Construction Contract Preparation and Management

From concept to completion

Geoff Powell

• Publisher: Bloomsbury Visual Arts
• Year: 2016
• Print ISBN: 9781137511140
• eBook ISBN: 9781350306349
• Edition: 2
• Topic: Diritto
• Subtopic: Diritto edilizio

This practical, user-friendly textbook starts at the beginning of construction projects and makes important connections between stages, accompanied by helpful illustrations and real-life industry examples. Contracts and agreements underpin the whole construction industry, and yet many graduates and young professionals do not realise just how important they are. Misunderstandings and mistakes can be extremely expensive and cause considerable delay.The textbook provides extensive explanation of the most commonly used forms of contract, an introduction to the general principles of contracts, and the implications of contract law and negligence as they affect the construction professional. Written by an author with extensive previous industry experience before he became a lecturer, this text is aimed at students of Contract Management/Procedures at both undergraduate and postgraduate level on both Civil Engineering and Construction courses. It is also helpful for starting professionals. New to this Edition:
- Often-overlooked aspects of NEC contracts such as contractor design
- Coverage of NEC ECC 2013, JCT 2011, CDM 2015 and the revised Public Contracts Regulations 2015
- More extensive advice on money, time and programmes and their importance

1

The construction industry

Aim

This chapter introduces the concept of the construction professional and explains the nature of construction.

Learning outcomes

On completion of this chapter you will be able to:

>>Relate the basic nature of the construction industry.

>>Describe how this has produced the characteristics of the construction industry.

Introduction

Imagine for a moment a world without ‘us’. A world without safe water to drink, sewers, waste and sewage treatment; electricity and gas supplies, telecommuni-cations; roads, railways, airports, canals, docks and harbours; schools, hospitals, offices, shops and factories; houses; art galleries, churches and cathedrals; and you see a world without the construction professional. You see a world without civilisation.

But construction is not a straightforward endeavour. It is very complex, with numerous interconnecting professions and activities requiring skill, knowledge, coordination and expertise. This is the realm of the construction professional who works within the built environment.

This book seeks to describe the activities of the construction professional, the importance of these and their interrelationship. Much of the academic training of civil engineers concentrates on design modules, often mathematical, largely because of their complexity and difficulty. Although students of the building professions have a broader academic training, they still spend a great deal of time learning about design and its application. However, to convert these designs into constructed assets requires a very different skill set based on contracts, management and people – concepts that this book attempts to explain.

Whilst it is possible to study each contractual aspect in isolation, an understanding of their connectivity and mutual dependence is crucial to visualising how construction projects are conceived, designed and constructed. Critically, too, it is the employer (for example, the local council, the supermarket chain, the electricity company) who pays for the construction project. So ensuring that the project truly delivers the requirements of that employer is both a crucial role and a major challenge for the construction professional. This will be explored in detail in this book.

The construction industry

The construction industry covers an enormous range of projects, from those of small value to projects costing billions of pounds; from simple to very complex technology; from projects lasting days to those lasting years. Despite this diversity, all projects have certain common features. Once a construction professional understands these features, he or she can apply them to projects of great variety.

Some characteristics of construction

It is important to understand why construction and the construction industry are different from manufacturing. This understanding can help us appreciate the need for different processes and skills in our industry. Of course there are simi-larities and there are many initiatives to bring some manufacturing thinking (such as standardisation and prefabrication) into the construction industry, to improve its efficiency. We all buy manufactured products: cars, clothes, televisions, computers, mobile phones, pots, pans and kettles. At first, it is easy to think that the construction industry is the same as manufacturing in that both processes produce a tangible end product. However, construction does in fact have many differences, which construction professionals need to appreciate if they are to be successful in their endeavours:

•The construction industry is characterised by a wide range of contributing professions, each with its own entry standards, ethical standards and professional pride.

•‘Civil engineering’ and ‘building’ are seen as separate professions in the UK, and their practitioners have different academic training at our universities.

•The industry is ‘trade based’, with a high number of temporary and mobile workers who actually carry out the construction itself, whereas manufacturing tends to have employees who work together from year to year.

•There is an industry shortage of competent labour, and construction and professional personnel.

•Unlike manufacturing, which sells ranges of products to a multitude of customers, construction projects usually have only one customer – the employer – but many users and other stakeholders.

•The EU Procurement Directives, applying to all ‘public procurement’, have an enormous effect on tendering and selection, materials specification and employers’ selection processes for suitable suppliers, manufacturers, contractors and consultants, particularly in the civil engineering side of the industry (see Chapter 11).

•Where these directives do not apply, contractors often bid (tender) for projects on a ‘one-off basis’.

•In ‘one-off ’ projects teams often come together for the first time. This can make initial communication difficult, so misunderstandings are frequent; whereas in manufacturing teams the working relationships tend to be more permanent.

•Contracting has a low ‘start-up cost’, compared with manufacturing. This can result in new entrants who may be less experienced and competent than established companies and have more potential for insolvency.

•Most construction projects are built ‘outside’, not in a factory environment. Thus ground conditions, weather and access issues produce much of the ‘risk’ inherent in construction.

•Construction projects often require ‘temporary works’, to facilitate the construction of the ‘permanent works’. These temporary works are usually designed by the contractor and are removed before contract completion.

•Many projects have a high individual impact on the environment and the public, and hence there is much legislation that regulates and controls construction activities. By contrast, in manufacturing the appropriate legislation forms part of the initial design of a product, which is then repeated many times during production.

•Construction projects usually require the lease or purchase of land.

•All projects require adequate and safe access. The impact of projects on local road networks must be considered both during construction and when completed.

•Environmental and ecological factors must be considered, both for ethical reasons and to satisfy regulatory bodies (see Chapter 6).

•Sustainability and minimisation of the carbon footprint of our projects is becoming increasingly important and the subject of new legislation.

•Construction is a dangerous activity, and there is a constant need to improve health and safety (see Chapter 7).

The result of these characteristics of construction

These characteristics of construction produce many of the processes and procedures which form an essential part of our industry. It is important for construction professionals to be familiar with them in order to design and build successful projects.

•An appropriate and comprehensive investment process is essential to control projects from concept to completion (see Chapter 2).

•The identification and management of stakeholders is essential (see Chapter 3).

•Thorough site investigation is indispensable (see Chapter 6). This investigation occurs prior to the preparation of the drawings and other documents that form the contract.

•Contract strategies must be selected to match the individual features of projects (see Chapters 8 and 9).

•Acceptable and understood conditions of contract are essential so that the allocation of risk is clear (see Chapters 19 to 25 on NEC3 ECC and Chapter 26 on JCT SBC, two standard forms of contract much used in the construction industry).

•Contract documents must be clear, comprehensive and issued in good time (see Chapter 4).

•Fair and well-structured tendering procedures are necessary, to select appropriate contractors, designers and suppliers in the first place (see Chapter 5).

•Payment mechanisms must be efficient, fair and understood (see Chapter 12).

•Good project management is fundamental if projects are to be run effectively (see Chapter 14).

•Clear, comprehensive and up-to-date design and construction programmes are essential. They need to cover all activities and show their durations, criticality and interrelationship (see Chapter 14).

•Team formation and team working across the whole project are essential to avoid misunderstandings, disputes and unnecessary cost. Team working only happens when the people involved in the project make a clear commitment to it, and constantly strive to improve it (see Chapter 9).

•Health and safety and the Construction (Design and Management) Regulations 2015 are of great importance. Their proper application is a legal requirement on all projects, both domestic and commercial. Chapter 7 deals with these regulations.

•Construction projects usually have an impact on the environment and there is extensive and increasing legislation to improve the activities of construction in this area. Construction professionals should always seek to improve the environment with their projects, and make them as sustainable as possible.

Mechanisms and enablers

Construction professionals are involved in all stages of developi...

Table of contents

• Cover
• Title Page
• Copyright
• Dedication
• Abstract
• Contents
• List of Figures
• Acknowledgement
• Preface
• Publisher
• 1 The construction industry
• 2 The investment process
• 3 Parties and stakeholders
• 4 An introduction to contracts
• 5 Tendering and contractor selection
• 6 Site investigation
• 7 The Construction (Design and Management) Regulations 2015 (CDM 2015) and safety
• 8 Contract strategies: separated, integrated and management
• 9 Contract strategies: partnering and commercial arrangements
• 10 Designers and design contracts
• 11 Framework agreements and the EU Procurement Directives
• 12 Pricing and payment mechanisms
• 13 Methods of measurement and BoQs
• 14 Time and programmes
• 15 Contract law
• 16 Liquidated damages
• 17 Negligence
• 18 Construction contracts
• 19 NEC3 ECC (2013) fundamentals
• 20 NEC3 ECC (2013) preparing the contract
• 21 NEC3 ECC (2013) core clauses one and two
• 22 NEC3 ECC (2013) core clauses three and four
• 23 NEC3 ECC (2013) core clauses five
• 24 NEC3 ECC (2013) core clauses six
• 25 NEC3 ECC (2013) core clauses seven to nine
• 26 JCT Standard Building Contract SBC11
• 27 Dispute resolution
• Appendix
• Index