Contractor Checklist

Your Contract
Apart from the very important objective in the doing a good job with professional pride, the work that you do essentially boils down to a question of risk, which is allocated by contract.
If one considers the classic project management triangle of time, cost and quality, quality is generally the contractor’s risk, at least for the reasonable quality of work.

The issue of time in construction contracts has traditionally allocated the risk of additional time to the owner, with the risk of cost to the contractor. However, such a risk allocation can be extremely unfair, and there are a number of contracts that provide the contractor with a right to “delay damages” in the event of time delays, for which it is not responsible.

The issue of cost, is often the one that is considered the most problematic because owners expect a fixed price (i.e. the contractor’s risk), and constructors argue for variations (i.e. the owner’s risk).

Diagram

The difficulty for us is where a client comes to us AFTER they have signed a contract and want to reallocate the risk already governed by the contract because they were not aware of the risk they were accepting.

Our strong recommendation is for a contract to be reviewed by us PRIOR TO SIGNING because we can highlight for you the risks associated with each clause so that YOU:

  1. may be in a position to change the wording to lower your risk prior to signing the contract; or alternatively
  2. are at least in a position to realistically price that risk.
    An increase in risk should theoretically require an increase in price, particularly where you have no realistic control over that risk, but so often clients are either unaware of the risk, or they fail to adequately price the risk.

Contract administration
Your contract should provide mechanisms whereby you can make claims for:

  • extensions of time (EOT’s) and possibly delay damages
  • latent conditions
  • variation claims; and
  • even claims for breach of contract

Very often, the time frames within which you are required to give notice is very short, and the information required in those notices is very comprehensive, and your failure to do so may mean that your claim is TIME BARRED OR BARRED, such that you will be unable to later make any claim. Often clients only discover this fact after speaking to a legal adviser, by which time it may be too late to make an enforceable claim.

Our strong recommendation is for the contract to be reviewed (preferably prior to signing, but even afterwards) when the contract administration procedures can be highlighted to you, so that you are aware of what is required to make enforceable claims.

If you make a claim under BCIPA and you have not adhered to the contractual timeframes, you may find that you have no claim that an adjudicator can approve.

Disputes
Very few people actually enjoy disputes, but a contract generally recognise that differences can arise between parties. It is important to understand and follow the dispute resolution mechanism provided in the contract (if it is an enforceable clause). If a dispute arises, it is particularly important to clearly articulate your concerns in the notice of dispute (if the contract requires one), so that the other party is aware, not only that a dispute has arisen, but also of your reasons about which there is a dispute.

If you are unable to resolve your dispute with the other party, the contract, generally provides a mechanism for the resolution of disputes by a 3rd party. The advantages of having such a mechanism may be savings in cost or time or possibly FACE-SAVING – all good outcomes will.

Please talk to us at the earliest possible opportunity so that we can best position you to achieve a commercial outcome for your project that you can live with and still sleep at night!

 

"In these difficult economic times, clients need flexibility and as much certainty as possible about their costs. Our firm can tailor its services to suit your needs, and can fit within your budget to allow you to negotiate with knowledge of your legal position. We can provide a fixed fee for certain services and we invite you to give us a call."
Chris Lenz, Principal