Contract Managment For Engineers and Technical Professionals

July 26, 2022 | Author: Anonymous | Category: N/A
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Contract Management for Engineers Engineers and Technical Technical Professionals

FIDIC NEC3 JBCC & GCC

 

Outcomes

• Relevance of the fours suites of contracts • Contract, Law, & Formation

• The ‘works’ ‘works’ contracts contracts natural natural and incidental terms • Contract Management • Provisions of these contracts including, but not limited to, o o o o o o

Usage, formation and composition Communications (contract management) Instructions and changes (variations) Valuation and payment Compensation processes Disputes and Terminations

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Relevance Relev ance of the four suites of contracts CIDB Standardization Gazette July 2015

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CIDB Prescribed Standard Contracts

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Normativ Normativee Reference

2.1 Conditions of Contract for Construction for Building and Engineering Works designed by the Employer (“Red (“Red Book ”) ”) (1999) as published by the International Federation of Consulting Engineers (FIDIC). 2.2 Conditions of Contract for Plant Electrical and Mechanical Plant andand for Design-Build Building and for Engineering Works, designed by the Contractor (“Yellow (“ Yellow Book ”) ”) (1999) as published by the International Federation of Consulting Engineers (FIDIC). i.e mos most t of FIDIC FIDIC(“ Silver 2.3 Conditions of Contract for EPC Turnkey Projects New Suite - “First Edition 1999” ”) (1999) as published by the International Federation Book ”) of Consulting Engineers (FIDIC). • The Construction Contract • The Plant and Design-Build 2.4 Conditions of Contract for Design, Build and Operate Contract Projects (“Gold (“Gold Book ”) ”) (2008) as •published by the The EPC/Turnkey Contract International Federation of Consulting Engineers (FIDIC). • Gold Book • The Short Form Contract Centric Systems

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Normativ Normativee Reference 2.5 Contract for the Supply and Delivery of Goods as published by the Construction Industry Development Board (1019). 2.6 General Conditions of Contract for Construction Works (Third Edition 2015) as published by the South African Institution of Civil Engineering. 2.7 General conditions Of purchase as published by the Construction Industry Development Board (1018). 2.8 JBCC Series 2000 Principal Building Agreement (Edition 6.1: March 2014) as published by the Joint Building Contracts Committee. 2.9 JBCC Series 2000 Minor Works Agreement (Edition 5.1: GCC 2015 March 2014) as published by the Joint Building Contracts (Third Edition) Committee. Contract Centric Systems

 JBCC CIDB 6.1 Supply 6

 

Normativee Reference Normativ

2.10 NEC3 Engineering and Construction Short Contract as published by the Institution of Civil Engineers.

32.11 NEC3 Engineering and Construction Contract as published by the Institution of Civil Engineers. NEC3 • ECC3 2.12 NEC3 Professional Services Contract as• published ECSC3 by the Institution of Civil Engineers. • PSC3 • TSC3 2.13 NEC3 Term Services Contract as published by the • TSSC3 Institution of Civil Engineers 2.14 NEC3 Term Services Short Contract as published by the Institution of Civil Engineers Contract Centric Systems

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The Contracts, their components and formation

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Think of Contract Law and Contracts as being layered Incidental Contract - Text

Agreement

Nominate Contracts

Conditions of Contract

General principles

Specifications

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Six (6) Requirements Requirements Tool What is a Contract?

Contract is a binding legal relationship that may be defined as • An Agreement • Between two or more legally competent persons (often a buyer and a seller) • Intending to create binding obligations • To make some lawful and possible

performance • That Complies with any legal or agreed formalities (if any)

1. 2. 3. 4.

Agreement Contractual Capacity Intention to be bound Lawful

5. Possible 6. Formalities

 

Parties to a Contract

• Natural o o

Major  Minor 

• Artificial Company o o

Close Corporation

• Partnership • Joint Ventures • Agents

 

Agreement Offer  

Statement of Intention   

Communicated Definite and Complete Contemplate Acceptance

Acceptance   

In Response to Offer  Unconditional Communicated 





Open for Acceptance

Revocability of Offer    

   

Rejection Counter offer  Acceptance is unclear or not communicate in the time or manner stipulated Expiry of the prescribed or reasonable time Revocation Death or legal incapacity of either party Impossibility



     

By Offeree To Offeror 

Manner Prescribed (if any) Express Tacit Postal (Expedition) Deemed Principle of Finality of Acceptance

 

Lawful & Possible Lawful • •

conclusion performance

• • • •

object legislative enactment common law good morals/public policy

Possible • Absolute •  Ab Initio / Supervening • Relative • Obligation o o o

alternative facultative generic

• Divisible

 

Formalities Generally None

Verbal

Implied

Tacit

 

Writing Alienations of land Performance, Schedule,

• • Credit agreements • Contracts of apprenticeship • Executory donations • Contracts of suretyship • Government Tendering

          

Risk 

Cost Primacy of Verbal

Form of Written Agreements Parol Evidence Rule Alterations Typing Errors Signature Integration Battle of the Forms Letter of Intent

 

What is a works contract?

Essential Terms • Agreement to let and hire work • Work relates to a corporeal thing • Time (agreed or determinable)

Natural terms • Duties of Contractor (Lessee) o o

o o o o o

Commence work in a reasonable time Complete work in a reasonable time Use reasonable skill, care and diligence Use suitable materials Comply with legislation Repair patent defects Warranty against latent defects

o

• Remuneration (agreed or determinable) • Independence

Return premises in similar condition in which received

• Duties of Lessor (Employer) o

Provide access to site in reasonable time Co-operate to enable completion and

o

delivery Pay Remuneration

o

 

Contracts are projects

• Project Knowledge Areas o o

Integration Management Scope Management

PMBoktm

o o o o o o o

Time Management Cost Management Quality Management Human Resource Management Communication Management Risk Management Procurement Management

Project Knowledge Areas

 

Contract Risk Triangle of Contract Scope [aka Performance Quality Technical]

Risk Time Schedule Negative Mal-

Cost

performance

Damages

 

Contracts are …

• Business inputs and outputs • Risk & Quality Management documents • Customer services tools

Accept

• Performance management tools Transfer

Avoid

Control

 

The Basis of Contract Management & Drafting The Risk Management Process Model

 

Contract Management, Tenders & Formation As recommended by FIDIC As Prescribed by the CIDB

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Contract Management Life Cycle The Contracting Process Pre-award

Award

Post-award

or Precontractual Phase

or Contracting Phase

or Post contractual Phase

Reaching agreement and finalizing the contract

Contract Administration through Termination

Activities leading up to the contract

 

Conrtact Management Process Buyer & Seller Views Phase 1. Pre  Award  – 

Buyer

1. Procurement Planning

1. Presales Seller  Activity

2. Solicitation Planning

3. Solicitation

2. Bid/No Bid decision making

3. Bid or Proposal Preparation

 

Conrtact Management Process Buyer & Seller Views Phase 2. Award

Buyer

Seller

4. Source Selection

Phase 3. Postaward

5. Contract  Administration

6. Contract Closeout

4. Contract

5. Contract

6. Contract

Negotiation and formation

 Administration

Closeout

 

Source Selection Criteria (Attributes)

• Attributes are features or qualities of a product, service, or supplier  • Importance depends on customer’s needs • Evaluation of product, service, or supplier is the sum of weighted attribute evaluations

 

Attribute Categories

• Three general categories o o o

Technical Management Price

• Selection and weighting of attributes must reflect buyer’s needs

 

Technical Criteria

• Relate to features or qualities of offered product or service • Examples o o o

Functions and capabilities Nature and quality of design Level and quality of performance

 

Management Criteria

• Features or qualities of seller as an Organisation • Examples o o o o

Reputation Qualifications of employees Capability and capacity of facilities and equipment Financial strength

o o o

Labour relations Policies Management systems

 

Price Criteria

• Main consideration: Reasonableness • Two components to reasonableness o

o

Realism Competitiveness

 

Seller er’’s Past Perform erformance ance Sell

as an Evaluation Factor

• There is an increasing trend toward the evaluation of past performance of sellers • Past performance reduces the emphasis on merely

writing good proposals • Past performance can be evaluated as a separate evaluation factor or as a sub-factor under technical excellence or management capability

 

Evaluation Standards

• Relate to attribute values

• Comparison to standards is basis for proposal evaluation • Three approaches o o o

Absolute standards Minimum standards Relative standards

 

Evaluation Procedures

• Collect information about potential sources • Read and analyze information • Make comparisons based on standards • Assign scores • Apply weights • Rank alternatives • Select best alternative • Keep records for justification (if necessary)

va uat on roce ure Example

 

Car/Mini-Van Car/Mini-Va n Evaluation Criterion

Standard

Proposal Value

Score

Weight

Weighted Score

Number of seats

Minimum (5)

7 (of 9)

60

20%

12.0

Safety rating

Minimum (Good)

Excellent

100

20%

20.0

Cargo capacity

Absolute (50-80 cu ft

57cu ft

65

10%

6.5

Fuel economy

Relative

1 8 (city)/24 (highway) mpg

70

10%

7.0

Price

Relative

R260,500

50

40%

20.0

Total

65.5

 

Contract Management Process: Award Phase Contract Negotiation and Formation

Buyer’s view and seller’s view • The process of reaching reachi ng agreement on the technical, schedule, price, and other terms and

conditions

 

Contract Negotiation: Negotiation: A Complex Activity for Both Buyers and Sellers

 Successful negotiators must  Successful must • Exhibit behavioural and analytical skills to diagnose di agnose problems and adapt winning strategies • Understand their own personalities and personal ethics and values • Know their products and services, desired terms and conditions, and pricing strategy

 

Impact on Long-Term Relationships

• Win-win negotiations result in win-win relationships where both parties gain from the relationship • Win-lose negotiations frequently result in lose-lose relationships where both parties, even the one that “won” the negotiation, are worse off than they would have been with a different deal (remember John and Rachel)

 

We all Negotiate Every Day

• Personal: Family and friends • Professional o o

Internal Organisation External: Buyers and subcontractors

Questions: How well do you negotiate?  Are your negotiations negotiations win-win or or win-lose?

 

Negotiation Approaches

• Intuitive approach o o o

Nonstructured Informall - not writ Informa written ten Inconsistent results

• Process approach o o o

Structured, planned Documented actions More consistent results

 

Getting to “Yes”

Getting to “yes” means • Getting around “yes, but-” o

o o

Focusing on common interests not positions Using joint problem solving, solvi ng, both internally and externally Realising that the right solution is a matter of perspective-buyer or seller 

• Getting past “no”

 

Buyer’s Negotiation

Objectives es (Interests) Objectiv

• Acquire necessary supplies and services of the desired quality, on time, and at the lowest reasonable price • Establish and administer a pricing arrangement that results in payment of a fair and reasonable price • Satisfy needs of the end user (customer)

 

Seller’’s Negotiation Seller

Objectiv Objectives es (Interests)

• Profitability (long-term vs. short-term) • Market share

• Satisfying the needs of the customer 

 

Negotiation Is Preparation

• Prepare, prepare, prepare

• Five important points to reach a mutually

satisfactory agreement o o o

o o

Determine each party’s interests

Create options Select fair standards Know your alternatives Develop a solid proposal (team plan)

 

ontract egot at on Process: Best Practices Prene Pre negg otiat iation ion Pl Pla annin nningg

Con Cond duc uctting ing Ne Negg ot otia iattions ions

Postne Postnegg otiat iation ion A ct ctio ions ns

1. Prepare yourself and your team

11. Determine who has authority

2. Know the other party

12. Prepare the facility

21. Prepare the negotiation memorandum

3. Know the big picture

13. Use an agenda

4. Identify objectives

14. Introduce the team

5. Prioritize objectives

15. Set the right tone

6. Create options

16. Exchange information

7. Select fair standards

17. Focus on objectives

8. Examine alternatives 9. Select your strategy strat egy,, tactics, and countertactics

18. Use strategy strat egy,, tactics, and countertactics 19. Make counteroffers

10. Develop a solid and approved team negotiation plan

20. Document the agreement or know when to walk away

22. Send the memorandum to the other party 23. Offer to write the contract 24. Prepare the contract 25. Prepare negotiation results summary 26. Obtain required reviews and approvals 27. Send the contract to the other party for signature 28. Provide copies of the contract to affected Organisations 29. Document lessons learned 30. Prepare the contract administration plan

 

Importa Importance nce of Terms Terms and and Conditions

 

Importance of Price

 

ategor es an ypes o Contracts Categories Fixed Price or Lump Sum

Cost-Reimbursement

Firm-Fixed-Price (FFP)

Cost-Sharing (CS)

Fixed-Price with economic price adjustment (FP/EPA)

Cost-Reimbursement (CR)

 

Cost-plus-award fee

Types of Contracts

Fixed-Price Incentive (FPI)

(CPAF) Cost-plus-incentive fee (CPIF) Cost-plus-fixed fee (CPFF) Cost-plus-a-

Time-andmaterials or Unit Price Time-and Materials (T&M) Unit Price

percentage of cost (CPPC)  

Tender process As recommended by FIDIC

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FIDIC’s process for obtaining tenders

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FIDIC’s process for opening & evaluating tenders

 

Tender Process A prescribed by the CIDB

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Maxi Security / SA Post Office

2013 (2) SA SCA

• Claim by Maxi Security R14million breach of contract, losses as a result of Post Office repudiation of contract. • TENDER, LETTER OF ACCEPTANCE, ACCEPTANCE, send by Post Office to Maxi Securi Security ty.. • LETTER OF ACCEPTANCE ACCEPTANCE  – contained words “subject to”. • COURT HELD:- the words subject to in a letter of acceptance was understood in the contractual context as introducing some other condition – condition – 60

which then makes the LETTER OF

ACCEPTANCE a COUNTER OFFER. OFFER. Contract Centric Systems  

The FIDIC Rainbow FIDIC & Their Contracts

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About • FIDIC FIDIC = Fédér Fédératio ation n In Inter ternat nationa ionale le Des Ingé Ingénieu nieursrsConseilss (Int Conseil (Internatio ernational nal Federation Federation of Consulting Consulting

Engineers) • 1955 – 4th Edition of ICE Conditions of Contract adopted for International use and published as the FIDIC Contract.

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FIDIC Contracts

New Suite - “First Edition 1999” • The Construction Contract • The MDB Construction Contract

• The Plant and Design-Build Contract • The EPC/Turnkey Contract • The Short Form • Dredgers Contract • • • •

Gold Book  Client/Consultant Model Services Agreement Sub-Consultancy Agreement Joint Venture Agreement

& a Conrtacts Guide

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 A Rainbow published 1999

Guide Publ Pu blish ished ed in 2001

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Which contract?

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• new FIDIC Book 

Short form

 – Price small (< US$ 500,000), or  – Construction time is short (< 6 months), or

simpl e or repetitive (dredging)  – Work is relatively simple

• Irrelevant whether design provided by  – the Employer (or his Engineer/Architect if he has one) or  – the Contractor,

• Irrelevant that project is  – construction,  – electrical,  – mechanical, or  – other engineering work.

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Redbook & MDB

Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer (The Construction Contract) • Employer Engineer) does most of thebuildings, design (traditional(his projects, e.g., infrastructure, hydropower, etc.) • Engineer  – administers Contract,  – monitors the construction work  – certifies payment

• Employer kept fully informed, makes variations, etc. • Payment according to  – bills of quantities or  – lump sums

• for approved work done.

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• •

Yellow & Orange Books

Employer creates outcome outcome or performance performance specification specification Contractor (or Supplier) does majority of design,  –  –



Yellow Book - traditionally electrical , mechanical works, & erection on site Orange Book - more recent design-build and turnkey type projects (plant projects, infrastructure and other types of projects)

Engineer (Employer’s Representative in the Orange Book)  –  –  –

administered the Contract, monitored the manufacture and erection er ection on site or construction work and certified payment,



Payment according to achieved milestones generally on a lump sum basis.



Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant and for Building and Engineering Works Designed by the Contractor (Plant and Design Design-Build -Build Contract) updates and supersedes both the existing Yellow Book from



1987 and the Orange Book from 1995.

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Contract Centric Systems  

EPC/Turnkey

• Contractor designs and takes full responsibility • Employer may appoint a Representative • Fixed price, to cover risks taken on by Contractor  • Payments according to progress • No certification of payments

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Application of FIDIC Suitable for  • Engineering and Construction Works o

o

o o

Design by Employer/Consultant & Construct Design & Build by the contractor [P&DB] & Turnkey Building Work  Combination

• Fixed price (Lump Sum) or  • Re-measurement

(ad-measured) • Not suitable for Cost Contracts

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Not suitable for time • Contracts based assignments Contract Centric Systems  

What’s in a (FIDIC) book?

• General Conditions • Guidance for Preparation of Particular Conditions • Forms o

o o o o

Securities • Parent Company Guarantee • Performance (demand) Guarantee • Tender Security (Silver) • Performance (Surety) Bond • Advance Payment Guarantee • Retention Money Guarantee • Payment Guarantee Letter of Tender  Appendix to Tender  Contract Agreement Dispute Adjudication Agreement

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Documents forming a a) Red Book

FIDIC Contracts a) Yellow Book

a) Silver Book

the Con Contr tract act Agre Agreem emen entt the Con Contr tract act Agre Agreem emen entt a) the a) the the Con Contr trac actt Agre Agreem emen entt a) the (if any) (if any)  b) the Letter of Acceptance  b) the Letter of Acceptance c) the the Let Lette terr of of Ten Tende derr c) the the Let Lette terr of of Ten Tende derr  b) the Particular d) the the Par Parti ticu cula larr d) the the Par Parti ticu cula larr Conditions Conditions Conditions c) these ese Ge General e) thes thesee Gene Generral e) these hese Ge Gen neral eral Conditions Conditions Conditions f) g) h) i)

the Spec Specif ifiicati cation onss the the Dra Drawi wing ngs, s, and and the the Sche Schedu dule less and and any any othe otherr docu docum ment ents order mutually mutu ally explanatory explanatory

f) the Employer’s Requirements g) the the Sche Schedu dule less and and h) The Contractor’s Proposal i) any any oth other docu docum ment ents

d) the Employer’s Requirements e) The Tender f) any any ot other her doc docum umen ents ts

ambiguity Contract Centric Systems

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Letter of Tender

“Letter of Tender” means the document entitled letter of tender, which was completed by the Contractor and includes the signed offer to the Employer for the Works.

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“Appendix to Tender” means the completed pages entitled appendix to tender which are appended to and form part of the Letter of Tender.

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“Letter of Acceptance” means the letter of formal acceptance, signed by the Employer, Employer, of the Letter of Tender, including any annexed memoranda comprising agreements betw between een and signed by  both Parties. If there is no such letter of of acceptance, the expression “Letter of Acceptance” means the Contract Agreement and the date of issuing or

Contract Centric Systems

receiving the Letter of Acceptance means the date 75 of signing the Contract Agreement.

 

“Contract Agreement” means the contract agreement (if any) referred to in Sub Clause 1.6 [Contract Agreement]

One Pager Compiles these document

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1.5 Priority of Documents

The documents forming the Contract are to be taken as mutually explanatory of one another. For the t he purposes of interpretation, the priority of the documents shall be in accordanc accordance e with the following sequence: (a) (b) (c) (d) (e)

the Agreement (if any), the Contract Letter of Acceptance, the Letter of Tender, the Particul Particular ar Conditions, these General Conditions,

the Requirements, (f) (g) the Employer’s Schedules,, and Schedules (h) the Contractor’s Proposal and any other documents forming part of the t he Contract. If an ambiguity or discrepancy is found in the documents, the Engineer shall issue any necessary clarification or instruction.

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General Layout of 1. 2. 3. 4. 5.

General Conditions

General Provisions The Employer  The Engineer  The Contractor  Nominated Subcontractors 6. Staff and Labour  7. Plant Materials and

8. Workmanship Commencement Delays and Suspension 9. Tests on Completion

10. Employer Taking Over  11. Defects Liability 12. Measurement and Evaluation 13. Variations and Adjustments 14. Contract Price and Payment 15. Termination by Employer  Employer  16. Suspension and Termination by Contractor  17. Risk and Responsibility 18. Insurance 19. Force Majeure 20. Claims, Disputes and Arbitration

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Particular Conditions

1. At the end of Sub-Clause 1.2, insert: In these Conditions, provisions including the expression "Cost plus reasonable profit" require this profit to be onetwentieth (5%) of this Cost.

2. The Engineer shall obtain the specific approval of the Employer before taking action under the following SubClauses of these Conditions: (a) Sub-Clause ** (b) Sub-Clause ** 3. etc

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Contract Centric Systems  

Altering FIDIC contracts

• Guiding Principles

• Preparing Tender Documents – The FIDIC Contracts Guide – Guidance Guidance for the Preparation of Particular Conditions • Complementary Terms of Contract • Recommendations • Pitfalls and Issues • Definitions in FIDIC & harmonising with CIDB

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Analysis and Important Provisions

 

Definitions 1.1 Definitions In the Conditions of Contract (“these Conditions”), which include Particu Particular lar Conditions Conditions and these these General General

Conditions, the following words and expressions shall have the meanings stated. Words indicating persons or parties include corporations and other legal entities, except where the context requires otherwise. 1.1.1 The Contract 1.1.2 Parties and Persons 1.1.3 Dates, Tests, Periods and Completion

1.1.4 Money and Payments Conrtact Centric Systems  

1.2 Interpretation

In the Contract, except where the context requires otherwise: (a) words indicating indicating one one gender include include all genders; genders; (b) words indicating the singular also include the plural and words indicating the plural also include the singular; (c) provisions including the word “agree”, “agreed” or “agreement” require the agreement to be recorded in writing, and (d) “written” or “in writing” means hand -written, typewritten, printed or electronically made, and resulting in a permanent record. The marginal words and other headings shall not be taken

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into consideration in the interpretation of these Conditions.

 

Some other rules

• Words and numbers

• Handwriting and printing • Inclusive lists • Non-Inclusive lists (etc. lists) • General & Specific Provisions • Ambiguity o o o

Reasonable vs unreas Reasonable unreasonable onable Commercial Comme rcial Sense vs Commer Commercially cially Senseless Senseless Contra Proferentum

 

Communication & Consensus Common Law Fair but Uncertain

Reception Theory Hearing + Understanding

Expedition Theory

 

1.3 Communications Wherever these Conditions provide for the giving or issuing of approvals, certificates, consents, determinations, notices and

requests, these communications shall be: (a) 1) In writing and 2) delivered by hand (against receipt), sent by mail or courier, or transmitted using any of the agreed systems of electronic transmission as stated in the Appendix to Tender; and (b) 3) delivered, sent or transmitted to the address for the recipient’s communications as stated in the Appendix to Tender. However: (i) if the recipient noticeaccordingly: of another communications shall thereafter begives delivered according ly:address, and (ii) if the recipient has not stated otherwise when requesting an approval or consent, it may be sent to the address from which the request was issued. Approvals, certificates, consents and determinations shall not be unreasonably withheld orsend delayed. When a 4) certificate is issued to a Party, the certifier shall a copy to the other Party. When a 4) notice is issued to a Party, by the other Party or the Engineer, a copy shall be sent to the Engineer or the other Party, as the case may be. be . Consider • What about Instructions and other communications not listed in



clause 1.3? What is the effect of these 4 requirements are not met? Contract Centric Systems

 

3.3 Instructions of the Engineer

The Engineer may issue to the Contractor (at any time) instructions and additional or modified Drawings which may be necessary for the execution execution of the Works and the remedying of any defects, all in accordance with the Contract. The Contractor shall only take instructions from the Engineer, or from an assistant to whom the appropriate authority has been delegated under this Clause. If an instruction constitutes a Variation, Clause 13 [ Variations and Adjustments ] shall apply. The Contractor shall comply with the instructions given by the Engineer or delegated assistant, on any matter related to the Contract. Whenever practicable, their instructions shall be given in writing. If the Engineer or a delegated assistant: (a) gives an oral instruction, (b) receives a written confirmation of the instruction, from (or on behalf of) the Contractor, within two working days after giving the instruction, and (c) does not reply bythe issuing a written rejection instruction two the working days after receiving confirmation, then the and/or confirmation shall within constitute written instruction of the Engineer or delegated assistant (as the case may be). Consider • How to whom and where must these instructions be given? • What does ‘practicable’ mean?

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Can a Instruction under Clause 13 be given orally

 

13.1 Right to Vary Variations may be initiated by the Engineer at any time prior to issuing the TakingOver Certificate for the Works, Works, either by an a n instruction or by a request for the Contractor to submit a proposal.

The Contractor shall execute and be bound by each Variation, Variation, unless the Contractor promptly gives notice to the Engineer stating (with supporting particulars) particulars) that the Contractor cannot readily obtain the Goods required for the Variation. Upon receiving this notice, the Engineer shall cancel, confirm or vary the instruction. Eachchanges Variation Variation include: (a) chang es tomay the quantities quant ities of any any item item of work work inc included luded in tthe he Contract Contract (however, (howev er, such changes do not necessarily constitute a V Variation), ariation), (b) changes changes to the the quality quality and and other other characte characteristi ristics cs of any item item of work, work, (c) changes changes to the the levels levels,, positions positions and/or dimensions dimensions of any any part of the the Works Works,, (d) omission omission of of any work work unl unless ess it is to be carried carried out out by others, others, (e) any addition additional al work, work, Plant, Plant, Materials Materials or or services services necessa necessary ry for for the the Perman Permanent ent Works, including any associated T Tests ests on Completion, boreholes and other testing and exploratory work, or (f) change changess to the the sequen sequence ce or ti timin ming g of the the executi execution on of the the Work Works. s.

The Contractor shall notthe make any alteration modification of the Permanent Works, unless and until Engineer instructsand/or or approv approves es a Variation. Variation. Conrtact Centric Systems

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13.3 Variation Procedure Proced ure If the Engineer requests a proposal, prior to instructing a Variation, the Contractor shall respond in writing as soon as practicable, either by giving reasons why he cannot comply (if this is the case) or by submitting: • a description of the proposed work to be performed and a programme programme for its

execution, • the Contractor’ Contractor ’s proposal for any necessary modifications to the programme according to Sub-Clause 8.3 [Programme [Programme]] and to the Time for Completion, and • the Contractor’s proposal for evaluation of the Variation. Variation. The Engineer shall,Engineering as soon as]practicable after receiving such proposal (under Sub-or approval, disapproval Clause 13.2 [Value or otherwise), respond with comments. The Contractor shall not delay any work whilst awaiting a response. Each instruction to execute a Variation, with any requirements for the recording of Costs, shall be issued by the Engineer to the Contractor, Contractor, who shall acknowledge receipt.  Measurement and Each Variation Variation shall be evaluated in accordance with Clause 12 [ Measurement Evaluation], unless the Engineer instructs or approves otherwise in accordance with this Clause.

Consider

• How (in writing or what) where, to whom must these instructions approvals or

comments be addressed? Contract Centric Systems  

Employer ’s Duties

• Arrangement for Payments [2.4] • Duty to Pay o

Introduction

o o

Contract ProvisionalPrice Sums

• Duty to Co-operate o o o o o o

Access to the Site [2.1] Permits, Licences or Approvals Duty to Minimise Delay Duty to Make Financial Arrangements Duty to Provide Information Estoppel

• Duty to Compensate o

Compensation for Interference by Employer

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Design Responsibility

• Employer ’s Design

• Contractor ’s Design • Contractor ’s Design Liability • Design Procedure • Design Warranties • Design Update • Deliverables

 

Time for Completion

• Legal approaches • Time Control • Extension of Time • Concurrent Delay o o o

Common Law Civil Law FIDIC

• SCL • Liquidated Damages and Penalties o o

Validity of Liquidated Damages Clauses Delay Damages

• Milestone Damages

 

Tests

• Tests Until Completion • Tests on Completion

• Tests After Completion • Tests During the Defects Notification Period • Delayed Tests • ISO Standard • Tailoring Test Procedures

 

• Taking Over 

Certificates

• Performance • Payments o o o o o o

Measurement Valuation Payment Procedures Payment Delays Late Payment Retention Monies

• Disputes

 

Discharge, Frustration and Force Majeure

• Risk and Risk Allocation • Normal Discharge • Rebus Sic Stantibus • Force Majeure

 

Risk, Insurance and Exceptional Risk

• Legal Risk Allocation • Risk Assessment o o o o o o

o o

Overview Employer ’s Risk  Care for the Works Sub-contractor ’s Risk  Fencing, Lighting and Guarding Misinterpretation of Data Bodily Injury Caps

• Insurance • Contractor ’s All Risk Insurance

• Uninsurable Risk 

 

Claims

• Procedural Rules • Claim Review and Preparation • Claim Notice • • • •

Documentation Requirements Presentation of Claims Claim Avoidance Extension of Time Claims

• Money Claims o o o o

Cost Profit Loss of Productivity Claims Legal Claims

• Gold Book 

 



Employers claims Employers Claims [2.5]

• “considers himself to be entitled to any payment under any Clause of these Conditions or otherwise in connection with the Contract, and/or to any extension of the Defects Notification Period, the Employer shall give notice and particulars to the Contractor ”. ”. o

The Employer or the Engineer may give notice and

o o

“The notice shall be given as soon as practicable” practicable” and give particulars of the claim,

• after which the Parties may agree the claim or failing which the Engineer may then make a determination in accordance with Sub-Clause 3.5 [Determinations

 

Contractor’s claims Event

Claim Notice 28d

 

Event

Claim Notice 28

Claim +14=42

Response 42

 

Event

Claim Notice 28

Claim +14=42

Response 42

 

Determinations 3.5

 

Contractors Claims Sub-Clause

Contractor ’s ’s Entitlement

1.9 CONS Delayed Drawings or Instructi Instructions ons

Contractor may claim extension of time. Cost and reasonable profit if Engineer fails to instruct within notified reasonable time

1.9 P&DB Errors in the Employers Requirement Requirementss

Contractor may claim extension of time. Cost and reasonable profit for error in Employer Employer’’s Requirements which was not previously discoverable

2.1 Right of Access to the Site

Contractor may claim extension of time, Cost and reasonable profit if Employer fails to give

Employer ’s ’s Entitlement

right of access to Site within time stated in the Contract

 

Contractor’s claims Sub-Clause

Contractor’ r’ss Entitlement

2.5 Employer’s Claims

Employer’ r’ss Entitlement Procedure with which Employer must comply when claiming payment from the Contractor and when claiming an extension to the Defects Notification Period

4.7 Setting Out

4.12 Unforeseeable Physical Conditions

Contractor may claim extension of time. Cost and reasonable profit for errors in original setting-out points and levels of reference Contractor may claim extension of time and Cost if he encounters physical conditions which are unforeseeable

 

Contractor’s claims Sub-Clause

Contractor’ r’ss En Entitlement

4.19 Electricity, Water and Gas

Employer entitled to payment if Contractor uses power water or other services provided by the Employer. If any, without prior notice under Sub-Cause 2.5 Employer entitled to payment if Contractor uses the Employer’ Employer’ss Equipment, if any, without prior notice under Sub-Clause

4.20 Employer’s Equipment and Free-Issue Material

4.24 Fossils

Employer’ r’ss En Entitlement

Contractor may claim extension of time and Cost attributable to an instruction to Contractor to deal with an encountered archaeological finding

2.5

 

Contractor’s claims Sub-Clause

Contractor’ r’ss En Entitlement

7.4 Testing

Contractor may claim extension of time, Cost and reasonable profit if testing is delayed by (or on behalf of) the Employer

Employer’ r’ss En Entitlement

7.5 Rejection

Employer may claim costs if defective Plant, Materials or workmanship is rejected and subsequently retested

7.6 Remedial Work

Employer may claim costs if Contractor fails to carry out remedial work and if he would not have been entitled to be paid for it

 

Contractor’s claims Sub-Clause 8.4 Extension of Time for Completion

Contractor’ r’ss En Entitlement Contractor may claim extension of time if completion (see Sub-Clauses Sub-Clauses 8.2 & 10.1) is or will be delayed by a listed cause (a) a Variation (unless an adjustment to the Time for Completion has been agreed under SubClause 13.3 [Variation Procedure]) or other substantial change in the quantity of an item of work included in the Contract, (b) a cause of delay giving an entitlement to extension of time under a Sub-Clause of these Conditions, (c) exceptionally adverse climatic conditions, (d) Unforeseeable shortages in the availability of personnel or Goods caused by epidemic or governmental actions, or (e) any delay, impediment or prevention caused by or attributable to the Employer, the Employer’s Personnel, or the Employer’s other contractors on the Site.

Employer’ r’ss En Entitlement

 

Contractor’s claims Sub-Clause

Contractor’ r’ss Entitlement

8.5 Delays Caused by Authorities

Contractor may claim extension of time if Country’s public authority causes Unforeseeable delay

8.6 Rate of Progress

Employer may claim costs attributable to revised methods which Contractor adopts in order to overcome a delay for which no extension of time is due

8.7 Delay Damages

Employer’ r’ss Entitlement

Employer may claim prescribed delay damages if Contractor fails to achieve completion within Time for Completion

 

Contractor’s claims Sub-Clause

Contractor’ r’ss En Entitlement

8.9 Consequences of Suspension

Contractor may claim extension of time and Cost if Engineer instructs a

Employer’ r’ss En Entitlement

suspension of progress 9.4 Failure to Pass Tests on Completion

10.2 Taking Taking Over of Parts of the Works

Employer may claim costs if Works or Section repeatedly fails Test on Contractor may claim Cost and reasonable profit attributable to the taking over of a part of the works

Completion Employer’s entitlement to prescribed delay damages is reduced by a proportion related to the contract

value of the part taken over

 

Contractor’s claims Sub-Clause

Contractor’ r’ss En Entitlement

Employer’ r’ss En Entitlement

10.3 Interference with Tests on Contractor may claim extension of time. Cost and Completion reasonable profit if Employer delays a Test on Completion 11.3 Extension of Defects Notification Period

Employer may claim extension of the Defects Notification Period if Works or Section or major Plant cannot be used for intended purpose because of any defect

11.4 Failure to Remedy Defects

Employer may claim costs if Contractor fails to remedy a defect for which Contractor is

responsible

 

Contractor’s claims Sub-Clause

Contractor’ r’ss Entitlement

11.8 Contractor to Search

Contractor may claim Cost and reasonable profit if instructed instruct ed to search for cause of a defect for which he is not responsible

12.2 P&DB Delayed Tests

Contractor may claim Cost and reasonable profit if Employer delays a Test after Completion

12.3 CONS Evaluation

Engineer evaluates each item of work, applying measurement and appropriate rate or price

12.3 P&DB Retesting

Employer’ r’ss Entitlement

Employer may claim costs attributable to repeated failures

of Test after Completion

 

Contractor’s claims Sub-Clause

Contractor’ r’ss En Entitlement

12.4 CONS Omissions

Contractor may claim a Cost which, although it had been included in a BoQ item, he would not recover because the item was for work which has been omitted

Employer’ r’ss En Entitlement

by Variation 12.4 P&DB Failure to Pass Tests Tests after Completion

Contractor may claim Cost and reasonable profit if Employer delays access to the Works or Plant

13.2 CONS Value Engineering

Contractor may claim half of the saving in contract value of his redesigned post-contract alternative proposal, which was approved without prior agreement

Employer may claim prescribed non-performance damages in event of failure to pass Test after Completion

of such contract value and of how saving would be shared

 

Contractor’s claims Sub-Clause

Contractor’ r’ss En Entitlement

13.3 Variation Procedure

The Contract Price shall be adjusted as a result of Variations

13.7 Adjustments Adjustments for Changes in Legislation

Contractor may claim extension Employer may claim payment of time and Cost attributable to of reduction in Contractor’ Contractor’ss a change in the Laws of the Cost attributable to a change in Country

14.4 Schedule of Payments

Employer’ r’ss En Entitlement

the Laws of the Country

If interim payment instalments were not defined by reference to actual progress, and actual progress is less than that on which the schedule of payments was originally based, these instalments may be revised

14.8 Delayed Payment

Contractor may claim financing charges if he does not receive payment in accordance with

Sub-Clause 14.7

ontractor s c aims

 

Sub-Clause

Contractor’ r’ss En Entitlement

Employer’ r’ss En Entitlement

15.3 Valuation at Date of Termination

Works, Goods and Contractor’s Documents are valued after Employer has terminated Contract

15.4 Payment after Termination

Employer may claim losses and damages after terminating Contract

16.1 Contractor’s Entitlement to Suspend Work

Contractor may claim extension of time, Cost and reasonable profit if Engineer fails to certify or if Employer fails to pay amount certified or fails to evidence his financial arrangements, and Contractor

16.4 Payment on Terminations

suspends work Contractor may claim losses and damages after terminating Contract

ontractor

 

a ms

Sub-Clause

Contractor’ r’ss En Entitlement

Employer’ r’ss En Entitlement

17.1 Indemnit Indemnities ies

Contractor may claim cost attributable to a matter against which he is indemnified by Employer

Employer may claim cost attributable to a matter against which he is indemnified by Contractor

17.4 Consequences of Employer’s Risks

Contractor may claim extension of time, Cost and (in some cases) reasonable profit if Works, Goods or Contractor’s Documents are damaged by an Employer’ss risk as listed in Employer’ Sub-Clause 17.3

18.1 General Requirement Requirementss

Contractor may claim cost of

Employer may clam cost of

premiums if Employer fails to premiums if Contractor fails to effect insurance for which he is effect insurance for which he is the “Insuring Party” the “Insuring Party”

for insurances

 

Contractor Claims Sub-Clause

Contractor’ r’ss Entitlement

18.2 Insurance for Works and Contractor’s Equipment (last paragraph)

19.4 Consequences of Force Majeure

Employer’ r’ss Entitlement Employer may claim payment of reduction in cost of premiums if the Contractor’s insurance of an Employer’s risk becomes unavailable at commercially reasonable terms

Contractor may claim extension of time and (in some cases) Cost if Force Majeure prevents him from performing obligations

19.6 Optional Payment, Termination and Release

Contractor’s work and other Costs are valued after progress is prevented Contractor’s  by a prolonged period period of Force Majeure and either Party Party then gives notice of termination

20.1 Contractor’s Claims

Procedure with which the

20.1 Contractor s Claims

Procedure with which the Contractor must comply when claiming an extension of time and/or additional payment

 

Disputes

• Dispute Resolution Methods o o o o

Mediation Dispute Review Dispute Adjudication Arbitration

• FIDIC Dispute Adjudication o o o o o o o o

Function and Role of the DAB Appointment Dispute Adjudication Agreement Dispute Avoidance Referral of a Dispute Jurisdiction Procedure Applicable Law

o

Reaching a Decision

 

NEC 3

Contract Centric Systems

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About

• Established 1818 • First President Thomas Telford (1820 – 1834) • 85,000 members spanning 164 countries • 12officesworldwide • 1991 • OGC • Constructing the team • Lord Latham

• (Bloat Ware) conrtact centic systems  



ICE Contracts 1945 - 1st Edition Edition of ICE ICE Conditions Conditions of Contract Contract

• 1955 – 4th Edition of ICE Conditions of Contract • adopted for International use and published as the FIDIC Contract • 2001 – 7th Edition of ICE Conditions of Contract • 1991 – First publication of NEC contract • 1995 – 2nd Edition of NEC contract • 2005 – 3rd Edition of NEC family of contracts • 2011 – Support for ICE conditions withdrawn

119

Contract Centric Systems

120

 

The nec Grand Plan Stimulus to Good

Project

Management

OBJECTIVES

Clarity

Flexibilit y

Contract Centric Systems

121

 

NEC3 …

• is a relational contract • has best practice early warning provisions allows for a real time programme •• allows for real time change control • has an effective procedure for dealing deali ng with defects • offers a range of pricing mechanisms (main

Options) other matters such as retention, sectionaland completion, Key Performance Indicators (secondary Options) • offers flexibility, clarity and simplicity and stimulus sti mulus to good management

conrtact centic systems

122

 

Flexibility – the NEC Family Supply Contract Supply Short Contract

Supply High  C 

 o m   p l      e x  i      t      y 

Low

 P   r   o  f    e   s   s   i    o  n  a  l    S   e   r   v  i    c   e   s   C  o  n  t    r   a  c   t  

ECC

TSC

Engineering & Construction Contract

Term Services Contract

ECS  P   S   C

Engineering & Construction Subcontract

ECSC Engineering & Construction Short Contract

TSSC Term Services Short Contract

ECSS

Engineering & Construction Short Subcontract

Framework Contract

Adjudicator’s Contract business case

Contract Centric Systems  

design

construction

operation

NEC 3 contracts suite So to summarise …. • NEC3 Engineering and Construction Contract • NEC3 Engineering and Construction Short Conrtact • NEC3 Subcontracts for the above • NEC3 Term Service Contract • NEC3 Term Service Short Contract • NEC3 Supply Contract • NEC3 Professional Services Contract • NEC3 NEC3 Adjudicator’s  Adjudicator’s Contract

123

Contract Centric Systems  



Decomposition Drating Take ICE General Conditions

• Remove Price  – Lump Sum ... Option A  – Remeas Remeasurable urable ... Optio Option nB  – Then add a number number of new pricing pricing options options C- F

• Remove all non-core elements o

o o

Call these Secondary Options X1-19 Remove Dispute resolution Particular terms numbersZ1 etc

• Rename what’s left “Core’ • Compile the Conditions of Contract in the Contract

124

Data conrtact centic systems  



NEC3 ECC Structure General Conditions, Particular Conditions & Data (e.g. FIDIC)

• Now in Contract Data (Data / Variables are inCompiled italics) o o o

o o

o o

Begin with the Core Clauses (9 of them) & add One of a selection a Pricing Option (called a Main Option numbered A-F) A -F) Select required Secondary Options (Number X1 X2 etc) Write any Additional Terms (called Z ‘clauses’ ‘cl auses’ (instead of Particular Terms)) Prepare ‘Works Information’ which can also contain contractual provisions, constraints etc. under which the works must be done.

Prepare Site Information Prepare Pricing Information

125

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126

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127

 

Agreement

The Employer and Contractor agree as follows

1. The Contractor will Provide the Works in accordanc accordance e with the t he conditions of contract identified in the Contract Data. 2. The Employer will pay the Contractor the amount due and carry out his duties in accordanc accordance e with the conditions of contract identified in the Contract Data. 3. The do docum cument entss fo formi rming ng par partt of of this this agr agreem eement ent are o o o

o

’s tender  the Contractor ’s the Employer ’s ’s letter of acceptance the Contract Data part one the Contract Data part two

o

the following documents

Signed at etc.

.

Contract Centric Systems  

1 General

Core Clauses

2 The Contractor’s main responsibilities 3 Time 4 Testing and Defects 5 Payment 6 Compensation events 7 Title 8 Risks and insurance 9 Termination

128

Contract Centric Systems  

129

Contract Centric Systems  



Main options Contract strategy o

Option Opti on A – A – priced contract with activity schedule

Option B – B – priced contract with bill of quantities • Target contracts generally o

o

Options C and D – D – target contracts

• Option E – E – cost reimbursable contract • Option F – F – management contract • Option W1 – W1 – dispute resolution

130

• Option W2 – W2 – dispute resolution Contract Centric Systems  

Secondary options

• Option X1 – X1 – price adjustment for inflation • Option X2 – X2 – changes in the law • Option X3 – X3 – multiple currencies • Option X4 X4 –  – parent company guarantee • Option X5 – X5 – sectional completion • Option X6 – X6 – bonus for early completion • Option X7 – X7 – delay damages • Option X12 X12 –  – partnering • Option X13 – X13 – performance bond

131

Contract Centric Systems  

NEC3 Some Pertinent Clause Definitions, Communications, Instructions, Variations Claims

132

Contract Centric Systems  

1) Partnering & Risk 1 General Actions 10

10.1 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. Consider What is ‘a spirit of mutual trust and co-operation’? bonii fid fide e way way? ? Is it the same a ‘fiduciary duty’ or a duty to act in a bon If a Party failed to act this way would it be a breach of contract. (Remember a breach of contract is a ‘compensa ‘compensation tion event’ Identified and defined terms 11

11.1 11.1 In th thes ese e co cond nditi ition onss of co cont ntra ract ct,, ter terms ms id iden entif tifie ied d in th the e Co Cont ntra ract ct Da Data ta ar are e in italics and defined terms have capital initials. Consider Why is ‘conditions of contract’ not in italics (its identified in the Contract Data)

133

Why is ‘Contract Data’ not a listed definition (it has initial capitals)

Conrtact Centric Systems

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Communications 13

13.1

Each instruction, certificate, submission, proposal, record, acceptance, notification, reply and other communication which this contract requires is communicated in a form which can be read, copied and recorded. W Writing riting is in the language of this contract.

13.2

A communication has effect when it is received at the last address notified by the recipient for receiving communications or, if none is notified, at the address of the recipient stated in the Contract Data.

13.3

If this contract requires the Project Manager , the Supervisor or the Contractor to reply to a communication, unless otherwise stated in this contract, he replies within the period the period for reply reply..

13.4

The Project Manager replies to a communication submitted or resubmitted to him by the Contractor for acceptance. If his reply is not acceptance, a cceptance, the Project  Manager states his reasons and the Contractor resubmits the communication within the period for reply taking account of these reasons. A reason for withholding acceptance is that more information is needed in order to assess

Contractor’s

submission fully. Considerthe What does “received” mean, how is ‘received’ established established an who must ‘receive’ it Contract Centric Systems  

Communications

Replies and acceptances & reasons if the reply is not acceptance [1.4] clause 15.1 – proposals to add to the working areas • • clause 21.2 – particulars of of the contractor’s design clause 23.1 – particulars of design of equipment • clause 24.1 replacement persons •• clause 26.2 –   – names of subcontractors clause 26.3 – conditions of contract for subcontracts • clause 31.1 – the first programme • • clause 31.3 – regular programmes clause 32.2 – revised programmes • clause 62.3 – quotations for compensation events • clause 85.1 – insurance policies • clause X13.1 – performance bond • clause X14.2 – advanced payment bond • • each has its own list of reasons for non-acceptance failure to reply may be a compensation event •

135

• • •

withholding acceptance for a state reason is not a compensation event some give a stated reason as 'more information is required' can be abused Period for reply extended by Project Manager with agreement of Contractor [13.6] conrtact centic systems

 

Communications

Notifications [13.7] • clause 14.2 – delegation • clause 14.4 – replacement of the project manager or supervisor  • clause 16.1 – early warning • clause 17.1 – ambiguities and inconsistencies • clause 18.1 – illegal or impossible requirements • clause 31.3 – programmes • clause 40.3 – tests and inspections • clause 42.2 – defects • clause 61.1 – compensation events • • • • •

 –  clause clause 61.3 61.4 – compensation compensation events events clause 61.5 – decisions on compensation events clause 61.6 – assumptions on compensation events clause 62.6 – quotations for compensation events

136



clause 64.3 – assessment of compensation events

• • •

clause 64.4 – late assessment of compensation events clause 65.1 – implementation of compensation events clause 73.1 – discovery of objects of value val ue etc conrtact centic systems

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Collaboration on risk

Definition (14) The Risk Register is a register of the risks which are a re listed in the Contract Data and the risks which the Project Manager or the Contractor has notified as an early warning matter.. It includes a description of the risk and a description of the actions which are to matter  be taken to avoid or reduce the risk. Early warning 16

16.1 The Contractor and the Project Manager give an early warning by notifying the other as soon as either becomes aware of any matter which could increase the total of the Prices, delay Completion, delay meeting a Key Date or impair the performance of the works in use. The Contractor may give an early warning by notifying the Project Manager of any other matter which could increase his total cost. The Project Manager enters early warning matters in the Risk Register. Early warning of a matter for which a

compensation event has previously been notified is not required. Contract Centric Systems

138

 

Procedure at a ‘partnering’ meeting

16.2

Either the Project Manager or the Contractor may instruct the other to attend a risk reduction meeting. Each may instruct other people to attend if the other agrees.

16.3

At a risk reduction meeting, those who attend co-operate in • making and considering proposals for how the effect of the registered risks can be avoided or reduced, • • •

seeking solutions that will bring advantage to all those who will be affected, a ffected, deciding on the actions which will be taken ta ken and who, in accordance with this contract, will take them and deciding which risks have now been avoided or have passed and can be removed from the Risk Register.

Consider What is a ‘proposal’? Is it a proposal if its not in a form that can be “read , copied and recorded”? Can you consider a proposal if it does not have effect or before it has effect? (Remember:

A communication has effect when it is received at the last address notified by the recipient for receiving communications’) How then, should these proceedings be conducted? Contract Centric Systems

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What happens with the decision reached at a t the risk reduction meeting?

16.4

The Project Manager revises the Risk Register to record the decisions made at each risk reduction meeting and issues the revised Risk Register to the Contractor.. If a decision needs a change to the Works Information, the Project Contractor  Manager instructs the change at the same time as he issues the revised Risk Register.

Consider What would happen if the Project Manager DID NOT instructs the change at the same time as he issues the revised Risk Register. Would Would an instruction given some tome la later ter  be in accordance with the contract?

27.3 27 .3 The The Contractor obeys an instruction which is in accordance with this contract and is given to him by the Project Manager or the Supervisor. Consider Does this mean that the Contractor must disobeys instructions that are not in accordance with the contract?

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2 Contractor’s •

Responsibilities Contractor’s obligations

• Subcontractors & personnel • Employer ’s ’s access

conrtact centic systems  

3 Time, 4 Defects & 5 •

Payment Stating and completion dates

• Programme • Finding an correcting defects • Malperformance • Assessment of moneys due • Payment

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conrtact centic systems  



6 Compensation Events Events – core

• Events relating to physical conditions • Notice of Compensation Event • Effect of failure to give an early warning • Quotation for Compensation Event • Assessment of a Compensation Event • Employer’s assessment • Implementation

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7 Title & 8 Insurance Materials and objects on site

• Limitation of Liability • Indemnities • Insurances

143

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9 Termination & •

Adjudication Termination

• Procedures • Settlement • Adjudicator  • Adjudication • Tribunal review

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conrtact centic systems  



• • • •

Ambiguities and inconsistencies Clause 17.1 requires the project manager or the contractor to

notify the other as soon as either becomes aware of any ambiguity or inconsistency in or between the documents forming the contract. The project manager is then required to give an instruction resolving the matter . Other contracts usually limit the power of engineers to resolve ambiguities in interpreting the works i.e. i .e. to change the works ‘information’ This clause is wide enough to extend to interpretation (or alteration) of the contract itself.

However clause 12.3 suggests the project manager can NOT – an change the contract (which includes the works information) apparent contradiction. If an instruction is not a change to the works information it is not a remuneration event

145



And .. Can the Project Manager remove an ambiguity in works information that relates to the contractors own ‘design’?? conrtact centic systems

 

Works Information Schedule of clauses referring to the works information Common core clauses •

Clause 11.2(2) – completion is when the contractor has done all the work the works information states is to be done by the completion compl etion date



Clause 11.2(5) – a part of the works not in accordance with the works information is a defect Clause 11.2(7) – equipment is defined by reference to what the works information does not require to be included in the works Clause 11.2(19) – definition of works information Clause 14.3 – the works information can be changed by instruction of the project manager  Clause 18.1 – if the contractor is required by the works information i nformation to do anything illegal or impossible the contractor gives notice and the project manager instructs appropriately

• • • •

146



Clause 20.1   the contractor is to provide the works in accordance with the works information Clause 21.1 – the contractor is to design such parts of the works as stated in the works information conrtact centic systems

 

Works Information Schedule of clauses referring to the works information •

• •

• • • •

Clause 21.2 – the contractor is to submit for acceptance such particulars of his design as the works information requires  – a reason for the project manager not accepting the design is that it does not comply with the works information Clause 22.1 – the employer’s entitlement to use the contractor’s contractor’s design may be restricted or expanded in the works information Clause 23.1 – a reason for the project manager not accepting the design of an item of equipment is that it will not allow al low the contractor to provide the works in accordance with the works information Clause 25.1 – the contractor is to share the working areas with others as stated in the works information Clause 25.2 – the employer and the contractor are to provide such services serv ices and other things as are stated in the works information inf ormation Clause 27.4 – the contractor is to act in accordance with health and safety requirements stated in the works information Clause 31.2 – the contractor is to show on each programme the work of the

147

employer and others as stated in the works Information I nformation – the contractor is to show on each programme any other information which the works information requires conrtact centic systems  

Works Information Schedule of clauses referring to the works information • •

• •

• • •

Clause 31.3 – a reason for the project manager not accepting a programme is that it does not comply with the works information Clause 35.2 – the employer is deemed to take over any part of the works he uses before completion unless the use is for a reason stated in the works information Clause 40.1 – clause 40 applies only to tests and inspections required by the works information (or the applicable applicabl e law) Clause 40.2 – the contractor and the employer are to provide materials, material s, facilities and samples for tests and inspections as stated in the works information Clause 41.1 – the contractor is not to bring to the working areas plant pl ant and materials which the works information requires to be tested before delivery Clause 42.1 – searching may include doing tests and inspections which the works information does not require Clause 44.1 – the works information may be changed so that a defect does

148

not have to be corrected •

Clause 44.2 –  theaccepts project manager givesneed an instruction changing the works information if he that a defect not be corrected conrtact centic systems

 

Works Information Schedule of clauses referring to the works information •





Clause 45.1 – if the project manager assesses the cost to the employer of having a defect corrected by others and the contractor pays the cost, the works information is treated as having hav ing been changed to accept the defect Clause 45.2 – if the contractor is not given access to correct a defect the project manager assesses the cost to the contractor of correcting the defect, and if the contractor pays this cost the works information is treated as having been changed to accept the defect Clause 60.1(1) – an instruction changing the works information is a compensation event unless it is: o

o

• •

a change to accept a defect a change to the contractor’s c ontractor’s design at his request or to comply with other works information

Clause 60.1(5) – failure by the employer or others to work within the times stated in the works information is a compensation event ev ent Clause 60(1)(16) – failure by the employer to provide materials, facilities fa cilities and samples for tests as stated in the works information is a compensation event

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samples for tests as stated in the works information is a compensation event Clause 63.8 – the assessment of a compensation event which is an instruction to change the works information in order to resolve resolv e an ambiguity or inconsistency is made having regard to which party provided the works information conrtact centic systems

 

Works Information Schedule of clauses referring to the works information •





Clause 63.9 – if changes to the works information make descriptions of conditions for key events incorrect, the project manager corrects the descriptions and takes such corrections into account in assessing compensation events Clause 71.1 – payment for plant and materials outside the working areas a reas is dependent upon the contractor preparing them for marking marki ng as the works information requires Clause 73.2 – the contractor has title to materials from excavation excava tion and demolition only as stated in the works information

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conrtact centic systems  

Works Information Schedule of clauses referring to the works information Clauses in Options A and B •

Clause 63.10 – the prices are reduced if a change to the works information is a compensation event which reduces total defined cost

Clauses in Options A and C • Clause 54.1 – information in the activity schedule is not works information Clauses in Options B and D • •

Clause 55.1 – information in the bill of quantities is not works information Clause 60.4 – a difference between the final total quantity of work and the quantity stated in the bill of quantities is not a compensation event if it results from a change in the works information inf ormation

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Works Information Schedule of clauses referring to the works information Clauses in Options C, D, E and F •

Clause 52.2 – the contractor is to keep accounts and records as stated in the works information

• •

6 Clauses in Options C, D and E Clause 11.2(25) o

o

o

cost incurred because the contractor did not follow an acceptance or procedure stated in the works information is disallowed cost cost of correcting a defect caused by the contractor not complying with the works information is disallowed Cost plant and materials not used to provide the works is disallowed cost unless resulting from a change in the works information

Clauses in Options C and D • Clause 63.11 – the prices are reduced if a change in the works information, other than a change proposed by the contractor, is a compensation event ev ent

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which reduces total defined cost

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Works Information Schedule of clauses referring to the works information Clauses in Option F •

Clause 11.2(26) – cost incurred because the contractor did not follow an acceptance or procedure stated in the works information i nformation is disallowed cost

Secondary Option clauses • Clause X4.1 – parent company guarantee – the contractor gives a parent company guarantee in the form set out in the works information • • •

Clause X13.1 – performance bond – the contractor gives a performance bond in the form set out in the works information Clause X14.2 – advanced payment – the bond for advanced payment is in the form set out in the works information Clause X15.1 – contractor’s design – the contractor is not liable for defects in his design if he proves prov es that he used reasonable skill and care to ensure it complied with the works information

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Subcontracting

• Contractor must submit names for acceptance by the

project manager before their appointment (clause 26.2). • Subconractor [11.2(17)] o a person or organisation o who has a contract with the contractor  o to construct or install part of the works o to provide a service necessary to provide the works o to supply plant and materials which he has wholly or partly designed desi gned specific specifically ally for the works works ??? • Why is latter not merely a supplier or if such a specialist is

unwilling to work as a subcontractor??

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Others

Others - defi Others defined ned by exclusio exclusion. n. ‘Others’ are people or organisations who are not the employer, project manager, supervisor, adjudicator, contractor, or any employee, •

subcontractor or supplier of the contractor. [Clause 11.2(10)] 11.2(10)] •

• •

clause 25.1 – the contractor is to co-operate with others in obtaining and providing information they need in connection with the works –  the contractor is required to co-operate with and to share the working areas with others as stated in the works information clause 27.1 – the contractor is responsible for obtaining approval of his design from others where necessary clause 27.2 – the contractor provides access to others notified to him

by the project manager 

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Others



clause 31.2 – the contractor is required to show on his programme the work of others as stated in the works information and dates relating thereto



clause 60.1(5) – failure by others to work within the times or conditions stated in the accepted programme and/or in the works information is a compensation event if others carry out work on the site not stated in the works information that is a compensation event clause 80.1 – loss or damage to plant or materials supplied by others on the employer’s behalf is an employer’s risk until the contract contractor or receives them clause 91.3 –  reason  reason for for termination of the contract contract by the employee employee is that the contractor has substantially hindered others





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Employer

• A legal party acts only through the PM (Like JBCC a 'principal agent‘? o clause 14.3 – only the project project manage managerr may give give an instruction which changes the works information, and o clause 21.3 – the contractor is required to obey instructions given only only by the project project manager manager or the supervisor  supervisor  • Are the common law duties of the employer (to assist

etc.) implied or excluded?

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Obligations of Employer

Core clauses co • 10.1 – to act as stated in the contract and in a spirit of mutual trust and cooperation • • •

• • •

 – to 14.4 give notice to the contractor before replacing the project manager or the supervisor  25.2 – to provide services and other things as stated in the works information 33.1 – to allow access to and use of each part of the site necessary for f or the work included in the contract, and to do so before the later of the access date and the date for access shown on the accepted programme

35.1 – to take over the works not more than two weeks after completion 35.2 – to take over any part of the works put into use (subject to exceptions) 40.2 – to provide materials, facilities and samples for f or tests and inspections as stated in the works information

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• •

43.4 – to give access to the contractor after take over if needed for f or the correction of a defect 51.1 – to pay amounts due to the contractor  conrtact centic systems

 

• • • • • • •

Obligations of Employer

51.2 – to pay within three weeks of the assessment date or to pay interest on late payment 83.1 – to indemnify the contractor contractor against claims etc. from employer’s risks 84.1 – to provide insurances as stated in the contract data 85.3 – to comply with the terms and conditions of insurance policies 90.1 – to notify the project manager giving reasons before terminating 90.2 – to follow the procedures in the termination table when terminating W1.3(1)/ – to notify disputes in accordance with the adjudication table

• W1.3(9)/ – to proceed as normal until the dispute is decided in adjudication a djudication Option X7 – delay damages

X7.2 – to repay any overpayment of delay damages with interest Option X14 – advanced payment •

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• •

X14.1 – to make the advanced payment of the amount stated in the contract data X14.2 – to make the advanced payment within four weeks of the contract date or receipt of the advanced payment bond conrtact centic systems

 



Project Manager

The project manager can be o o o o

External consultant In-house employee Natural person Firm

Is notified in part one of the contract data Not to be replaced before notice of replacement is given [14.4] • Can delegate any of his functions [14.2] • Not expressly required to be impartial • •

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o

House of Lords said its implied i mplied anyway

o

[Costain [Cos tain Ltd and Others Others v. Bechtel Bechtel Ltd (2005) (2005)]] conrtact centic systems  

Project Manager

Core clauses co • 10.1 – to act as stated in the contract and in a spirit of mutual trust and cooperation • 13.1 – to communicate in a form which can be read, copied and recorded • 13.3 – to reply to a communication within the period for reply • 13.4 – to reply to a communication submitted or re-submitted for acceptance and to state reasons for non-acceptance • 13.5 – to notify any agreed extension to the period for reply • 13.6 – to issue certificates to the employer and to the contractor  • 13.7 – to communicate notifications separately from other communications • 14.2 – to notify the contractor of delegation of any actions • 16.1 – to give early warning of matters with delay, cost or performance implications • 16.3 – to co-operate at risk reduction meetings

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16.4 – to record decisions taken at risk reduction meetings, to revise rev ise the risk register and to give instructions changing the works information if necessary

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• • • • • • •

Project Manager

17.1 – to give notice of ambiguities or inconsistencies in the documents and to give instructions resolving ambiguities or inconsistencies 18.1 – to give instructions changing the works information in the event of illegality or impossibility in the works information 19.1 – to give instructions stating how the contractor is to deal with prevention prev ention events 21.2 – to accept particulars of the contractor’s contractor’s design or to give reasons for non-acceptance 23.1 – to accept particulars of the design of equipment or to give giv e reasons for non-acceptance 24.1 – to accept replacement persons proposed by the contractor or to give giv e reasons for non-acceptance 25.2 – to assess the cost incurred by the employer if the contractor fails fa ils to

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provide services and other things 25.3 – to assess the additional cost incurred by the employer if the contractor fails to meet key dates

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• • • • • • • •

Project Manager

36.1 – to state changes to key dates to be included in any quotation for acceleration 40.6 – to assess the cost incurred by the employer in repeating a test of inspection after a defect is found 26.2 – to accept proposed subcontractors or to give reasons for nonacceptance 26.3 – to accept proposed subcontract conditions or to give reasons for nonacceptance 30.2 – to decide the date of completion and to certify completion within one week of completion 90 5.7 Express duties of the project manager  31.3 – to accept the contractor’s contractor’s programme within two weeks of submission or to give reasons for non-acceptance 32.2 – to accept a revised programme or to give giv e reasons for non-acceptance

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35.3 – to certify within one week the date when the employer takes over any part of the works

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• • • • •

Project Manager

43.4 – to arrange for the employer to give access and use to the contractor of any part of the works needed for the correction of defects after taking over and to extend the period for correcting defects if suitable access and use is not arranged within the defect correction period 44.2 – to change the works information, the prices and the completion date if a quotation for not correcting defects is accepted 45.1 – to assess the cost of having defects corrected by others if the contractor fails to correct notified defects within the defect correction period 45.2 – to assess the costs the contractor would have incurred to correct defects for which he is not given access 50.1 – to assess the amount due for payment at each assessment date and to decide the first assessment date to suit sui t the procedures of the parties 50.4 – to consider any application from the contractor when assessing amounts due for payment and to give the contractor details of how amounts

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due have been assessed

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• • •









Project Manager

50.5 – to correct any wrongly assessed amounts due in a later payment certificate 51.1 – to certify payment within one week of each assessment date 61.1 – to notify the contractor of compensation events which arise from the giving of instructions or changing of earlier decisions and to instruct the contractor to submit quotations 61.4 – to decide within one week of notification noti fication (or such longer period as the contractor agrees) whether the prices, the completion date and key dates should be changed when the contractor notifies a compensation event and to instruct the contractor to submit quotations 61.5 – to decide whether the contractor did not give any early warning of a compensation event which should have been given and to notify the contractor of his decision 61.6 – to state assumptions for the assessment of compensation events in the event that the effects are too uncertain to be forecast reasonably and to correct any assumptions later found to have been wrong 62.1 – to discuss with the contractor different ways way s of dealing with compensation



events 62.3 – to reply within two weeks to quotations for compensation events submitted by the contractor 

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• • •

• •





Project Manager

62.4 – to give reasons to the contractor when instructing the submission of a revised quotation 5.7 Express duties of the project manager manager 91 62.5 – to extend the time allowed for the submission of quotations and replies if the th e contractor agrees and to notify the contractor of any agreed extensions for the submission of quotations or replies 64.1 – to assess a compensation event: — if the contractor has not submitted a quotation within the time allowed — if the project manager decides the contractor has not assessed the compensation event correctly — if the contractor has not submitted a required programme  — if the project manage managerr has not accepted accepted the contractor’s contractor’s latest programme 64.2 – to assess a compensation event using his own assessment of the programme:  — if there is no accepted programme — if the contractor has not submitted a revised programme for acceptance as required 64.3 – to notify the contractor of any assessments made of a compensation event



within the period allowed to the contractor for his quotation 65.1 – to implement compensation events by notifying the contractor of accepted quotations or his own assessments

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• • • • •

Project Manager

73.1 – to instruct the contractor how to deal with objects of value, historical or other interest 85.1 – to accept policies and certificates of insurance submitted by the contractor or to give reasons for non-acceptance 87.1 – to submit to the contractor policies and certificates for insurances to be provided by the employer  90.1 – to issue a termination certificate when either party gives giv es notice of termination for reasons complying with the contract 90.4 – to certify final payments within thirteen weeks of termination

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• •

• • • • • •

Project Manager

Option A clauses 36.3 – to change the completion date, key dates and prices when a quotation for acceleration is accepted and to accept the revised programme

54.2 – to accept a revision to the activity schedule or to give giv e reasons for nonacceptance 65.4 – to include changes to the prices, key dates and to the completion date when notifying implementation of a compensation event Option B clauses 36.3 – to change the completion date, key dates and prices when a quotation for acceleration is accepted 60.6 – to correct mistakes in the bill of quantities 65.4 – to include changes to the prices, to key dates and to the completion

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date when notifying implementation of a compensation event

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Project Manager

Option C clauses • 11.2(25) – to decide disallowed cost • • • • • •

26.4 – to accept proposed contract data for subcontracts or to give reasons for non-acceptance 36.3 – to change key dates, the completion date and prices when a quotation for acceleration is accepted 53.1 – to assess the contractor’s contractor’s share 53.3 – to make a preliminary assessment of the contractor’s contractor’s share at completion contractor’s share in the final amount 53.4 – to make a final assessment of the contractor’s due 54.2 – to accept a revision to the activity schedule or to give giv e reasons for nonacceptance

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• •

65.4 – to include changes to the prices and to the completion date when notifying implementation of a compensation event 93.4 – to assess the contractor’s contractor’s share after certifying termination conrtact centic systems

 

Project Manager

Option D clauses • 11.2(25) – to decide disallowed costs • • • • • • •

26.4 – to accept proposed contract data for subcontracts or to give reasons for non-acceptance 36.3 – to change the completion date and prices and key dates when a quotation for acceleration is accepted 53.5 – to assess the contractor’s contractor’s share 53.7 – to make a preliminary assessment of the contractor’s contractor’s share at completion contractor’s share in the final amount 53.8 – to make a final assessment of the contractor’s due 60.6 – to correct mistakes in the bill of quantities 65.4 – to include changes to the prices, to key dates and to the completion

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date when notifying implementation of a compensation event •

contractor’s share after certifying termination 93.5 – to assess the contractor’s

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Project Manager

Option E clauses • 11.2(25) – to decide disallowed cost • 26.4 – to accept proposed contract data for subcontracts or to give reasons for non-acceptance • 36.4 – to change the completion date and key dates when a quotation for acceleration is accepted • 65.3 – to include changes to the forecast amount of the prices, key dates and the completion date when implementing a compensation event • 5.7 Express duties of the project manager 93 Option F clauses • 11.2(25) – to decide disallowed cost • 26.4 – to accept proposed contract data for subcontracts or to give reasons for non-acceptance • 36.4 – to change the completion date and key dates when a quotation for

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acceleration is accepted 65.3 – to include changes to the forecast amount of the prices, key dates and the completion date when implementing a compensation event

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Project Manager

Dispute resolution clauses • W1.3(1) – to notify the employer of disputes relating to quotations treated as having been accepted  – to notify agreed extensions of the times for referring disputes to W1.3(2) adjudication • W1.3(9)/ – to proceed with matters in dispute as though they were not disputed until notification of the adjudicator’s decision Secondary option clauses • X7.3 – to assess the benefit to the employer of taking over parts of the works in •

• •

order to proportion down delay damages X13.1 – to accept a performance bond or to give reasons for nonacceptance X14.1 – to accept an advanced payment bond or to give reasons for f or non-

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acceptance

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• • •

Supervisor

Separate independent roles ! Named in Data part 1 No restriction on appointment can be o o



same person from different firms

Express duties o o o

10.1 – to act as stated in the contract and in a spirit of mutual trust and co-operation 13.1 – to communicate in a form which can be read, copied and recorded 13.3 – to reply to a communication within the period for reply

o o

o o

13.6 issue certificates to the and thebefore contractor   – to 40.3 –  to notify the contractor of project his testsmanager and inspections i nspections they start and afterwards of the results 40.5 – to do tests and inspections without causing unnecessary delay 41.1 – to notify the contractor when plant and materials have passed pre-delivery

o

o o o

tests and inspections 42.1 – to give reasons for searches which are instructed 42.2 – to notify the contractor of defects found 43.3 – to issue the defects certificate 71.1 – to mark equipment, plant and materials outside the working areas for payment purposes

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Key Role players The project manager and the supervisor

• Acceptance by either the project manager or the

supervisor of a communication from the contractor or of his work does not change the contractor’s responsibility to provide the works or his liability for his design [14.1] • Delegation [14.2] by Project Manager and Supervisor unrestricted. NEC silent on effect of delegation. • Clause 14.3 The project manager may give an instruction to the contractor which changes the works information. – is the ‘Variations Clause’

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Contractor

• Design obligations, responsibilities and liabilities • Providing the works • The contractor ’s design • Using the contractor ’s design • Design of equipment • People • Working with the employer and others • Subcontracting • Other responsibilities

• Express obligations of the contractor  • Express prohibitions on the contractor  conrtact centic systems

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Unstated Contractor Obligations

• Confidentiality • To proceed with care and diligence

• To Inspect the site [is it implied by 60.2to inhave judging physical conditions contractor is assumed taken into account information obtainable from a visual inspection of the site] • To Set out the works [implied by 11.2 in Provide the

Works] • To perform variations • To submit interim application for payment

• To notify on completion • To conform to statutes conrtact centic systems

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Design obligations, responsibilities and liabilities Key Questions • How is the obligation to undertake the design allocated between the parties? o

o



How is the responsibility for the effectiveness of the design to be allocated between the parties? o



Obligation – the contractor designs the part of the works which the works information says he is to design Can such an obligation obli gation be imposed by a change instruction?

Responsibili Resp onsibility ty - each party party is gener generally ally responsible responsible for the design which it

undertakes What standard of liability attaches to the party responsible for design o

implied term in design and build contracts that the finished works will be reasonably fit for their intended purpose – is strict liability

o



be reasonably fit for their intended purpose   is strict liability The law does not normally imply terms of fitness for purpose into contracts for the supply of professional services – reasonable skill –  negligence must be proven

NEC3 has no limitation on Liability for design – thus strict liability is probable conrtact centic systems

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Obligations of the contractor

The contractor [20.1] o o



Provides the Works [def] in accordance with the Works Information [def]

Management obligations [20.2] Option F o

o

The contractor manages his own design, the provision provisi on of services and the construction and installation of the works, The contractor is to subcontract all of these except work which the contract data states that he is to do himself

Options C, D, E and F - i.e. cost reimbursable options • Practical implications of design and subcontracting [20.3] o o

The contractor advises the project manager on the practical implications imp lications of the design of the works

o



the works and on subcontracting arrangements

Forecasts ofintotal actual cost [20.4] o prepare, consultation with the project manager, regular forecasts of the total defined cost at intervals as stated in the contract data for submission to the project manager  conrtact centic systems

 

Express obligations of the contractor

Core clauses co • 10.1 – to act as stated in the contract and in a spirit of mutual trust and cooperation • 13.1 – to communicate in a form which can be read, copied and recorded • 13.3 – to reply to a communication within the period for reply • 13.4 – to resubmit a communication which is not accepted within the period for reply • 13.7 – to communicate notifications separately from other communications • 16.1 – to give early warning of matters with delay, cost or performance implications • 16.3 – to co-operate at risk reduction meetings • 17.1 – to give notice of ambiguities or inconsistencies in the documents • 18.1 – to give notice of any illegality or impossibility impossibil ity in the works information

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20.1   to provide the works in accordance with the works information 21.1 – to design such parts of the works as stated in the works information inf ormation



21.2 – to submit particulars of his design for acceptance

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• •

• •

• • •

Express obligations of the contractor 23.1 – to submit when instructed particulars of design of items of equipment equipm ent 24.1 – to employ key persons as stated in the contract data or acceptable replacements. To submit relevant details of proposed replacements

the project manager’s instructions 24.2 – to remove any employee on the 25.1 – to co-operate with others in obtaining and providing information. To cooperate with others and to share the working areas with others as stated in the works information 25.2 – to provide services and other things as stated in the works information and to pay the assessed cost of not providing such services and other things 25.3 – to pay any additional cost incurred by the employer as a result resul t of failure to achieve key dates

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• • • • • • •

Express obligations of the contractor

26.2 – to submit the names of proposed subcontractors for acceptance 26.3 – to submit the proposed conditions of contract for each subcontract for acceptance 27.1 – to obtain approval of his own design from others where necessary 27.2 – to provide access to the works to the project manager, supervisor superv isor and others 27.3 – to obey instructions given by the project manager or the supervisor superv isor which are in accordance with the contract 27.4 – to act in accordance with health and safety requirements stated in the works information 30.1 – to do the work so that completion is on or before the completion date

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• • • • • •

Express obligations of the contractor 30.3 – to do the work so that the condition stated for each key date is met by the key date 31.1 – to submit a programme for acceptance within the period stated in the contract data 31.2 – to show various details in each programme 32.1 – to show various details in revised programmes 32.2 – to submit a revised programme when instructed to or at intervals interv als as required in the contract data 36.1 – to submit details of assessment with each quotation for acceleration

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• • •

• • • •

Express obligations of the contractor 36.2 – to submit a quotation for acceleration when so instructed or to give giv e reasons for not doing so 40.2 – to provide materials, facilities and samples for f or tests and inspections as

stated in the works information 40.3 – to notify the supervisor of tests and inspections before they start and to notify the supervisor of the results of tests and inspections. To notify the supervisor before doing work which would obstruct tests or inspections 40.4 – to correct defects revealed by tests or inspections and to repeat such tests or inspections 40.6 – to pay the assessed cost incurred by the employer in repeating tests or inspections 42.1 – to carry out searches as instructed by the supervisor  superv isor  42.2 – to notify the supervisor of defects found before the defects date

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• • • • • • •

Express obligations of the contractor 43.1 – to correct defects 43.2 – to correct notified defects before the end of the defects correction period

44.2 – to submit a quotation for reduced prices or earlier completion in the event of a change to the works information being considered to avoid correcting a default 45.1 – to pay the assessed costs of having defects not corrected within the defects correction period corrected by others 45.2 – to pay the assessed costs of defects not corrected because access was not given 51.1 – to pay the employer if an interim assessment reduces the amount due from that already paid 61.1 – to put instructions or changed decisions into effect

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• • • • • • •

Express obligations of the contractor 61.3 – to give notice of any event believed to be a compensation event ev ent and to do so within eight weeks of becoming aware of the event 61.4 – to submit instructions for compensation events if instructed to do so

61.6 – to base assessments for compensation events on any assumptions stated by the project manager  62.1 – to submit alternative quotations for compensation events if instructed to do so 62.2 – to submit detail of assessments with quotations for compensation events 62.3 – to submit quotations for compensation events within three weeks of being instructed to do so 62.4 – to submit revised quotations for compensation events within three weeks of being instructed to do so

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• • • • • • • • •

Express obligations of the contractor 72.1 – to remove equipment from the site when it is no longer needed 73.1 – to notify the finding of any object of value, val ue, historical or other interest 81.1 – to carry risks which are not the employer’s risk from the starting date

until the defects certificate is issued 82.1 – to make good loss or damage to the works until the defects certificate is issued 83.1 – to indemnify the employer against claims due to contractor’s contractor’s risks 84.1 – to provide insurances as required by the contract 85.1 – to submit insurance policies and certificates for acceptance a cceptance 85.3 – to comply with the terms and conditions of insurance policies 86.1 – to pay the costs incurred by the employer in covering insurances which are the contractor’s responsibility

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92.2 – to leave the working areas and remove equipment on termination

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Express obligations of the contractor

Option B • NIL • Options C, D, E, & F • • • • •

 – to advise the project manager on the practical implications of the design of 20.3 the works and on subcontracting arrangements 20.4 – to prepare forecasts of the total actual actu al cost for the whole of the works work s 26.4 – to submit the proposed contract data for each subcontract for acceptance 36.3/36.4  – to submit a subcontractor’s subcontractor’s proposal proposal to accelerate accelerate for acceptance acceptance 52.2 – to keep records of costs and payments

• 52.3 – to allow the project manager to inspect accounts and records Option F (only) •

20.2 – to manage the contractor’s design design and the construction and and installation of the works. To subcontract such design, construction and installation as not stated in

187

the works information to be done by the contractor. To do work not stated in the works information to be subcontracted himself or to subcontract it

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Express obligations of the contractor

Options W1 and W2 • W1.2(1)/ – to appoint any adjudicator under the NEC Adjudicator’s Contract • • • •

W1.3(1) – to notify disputes and to refer to adjudication in accordance with the ‘Adjudication Table’ W2.3(1) – to give notice to the employer before referring a dispute to the adjudicator  W1.3(6)/ – to copy to the employer any communication with the adjudicator 

W1.3(9)/ – to proceed with with matters in dispute as though though not disputed until the adjudicator’s decision is notified

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Express obligations of the contractor

Option X4 – Parent company guarantee • X4.1 – to give the employer a parent company guarantee in a form set out in the works information Option X7 – Delay damages • X7.1 – to pay delay damages as stated in the contract data from the completion date until completion or take over  Option X13 – Performance bond f or the amount stated in • X13.1 – to give the employer a performance bond for the contract data and in the form set out in the works information

Option X14 – Advance payment to the contractor • X14.3 – to repay advanced payments to the employer in instalments as stated in the contract data

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Option X17 – Low performance damages •

X17.1 – to pay low performance damages as stated in the contract data for defects included in the defects certificate showing low performance

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• • • • • • • •

Express prohibitions on the contractor

21.2 – not to proceed with work until the project manager has accepted the design 26.2 – not to appoint a subcontractor subcontractor without the project manager’s acceptance 26.3 – not to appoint a subcontractor subcontractor without the project manager’s acceptance of the terms of the subcontract 30.1 – not to start work on site before the first access date 41.1 – not to bring to the working areas, plant and materials to be tested or inspected before delivery 61.2 – not to put into effect a proposed instruction or a proposed changed decision 90.5 – not to do further work after a termination certificate has been b een raised W1.3(2) – not to refer disputes to adjudication unless notified and referred within the times in the adjudication table

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W1.4(1)/ – not to refer a dispute to a tribunal unless it has first been referred to adjudication



W1.4(6)/ – not to call the adjudicator as a witness in tribunal proceedings

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Time

• Starting and completion • Programmes • Revision of programmes • Shortened programmes

• Access to and use of the site • Instructions to stop or not to start work  • Take-over  • Acceleration

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Commencement and progress

NEC 3 does not expressly provide • the contractor should start on or about a particular date • that the contractor should proceed with due expedition and/or regularly and diligently • that the contractor should use his best endeavours to

prevent or reduce delay Damages for delay • No express provision – you must include option X7 for liquidated damages – other wise you would have to

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apply common law rules relating to breach and repudiation (or use a z clause to make time of the essence conrtact centic systems  

Commencement and progress NEC 3 does not expressly provide • For Sectional Completion – use option X5

Suspension of work  • Project manager may give instruction to stop or start and is deal with as a compensation event. • No self help provisions for contractor if i f not paid Take over  • Usually when risk transfer from contractor to employer 

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• NEC follow but provides no formality, ‘completion’

defined not ‘take over’ conrtact centic systems  

Testing and defects

• Definitions and certificates • Tests and inspections

• Testing and inspection before delivery • Searching and notifying defects • Correcting defects • Accepting defects • Uncorrected defects

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Payments

• Assessing the amount due • Payments

• Defined cost • Payments – main option A • Payments – main option B • Payments – main option C • Payments – main option D • Payments – main option E

• Payments – main option F

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Compensation events • Clause 60.1 lists nineteen compensation events which are intended to apply to all the main options.

Clauses 60.2 and 60.3 provide clarification of some of the events but do not add to the list. o

o o o

Clauses 60.4, 60.5 and 60.6 60 .6 are compensation events applicable applicabl e only to NEC3 contracts with bills bill s of quantities – main options B and D. The secondary options list five more compensation events: ev ents: clause X2.1 – a change in the law occurring after the contract date clause X12.3(6) – change in partnering information clause X14.2 – delay by the employer in making an advanced payment

196

o

clause X15.2 – correction by contractor of a defect for which he is not liable

o

clause Y2.4 – suspension of performance under HGCR Act 1996

conrtact centic systems  

Compensation events These can be summarised and Categorised Summary • clause 60.1(1) – changes in works information • clause 60.1(2) – late access/use of site • clause 60.1(3) – late provision of specified things • clause 60.1(4) – stopping/suspension of work • clause 60.1(5) – late/additional works

197

• clause 60.1(6) – late reply to communications • clause 60.1(7) – finding of objects of interest

conrtact centic systems  

NEC3® compensation ev events ents • clause 60.1(8) – changes of decisions • clause 60.1(9) – withholding of acceptances • clause 60.1(10) – searches for defects • clause 60.1(11) – tests or inspections causing delay • clause 60.1(12) – physical conditions • clause 60.1(13) – weather conditions • clause 60.1(14) – employer’s risk

198

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Compensation events • clause 60.1(15) – take-over before completion • clause 60.1(16) – failure to provide materials etc. • clause 60.1(17) – correction of assumptions • clause 60.1(18) – breach of contract by employer • clause 60.1(19) – prevention • clause 60.4 – final quantity differences • clause 60.5 – increased quantities causing delay

199

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200

 

Works related compensation events

Clause 60.1(1) – changes to the works information i nformation • Clause 60.1(1) states that an instruction given by the

project manager changing the works information is a compensation event unless it is a change: • made to accept a defect, or • is a change to the works information inf ormation provided by the contractor for his design desi gn made either at the contractor’s request or to comply with works

information provided by the employer

conrtact centic systems  

Employer’s default events

• clause 60.1(2) – late access/use of the site

• clause 60.1(3) – late provision of specified things • clause 60.1(5) – late/additional works • clause 60.1(16) – failure to provide materials etc. • clause 60.1(18) – breach of contract

201

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202

 

Employ Emplo yer er’’s risk risk event

Clause 60.1(14) provides that an event which is an employer’s risk as stated in the contract is a compensation event. The employer’s risks are detailed in clause 80.1 and can broadly be described as: • 12.6 Project manager/supervisor related events o o o o

general – use of the works, unavoidable loss or damage loss or damage of employer supplied goods war, riots and similar non-insurable events loss or damage after take-over

o o

loss or damage after termination additional risks as listed in the contract data

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Project manager/supervisor related events

• clause 60.1(4) – stopping/suspension of work

• clause 60.1(6) – late reply to communications • clause 60.1(7) – finding of objects of interest • clause 60.1(8) – changes of decisions • clause 60.1(9) – withholding of acceptances • clause 60.1(10) – searches for defects • clause 60.1(11) – tests or inspections causing delay

203

• clause 60.1(15) – take-over before completion • clause 60.1(17) – correction of assumptions

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Physical conditions

• clause 60.1(12) – compensation event for physical

conditions  judging physical conditions • clause 60.2 –  judging • clause 60.3 – ambiguity or inconsistency in site information

Under clause 60.1(12) it is a compensation event if the contractor encounters physical conditions which are: • within the site • not weather conditions

204

• conditions which an experienced contractor would

have judged at the contract date to have such a small chance of occurring that it would have been unreasonable to have allowed for them

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 Judging physical conditions

Clause 60.2 supports clause 60.1(12) by stating the factors the contractor is assumed to have taken into account in judging physical conditions. These are: • the site information • publicly available information referred to in the site information • information obtainable from visual inspection of the site

205

• other information which an experienced contractor could reasonably be expected to obtain

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Adverse weather

The wording of clause 60.1(13) does not of itself lead to identification of the compensation event. The clause needs to be read in conjunction with the contract data, part one, entries for the compensation event. These state: • the place where weather is to be recorded • the weather measurements to be recorded • the location of the historic weather records

206

• assumed values where there are no historic records

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Prevention The clause states as a compensation event, an event which: • stops the contractor completing the works, or • stops the contractor completing by the date shown on the accepted programme • and which neither party could prevent • and which an experienced contractor would have  judged at the contract date to have had such a small chance of occurring that it would have been

207

unreasonable to have allowed for it • and which is not one of the other compensation compensati on events conrtact centic systems  

Measurement related events

This covers four clauses found in main options B and D only, all relating to measurement of the works by bill of quantities: • clause 60.4 – final quantity differences • clause 60.5 – increased quantities causing delay • clause 60.6 – correction of mistakes in bill of quantities • clause 60.7 – assessment of events resulting from

208

inconsistencies

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Secondary option clause events

• clause X2.1 – changes in the law

• clause X12.3(6) – changes in partnering information • clause X14.2 – delay in making advanced payment • clause X15.2 – correction of a defect not contractor’s liability • clause Y2.4 – suspension under HGCR Act 1996

209

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NEC3 compensation event procedures: event

• Events o o o

Core clauses 60.1 to 60.7 Secondary options X2, X14 and X15 Additional events may also be stated by the employer in the contract data.

• The project manager is required to notify the contractor o

of compensation events arising from instructions or the changing of earlier decisions.

• The contractor is required to notify noti fy the project

210

The contractor is required to notify noti fy the project manager within eight weeks o

of other events or events not notified by the project manager.

conrtact centic systems  

NEC3 compensation event procedures: event

• The contractor is required to submit submi t quotations for compensation events showing both time and

money implications. He may be required to submit alternative quotations. A revision of the accepted programme must be submitted with each quotation if there are time or disruption implications. • Quotations for changes to the contract price are

211

based on assessments of Defined Cost incurred or forecast to be incurred.

conrtact centic systems  

NEC3 compensation event event procedures:

• In circumstances where the project manager does not reply to a quotation within a stipulated period a

quotation is treated as having been accepted. • The project manager is permitted to make his own assessment if o

the contractor does not submit his quotation on time or

o o

if the contractor’s programme is not in order or if he (the project manager) decides that the contractor’s assessment is incorrect.

212

conrtact centic systems

213

 

NEC3 compensation event event procedures:

• In circumstances where the project manager does not accept a quotation but fails to make his own

assessment within a stipulated sti pulated period, the quotation is treated as having been accepted. • The project manager is required to notify the contractor when a quotation is accepted or his own assessment is made. The contract price and the times for completion and key dates are

changed accordingly.

conrtact centic systems  

Assessment of compensation events

• General assessment rules

• Particular assessment rules • The project manager ’s assessments • Implementing compensation events • Other financial remedies

214

conrtact centic systems

215

 

Title

• Employer ’s title to equipment, plant and materials • Marking equipment, plant and materials • Removing equipment • Objects and materials within the site

conrtact centic systems  

Risks and insurances

• Employer ’s risks

• Contractor ’s risks • Repairs • Indemnity • Insurance cover  • Insurance policies • Contractor ’s failure to insure • Insurance by the employer 

216

conrtact centic systems

217

 

Termination

• Summary of NEC 3 termination provisions • Termination for ‘any reason’ • Termination under section 9 • Reasons for termination • Procedures on termination • Amounts due on termination

conrtact centic systems  

Dispute resolution

• Developments in dispute resolution • Meaning of dispute • Adjudication under Option W1 • Adjudication under Option W2 • Review by the tribunal • The Adjudicator ’s Contract

218

conrtact centic systems  

 JBCC Contracts  Joint Building Contracts Committee

219

Principal Building Agreement 6.1 March 2014 220  

 Joint Building Contracts Committee

JBCC formed in 1984 • Association of Construction Project Managers • Association of South African Quantity Surveyors • Master Builders South Africa • South African Association of Consulting Engineers • South African Institute of Architects • South African Property Owners Association

conrt act centic syste

• Specialist Engineering Contractors Committee

conrtact centic systems

221

 

 JBCC Versions Versions

Insti tute of British Architects) • 1931 – RIBA Blue Form (Royal Institute • 1984 – JBCC established st

•• • • •

1991 Principal 1998 –   – JBCC JBCC Series 2000Building Agreement 1 Edition JBCC Series 2000 Edition 2000 July JBCC Series 2000 Edition January 2003 JBCC Series 2000 Edition 4.0 March 2004

• JBCC Series 2000 Edition 4.1 March 2005 o

Preliminaries May 2005

JBCC Series 2000 Edition 5.0 July 2007 o

Contract Data includes preliminaries

• Edition 6.0 September 2013 (Recal (Recalled) led) • Edition 6.1 March 2014 (CIDB Gazette July 2015) conrtact centic systems  

 JBCC Series 2000 Current Documents

• Principal Building Agreement 6.1 March 2014 o

PBA Contract Data

• Nominate/Selected Subcontract Agreement o

N/S Contract Data

• Minor Works Agreement 5.1 March 2014 o

MWA Contract Data

• Ancillary administration forms Forms: Tender  o

222

o o

Guarantees: Construction, Payment, Advanced, Variable Certificates: Site Possession, Payment, Completion

conrtact centic systems  

Application of Contracts Suitable for  • Engineering and Construction Works o

o

o o

Design by Employer/Consultant & Construct Design & Build by the contractor [P&DB] & Turnkey Building Work  Combination

• Fixed price (Lump Sum) or 

223

• Re-measurement

(ad-measured)

• Not suitable for Cost Contracts • Not suitable for time based assignments Contract Centric Systems  

WHY A NEW EDITION Principal Building Agreement EDITION 6.1 Since 5.0 2007 Edition, there has been changes in the law • CPA Consumer Protection Act • Amendments to building regulations • OSH ACT

224

Resulting in a 30 Clause agreement  – from a 42 Clause agreement Consider Perhaps 5.0 was just a mess? Contract Centric Systems

225

 

General Layout of the PBA Version 5.0 – Had EC & CE parts to complete

• Principal Building Agreement o

o

Definitions (and interpretation) Objectives and preparation

Version 6.1 – Has CONTRACT DATA [CD]

• Principal Building Agreement o

Interpretation Insurance & Security

o

Execution

o

o o o

o o o

Execution Completion Payment

o o o

o

Termination Dispute Contract Agreement

Completion Payment Suspension & Termination Dispute Resolution

Agreement (is severed)

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226

 

DEFINITIONS 1.0 Definitions and Interpretation •

.

• INTERPRETATION

1.0 Interpretation



OBJECTIVE AND PREPARATION 2.0 Offer, Acceptance and Performance Obligations 3.0 Documents

1.1 Definitions 1.2 Interpretation 2.0 Law regulations & notices 3.0 Offer & Acceptance

4.0 Design Responsibility 5.0 Employer's Agents 6.0 Contractor's Site Representative 7.0 Compliance with Laws and

4.0 Assignment 5.0 Contract documents 6.0 Employer's Agents 7.0 Design Responsibility

Regulations 8.0 Works Risk

• INSURANCE & SECURITY 

9.0 Indemnities 10.0 General Insurances 11.0 Special Insurances

8.0 Works Risk  9.0 Indemnities

13.0 Assignment 14.0 Security

10.0 Insurances 11.0 Securities

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227

 

.

• EXECUTION

15.0 Preparation for and

Execution of the Works 16.0 Site and Access 17.0 Contract Instructions 18.0 Setting out of the Works 19.0 Temporary Works and Plant 20.0 Nominated Subcontractors 21.0 Selected

• EXECUTION

12.0 Duties of Parties 13.0 Setting Out 14.0 Nominated Subcontractors 15. Selected Subcontractors 16.0 Direct Contactors 17.0 Contract Instructions

Subcontractor  22.0 Employer's Direct

Contractors 23.0 Contractor's Domestic Subcontractors Contract Centric Systems

228

 

• COMPLETION

• COMPLETION

24.0 Practical Completion 25.0 Works Completion 26.0 Final Completion

18.0 Interim Completion (!) 19.0 Practical completion 20.0 Sectional Completion 21.0 Final completion 22.0 Latent Defects Liability Period 23.0 Revision Of The Date for Practical Completion 24.0 Penalty for Late or

27.0 Latent Defects Liability Period 28.0 Sectional Completion 29.0 Revision of Date for

Practical Completion 30.0 Penalty for Late or Non-Completion

Non-Completion !Interim Completion In The NSA

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229 .

 

• PAYMENT 

• PAYMENT 

31.0 Interim Payment 32.0 Adjustment to the Contract Value 33.0 Recovery of

25.0 Payment 26.0 Adjustment Of The Contract Value & Final Account

Expense and Loss 34.0 Final Account and Final Payment 35.0 Payment to Other Parties

27.0 Recovery of Expense and Loss

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230

 

• TERMINATION 36.0 Termination by Employ Emp loyer er - Con Contra tracto ctor's r's

Default 37.0 Termination by Empl Em ploy oyer er - Lo Loss ss and and Damage

38.0 Termination by Contracto Contr actorr - Empl Employer oyer's 's Default 39.0 Termination Cessation of the Works • DISPUTE

40.0 Settlement of

 SUSPENSION ION & •  SUSPENS TERMINATION

28.0 Suspension of the contractor  29.0 Termination

30.0 Dispute Resolution

Disputes • CONTRACT AGREEMENT 41.0 Post Tender Provisions 42.0 Contractual Agreement Contract Centric Systems  

Examination of Clauses of Interest

231

Contract Centric Systems  

GCC 2015 Contract South African Institution of Civil

232

Engineers General Conditions of Contract for Construction Work (Third Edition) 2015 233  

South African Institution of Civil Engineers

SAICE has been in existence since (at least) 1954 SAICE document versions include –  • SAICE GCC for Civil & Engineering Works 6th Ed 1990 • SAICE GCC COLTO 1998 • GCC 2004 • GCC 2010 (Second Edition) & Management Guide • GCC 2015 (Third Edition) •

Intent – part of Standard of

Contr  act Centri c

Uniformity in Construction Procurement o o o o

FIDIC NEC3 JBCC 5.0 Series 2000 (now 6.1) GCC 2010 (now 2015)

Contract Centric Systems

234

 



Other documents used with GCC 2015

CIDB / SANS 294-2004 o

o



Standard form of tender invitation Form of Offer and Acceptance

Contract Data o

o

Part 1: Data provided by Employer  Part2: Data provided by Contractor 



GCC 2015 – The General



Condition of Contract Performance Guarantee

• Documents not

provided by SAICE with GCC 2015 Small works [none o

o

suggested] Subcontract

• SAFCEC SAFCEC - Gen Genera erall Conditions of • Subcontract BIFSA – Standard Subcontract Agreement

Adjudication o

o

o

Disclosure statement (adjudication board member) Adjudication Board Member Agreement Adjudication Board Rules

2000 o

Professional Services • PROCSA – Client Consultant Professional Services Agreement

Contract Centric Systems  

Application of GCC 2015

Suitable for  • Engineering and Construction Works o

o

o o

Design by Employer/Consultant & Construct Design & Build by the contractor [P&DB] Building Work  Combination

• Fixed price (Lump Sum) or 

235

• Re-measurement

(ad-measured) • Not suitable for Cost Contracts • Not suitable for time based assignments Contract Centric Systems

236

 

1.

General 1. 2.

2.

SANS 294

Actions Tender Documents [se [see ne nexxt slide]

3.

Tenderers obligations

Emplo loy yers undertakings

1. 2.

Opening of Ope of ten tend der sub subm mis isssions Two envelope system N -did sc rejectio Go ronun und s lfoosrure rej ion n and disqualification Tests fo for re responsiveness Arithmetic errors Clar Cl arif ific ica atio ion n of te ten nder off offer  er  Eva vallua uattion of tender of offers

1.

Eligibility

2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Cost of tendering Check Documents Confidentiality Reference documents Acknowledge addenda Site Si te vi visi sitt an and d cla clari rifi fic cat atiion me meet etiing Seek clarification Insurance Pricing te tender of offer   Alte terrati tio on of of do document ntss

3 4..

12. 13. 14.. 14 15.

Alt lte ern rna ati tiv ve te tend nde er of offfer erss Subm Su bmit itti ting ng th the e te tend nde er of offfer  Infor Inf orma mati tion on an and d data data to to be be com compl plet eted ed in in all all resp respec ects ts Closing titime

9.

5. 6. 7. 8.

10.. 10

Insurance provided by the Ins employer  Acce Ac cept ptan ance ce of te tend nder er off offer  er 

16. 17.. 17 18. 19. 20.. 20

Tender offer validity Clar Cl arif ific icati ation on of te tend nder er af afte terr su subm bmis issi sion on Provide oth the er mate terrial Insp In spec ecti tio ons te test stss and and an anal aly ysi siss Subm Su bmit it sec secur urit itie ies, s, bo bond ndss poli polici cies es etc etc.. Check final draft

2 21. 2.

Re Retu o osthe er ten tende derr doc docum umen ents ts Cetur rtirfnicof afteoth

11. 11. 12.. 12 13.. 13 14.. 14 15.. 15

Notice Noti ce to un unsu succ cces essf sful ul te tend nder erers ers Prep Pr epar are e con contr trac actt doc docum umen ents ts Isssue fi Is fina nall con contr tra act Compl Co mplet ete e ad adju judic dicat ator orss co cont ntra ract ct Prov Pr ovid ide e cop copie iess of of the the con contr trac actt

Contract Centric Systems  

General 1.2 [Tender documents]

T1 Tendering procedures T1.1 Tender Notice and Invitation to Tender T1.2 Tender Data T2 Returnable documents T2.1 List of Returnable Documents T2.2 Form of Offer and Acceptance T2.3 Contract Data T2.4 Activity Schedule Schedule / Bill of Quantities T2.5 Returnable Schedules C1 Agreement and Contract Data C1.1 Form of Offer and Acceptance Acceptance

C1.2 Contract Data(if not included in volume 2) C2 Pricing data C2.1 Pricing Instructions

237

C3 Scope of Work C3.1 Scope of Work C4 Site information (engineering and construction works contracts only)

C4

Site Information

Contract Centric Systems  

General Layout of a GCC 2015 Contract

• Form of Offer and Acceptance (CIDB/SANS 294) • Contract Data o o

Prepared by Employer  Prepared by Contractor 

• General Conditions 1. 2. 3. 4.

General Basis of Contract Engineer   Contractor’s general obligations

5. 6.

Time and re related ma matters Qualit ity y and re rela latted ma matt tte ers

238

7. 8.

Risk and re related ma matters Termination of of co contract

• Pricing data • Scope of Work  • Site Information Contract Centric Systems  

Contract Data the Employer provides when requesting tenders CONDITIONS OF CONTRACT

The General Conditions of Contract for Construction Works, Works, Second Edition, 2010, published by the South African Institution Institution of Civil Engineering, Private Bag X200, Halfway House, 1685, is applicable to this Contract and is obtainable from www.saice.org.za . CONTRACT SPECIFIC DATA The following contract specific data, referring to the General Conditions of Contract for Construction Works, Wor ks, Second Edition, Editi on, 2010, are applicable appli cable to this Contract: Compulsory Data Clause 1.1.1.13: -The Defects Liability Liabili ty Period is ... A time measured from the date of the Certificate of Completion . (Omit the Contractor is to state the time achieving Practical Clause 1.1.1.14: -The time for if achieving Practical Completion is ...for  A time measured from Completion). the Commencement Date.

239

Or, if Practical Completion in portions is required , The times for achieving Practical Completion for the portions as set out in i n the Scope of Works are: For portion 1 within …. followed by further portions as required The time for achieving Practical Completion of the whole of the Works is ... Cla lau use 1. 1.1. 1.1. 1.15 15:: The na nam me of the Empl plo oyer is ... The legal name of the Employer .

Clause 1. 1.1.1.26: The Pr Pric icin ing g Strategy is is ... Either Re-measurement Contract or Fixed Price Contract. Clause Clau se 1.2.1.2: 1.2.1.2: - The address address of the the Employer Employer is ... ... The physical address, postal address, e-mail address and/or fax number where the Employer will receive notices . Clause 1.1.1.16: 1.1. The ofmthe Con1.16: tract C entname ric Syste s Engineer is ... The legal name of the Engineer   

Contract Data the Employer Cla laus use e 1. 1.2. 2.1. 1.2: 2: -

provides

The ad The addr dres esss of the En Engi gin nee eerr is ... The physical address, postal address, email address and/or fax number where the Engineer will receive notices Clause 5.3.1: - The documentation documentation required before commence commencement ment with Works Works execution execution are: :Health and Safety Plan (Refer to Clause 4.3) :Initial programme (Refer to Clause 5.6) :Security (Refer to Clause 6.2) :Insurance (Refer to Clause 8.6) . .. Other requirements Clause 5.3. 5.3.2: 2: - The time to to submit the documenta documentation tion required before commen commencement cement with Works execution is ... days.  A reasonable reasonable time is 28 days. Clause Clau se 5.8. 5.8.1: 1: - The non-w non-work orking ing days are ... ... Usually Sundays The special non-working days are: (1) Usually the public holidays or a selection of the public holidays, for example certain religious holidays. (2) The year end break commencing on ... and ending on ....

240

Clau Cl ause se 5. 5.13 13.1 .1:: -

The pe The pena nalt lty y fo forr fa faililin ing g to co comp mple lete te th the e Wo Work rkss is .. .... Monetary value per day Or, if completion in portions is required, The penalty for failing to complete portion 1 of the Works is .... followed by further portions as required. The penalty for failing to complete the whole w hole of the works is .....

engineering ring works, 5 The la lattent defect perio iod d is ... Usually 10 years for civil enginee years for building works but shorter for certain electrical and mechanical engineering works. Clause Cla use 6.5 6.5.1. .1.2.3 2.3:: The per percen centag tage e allo allowan wance ce to cove coverr overh overhead ead cha charges rges is ... Omit if the Contractor is to state the overhead charges, otherwise state the percentage Contract C entric Systems value.

Cla lau use 5.16.3: -

 

Contract Data the Employer provides Clause 6.10.1.5: - The percentage advance advance on materials not not yet built into the Permanent Works is ... A percentage. percentage. Clause Clau se 6.10. 6.10.3: 3: - The limit of retent retention ion mone money y is ... A monetary value usually decided decided in conjunction conjunction with with the security to be provided in terms of Clause 6.2. 1. For financially stronger contractors contractors the liability li ability for the performance guarantee is usually a higher percentage with the limit of retention money at a lower amount Clau Cl ause se 8. 8.6. 6.1. 1.1. 1.2: 2: -is ... Monetary The Th e val vvalue. alue ue of Pl Plan antt and and ma mate teria rials ls su supp pplie lied d by by the the Em Empl ploy oyer er to be in incl clud uded ed in th the e insu insura ranc nce e sum sum Clau Cl ause se 8. 8.6. 6.1. 1.1. 1.3: 3: -

The Th e amo amoun untt to to cov cover er pr prof ofes essi sion onal al fe fees es fo forr rep repai airi ring ng da dama mage ge an and d los losss to to be be inc includ luded ed in th the e insurance sum is ... Monetary value. Clause Clau se 8.6.1.3: 8.6.1.3: - The limit limit of indemnity indemnity for liabilit liability y insurance insurance is ... ... Monetary value value. Clause Claus e 10.5 10.5.3 .3 - The number number of Adjudica Adjudication tion Board Board Members Members to to be appointed appointed is is ... Either one or three. Optional data Only the statements applicable to the options chosen should be completed

Clause 1.3.2: Clause 1.3.3: -

If the governing law is not the law of South Africa then: The governing law is ... the law of the applicable country or jurisdiction. If the language of the Contract and for written communications communications is not English, then:

241

Clause 3.1.3: -

Clause 5.4.2: -

The language of the Contract and for written communications is ... the applicable language. If the Engineer must get specific approval from the Employer for the execution of any part of his functions or duties then: The Engineer shall obtain the specific approval of the Employer before executing any of his functions or duties according to the following Clauses of the General Conditions of Contract: 1.Clause ... number, function or duty and if required, the financial or other limit applicable.  2 Further Clauses Clauses as required required Please note that getting specific approval from the Employer will delay decision-making and this may increase the completion time and cost of the Works. If the access and possession of the Site is not exclusive to the Contractor then: The access and possession of Site shall not be exclusive to the Contractor but as set out in the Site Information.

Contract Centric Systems  

Clause 6.8.2: -

Clause 6.8.3: Clause 8.6.1: -

Contract Data the Employer provides

If the value of payment certificates is to be adjusted by a Contract Price Adjustment Factor then: The value of the certificates issued shall be adjusted in accordance with the Contract Price Adjustment Schedule with the following values: If the value of x is not 0.1 then: The value of “x” is ... the portion, expressed as a decimal of unity, not subject to adjustment. The values of the coefficients are: a = … Labour  = …. Material …  Material Contractor's Contractor 's equipment b c= …. d = … Fuel Please note that that the total total of all the coefficients must equal 1.0 The province wherein the larger part of the Site is located is ... Select the province for which the Labour Index would be applicable from Statistical News Release, P0141, Table A . The applicable industry for the Producer Price Index for materials is ... Select the applicable industry from Statistical News Release, PO 142. 1, Table 11. The area for the Producer Price Index for fuel is ... Select the area from Statistical News Release, P0142. 1, Table 12. The base month is ... month and year prior to the closing of the tender . If price adjustments for variations in the costs of special materials are allowed then:

Price adjustments for variations in the costs of special materials are allowed. If a completely different type of insurance scheme than the scheme, with additions, stated in the General Conditions of Contract is required, then: Delete Clause 8.6.1 and replace it with ... The requirements and/or and/or details of the insurance scheme.

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If the Employer is to arrange the insurance, details of the insurance should be given to allow the Contractor to arrange further insurance he might require. Clause 8.6.1.2: - If special risk insurance from SASRIA is not required then: A Coupon Policy for Special Risks Insurance issued by the South African Special Risks Insurance Association is not required. Clause 8.6.1.5: - If additional insurance is required then: In addition to the insurances required in terms of General Conditions of Contract Clauses 8.6.1.1 to 8.6.1.4 the following insurance is also required ... The requirements and/or details of the additional insurance. Clause 8.6.5: If insurance is to be effected with an insurance company not necessarily in South Africa then: The insurances shall be effected with an insurance company registered in ... any country or name of country. Clause 10.5.1:If the preferred method method of dispute resolution is by standing adjudication instead of ad-hoc adjudication then: Dispute resolution shall be by standing adjudication. ontra-ct C ntrpreferred ic Systemmethod s Clause C 10.7.1: If e the metho d for the determination of disputes is arbitration instead of litigation li tigation then: The determination of disputes shall be by arbitration.  

Contract Data the Contractor gives when tendering Clause 1.1.1.9:1.1.1.9:- The name of of the Contractor Contractor is ... The legal name of the Contractor . Cla lau use 1.2.1.2: The address of the Co Contractor is is ... The physical address, postal address, e-mail address and/or fax number where the Contractor will receive notices. Clause 1.1.1.14:(Omit if the Employer is to state the time for achieving Practical Completion). Commencement The time for achieving Practical Completion is ...  A time measured from the Commencement Date. Or, if Practical Completion in portions is required, The times for achieving Practical Completion for the portions as set out in the Scope of Works are: For portion 1 within … followed by further portions as required The time for achieving Practical Completion of the whole of the Works is ... Clause 6.2.1 : -

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Contract Data the Contractor gives when tendering Note: In the Standard for Uniformity in Construction Procurement in section 4.4.4.4 it is stated that: “Retention monies that are held shall not exceed 10% of any amount due to a contractor. Where guarantees of an insurance company or bank that are provided are equal to or greater than 10% of the contract price, the total amount of retention monies held shall not exceed 5% of the t he contract price. “

Clause 6.5.1.2.3: - The percentage percentage allowance to cover cover overhead charges is ... Omit if the Employer is to state the overhead charges, otherwise state the percentage value. Clause 6.8.3: - If price adjustments for a variation in the costs of special materials is allowed then: The variation in cost of special materials is Type of special material

Unit

Rate or price,

(The type of special materials may be listed, leaving the unit and rate or price to the tenderers to fill in or the tenderers are allowed to state the type of special materials, the unit and the rate or price.)

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Agreement to let and hire work

• Common Law scope • Project

1.1.1.28 - “Scope of Work ” means the document that specifies and describes the Works which are and to beany other provided,

• SANS 294

The terms of the contract, are contained in o

o o

Part 1 - Agreeme Agreements nts and Contract Data, (which includes this Agreement) Part 2 -Pricing Data Part 3 -Scope of Work.

requirements and constraints relating to the manner in which the

o

Part 4-Site Information

work is to be carried out Contract Centric Systems  

• •

Time (agreed or determinable)

“Day Day” ” shall mean a calendar day 5.1. 5. 1.1 1 Ti Time me Ca Calc lcul ulat atio ions ns - Except where otherwise provided by the Contract, where a specific time-span is stipulated in the Contract for carrying out any task or for the termination of any right or the duration of any event or circumstance, ci rcumstance, • • •



The special non-working days set out in i n the Contract Data that fall within the said time-span, as well as The day on which the time-span commences shall be excluded from the calculation of the time-span concerned.

“Commenceme Commencement nt Date Date” ” means the date that the Agreement, A greement,

made in terms of the Form of Offer and Acceptance, comes into effect. [1.1.1.5] • “Practical Completion” Completion” means that the whole or portion of the

246

Works has reached a state of readiness, fit for the intended purpose, and occupation without danger or undue inconvenience i nconvenience to the Employer, although some work may be outstanding. [1.1.1.24 ] • “Certificate of Practical Completion” Completion” means the certificate issued by the Engineer stating the date on which Practical Completion was achieved. • “Due Completion Date” Date” means the date of expiry of the time stated in the Contract Data for achieving Practical Completion Completion of the Works, calculated from the Commencement Commencement Date and as adjusted adjusted by such extensions of time or acceleration as may be allowed al lowed in Contract Centric Systems terms of Contract. [1.1.1.14 ]  

Time (agreed or determinable)

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Commence 3.5 5.3. 5. 3.1 1

5.3. 5. 3.2 2

Commen Comm ence ceme ment nt of th the e Wo Work rkss - Upon the Engineer's instruction the Contractor shall, save as may be otherwise provided in the Contract or be legally or physically impossible, commence executing the Works. Such instruction shall be subject to the submission by the Contractor, and approval by the Engineer, Engi neer, of documentation required before commencement with Works execution, as set out in in the Contract Data. Unac Un acce cept pted ed do docu cume ment ntat atio ion n - If the documentation referred to in Clause 5.3.1 is not submitted within the number of days stipulated in the Contract Data from the Commencement Date, or is found to be unacceptable, the Employer may terminate the Contract in terms of Clause 9.2. [should [should be read with the Form of Offer & Acceptance A cceptance see next slide] slide]

248

5.3.3 5.3. 3

Time to Time to instr instruct uct com comme mence nceme ment nt of of the the Work Workss - If the Engineer s instruction to commence executing the Works, or to resubmit documentation, is not received by the Contractor within 7 days from the actual date of submission of the documentation referred to in Clause 5.3.1, commencement of the Works shall be deemed to be on the expiry of such 7 days.

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• • • • • •

Agreed or determinable fee

“Contract Price” means the Contract Sum subject to such addition thereto or deduction therefrom as may be made from time to time under the provisions of the Contract. “Contract Sum” means the accepted amount provided for in the agreement

made in terms of the Form of Offer and Acceptance. “Bill of Quantities” means the document so designated in the Pricing Data, if any. “Pricing Data” means the document that sets out the Pricing Strategy and provides the criteria and assumptions which it will be assumed in the Contract were taken into account by the Contractor when developing the Contract Sum. “Pricing Strategy” means the strategy stated in the Contract Data which is adopted to secure prices and to remunerate the Contractor in terms of the Contract. “Fixed Price Contract” means the Contractor is paid the Contract Sum for execution of the Works subject to adjustments in accordance with the Contract.



''Re-measurement Contract” means the Contractor is paid an amount determined from the actual quantities of work completed multiplied by the rates or prices for such work subject to adjustments in accordance with the Contract.

Contract Centric Systems  

Commencement Read with the Form of Offer and Acceptance “The Tenderer shall within two weeks after receiving a completed copy of this Agreement, including the Schedule of Deviations (if any), contact the Employer's agent (whose details are given in the Contract Data) to arrange the delivery of any bonds, guarantees, proof of insurance and any other documentation to be provided in terms of the

250

Conditions of Contract identified in the Contract Data at, or just after, the date this Agreement comes into effect. Failure to fulfil any of these obligations in accordance with those terms shall constitute a  repudiation of this Agreement.” Agreement.” Contract Centric Systems  

• • •

Communication

Reception theory “Writing” Written communication under GCC o o

o

• •

Hand delivered or  Delivered at address provided in Contract Data (or the notified changed address) 1.2.1 In English (or as in Data)1.3.3

Communications Include Communications Types of … o o

Notifications for submitting data or information: Requests for consent approval of a matter or permission to do something

251

o o



Submitting a claim or insisting on a right r ight Giving an instruction with authoritative directions as how to take actions

Party who … o o o

Written actions required from the Contractor  Written actions required from the Employer  Written actions required from the Engineer 

Contract Centric Systems  

Written actions required from the Contractor

1.2.1.2 1.2.3 2.2.1

Notice of change of address Notice of authority of persons Notice of adverse physical conditions

2.5.1 4.9.1 5.8.2 5.9.3 5.10.1 5.11.3 5.14.1 6.3.2.1

Consent for assignment Notification of owner of Construction Equipment Proposal to execute work during non-working times Requiring drawings and instructions Demanding compliance by Employer with terms of Contract Request to proceed with the Works after suspension Request for Practical Completion Confirmation that an order is a Variation Order

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6.4.2 6.9.1.2 7.5.3

Changing default period for delivery of Variation Order valuation Agreement that Plant and materials may be stored at other places than on Site Notice that Plant and Works are ready for testing and examination

8.5.1

Reporting of accidents

Contract Centric Systems  

Written actions required from the Contractor

9.1.2 9.1.4

Notice of termination of Contract due to state of emergency, etc Notification of increased Cost due to termination

9.3.1.1.3 9.3.1.3 10.1.1.1 10.1.1.2.1 10.1.1.3 10.1.3.3

Notice to remedy default Notice to terminate the Contract Claim for extension of time or additional payment Notice of intention to claim Delivering updated particulars of claim Agreement/disagreement Agreement/disagree ment regarding correctness of recorded

10.2.1

matters Notice of dissatisfaction

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10.3.1 10.4.2 10.6.1.2

Notice of dispute Amicable settlement failure Notice disputing validity of Dispute Board's or Adjudicator's decision

10.6.3 10.9.1

Notice when Dispute Board or Adjudicator fails to give a decision Appointment of dispute resolving persons

Contract Centric Systems  

Written actions required from the Employer

1.1.1.16 Replacing the Engineer 1.2.1.2 Notice of change of address 1.2.3 2.5.1 6.4.2

Notice offor authority of persons Consent assignment Changing default period for delivery of Variation Order valuation 6.9.1 6. 9.1.2 .2 Ag Agree reemen mentt that that Plan Plantt and and mater material ialss may may be

stored at other places than on Site 6.10.1. 6.1 0.1.5 5 Approv Approval al of indemnit indemnity y for Plant Plant and and materials materials for for

254

7.6.2.2 9.1.1

sequestration/liquidation Consent to accept plant at reduced price Notice of terminati termination on of Contract due to war, hostilities, etc.

Contract Centric Systems  

Written actions required from the Employer

9.1.2

Notice of termination of Contract due to state of emergency, etc.

9.1.2.2 9.2.1.3 10.2.1 10.3.1

Accepting additional Cost instead of termination Notice to remedy defect in breach of Contract Notice of dissatisfaction Notice of dispute

10.4.2 Amicable settlement failure 10.6.1.2 Notice disputing validity of Dispute Board's or

255

10.6.3 10.9.1

Adjudicator's decision Notice when Dispute Board or Adjudicator fails to give a decision Appointment of dispute resolving persons

Contract Centric Systems  

Written actions required from the Engineer

1.2.1.2 3.2.1 3.2.4 4.8.2 4.9.1 4.12.2 5.7.1 5.7.3 5.8.1.1 5.9.7

Notice of change of address Nomination/termination of Engineer's Representative Delegation/termination of Engineers authority to others Instr tru uctio ion n to to pr provi vid de fac acililit itiies to others Consent to remove Construction Equipment Approval of Site Agent Notice that rate of progress is behind programme Conditions for payment for acceleration Permission for executing work during non-working times Approval of and departure from Contractor's designs

256

5.9.7 5.11.1 5.14 5. 14.1 .1 5.14.2

Approval of and departure from Contractor s designs Order to suspend the Works Issu Is suin ing g lis listt of of wor work k for for Pr Prac acti tica call Co Comp mple leti tion on Issuing list of work for Completion

6.3.2 6.3.2.1

Orders for variations Contradiction that an order is a Variation Order

Contract Centric Systems  

Written actions required from the Engineer

6.4.2 7.5.2 7.5.3

Delivery of Variation Order valuation Authorization for delivery of Plant to Site Advising non-attendance of testing Plant or examining Works

7.6.1 7.6.3 7.7.1 7.8.1 7.8.1

Ordering making good of Plant that failed testing Ordering removal of improper work Ordering search for defects Ordering making good of defects in Defect Liability Period Allowing the correction of defects after the Defects Liability Period

7.9.1 9.2.1.3

Notice of emergency occurrence Certifying Contractor's breach of Contract

257

9.2.1.3.2 Notice to proceed with work 9.2.1.3.4 Notice that Plant, material or work have been condemned 10.1.3 10. 1.3.3 .3 Agre Agreem ement ent/di /disag sagree reeme ment nt rega regardin rding g corre correctn ctnes esss of reco recorde rded d matters 10.1.5 10.2.3

Ruling on claim for extension of time or additional payment Rulilin ng on dissatisfaction claim

Contract Centric Systems  

2. BASIS OF CONTRACT 2.1 Available data and information 2.2 Adverse physical conditions 2.3 Technical data 2.4 Ambiguity or discrepancy 2.5 Assignment

258

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Engineer & Contractor

3. ENGINEER 3.1 Functions of the Engineer  3.2 Engineers Representative

4. CONTRACTORS GENERAL OBLIGATIONS 4.1 Extent of obligations and liability 4.2 Engineers instructions 4. 3 Legal provisions 4.4 Subcontracting 4.5 Notices and Fees 4.6 Patent rights 4.7 Fossils

259

4.8 Facilities for others 4.9 Construction Equipment 4.10 Contractors employees 4.11 Competent employees 4.12 Contractors superintendence

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Time & Cost Management 5. TIME AND RELATED MATTERS 5.1 Time calculations 5.2 Commencement of the Contract 5.3 Commencement of the Works 5.4 Access to the Site 5.5 Time for Practical Completion 5.6 Programme 5.7 Progress of the Works 5.8 Non-working times 5.9 Instructions 5.10 Delays attributable to the Employer 

6. PAYMENT AND RELATED MATTERS 6.1 Payment to Contractor  6.2 Security 6.3 6.4 6.5 6.6

Variations Value of variations Daywork rkss Provisional sums sums and prime cost sums 6.7 Mea Measur surem ement ent of the the Work Workss 6.8 Adjustment in rates and/or prices

5.11 5.12

Suspension of the Works Extension of time for Practical Completion 5.13 Penalty for delay 5.14 Completion 5.15 Clearance of Site 5.16 Approval

6.9 Vesting of Plant and materials materials 6.10 Payments 6.11 Variations exceeding 15 per cent

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Performance and risk

7. QUALITY AND RELATED MATIERS 7.1 Quality of Constructio Construction n Equipment 7.2 Quality of Plant workmanship and materials 7.3 Access to the Works

8. RISKS AND RELATED MATTERS 8.1 Protection of the Works 8.2 Care of the Works

7.4 andof testing 7.5 Samples Examination the

8.3 Excepted risks

Works 7.6 Defective Plant materials and work  7.7 Search for defects 7.8 Defects 7.9 Urgent remedial work 

8.4 Indemnifications 8.5 Reporting accidents

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Claims & Closeout 10. CLAIMS AND DISPUTES 10.1 Contractors claim

9. TERMINATION OF CONTRACT

10.2 10.3 10.4 10.5 10.6

9.1 Termination of Contract 9.2 Termination by Employer  9.3 Termination by

Dissatisfactio Dissatisfaction n claim Dispute notice Amicable settlement Adjudication Disagreement with Adjudication Boards decision

10.7 Arbitration 10.8 Court proceedings 10.9 Appointment 10.10 Common provisions 10.11 Continuing validity

Contractor 

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Claims

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End

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