General Contracting - Revision history

Designing Buildings: Redirected page to Traditional contract for construction

2014-12-18T07:57:54Z

Redirected page to Traditional contract for construction

← Older revision		Revision as of 07:57, 18 December 2014
Line 1:		Line 1:

−	#redirect:[[~~Traditional_contract~~\|~~Traditional_contract~~]]	+	#redirect:[[Traditional_contract_for_construction\|Traditional_contract_for_construction]]

	[[Category:Roles_/_services]]		[[Category:Roles_/_services]]

Designing Buildings: Redirected page to Traditional contract

2014-12-15T15:01:39Z

Redirected page to Traditional contract

← Older revision		Revision as of 15:01, 15 December 2014
Line 1:		Line 1:

		+	#redirect:[[Traditional_contract\|Traditional_contract]]

−	~~== General ==~~	+	[[Category:Roles_/_services]]
−	*Designers, on behalf of the employer, produce the documents	+
−	*The contractor agrees to produce what has been specified in the documents	+
−	*The contractor should be invited to price a complete set of documents that describe the proposed building fully - if design is only partially complete, general contracting begins to break down, as there will be a high demand for communication and information which is difficult to manage	+
−	*The contractor has no responsibility for design	+
−	*The contractor's offer of price is based on the bill of quantities, a document that itemises and quantifies every aspect of the work	+
−	*The bill also forms an important mechanism for controlling costs as the project progresses	+
−	*Therefore the QS has a central role	+
−	*Structural and services engineers provide specialised services that are co-ordinated by the architect	+
−		+
−	~~== Use of General Contracting ==~~	+
−		+
−	~~Typical circumstances in which general contracting is used~~:	+
−	*The employer has caused the design to be prepared and for the purposes of the building contract takes responsibility for it	+
−	*The employer's designer is sufficiently experienced to co-ordinate and lead the design team and to manage the interface between design and production	+
−	*The design is substantially complete when the contractor is selected	+
−		+
−	''(A fully measured bill can only be prepared from a complete design: a bill of approximate quantities can be used for an incomplete design. The contract then becomes a re-measurement contract: the work is specified in approximate measure for the purposes of tendering and after execution is measured again for the purposes of payment. There is also a without quantities version of JCT 98)''	+
−	*An independent quantity surveyor will be used to plan and control the financial aspects of the project	+
−	*The contractor is selected on the basis of the contractor's estimate and carries the risk that the estimate may be wrong	+
−		+
−	~~''(If firm quantities are used, the work is not re-measured and the contractor is paid on the basis of'' the quantities in the bill, unless the work has been subject to a variation)~~	+
−	*The employer reserves the right to select sub-contractors for certain parts of the work	+
−		+
−	''(A contractor will be paid whatever nominated sub-contract work costs: such work falls into the category of prime cost or cost reimbursement. Therefore, the risks for the contractor are different to hose associated with the employment of domestic sub-contractors, where the contractor pays them from within the contract price)''	+
−	*'Prime Cost Sums', including employer-selected sub-contracts, do not form the major proportion of the contract sum	+
−		+
−	''(If a large proportion of the work is in prime cost sums, the contract will be unsuitable because the contractor is reduced to a co-ordinator and accountant and the clauses do not reflect that role)''	+
−	*The employer's agents feel that it is important to use an acceptable negotiated form to ensure a fair an familiar distribution of risk	+
−	*The employer makes no explicit choice and the advisors do not raise the issue	+
−		+
−	~~== Basic Characteristics ==~~	+
−		+
−	~~=== Design and Workmanship ===~~	+
−	*The design must be documented in order for the contractor to be able to tender for the work, but it will not cover everything	+
−	*Many detailed aspects are within the skill and knowledge of the contractor	+
−	*There are also many factors which are not documented simply because no-one thought of them before site work started	+
−	*In these cases it is essential for the contractor to seek clarification: a contractor who makes assumptions will incur design liability for these choices and will be exposed as he will probably not carry PI insurance for such decisions	+
−		+
−	~~=== Contractor's Obligations ===~~	+
−	*The contractor undertakes to do the work described in the documents	+
−	*It is rare that the contractor is placed under an obligation of fitness for purpose	+
−	*Certain items specified as such in the bills have to be done to the reasonable satisfaction of the architect	+
−		+
−	~~=== Nominated Sub-contracting ===~~	+
−	*A mechanism for ensuring that the contractor employs sub-contractors of adequate standing	+
−	*Without nomination, contractors would use high calibre sub-contractors when tendering to keep the bid price high, but on winning may re-negotiate to find the cheapest sub-contractor	+
−	*One abuse of nomination is to relieve the architect of the burden of having to detail the design and specification fully	+
−		+
−	~~=== Variations ===~~	+
−	*There are detailed provisions for valuing the financial effect of variations and are based upon the contractors' original price: the contractor should be paid according to what would have been included in the bills had the contractor known about the varied work at the time of tendering	+
−	*Only in exceptional circumstances should the basis of payment be total cost reimbursement	+
−	*Variations allow the design team to refine the design, but are often abused by client making arbitrary changes: this leaves the client exposed to contractor claims	+
−		+
−	~~=== Payment ===~~	+
−	*The contractor will typically be paid in instalments	+
−	*Interim certificates, issued by contract administrator, state how much is due to the contractor	+
−	*A small amount is retained by the employer on each interim certificate in a retention fund to cover the employer in case of the contractor's insolvency and encourages the contractor to remedy any defects after completion	+
−		+
−	~~=== Completion ===~~	+
−	*When the work is substantial complete, a certificate of practical completion is issued	+
−	*A defects liability period, usually of twelve months, then commences, during which time the contractor has the right to remedy any defects that become apparent in the building	+
−		+
−	~~=== Extensions of time and liquidated damages ===~~	+
−	*The contract period may be extended for various specific reasons	+
−	*Such an extension will relieve the contractor of liability for liquidated damages	+
−		+
−	~~=== Fluctuations ===~~	+
−	*A financial provision related to changes in the market prices of the contractor's resources	+
−	*In periods of high inflation it is more economical for the employer to absorb the risk of price rises, in which case the fluctuation clauses are used	+
−		+
−	~~== Risk in General Contracting ==~~	+
−		+
−	~~=== Money ===~~	+
−	*The employer is entitled to expect the building to be completed on time	+
−	*Failure to achieve this will render the contractor liable to pay liquidated damages	+
−	*The employer should ensure that all contractors and sub-contractors are backed up by financial guarantees and bonds, otherwise the liquidated damages may be worthless	+
−	*The primary element of the tender price is the cost of labour and materials plus office overheads	+
−	*Premiums are added onto this which reflect the market situation and the level of risk associated with the project	+
−	*The allocation of certain items of risk to the contractor will greatly affect the contract sum	+
−		+
−	~~=== Default ===~~	+
−	*The risk of default lies with the contractor as all work must comply with the contract documents	+
−	*The contractor is responsible for every person on site, whether directly employed, a domestic sub-contractor or a nominated sub-contractor	+
−	*There is a danger that a contract can result in the employer having no recourse when a nominated sub-contractor fails to perform.	+
−	*If a nominated sub-contractor causes delay, the contractor can claim an extension of time and will not have to pay liquidated damages, therefore the contractor will have suffered not loss.	+
−	*Having suffered no loss, the contractor cannot sue the nominated sub-contractor	+
−	*Unless there is a direct agreement between the employer and the nominated sub-contractor there is no route for the defaulting sub-contractor to be penalised	+
−	*This underlines the importance of strictly following the procedures for the nomination of sub-contractors	+
−	*Since general contracting does not provoke fundamental questions about risk it is rarely priced for and if contracts are amended, it can lead to bankruptcies	+
−		+
−	~~=== Completion ===~~	+
−	*The contractor has a right to complete the works	+
−	*The employer has the power to determine the contract if the if the contractor fails to make regular and diligent progress, suspends the works or becomes insolvent	+
−	*A contractor has the right to suspend the contract if the employer obstructs the issue of certificates, continually suspends the work or becomes insolvent	+
−		+
−	~~=== Time ===~~	+
−	*General contracts are very specific about time	+
−	*Certain types of delay are permitted, provided that specific events are identified in a clause which entitled the contractor to an extension of time	+
−	*They include some items that do not entitle the contractor to loss and expense	+
−		+
−	~~=== Quality ===~~	+
−	*General contracting is ideal for documented control systems	+
−	*The client can pre-define the contractor's targets and have a legal recourse in the event of them not being achieved	+

Xela: Created page with " == General == Designers, on behalf of the employer, produce the documents The contractor agrees to produce what has been specified in the documents *The contractor should be ..."

2014-01-05T07:46:36Z

Created page with " == General == *Designers, on behalf of the employer, produce the documents *The contractor agrees to produce what has been specified in the documents *The contractor should be ..."

New page

== General ==
*Designers, on behalf of the employer, produce the documents
*The contractor agrees to produce what has been specified in the documents
*The contractor should be invited to price a complete set of documents that describe the proposed building fully - if design is only partially complete, general contracting begins to break down, as there will be a high demand for communication and information which is difficult to manage
*The contractor has no responsibility for design
*The contractor's offer of price is based on the bill of quantities, a document that itemises and quantifies every aspect of the work
*The bill also forms an important mechanism for controlling costs as the project progresses
*Therefore the QS has a central role
*Structural and services engineers provide specialised services that are co-ordinated by the architect

== Use of General Contracting ==

Typical circumstances in which general contracting is used:
*The employer has caused the design to be prepared and for the purposes of the building contract takes responsibility for it
*The employer's designer is sufficiently experienced to co-ordinate and lead the design team and to manage the interface between design and production
*The design is substantially complete when the contractor is selected

''(A fully measured bill can only be prepared from a complete design: a bill of approximate quantities can be used for an incomplete design. The contract then becomes a re-measurement contract: the work is specified in approximate measure for the purposes of tendering and after execution is measured again for the purposes of payment. There is also a without quantities version of JCT 98)''
*An independent quantity surveyor will be used to plan and control the financial aspects of the project
*The contractor is selected on the basis of the contractor's estimate and carries the risk that the estimate may be wrong

''(If firm quantities are used, the work is not re-measured and the contractor is paid on the basis of'' the quantities in the bill, unless the work has been subject to a variation)
*The employer reserves the right to select sub-contractors for certain parts of the work

''(A contractor will be paid whatever nominated sub-contract work costs: such work falls into the category of prime cost or cost reimbursement. Therefore, the risks for the contractor are different to hose associated with the employment of domestic sub-contractors, where the contractor pays them from within the contract price)''
*'Prime Cost Sums', including employer-selected sub-contracts, do not form the major proportion of the contract sum

''(If a large proportion of the work is in prime cost sums, the contract will be unsuitable because the contractor is reduced to a co-ordinator and accountant and the clauses do not reflect that role)''
*The employer's agents feel that it is important to use an acceptable negotiated form to ensure a fair an familiar distribution of risk
*The employer makes no explicit choice and the advisors do not raise the issue

== Basic Characteristics ==

=== Design and Workmanship ===
*The design must be documented in order for the contractor to be able to tender for the work, but it will not cover everything
*Many detailed aspects are within the skill and knowledge of the contractor
*There are also many factors which are not documented simply because no-one thought of them before site work started
*In these cases it is essential for the contractor to seek clarification: a contractor who makes assumptions will incur design liability for these choices and will be exposed as he will probably not carry PI insurance for such decisions

=== Contractor's Obligations ===
*The contractor undertakes to do the work described in the documents
*It is rare that the contractor is placed under an obligation of fitness for purpose
*Certain items specified as such in the bills have to be done to the reasonable satisfaction of the architect

=== Nominated Sub-contracting ===
*A mechanism for ensuring that the contractor employs sub-contractors of adequate standing
*Without nomination, contractors would use high calibre sub-contractors when tendering to keep the bid price high, but on winning may re-negotiate to find the cheapest sub-contractor
*One abuse of nomination is to relieve the architect of the burden of having to detail the design and specification fully

=== Variations ===
*There are detailed provisions for valuing the financial effect of variations and are based upon the contractors' original price: the contractor should be paid according to what would have been included in the bills had the contractor known about the varied work at the time of tendering
*Only in exceptional circumstances should the basis of payment be total cost reimbursement
*Variations allow the design team to refine the design, but are often abused by client making arbitrary changes: this leaves the client exposed to contractor claims

=== Payment ===
*The contractor will typically be paid in instalments
*Interim certificates, issued by contract administrator, state how much is due to the contractor
*A small amount is retained by the employer on each interim certificate in a retention fund to cover the employer in case of the contractor's insolvency and encourages the contractor to remedy any defects after completion

=== Completion ===
*When the work is substantial complete, a certificate of practical completion is issued
*A defects liability period, usually of twelve months, then commences, during which time the contractor has the right to remedy any defects that become apparent in the building

=== Extensions of time and liquidated damages ===
*The contract period may be extended for various specific reasons
*Such an extension will relieve the contractor of liability for liquidated damages

=== Fluctuations ===
*A financial provision related to changes in the market prices of the contractor's resources
*In periods of high inflation it is more economical for the employer to absorb the risk of price rises, in which case the fluctuation clauses are used

== Risk in General Contracting ==

=== Money ===
*The employer is entitled to expect the building to be completed on time
*Failure to achieve this will render the contractor liable to pay liquidated damages
*The employer should ensure that all contractors and sub-contractors are backed up by financial guarantees and bonds, otherwise the liquidated damages may be worthless
*The primary element of the tender price is the cost of labour and materials plus office overheads
*Premiums are added onto this which reflect the market situation and the level of risk associated with the project
*The allocation of certain items of risk to the contractor will greatly affect the contract sum

=== Default ===
*The risk of default lies with the contractor as all work must comply with the contract documents
*The contractor is responsible for every person on site, whether directly employed, a domestic sub-contractor or a nominated sub-contractor
*There is a danger that a contract can result in the employer having no recourse when a nominated sub-contractor fails to perform.
*If a nominated sub-contractor causes delay, the contractor can claim an extension of time and will not have to pay liquidated damages, therefore the contractor will have suffered not loss.
*Having suffered no loss, the contractor cannot sue the nominated sub-contractor
*Unless there is a direct agreement between the employer and the nominated sub-contractor there is no route for the defaulting sub-contractor to be penalised
*This underlines the importance of strictly following the procedures for the nomination of sub-contractors
*Since general contracting does not provoke fundamental questions about risk it is rarely priced for and if contracts are amended, it can lead to bankruptcies

=== Completion ===
*The contractor has a right to complete the works
*The employer has the power to determine the contract if the if the contractor fails to make regular and diligent progress, suspends the works or becomes insolvent
*A contractor has the right to suspend the contract if the employer obstructs the issue of certificates, continually suspends the work or becomes insolvent

=== Time ===
*General contracts are very specific about time
*Certain types of delay are permitted, provided that specific events are identified in a clause which entitled the contractor to an extension of time
*They include some items that do not entitle the contractor to loss and expense

=== Quality ===
*General contracting is ideal for documented control systems
*The client can pre-define the contractor's targets and have a legal recourse in the event of them not being achieved

General Contracting - Revision history

Designing Buildings: Redirected page to Traditional contract for construction

Designing Buildings: Redirected page to Traditional contract

Xela: Created page with " == General == *Designers, on behalf of the employer, produce the documents *The contractor agrees to produce what has been specified in the documents *The contractor should be ..."

Xela: Created page with " == General == Designers, on behalf of the employer, produce the documents The contractor agrees to produce what has been specified in the documents *The contractor should be ..."