- •Introduction
- •List of tables
- •List of figures
- •Table of cases
- •Table of statutes
- •Glossary
- •1 UK construction sector context
- •1.1 The nature of the sector
- •1.2 The nature of professionalism in construction
- •1.3 The nature of projects
- •1.4 Procurement methods
- •2 Roles and relationships
- •2.1 Common problems
- •2.2 Client roles
- •2.3 Consultant roles
- •2.4 Professional services agreements
- •2.5 Architect
- •2.6 Quantity surveyor
- •2.7 Typical terms in professional services agreements
- •2.8 Integrated documentation
- •3 General contracting
- •3.1 Background
- •3.2 Use of general contracting
- •3.3 Basic characteristics
- •3.4 Risk in general contracting
- •3.5 Standardized approaches to general contracting
- •4 Design-build
- •4.1 Background
- •4.2 Features of DB contracts
- •4.3 Use of the JCT design build form (JCT DB 11)
- •4.4 Characteristics of JCT DB 11
- •4.5 Risk in DB
- •4.6 Approaches to DB
- •5 Construction management
- •5.1 Background
- •5.2 Use of construction management contracts
- •5.3 Principles of CM contracting
- •5.4 Overview of JCT CM Contract
- •5.5 Allocation of risk in construction management
- •5.6 Approaches to construction management
- •6 Collaborative contracting
- •6.1 Background
- •6.2 Use of collaborative contracting
- •6.3 Principles of collaborative contracting
- •6.4 Characteristics of collaborative contracting
- •6.5 Risk in collaborative contracting
- •6.6 Approaches to collaborative contracting
- •7 Risk allocation and procurement decisions
- •7.1 Types of risk in construction contracts
- •7.2 Dealing with risk
- •7.3 Procurement
- •7.4 Identifying and choosing procurement methods
- •7.5 Characteristics of procurement methods
- •8 Contract choice
- •8.1 Use of standard contracts
- •8.2 Contract drafting
- •8.3 JCT contracts
- •8.5 The burgeoning landscape of standard forms
- •9 Tendering and contract formation
- •9.1 The meaning of construction contracts
- •9.2 The formation of contracts by agreement
- •9.3 Contracts made by tender
- •10 Liability in contract and tort
- •10.1 Express terms
- •10.2 Exemption clauses
- •10.3 Incorporation by reference
- •10.4 Implied terms
- •10.5 Liability in tort for negligence
- •11.1 Standard of work
- •11.2 Statutory obligations
- •11.4 Transfer of materials
- •12.1 Implied obligations
- •12.3 Responsibility for the contract administrator
- •12.4 Responsibility for site conditions
- •12.5 Health and safety
- •13 Responsibility for design
- •13.1 Design management
- •13.2 Design duties in law
- •13.3 Legal responsibility for design
- •14 Time
- •14.1 Commencement
- •14.2 Progress
- •14.3 Completion
- •14.5 Adjustments of time
- •15 Payment
- •15.2 The contract sum
- •15.3 Variations
- •15.4 Fluctuations
- •15.5 Retention money
- •16.1 Contract claims and damages
- •16.2 Grounds for contractual claims
- •16.3 Claims procedures
- •16.4 Quantification of claims
- •17 Insurance and bonds
- •17.1 Insurance
- •17.2 Bonds and guarantees
- •18 Role of the contract administrator
- •18.2 Contract administrator as independent certifier
- •19 Sub-contracts
- •19.3 The contractual chain
- •19.7 Collateral warranties
- •20 Financial remedies for breach of contract
- •20.1 General damages
- •20.2 Liquidated damages
- •20.3 Quantum meruit claims
- •21 Defective buildings and subsequent owners
- •21.1 Claims in negligence
- •21.2 Statutory protection
- •21.3 Alternative forms of legal protection
- •21.4 Assessment of damages
- •22 Suspension and termination of contracts
- •22.1 Suspension of work
- •22.2 Termination for breach at common law
- •22.3 Termination under JCT contracts
- •22.4 Termination under NEC contracts
- •22.5 Termination under FIDIC contracts
- •22.6 Termination of contract by frustration
- •23 Non-adversarial dispute resolution
- •23.1 Background to disputes
- •23.2 The nature of construction disputes
- •23.3 The role of the contract administrator
- •23.4 Methods of dispute resolution
- •24 Adversarial dispute resolution
- •24.1 Adjudication
- •24.2 Arbitration
- •24.3 Litigation
- •24.4 Arbitration or litigation?
- •References
- •Author index
- •Subject index
UK construction sector context 11
If the essential relationship between risk and price were recognized, it would have another important effect. It would render unnecessary any discussion of such emotive issues as whether the passing of the risk to one party or the other contractor is ‘unfair’ or ‘immoral’. As Wallace (1986) points out, any discussion about whether or not a particular risk should be so included in the price is a discussion of policy, and not of ‘fairness’, ‘morality’ or ‘justice’. But this is only true to the extent that contractors and sub-contractors can truly be said to have the option as to whether to price for risk.
1.3.3The involvement of participants
An important aspect of the way that people belong to groups is the partial involvement of participants. Any member of an organization is typically a member of many organizations simultaneously. People have interests outside their work: they may be members of professional institutions, their project membership may arise as a consequence of their belonging to a firm, and so on. In other words, it would be wholly wrong to expect exclusive and total devotion to a project from those who take part. It is inevitable that participation in any organization, project or firm is partial (Scott 1981).
The piecing together of each of the specialist skills that are needed produces an organizational structure and a pattern of relationships that are temporary. It is temporary because the project team will be disbanded after the project is completed as the team is no longer required. This feature is another of the distinguishing features of construction project management and is sometimes referred to as the creation of a temporary multi-organization (Cherns and Bryant 1984). This phrase indicates not simply the transience of a project but also the fact that people become involved by virtue of their membership of another organization; whether professional institution, firm, partnership or other group. In order to understand the way that contractual relationships are regulated in construction projects, it is important to note that everyone who becomes involved with a project presumably intends to detach from it at some point. For this reason, organizational structures in construction projects are constantly changing as different people come and go from the collective effort.
1.4PROCUREMENT METHODS
The dictionary definition of procurement is the acquisition of things, usually on behalf of someone else (Brookes 2003). ‘Construction procurement’, in simple terms, often refers to the strategic process of how contracts for construction work are created, managed and fulfilled, as in the BS ISO 10854 which uses the term in this narrowly defined sense. But the term is often used to embrace more than this. The procurement process in construction typically involves much more than mere purchasing, and its definition usually extends to funding and organizing construction at all stages of development (Hughes et al. 2006, British Standards Institution 2011). A comprehensive definition currently under discussion in the drafting committee of BS8534 is:
12 Construction contracts
The strategic processes of funding, organizing, managing and decisionmaking in a construction project (or programme) at all stages of development, including the creation, management and fulfilment of contracts for construction work, consultancy and advice throughout the supply chain networks that collectively achieve construction output.
Therefore, in construction, the procurement of buildings and structures requires an understanding of a complex web of ideas from a range of academic disciplines. Most large organizations have a procurement department that deals with the purchase of day-to-day supplies for the business. The acquisition of buildings and structures is typically far more complicated than that, and requires specialized skills to manage it. Many different companies and organizations interact during the process. As we have seen, some have statutory roles, some specialize in design, some in construction and so on. Components and materials have to be brought together in a unique combination and this requires great technical understanding. How businesses operate in this context requires a good understanding of business economics and of risk. How a construction project team is assembled and evolves during a project requires an appreciation of organizational theory and of the management of people. How contracts are used to tie different roles into a project requires an understanding of contracts and contract law; the fundamental purpose of this book.
This introductory Chapter has described in very general terms the types of participant in the construction process. It has highlighted some of the reasons that people become involved and outlined some of the formative influences of the major interest groups. The fact that each of the participants has his or her own reasons for becoming involved is important for those who seek to control contractual relationships and avoid disputes. The characteristic patterns of participants’ involvement and the disposition of risk among them constitute the procurement method, or procurement system for a project. A range of procurement methods is described in subsequent Chapters, after a discussion of the major roles typically involved.