Business Procurement and Contractual Practice Sample
Introduction
Implementation of the proper legal terms and procurement methods is important in order to get the better aspects of the constriction of the building and give it for rent. In this paper, all the important laws and procurement will be discussed. In addition to that, the happening torts in the case of improper management of the construction projects will be discussed. JCT SBC/Q 2016, and NEC4 ECC are the most important legal aspects that can be used for the construction disputes and these will be addressed in this paper. Moreover, several aspects of the multi-tiered dispute resolution mechanisms will be taken into account.
Question 1
Procurement is the method of finding and agreeing to all terms and conditions of obtaining goods, services or any kind of work related to construction from an external source which is done sometimes by means of tendering or bidding processes. The process of procurement includes purchasing decisions under scarcity conditions. There are different types of procurement methods for acquiring quality products and services. Jim Akis Khan is ready to take a considerable amount of risks involved in the project of construction in South East London. He cannot take the interior design process lightly as he is a keen environmentalist. In this context, design and build would be one of the most appropriate procurement methods. In this method, the contractor is responsible for taking all kinds of responsibilities and risks and both design as well as building phases should be managed effectively by him (Harris et al. 2021). This is a route of procurement in which appointment is made to the main contractor for design and construction purposes which is different to the traditional contract. Consultants are appointed by the clients to design the process of development and then appointment is made to the contractor to construct the building. He is responsible for designing, planning, organising, controlling and constructing the works according to the requirements of employers (Bajjou et al. 2017). The contractor should have a large number of internal employees with effective facility management because of managing all design and build aspects. The company that Akis Khan should consult must have a strong and coordinated partnership with various other kinds of contractors for the completion of the construction job within the estimated deadline. He can make himself involved in the project by advising the contractor regarding eco-friendly interior design as he has high interest in environmental aspects. Eco-friendly interior design is the design process of reducing the number of resources required in construction by procuring eco-friendly materials with a focus on the impact of health and environment on the same (Singh, 2018).
Construction management is another procurement method that can be adopted in this regard. In case of large and complex projects with internal management resources, construction management can be a highly effective procurement method. Complete control can be maintained over the process which can help the company save a lot of money in the process and advanced supply chain management is required in this regard. It is a unique procurement route where multiple subcontractors are directly employed by the developer (Morledge et al. 2021). Akis Khan can discuss the project needs with the construction manager who is responsible for managing the entire construction project and he acts in the developer’s best interest.
Akis Khan wanted to rent three houses that are to be constructed in South East London and live in one of them. In this case, a domestic building contract can be adopted in the project. A domestic building is a residential place with multiple family units staying in it and is owned by another owner (August and Walks, 2018). However, akis Khan needs to follow some rules while constructing the house. Space of road as well the residence surrounded should be compared with the area of construction. The rules and regulations on ventilation should be considered during the designing phase. There should be open space, parking standards, adequate sewerage facilities, and floor space area. These are some of the regulations that are to be followed mandatorily by the ones involved in the construction project (García-Sanz-Calcedo et al. 2021). Akis Khan should ensure that the same is being done for successful completion of the project without any delay and without bearing excessive expense. For doing so, an appropriate budget should be set for avoiding any kind of hindrances at the middle of the construction project. Jim Akis Khan should select the best constructor who can meet all his requirements at the estimated budget by checking all the work quality previously done by him before assigning the project to him. There should be a commencement date of the proposed agreement along with its fixed time period. Both the parties will have the right to terminate the agreement anytime they want and the timeframe of notice must be sent during the termination.
Question 2
Tort is a civil wrong that is independent of any contract. It also involves breaching of duties owed to individuals generally. A tort is considered a civil wrong because it infringes a person’s or a group of individuals’ rights and it depends on the claimant’s rights whether he needs proceedings or not and no compulsion is there in this regard. Three torts that are likely to occur in the phases of the construction project are discussed below:
- Negligence is a form of tort which is not focused on any contract breach but it is mainly concerned with wrongful acts (Koko and Nkemjika, 2021). Negligence generally means that one person is responsible for carrying out duties and the duty of care is breached. The plaintiff needs to suffer damage because of that breach. During making of any claim of negligence, it is required to establish a duty of care which is a legal obligation that needs adherence to the “standard of reasonable care” while conducting any task that can probably cause harm. In construction projects, high levels of skills are required which is not possible to attain every time. In case of occurrence of any physical damage in the sites of construction raises the questions of duty of care that can take place due to negligence acts (Hughes and Ferrett, 2020). In the case, “SSE Generation v Hochtief Solutions AG [2018] CSIH 26”, Hochtief was engaged by SSE under the contract of NEC2 for designing, constructing and commissioning a hydroelectric scheme in Glendoe. Hochtief refused to conduct any kind of remedial work and claimed that the works were conducted with enough skills and care which made SSE to engage a third party to carry out the work and it involved a huge investment. The court made the judgement that there existed some defect which was not due to the design works of contractors but because of the ways of implementation of the design (Yeu, 2018). This indicated that reasonable skill and care was not engaged as it was not a complete design issue. Hence, a defect in the implementation of design was a result of negligence.
- Nuisance is a tort which involves unreasonable interference with the use of land of another party. It can be of three types, namely, public, private or statutory. While carrying out work at any building site, some activities can cause nuisance (Netregs.org.uk, 2022). In the case, “Culwell v. Abbott Construction Co. (1973)”, the defendant who was a building contractor was employed in the construction work of a hospital building. A chalk line was placed by the employees of the defendant across the sidewalk and running about the building’s length for marking the excavation work’s perimeter. The plaintiff fell against a part of the building while using the sidewalk to enter the hospital. Allegation was made by the court that the plaintiff was injured due to the maintenance of nuisance.
- Trespass to land is another tort that may likely occur in the construction phase which involves the matter of interference with land possession without any lawful justification (Schremmer, 2020). Direct interference is made through certain tangible objects and the trespass is actionable.
The possible defences for the above identified torts are:
- Plaintiffs through ordinary care can avoid the consequences of negligence of the defendant. The defendant cannot avoid the consequences of negligence of the plaintiff by exercising ordinary care.
- Nuisance for the wellbeing of the public, nuisance due to others’ act, reasonable care, fault of plaintiff and so are the possible defences for the nuisance tort (Epstein and Sharkey, 2020). Abatement, injunctions and damages are the remedies available to nuisances. In this context, the local council can serve an abatement notice and a fine can be charged in case of non-compliance with the regulations. While planning any construction work, if it is known that it can cause nuisance then it is essential to apply prior consent from the local council or make a discussion on the restrictions that would be imposed if needed.
- Defences are available in case of trespass of land which includes licence, justification using law, necessity and jus tertii (Winchel, 2020). Licence is an implied permission provided by the possessor of land.
Question 3
Construction projects rely on several factors and situations which are both foreseeable and unforeseeable. There are several reasons for the delay in the construction projects which are committed by the employer. This includes delay in site handling, delay in appointing project management consultant, delay in drawing approval, delay in the supply of issue material which is time-free and insufficient funds. Some delays are also caused by the contractors and several reasons are responsible for it. Clause for delay for JCT based on Mason, 2016:239 includes delay in mobilisation, in obtaining plant and machinery, delay caused by subcontractors, labour disputes and delay in getting approvals (Lessing et al. 2017).
There can be different compensation for delay and any kind of breach in the contract based on various laws and regulations. It is essential to prove the serious cause of loss and damage experienced by such a party on breaching of the contract. Clause 63.3 ECC provides the most advantage of additional timing. Along with clause 63.1 provides 4 days extension of the deadline. Majority of the construction contracts are given additional time along with the additional compensation for delay. In case of situations where the delay takes place for the contractor, the owner in such a situation is responsible for receiving liquidated damages specified under the contract and in such a situation, the contractor can receive extension of time without any need of additional compensation. The ways in which the contractor and the contract owner deal with several kinds of delays rely completely upon the contract (Levy, 2018). FIDIC known as red book has primarily 3 sections. These comprises 20.1 for rule management, clause 8.4 deals with claims for time extension withholding basic propaganda of the contractor’s necessities. In the case law of “Built Qld Pty Ltd v Pro-Invest Hospitality Opportunity (ST) Pty Ltd [2021] QSC 224”, the dispute took place between different members involved in the construction project. The Queensland Supreme Court was needed to consider the appropriateness and effectiveness of various methodologies taken by the parties. Clause 34.3 mentioned in the contract provided the fact that the contractor has the right for EOT for conducting WUC. In these circumstances, the contractor will be delayed to reach practical completion by a justified cause of delay. EOT claims needed to be made within a time-period of 14 days of the contractor which can be considered as a qualifying delay. However, any delay more than 28 days needs a prospective analysis as per the judgement made in the case by the Supreme Court.
Construction contracts do not generally cover all forms of delay. For instance, delays such as concurrent and pacing generally lead to disputes between the construction’s members such as owners and contractors in most cases and this kind of issue of delay is not covered in construction contracts. Majority of the construction projects usually consist of a specific clause about timely completion of the task under the contract and it also includes the fact that time is the most important factor that suggests the obligation of the contractor to ensure completion of the contract within an estimated timeframe (Shabbar et al. 2017). Project timelines can also be extended due to any kind of natural disasters or such other related issues. For example, the sudden outbreak of COVID-19 suspended most of the construction works due to the government restrictions to stop the spread of the virus. Provisions made in the “force majeure” and “change in law” needed to be interpreted which led to the rise of huge debate in the field of construction law. A judicious contractor should have adequate knowledge regarding the practical ground realities related to the construction project. It is required to conduct appropriate due diligence, inspection along with independent assessment to examine the probable hindrances or failures which would deprive the contractor from claiming any kind of damage or additional compensation.
Under NEC4ECC, extension for time should be made at the time depending on information and possible predictions to the effects of the events. The JCT SBC/Q 2016, involves a hybrid approach of two stages under which the extension of time should be claimed and examined based on actual and desired completion. The FIDIC Red Book also involves a hybrid approach where the engineer should grant the extension of time for specific clauses in case completion is delayed during the construction project or in the future. The Engineer is also allowed to review the previous assessments of EOT as per the EOT clause and to increase them if needed which cons templates the application of retrospective analysis.
Question 4
A. Mechanisms of Multi-tiered Dispute Resolution
Dispute Resolutions is one of the major provisions of the JCT contracts that has been one of the individual parts of the JCT SBC/Q 2016. The dispute provisions are majorly described in section 9 and articles 7-9 further classify the internal factors of the provisions. NEC is the section for providing the callus and the provisions for dispute management and resolutions. It is one of the most important sections in the different aspects of the provisions and it has been seen that there are several attributes of the “Multi-tiered Dispute Resolution Mechanisms” and the mechanisms play different roles in the different sections. The different mechanism approaches the problems differently and the resolution of the problems is done by taking different styles of mitigation.
The major attributes are Mediation, Adjudication and Arbitration or litigation. These are the different sections that take different approaches to the different problems. In this paper, the description of the mechanism will be addressed. Arbitration is one of the most important aspects
That focuses on the resolution of the issues or disputes in the case of customer dissatisfaction in the adjudication section (Olujobi et al. 2018). It can be considered as both the binding and non-binding acts that help the participants to get the better aspects of the dispute resolutions.
In the case of Arbitration, an arbitrator is empowered and given the power to grant a range of remedies in the case of different sections that will be further processed and the court (Ortolani, 2019). It is different from a litigation act which allows the participants to be private about these things whereas the litigation helps the participants to get public with all the information and norms. Arbitration can be selected at the time of contract and that can be switched to litigation further.
B. Principles of NEC contract
The principles of the NEC contract are as follows-
Clarity and simplicity are the most common factors of this contract as the contract is well supported by externally necessary factors like additional materials and a detailed flow chart of the processes.
As per the thoughts of Leung and Kwok (2019), flexibility is one of the most important advantages of this act this can be formed from the different sections of core clauses, main options, dispute resolution options as well as the secondary options, Hence the chances of the effectiveness of this act increase a lot more extent.
- C) The case law called “Donoghue v. Stevenson”, establishes crucial principles of the degree of liability of duty of care and it introduced the neighbour principle in the early 20th century. This case law effectively sets a benchmark for the duty of care standards. With the enhancing legal convulsions, the established standards became too simple. It is considered as the most important case in Western Law. This case gave rise to the modern-day law of negligence and introduced the neighbour test (Momodu and Oseni, 2019). Manufacturers possess a legal duty of care for the consumers if the defects are not identified before receiving the goods. Before the occurrence of this case, it was considered that duty of care prevailed in particular circumstances which could be between two parties who were contractually obliged or where manufacturers produced extremely dangerous products. After the occurrence of the case, the judgement regarding this fact broadened the duty of care’s scope and it included any person could be reasonably impacted by acts or omissions of other people. The decision taken by the court in this case was a landmark decision in English Tort Law and helped in the establishment of fundamental principles of the tort of duty of care. Multi-tiered dispute resolution are different clauses involved in agreements that consist of a phased process for resolving differences which initiates with several steps for alternative dispute resolution by conducting negotiations with senior managers and others (Jenkins, 2021). The dispute in the case was resolved by following several alternative steps which led to the establishment of completely effective regulation. Inductive reasoning has been applied in the present case as the court has used particular instances of duty of care from different cases to set a general principle thereby showing the fact that there is an existence of duty of care in Donoghue.
Conclusion
This study focused on the issues in construction business and the constructional practice within the industry. Here it provides answers related to the construction practice and business procedure in the construction industry. On the other hand, analyses the domestic building construction laws and the way constructors deal with different construction laws to enhance the business condition of the industry. Delay in the construction process and monetary policy in the business was also analysed in this study in a proper manner. Finally, it discussed cash law benefits related to the construction industry to manage overall business conditions in a successful manner.
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