Business Procurement and Contractual Practice Assignment Sample
Question 1
It is not a novel phenomenon that the construction industry has become more cutthroat in recent years. This may be seen in the individuals’ professional relationships, communication habits, and dedication to the success of the project, in addition to their dedication to their colleagues and to themselves. Because of these problems, every person who works in building and construction experiences annoyance and incurs additional expenditures. In contrast to the standard practice of the past, contract documents do not provide the basic essential information required to limit hostile reasoning. Documentation pertaining to contracts is sometimes overlooked and is not brought to light until a problem has already occurred. This allows the wrong person or parties to be blamed for the issue.
When it came time to negotiate contracts, architects, engineers, and quantity surveyors had a difficult time adapting to each new set of requirements, which had a ripple effect across the whole construction industry. A number of standard forms have come under fire from the construction industry for failing to properly specify design aims and for failing to adhere to contemporary concepts such as risk allocation and project management (Zecchin, 2020). Uncertainty in the building industry was caused by bad draughtsman ship as well as improper contract manipulation by non-legal experts. Wallace’s draughtsman ship was just as poor as the rest of his work (1996). Because of their complexity, contracts are becoming an increasingly contentious and difficult area of dispute resolution.
Building is becoming increasingly difficult and time-consuming as a result of the increasing complexity of construction projects and advances in technology. Contracts and project management procedures, in their current state, are incapable of keeping up with the rapid pace of change within the sector. Reduced profit margins and restricted cash flow pose a challenge to the owners of small businesses in terms of their financial well-being. As a direct result of this, the durations of projects have been shortened, and novel strategies for completing projects in a more expedient manner have been tested and shown to be useful. These variables caused cooperative connections to collapse, which led to “win-lose” mentalities and division among the people who participated in the research (Thompson, 1998).
One of the most frustrating things that may happen to you as a construction project manager is when owners and contractors do not adhere to the standard procedures recommended by the industry. It has resulted in misunderstandings, conflicts, financial losses, incorrect contractual linkages, and poor performance on building jobs. As a result, current contract document suites feature more contract forms. Since the 1970s, the business world has been progressively turning to individualised or altered forms of contracting in order to solve persistent problems.
- Following an evaluation and analysis of the challenges discussed in the prior section, four (4) research questions were developed to assist us in gaining a deeper comprehension of the imperative nature of implementing future contractual reform. Most prominent research questions are: Successful initiatives require: The success of a project is often quantified in standard contracts. How does the use of standard form contracts impact the completion of a project? queries directed towards the author
What steps were taken to apply and evaluate the National Building Code (NEC) in the United Kingdom’s construction industry? I’m interested in learning more about how the construction industry came to create and execute the NEC.
We will discuss how the NEC is different from other types of contracts a little farther down on this page.
Is it possible to quantify the worth of the NEC system and the factors that will influence its adoption in the Australian construction industry so that we can have a better understanding of its value and how widely it will be used? Can the value of the NEC system, as well as its widespread adoption in Australia’s construction industry, be measured?
The purpose of both these questions and the comments that they create is to assist us in gaining a better understanding of the dynamics of contractual disputes that might arise over the course of building projects. These advancements make it possible to foresee the future and control the risks associated with contractual obligations. To have a better understanding of what we are about to learn, we will start by reading scholarly publications that cover these topics. During the majority of this inquiry, we will concentrate on the initial study topic. To begin, we will address these concerns by doing research into the relevant scholarly literature.
- Successfully completing all of the project’s aims.
According to Annola and colleagues, the level of achievement attained by a project participant is proportional to how well their individual objectives are accomplished (2021). (pp94-111). It’s possible for one’s personal objectives and expectations to be influenced by their professional, social, and financial aspirations, and vice versa. As markers of successful project completion, Takim and Akintoye (2002) consider the absence of claims or legal actions, the “fitness for purpose” of the building, and the profitability of the contractor. Takim & Akintoye (2002) cited the absence of claims or litigation as one sign of the successful completion of a project. According to the findings of Nguyen et al., construction projects that are completed on time, without going over budget, and to the satisfaction of all stakeholders are often viewed as successful (2004).
In the past few decades, a great number of studies on the success of construction projects, either in a broad or more specific sense, have been carried out. These studies have focused on a variety of factors, including time and financial constraints, productivity levels, and the resolution of disputes, among other things, with the intention of improving the results of construction projects. Because so many academics have neglected the impact that formal contractual forms may have on the success of a project, there is a dearth of research on the topic.
Jaselkis and Ashley (1991) examined a range of factors in order to satisfy the financial and schedule restrictions of the project while also improving its overall effectiveness. It has been shown that “decreased team turnover” and “programme constructability” are both required in order for a construction project to be completed on time. Chan and Kumaraswamy conducted an investigation on the development delays in Hong Kong. They found various factors that contributed to the delays (1997). Problems with on-site administration and supervision, unanticipated ground conditions, sluggish team decision-making, client-initiated modifications, and obligatory task changes were the primary contributors to the majority of the delays.
Although they are related, PFI contracts and joint ventures are distinct concepts that each bring their own set of benefits to the table. In order to have successful collaborative partnerships, it is essential to formulate and communicate a strategy for conflict resolution, be ready to pool resources among project participants, precisely define responsibilities, and maintain a mentality that prioritises cooperation and win-win situations. The partnership process should be monitored on a regular basis; this is a crucial component of the monitoring process, and it should be included.
- A success factor is “any knowledge, skill, characteristic, or other human feature that is necessary to complete the job or function that separates decent performance from great performance,” as defined by PEPDS (2004). “the objective of the performance,” “attitude toward the performance,” “values,” and “motivation” are some other factors. According to research conducted by Phua (2004), the operational success of a multi-firm project may be evaluated based on how effectively it achieves monetary, temporal, and technical goals. According to Low and Chuan (2006), the success of a project should not be disregarded or undervalued. According to their point of view, the conventional definition of project success, which places a focus on time, money, and quality, is insufficiently broad and unambiguous.
According to Austin et al., the construction industry has the most difficult challenges in terms of project and contract management (2002). A significant number of scholars have made the decision to look into these topics. It is the responsibility of the project manager to decide whether contracts between an employer and one or more contractors are going to take precedence over any others. The stipulations of the contract do not depend in any way on the financial performance of either party. The manner in which managers try to maximise profits while minimising losses influences the manner in which they try to achieve those goals (von Branconi and Loch, 2004). When developing new contracts, senior management should consult the following eight criteria for evaluating contracts, according to experts (op. cit., 2004).
Numerous research have been carried out in an effort to identify the processes that result in the finest finished building projects. There has not been any research conducted to determine whether or not different contract forms may assist in the efficient completion of building projects. Despite the significance of contract type, Chan et al(2004) .’s conceptual framework for successful project management does not mention it once.
According to the findings of a recent study, the success of large-scale building projects in Vietnam is not dependent on meeting any of the criteria examined, including “form of contract” (Nguyen et al., 2004). The results are unexpected and call into question the propriety and logic of such assessments and conclusions, according to a summary of the findings.
It is almost impossible to get a consensus on the causes of construction disputes due to the huge variety of points of view that are presented in the relevant literature. You may be able to detect the root of construction disagreements and failed contracts with the assistance of online tools. There has not been a lot of study done on the most important construction contract themes, such as why today’s contracts are more detrimental or how to minimise the number of construction contract disputes. This is mostly because there is a dearth of data. In the last ten years, there has been very little study conducted to improve existing contract forms and eliminate flaws. As was discussed before, existing contracts need to be replaced since they include weaknesses that need fixing in order to alleviate the tensions that have grown up among the many participants in the sector in recent years.
Standard construction contracts, as stated by Loosemore and Hughes (1998), lack the flexibility and productivity necessary to deal with the current crisis in the construction industry. According to the findings of the study, project participants try to steer clear of variable contracts, which ultimately leads to a loss of administrative and organisational control over the undertaking. According to Zaghloul and Hartman, the formation of contractual partnerships results from contentious situations that reveal one party’s faith (or mistrust) in the terms and conditions of the contract (2003). According to the results of the poll, trust is the single most important factor to consider when pairing clients with service providers. According to the findings of the study, having trust between the parties to a contract paves the way for more effective risk distribution strategies and contracting methods, in addition to significant cost reductions in construction.
Both Ramazdeen and Rajapakse conducted tests to evaluate the construction contract criteria for readability and complexity (2007). Readability is a factor in contract interpretation, which is a significant factor in contract interpretation; however, the study did not provide an algorithm to account for differences in the interpretation of contract clauses, despite the fact that it acknowledged a relationship and acknowledged that there is one. There hasn’t been a lot of research put into figuring out the specific regulation that provides solutions to issues with building contracts.
According to specialists that work in dispute resolution (Wright and Fergusson, 2009), maintaining the confidentiality of contracts is essential to the success of most endeavours, especially those that are involved in the financial business (Wright and Fergusson, 2009). When a contract is brought up, there is almost always a disagreement or a claim that is still being worked out.
According to sources in the process and construction industries, the NEC is increasingly being followed by electrical designers working on civil projects (Broome, 1997). (Broome, 1997) conducted interviews with representatives from 28 NEC-purchased projects in order to assess the advantages of collaborating with the NEC in the UK. Within the context of this situation, it has been postulated that the benefits of the NEC were successful in avoiding arguments and in fostering healthy relationships amongst all of the stakeholders. After the NEC was founded, according to Barnes, both consumers and contractors “report a tremendous improvement in relationships and a better outcome” (2000). (pp73-78). Patterson (2001) contends that the NEC is a well-structured and adaptable system that can be used to provide procurement strategy rather than to dictate it. He bases this assertion on the fact that the NEC has been around since the 1970s.
It is not difficult to locate projects that made advantage of the NEC. The National Engineering Consortium (NEC) was an essential contributor to the successful completion of the £30 billion Channel Tunnel Rail Link Project in 2011. In 1997, the NEC Users’ Group recommended going with the contract option because it gave them the ability to “manage all the varied interfaces and adopt a collaborative problem-solving strategy.” (pp3-4). One of the company’s most important customers is ESCOSA, while NEC is another one (ESKOM). Given that ESKOM is the fifth-largest utility in the world, the company has considerable NEC knowledge. 1995 Users’ Group for NEC Since 1993, the Royal Hong Kong Jockey Club has been utilising the NEC, which has provided them with a number of benefits, including the creation of improved facilities at a lower cost (NEC Users Group, 1996).
(NEC Users’ Group, 2008) There have been rumours circulating in the Middle East that NEC3 would be responsible for the construction of new buildings and infrastructure for London 2012. This will be carried out as part of the Olympic delivery plan that will be implemented in the host city. The Olympic delivery plan will be put into action during the following several months by the host city. According to Wright and Fergusson’s research, Meridian, an electric provider in New Zealand that specialises in renewable energy and is controlled by the government, has found the National Electricity Code to be helpful. This finding supports the findings of the authors’ previous research. As a result of the findings of the research, the National Economic Council can recommend that the economy of the nation make more use of technological advances (2009).
According to Wright and Fergusson, being successful demands active management of one’s time, money, and resources. In their lecture, they provide illustrative cases of effective leadership (2009b).
forty-nine
After more than 40 years, the NEC continues to be an important resource for generalists. Other incidents took place in South Africa, Hong Kong, and New Zealand in addition to those that took place outside of the United Kingdom. To the best of this writer’s knowledge, there has not yet been any research conducted in Australia on the subject of the NEC’s potential applications. The completion of a comprehensive investigation into the use of this sort of contract in the Australian construction industry will make it possible to evaluate the NEC’s potential to improve project management in the Australian construction sector after the investigation has been completed.
References
Annola, V., Haapio, H. and Koskela, M., 2021. Interpreting images in contracts. Research Handbook on Contract Design, Forthcoming in.
D’Onofrio, R., Frame, S. and McEwen, L., 2018. Delay Analysis: A Comparison of the UK and US Approaches. Const. L. Int’l, 13, p.52.
Frame, S. and McEwen, L., 2018. Delay analysis: a comparison of the UK and US approaches. CONSTRUCTION LAW INTERNATIONAL, 13(3), p.53.
Hansen, S., 2020, May. Does the COVID-19 outbreak constitute a force majeure event? A pandemic impact on construction contracts. In Journal of the civil engineering forum (Vol. 6, No. 1, pp. 201-214).
Jackson, S., 2018. Good faith: what is it good for?. CONSTRUCTION LAW INTERNATIONAL, 13(3), p.10.https://www.google.com/search?q=Jackson%2C+S.%2C+2018.+Good+faith%3A+what+is+it+good+for%3F.+CONSTRUCTION+LAW+INTERNATIONAL%2C+13(3)%2C+p.10.&rlz=1C1ONGR_enIN996IN996&oq=Jackson%2C+S.%2C+2018.+Good+faith%3A+what+is+it+good+for%3F.+CONSTRUCTION+LAW+INTERNATIONAL%2C+13(3)%2C+p.10.&gs_lcrp=EgZjaHJvbWUyBggAEEUYOdIBBzYwNmowajeoAgCwAgA&sourceid=chrome&ie=UTF-8
Lau, C.H., Mesthrige, J.W., Lam, P.T. and Javed, A.A., 2019. The challenges of adopting new engineering contract: A Hong Kong study. Engineering, Construction and Architectural Management.
Leung, R.H. and Kwok, B.C., 2019. How one shall interpret ‘spirit of mutual trust and co-operation’in NEC contracts. Proceedings of the Institution of Civil Engineers-Management, Procurement and Law, 173(1), pp.14-20.
Mak, K.W., Hamill, S. and Kong, D.S.W., 2018, August. Kennedy Town swimming pool, Hong Kong, China–an NEC journey. In Proceedings of the Institution of Civil Engineers-Civil Engineering (Vol. 172, No. 1, pp. 23-28). Thomas Telford Ltd.
Ndekugri, I., Ankrah, N.A., Adaku, E. and Mzyece, D., 2022. An analysis of health and safety provisions in NEC contracts. Proceedings of the Institution of Civil Engineers-Management, Procurement and Law, 40(XXXX), pp.1-11.
Tan, Y., 2020. Large-scale Construction Project Management: Understanding Legal and Contract Requirements. CRC Press.
Zecchin, F., 2020. Megaprojects Contracts: Between International Practices and Italian Law. In Megaproject Management (pp. 107-122). Springer, Cham.
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