Heriot-Watt University Construction Contract

Constructions happen in our daily lives, but they all have to follow certain procedures for them to be successful. There are legal requirements that are needed, and the parties responsible should make sure they follow the rules. Certain variables should also be considered before signing the agreement between both parties. These variables include the time needed for the construction to be through, in case of risks what would be the immediate actions, resources (cost) among others. All these should be defined to avoid misunderstanding during the process. To solve all these, there are the NEC3, FIDIC and JCT05 SBC/Q contracts which defines and explains the whole process in details without assumptions.

Law Governing Construction Contracts

For construction to embark, there must be parties involved. There are the employer and the constructions companies. There must be an agreement between the parties which is the contract. There are certain rules which govern every construction contract. The terms on both sides must be equal before signing. The parties should be legally accepted in their line of working. Both parties should be competent to enter into a contract (Al-Shammari 2017).

The construction contract has its requirements (Ndekugri 2016). One of the important requirement is the payment methods. After the construction company delivers, there should be a payment from the university council. It is in the contract where they state whether there are down payments or not and if there is one, how much? In the same area, there would be a statement showing the total cost of the building construction as agreed by both parties.

The contract should have the period of construction. Some contracts have the specific dates which the construction is expected to come to an end, while others do not specify the specific dates but the construction should take a reasonable period.

Risk occurrence is a must when it comes to construction (Hughes 2015). Some of the risks are expected risks; they may include delays, injuries among others. In the contract, there should be the solution to these risks, will they be transferred to the construction company? How will they be solved?

NEC3 ECC contract

The NEC3 ECC contract is the core document from which the A to F selections is extracted. The form contains all the main and secondary clauses together with the cost components of the contract. It is the most used contact worldwide since it is used in the construction of complex buildings with complex designs.

Main Options Clause

A

The contact should have the total cost of the whole activity. These are where time is very important since the total cost will be determined by the time taken to complete the project. The longer the period, the higher the cost and vice versa. The time taken to complete the building should be reasonable to avoid unreasonable expenses.

B

For the price to be evaluated, there is the need for the bill of quantities. The total quantities that will be needed to complete the construction with their respective prices so that the total cost can be calculated.

C

It is always difficult to get the exact time and cost to complete the construction. The contact should have the target time so that the cost can be approximated.

D

Quantities cost changes over time. To complete the school building, it will take time, and due to price fluctuations, it can be difficult to get the exact price of a particular product at a given period. Due to this reason, the contract should have the target bill of quantities.

E

After the contract is sealed, the construction company may have other additional charges which were not incorporated in the total cost. Through the reimbursable cost contract, the construction company should process the total cost with proof, and the university which is the employer should compensate the company.

F

There must be a management agreement which has the responsibility of controlling the budget process. If the budget is not managed well, there can be cost problems which can lead to delay in project construction.

Secondary Option Clauses

X1

Inflation in a country is never known when it will happen and when it happens, it affects the overall cost of commodities and the cost of living. The contract should be flexible in a way if there is inflation, the university has to add more money to the project to complete the project.

X2

A contract is a law-abiding document. In the process of construction, there may be changes in the law regarding lands, forms of construction, heights of buildings and other rules. The management should be ready to welcome these regulations.

X3

If the budget is dealing with multiple currencies, i.e., some resources are bought abroad, the weight of the currency with comparison with others may change. These can lead to the addition of more money or reduction if the primary currency is stronger. The currency rate keeps on fluctuating hence the management should be ready for any scenario.

X4

The contractor may need a PCG form which acts as security to protect them from insolvency or bankruptcy of the contractor. It is not then common but it is a requirement that should be followed.

X5

Building a university building accommodating all those staffs is a long-term project. Certain stages should be completed in stages. The contract should have the dates of each stage completion so that the work can be evaluated and progress was seen.

X6

It is difficult to get the exact time to complete such a long-term project, but there is always the estimated time. If the construction company completes the project way back before the dates, it means the risk of loses will be reduced hence there is the bonus for the early completion.

X7

If the construction process exceeds the time set, there is always the delay damages. First, the budget proposed will be changed hence there would be a cost increase. There will be time lost. The contract should indicate the consequences to this to both parties.

X12

When the university council gives the work to the constructors, they form a partnership. In all partnership, some rules govern them. All these rules should be in the contract.

X13

After a project completion, there would be a performance bond or else a contract bond by an insurance or financial company which guarantees the construction is satisfactory.

X14

The contractor needs an advanced payment before work starts. After the work, the payment due will be paid as indicated in the contract.

X15

Some dangers might happen during the construction process. In these contact, there is the limit of the contractors liability towards external risks.

X16

The contract indicates what the two parties will hold even after the building process is completed.

X17

There are other costs which are due to fewer performance damages. The contract defines how the loss will be shared between the university and the contractor.

X18

The limitation of liability in the contract reduces the rate of exposure the university can face in case there is claim or lawsuit.

Y (UK)2

This is the housing grants, construction, and regeneration. The act makes provision for house assistance like grants in case of unfit buildings together with clearance areas among others.

Y (UK)3

The 1999 act allows third parties to introduce terms in the contract which benefit them and if they are bleached, consequences follow.

Z

It contains any other additional conditions like the types of risks, design related to equipments, Ambiguities and inconsistencies, prevention measures, responsibilities of each party among others.

Payment Requirements in the NEC 3ECC

The payment process undergoes specific processes during the construction process. It all starts by filling the PCG form to avoid any problems regarding insolvency of the contractor. The secondary option advance payment follows. It helps the contractor get the materials they need. Then the payment bond follows which after being satisfied with the building, the due payment is paid. Then there are the collateral warranties provided by the third parties like the designers (Laryea 2017).

The contract contains a mechanism that shows how payment was done under different stages of construction. It also requires a payment notice to be produced showing what was paid and at what time. In case of a reduction in the sum, there is the payless notice to be updated in the payment notice. All those have to be done before the final date of payments. If the parties agree otherwise, there is also a lump sum payment option.

Contractual Standing regarding Conditions Governing Contractual Programed

According to clause 50.3 of the NEC3 ECC, if no program is identified when searched in the contract data, then a quarter of the cost of the work as per the date is calculated and retained until the contractor submits the first program to the project manager for the approval purpose (Dief 2016). The program shows the information which the contract needs. If this takes a long time the project manager issues a warning to the contractors to do so otherwise, the payments will withhold further.

Dispute Resolution Methods Indicated in the NEC 3 ECC Contract

Disputes are common between two parties which are partners and working together. In the construction process, there are many kinds of disputes which can be solved using the NEC3 contract document if followed. The dispute can be due to failure to deliver the programme for approval, issues on compensation and payment among others.

There is option W1 or W2 ways to solve the dispute. One adjudication covers international market and the other only in the UK. In case of major conflict, there is the housing grant, construction and regeneration act which is applied.

A dispute about a citation for a compensation occasion which has been dealt with as having been acknowledged. This time, the business may allude the dispute to an adjudicator. He ought to do as such in the vicinity of two and a month after the project manager's notice of the dispute to the business and the temporary worker. That warning must be influenced not more than a month after the citation was dealt with as acknowledged.

Without a doubt, Option W1 would itself be able to be seen as a default system. Given the HGCRA does not apply, it naturally applies. This isn't the leading cause of strain between the two arbitration arrangements and the NEC3's local and universal applications. You don't select a choice in the agreement information. One potential issue with this approach is that if the contract is utilized someplace with its own particular arbitration sort enactment, then it might well be the case that alternative W1 won't agree to the neighborhood enactment. This will imply that, as with NEC2, the dispute determination methods might be entirely supplanted by a nearby enactment.

In W2, it is the more conventional shape and is to be utilized as a part of the UK when the HGCRA applies (Rowlinson 2015). Choice W2 conforms to the HGCRA and clarifies at its beginning that, a dispute emerging under or regarding this agreement is alluded to and chosen by the Adjudicator. A Party may allude a dispute to the Adjudicator whenever.

If there is any other issue. Either gathering may allude a dispute about some other issue in the vicinity of two and a month after the warning of the dispute to the next gathering and the project manager. In different words, this is a fallback or default system that can be utilized by either party.

FIDIC Red Book form

The FIDIC has dedicated itself to the assemblage of administration archives for a wide range of tasks, among which the FIDIC Conditions of Contract are of the most astounding impact and are the most prevalent application. A question to the Adjudicator whenever. FIDIC Conditions of Contract (new release) raise...