Transcript PowerPoint - Construction Engineering

A Guide to Standard Forms of
Construction Contracts
(Source: Rethinking Construction, 2004)
The need for contracts
 The transition from successful design to
successful project completion requires the
selection of a contract which reflects the
aspirations of all Parties involved and meets the
demands of the project.
 Key criteria must be identified and risks allocated
before the form of contract is selected.
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Client Requirements
 Balance of time/quality/cost
 Can be defined by following criteria:
Speed – design & construction
Separation of design & construction
Cost certainty
Dealing with complexity
Client involvement
Capacity for variations
Clarity of remedies
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Procurement Method
 Choice of contract dependant on procurement
method
General contracting
Design & build
Construction Management
Partnering
Management contracting
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Risk
The allocation of risk is a major element of any contract.
 Contractor includes cost of risk in tender calculation
 E.g. ‘Price certainty’ is bought by paying the contractor
to accept the risk in a changing commercial market
 Degree of risk must therefore be assessed and the
economics of risk apportionment assessed – part of
‘best value’ calculations
 Key areas of risk are:

Default
Delay
Quality
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JCT 98: Standard Form Building Contract


6 versions; private, L.A., +/- quantities, approx. quantities
A much used standard form
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JCT: IFC (Intermediate Form of Building Contract)

Used for well specified traditional building work without complex
service packages. With or without BoQ
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JCT: MW 98, Agreement for minor work

For small & simple works, Conditions give bare outline of duties
& responsibilities. Risk allocation very simple
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JCT: PCC 98 Prime cost contract

Cost plus contract, works not fully defined, all work on instruction
of Architect
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JCT: CD 98 Standard form with contractors design

Let on basis of ‘Employers Requirements’ and performance
specification
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JCT: MC 98 Management contract

All works sub contracted, main contractor coordinates
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JCT: MTC 98 Measured term contract

Used for regular maintenance or repeating minor works
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JCT Construction management contract

Alternative clauses give flexibility, tailored for specific contract
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ICE Conditions of Contract

Work to satisfaction of the Engineer, who has high powers of
control
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FIDIC Conditions of Contract


Engineer employed as Client’s agent (as JCT 98)
2 parts – 1)General Conditions, 2)Project specific conditions
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NEC - Engineering and Construction Contract


Core clauses common to all projects plus suite of alternative
procurement options
Common in Partnering Agreements, written in plain English,
promotes team approach
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Conclusions
Many forms of contract have developed
 The initial form has often been amended to suit
particular role definitions and issued as a separate
standard document
 The type of contract influences;

Degree of client involvement
Design & management separation
Complexity
Variations
Speed
Cost certainty and
RISK APPORTIONMENT
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