CIVIL ENGINEERING & CONSTRUCTION
Martin Kennedy, director of quantity surveyors Kennedy Solutions, explains what can go wrong in construction contracts.
C
ommercial management of construc- tion projects – whether building, civil engineering, rail or petro-chemical – should be a straightforward occupation.
When you look at the structure that makes up typical construction contract documen- tation - the terms and conditions of con- tract, the drawings, the specifi cation and the pricing document – all of the bases ap- pear to be covered.
Armed with such an array of tools what could go wrong? Well, several things actually!
On the contractors’ side:
Late receipt of information; late approval of design; late approval of the programme; incorrect rejection of design; scope creep; delayed access to site; cancelled posses- sion; etc…
On the employers’ side:
Slow mobilisation; insuffi cient design staff; late submission of designs; poor quality of design; late procurement of material; inad- equate site management; lack of co-ordi- nation; insuffi cient detail on programme; delay to programme; etc…
In modern contracts, even more unknowns are expected to have been considered and included in the Contract Sum – as part of a risk register.
All of the above events occur on a regular 32 | rail technology magazine Aug/Sep 11
basis and at fi rst glance there is a mecha- nism in the contract to deal with all of these events.
But unless either party has fully document- ed the events at the time – and in accord- ance with the contract – the injured party will have put itself at risk of being unable to recover full entitlement in respect of time and cost.
Too often, it is only when things begin to go wrong that the parties start to look hard at the contract.
Ideally before the start of the contract, it is important that both parties understand their respective obligations within the con- tract and work to an accepted programme.
This is where effective commercial man- agement is required. Good early advice and the setting up of appropriate commercial systems can in many cases save substantial sums of money, not to mention the stresses involved in dealing with potential contract disputes.
The above is not to say that all contracts are perfect. The contract only refl ects the pro- cess the parties have agreed to – for better or worse. Certainly, there is occasion when the documentation is not of suffi cient accu- racy and is open to differing interpretation. Such matters can be dealt with by a third party if necessary.
Our experiences have shown that parties to the contract do generally understand their
respective duties and obligations. How- ever, on occasion a party will avoid taking an action in accordance with the contract when it thinks it may “upset” the other side.
Good relationships are put ahead of essen- tial contract administration of the contract.
This will usually result in much wringing of hands and gnashing of teeth when such relationships are found to be built on shift- ing sand.
In summary, when you enter into a contract, ensure that you adhere to its provisions.
Such adherence does not mean that every- thing will run smoothly, but it will provide clarity as to the method of resolution and the best chance of a recovery in respect of time and/or cost.
Failure to do so will weaken your negotiat- ing position.
Kennedy Solutions has vast experience in commercial management, claims avoid- ance and claims management in all con- struction sectors. Kennedy Solutions has Link-Up accreditation for work on Network Rail and London Underground projects.
FOR MORE INFORMATION
If you have current unresolved commercial issues, email
info@kennedy-solutions.com or visit
www.kennedy-solutions.com
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