The Construction Project of a Fashion Store - Case Study Example

Running Head: Management Contracting Management Contracting Introduction Different contracting mechanisms are available in today’s industrial world. Implication of this situation is that project specific contracting approaches must be developed as per the project’s unique needs. Therefore, before addressing the necessities of the construction project of a fashion store in the heart London, we will have to examine the different contract strategies available. Figure 1: Management contracting interrelationships (Source: The Royal Institution of Chartered Surveyors, 2012) Comparative Analysis (a) Design, liability, and possible incorporation of sustainability Under the Design & Build framework, design and liability issues have been covered through the subsection of Employer’s Instructions (Clauses 3.5 to 3.15). Thus, the contract owner is not supposed to have any professional level architectural knowledge. Hence, the contractor’s responsibilities are considerably increased. (JCT, 2011a) Unlike Design & Build, Standard Building framework does not give a broader treatment to the contract owner. Instead of delegating the power of instruction onto the employer (as done in Design & Build), it is delegated onto Architect or Contract Administrator. This specific treatment may favour the contractor in a complex engineering project on the basis of mutual professional understanding. Furthermore, sub-contracting issues are more directly covered by Clause 3.23, which can help the contractor to transfer certain liabilities. (JCT, 2011b) But NEC3 has a more flexible approach, particularly in the context of the project of a facility such as the fashion store. In the terms as given in Clause 10.1, the main parties are employer, contractor, project manager and supervisor. For developing a fashion store, there is not guarantee that the project manager will certainly have architectural or engineering knowledge. So if the task of architectural and engineering supervision is delegated to a separate supervisor with professional qualifications, then both the employer (the client) and the project manager will be able to communicate with the contractor more effectively. Regarding liability, Design & Build covers the issues under Clauses 6.1 to 6.3 (JCT, 2011a). In these clauses, liability of errors in initial design and time calculations is delegated directly to the contractor. In Standard Building contract, design issues are somewhat strictly addressed under the sub section dedicated to the issue of “work not in accordance with the contract” (JCT, 2011b). Contextually, design specific liabilities are covered in Clause 2.19. Both of the mechanisms can be very helpful in designing the current fashion facility. However, NEC3 cannot help the client in handling the design and liability issues. The optional clause of X 15 in NEC3 can be explained as dedicated to delimit the “contractor’s liability for his design to reasonable skill and care” (New Engineering Contract, 2005, p. 52). Nevertheless, NEC3 is highly compliant with the recent UK building construction regulations that emphasise sustainability. This is established by the Clause 27.4 which states that the contractor must act according to “the health and safety requirements stated in the Works Information” (New Engineering Contract, 2005, p. 8). However, Design & Build framework addresses sustainability more flexibly in Schedule 2, Clause 8, while Standard Building framework addresses this issue in Schedule 8, Clause 2. Unlike NEC3, agreement specific revisions are allowed by JCT that may not always comply with the Health and Safety Executive guidelines. (b) Cooperation and buildability Issues regarding cooperation and buildability have been addressed under the Schedule 2, Clause 7 in Design & Build contract (JCT, 2011a). These issues are addressed under Schedule 8, Clause 1 in Standard Building contract (JCT, 2011b). In both the cases the language is somewhat similar since the generic term Collaboration has been used in both the documents and interpretation can be flexible according as agreement specific parameters. But NEC3 has a different approach as explained below: “The Employer, the Contractor, the Project Manager and the Supervisor shall act as stated in this contract and in a spirit of mutual trust and co-operation.” (New Engineering Contract, 2005, p. 8, Clause 1, Action 10.1) (c) Speed and timeframe In Design & Build framework, first of all necessary conditions have been clarified with the help of definitions covered under Clause 1. Under Clause 1.1, it has been declared that “the Date for Completion of the Works or of a Section as stated in the Contract Particulars or such other date as is fixed either under clause 2·25 or by a Pre-agreed Adjustment” (JCT, 2011a, p. 25). Again, asking for extensions in time has been subjected to evidence based approval by Clauses 2.23 to 2.25. The Standard Building framework has also taken up a similar approach as Design & Build framework following somewhat the same set of definitions. Yet arbitration mechanisms can be regarded as more flexible in Standard Building, since Clause 1.9.1 regarding final certificate requires professional supervision instead of employer’s discretion. (JCT, 2011b) However, in NEC3, the core Clause 3 covers almost all the issues regarding time management, giving the project manager (who is analogous to the contract administrator of JCT2011 frameworks) both responsibility and discretionary rights. (New Engineering Contract, 2005) In both NEC3 and management contracting with the help of JCT2011 Standard Building contract, the contractor has a certain degree of claim towards adjustments and allowances. But Design & Build framework involves assigning definite time periods to schedule definite tasks as fast as possible. (d) Ease of administering the contract In this section, the main finance related clauses will be discussed with regard to the factors like payment, variations, insurances, bonds, etc. Both JCT Design & Build and Standard Building cover the factors like payments, variations, fiscal damages, etc. as per the specification regarding a separate section under Payments. In Design & Build, Clause 4.4 to Clause 4.12 would specify the payments, certification and noticing parameters. In Standard Building contract, the Section 4 on Payments is used for these purposes. However, there are two unique clauses as compared to Design & Build. Clause 4.1 covering work included in contract sum is not present in Design & Build. Also, Standard Building framework has additional Clause 4.5 which explains final adjustment mechanisms. Both these frameworks have Section 6 dedicated to Injury, Damage and Insurance issues. In Design & Build, retention bond is explained in Clause 4.17. In Standard Building, retention bond is covered in Clause 4.19. (JCT, 2011a; JCT, 2011b) In NEC3, payment processes covering issues like liquidation, insurance, variations, etc. are covered under the core Clause 5 with specific mechanisms included in Clause 51. Since final decisions regarding payments and fiscal affairs are to be taken by the project manager, chances of confusion are less. Furthermore, the optional clause of X 13 is dedicated to performance bond system which can considerably speed up a project and save time for our client. (New Engineering Contract, 2005) Conclusion In choosing a suitable contract strategy, project specific necessities should be the ultimate deciding factors. Final Recommendation The new property for enterprise flagship is essentially a small scale civil engineering project where lots of utilities like lighting, air conditioning, interior designing, etc. will be required. Moreover, it is going to be a sophisticated industrial setup. Therefore, sustainability issues will be particularly examined by the government authorities during passing the construction plan. Therefore, the client must go for NEC3. Unlike the Design & Build and Standard Building frameworks from JCT, NEC3 has a core Clause 27.4 covering sustainability issues like health and safety. On the other hand, JCT frameworks have some flexible clauses covering this topic and lack effectiveness. NEC3 has special instruments like Professional Services Contract (PSC) and Framework Contract (FC) to consult professionals other than engineers and architects directly (New Engineering Contract, 2005). The JCT2011 frameworks do not cover these issues exhaustively. Some experts (e.g. Clamp, 2007) hold Design & Build can speed up a project. Using NEC3 too, a project can be speeded up. By using the optional Clause X 7, delay damage issues can be handled effectively with NEC3. Furthermore, if Clause X 15 appears to be problematic, it can be replaced by Clause X 17 to compensate low performance damages. List of References Clamp, H. and Cox, S. 2007, Which Contract? Choosing an Appropriate Building Contract, Marylebone: Royal Institution of British Architects New Engineering Contract. 2005, Procurement and Contract Strategies, Institution of Civil Engineers and Ben & Bain Ltd: London and Glasgow JCT. 2011a, Design & Build Contract. London: Sweet and Maxwell JCT. 2011b, Standard Building Contract.. London: Sweet and Maxwell The Royal Institution of Chartered Surveyors. 2012, 2.6 Management Contracting - Current Consultations – RICS. [online] Available: https://consultations.rics.org/gf2.ti/a/296834/28233/PJPEG/-/Figure%205.jpg. [Last accessed on 10th March, 2013] Read More