Contractual Procedures B 2010 - Tutorial 01 Assignment)

8/8/2019 Contractual Procedures B 2010 - Tutorial 01 Assignment)

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Contractual Procedures B

CN3036 Tutorial 1


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Assignment

Briefing


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Assignment

Weighting : 50% ; Examination : 50%

Maximum of 3,000 words

Write a professional report to yourcontractdirector

Correct format and well structure

(with use of numbered heading)

Font size 12 and 1.5 spacing


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Assignment

Latest date for submission: 19 Dec 2010

Reference : relevant clauses from contracts

But do not re-write the clause (use your

own words to express)


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Assignment Report FormatCover page Subject of report, author, date

Contents page Heading numbers

Abstract Brief summary of report e.g.

purpose of report

Introduction Background information e.g.

contract used

Main body of report Findings: Difference between 2

contracts

Conclusion Summary of results

Recommendation If any e.g. when appropriate to

use that contract

Appendices/ Reference correct format


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Assignment

Critically compare the terms, conditions and

procedures contained within the standard FIDIC

conditions of contract for construction first edition

1999 with a standard HK conditions of contract

What Standard HK conditions of contract refer to?

HKIA (which edition? 2005 or 1999) GCC

Others (e.g. JCT)


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Assignment Suggested Contents

Under the following headings:

Nature of projects with approximate values

Master programme

Establishing the contract sum

Procedures for sub-letting

Responsibility for health and safety

Procedures for claiming an extension of time


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Standard Forms of Contract

B

ackground


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For the majority of building contracts, it is

common practice to use standard forms of

contract

Reason

It is essential to set out all the details of the

work in a proper form of contract, and state

each partys duties, obligations and rights

Otherwise misunderstanding and dispute

between the parties to a building contract


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Using a standard document avoids the waste of

time that would result from having to individually

draft the many terms necessary for each new

contract

In the event of disputes, standard forms of

building contract provide a means of settlement,

without the need to refer the matter to a court oflaw. E.g. an arbitration agreement clause in the

document allow the parties to refer this disputes

to arbitration


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Private Sector

HKIA/RICS standard form

Most wisely used private sectorstandard form of building contract

Full title of this form is Agreementand Schedule of Conditions ofBuilding Contract (Standard FormofBuilding Contract) for use in

Hong Kong , Private Edition (WithQuantities and Without Quantities)

SFBC 2005 edition


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Private Sector

FIDIC standard form

Most wisely used standard form of

contract for the purpose of

construction work (both building and

civil engineering) where tenders areinvited on an international basis

General Conditions are linked with

the Conditions of Particular

Application (which is the part of the contractspecially drafted to suit the peculiarities of the

individual contract) by corresponding clause numbers)


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Private Sector

Certain employers, e.g. MTRC, Housing

Authority, Swire each produce a standard form of

contract for use on their own projects


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Public Sector

Government standard form

Building

Government of Hong Kong General Conditions of

Contract for building, 1990 Edition

Civil Engineering

Government of Hong Kong General Conditions of

Contract for Civil Engineering Works, 1990 Edition

E&M Government of Hong Kong General Conditions of

Contract for Electrical and Mechanical Engineering

Works, 1990 Edition


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Differences between Private Sector

& Public SectorStandard Forms

A mediation provision in public sector contract provide an

optional alternative to arbitration as a means of resolving

disputes

The public sector standard form, the payment certificate is

to be issued to the employerwith a duplicate copy to main

contractor. Payment required within 14 days of issue

The private sector standard form require paymentcertificates to be issued to main contractor, who will in

turn present them to employer, payment must be made

with X (21/30/45) days of presentation rather than of issue


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Standard Forms of Sub-contract

Most standard forms of main contract will

have a sister document to be used when

the main contractor is directed by theemployer to enter into a nominated sub-

contractor agreement with a sub-contractor


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Formalization of contract

Tender submitted by a contractor constitutes an

offerand if the tender is accepted without

qualifications or amendment legally binding

contract

But it is usual practice to quality the tender, which

has the effect of not binding either party legally

Until the standard form of contract document has

been signed by parties


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Formalization of contract

When using Standard Form of Contract, the

signatures, together with name and address, of

both parties to the contract, the Employerand

the Main Contractor, are recorded in theA

rticleofAgreement

The names of both the architectand the quantity

surveyorappointed by the employer should also

be recorded

Contract Sum that the Employer has agreed to

pay the main contractor


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Precedence of Contract Document

A building contract incorporates the following:

Contract drawings

Contract bills

(Bills of quantities/ Schedule of Rate)

Standard form of contract

Articles of agreement (signed)

Terms of contract (contract clauses) Appendix (fill in the details)

Special Conditions of Contract(Amendment to standard form of contract)


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Precedence of Contract Document

If one document conflicts with another

document which one take precedence over

the other?

The specially written or amended clause

will take precedence over the standarddocument


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Discrepancies & Errors in Contract

Discrepancies between contract

documents may be discovered :

During Pre-contract stage

Tenderer should immediately inform architect (bymean of tender query) and architect should make

necessary amendment and each inform tenderers

During Post-contract stage Contractor should immediately give architect

written notice and architect should issue A.I. to

correct the discrepancy which would be adjusted in

final account


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Contracting Parties

ForBuilding Contracts

And their obligation under the contract


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Contractors obligation

under the contract


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Main Contractors obligations

Progress and complete the works in

accordance with the Contract (Clause 2.2)

Give written notice to the Architect immediatelyupon finding a discrepancy in or divergence

between contract documents

Provide programme and amendments whenamended

Comply with statutory obligations


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Provide necessary insurance in respect of:

Damages to works

Damage to property owned by 3rd party

Personal injury to workmen

Damage by fire, storm, flooding etc.

Clause 18 and 19


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Materials and workmanship complied withthe standards as described in Contract and

to reasonable satisfaction of the Architect

[Clause 8.1.3]

Contractor shall be responsible for the

setting out of the works

Submit any claims to architect in

reasonable time


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Keep a competent foreman-in-chargeconstantly upon the works

Allow architect and his representativesaccess to the site/workshops at all

reasonable time

Permit carry out ofinspection [Clause8.2.2]

Rectify defects [Clause 8.4]


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Employers obligation

under the contract


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Employers obligations

Payment Employer is obliged to pay the main contractor for

work carried out

QS to value completed works and then certified by

architect, which in turn is paid by the employer

Give possession of site [Clause 23.1.1]

Employer must give main contractor possession ofsite in order that main contractor may carry out the

works

Employer need to specify the possession date and the

finish date (completion)


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Employers obligations

Appoint Architect and Surveyor (Article of

Agreement)

Supply instruction employer must give

main contractor instructions concerning the

works

Employermust not interfere with progress


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Non-contracting Parties


And their obligation under the contract


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Non-contractual parties to main

contract Consultant team involved in the design

and supervision of works are not parties to

the main contract

Each has their own employment contractwith the Employer


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Architects Duty

Design exercise great care to give bestpossible advice and to warn employer ofpotential risks

Drawings to supply sufficient drawingsand information, within reasonable time,for the execution of works

Cost to ensure that building can becompleted within stipulated cost, or areasonable increase


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Architects Duty

Supervision to supervise and inspect

sufficiently to ensure that materials and

workmanship conform with contractual

requirement

Payments to certify payments

[Architects Certificate] to the maincontractor, without fraud and with completeimpartiality


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Quantity Surveyors Duty

Pre-contract Duties Cost advise Employer of project costs

Contractual arrangements advise on

suitability Tender documents prepare and send to

contractors

Bills of quantities prepare from tenderdrawings

Tender report- advise on choice of

contractors


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Quantity Surveyors Duty

Post-contract Duties

Prepare certificates of payment involve

measuring and valuing the work properly

Prepare variation accounts measuring,

pricing and agreeing the value with main

contractors QS

Calculate adjustment adjustment to the

contract sum due to fluctuations


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Professional Negligence

Architect, QS and consultant engineers areprofessional people

They owe a duty to the Employer to carry out

theirwork with proper care

They are liable for damages for negligence if

employersuffers a loss that is due to a lack of

care or duty

Legal action [Tort] may be taken against them by

employer based on terms in their employment

contract


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Contractual Arrangements



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Lump sum on Bills ofQuantities

The contract sum is derived from the total

of the items in the BQ (which is prepared

by consultant QS)

The contractor undertakes to carry out the

work in accordance with the drawings and

as described inB

Q

The responsibility forincorrect quantities

rest on the Employer


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Lump sum on Drawing & Specification

Tenderers are required to provide

schedule of rates or tender price

breakdown by themselves

The responsibility for incorrect quantities

rest on the tenderers

Therefore, there are more risks imposed

on tenderers when compared with firm BQ

lump sum contract


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Difference between the With Quantities &

Without Quantities Editions

Where bills of quantities have not been produced

and it is the intention of the parties to use a

specification and a schedule of rates in its place,

the without quantities edition of the standard formwill be used

Without quantities edition differs from the withquantities edition in the following:

The specification takes the place of the BQ as

a contract document


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Common issues covered by


Parties to the contract & the Professionals

Quality & Workmanship

Time (commencement/duration)

Practical / Substantial Completion Payment

Dispute Resolution

Instructions / Variations to the contract

Insurance Sub-letting

Damages for breach of contract

Determination

Documents

Contractual Procedures B 2010 - Tutorial 01 Assignment)