Modern construction works require a complex set of documents to form a works contract. The numerous parties and organisations involved, not to mention the plethora of legislation which must be adhered to mean a set of documents which is usually fairly hefty, and can be daunting. They may include drawings, specifications, pricing documents, schedules of work, programmes, conditions of contract, contract amendments, health and safety requirements and so on. Consequently, the potential for errors within and between information is significant and can end up costing the client or the contractor a lot of money.
Most of the contract documents started life as the tender documents. After the tender process and post tender discussions, amendments and such like are incorporated into a final bundle of contract documents. Clients and contractors must therefore be fully aware of the scope and content of the tender documents as well as any agreed amendments, to ensure the basis for a robust contract.
The following top tips give some pointers to look out for when compiling or reviewing that mountain of paper or electronic documentation.
1 – Is there a clear list of the contract documents?
This is pretty fundamental and may sound obvious, but how many times have you needed to “check the contract” but struggled to establish exactly what’s in it. Make sure that there is a clear list of contents included in the contract that identifies all the contract documents in it.
2 – Use consistency when naming documents
Following on from above, ensure the list of contract documents names each document exactly as is, for example if the list refers to “Pricing Schedule Rev 1” ensure the document included is actually titled “Pricing Schedule Rev 1” and not anything else such as “Schedule of Prices” for example. Sounds obvious, but it happens frequently causing confusion as to which document is actually included in the contract.
3 – Is the scope of work clearly defined?
Again, another pretty obvious requirement that often gets overlooked or not addressed satisfactorily. Not all projects can be neatly ringfenced, so it’s vital to clearly set out what is part of the works and what isn’t. For example, a marked up set of scope drawings accompanied by a summary description, which should then be clarified with further detail. All parties should be able to clearly identify what is part of the works and equally importantly, what isn’t.
4 – Avoid unnecessary information, but ensure sufficient
Too often documents are included in the contract “just in case”. The idea being that if that information is included, consultants in particular, have covered themselves from missing something. However, this approach can backfire and result in claims and disputes because the excess information included may conflict with something else, or confuse the meaning of another part of the documents. Only include that which is necessary!
5 – Use an appropriate form of contract for the work
Choosing a form of contract is a major consideration for any project. Options exist for most different procurement routes, for example D&B may use a JCT D&B form, an NEC form or an IChem E form. Much of the choice depends on the type of works being undertaken, e.g. traditional build, civils, process works etc., so it is important that you use a form and option that is appropriate for your project.
6- Ensure competence with form of contract
It’s great to be seen as cutting-edge by using a new form of contract however, if the parties do not know how it operates it can be a recipe for disaster. When NEC forms were first being used, Hawk’s experience was that many clients and contractors still administered them using a JCT approach, whereby EOTs and money claims were dealt with separately from compensation events. This resulted in no end of problems. Although it may be safer to stick with what you know, the best advice is to seek specialist advice so that you not only use the correct form of contract and option, but also correctly administer it.
7 – Are all the contract amendments necessary?
Consider whether amendments to the form of contract are needed. Hawk has seen disputes arise over the meaning of the amendment particularly when it may conflict with the standard form. Make sure that any amendments are clear and do not contradict or confuse when read with the standard wording. If you are in any doubt as to the purpose and meaning of an amendment, ask; do not simply accept them unless you understand their impact and implications.
8 – Consider correct allocation of risk
Successful construction contracts effectively allocate risk between the parties. Standard Forms of Contract do this effectively so it’s probably not a good idea to use amendments to simply offload all risks onto the other party. If the other party cannot manage the risk, then there is a problem for everyone. Best advice is to ensure that the risk is owned by the party best able to manage it.
9 – Review each document in turn
Prior to inclusion, ensure all documents are carefully checked and reviewed. Often the smallest error can lead to major cost and time overruns. Question the need for each document and ensure each one adds something to the overall package rather than leading to confusion or ambiguity.
10 – Ensure consistency between documents
With the multitude of documents included in the contract, problems can arise between different documents, which can be magnified when considering the precedence between various documents. With different consultants producing different sections it is imperative that overall coordination and cross checking is carried out to ensure consistency of content. Most forms of contract cater for discrepancies and ambiguity between documents but regardless, dealing with such issues, particularly when there is a potential cost involved, does not make for a smooth project that runs to schedule.
Compiling contract documents is a meticulous process that needs to be undertaken diligently and methodically. Remember also to take account of any changes to tender documentation due to post tender clarifications, drawing revisions and suchlike, agreed post tender. Our advice is always to use an experienced QS to undertake this task. Hawk has many years of experience so please do not hesitate to contact us if you need any advice on how best to compile or review your contract documents.
If you have any questions on any of the above or would like assistance with your contract, get in touch here.