EG7036 Assignment Sample – Business Procurement and Contractual Practice 2022
Jim Akis Khan wants to develop his own lands in South East London and make 4 units of 3- bedrooms terraced houses. He intends to rent three houses and live in one. He is willing to take reasonable amount of risks but on a project, where he will get scope of reasonable amount of involvement. He is an environmentalist and not willing to take interior decoration lightly. He has got loan from the bank for the houses.
Now, as a Senior Manager and Legal advisor, I would advise him a procurement method for the construction. The process of procurement would involve the measures, which need to be taken for the execution of the project. It is my duty of guide him to the best suited procurement method according to his requirement.
There are different types of procurement methods in construction industry, which need to be analyzed during the planning stage of the project, according to the client’s requirements. For this he needs to hire a professional tem of project management, which will include:
- An architect
- Quantity surveyor
This team will work on the client’s requirements before planning the project. This analysis will require to focus on the important aspects of the project, such as:
- Intension for the development
- The requirements of the project
- Quality desired
- Time frame for the project
It is also the duty of the Project Management Team to qualify the client’s exact requirement, expectation and limitations. The procurement method must look into the area, where they should not exceed the budget, must try to complete the project within the time frame. The whole contract method will be based on some deciding factors, which needs to be considered.
These are the following deciding factors for a procurement method-
- Budget plan
- Time framing
- Project restrictions
- Quality outcome
- Ownership of asset
- Risk factors
As Jim Akis Khan has mentioned, that he will not compromise on the interior decoration part, has he is an environmentalist. So it is advisable for him to go for quality based contract, which will best suit his desire for the finishing outcome that he wants to see in his project.
Secondly, as he is not an expert in construction, so risk factor must be considered on his part. As it might be difficult for him to understand every aspect of the construction industry, so it would be advisable for him to go for a procurement method which will handle these types of risks. Lastly, the financing part on his case will be handled by the bank. So it would the Jim Akis Khan to be transparent with the bank transaction method.
In construction industry, there are mainly two categories of Procurement Method/ Contract to follow, and they are:
- Traditional methods of procurement/contract- lump-sum contract, Re-measurable contracts, cost reimbursement/ cost plus contracts.
- And an Alternative method of procurement/ contract – design & build contract, Management contract.
According to the requirements and specifications produced by Jim Akis Khan, I would recommend him to opt for Alternative Procurement Method or Contract. This method of contract is designed by the contractor as per the client’s requirement and demand. Whereas, in traditional method, the duty of the contractor is quite shrink and limited. In alternative method of contract the client will get the scope to review the design of the contract and make modifications, if necessary.
The design & build root of this procurement will be advantageous for the client because he doesn’t need to go for hiring anther consultant for design management for the project. The cost of the project is based on the design of the construction and management process.
Secondly, Jim is making four units of houses, which would be a complex project. Among the four units, three units will be given on rent and one for his personal use. So management contacting procurement root will be beneficial for him. Because this would involves sub-contractors under the management contractor.
This will give ample scope for Jim to go for different packages that this sort of management can offer. Here the client’s risks will be handled by the management contractors and the client will directly communicate with the management contractor, as the sub-contractors will be supervised and managed by them. So Jim will face less risk in term of budget planning and time management.
Tort is defined an act of omitting rather than agreement which can lead to severe injuries and the law can ask for liability.
Tort actions are divided into 3 different parts. They are:
- Actions done with carelessness
- Actions done with intentions
- Actions done against the law
Tort actions against the law can ask the former for answerability.
The construction phase activities are basically the different sectors of construction. The construction phase includes the planning part, the discussion with the ones from construction panel, then the layout planning and making, designing of the construction site, foundation of what needs to be done, casting out the column and then construction starts; building up the walls, framing out the plots, flooring, roofing, fixing the tiles (if needed), painting and the miscellaneous works.
The law of construction is consisted of 6 main case laws. They are:
- Contract law
- Law of tort
- Breach of statutory duty
- Law of restitution
- Criminal law
Contract law refers to that law which is related to the deal or the agreement done between parties. Law of tort refers to the law that takes action against civil wrongs. Legislation refers to the rules and regulations which help in carrying out the operations related to construction. Breach of statutory duty refers to the irresponsibility of carrying out the duties in a proper way and also to fail in taking actions against a civil wrong.
Law of restitution refers to the deprivation of the suspect to a profit, other than compensating the one who claimed for a loss. Criminal law refers to the actions taken against the non-violence happened. It is constituted under the criminal activity of English Law.
There are innumerable tort actions that can happen in a construction activity. The torts are basically of three types:
- Negligence torts.
It refers to a state when an individual is unable to carry out his/her responsibilities. In other words, the individual is careless about the duties which need to be monitored.
- Intentional torts.
It refers to a state when an individual harms the other person intentionally without a cause. Though intentional tort can be referred as a criminal case also, yet there is a difference. Intentional tort interferes with the living of an individual and his/her image in the society, while a criminal tort deals with the society and its interest.
- Strict liability torts.
It is applied to those cases where the blame of injuring someone is imposed on the wrong person without any strong proof.
Three torts that can occur in the construction phase of projects are:
- Slip and fall accidents.
- Defective products.
- False imprisonment.
The above torts are one of the most common torts that can happen and should be taken care of.
We can defend the slip and fall accidents by cleaning the slippery areas and drying out the wet areas. We can remove the unwanted things from our walkways so that we don’t fall and we should be careful regarding the doors of a cabinet and drawers; whether open or closed.
Defect products can be defended by looking after the products before implementing them at work. The products should be checked in a proper way and if any defect arises, it should get dumped right at that point of time.
False imprisonment can be defended by proving that the person who is falsely accused for a civil wrong is actually not the one against whom actions should be imposed.
Extension of time is the basic clause for a contractor where he is she has to provide with the valid reasons being delayed during the work period. In this case it is important for the contractor to provide with a detailed application within 42 days of the occurrence of the delaying event. If it is not done by he and then the Engineer will not have the power to provide him with extension of time. Further, he would face some challenges such as liquidated damages for delay.
After he receives any extension of time, recovery of time related costs could be possible of remaining on site longer. Possible grounds for extension of time includes a genuine cause for the delay or some adverse climatic conditions, due to epidemics or governments there can be some unforeseeable meaning ‘not reasonably foreseeable by an experienced contractor by the date for submission of the tender’, shortages of personnel or goods and lastly delay caused by the employer or a party under his control.
There can be even more number of reasons of delay which is provided in various clauses such as late information which means informing the organization with a valid reason regarding the delay. Then come error in setting out information and denied or late access or possession. Next is Engineer’s instruction to suspend work and Employer’s interference with Tests on Completion. Then come termination by contractor, employer’s risk, force majeure and optional termination.
In a clause, physical conditions are defined such as ‘natural physical conditions and man-made and other physical obstruction and pollutants’. Again, full supporting particulars means where the contractor provides full supporting details of the application but sometimes it becomes difficult for the contractor to provide with so leading to complexity. When all of them are followed regularly then it makes a good record continuously and the rapid compilation of the claim imperative.
But in reality the quality varies considerably as some of them are not in details and some not even particularized. All these sort of claims doesn’t deserve any reward or recognition which means that they don’t deserve any success. When there is a different reason for delay then a period of delay should be attributed to each cause. This indicates a basic requirement of linking cause and effect. The basic requirement is to particularize the claim.
When there is concurrent delay then the contractor needs to decide which delay, if any caused overall delay. In order to obtain this the contractor might need to go through for providing factual evidence. In this way he will be helping himself and also the Engineer to follow and understand the arguments. Correspondence, meeting minutes and other documents will be reasonably included in such cases or situations.
Now comes the turn of the Engineer to respond with an approval or with disapproval and detailed comments by a defined clause. While making the extension possible he must proceed according to another clause where he needs to require consulting with the Contractor in order to draw a conclusion or an agreement. If it is not possible for him to do any of these then he has to take a fair decision in determining the extension of time.
In this case the Engineer is the first step adjudicator or arbitrator. Unlike the tribunals who are seen in the later scene, the Engineer here is adjudicator or arbitrator. Here the role of engineer is to deal with the claims fairly. This also doesn’t mean that there needs to be an acceptance of some unmeritorious claim. In actual it means that when the contractor makes valid point then the engineer should look into them and draw a reasonable conclusion.
‘The duties, rights, obligations, roles and responsibilities of all the contract
Participants must be generally as implied in the general conditions, and appropriate
To the requirements of the project’ is one of the golden principles of FIDIC, discuss.
FIDIC stands for the International Federation of Consulting Engineers. It is a type of contract which is used in construction contracts. FIDIC depicts fair and balanced forms of construction.The roles, responsibilities, duties, rights, obligations of engineer, contractor, sub-contractor, contracting authority or employer are not supposed to be significantly changed from that which is mentioned in general conditions. Also the golden principles state that the roles of engineers, contractors, sub-contractors must be suitable to the need of the project.
The silver book states that this type of contract is not acceptable where there is not enough time or data or information to execute the designs. In such cases selection of silver book will not be acceptable for the project. The type of skills, experience and knowledge is equally important to ensure that the persons are suitable for the specific requirements for the project because the engineer role under FIDIC contracts is critical.
The engineer is responsible to check the quality of the materials used in the construction and also should give fair and balanced solutions.
The roles and responsibilities of engineer, employer, contractor, sub-contractor, tenderer, employees and all the contract participants must also be suitable to the requirements of the project. This wording is indefinite and biased. FIDIC suggests:
To assume the unpredictable conditions under Pink, Red, Yellow books of FIDIC, requirement of contractors would not be adaptable with GP1.
Not providing enough time for tenders to inspect, check and verify the employer’s requirements would not be adaptable with GP1 under FIDIC Silver book.
The allotment of different specific roles, responsibilities and duties to various participants for contracts in FIDIC contracts has made progress over an indefinitely long period of time. Also it delivers the best outcome or result for all the contract participants to submit the project work which satisfies parties expectations altogether.
The submission of a huge project for construction involves tangled and complex interaction between the participants. Each of them has individual roles as well as responsibilities which needs to be carried out perfectly. FIDIC considers the roles and responsibilities of all the participants to be the most efficient, expertise, experienced, skilled and appropriate ones.
The selection of types of contracts can be evaluated by certain factors. In any organization, legal contract is a standard business procedure to avoid any kind of misunderstandings between two parties in future. There are several contracts we should consider while selecting the type of contracts.
1) Scope uncertainty: It is the unpredictability in the actual amount of work that is required to be done. It happens when there occur mismanagement issues between the contract participants.
2) Contractual Issues: Contract between two parties is the base for any business. It provides complete understanding of the business so that no one can claim any sort of issues or misunderstandings later. However people with low bargaining power and limited knowledge often face contractual issues.
In order to avoid such issues it is very important to review performance schedule, monitor performance of the contract, utilize the right technologies as well. By doing so, the exposure to risk produced by certain set of circumstances or uncertainty can be handled.
3) Importance of setting milestones in a project as it will help to monitor deadlines. It helps to track the contractual progress which helps to provide best service and delivery to the clients over a period of time.
ADR is a widely recognized mechanism for dealing with disagreements at initial stage before the parties are entrenched in their respective positions. The primary value lies on the fact that puts ADR “on agenda” of a tiered dispute resolution. As a sign of weakness commercial parties consider the suggestion of ADR perceived at an early stage.
At various stages parties oblige the procedural rules when the dispute resolution provides for litigation. In such cases various parties may consider that there is no need to provide for ADR in their contract. When drafted appropriately an agreement to ADR may get enforced by the party.
NEC was first introduced in U.K IN 1993 as the New Engineering Contract. It was made for promoting collaboration and partnership among the client and the contractors. It was developed as a remedy measure for various types of traditional contact method and respective adversarial outcomes. The main purpose of NEC was to:
- To encourage good management
- To be simple and transparent in using language and no hard legal terminology.
- To heighten the scope of dealing with both major and minor projects
- To encourage good management: the contract can be processed in flow chart and be stored in cloud. The plan of action and roles are clearly mentioned. Timeline is addressed for each action.
- Clarity and transparency: the contract is written in easy English that can be easily understood. No confusion should be there in the contract.
- Flexibility of contract: the contract is for both for professional and project based supplies and services. All levels of contract gets the scope of appearance in the project management.
The famous case of Donoghue and Stevenson, also names as, the “Paisley Snail” or “Snail in the bottle” contributed a lot in the tort of negligence.
As stated that Mrs. May Donoughue ordered a Scotsman ice cream float, a mixture of ice cream and ginger beer; and found a decomposed snail floating out of the bottle. She has to face a lot of health issues due to it.
She filed an allegation which is submitted in the 5 condolences, which stated that Stevenson had a responsibility of taking care of his customers in a proper way and should take care of everything served in a proper way. She further stated that it was his negligence that he didn’t check the cleaning part properly and was not at all serious about the hygiene part.
Later, on 27th June, 1980, the judgment was passed and the judge stated that it was Stevenson’s negligence and should pay the liability.
Antoniou, F., Aretoulis, G., Konstantinidis, D. and Kalfakakou, G., 2012. Selection Criteria Used for the Choice of Contract Type for Major Highway Construction Projects. Procedia – Social and Behavioral Sciences, 48, pp.3508-3517.
Antoniou, F., Aretoulis, G., Konstantinidis, D. and Kalfakakou, G., 2013. Complexity in the Evaluation of Contract Types Employed for the Construction of Highway Projects. Procedia – Social and Behavioral Sciences, 74, pp.448-458.
Eriksson, P., 2021. Procurement strategies for enhancing exploration and exploitation in construction projects.
Suresh Tiwari, S., Chan, S. and Mubarak, M., 2018. Critical analysis of procurement techniques in construction management sectors. IOP Conference Series: Materials Science and Engineering, 342, p.012100.
Yan, L., Yang, T. and Deng, J., 2017. The Combinational Connotation of Contract Strategy in Chinese Public Construction Projects: A Grounded Theory Approach. International Journal of Architecture, Engineering and Construction, 6(1).
Know more about UniqueSubmission’s other writing services: