Standard Building Contract - Essay Example

Standard Building Contract There are several problems and issues that surfaced in this project’s life cycle and each has a different domain as per JCT 2005 Standard form of Building contract. These issues are discussed in detail in their chronological order. The first among which is regarding the fact that the contractor noticed a contradiction between drawing and BOQ but assuming that drawings were right, conducted the work accordingly. In this situation the contractor has shown non compliance to the JCT Contract, where he was liable under the clause 2.15.1/2/4 to inform the CA/ Architect through a written notice about the discrepancy created by the conflicting documents and then the CA/Architect shall decide what was right, the drawing, BOQ or neither. Where as in this case the contractor did not take any consent from the CA. Hence the CA/Architect is not responsible neither bound to pay for any additional claims in the BOQ and Interim Payment Certificate. But the above conditions and clauses are only applicable if the contractor becomes aware of the conflicting documents. The second issue of alteration of position of brackets that are already fixed. In light of the JCT contract, I am of the opinion that the contractor does not have the capacity to refuse the CA/Architect of any redo of work or variation in the design/construction, until the contractor has been issued a completion certificate or in case the work ordered by the CA/Architect is out of his authority. In any other case contractor is bound to follow the instruction and variation made by CA. whereas if the particular activity is on the critical path then contractor can claim an extension in the deadline, along with a reasonable compensation of performance of the particular task. The clause 5.6 deals with all the rules that are applicable in case of a variation in work. Whereas on the other hand contractor is contractually bound to show compliance to any instruction that is given by the CA/Architect under the clause 3.10.1/2. Further under clause 3.10.3 if the contractor does have any reservation he must inform the CA/Architect within 7 days. In case the contractor refuses to comply or does not respond in writing within 7 days, the clause 3.11 of the JCT contract is applicable under which the CA/Architect have the power to employ another person/party to perform the task and the cost incurred in the engagement of the new party to complete the task will be paid by the contractor and deducted from the contract sum. In my opinion I believe that the situation in our case the CA/Architect will issue a written notice and if the contractor does not comply he will have to face similar outcomes as mentioned above. Now, the employer has to invite another party to complete the desired task and deduction from the current contractor’s bill. Thirdly the issues of the modification of working hours where the architect has already written a letter to the contractor. Hence he has done his part of the work so that the clauses under chapter of “variation” of JCT contract 05 can be applicable. Under the clause 5.1.2.3 the CA/Architect has the right to change and make “variation” in the working hours of the contractor and the contractor has to comply with the orders, where as he has the choice to make an equal valuation of the variation, which is then to be communicated to the CA/Architect, for which the clauses 5.2 “Valuation of Variations and provisional sum work”, clause 5.6 “The Valuation Rules Measurable Work” and 5.9 “Change of conditions for other work” are applicable. I strongly believe that the contractor has no other option but to comply with the instructions as it engages as employer directly. In case of non compliance to the instructions that are been given by the CA/Architect, the contractor can face disqualification from the project under the clause 3.11 “Non-compliance with instructions” of the JCT standard form of building contract. Whereas this clause is recommended to be a used as a warning as in our case where the contractor is repeatedly showing non compliance the details of these clause can be brought into his notice. But it is recommended that this clause is not be used as it will create several other problems and legal issues for both sides. On the other hand the employer has demanded a section of the site for its own personal use for parking purposes. In this case the contractor has the full authority over the site as he has been given the possession of the site till the project is completed. In accordance to the clause for Possession in section 2 clause 2.4.2 of the JCT 05 the contractor shall retain the full possession of the completed site or the section of his work until the project is completed and it is clearly written in the contract that “the Employer shall not be entitled to take possession of any part or parts of the Works or Section until such date.”. Further, the clause 2.6 “Early use by Employer” does provide a provision that an employer can use the site for his purpose but the employer has to attain a written consent of the employer before occupying the space for personal use. So in my opinion the only way the employer can get the area for his use is that he gets the consent of the contractor, which in our case seems to be difficult. Fourthly, the problem regarding delay in roof carcasing due to the strike of truss manufacturers. Regarding this issue the contractor has a weak position as it is clearly mentioned in the clause 2.27.1/3 that it is the foremost obligation of the contractor to foresee any coming issues in regard to time delay and when it becomes “reasonably apparent” that the issue is inevitable, he must inform the CA/Architect in written form about the circumstance and causes of delay. This will also be accompanied by the request for assistance in finding a suitable alternative which can be in terms of method of construction or material of construction. Whereas if the CA/Architect was informed the sequence of work could have be altered this could have saved the cost as well as time. But the contractor has shown noncompliance to clause 2.27.1 , hence CA/Architect is not bound to provide the contractor with an extension in time or financial damages that have incurred during and by the delay. The strike is a relevant event as per clause 2.29.11 but it refers back to clause 2.27 and 2.28 for its translation. Where both are conditional to the fact that contractor must lodge a notice regarding the delay, in timely and reasonable manner. Hence in my point of view I prospect this matter will end up in favour of CA/Architect. As the contractor has failed to comply with clause 2.27 and 2.28 of the contract. Fifthly, the issue regarding nonpayment of interim valuation # 6. Under the clause 4.14 of the JCT contract 05, the contractor is given the right to suspend work on site in case of nonpayment. Under clause 4.13.4 the CA/architect has a time limit of 5 days to realease the payment after the certificate has been issued. After which under clause 4.14 the contractor has to wait for 7 days, and incase the CA/Architect still does not comply. The contractor has the right to suspend the work. On suspension of work the Architect/CA issues a written notice if he wants to suspend the performance of the contractor if he desires so, hence in this condition he contractor is liable to move his resources to other sites. In our case the Architect has not issued any written notice of suspension of contractor, and the payment was made in a week. The work suspension for the time when the payment was not made is justified but once the payment is made the work should start with immediate effect. Due to this fact that this is mismanagement on the side of contractor he can only claim damages of one week in both respects, firstly the claimable financial losses and secondly time extension of only one week is to be allowed to him. Due to the forced delay and mismanagement the contractor does not qualify to use the contract clause 2.27 and 2.28 for extension in time. In addition no such event is mentioned clause 2.29 hence even exceptions to clause 2.27 and 2.28 are even not applicable. Concluding, the compensation of time and money for one week will be given to contractor any other claims are not claimable under the contract. The contractor claims regarding the loss and expense have serious loop holes in them. The first issue is regarding the delay due to the strike of the truss manufacturer which delay of six weeks was seen in the specific task. The first issue in the claim is that the claim must be made regarding the cost of only that specific activity rather than the whole contract cost and then translating it into weekly is another fault on the part of the contractor. Concluding, only the cost of truss carcasing is to be included in the claim and not the cost of entire contract. The time of the claimed delay is to be reduced due to the fact that at the same time the contractor has also suspended the work due to nonpayment. It is to be noted that the claimable cost will only be against 3 week, as they did not overlapped with suspension of work by contractor. Under the clause 4.23 of the contract the contract will require to ascertain all claims and damages from the QS, without which nothing can be claimed. Relevant matters are detailed in clause 4.24 of the contract. There is no provision in the contract for a claim for expenses arising from operatives striking. However, if the contractor has successfully submitted a claim for an extension of time under clause 2.29.11, then the resultant expenses are redeemeable under clause 4.24.1 as the extension would have to be confirmed in writing as a variation. The claim concerning the disruption caused by the nonpayment of interim certificate # 6 is also considered to be overvalued. Firstly because the claim can only be done against the payment that was to be paid under the interim certificate #6 which is £ 75,500 and any claim that is to be made should according to this amount. Whereas the contractor has made a claim against the total amount of the contract which is wrong.The contractor has the right to the money as a claim in Loss and expense under the clause 4.24.4 under which if the contractor is liable for the compensation if provided the suspension was not frivolous or vexatious. Secondly the payment was only delayed for a week, whereas the claim is done for four weeks. As the contractor claims that he has send the resources to other sites is mismanagement on the side of the contractor and he is responsible for it. It must be noted that the resources which were mobilized on other sites did do some work there, hence the contractor made profit there as well. In principal the loss during the delay was not been estimated correctly. In which case the contractor is not showing full compliance to the clause 4.23.3 of the JCT 05, where the contractor has to provide the CA/Architect with application showing the true amount of loss that has incurred as direct cost to the contractor. When this application will be given to the QS to be ascertained there will obviously be issues between the parties. Concluding this part of the claim, that the claimed cost is faulty as the total cost should be is £ 75,500, and the claimed duration is 1 week and not 4weeks as the payment was made after one week. Lastly the interest cannot be applied in this case, as it is clearly written in the claim that 10 % of interest is made per month. Here it must be noted that 10 % interest per month can only be applied if the money/payment was retained for a period of a month or longer, where as in our case the payment was just after one week. Hence the interest for nonpayment is not applicable at all on monthly basis. On the other side the claim of interest can only be made on daily basis, where the interest rate will be considerably less. In my point of view the claims will not be accepted by the CA/Architect and will be amended before acceptance of any side. The CA/Architect has the full right to instruct the contractor to redo a certain work all over again. The Architect is empowered by the clause 2.38 by which the architect can order the contractor to redo or take off the materials which he deems as defective and not up to standards. In addition under the clause 2.38.2 and 2.39 the Architect/Contract Administrator may whenever he considers it necessary issue instructions requiring any such defect, shrinkage or other fault to be made good. Under clause 2.39 the contractor has to redo/improve the defective part of the work and then invite the architect for inspection upon which the CA/Architect will issue certificate of good making and eventually the contractor will be given the payment of the respective work. In our case the contractor has no other option but to comply with the CA/Architects instruction and complete the work with quality to receive the payment of the specific work. Incase of noncompliance the contractor will have to face the clause 3.10 and 3.11 which empowers the CA/Architect to stop the payment of the work and in case of complete noncompliance award the work to another party. Then the JCT contract does not mention explicitly about the rights to the CA/Architect to remove any person of the contractor on the site. Whereas Clause 3.2 does hint on the responsibility of contractor to appoint an able and effective person in charge on site and this person will mediate with the CA/Architect and comply with their instructions. Further in clause 3.21 the CA is given a conditional right to exclude a person from the site according to which The Architect/Contract Administrator may (but shall not unreasonably or vexatiously) issue instructions requiring the exclusion from the site of any person employed thereon. In my view this issue is highly depended on the fact that how does each party translate the meaning of “unreasonably “. The contractor can refuse to comply on expulsion of the person saying it as unreasonably but it is highly recommend replacing a controversial person form site as it might lead to additional friction in the system. Lastly the issue is of the contractor who wants to terminate the contract. In the light of the contract the CA/Architect has the right to stop the project for smaller durations, in addition the CA must inform the contractor of his intentions about the future of the contract. As it is clearly evident that the CA/architect has taken 6 weeks and now demands 4 more weeks, which makes the total duration of suspension period upto 10 weeks in a project of 52 weeks. It is clear that the duration is too much. As the contractor has shown the intention to terminate the contract and the employer has shown no such intention, hence the termination will be initiated by the contractor. Therefore the clause 8.9 would be employed where the termination is initiated by the contractor. It is to be notified that the contractor now has the right to terminate the contract under the clause 8.9.2 which gives the right to contractor to terminate the contract as whole of the uncompleted Works is suspended for a continuous period of the length stated in the Contract Particulars. If the contractor succeeds to terminate the contract under clause 8.9.2 then clause 8.12.3 will empower the contractor and bound the CA/Architect to give all dues as per the following clauses, where 8.12.3.1 will give the total value of work properly executed at the date of termination, the clause 8.12.3.2 will provide the contractor with any sums ascertained in respect of direct loss and/or expense, under clause 8.12.3.4 he is liable to get the cost of materials or goods (including SiteMaterials). Lastly the contractor will get the any direct loss and/or damage caused to the Contractor by the termination under the clause 8.12.3.5 of the JCT 2005 Standard Form of Building Contract. References The Joint Contracts Tribunal Limited (2005). Standard Building Contract With Quantities. UK: JCT Ltd ,UK. 1-123. Sarah Lupton (2009). Guide to DB05 JCT Design and Build Contract. London, UK: RIBA Publishing. 3-196. The Joint Contracts Tribunal Limited. (2009). Standard Building Contract. Available: http://www.jctcontracts.com/contracts/98/9805sbc.jsp. Last accessed 12-05-2012. David Chappell (2007). Understanding JCT Standard Building Contracts. UK: Taylor & Franci. 10-90. Read More