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Law and Contracts

Fda Professional Practice Construction Operation Management

David Walker

on 11 October 2016

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Transcript of Law and Contracts

Sources of Information
Law of Tort
What do you know?

National Joint Consultative Committee for Building

NJCC was disbanded in 1996

Joint Contract Tribunal (JCT)

The JCT was established in 1931 by the Royal institute of Building Architects and National Federation of Building Trades Employers (NFBTE). The JCT produces standard forms of contract for the construction Industry. The JCT is comprised of seven members who authorise the publications these are listed by the JCT in 2014 as the British Property Federation, the Contractors Legal Grp Limited, the Local Government Association, the National Specialist Contractors Council, the Royal Institute of British Architects, the Royal Institution of Chartered Surveyors and the Scottish Building Contract Committee.


Law and Contract
Learning outcomes
On completion of this module you will be able to

1. Identify the nature of legal and contractual control of construction projects and demonstrate your understanding of their use in a range of work/practice contexts (KU1);
2. Demonstrate the ability to reflect on, analyse and evaluate liabilities and responsibilities of contractual arrangements with other parties to inform your approach to controlling construction projects (CS1, CS2);
3. Develop an inquiry that explores or improves areas of your work/practice and demonstrate the ability to share ideas and information effectively with others (PS1, PS2);
4. Self-assess your capabilities and professional development needs in law and contractual work and demonstrate the ability to take responsibility for the quality of your own learning. (PES1, PES 2).
Time at Large
Types of contract

Traditional/Fixed Priced/Prime Cost

For traditional procurement there are three main types of contract:

Lump sum contracts – where the contract sum is determined before construction work is started. The contractor undertakes a defined amount of work in return for an agreed sum. Contracts ‘with quantities’ are priced on the basis of drawings and a firm bill of quantities. Contracts ‘without quantities’ are priced on the basis of drawings and another document — usually a specification or work schedules.

Measurement contracts – where the contract sum is not finalised until after completion, but is assessed on
remeasurement to a previously agreed basis. This type of contract can arise because the work which the contractor undertakes cannot for good reason be measured accurately before tenders are invited. Design will be reasonably complete and an accurate picture of the quality required will be available to the tenderer. Probably the contract of this type with least risk to the client is that based on drawings and approximate quantities. Measurement contracts can also be based on drawings and a schedule of rates or prices. A variant of this is the measured term contract under which individual works can be initiated by instructions as part of a programme of work, and priced according to rates related to the categories of work likely to form part of the programme.

Cost reimbursement contracts – where the sum is arrived at on the basis of prime (actual) costs of labour, plant and materials, to which there is added an amount to cover overheads and profit. Sometimes referred to as a ‘cost-plus’ or a ‘prime cost’ contract; the amount or fee added to cover overheads and profit can be a fixed sum, a percentage, or on some other reimbursement basis. Where the full extent of the work is not known or cannot be designed pre-tender, this is a relatively high risk option for the client and only generally acceptable where the circumstances preclude other alternatives or where a partnering ethos is established.
Design and build procurement

A method where the contractor is responsible for undertaking both the design and the construction of the work in return for a lump sum price. There are variants on this option depending on the degree to which initial design is included in the client’s requirements.

Appointment of a contractor is often by two stage tendering, thus keeping a competitive element, but not expecting every tenderer to produce full proposals.

The client’s requirements can range from a simple accommodation schedule to a fully worked out scheme design, but generally should be matched by the contractor’s proposals. Adequate time must be allowed for the client’s requirements to be prepared to the appropriate level, and professional consultants will usually be required. The contractor must be given adequate time to prepare his proposals, together with an analysis of his tender figure. It should also be remembered that evaluating tenders for design and build may be difficult, because design proposals need to be balanced against price, and it is vital to check that the proposals satisfy the client’s requirements.

The client has control over the design element included as part of his requirements, but, once the contract is let, has no direct control over the development of the contractor’s detail design. The contractor assumes responsibility for design at this point, and usually appoints his own consultants (although the designers may be in-house) to formulate a design or to develop the design in the client’s requirements as necessary. Although it is a common practice for the client to ask the contractor to take over his own consultants under an agreement, there can be problems in such arrangements in terms of design accountability.

Because design and construction may proceed in parallel, it may be possible for the overall programme time for the project to be shortened; by how much will depend on the extent to which the contractor is responsible for design, and for design development.

There can be reasonable certainty over construction costs because a contract price is known at the outset.
Provided that the client refrains from ordering changes during the construction of the work, the contractor will be obliged, subject to the conditions, to complete the project for the contract sum.

The terms of a design and build contract make no provision for an independent contract administrator.Decisions or instructions may be required of the client from time to time, and the client may decide to appoint an agent either to advise or to act on his behalf.

It might be possible for the client to order design or specification changes during construction, but the consequences in terms of direct costs, cost of disturbance and additional time needed will be largely for the contractor to advise upon.

Matters relating to valuation and payments are often left largely in the hands of the contractor. The client may appoint his own consultant to advise, but the contract conditions do not recognise a role for such a person.

Completion within the contract period is an obligation on the contractor, although the client may have to accept a later completion to take account of delays due to reasons listed in the contract.

Speculative risks are largely with the contractor, but can reduce according to the extent of the design input by the client. In terms of cost and time this is a relatively low risk procurement option for the client, but there can be uncertainty over design and quality, particularly if insufficient attention was paid initially to the preparation of the client’s requirements and the checking of the contractor’s proposal
Typical conditions found in construction contracts can include (in alphabetical order):

Assignment, rights of third parties and collateral warranties.
Contractor's design.
Contract sum and adjustment,
Date for possession, deferment of possession, progress, delays, completion date, suspension & termination.
Dispute resolution procedures and alternative dispute resolution.
Employer's instructions.
Force majeure.
Information release schedule.
Injury, damage and insurance.
Joint Fire Code.
Liquidated damages.
Net contribution clause.
Partial possession.
Payment, valuation (including off-site materials), certificates, fluctuations and retention.
Practical completion.
Project management and contract administration.
Quality of works.
Relevant events (compensation events), extensions of time and loss and expense.
Sectional completion.
Statutory obligations.
Testing and defects (defects liability period)
Variations, prime cost sums and provisional sums.
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