Construction Project Management - Case Study Example

Executive Summary The project provided a brief introduction with an overview on what the researcher was attempting to discuss in the main body. The discussion part provided a critical analysis of the topic about Sir Egan’s perspective on the rethinking construction in relation to legal obligations and resolution of disputes. Within the discussion part, the researcher provided significant purpose that the formal contract document plays in the construction project management. The researcher also evaluated the legal and financial risks in regard to partnering rather than a formal contract in business transaction process. The possible dispute resolutions processes were included such as using a formal contract law within partnering business. This is essential because the formal contract will help in resolving disputes that may arise in case one violates the contract laws. Lastly, the conclusion was included and it offered a summary of the research project. Construction Project Management Introduction Partnering is a collaboration method that has been inexistence for many decades in the construction industries globally. For the past decades, construction industries have implemented formalized and acceptable standard documentations for using in the partnering arrangement. In the rethinking process report produced by Sir John Egan about the construction task force, Egan argued that effective partnering process does not rest on contracts. This is because contractors can add to the project costs and even they cannot add value to the customer. However, in case the relationship between the employee and the business, developer or contractor is soundly based, as well as, both parties recognize the need for mutual interdependence; the formal contract should steadily be obsolete (Rethinking Construction 1998, 199). Construction industries have attempted to make significant changes in the construction management costs in order to improve the performance level in the construction industries. Although formal document are used as a legal binding document for solving disputes in the construction industries, sound relationships between a contractor and an employee based on mutual interdependence can lead to cost reduction; thus improving the project performance. Discussions Partnering has become a significant aspect in the construction industries; thus, it does not only rest on contracts but also creating sound relationships between a contractor and an employee. This is based on the mutual interdependence leading to cost reduction; thus improving the project performance. Contracts and partnering arrangement are made between the contract developer and an employee (Thomas and Thomas 2008, p. 23). Thus, construction companies develop varied standard forms in the industry, which can be used for partnering in order to avoid potential disputes that may arise during the construction process. For instance, partnering charters are among the standard of recognized forms of contracts employed in the construction project management. Partnering does not only involve systems or methods employed in the construction project management, but is about empowering people to perform the work more efficiently in order to achieve the desired goals of the company (Pratt 2012, p. 79). Merging this in the joining process in the construction agreement is effective because they can contribute to the desired welfares. The benefits can be achieved in case both parties maintain good and mutual relationships as intended. The purpose of partnering process is to complete the project efficiently; hence satisfying both parties. Additionally, successful partnering can resolve disputes and also offer varied benefits to both the clients and the contractors. Bennett, Peace and Chartered Institute of (2006, p. 45) argue that partnering is an effective way of tackling construction projects; thus enabling contractors and clients to achieve higher levels of efficiency. For instance, the benefits realized by the clients can include reduction cost or better value of the client’s money, achieving quality work, less conflicts, less risks and speedy delivery of work. Other benefits also include fewer complaints or claims, effective communication, less bureaucracy, effective understandings and tolerance to any problem that may arise (Fewings 2005, p. 78). On the other hand, the benefits of the contractor include increased profits, greater certainty of workload, less conflicts, effective communication and understandings. The contractor can also be able to make effective decisions and reduction of competitive tendering process; thus reducing operating costs. However, contracts or formal documents are made to allocated authorities for varied reasons. The purpose of the formal document is to eliminate any vagueness concerning the terms and conditions applied in construction project management. This document is written with an aim of helping the parties involved to solve disputes in case they arise in the construction process. It also defines the duties or tasks of both parties in the construction process. This is crucial because it will enable parties to solve conflicts of interest that may arise and also avoid misinterpretations of the contract. In most cases, many official documents contain introduction that defines significant terms employed during the agreement in order to avoid misinterpretations. This is crucial because it helps in elimination of the joblessness in the use of recurrent language. Additionally, parties involved in the contract are identified and complex terms substituted to avoid confusion throughout the document. In most cases, many official agreements will include supplies that define the breach of the contract. Many of the formal contracts also contain a clause that illustrates the way in which parties involving in the contract can return to the agreement restrictions. The provisions are included that reveals, which laws, should govern the enforcement and interpretation of the contract (Dykstra 2011, p.122). The involving parties should also sign the amendments to the informal document. Most contracts contain an arbitration clause because litigation can be costly and time consuming for both parties involving in the contract. Therefore, arbitration clauses are crucial because they will help in resolving disputes that may arise due to interpretation, contract bleaching and performance issues. Therefore, such closes may stipulate the way mediation needs to be conducted. Despite the benefits realized to both contractors and clients from effective partnering in the construction process, the client may begin to wonder whether he is paying too much due to non-competitive pricing. Although partnering is crucial, the contractor can be comfortable and reliant upon few clients without too much competition and innovations. Thus, the client may few such contractors as people who can add considerably to the project costs and often add no value for the client (Construction Task Force and Great Britain 1998, p.6). Contrarily, the contract can become disappointed by arguing that the client expects too much. Thus, the patterning arrangement may fail due to misunderstandings of one another in the business process. Thus, proper administering including being open, trustworthy, co-operative, good faith and respecting the responsibilities of each other are effective in the partnering process. In the report of the rethinking process, Egan wanted to reveal the request of best applies that an industry and its customers can cooperatively employ to increase the functioning level. The report proposed the creation of movement change that should be dynamic, inspirational and non-institutionalized for radical and continuous performance in the construction industry (Potts 2008, p 20). The report contributed to further action of facilitating cultural change with an emphasis laid upon the need for improvement across the construction industry. The report encourages the construction industry to make radical changes in order to achieve their objectives effectively. Egan recommended that the industry should rethink construction in order to improve the performance. This is through matching the performance of the client-led manufacturing industries, integration performance process and encouraging teams to introduce the key driver for organizational change (Great Britain 2001, p. 72). Egan further argued that the industry should work through long-term relationships by partnering; thus improving the performance level. Potts (2008, p 21) argues that rethinking construction have been met by varied construction clients; hence contributing to effective business performance. For instance, the UK government policies have now increased the need for public sectors to fully execute effective principles for rethinking construction, which have been proven as the best practices. These principles aim to accelerate the change in the construction project and improve the management in the construction process; thus meeting the expectations of clients and stakeholders effectively. The principles also encourage the construction managers to work within the framework of laws, codes and standards established for the purpose of creating effective performance (McCarthy 2010, p.83). Therefore, the construction managers should understand the impact of the project on the environment; thus establishing corporate laws and regulations to achieve the demanding goals of their clients effectively. Partnering is not a solution to the contractual problems, but effective partnering can reduce problems that may arise in the proposed project. Carr and Forum on the Construction Industry (2000) argue that partnering should be employed when it is mostly likely to be effective. It can be used in large construction project management where the risks cannot be fully determined or measured effectively. Thomas and Thomas (2008, p.132) argue that partnering can be vogue in case managers implements partnering model, but fail to understand where to start from. Thus, the authors reveal varied aspects of partnering relationships starting from scratch in order to achieve success. This is crucial because it will contribute to success; hence enabling the construction industry to achieve their stated objectives. There are financial risks of relying on relationship rather than a formal contract in commercial transaction process. This may arise due to varied aspect such as mistrust, lack of effective communications, poor decision making among the business developer and the clients. Therefore, disputes may arise which may contribute to financial risk; hence effective or successful partnering should have a formal contract revealing the way decision will be made and the way disputes would be resolved (Blockley and Godfrey 2000, p. 69). However, in the case where contract law is applied, the cost of using agreement law may be more palpable and profitable. For instance, contract legal action in some countries such as the United Kingdom and United States are often an expensive game of chance. This is because when other fails to perform, aggrieved parties may not be sure whether they will win or succeed a contract lawsuit. Many possible plaintiffs may accomplish that they cannot a ford to roll the cube. Moreover, such contract laws in UK and Untied States are not predictable and certain. This is because much of them rest upon hard-to-apply qualitative standards; hence, the contract lawsuit may be costly, fail or put the company at a financial risk. Sometimes such contracts are hard to prove facts because justifiable expectations may be rushed on the burden of proof or may be exposed to statute of frauds (Kloppenborg 2009, p. 34). Therefore, agreement terms are substance of making choice but in most cases, supplies enter a contract by a trick through a formal agreement. Pratt (2012, p. 122) argues that the contract law are necessary in the construction project management because it reduces business risks and helps in resettling the disputes. The major reason why financial marketers depend on contract law is because they want to secure their business and reduce financial risks. Thus, monetary contracting usually involves significant deal risks and requires steady and predictable agreement protection and effective contract declaration. Such guarantee is most probably best offered by efficient formal contract law in order to protect both project the developers and the clients. Many commercial businesses rely on partnering but business seldom requires contract law for securing finance. This is because the benefits of agreement law overshadow its very high prices. Therefore, business requires formal contract law because transaction rests on trust, long-term sanctions of continuing relations and other aspects (Lutchman 2011, p. 97). These are crucial but certainly, there are costs that are encountered in creating or maintaining trust or dealing with people that one has maintained a long-term relationship with. Many businesses fail to understand the terms and conditions of the contract; hence, they may end up facing varied problems in the contract litigation issues (Roe and Jenkins 2003, p. 101). Thus, it is crucial for business people to read first and understand the contract law to know what it requires or entails. This is essential because it will help them to overcome contract disputes and litigation troubles that may lead to varied problems. Conclusions In conclusion, although formal document are used as a legal binding document for solving disputes in the construction industries, sound relationships between a contractor and an employee based on mutual interdependence can lead to cost reduction; thus improving the project performance. Businesses should understand that partnering is not the effective problems to contract issues, but effective partnering may contribute to successful business management. Partnering has become a significant aspect in the construction industries; thus, it does not only rest on contracts but also creating sound relationships between a contractor and an employee. Successful partnering can resolve disputes and also offer varied benefits to both the clients and the contractors. The main purpose of the formal document is to eliminate any vagueness concerning the terms and conditions applied in construction project management process. Parties involved in the contract are identified and complex footings substituted to avoid misperception throughout the text. Thus, partnering is not a solution to the contractual problems, but effective partnering can reduce problems that may arise in the proposed project. Varied financial risks of relying on relationship rather than a formal contract may arise in commercial transaction process. This may result due to mistrust, lack of effective communications, poor decision-making and many others. However, many commercial businesses rely on partnering but business seldom requires contract law for securing finance; hence improving business performance. Bibliography Blockley, D. I., & Godfrey, P. (2000). Doing it differently: Systems for rethinking construction. London: Thomas Telford. Bennett, J., Peace, S., & Chartered Institute of Building (Great Britain). (2006). Partnering in the construction industry: A code of practice for strategic collaborative working. Oxford: Butterworth-Heinemann. Construction Task Force., & Great Britain. (1998). Rethinking construction: The report of the Construction Task Force to the Deputy Prime Minister, John Prescott on the scope for improving the quality and efficiency of UK construction. London: Dept. of the Environment, Transport and the Regions. Carr, F., & Forum on the Construction Industry. (2000). Partnering in construction: A practical guide to project success. Chicago, Ill: American Bar Association. Dykstra, A. (2011). Construction project management: A complete introduction. San Francisco: Kirshner Pub. Fewings, P. (2005). Construction project management: An integrated approach. London: Taylor & Francis. Great Britain. (2001). Rethinking construction: An implementation guide for local authorities: implementation toolkit. England: Developed on behalf of the Local Government Task Force. Kloppenborg, T. J. (2009). Project management: A contemporary approach. Mason, OH: South- Western Cengage Learning. Lutchman, C. (2011). Project execution: A practical approach to industrial and commercial project management. Boca Raton: CRC Press / Taylor & Francis. McCarthy, J. F. (2010). Construction project management: A managerial approach. Westchester, Ill: Pareto -- Building Improvement. Pratt, M. G. (2012). Rethinking Identity Construction Processes in Organizations: Three Questions to Consider1. Oxford University Press. doi:10.1093/acprof:oso/9780199640997.003.0002 Potts, K. F. (2008). Construction cost management: Learning from case studies. London: Taylor & Francis. Rethinking Construction (January 01, 1998). “ The report of the Construction Task Force” Proceedings- Institution of Civil Engineers Municipal Engineer, 127, 4, 199-203. Roe, S., & Jenkins, J. (2003). Partnering and alliancing in construction projects. London: Sweet & Maxwell. Thomas, G., & Thomas, M. (2008). Construction Partnering and Integrated Teamworking. Hoboken: John Wiley & Sons, Ltd. Read More