Assignment Sample on BLD703 Construction Legal Studies
Introduction
The core purpose of the study is to analyze the different rules and regulations of JCT (Joint Contract Tribunal) and NEC 4 (New Engineering Contract), which makes construction rules. Joint Contracts Tribunal is an authority that makes a construction framework for effective project performance. The discussion is made of comparison regarding the time, quality and cost of both the tribunal. The conducted study is emphasizing on the different strategies of risk allocation and the mechanical process for smooth delivery of the construction project. Besides, the different terms of construction projects have been discussed in the paper, which is effective for implementations of both construction formats (Richard Patterson, 2021). There is a demonstration of project concepts and principles interrelated with JCT and NEC successful applications. Finally, an evaluation of both the JCT and NEC will provide a brief overview regarding the effectiveness of following these frameworks to ensure the effective delivery of the construction projects.
Comparison between JCT and NEC comparison
JCT is a standard building contract that is made for large projects to get the appropriate result from the project. On the other hand, NEC is a contract series that is designed for the completion of the project.
Time perspective
- Although both the NEC and JCT have their own time framework for completion of the project within the time period. For instance, The starting time and completion time are allocated in both the forms, which are different from each other.
- In the case of JCT contracts, a master program is generally planned for completing the project as soon as possible (co.uk, 2021). The working schedule is planned in such a way that the project plan is executed within the given time. On the contrary, the NEC contracts have no specific time limit and there is no master program planned for such contracts. Besides, it is not necessary to deliver the project within an early period.
Cost perspective
- The cost is an important parameter for both the contracts and both the contracts emphasize the amount payable to its contractor. However, NEC emphasizes something more, such as a lump sum amount for cost reimbursement. The JCT divides the tasks into small parts for a better understanding of the cost in each part. It is helpful for identifying the different types of costs that are related to the project (Yadeta and Pandey, 2020).
- The NEC considered both the time and cost effectively. It is difficult for NEC to identify the cost of the project as it does not maintain a separate structure for cost-effectiveness. In the NEC process, the project manager asks for different quotations and evaluates the cost of multiple quotations.
- Multiple quotations are collected from the contractors due to analysis of the cost of the project in detail and the project manager chooses such a project which is cost-effective. Such practice is followed as the project manager can balance between cost and time whenever he feels it is necessary. In this way, the NEC format is made and the whole responsibility lies on the project manager. Hence, JCT enables the authority to determine and analyze the cost from various sites and the management can take proper decisions after such analysis of cost.
Quality Perspective
- Quality is considered in both the JCT contracts and NEC contracts however, it varies according to the format of the contract. In the case of contract designing and employer, designing JCT provides a different framework that needs to be followed as it separates the contractor from all the aspects (Al-Shammari, 2017). For instance, the authority has to inspect the work after a certain period.
- In case there is any deviation that takes place in the management needs to improve it for a better quality of the project. However, the NEC format is made by considering all the things such as contractor-design and employer-design in a compact and the manager is obliged to follow this.
- The quality is maintained by following the project every time and correcting the defects each time. On the other hand, the JCT provides the rules that are mandatory for the administrator to follow the rules for better project service. Whereas, the NEC makes it liable to both parties that whenever they see any defect in the project they inform each other to take necessary steps to rectify it. For quality checking, NEC accepts the contractor’s defect.
Contractual Provisions-JCT and NEC
The JCT and the NEC both share the standard contracting forms, which make an effective relationship between the contractor and employer for completing any construction project. The objective of the project can be minimized through an effective risk allocation strategy in the construction project (Hafsi, 2017). The project initiation, project planning and execution of planning are necessary to achieve success in the project. Any unforeseen situation can take place in the project activities such as disputes between the employer and contractor, weather issues, strikes, riots, which are in contrast to the project success. Risk allocation strategies are necessary to face such challenges. Construction companies to increase the potentiality of employees commonly use this process. Risk allocation is a major factor for construction projects and there are various methods that need to be followed by the authority, which is discussed below:
Risk Acceptance or risk retention
Risk acceptance is a concept that empowers the construction company to accept the loss and accept the unexpected gain whenever it occurs. On the contrary, the retention of risk states that the loss is greater than the insurance of materials. For instance, when any material is damaged in the project site and the actual price of the material is greater than the climbing price. In that phase, the construction company has to retain the loss (Eadie and Moore, 2017). Apart from that, there are various types of risk that are not predictable and it is sure that the loss will affect the project then the administrator has to consider before the starting of the project. This is considered a default risk. The term active risk retention is maintained in the project premises as the project manager willingly makes a plan to retain the risks. The purpose of such a practice is to save money. On the contrary, there are passive risks that can harm the project continuation and the project manager is unaware of the unexpected losses. The advantage of using the retention practice is that it decreases the risk and helps in maintaining cash flows.
Risk Transfer process
The transfer of risk is a better step for the construction projects that transfer the risk to other parties. In this situation, the burden of risk is allocated to the party for completing the project in a timely manner. It will improve the quality of the project. Generally, the contractors follow the insurance scheme or shift the loss to a third party (Bevanbrittan.com, 2021). Besides, the bonds and warranties are contracted between the parties for reducing the loss. Sometimes, the construction companies collaborate with other companies to lower the burden. Hence, risk transfer is the effective method of mitigating the risk in construction projects.
Risk Share
The construction project companies collaborate with other companies so that the risk can be shared and minimize unnecessary expenses. Risk sharing is a practice of risk allocation that helps the contractors and employers to complete the project (Silungwe and Khatleli, 2021). The sharing process of risk is an important factor of mitigating the risk, which is widely accepted for construction projects. The construction companies collaborate and merge with the third companies for sharing the overloaded risks. Risk sharing is considered for the partnership with public and private companies.
Differentiation of events
In the case of NEC contracts, the contractor can add the time and cost to complete the events. The contractor has to consider both the time and cost in accordance with the project duration (Bevanbrittan.com, 2021). However, In the case of JCT contracts, the contractor only claims for the cost purpose and that are limited to the events only. Hence, in this scenario, the scope of JCT becomes narrower as compared to NEC contracts.
Ground Condition
In case there is any unexpected ground condition that takes place in the project site then the contractor can judge the matter and make an effective plan for a compensation event. On the contrary, the JCT contractor highly emphasizes the analysis of risk and the contractor is liable to face the risk and complete the project.
Risk Avoidance
The project managers formulate the project plan to avoid the risk in future and it helps in smooth project functioning. The contractor often extends the task schedule to avoid the risk. The changing of strategies will be an effective solution for mitigating the risk (Bevanbrittan.com, 2021). The ultimate goal of risk avoidance is to improve the overall performance of the project and reduce the burden of unexpected losses that are caused due to improper decisions. Risk management strategies need to be developed in the management to increase the effectiveness of the project and equal the division of risk among the contractor and the employers.
Risk Reduction
Risk reduction is a popular strategy for construction projects as all the contractors use this strategy for lowering the risk in the project site. However, the construction company can achieve success in risk reduction when it gets success in effective quality management. The application of quality management in the project automatically reduces the project risk from the whole project.
Procurement system
The procurement system is acceptable in the risk management of construction organizations. It is used as a tool for the allocation of risk. However, the allocation of risk to different procurement varies from contractor to contractor (Nec-adjudicators.org, 2021). For instance, for the designing process, there is a high chance of risk whereas in the case of construction management there is a lower chance of risks. In case the service is not provided in a specified format then there is a chance of payment delay and compensations to the victim.
Adverse Weather condition
In the case of the JCT contract format, the weather will be considered as an adverse situation in case it affects the normal activities of the project (Zhang et al. 2018). Whereas the NEC format only considers those weather conditions that happen once in 10 years and is considered as a compensation event. It is mandatory for the JCT contractors to notify the employers in case it needs time. Whereas, the NEC contracts empower the contractor that informing the other party is not necessary. Hence, the rules of NEC are appropriate in this regard and it is less controversial in the construction industry.
Conflicting Roles (Certifier &Administrator)
There is a difference between the role of administrator and certifier in the JCT construction and NEC construction project rules.
Effective Decision-making
The certifier of the project gives a certificate after checking the quality of the contract and in case he is satisfied with the work quality. In the case of a JCT contract, the certifier plays an important role in giving the final consent to the contractor (Rasslan and Nassar, 2017). In case there is any complexity about the completion of the project then the certifier can restrict his assent to the contractor. The whole project will get the final certificate when the certifier is pleased with the duration of the project. The NEC follows the mechanism for accepting the contractor’s proposal and the project manager is the final authority to give a certificate to the project.
Essential distribution of powers
The JCT contracts prefer the certifier to give final consent to the construction project whereas; the administrator is the highest authority to give their views on the project (Crowther and Ajayi, 2019). The NEC and JCT do not accept the replacement of the certifier; it can be completed within 21 days if necessary.
There are three basic principles such as validity, reliability and standardization. The standardization process is conducted for the evaluation of the project according to the standard. The construction industry has to follow various policies to minimize defects. The project manager is empowered to make any plan for the future growth of the project.
Meetings
The contractor has to meet with the stakeholders frequently and in case there is anything wrong with the project then the whole responsibility lies on the certifier (Frame and McEwen, 2018). The NEC contract practices provide the rules and regulations for meeting the stakeholders. There are strict rules regarding the effective follow-up strategy that have to be followed by the project manager. The rules are discussed elaborately so that the manager easily understands the pros and cons of the topic.
Necessity of information
The project manager has to inform the employer in case any unforeseen situation takes place during the continuation of the project. Information is necessary for maintaining the flow of the project and it will increase the project stability and project reliability. In this situation, the manager is considered as part of the project team and he submits the report to other stakeholders by gathering the information.
Quality Control effectiveness
The JCT administrator issues information in a timely manner and provides pre-agreed information to the other party. Whereas the project manager of NEC acts as the middleman of the project and planned the project design (Hagiwara, 2021). The manager replies to the contractor after the completion of the project. Hence, the quality control in both cases is different and it affects the performance of the project.
Stimulation in the management process
The NEC is more flexible in comparison to the JCT contracts and the rules of NEC are highly useful for resolving disputes among the parties. It is also beneficial for the real-time management of the project as the steps are taken after evaluating all the processing of the project. In this way, it reduces the extra burden of administration and helps the manager to smoothly run the project. NEC contracts are clearer and it reduces the ambiguity for better performance for the completion of projects.
Legal Principle and concepts
Principle and concept of NEC contracts
The NEC format is created for bringing more flexibility, clarity and increase the effectiveness in construction management. The NEC is quite different from traditional contracts as it emphasizes the three basic principles such as flexibility, clarity and good management. It is useful for both the case of professional services and construction projects (Richard Patterson, 2021). The contract’s rules are stored in the cloud system and it gives value to money and time. The NEC is used for the construction and infrastructural cases in the UK. In addition to the UK, the law is also maintained by other countries such as New Zealand, Hong Kong, and South Africa (Du Plessis and Oosthuizen, 2018).
However, the NEC contracts are not to be used as a panacea for construction projects as it is needed for infrastructure development to get the appropriate result. The NEC format is made based on the pacific region and it is formulated by the UK civil engineering institutes. Hence, the scope of NEC is narrow in this regard as the UK engineers can use it easily. However, recently the number of followers of NEC has increased and the other countries are highly following the strategy for getting positive outcomes. The standard of NEC is quite different from others as it considers various things such as time factor, payment, testing of the project, the responsibility of contractors, and risk factors (Finnie et al. 2018). According to this rule, the responsibility of the contractor is to follow the provision of work, design the project, and subcontract. It also highlighted the risk factor that is essential for the construction.
Principle and concept of JCT contracts
The contract process is emphasizing on the building, designing of contact, and making standard buildings. The JCT format is mainly emphasizing practical completion and trying to reduce a portion of overloaded work. It will speed up the work efficiency and reduce the project duration. Besides, there is a provision for liquidated damages in case the contractor faces any losses to process the construction activities (Gunduz and Elsherbeny, 2020). The “third party rights” are included in the position of collateral warranties and it is the new rule that is added in the constructional project norms. However, the collateral warranties are actually followed by managers in most cases.
Design and Build contract
The “Design and Build contract” is the most popular project method that is used by the contractors for making shopping centers, sports stadiums. In this case, the contractor makes a plan as per the requirement given by the employer. Based on the proposal of the employer the contractor makes the project design and then the task is started.
Standard Building Contract (SBC)
Three important terms are considered during the project design. Such components are lump sum, SBC/Q, and SBC/XQ. The price of the contract will change in case there are changes of anything in SBC/XQ and SBC/Q (Lukhele et al. 2021). The employer provides all the relevant documents to the contractors so that the contractor can understand the quality and quantity of the work. Apart from this, the employers provide documents, specifying the work schedules and work quality. It is effective in cases where the situation of the contract is uncertain and there are different types of risks that can affect the efficiency of work. The bill of quantities is provided to the employer to make them aware regarding the project designing and project planning. The effectiveness of the work is measured by the project manager which is beneficial for the evaluation process.
Conclusion
It can be concluded that both the contracts are standard forms that are applied in the construction sector. The JCT framework is used at the domestic level and it is an old format of the construction process. In contrast, the NEC is a completely new format and it is accepted by all the countries in the world. There is some difference in the calculation of cost and time and the principle is not similar in both the cases, which are discussed above. Hence, it is made for international purposes. There is a similarity between the contracts where both the contracts make responsible to the managers for their code of conduct relating to the project. Hence, the JCT contracts mainly emphasize the risk and liability of the project. Whereas NEC emphasizes collaborative and pro-activeness of the project. From the above discussion, it can be concluded that JCT makes regulations for the UK and NEC makes regulations for worldwide construction projects. Many countries are following the policies of NEC for increasing the standard of knowledge regarding construction projects. Both the organizations are making the rules for resolving the disputes between project managers and employers.
References
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