Forms of Contract for Construction Work

Forms of train for grammatical eddy Work1.0 Introduction The ScenarioA leading manufacturer of confectionary in the UK suffered a devastating fire at their factory in Sheffield. Their insurers have authorised an immediate offset printing of the reconstruct sue and have been paying a sum of approximately 1 5m. per month to the ascertain company as Business Continuity insurance to cover both loss of profit and to consent to products to be imported from another country for packaging and sale.The factory site has been cle argond exploitation an enable lives urge on and it has been decided that an catch single adjureor, who is capable of undertaking this flake of sour would be agitateed. It is now the responsibility of an experienced project actr to administer the rebuilding of the factory, which currently is thought to be in the region of 60m worth. The time scale and who the project manager give utilisation to achieve the livery of the new building and process equi pment to enable the manufacture of candy store to re-start, including any trials, per stimulateance tests and commissioning at the earliest possible opportunity is for him/her to decide.On this account, time of consequence and quality is the primary concern and be is secondary, thus, a skeletal frame of curve with a procurement route or strategy that would facilitate the twisting of the rebuilding to start immediately, while either other preparations (e.g plan whole shebang) towards the building objective argon tone ending on, would be the appropriate or desired form of conduct.Chapter 22.0 Forms of takeStandard form of draw for the execution of piddle and the appointment of consultants argon basi presagey employ in the complex body part, engineering science and treat industries. These tackles argon hustling by one body in isolation or jointly prepared by bodies representing employers, consultants and contractors. Some of the forms of contracts by these bodie s areJoint contract Tribunal (JCT) forms of contract applied science fore on the spur of the momenten (necrotizing enterocolitis 3) forms of contractInstitute of Civil Engineers (ICE) forms of contractAssociation of Consultant Engineers (ACE) forms of contractAssociation of Consultant decorators (ACA) forms of contractGeneral Condition/works forms of contact2.1 Criteria for the Selection of Forms of take upAccording to the office of building and victimization in Australia (1996), there are a transmutation of forms of contract and procurement route that are ready(prenominal) for acquiring a new or rebuilding of building, facilities or infrastructure, which are basically determined by a number of criteria, which areType of lymph nodeLevel of involvement unavoidable by the knobThe project size and complexitySpeed Time available for wrench risk of infection allocation move up to the objective solutionCost certainty and method of financing the project medical specialist input dexterity for variations Ability to change backdrop of work and assume AdministrationSeparation of material body and management2.2 shoot Types2.2.1 Traditional ContractTraditional contracts are the sign of contracts that separate the innovation from the kink forms with consultants leading on normal and the contractor responsible for the verbal expression execution. In this type of contracts, a consultant (an architect in most cases) acts on behalf of the client/employer as the contract administrator and most risks are passed to the contractors and sub-contractors. Traditional contracts embraced carryion it out latter mentality, where time, embody and other related problems are left to the end of the project, which often leads to dispute. lapping of de mansion house and construction stages in the traditional contract is not encouraged and there is wide chiding that traditional contracts polarise the parties resulting in extreme inefficiencies and promote dispute. Ho wever, it focuses on the clients briny requirements of design control, time and personify certainty. Most of the JCT, ICE and General Conditions/work contract forms adopt the traditional contract.According to Holt (2010), examples of traditional contracts involveJCT Standard configurationing Contract with QuantitiesJCT Intermediate contractJCT small Works Contractnecrotizing enterocolitis Engineering and anatomical structure Contract ( election A and B fixed price)2.2.2 devise and Build ContractsDesign and Build contract is probably the recent form of procurement and it is available from most of the contract producing bodies (Keown 2010). In a design and build contract, the client employed consultant to prepare documents outlining his requirement in a form of a brief initial designed scheme (Employers Requirements). A single contractor is because appointed to allow the designed scheme as required (contractors proposals) by employing his or her own design team and then(pren ominal) carries out the execution of the work using both the employers requirements and the contractors proposals. The contractor could also engage the original consultant to complete the design through a novation agreement and term or use his own design team for the purpose, which would be verified by the clients design team. Under the design and build method, there is no independent contract administration rather the employer uses employers agent to administer the contract.Examples of Design and Build proposed by Holt (2010) areJCT Design and Build ContractThe necrotizing enterocolitis Engineering and eddy Contract (error correction code) - set cost contract with action schedule or Bill of Quantities ( chief(prenominal) alternative C).2.2.3 Non-Traditional (Management) ContractsNon-traditional contracts such as management contracts are specialist forms of contract, where a specialist e.g management contractor or project manager manages the construction activities on behalf of t he client/employer. It is satisfactory for large, complex and fast-track projects such as mellow-rise buildings. Management form of contract tends to solve the problems associated with traditional contracts by a means of collaborative working and trying to unite the various project participants in bon ton to avoid polarisation. It claims to remove traditional contract inefficiencies and increase cost and time certainty. kink procurement by management contract requires colossal care and high level of sophistication by employer and contractor.According to Keown (2010), advantages of using management contract includeIt is a energetic method of procuring a competitive tendered.It facilitates a quick start of construction activities on the site.Flexibility design activities can extend into the construction period.It gives the opportunity for changes in the cathode-ray oscillo mise en scene of work.It avoids polarisation of parties by collaborative work.It encourages early contrac tor input on the programme, buildability and content of work contract packages.The employer/client has an opportunity to stop the project in front proceeding to construction, for a set hire to the contractor.Examples of Non-traditional (management) contract proposed by Holt (2010) areJCT Construction Management AppointmentJCT Management Building ContractThe necrotizing enterocolitis ECC, Management Contract main picking FJCT Construction probity (CE)Chapter 33.0 Review of polar Forms of ContractThe JCT, NEC3, ICE, and ACA forms of contract are intended to be reviewed for the selection of a worthy form of contract for the rebuilding of the confectionery factory.3.1 Joint Contract Tribunal (JCT) 2005JCT form of contract, which was formerly known as RIBA contract until 1977 was the first form of building contract concur between architects and builders established in 1931 (Chappell, et al. 2001). The JCT now comprises maestro bodies, which areRoyal Institute of Chartered Survey ors (RICS)Royal Institute of British ArchitectsScottish Building Contract CommitteeBritish Property FederationConstruction FederationLocal Government Association subject area specialist Contractor Council LimitedThe JCT forms of contract embraced the traditional procurement philosophy and are very pop in the UK. According to the survey carried out in 2004 by Royal Institute of Chartered Surveyors (RICS 2006), which was attach RICS contracts in Use Survey 2004, approximately 78% of construction contracts were procured using JCT in the UK.As remark previously that most JCT contracts are basically traditional contract, they required well- developed design before the construction works to stick. It is a form of contract that is fairly complicated and is always criticised for polarising construction team and encourage claims this must always be borne in mind when considering selecting JCT forms of contract. However, it also offers collaborating working contracts like Construction E xcellence (CE) that has not been tested in the market (Keown 2010).The JCT 2005, which is the current and updated form of contract, has varieties of procurement methods for small and large projects that are basically intended for building/construction work, particularly in the private/commercial sector depending on procurement criteria being considered.According to Keown (2010), most JCT forms of contract do not have any express clauses on anchor condition, thus, they are often amended and include terms that exclude liability for ground conditions. So, JCT contracts are not fit forRail or road related worksCivil or earthworksMechanical or electrical jell/ inductances worksLandscape or archaeological works andbionomic or environmental worksThe JCT 2005 various forms of contract use to suit the ever changing construction industry areThe Minor Works (MW) Building ContractThis form of contract is very familiar and worthy for small construction works, which are relatively simplisti c in nature. It is lump-sum form of contract that ground on drawings and specifications, unless not re-measurement contact and requires an independent contract administrator. According to Keown (2010), it is suitable for construction work that worth 100,000 (2008 prices).The Minor Works with Contractors Design (MWD) ContractIn this form of contract, which is a adaptation of Minor works (MW), the contractor issues design, which is limited to discrete parts of the works. However, it should be noted that it is not a design and build contract.Intermediate Building Contract (IC)This form of contract is another popular form of JCT contract suitable for construction works of a simple content without complex building service installations (BrunswickIS 2007). It is a lump-sum contract based on drawing and specifications, ranging from 100,000 to 800,000 (2008 rough financial prices) (Keown 2010). It also requires independent contract administrator and a quantity surveyor.Intermediate Buil ding Contract with Contractors Design (ICD)This form of contract is a version of the intermediate building contract, which the contractor can yield design that is limited to discrete part of the works. It should be noted that it is not a design and build contract.Standard Building Contract (SBC)The SBC is a late and sophisticated construction contract, which is suitable for larger projects that value 500,000 upwards (2008 prices) given by Keown (2010). The SBC requires considerable experience to operate and understand it effectively and an independent contract administrator and quantity surveyor are affected. It is irreconcilable for projects with red-blooded substructure work, excavation and earthworks. SBC comes in three formatsStandard Building Contract with Quantities (SBC/Q)Standard Building Contract with Approximate Quantities (SBC/AQ)Standard Building Contract without Quantities (SBC/XQ)The SBC/Q and SBCXQ are lump-sum contracts based on drawings and specification, if th ere is a crown of quantities, then these rates and prices are for valuing variations. While the SBC/AQ is a re-measurement contract.All these forms of SBC made provision for the contractor to provide design known as contractors Design Portion, which is limited to discrete parts of the works such as the piling, mechanical and engineering works. However, it should be noted that it is not a Design and Build Contract.Design and Build Contract (DB)JCT design and build is a sophisticated contract requiring considerable experience to be utilize effectively. The employer/client provides the initial design that sets out his requirement in the contract document (Employers Requirement) and the contractor completes the design (contractors Proposals) and commences the construction work. It is a lump-sum contract that requires adequate time and great care to draft the employers requirements as it does not encourage change of scope or variation without incurring an additional cost. Design and bu ild contract does not require an independent contract administrator, rather the employer/client uses an Employers Agent to administer the contract.Major ejection Construction Contract (MP)JCT MP Contract is suitable for large projects, which both the client and contractor are sophisticated and experienced construction parties working on large projects that value around 10m upward (2008 prices) (Keown 2010). It is comparable to Design and Build, where the client provides initial design and the contractor completes the design and commences the execution work. Thus, adequate time and great care are required in drafting the employers requirement as there is little scope for change later..Prime Cost Building ContractThe JCT kick cost building contract is a cost reimbursement form in which the contractor is paid by a fixed fee or a percentage fee in addition to the incurred cost. According to Keown (2010), this form of contract is utilize where the scope of work could not be defined s uch as refurbishment work or where the works have to start immediately such as emergency work after fire damaged. In this form of contract, cost of the project cannot be ascertained until the completion, and it could be utilise alternatively to the NEC 3 ECC Main pickaxes E, which is also a cost reimbursement contract..JCT Management Contracts (MC)The JCT has two forms of management contracts, which are Construction management form and Management contract form. Both forms require great care and a high level sophistication and experience by the employer and the contractor. They are not popular in the UK but sometimes used on large, complex and fast track projects.Construction Management In this form, the contractor acts on behalf of the client as only a construction manager to manage the construction work by supervising the trade subcontractors employed by the client.Management Contract In this form, the main contractor acts as construction manager for the works and employs the sub contractor. The main contractor does not carry out any construction works but manages the work carry out by his subcontractor for a fee plus the prime cost.The JCT Construction Excellence (CE)This form of contract is radically different from all other JCT forms of contract because it is a partnering/collaborative contract newly introduced in 2007 to enter the collaborative contract market that is dominated by the NEC and PPC2000 forms. In JCT CE form, the parties are referred to as suppliers and purchasers and it took the form of traditional two companionship contract used for procurement of construction works and construction services. The contract terms and condition are short and straightforward, and can be priced either by lump sum or by target cost having a guaranteed Maximum cost facility. What is unusual about this form is that the risk associated with the project is identified and then allocated the risks between themselves, particularly respect to time and cost.According t o Keown (2010), As of 2009, the JCT CE contract appears to be rarely used, thus, it has not been tested in the market.In my opinion, JCT forms of contract are not the best plectrum for the rebuilding of the confectionery factory becauseJCT forms of contract are basically intended for building/construction work, thus, will therefore, be inadequate in addressing the engineering aspect of the factory.It required well- developed design before the construction works to commence, thus, unsuitable for work that would commence immediately.It is always criticised for polarising construction team and encouraging claims, thus, may not encourage a untroubled relationships among parties involved, which is required for the success of the project.So, JCT forms of contract will not be considered for the rebuilding of the confectionery factory.3.2 NEW ENGINEERING CONTRACTS (NEC 3) FORMS OF CONTRACTThe New Engineering Contracts (NEC 3) is a family of NEC tired contract launched in 1991 that was r evised in 2005 to replace NEC 2 suite that promotes a partnering culture, and has been cited has the preferable form of contract in Constructing the team, a report by Sir Michael Latham (Knowles 2001).The New Engineering Contract (NEC 3) suite adopts a different get to the procurement and execution of construction engineering through a proactive means to construction problems as the work hap. It is a Non- traditional form of contract that embraces early coaction of all parties involved to avoid polarisation that is claimed to be caused by traditional form, and also, intended to create an upright balance of risk between the parties to the contract. NEC 3 is applicable to a wide variety of major(ip) and minor construction works, which includeBuilding and Civil engineering worksMechanical and electrical plant/installations worksProcess engineering andOffshore fabrication.Some of the ways by which NEC 3 stage proactive features includeEarly collaboration and involvement of all par ties, which include the client, project manager, contractor, subcontractor, etc.The contractor proposes how to solve arising problems.It embraces parallel activities between the design and construction activities.It gives no chance for storing up of claims until after the work is accomplished.It is better suited for a project that must be completed quickly, even if that faster completion makes the project more expensive i.e. timely procedure/response and programmes are primary and cost is secondary.The pro-active approach that embraces collaboration of all parties and more man-hours administration is emphasised in the first core clause of the NEC 3, which states that The Employer, the contractor, the project manager and the supervisor shall act as stated in this contract in the savour of mutual trust and co-operation (core clause 10).The NEC 3 forms of contract that are currently in use areNEC 3 Engineering and Construction Contract (ECC)NEC 3 Engineering and Construction Subcontra ct (ECS)NEC 3 Engineering and Construction Short Contract (ECSC)NEC 3 Engineering and Construction Short Subcontract (ECSS)NEC 3 Tern Service Contract (TSC)NEC 3 theoretical account ContractNEC3 Professional Services ContractNEC3 Adjudicators Contract.NEC 3 Engineering and Construction Contract (ECC)NEC 3 ECC is the most widely used NEC 3 contract for appointing the main contractor for building, civilian and all other engineering works including any level of design responsibilities i.e. it allows the contractor to provide design (Clause 21). However, it should be noted that NEC 3 has no specific design and build contract.The ECC has six (6) main creams and twenty-two (22) secondary options to choose from. The main options areMain Option AContract type priced contract with Activity schedule. determine Mechanism Lump sum attempt parcelling ContractorSuitability suitable for contract that the client wants maximum cost certainty but the carry for a complete design is important. Main Option BContract type Priced contract with BoQ determine Mechanism Re-measurementRisk apportionment ContractorSuitability suitable for contract where there are suit works and there is uncertainty on the final quantities of the work.Main Option CContract type Target contract with Activity SchedulePricing Mechanism Cost re-imbursement with pain-gain mechanismRisk Allocation Shared between the client and the contractorSuitability suitable for contract where there is a need for an early start on site or the design is incomplete or inadequate.Main Option DContract type Target contract with BoQPricing Mechanism Cost re-imbursement with pain-gain mechanismRisk Allocation Shared between the client and the contractorSuitability suitable for contract where there is a need for an early start on site or the design is incomplete or inadequate.Main Option EContract type Cost Re-imbursement ContractPricing Mechanism Cost re-imbursementRisk Allocation ClientSuitability suitab le for contract where it is difficult or impossible to define the scope of work (e.g. refurbishment work) or where the construction works have to start immediately (e.g. emergency work after fire damaged).Main Option FContract type Management ContractPricing Mechanism Cost re-imbursementRisk Allocation ClientSuitability suitable for contract where both the client and contractor have experience in construction work that has to start immediately. NEC 3 Engineering and Construction Subcontract (ECS)The NEC 3 ECS contract is similar to ECC but used to appoint a subcontractor after the main contractor has been appointed through the ECC. NEC 3 Engineering and Construction Short Contract (ECSC)The NEC 3 ECSC contract is used for small and medium sized simple and well-defined projects that worth up to 500,000 (2008 price), where the sophisticated systems of the ECC are nor appropriate. It does not have main options, but can be a lump sum or re-measurement contract. NEC 3 Engineering and Construction Short Subcontract (ECSS)The NEC 3 ECSS contract is similar to the NEC 3 ECSC contract, but used to appoint subcontractors after the main contractor has been appointed under NEC 3 ECSC. NEC 3 Tern Service Contract (TSC)The NEC 3 TSC is similar to the ECC and is used for projects where regular work is required from a contractor over a period of time such as the appointment of suppliers to manage and provide a service. A plan or scheduled of work to be carried out is agreed upon by the client and contractor, and then payment is made using any of the options A, C or E. NEC 3 Framework Contract (FC)The NEC 3 FC is a simple contract which is meant to be used in conjunction with other NEC 3 forms that will provide the contracts for call off contracts. It is used to appoint suppliers to carry out construction work or to provide design or informative services on an as-instructed basis. According to Keown (2010), the JCT framework contract is probably a better choice now.In my opinion, NEC 3 ECC with option E form of Contract is the best for the rebuilding of the confectionery factory base on the reasons given in the concluding part.3.3 Institute of Civil Engineers (ICE) Forms of ContractThe ICE standard form of contract first edition was established in 1945 for mainly civil engineering and sometimes on building work that involved a large amount of earthwork. It is considered to be a traditional contract that requires a well-developed designed before the construction work can commence and contract administration under this form of contract is similar to that of the JCT. Experienced practitioners sometimes claimed that the ICE form of contract is complicated and not easy to understand, and are also frequently criticised for polarising construction team and encouraging claim just like the JCT form.According to Keown (2010), ICE contracts have different version, which includeMeasurement pas seul Contract it could be re-measurement or lump sum contract suita ble for large civil engineering work that worth 300,000 (2008 rough prices).Minor Work Contract it is a shortened form of the heedful version suitable for simple works with 6 months duration and up to 300,000 worth (2008 rough prices).Design and Construct Contract it is similar to the measurement version, but the employer provides the initial design (Employers Requirement), which would be completed by the contractor (Contractors Submission) and then carries out the construction work.Term Version Contract it is used where there is variety of construction works or works at different locations to be executed over a period of time. It also accommodates emergency call out type work.Archaeological Investigation Contract it is a simple contract for archaeological investigation.Ground Investigation Contract it is similar to measured version and suitable where the employer intends to develop a site and required specialist contractor to perform unanimous on-site investigation.Target Cost Co ntract it is essential for a cost re-imbursement contract. However, a target cost mechanism option is provided to give the contractor incentives to control cost.In my opinion, the ICE form of contract is not the best option for the confectionery factory becauseIt is mainly suitable for civil engineering works and building work that involves substantial earthwork, thus, may not be adequate for other engineering works like plant installation that is required.It requires a well-developed design before construction work could start, thus, unsuitable for this confectionery factory rebuilding post which the work has to start immediately.It tends to polarise the construction team and encourages claim, which may be a threat to the progress of the work.3.4 Association of Consultant Architects (ACA) Forms of ContractThe ACA forms of contract is a non traditional collaborative contracts introduced in 1982. It is the only multi party standard form construction contract in the UK, where parties including the client, key consultants, main contractor and specialist subcontractors sign up the same contract i.e. all the parties are in a contract with each other, owe each other a duty of care and can sue each other for geological fault of contract and duty of care (Keown 2010). There is no suggested limit on cost or type of contract which this form is best suitable for because of its flexible accommodation of alternative clauses (Clamp, Cox and Lupton 2007).The ACA has different forms, which are be after Partnering Contract (PPC 2000) it is a sophisticated and complicated partnering contract, which requires great care in setting up and running, particularly when preparing the project partnering Agreement.Specialist Partner Contract (SPC 2000) it embraces the PPC 2000 procedures and philosophy, but focuses on sub-contracting and relationship between main contractor, main sub-contractors and specialist.Term Partnering Contract (TPC 2005) it is suitable for works and services th at extend over a period of time or where there is periodic/planned maintenance and can also accommodate to call out work.Extend the multi-party contract philosophy to Project Partnering Contract (PPC).In my opinion, the ACA forms of contract are unsuitable for the rebuilding of the confectionery factory because it does not give options for which someone can choose from.ConclusionIn my opinion, NEC 3 ECC form of contract with Main Option E and probably supplemental Options 5, 6, 7, 12 and 14 would be the best form of the contract options for the rebuilding of the confectionery factory becauseIt is suitable for engineering and/or construction work, which includes civil engineering, building, mechanical and electrical plant/installations work, process engineering and all allied industries that are adequate for the rebuilding of confectionery factory.It does not require well- developed design before the construction works to commence i.e. it encourages a parallel operation between the design and construction activities, thus, suitable for work that would commence immediately as applied to the confectionery factory.It embodies an efficient management process and stimulates good management of the relationship among all the parties involved, thus, avoid polarisation of parties involved.Its collaborative working across the entire range of mountains optimises the project success.It uses clear and simple language, which is straightforward and easily understood.The NEC 3 ECC forms of contract with option E cost reimbursement contract among other options of NEC 3 ECC would be considered for the rebuilding of the confectionery factory pursuant to the information given from the project proposal that it has been agreed that a single contractor would be employed to carry out the construction work and time cannot be spared for a well-developed design, since the construction work has to start immediately.4.1 Confectionery Factory Rebuilding Project Parties and OrganogramFor t he rebuilding of the confectionery factory, the identified parties that are likely to be involved in this project areClient/EmployerProject MangerArchitectStructural EngineerCivil EngineerMechanical EngineerElectrical EngineerTechnology SpecialistQuantity SurveyorQuality Assurance OfficerCost ManagerCDM RegulatorFacilities ManagerPlanning supervisorslawyerMain ContractorBuilding works SubcontractorMechanical Electrical Services SubcontractorPlant Installation Specialist SubcontractorSuppliersA detail organogram that shows these parties and their contractual relationship is attached below.4.2 Contractual Relationships and AgreementFor the NEC 3 ECC, option E cost reimbursement contract chosen for this project, with a project manager leading and plan for a single contractor to execute the project, the contractual relationship will exist betweenClient/Employer and Project Manager