Construction Law - Assignment Example

Construction Law Word Count: 2285 I. Introduction As the global economy is living through its worst crisis for about 90 years many changes are happening. Priorities change, accepted norms are being questioned, globalization which was thus far a given is now debated again, protectionism is starting to appear in the most unexpected of places (US, EU construction industry etc.). Chief among those is the organizational structure that can best utilize precious limited resources to maximize the return on the organization’s performance in construction. Furthermore, success potential can be enhanced by the combination of a sound choice of structure, adequate planning for its implementation, and particular attention during the initial rollout. Depending on the current status of procurement activities of the candidate company, significant changes in mentality, spending patterns, accountability, reporting, etc., can be a source of significant and often catastrophic friction. This paper intends to critically discuss the different structure and options in setting up and implementing a contract for construction procurement. The focus is primarily on one company that is typically decentralized without particularly strict headquarters’ control. This sector is chosen for the particular difficulties any procurement organization would likely face chief among which, is the perennial question about decision making and whether it is done centrally or locally. As an advisor, it is suggested that you hire three new people immediately. These three people would be an architect, a contractor, and an accountant. The reasons for hiring each of these three people will become quite apparent very quickly. II. The Architect The reason one needs to get a good architect is paramount. A good architect on the project lays the foundation for everything else. “Architectural services should be calculated as part of the project cost, typically just under ten percent of the building budget…Architects bring a global vision to the very complicated process of building…” (“Working With an Architect,” 2011, pp. 1). Ideally, one wants to choose an architect for the project who has character. In the same way this architect’s character is, so shall your structure be. You want an architect who will be able to see the project through from inception to completion. Therefore, this person is going to have to envision the project as well as bring it to fruition. The architect has to have a good idea in mind of what the finished product is going to look like. Therefore, you must choose an architect who not only can produce physical plans for what a building will look like—but someone who has a vision. By vision, I don’t mean that he can see well. By having vision, I mean that this architect should ideally have a good grasp of architectural principles such that he or she knows what makes a striking building, and how that knowledge can best be applied to your particular project. Now, in this instance, I would be looking for an architect with solid experiential knowledge in designing larger structures, such as schools, churches, mosques, and yes, of course, stadiums. If you can find someone who specializes in building large complexes, that would be even more highly advisable. “The primary role of an architect is to interpret the client’s ideas and draw up professional plans for any building work. Although it is possible to employ an architect solely for this purpose, they will also offer to fulfil …range of…tasks…[so]…that the entire building process progresses smoothly” (Ravenscroft, 2011, pp. 1). In short, you want to hire someone for the position of architect that is going to be competent. You also want to hire someone who knows what he or she is doing. Ideally, you are looking for an architect who not only knows his or her facts, but also ideally specializes in building the kinds of venues that are planned for being built. You don’t want this architect to come fresh out of school with no experience. For a major project such as this you are seeking an architect who has at least 10 years’ worth of experience under his or her belt. That, however, is just the beginning. This architect should have either: 1) gone to one of the top universities in the country; or 2) have graduated in the top 5% of his undergraduate class. This not only demonstrates that the architect cares about his or her education but places a value on education. You should be concerned that your architect is the sort of person who has an educated mind. He or she will be open to new and fresh ideas, while at the same time will be somewhat of a traditionalist as far as thinking about the scope of the project, what you require on a macro level, and also what you are thinking you would like the ultimate end-product to look like in terms of the finished building, holistically speaking. Your architect should definitely have a sense of style and what is trendy in terms of buildings. At the same time, your architect should have a very keen sense for what is traditional in architecture, and perhaps he or she knows how to best blend those two worlds in order to create a unified, new vision. The architect should consider everything you are thinking about, whether it be deciding what kind of materials the beams should be constructed from to whether your structure should be “green,” i.e., environment-friendly, or not. From inception to fruition, this building is going to be something that represents your name-brand image forever (or at least for the foreseeable future), and so you should plan carefully what is the style and essence you wish to show the world. A building not only represents your company but it says a lot about what you think about the world. For example, a company that strives to build a green, or environmentally-friendly, building stresses the fact that it cares about the environment. Thus, many people do notice those kinds of things in whether to choose to support your particular establishment. Thus it would behoove you well to consider things like that as you go about in your decision how to hire your architect. If you decide to “go green,” there are numerable architects you can choose who would be well-suited to help you do this. On the other hand, if you choose not to be environmentally-friendly in your choice of building, there are plenty of old-fashioned architects who will still cater to your particular needs and interests. Really, whether you decide to go green or not depends on the type of image you are willing to display to the public. It is becoming increasingly popular for organizations to build sustainable buildings because the public they are seeking to gain support from supports eco-friendly atmospheres. The ideal architect for your project is someone whom you know will be suitable for your purposes. For all practical purposes, you are trying to build within the specifications given by B.Q. Your architect has to be someone reliable and trustworthy. He or she needs to be the type of person you could call in the middle of the night and say, “No, I want to scrap those plans,” and you know he or she would do it in a second. This is not to say that the person should be at your every beck and call. However, that architect should be available to you whenever you need to get a hold of the person, just in case you want to change any of the plans. The ideal architect should be willing to bend to your whim a bit and cater to your needs. If your architect is not willing to work with you, then you do not want to work with that person. The architect must understand that his work is a reflection of who he is, and anything less than that architect giving his or her personal best is not good enough for your company. III. The Contractor Choosing a contractor is an important business. It’s one that’s not to be taken lightly, for this person is ultimately going to hire the people who work on your structure. Therefore, this matter should be approached with some care. The contractor is going to basically follow the architect’s blueprints down to a tee. Therefore, the architect will probably know a contractor whom he or she works with and can recommend someone suitable for your project. If you hire an excellent architect in the first place, the architect will probably know someone who is a first-rate contractor. That is partially why choosing an architect is so godawful important—because he or she could very well determine the quality of the end-product here. In your case, this building is going to have a specific structure with plans that might be in flux, as noted in the case study. Thus, as you can see, the importance of knowing your architect is of premier importance. Your contractor is basically going to tell you the lay of the land and how the project is going to be carried out. The contractor is going to be the person who hires everyone who works on the project. “In Liverpool City Council v. Irwin (1977), the House of Lords noted two distinct circumstances in which the courts might imply terms: 1) if it were necessary to give business efficacy to a contract; and 2) if the terms were simply spelling out what both parties knew was part of the bargain” (Chappell, 2007, pp. 70). You ideally want a contractor who has been in the business for awhile, preferably 15 to 20 years. The more experience the contractor has, the better. “The contractor will carry out its work in a good and workmanlike manner—that is, it will carry out the work using the same degree of skill as would an averagely competent contractor who is experienced in that kind of work: Hancock and Others v. B W Brazier (Anerley) Ltd (1966)” (Chappell, 2007, pp. 71). In addition proper materials, a reasonably fit building, and a deadline must all be agreed upon within the contract (Chappell, 2007, pp. 71). The contractor is going to be a significant person you hire; therefore, choose your contractor wisely. Since this person is going to hire everyone on the job who will personally work on your project, from laying bricks to concrete, you want to know that this person is similarly reliable and trustworthy. IV. The Accountant It’s important to get an accountant you can trust because this person is basically going to have to keep all your finances in order. Hire this person as soon as possible and don’t delay—because your financial worries will be less if you know you have someone watching over everything with the eye of a hawk and knowing where every one of your monies is spent. Thus, all the money issues in this case study Could be handled well by an accountant who knows something about how to distribute and manage funding properly. There are many types of procurement options, but the cost plus fixed fee is probably the safest way to go. Basically, this is the best way to choose. A cost plus fixed fee may be the type of procurement best suited for this project. “In this case the contract payment is calculated by tracking costs internally, looking at the receipts, and then, using internal accounting resources, calculate payment based upon the tracked costs” (Skrzypczak, 2011, pp. 1). Since costs are tracked internally (most likely by the accountant you hire), this accountant will look at the receipts and then calculate payment accordingly. The problems that one runs into with fixed pricing and things like that are that projects can be delayed due to bad weather, personal problems, etc. Therefore, having a cost plus fixed fee is a guarantor that everyone on the project gets paid for their work, and it also assures the client (you) that you are getting what you paid for. In essence, everything is going to be paid for and there will be no excesses in cost. Prices should be selected based on what the going rates are for materials. This can be discussed with the contractor at some length, however one prefers to have the discussion, whether formally or informally. In terms of impressing the stakeholders with various stages of the project, some effort should be made in order to make this a special event. Planning and executing a building is a major milestone in any company’s span of life, and therefore it should be summarily celebrated. Ideally, some sort of planning committee should be hired to execute the vision of the project—in order to avoid the bickering between the contractor, the architect, and the employer—and that the Money issues can be resolved by the accountant. V. Conclusion Balance sheets are taking a severe toll worldwide and liquidity is ever harder to come by especially since lending had virtually frozen. This combination of reduced liquidity, more difficult lending terms and the deteriorating trading environment in the wake of the recession in developed countries and creeping regulatory restrictions is making companies the world over to focus sharply on their procurement functions. While procurement has long been identified as an important contributor to operational performance in construction, it is widely overshadowed (in terms of board level representation and other seniority metrics) by more bottom-line or customer oriented functions like marketing and sales. As companies are making either a deliberate re-focusing or are forced by events to elevate the importance of procurement there are many choices that need to be made in order for the exercise to bear the intended results. That is why, with such projects, it is important to have an excellent architect, an excellent contractor, and an excellent accountant. REFERENCES Chappell, D. (2007). The JCT design and build contract 2005. UK: Wiley-Blackwell. Ravenscroft, T. (2011). Finding and choosing a good architect. [Online Article]. . Retrieved 11 May 2011. Skrzypczak, P. (2011). Considerations in Procurement: Contract Types and Assigning Risk. [Online Article]. . Retrieved 11 May 2011. Working with an architect. (2011). [Online Article]. . Retrieved 11 May 2011. BIBLIOGRAPHY Chappell, D. (2006). The JCT intermediate building contracts 2005. UK: Wiley-Blackwell. Minahan, T. (2005) Center-led procurement. UK: Aberdeen Group. Poirier, C. (2003) Using models to improve the supply chain. US: CRC Press. Sollish, F. & Semanik, J. (2007) The procurement and supply manager’s desk reference. US: J.Wiley & Sons. Trent, R. (2007) Strategic supply management. US: J. Ross Publications. Walker, D. & Hampson, K. (2003) Procurement strategies: a relationship-based approach. Oxford: Blackwell Publishing. Read More