Introduction. Construction Contracts. Unit 4: Principle of Contract Administration under JCT 5 SBC/Q 1/15/2016

Transcription

1 Introduction R. Sarvananthan ( Sarva) B.Eng, MSc CPM, MIES, MASCE 1 Construction Contracts Unit 1: Introduction to Construction Contracts Unit 2: Standard form of Construction Contracts Unit 3: Managing Time & Payment Unit 4:Principle of Contract Administration under JCT 5 SBC/Q Unit 5: Insurance, Bond and Adjudication Unit 6:JCT SBC/Q Contract time, Certification and Payment Under JCT 5 SBC/Q and PSSCOC 2 Unit 4: Principle of Contract Administration under JCT 5 SBC/Q 3 1

2 The Traditional Contract separates construction from design. A construction contract will be defined as a contract for carrying out of construction operations 4 Parties in a building contract: Numbers & identity of persons varies depending on nature& complexity of project Employer (The term used in JCT) Architect (Agent of Employer) Quantity Surveyor Engineer (Civil& Structural) Specialist consultant (M&E) Project Manager Clerks of Works (In Singapore Called as RTO) Contractor / Subcontractors (DSC, NSC) 5 Types of construction contracts:- Lump sum contract (pre-agreed price, adjustment by variation of works & cost fluctuations) Measurement contract (measurement of work done upon completion using Schedule of Rates) Cost reimbursed contract cost plus fixed fee, cost plus variable fee, cost plus percentage) fee cover profit& management fee 6 2

3 Types of construction contracts :- Design and build contract (Contractor involve in both design& build) Package deals (design, build functions, may take on also architect, engineer, surveyor s roles) Turnkey contracts similar to design & build, may even include procurement of site, interior furnishing, fittings, furniture & equipment 7 Types of construction contracts:- Management contract a project manager coordinate and organise the works (commonly for large projects) there are 2 different approaches: 1. Management contracting Employer engage a Management Contractor to co-ordinate the completion ofaseriesofworkpackages 2. Construction management Employer engage a series of Works Contractors (Employer s Direct Contractors) who are responsible for coordinating and managing the completion of a series of work packages 8 Types of construction contracts :- Joint venture or partnering can be a landowner & a developer; two or more parties 9 3

4 JCT 05 standard form of building contract (JCT : Joint Contracts Tribunal) Current edition of the standard conditions of contract is JCT05 SBCC (Scottish Building Contract Committee) updates after each JCT editions. 10 Contract Structure JCT (Please refer to Appendix 3.1) Articles of agreement Recitals Articles Contract Particulars Attestation Conditions Schedules 11 Letters of intent: Document expresses an intention to enter a legal relationship subject to the subsequent resolution of a condition. Such letters are intended to fall short of establishing a legal relationship and at the same time provide comfort to the recipient. Under Scots law is a legally enforceable promise; but not under English law 12 4

5 Employers obligations: Implied Obligations to Contractor Not to hinder/prevent the Contractor s progress of work To cooperate with the Contractor 13 Employers obligations: Expressed Obligations to Contractor 1. Duties require the client to perform certain actions: To describe the work scope in the contract (Sixth Recital) Topaythecontract sum(article2) To give site possession to Contractor (Clause 2.4) To provide contract documents for reference by the Contractor (Clause 2.8.1) Not to divulge any rates or prices in the Bills, except for contract purposes (Clause 2.8.4) 14 Employers obligations: Expressed Obligations to Contractor 2. Rights endow the client with the expectation that other parties will perform tasks for them: To receive design proposals from the Contractor(for Contractor s Design Portion)(Ninth Recital) To refer dispute to adjudication (Article 7) To own materials sorted on & off site before installation to the building structure (Clause 2.24 & 2.25) To retain a portion of the contract sum until Defects Liability Period is ended(clause 4.18) 15 5

6 Employers obligations: Expressed Obligations to Contractor 3. Liabilities are placed on the client by the contract andexpose themtoriskslike: Liability arising from the omission of relevant information from the contract documents (Clause ) Liability arising from inadequate descriptions of their requirements (Clause ) Liability arising from failure to pay the Contractor following earlier withholding on money from interim valuations (Clause 4.14) 16 Employers obligations Possession of the site Date of possession(in contract particulars) Otherwise possession must be given within a reasonable time Delay in giving possession, employer must grant EOT, otherwise unable to apply LD Full possession, unless stated otherwise Employer has no rightto access to site after site possession by Contractor 17 Employers obligations Possession of the site Other employer s direct contractors access to site is subject to consent of the contractor At practical completion, the employer regains possession, contractor ceases to have possession Sectional completion Contract termination 18 6

7 Contract administration: Employer to administer the site to ensure that the contractor can meet their obligations under the contract SBCC requires the appointment of an architect or contract administrator, together with a quantity surveyor Architect is an agent of the Employer Employer owes a duty to ensure that the architect executes his obligations properly Employer is under an implied obligation not to interfere with the architect s certification process; otherwise maybeopen toaclaimfordamages 19 Agents under the contract: In JCT 2005, Architect, Clerk of Works (RTO) & Quantity Surveyors are Agents of the Employer An agent is a person exercising contractual powers on behalf of someone else Employer is bound by the act of his Agents whom he employed 20 The Architect as an agent: The architect as the Employer s agent, has 4 duties and responsibilities :- 1. He may not profit from his appointment other than byhisfee 2. He may not delegate except as defined by the contract 3. He must act in his principal s interest, and does not enjoy the protection given by an arbitrator 4. He owes a duty of care, i.e. To use the reasonable care & skill of such persons of ordinary competence measured by the professional standard of the time. 21 7

8 Architect also owes a duty of care to the contractor (Headley Byrne & Co Ltd v Heller & Partners Ltd, 1964 If an architect gives information which proves false and negligent and the contractor suffers loss, then the contractor can sue the architect for that loss). 22 Architect or Contract Administrator? The Architect has 2 responsibilities on construction projects, namely: 1. To fully develop the design and provide solution to meet the Employer s needs 2. After the Contractor has been appointed, the Architect has to administer the contract to ensure that the design is successfully constructed This administration role was traditionally allocated to the Architect in previous versions of the JCT standard forms of contract. However, more recent editions have introduced the possibility of a non-architect to assume the contract administrator role. For examples: the QS, PM, CM or any suitable experience organisation. 23 Architect s instructions: Power of the architect to issue instructions, May not vary the contract conditions, or the appendix May not vary the scope of the works (from constructing 1000m2 to 2000m2 of office block) May not instruct beyond the scope of the works refer to the site boundary and the nature of the works define 24 8

9 Can the architect issue instructions for variations after the issue of the certificate of practical completion? Clause 2.38 of JCT05 gives the right to issue for rectification of material and workmanship defects Unclear on design defects 25 Clause 3.13 gives the right to issue instructions within the meaning of the clauses of the contract; contractor may request the architect to specify in writing, which provision of the contract conditions The architect shall comply immediately Contractor may make a reasonable objection against an architect s instruction if it is outside the conditions of contract 26 All instructions issued by the architect shall be in writing Clause Oral instruction will be of no immediate effect; must be confirmed by architect in writing within 7 days, or confirmed by contractor within 7 days. If not disputed by architect within 7 days, contractor s confirmation will become an architect s instruction If Contractor complies with an oral instruction, architect may confirm in writing at any time prior to the issue of the final certificate 27 9

10 Clerk-of-Works as an agent Functions defined by the contract (Clause 3.4) Appointment of a Clerk-of-Works by the Employer to inspect the works Has no power to issue instructions to the contractor May issue directions to the contractor The directions has no effect to the contract, unless it is followed up and confirmed by an architect s instruction within 2 days Under Clause 5.7, the Clerk-of-Works may be appointed as the architect s authorised representative to sign daywork sheets 28 Information and instructions JCT 05 Clause 2.8 provides that the Architect has to issue further drawings, information, details to enable the contractor tocarryout andcompletetheworks Otherwise entitles contractor to Extension of Time (Clause 2.26 to 2.29) May be construed affecting progress of work, contractor is entitled toclaimforlossandexpense (Clause4.23 to4.26) If employer fails to provide information and drawings to proceed, may entitle the contractor to rescind the contract 29 Variations Employer s right to instruct variations contractor is obliged to carry out. -employerisobligated topay - variations can be given any time up to completion of the works, subject to appropriate adjustments to the Completion Date and the Contract Sum (Clause 2.28 and 4.3 respectively) 30 10

11 InJCT05,themeanings ofvariation are:- 1. Alteration or modification of design, quality or quantity of the works 2. Employer imposing obligation or restriction as the four(4) defined matters : Accesstothesiteoruseofspecificpartsofthesite Limitation of working space Limitation of working hours Execution/completion of the works in any specific order 31 Other meanings of variation:- 1. To expand provisional sums in the contract 2. To expand provisional sums in any nominated sub-contract Contractor is entitled to EOT if work is delayed by such instructions Contractor is entitled to payment for the work carried out Employer cannot vary a contract to the extent it alters the fundamental nature of the contract work 32 Employer s other obligations: To make payment for the works executed by the contractor under the contract Payment is made upon the issue of certificates by the architect Obligation to insure in respect of health and safety 33 11

12 The Contractor s obligations: Completing the Works completing the works, in a good and workmanlike manner using skill and care to be expected of a builder of ordinary competence, in accordance with the contract documents (Clauses2.1,2.3&3.6) Hand over to the Employer(Clause 2.38) Remedy any defects, shrinkage or other faults during Defects Liability Period(Clause 2.39) 34 The Contractor s obligations: Quality of the Works An implied term that completing the works tobefitforpurpose For remedying any defects, shrinkage or other faults during DLP Obliged to use materials and workmanship of the quality and standard specified in the contract documents(clauses 2.1 and 2.3) 35 The Contractor s obligations: Defective Works Liable for latent defects for the duration of the specified period During construction, have to complied with instruction to remove from the site any work, materials or goods not complying with the contract(clause 3.18) After practical completion, to make good the defects during Defects Liability Period (Clauses 2.38&2.39) 36 12

13 The Contractor s obligations: Progress of the Works Must complete the works by a specified time, on or before completion date Must use their best to endeavour and prevent delay in the progress To prevent completion of the works being delayed To do all may reasonably be required to the satisfaction of the architect to proceed and complete the works before the completion date 37 The Contractor s obligations: Insurance and indemnity the contractor is obliged to take out and maintain insurance against personal injury or death in respect of damage to property Health and safety obligation to provide competent staff, adequate material, proper system of effective supervision, a safe place of work 38 End Of Unit 4 Thank You 39 13