Conditions of Work for Civil Engineering Construction - Assignment Example

Introduction Conditions of work for civil engineering construction fourth edition of international federation of consulting engineers, FIDIC released in the 1987 is still applied today by many construction engineers specifically in the Middle East. The 1999 version has also been applied many countries. However, there is a recent increase in use of the New Engineering Construction (NEC) contract in the UK and the Australian countries.NEC has now come to be known as an acceptable substitute for FIDIC. Conditions of contract of NEC were developed by the UK institution of civil engineers. Engineers are opting for NEC because it is more flexible and can suit the whole construction industry. It is also highly adaptable, provides a range of options for risk allocation. Compared to other construction contract forms, it is the simplest using understandable language where the roots of many disputes have been left out. The use of flow charts also makes it more clear and easy to use. In this paper, the core clauses of NEC and FIDIC are compared with particular emphasis to the core risks and insurance. Comparison NEC assigns risks cover according to contemporary principles. Nevertheless unlike FICID, it defines the contractors’ risks in reference to those risks not listed under the employers’ risks. Under NEC conditions, the responsibility of care of the contractor goes beyond the completion of a contract. In the clause 80.1of NEC 3, the employers risks are articulated. They are categorized into six broad groups which include: one, risks involving the site or works and the legal and general liabilities and defaults that may arise from his design. In cases of risks that may crop up from the employer design fault can be insured against through a professional indemnity policy. If it is the employer own design or covered by NEC professional service contract where an outside contractor is involved. In dealing with unexpected situation, NEC has a range of provisions offering compensation for the events or occurrences that are at the employer’s risk. This goes a long way in assisting the project manager and contractor to man the construction projects without being obscured by these events. In the sub-clause 60.1 provision for variations are made where the contractor may request for extension of time for completion and even addition of payment. In such cases, the contractor only articulates his desire for time extension or rising of payment in a quotation. In sub-clause 61.6, affirms that in instances where the results of compensation of an event are uncertain, then the project manager must articulate postulations on which to base the quotation. In clause 16, there is a sub-clause that allows the contractor to call an early warning meeting. Such a meeting allows for the contractor and project manager to discuss about problem situation and come up with workable solutions (FORWARD 59). Failure to call for the early meeting shifts the cost that could have been avoided in case the meeting was called to the contractor. FDIC on the other hand has differing provisions for unexpected situations. Procedures under the FIDIC, are based on written notices where the contractor is required to write warning notices on unexpected costs and delays and their implications on the project. The engineer has the authority and decides whether the contractor should get more time or have addition of money. Unlike in the FIDIC, where liabilities information are scattered all over the paper, In the NEC, the information is arranged in an orderly manner making it easy to access and use. The two contraction forms show great difference when it comes to dealing with information provided by the employer. In clause 17, employers risk is not well defined. The employer ought to take responsibility of faulty design yet it is the sole role of the contractor to come up with the design as articulated in article five. In the Silver book of the FIDIC, the employer is not meant to take any responsibility on error that may arise from incorrectness of information that he offers to the contractor. The contractor is made to take responsibility of losses arising from such mistakes which is quite unfair. The employer should provide information to the contractor before the base date on the state of conditions of the construction site based on hydrological and subsurface conditions and also the environmental conditions. The contractor takes the responsibility of validating such information and making correct interpretation. In cases of design of works is again solely placed on the contractor, information about design coming from the employer shall not alleviate the responsibility of design from the contractor. It is assumed he is professional enough to have foreseen the results of certain decision and should have come up with a way of preventing it. He is assumed to have looked for necessary information regarding risks, contingencies and other circumstances that may affect the project. It is assumed that by signing the contract, the contractor takes the responsibility for having predicted the possible risks, difficulties or costs unless the contract states otherwise. However with the NEC, the clause governing the information from the employer is flexible in that the contractor does not take all the responsibility if he was misinformed. The owner takes responsibility of losses based on information provided by him. In this situation, the owner is accountable for the correctness of information he gives. He also takes responsibility of details given prior to signing of the contract. However, the contractor shall be held accountable of any omissions, errors or discrepancies on specifications, documents and drawing provided by the owner. Yet, the NEC model also states that the contractor should carefully examine the information availed to him to rule out biases and ambiguity before setting out to work. He should then put in writing that he entered into the contract being fully informed of the terms of service and having done a conclusive survey of the data given to him. From what has been discussed, it is quite obvious that the two contracts have differing principles regarding to the owner’s extent of accountability of information that he provides. In contracts involving large projects, the contractor can only obtain some fundamental information from the employer. It would thus be morally wrong to hold him accountable for incorrect information that may be given to him. Such information includes physical limits of the works, quality of source of energy meant to be utilized and the location of the site (BUNII 68). All this points to the fact that as much the information in the FIDIC contract may be applied in a construction contract, it has several flaws which leads to rise of disputes. NEC has however eradicated areas that are hotspots for disputes. The structural framework of these two contract forms differs. Whereas, NEC have provision for both contractor and employer design making it to be highly flexible and a single design to be applicable in electrical, mechanical engineering and building works. It is a family of contracts with an adjudicator, subcontract, partnering option and professional contractor option. Each of these contracts is come with flow charts and diagrams making it easy to follow (FORWARD 89). With the FIDIC however, conditions of contract are only applied in situations where the owner provides the design. If the design originates from the contractor, the contract provides a separate contract. Similarities between the two standard form contracts Both FIDIC and NEC are governed by the policy of being risk neutral. This means they overlook risks when deciding on areas to invest in (BUNII 78). They also both have an autonomous engineer or contractor to carry out the project. They also have the objective of presenting multi suites from which clients can work with. Summary Similarities Between FIDIC and NEC They both have the motive of: Being risk neutral They have an autonomous CA taking controlling the contract They are set out to provide multiple suites to provide procurement of various construction processes Differences Feature NEC FIDIC Liability of the employer on information he present The owner is liable and held responsible for mistakes arising from information that they give. However, the contractor takes responsibility of losses from discrepancies on information availed to him. The contractor takes responsibility of any information taken from the owner as he is believed to have gone through all the information at his hands as professional ensuring there are no biases. Dealing with unexpected situations The contractor is supposed to articulate his desire for deadline extension and increase of payment in quotation. He can also call for warning meeting in case of foreseen problems failure to which makes them accountable for any losses that could have been prevented by such meeting The contractor requests for time and money addition through written documents. Such documents should be approved by the project manager. Dealing with time issues Tend to tackle time issues proactively Depends on contractor entitlement following relevant events No of contraction forms Has come up with three different contraction forms for dealing with different situations Asserts that a single form is applicable in any construction contract. Adaptability and flexibility Show great flexibility in the causes on risk allocation and insurances of this risk. This is catered for in the various Contract construction forms. It is very rigid system and risk allocations are not bound to change that much from the way they have been articulated in the single contract form. Simplicity The clause on risk allocation and insurance are stated in very simple language and are Put together under a single clause. Many areas that would be a source of dispute have been left out thereby reducing the chances of disputes arising among the stakeholders used. The language used in articulating the clauses are put in hard jargon that sometimes can only be interpreted by a lawyer. This becomes a source of major dispute on risks and insurance cover. Clauses dealing with risk management and insurance are scattered all over the document. Conclusion Use of standard construction system has become a common thing in the current world. This is because they are convenient and easily accessible. Contractors and financial institutions are quite conversant with their use in spreading out risks which reduces risk contingency. Their use calls for training people in managing contract resulting in further efficiency. Interpretations of the clauses are put to test and even at times left to court elucidation. All this reduce the possibility of substandard performance since the parties involved are clear on their roles and responsibilities (FORWARD P,89). FIDIC’s mission is to uphold sound effective management of the engineering work. Most standard contraction forms are alike and draw a lot from each other. This is illustrate by the many similarities between the NEC and FIDIC as discussed above. Fundamental construction laws for many countries are also similar making application very easy. Work cited Bunni, Nael G, and Nael G. Bunni. The Fidic Forms of Contract: The Fourth Edition of the Red Book, 1992, the 1996 Supplement, the 1999 Red Book, the 1999 Yellow Book, the 1999 Silver Book. Malden, MA: Blackwell Pub, 2005. Print. Forward, Frances. The Nec Compared and Contrasted. London: Telford, 2003. Print. Jaeger, Axel V, and Götz-Sebastian Hök. Fidic: A Guide for Practitioners. New York: Springer, 2009. Print. Muir, Wood A. M, Wood A. M. Muir, and Wood A. M. Muir. Civil Engineering in Context. London: Thomas Telford, 2004. Print. Read More