What is a Construction Contract?
Contracts are an important part of the process of any construction or civil engineering project. A construction contract such as a JCT Contract or NEC Contract provides important protection for all parties and is vital in preventing disputes. Primarily the contract safeguards against payments and guaranteeing adequate work, but if a dispute arises, construction contracts can also dictate how the parties move forward to resolve the issue.
Care must be taken to ensure that the construction contract is well written and incorporates all the necessary content. If the terms are unclear or the contract is ambiguous it can have a negative impact and could be onerous from the start. By formally recording such matters in writing the assumptions and ambiguity are removed. This in turn aids the management of the works, reduces the likelihood of problems occurring later down the line and avoids dispute as to what terms apply.
Our experts can help you by:
- Setting up your construction project to identify, assess, and avoid commercial disaster.
- Carrying out contract reviews for dispute avoidance.
- Advising on the most suitable contract form to be used for your project, pointing out any bespoke content required and construction contract management.
- Undertaking the full preparation, issuing, and negotiation of contract terms.
- Producing bespoke subcontract forms with specific terms and conditions and project specific requirements.
- Ensuring payment provisions are included in your contract and that they comply with the Construction Act.
- Checking that contract terms are edited or omitted to ensure that a contract is not onerous prior to committing to it.
- Managing and resolving contractual issues quickly, effectively, and commercially should they arise, typically through adjudication and Expert Witness services.
Contract forms differ immensely, standard forms are normally tried, tested and fair to both parties, bespoke contracts should be avoided as they will be the opposite. It is imperative that prior to committing to a contract you fully understand certain elements including:
- The Payment Provisions
- Defects and retention mechanisms
- Set-off clauses
- Design responsibility
- Extension of Time and/or loss and expense
- Condition Precedent
- Acceleration, omission and supplementation
- Termination provisions
- Conclusivity provisions
- The Particulars
Which form of construction contract should I use?
To ensure that a contract is robust it is typical to make use of a standard industry form such as one of the many forms available from the JCT contract or NEC contract suites. It is necessary to select the correct form of contract that best suits the type of project and procurement route. The correct content and appendices must be included to capture the agreement, and the form should only be amended to include any bespoke risk allocation agreed between the parties. Find out more about the JCT and NEC contracts below:
Contract Administrator/Management/Employer’s Agent
To operate the contract effectively a suitably qualified/experienced contract administrator, employer’s agent or project manager is required to take this responsibility. The role involves a multitude of tasks and responsibilities such as:
- Inviting and processing tenders
- Preparing contract documents
- Administrating contract terms, notices, consultants and procedures
- Certifying interim payments
- Issuing instructions such as contract variations or directions
- Chairing meetings and issuing progress reports
- Assessing claims such as extension of time and loss and expense
- Managing site inspections and defect rectification procedures
- Issuing certificates of practical completion and later the certificate of making good defects
- Agreeing the final account and issuing the final certificate
Arbicon's expertise includes stepping in to rescue projects that have failed, not only providing the necessary Expert Report but the contract management and completion of the works. When complete a claim is then made, if instructed, to recoup the losses sustained.
Construction disputes can be costly, risky and potentially damaging to relationships between Main Contractors, Subcontractors and Building Employers. Ensuring the correct contract is in place from the start can help construction projects run smoothly and aid dispute avoidance.
For more information or advice on a construction contract, please use our contact form or call any of our offices.