Contractual Procedures for Building - Essay Example

? CW2: Contractual Procedures a. The traditional ‘Build Only’ procurement segregates the design and construction aspects. The employer/owner directly employs the contractor and professionals (designers, project manager) under separate contracts. Professionals are hired under independent contracts for preparing design and specification (Bould, 2012) (APUC, 2012). This represents contractual relationships under a standard building procurement. The employer enters into separate contracts with the designer and the contractor. When the designer completes the design, the contractor will carry it out. The employer has direct control over the design, cost and quality elements; however, the process of designing becomes more time-consuming. As the contractor was excluded from the design stage so the employer retains the risk for any mistakes or errors in the design (Gerrard, 2012). On the other hand, in the ‘Design and Build procurement’, the contractor is assigned the responsibility for both, designing and construction by the employer. All the Design and Build strategies have the same parameter, that the contractor will become responsible for design and construction of the project at a given point of time for a fixed amount of money. The client/employer is required to seek professional help for preparing a detailed statement of requirements before signing a contract with the contractor. Thereafter, the contractor will be liable for design, labour, material which will lead to a single point of responsibility. The contractor’s efficiency will escalate as he exercises control over design and construction. Moreover, any arguments over design will be between the contactor and professionals instead of the employer and professionals. 1.(b). Engineers are going to be appointed by the employer or contractor depending on the procurement model. A chief engineer should be nominated if several engineers from various fields are to be appointed. Engineers should be given authority and access if the design is based on a process of technology, to which the employer holds licence. Under the standard build procurement, an engineer is required to meet the employer’s needs for inviting tenders. On the other hand, in a design and build procurement, the role of an engineer is based on providing a performance specification, standards for material input and design which will be included in the Works Specification (NEC Contract, 2012). To be more precise, a structural engineer is responsible for designing the structure of a building together with drainage and installation. He will also provide professional and expert opinion to the client about the structure and cost of every part of the building. His work must co-ordinate with the architect and services engineer. A services engineer’s role is to design and identify mechanical and electrical services keeping in view the employers specifications. They are to provide advice on matters like environmental issues, sustainability and cost. Following novation, engineers will be responsible to the contractor instead of the employer (APUC, 2012). 1.(c). Compensation events are those which do not arise because of a default on the contractor’s part and therefore entitle him to compensation in price and time. A resource forecast is used to assess the impact of any compensating event on cost and time. Compensation event pass through notification, quotation, revision and implementation stages. An event should meet the criteria mentioned in Clause 60 of NEC3 to be treated as a compensation event (Eggleston, 2006). Clause 60(1) states that: “A Project Manager gives an instruction changing the works information except: a. A change made in order to accept a defect or b. A change to Works Information provided by the Contractor for his design which is made either at his request or to comply with other Works Information provided by the Employer.” In this scenario, the Employer has instructed the Contractor to provide a design on an arch detail which was not included in the original contract works information or the agreed contract. Keeping the above clause in mind, this qualifies for a compensation event since the design of an arch detail is not concerned with removing any defect. In addition, neither was it provided by the Contractor as a change in design nor will it affect compliance with other works information given by the Employer (GMH Planning, 2012). Clause 61.3 states that the Contractor should inform the Project Manager of a compensation event, in case where he considers an event as a compensation event or the project manager fails to notify him. Therefore, the Contractor should notify the Manager, who will have to respond shortly. If the contractor fails to notify the Project Manager within 8 weeks after becoming knowledgeable of a compensation event, then he will not be permitted to change prices, time schedule or key dates. If the Manager agrees, then the Contractor should submit a quotation along with a revised programme (Eggleston, 2006) (Gould, 2007). 2(a). Clause 8.11 of JCT grants the right of termination of contract to parties, the employer and the contractor. One of the reasons of termination mentioned in this clause says” “instructions issued in regard to correction of discrepancies, variations or postponement of work where this resulted from negligence or default of statutory undertaker”. In this case, the Employer issued a notice concerning some contract defects identified. However, the Contractor declined to rectify the errors and instructed the Employer to remove his goods from the site. This provides evidence of failure to comply with instructions delivered concerning correction of statutory obligations. Another integral provision in this regard is that a termination notice should not be given “unreasonably or vexatiously”. Law specifies that termination will be deemed reasonable if the contractor fails to comply once or twice so it can be concluded that the Employer is justified in his claim (Constable & Chambers, 2009). Before issuing the termination notice, the employer is required by law to send a notice to the contractor identifying the defect, at least 14 days before serving a termination notice. The Employer has fulfilled this condition because 28 days have elapsed since he delivered a notice of defect in the contract to the Contractor. Now he should issue a termination notice, pointing out the reasons for termination. If the Contractor fails to rectify the defect within 7 days from the date of notice, then the employer can issue a second notice terminating the contract. Law requires an employer to serve the termination certificate by actual, special or recorded delivery. The first notice may be presented by an architect/administrator but the second one must be served by the Employer (GMH Planning, 2012). 2.(b). The repercussions of termination depend on the reason and the party opting for it. JCT states that after terminating a contract, an employer can hire and remunerate others to perform the remaining work. It directs the contractor to vacate the work site and the employer to take its possession. This is because the contractor is not entitled to a licence to stay on a site after termination (Patterson, 2007). The contractor does not have a right to receive any sum for direct loss or damage as a result of termination. Clauses that previously required payments to be made or site to be temporarily given to the contractor do not apply any more. Law dictates that the employer is not required to make any payments to the contactor after termination, even if these relate to previously issued certificates. Only if the defects are eliminated or the work is completed, will the contract become entitled to receive payment. As in this case, the Contractor has refused to remove the defect so he obviously not entitle to receive payments for the defective goods (Eggleston, 2006). In fact, an account is required to be drawn up after the works have been completed or the defect corrected. It states the amount of loss or expenses borne by the employer due to termination, the amount paid to the contractor and the amount which would have been paid if the contractor completed the project. The resulting figure would determine the amount due to the employer or contractor. In this situation, the amount is likely to be payable to the employer. This will actually be the difference between the actual cost and the initial contract. So the Contractor is not entitled to payment for defective goods but rather liable to the Employer (Chappell, 2007). Word Count: 1398 References APUC, 2012. Guide to Procuring Construction Projects. [Online] APUC Available at: HYPERLINK "http://www.apuc-scot.ac.uk/uploads/Docs/pdf/Guide%20to%20Procuring%20Construction%20Projects%2029-6-11.pdf" http://www.apuc-scot.ac.uk/uploads/Docs/pdf/Guide%20to%20Procuring%20Construction%20Projects%2029-6-11.pdf [Accessed 12 April 2012]. Bould, M., 2012. Forms of Procurement - Communications and Contractual Relationships. [Online] Available at: HYPERLINK "http://www.caribbeanconstruction.com/index.php?option=com_content&view=article&id=361&Itemid=5" http://www.caribbeanconstruction.com/index.php?option=com_content&view=article&id=361&Itemid=5 [Accessed 12 April 2012]. Chappell, D., 2007. Understanding JCT Standard Building Contracts. 8th ed. London: Routledge. Constable, A. & Chambers, K., 2009. The JCT Contract in a Cold Climate. [Online] King’s College Construction Law Association Available at: HYPERLINK "http://www.kccla.org.uk/pdfs/JCT%20Contract%20in%20a%20Cold%20Climate%201_Notes.pdf" http://www.kccla.org.uk/pdfs/JCT%20Contract%20in%20a%20Cold%20Climate%201_Notes.pdf [Accessed 12 April 2012]. Eggleston, B., 2006. The NEC 3 Engineering and Construction Contract: A Commentary. London: Wiley-Blackwell. Gerrard, R., 2012. Relational Contracts - NEC in Perspective. [Online] Lean Construction Available at: HYPERLINK "http://www.leanconstruction.org/lcj/LCJ_05_006.pdf" http://www.leanconstruction.org/lcj/LCJ_05_006.pdf [Accessed 12 April 2012]. GMH Planning, 2012. ECC Clause 60.1 – Compensation Events. [Online] Available at: HYPERLINK "http://gmhplanning.co.uk/nec3-guidance-notes/ecc-clause-60-1-compensation-events/" http://gmhplanning.co.uk/nec3-guidance-notes/ecc-clause-60-1-compensation-events/ [Accessed 12 April 2012]. GMH Planning, 2012. NEC3 Guidance Notes. [Online] Available at: HYPERLINK "http://gmhplanning.co.uk/nec3-guidance-notes/introduction/" http://gmhplanning.co.uk/nec3-guidance-notes/introduction/ [Accessed 12 March 2012]. Gould, N., 2007. NEC3: Early Warning and Compensation Events. Research Report. London: Fenwick Elliot Fenwick Elliot. NEC Contract, 2012. Engineering and Construction Contract (ECC). [Online] NEC Contract Available at: HYPERLINK "http://www.neccontract.com/documents/contracts/Guidance%20Notes/Engineering%20and%20Construction%20Contract.pdf" http://www.neccontract.com/documents/contracts/Guidance%20Notes/Engineering%20and%20Construction%20Contract.pdf [Accessed 12 April 2012]. Patterson, R., 2007. NEC3: Introduction to NEC contracts. 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