Standard Construction Contracts Research Articles

분리도급 건축주의 조정의무

On April 29 2020, a fire broke out at a construction site of a logistics center in Icheon, Gyeonggi-do, and unfortunately, as many as 38 people were killed and 10 were injured. The fire report, released to the press a few days later, showed that the cause was the simultaneous dilution of urethane foam and the installation of elevators and ducts, which another builder should not have done together. If the owner separately orders a project to different contractors but fails to coordinate among them, the construction might not smoothly proceed to cause delay, costs and defects, or even to frustrate completion; eventually, (sub-)contractors and their workers could unfortunately suffer life, body, and material damage. Separated contracting has been mentioned so far only as a contract form in contrast to comprehensive(including turnkey) contracting. However, there are few studies on what the legal differences between the two forms of contracting. Among the legal issues unique to separate contracts, the most crucial problem is maybe who is to coordinate works carried out by various contractors. In this article, this problem will be scrutinized with help of comparative analysis of the three countries (Germany, Switzerland, and Austria) representing the (European) continental legal system. These three countries are common in that the owner bears the duty of coordination. In particular, an Austrian act (Bauarbeitenkoordinationsgesetz), enacted in 1999, stipulates the obligation of the owner to coordinate(art. 3, par. 1). On the other hand, Germany and Switzerland have related regulations in their standard contract forms for construction work. Here, the usage of terms is first summarized (II), followed by examination of the contents of foreign reference laws and standard contract forms(III). Based on the discussions of these countries, one after another mentioned are the constructive elements of a separatedly ordered contract(Ⅳ) and the concrete scope of coordination. In Korea, the Act on the Punishment of Severe Disasters was recently entered into force in order to cope with worker’s compensation but it has congenital limits owing to its penal nature. As a conclusion, this study suggests ①that in standard construction contract forms, currently not in any act, ②the principle of owner’s liability for coordination should be declared and ③that necessary implementation measures should be stipulated there in detail for various steps of construction process.

Independence and impartiality of contract administrators in the New Zealand construction sector

Contract administrators play essential roles in the construction sector, as they administrate the execution of construction contracts. A contract administrator acts as a representative of clients and an independent certifier to contractors. This dual role can bring conflicts within the contract administrator’s duty. Therefore, concerns have been raised whether contract administrators can perform their duties fairly and impartially when serving clients and contractors. This study examines the independence and impartiality of contract administrators in the construction sector. This study also reviews the current New Zealand standard construction contract forms to understand the role and position of contract administrators. A questionnaire survey was conducted in New Zealand to obtain views from 42 construction practitioners. The survey results suggest that independence and impartiality of contract administrators may exist in the New Zealand construction sector, manifesting that most survey respondents experienced a reasonable and fair performance from contract administrators when carrying out their duties. This study contributes to the existing knowledge of contract administration by revealing the existence of independence and impartiality of contract administrators in the New Zealand construction sector. Also, this study contributes to industrial practices by putting forward concerns and recommendations to improve the legal obligations of contract administrators in construction contract forms.

SELECTION OF STANDARD CONSTRUCTION CONTRACTS MODEL AND CONTRACT PURCHASE PRICING

The aim of the research is to determine for a contract’s “Design and construction works of Vilnius city wastewater treatment plant” the most suitable variant of the combination of the FIDIC standard construction contract model and the purchase pricing of contract works using the SAW. Based on expert assessments, a matrix of possible solutions is formed by interviewing 8 experts (4 public procurement specialists and 4 civil engineers). Calculations have shown that the most appropriate combination of the FIDIC standard construction contract model and contract purchase pricing is the FIDIC Yellow Book and fixed price pricing. The obtained research results mainly reflect the essence of the FIDIC Yellow Book, assessing the specifics of the contract and the complexity of the planned works.

Enforcement of legal remedies against construction projects time overrun in Ethiopia: A critical appraisal

Construction time overrun is one of the common inefficiencies of public construction projects in Ethiopia. Laws and standard construction contracts stipulate different legal remedies against project time overrun. This paper is meant to unravel these legal remedies and their application to construction project time overrun in public construction projects in Ethiopia. To this end, the magnitude of time overrun, its common causes, and the practical implementation of legal remedies against it is exposed through literature review, primary data obtained from 18 roads and 10 public building projects, and interviews of 10 key informants. The result showed, although time is not the essence of construction contract in international standard conditions of contracts, it is a fundamental obligation the breach of which would give rise to termination of the contract under the laws and standard conditions of contracts applicable to public works in Ethiopia. However, the paper established that the practical implantation of these legal remedies against time overrun in public construction projects is very erratic although time overrun is a rampant challenge of the construction industry of the country in general and public construction projects in particular.

Mitigating the Risk of Delays in Power Plant Projects

This article explores how the EPC contractor’s risk of project delays related to the default of a key component supplier can be mitigated contractually. Only a limited number of the remedies that are regulated in standard construction contract forms are designed to support the EPC contractor’s chances of quickly and successfully replacing a key component supplier, which is often the only relevant remedy worth pursuing for an EPC contractor in case the supplier lacks the ability or will to perform the sub-contract on time. Replacing for example a boiler builder in a power plant project is fundamentally problematic because the boiler is a highly complex and often tailored component. The EPC contractor can, however, seek to contractually alleviate the inherent challenges of replacing a defaulting boiler builder by facilitating quick and unhindered access to the three main elements, which the construction or manufacturing of most key components entails, namely: The hardware, the design, and the manpower.

Studying Payment Provisions under National and International Standard Forms of Contracts

AbstractDelayed payment is becoming a critical issue in the construction industry. Late payment and/or nonpayment cause severe cash-flow problems to contractors and across the entire contracting supply chain. There are many factors that cause late payment problems, including owner’s poor financial management; disagreement on valuation of executed works and consequent delayed certification; using paid-when-paid clauses with subcontractors, suppliers, and manufacturers; and noncompliance with contractual provisions in requesting and claiming payments. The objective of this paper is to present a study of the payment provisions under most widely used standard construction contracts, both nationally and internationally. This paper studies the payment provisions under traditional standard construction contracts including those published by the American Institute of Architects (AIA), ConsensusDocs, Engineers Joint Contract Documents Committee (EJCDC), International Federation of Consulting Engineers (FIDIC), Wor...

Administering Extension of Time under National and International Standard Forms of Contracts: A Contractor’s Perspective

Time management is one of the most important factors contributing to the success of construction projects. It is not uncommon that many construction projects fail to meet their deadline and finish late for a variety of reasons that have been already studied extensively in the literature. To this end, it is imperative to know the different contractual procedures associated with extension of time. In spite of the fact that these provisions are usually expressly stated in each contract, they are sometimes misunderstood and/or misapplied. This can result in incurring lots of short- and long-term losses. The objective of this paper is to present contract administration guidelines for appropriate utilization and administration of the extension of time clauses under the most widely used construction contracts both nationally and internationally. The authors studied the extension of time provisions under traditional standard construction contracts and/or general conditions of the construction contracts including those published by the American Institute of Architects (AIA), ConsensusDOCS, the Engineers’ Joint Contract Documents Committee (EJCDC), the International Federation of Consulting Engineers (FIDIC), the World Bank, the Joint Contracts Tribunal (JCT), and the New Engineering Contract (NEC). In doing so, the authors used a three-step research methodology that included reviewing the conditions for entitlement, the associated required procedures, and the interrelated repercussions for failure to follow notice and claim provisions. Consequently, a comparative analysis between the contracts under investigation was provided. As far as the authors are aware, this is the first study of its kind, and is the most comprehensive in its approach and associated analyses. This study should promote efficient and effective management of claims for additional time, and would better enable the contractor as well as other associated parties to mitigate time-related consequences during the course of their projects.

아시아 지역 영연방국가의 지정하도급(NSC)제도에 관한 비교 연구 - 표준계약약관의 지정하도급자 항목분석을 중심으로 -

최근 국내 건설시장의 축소와 수주경쟁의 심화로 인하여 많은 건설기업들이 이에 대한 대안으로써 해외건설 시장에 진출하고 있다. 그러나 해외건설 프로젝트에서는 국내 건설 프로젝트와 책임과 권한의 범위가 다른 다양한 프로젝트 주체가 참여하고 있으며, 프로젝트를 둘러싼 수행환경 및 계약관행이 국내 건설 프로젝트와 다르기 때문에 다양한 리스크 요인이 존재하고 있다. 특히 해외건설 프로젝트의 문제가운데 하나가 Nominated Sub-Contracting (NSC)로 알려진 영국과 영국연방국가에서 사용되어지고 있는 하도급계약이다. 본 논문은 영국과 아시아지역 영연방 국가의 JCT약관, SIA약관, HKIA약관, PAM약관의 비교를 통해 NSC제도와 차이점을 소개한다. 또한 NSC계약의 채용 거부와 계약 해지와 관련된 약관항목분석을 통해 NSC제도의 유형을 분류한다. In recent, many Korean contractors have tried to extend their business area into the overseas construction market, mainly as a result of a reduction in their domestic construction market. However in terms of risk, overseas construction projects are likely to face a number of unpredictable problems, many of which occur as a result of differences in contract cultures and construction environments between Korea and other countries. One key issue facing overseas construction projects in particular, is that of sub-contracting and control, and the way in which many countries of Commonwealth of Nations operate a unique subcontracting method well known as a nominated sub-contractor(NSC). This paper introduces the NSC system and differences as comparing among standard construction contract forms, such as JCT, SIA, HKIA and PAM. in UK and Asian Commonwealth of Nations. Also, we attempt to classify the type of the NSC system through the consideration of NSC clauses in accordance with the objection and termination of NSC contracting respectively.

‘WLTM caring contractor’: the dating game of Design and Build contracts

The standard construction contract in the UK, such as JCT 2005, is designed to balance time, quality and cost. Typically, the contract documents consist of a bespoke design described by a full package of drawings and a specification describing quality, techniques and materials. These enable a contractor to offer a fixed price for the work and establish a programme and the aim is to provide a level of financial security that leaves little to error or to contingent forces. That, at least, is the theory. In practice, there are few contracts that run as smoothly as the theory suggests, which accounts for the myriad case law in this area.In preparing the contract documents, an architect conventionally begins their work by acting as agent for the client. Once appointed, s/he develops the brief with the client and/or users, designs the building and guides the scheme through the regulatory system, describing it in sufficient detail to allow a contractor to arrive at an accurate cost. After this, the ways in which a building can be procured can vary considerably. This article focuses on what happens under a Design and Build (D&B) contract.

An integrated methodology for collecting, classifying, and analyzing Canadian construction court cases

Construction contracts are becoming more complicated, and the increase in complexity of construction processes, documents, and conditions of contracts has contributed to a higher possibility of disputes and conflicting interpretations. The judicial system has been the means for dispute resolution for claims that cannot be solved through other means such as negotiation and arbitration. Knowledge of previous outcomes of judicial processes will both inform participants in a dispute and increase the likelihood of a less-expensive out-of-court dispute-resolution process. This paper presents a methodology to classify, categorize, and analyze Canadian case-law construction claims. In total, 567 Canadian construction court cases have been collected from 10 different sources and are classified into 12 categories that follow the Canadian Construction Documents Committee (CCDC) standard construction contract document CCDC 2-1994. The proposed methodology is implemented in a computer-integrated system called the Canadian construction claim tracker (CCCT), which consists of one central database and three modules, namely a statistical module, a prediction module, and a classification module. The CCCT provides its users with easy and quick access to past case-law claim information.Key words: construction courts, claims, litigation, artificial neural networks, Canadian Construction Documents Committee.

A facility manager's approach to standardized construction contracts

PurposeThe purpose is to investigate the usefulness of standardized construction contracts for facilities managers.Design/methodology/approachResearch methodologies include comprehensive literature review, examination of standard contracts and online survey with professional facilities managers.FindingsThe study concludes that, with minor alterations and diligence, information necessary for successful management of a built facility can be obtained from the constructor.Practical implicationsThis research will assist facilities managers in preparation and review of standard construction contracts, to ensure they are receiving adequate information to properly manage a facility.Originality/valueThe paper helps to guide facility owners in their preparation and review of standard construction contracts.

An Evaluation of the Saudi Contract for Public Works

The contract for public works is the only national standard construction contract document of its kind in Saudi Arabia. Despite the passage of almost 20 years since its institution, vast amount of experience accumulated from its wide usage in various types of public works projects, its implementation as one-type-fíts- all, and some persisting contention particularly by contractors about its lack of equitability; little in the way of scientific research has been reported about its evaluation. This paper reports on a survey of construction main participants regarding evaluation of this standard form of contract. Respondents were drawn from the three different contracting parties and were asked to indicate their opinion about the contract based upon 11 evaluation attributes. Survey results indicated that the contract is barely adequate, raising concerns about its efficiency and effectiveness. Given the fact that understanding contracts is fundamental to construction management, it is hoped that the views revealed through this research will be instrumental in the development of the Saudi construction industry.

Multistep Dispute Resolution in Design and Construction Industry

The construction industry has a propensity to disputes dating back thousands of years, at least to the time of the Hammurabi Code. As a result, the industry devised alternative methods for dispute resolution to avoid the civil litigation. Since the late nineteenth century, the traditional two-step process has been included in standard construction contracts. The engineer first renders a determination, followed by binding arbitration if either the owner or contractor disagreed with the engineer's decision. In the last half of the twentieth century, the industry has reexamined this traditional two-step method. This examination has produced a multistep dispute resolution process consisting of ~1! loss prevention and dispute avoidance, ~2! direct negotiations, ~3! facilitated direct negotiations with preselected standing neutrals, ~4! issue specific outside neutral facilitated negotiations, and ~5! binding adjudication. This paper examines the evolution of this multistep dispute resolution process within the construction industry.