Completion of
the Deliverable based on what is known and what
ought to be reasonably foreseeable to an
experienced contractor at the time, and to allow
the Time for Completion to change in a controlled
manner
The Risks To respectively allocate the
foreseeable and unforeseeable / likely and
unlikely risks to each of the Parties and
Possible Disputes To provide a mechanism to
principally avoid, but to otherwise effectively
deal with disputes.

6
THOUGHT FOR THE DAY

The type of contract form to be used will depend
on the Employers preference as well as the
Works to be executed
Many employers use standard form contracts
developed and published by industry-based
organisations
The idea of standard form contracts is to include
provisions which are beneficial to both parties
to the contract in accordance with good practice
Some contracts are, however, not based on the
approach of good practice
Therefore it is important to know the three Rs

7
THOUGHT FOR THE DAY

The type of contract form to be used will depend
on the Employers preference as well as the
Works to be executed
Many employers use standard form contracts
developed and published by industry-based
organisations
The idea of standard form contracts is to include
provisions which are beneficial to both parties
to the contract in accordance with good practice
Some contracts are, however, not based on the
approach of good practice
Therefore it is important to know the three Rs
Rights

8
THOUGHT FOR THE DAY

The type of contract form to be used will depend
on the Employers preference as well as the
Works to be executed
Many employers use standard form contracts
developed and published by industry-based
organisations
The idea of standard form contracts is to include
provisions which are beneficial to both parties
to the contract in accordance with good practice
Some contracts are, however, not based on the
approach of good practice
Therefore it is important to know the three Rs
Rights
Responsibilities

9
THOUGHT FOR THE DAY

The type of contract form to be used will depend
on the Employers preference as well as the
Works to be executed
Many employers use standard form contracts
developed and published by industry-based
organisations
The idea of standard form contracts is to include
provisions which are beneficial to both parties
to the contract in accordance with good practice
Some contracts are, however, not based on the
approach of good practice
Therefore it is important to know the three Rs
Rights
Responsibilities
Risks

10
THOUGHT FOR THE DAY

The type of contract form to be used will depend
on the Employers preference as well as the
Works to be executed
Many employers use standard form contracts
developed and published by industry-based
organisations
The idea of standard form contracts is to include
provisions which are beneficial to both parties
to the contract in accordance with good practice
Some contracts are, however, not based on the
approach of good practice
Therefore it is important to know the three Rs
Rights
Responsibilities
Risks
Within standard form contracts you will find your
three Rs within the General Conditions of
Contract read together with the amendments
thereto as set out in the Contract Data and
Special / Particular Conditions

11
THOUGHT FOR THE DAY

The type of contract form to be used will depend
on the Employers preference as well as the
Works to be executed
Many employers use standard form contracts
developed and published by industry-based
organisations
The idea of standard form contracts is to include
provisions which are beneficial to both parties
to the contract in accordance with good practice
Some contracts are, however, not based on the
approach of good practice
Therefore it is important to know the three Rs
Rights
Responsibilities
Risks
Within standard form contracts you will find your
three Rs within the General Conditions of
Contract read together with the amendments
thereto as set out in the Contract Data and
Special / Particular Conditions
The obvious benefit of the standard form is
common understanding and the resultant efficiency
in Tender and Execution Phases.

12
THOUGHT FOR THE DAY

The role players are
Employer
Main Contractor
Sub-contractor
(Designer / Supplier / Manufacturer etc)
Importantly
Familiarise yourself with the contract
Be aware of all changes to standard form
contracts
Strict compliance

Integrity,quality,consistency.

Standard Forms

15
Available standard forms

What Standard Forms are available for use (and
required to be used by State Owned Entities)

16
Available standard forms

The FIDIC Suite (latest is 1999)
Silver Book EPC
Yellow Book Design Build
Red Book Construction Work and
Green Book Minor Work.

17
Available standard forms

New Engineering Contract

18
Available standard forms

New Engineering Contract
Engineering and Construction Contract

19
Available standard forms

New Engineering Contract
Engineering and Construction Contract
Construction Short Contract

20
Available standard forms

New Engineering Contract
Engineering and Construction Contract
Construction Short Contract
Joint Building Contracts Committee Series 2000
(5th Edition 2007)

21
Available standard forms

New Engineering Contract
Engineering and Construction Contract
Construction Short Contract
Joint Building Contracts Committee Series 2000
(5th Edition 2007)
Principal Building Agreement

22
Available standard forms

New Engineering Contract
Engineering and Construction Contract
Construction Short Contract
Joint Building Contracts Committee Series 2000
(5th Edition 2007)
Principal Building Agreement
N/S Subcontract

23
Available standard forms

New Engineering Contract
Engineering and Construction Contract
Construction Short Contract
Joint Building Contracts Committee Series 2000
(5th Edition 2007)
Principal Building Agreement
N/S Subcontract
General Conditions of Contract for Construction
(2004)

24
Available standard forms

The standard forms of contracts can, and usually
will, be changed to fit the different
requirements for different projects or to suit
the requirements of a particular employer
These conditions may change the rights and
responsibilities of the employer and contractor

25
Global reachlocal specialistknowledge.
26

Before Signing

27
Before signing

Completion Date

28
Before signing

Completion Date
Contract Price
Lump Sum / Re-measurable
CPA?
Cost Plus

29
Before signing

Completion Date
Contract Price
Lump Sum / Re-measurable
CPA?
Cost Plus
Payment Structures Progress / milestone based

30
Before signing

Completion Date
Contract Price
Lump Sum / Re-measurable
CPA?
Cost Plus
Payment Structures Progress / milestone based
Bond Requirements
Performance
Retention
Advanced Payments

31
Before signing

Completion Date
Contract Price
Lump Sum / Re-measurable
CPA?
Cost Plus
Payment Structures Progress / milestone based
Bond Requirements
Performance
Retention
Advanced Payments
Penalties

32
Before signing

Completion Date
Contract Price
Lump Sum / Re-measurable
CPA?
Cost Plus
Payment Structures Progress / milestone based
Bond Requirements
Performance
Retention
Advanced Payments
Penalties
Material Terms

33
Before signing

Completion Date
Contract Price
Lump Sum / Re-measurable
CPA?
Cost Plus
Payment Structures Progress / milestone based
Bond Requirements
Performance
Retention
Advanced Payments
Penalties
Material Terms
Programming Requirements

34
Before signing

Completion Date
Contract Price
Lump Sum / Re-measurable
CPA?
Cost Plus
Payment Structures Progress / milestone based
Bond Requirements
Performance
Retention
Advanced Payments
Penalties
Material Terms
Programming Requirements
Entitlements to Extension of Time and Additional
Costs
Variation Orders
Omissions
Delays

35
Before signing

Completion Date
Contract Price
Lump Sum / Re-measurable
CPA?
Cost Plus
Payment Structures Progress / milestone based
Bond Requirements
Performance
Retention
Advanced Payments
Penalties
Material Terms
Programming Requirements
Entitlements to Extension of Time and Additional
Costs
Variation Orders
Omissions
Delays
Limitation of Liability

36
Before signing

Completion Date
Contract Price
Lump Sum / Re-measurable
CPA?
Cost Plus
Payment Structures Progress / milestone based
Bond Requirements
Performance
Retention
Advanced Payments
Penalties
Material Terms
Programming Requirements
Entitlements to Extension of Time and Additional
Costs
Variation Orders
Omissions
Delays
Limitation of Liability
Resolution of Anticipated Disputes

Integrity,quality,consistency.

Contract Phases

39
Contract Phases
40
Contract Phases
41
Contract Phases
42
Contract Phases
43
Contract Phases
44
Global reachlocal specialistknowledge.
45

Its not just a contract

46
Construction Contracts its not just a
contract

An evolving merx against a backdrop (very often
over an extended period of time) of evolving
circumstances (both unforeseeable and
foreseeable, albeit not always predictable).
Reasonable programming.
Breach (albeit not material) is expected. A
degreed of breach is the rule rather than the
exception and events or circumstances giving rise
to disputes are common place not because of the
nature of the industry players but rather the
nature of activity.
Risk is considered (not avoided at all costs),
understood and allocated.

47
Construction Contracts its not just a
contract

Principal Drivers Traditional Time, Cost and
Quality modern approach includes Health
Safety.
Quality Workmanship and Performance (as
appropriate).
Time and Cost are moving targets - One of the
Parties has to accept the risk. The extent / lack
of planning and the proper allocation of risk
are a key factors in Time and Cost optimisation.
Health Safety statutory requirements and
corporate policy considerations. The concept of
best practice and zero harm is most often
required and/or adopted in mature jurisdictions
and by responsible corporations.