JCT Design and Construction Contract - New Approach

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A NEW APPROACH TO THE

JCT DESIGN AND BUILDCONTRACT



By the same author

A New Approach to the Standard Form of Building Contract (MPT, 19!,The Con"truction Pre"" #td, 19$%

A New Approach to the &C' Condition" of Contract, olume 1 (The Con)"truction Pre"" #td, 19*%

A New Approach to the &C' Condition" of Contract, olume ! (The Con)"truction Pre"" #td, 19+%

A New Approach to the (F&&C% &nternational Ci-il 'ngineering Contract

(The Con"truction Pre"" #td, 199%

A New Approach to the (.CT% 19/0 Standard Form of Building Contract

(The Con"truction Pre"" #td,

A New Approach to the (.CT% 19/0 Standard Form of Nominated Su)Contract (Con"truction Pre"", 19/!%

A New Approach to the (2M31% Standard Form of Building Su)Contract

(Con"truction Pre"", 19/4%



A NEW APPROACH TO THE

JCT DESIGN AND

CONTRACTGlyn P Jones

MSc ARICS MCIOB 149749

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CONSTRUCTION PRESSLONDON AND NEW OR!



CONTENTS

Preface -ii

Chapter 1 The de"ign and it" life)c5cle co"t" 1

Chapter ! Choo"ing the right id

Chapter 4 The ri"6" in-ol-ed 9

Chapter $ A commentar5 on the clau"e" 14

Chapter * The rea"on for flowchart" 44

Chapter + Flowchart" 4*



Con"truction Pre""an imprint of: #ongman7roup #imited

#ongman 8ou"e, Burnt Mill, 8arlow,'""e CM!0 !.', 'ngland :

ssociated companies throughout the world

Published in the United States of America byLongman Inc. !ew "or#

;7l5nP .one", 19/$

All right" re"er-ed< no part of thi" pulication ma5 ereproduced, "tored in a retrie-al "5"tem, or tran"mittedin an5 form or 5 an5 mean", electronic, mechanical,photocop5ing, recording:, or otherwi"e, without theprior written permi""ion of the Puli"her":

Fir"t puli"hed 19/$

Briti"h #irar5 Cataloguing in Pulication ata.one", 7l5n

A new approach to the .CT e"ign and BuildContract:1: .oint Contract" Triunal: .CT e"ignand Buiid Contract !: Building = Contract"and "pecification" = 7reat Britain&: Title+9!>:/ T8$!*

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Set in 1MB Pre"" @oman and ni-er" 5#on"dale T5pe"etting Ser-ice", #anca"ter



PREFACE

&t wa" onl5 a matter of time efore >de"ign and uild> grew and came of agein the : Contractor" 6new mar6et" ei"ted for the direct "elling of theircon"truction ware": The5 6new pac6age" or id" containing inclu"i-e de"ign"er-ice" would appeal to man5 ut no >official> "tandard form of contractei"ted for tho"e who wi"hed to offer, or accept, de"ign3uild deal":

Now, the con" truc ti on indu "t r5 ha" what it want " ) a .CT Cont ra ct

with a pedigree near perfect: Standard in form, roc6)anchored into a long

lineage of wa5" and word" familiar to the indu"tr5>" practitioner", it ha" the

fleiilit5 needed to "ati"f5 and protect mo"t 6ind" of client ) from the

one)off cu"tomer who 6now" not what he want" (eactl5%, to the #ocal

Authorit5 that doe" 6now, or the commercial client who ha" hi" own team

of conceptual de"igner" needing their outline" de-eloped into drawing",

detail" and "pecification":

Fu"ing de"ign and uilding techniue together into a full parcel of "er-ice"

undoutedl5 "harpen" attitude" to ri6", method", time, co"t, ualit5 and

warrantie": Furthermore, it force" de"ign3uild idder" to compete on three

front" rather than one (price%: e"ign and their de"ign>" life)c5cle co"t" now

ecome part of the id att le:

Contractor", to "ucceed on the "econd and third front, need to tune in to"ocial trend", the ta world, the land of lea"e)ac6, and learn to pla5 thedi"count tale" until the5 are a" adept with pre"ent -alue" of future pound"a" the5 are with the future -alue" of pre"ent one"< con-incing client" theirde"ign>" pac6age include" not onl5 the mo"t acceptale de"ign3co"t choice

ut al"o the lowe"t life)c5cle co"t commitment:

2f cour"e, the ogre of o-erall unending liailit5 will ho-er low o-erde"ign3uild contractor" unle"" the client choo"e" to utili"e the clau"e !facilitie" to grant certain relief" where perhap" no-el de"ign" are in-ited:2therwi"e the general fear of maDor mi"ta6e" ma5 "low down the emergenceof right new Briti"h de"ign3uilder" until the "torm cloud" "urroundingliailit5 are dri-en awa5,

Thi" form of contract "hould ha"ten the return of people>" confidence in

uil ding": &t "hould encourage the mar6eting of uilding", offering c lient"

a choice of product, price, ualit5, longe-it5, pa5)ac6 term", and life)c5cle"<

enaling the con"truction indu"tr5 to ta6e more and more ri"6" with a

greater degree of certaint5 that profit" will e gained rather than lo""e"

"uffered:

Thi" oo6 endea-our" to clarif5 thi" Contract for practitioner", intro)

ducing al"o chapter" on matter" of de"ign, idding and ri"6": The manu"cript

and chart" were all con-erted into print 5 Margaret Smith, who managed

it all in her u"ual inimitale wa5 and & etend to her m5 than6" for "uch

ecellence:

7l5n P .one"ing Fai"al ni-er"it5ammim

March 19/$



THE DESIGN AND ITS LIFE-CYCLE COSTS

Introduction

The traditional procedure for client" wi"hing to u5 new uilding", or rehailitate old one", ha" een to "elect anindependent profe""ional de"igner and to tell or di"cu""with him what he want", what he can afford, and whatae"thetic "tandard" he ha" in mind: The cho"en architectin turn arrange" for contractor" to id for the con"tructionof hi" de"ign on the client> " propert5:

Till" di"tinct two part proce"" ha" di"ad-antage" well6nown to e-er5one concerned with the de"ign productionand procurement of uilding":

The >de"ign)and)uild> proce"" pro-ide" differentl5 fora one "tep wa5 of procuring con"truction wor6 5 tho"ewho prefer the de"igner to e al"o the uilder< the5 thencan "pea6 to one per"on aout de"ign, time, and price ina compo"ite wa5 and in-ite id" compo"ed of the"e threeunified element":

Con"truction wor6 increa"ingl5 reuire" clo"er integra)

tion of "peciali"m" who"e de"ign" and their eecution mu"t

interloc6 into e-er tighter fit": Thi" i" generall5 ac6now)

ledged to e le"" ea"il5 achie-ed when a de"ign team act"

independentl5 from the con"truction team:

Fu"ing the de"igner>" and uilder>" mind" togetherundoutedl5 "harpen" up attitude" to matter" of ri"6,techniue, time, ualit5, co"t and warrantie": &t force" the

de"igner to li"ten to the uilder for the5 are one, acting andthin6ing in uni"on, in their "earch for optimum "olution":Thi" freuentl5 topple" de"ign choice from it" u"uall5dominant and una""ailale place: e"ign matter" ha-e to

Thi" ma5 worr5 traditionali"t" who "ee all delicatede"ign" eing ludgeoned into oli-ion 5 ra"h uilder":8owe-er, man5 would argue the relati-el5 free rein enDo5ed

5 de"igner " under the con-ention al two "tep rule" ha" produced no appreciale increa"e in eautiful uilding": &nan5 ca"e there i" no rea"on to pre-ent de"igner" ecoming

uilder" rather than uild er" ecoming de"igner":

The design/build contract

&n commercial field" the client ma5: to the de"igner>" reliefor di"ma5, "how no intere"t at all in ae"thetic "tandard": 8i""ole concern ma5 e to own a new factor5 or warehou"e, fitfor a certain purpo"e, uilt an5where within a certain areain the fa"te"t po""ile time at the lowe"t po""ile co"t andto la"t for twent5 5ear": Furthermore, he ma5 wi"h to ha-elittle or nothing to do with it until it ecome" read5 for hi"occupation:

2n the other hand, the client ma5 want a memoraleand monumental uilding: 8e ma5 ha-e -er5 "trong -iew"on ae"thetic" and the "ocial amenitie" needed to partner hi"

propo"ed proDect: 8e ma5 alread5 own land upon which to uild< it ma5 (at hi" co"t% ha-e een "ur-e5ed ao-e and elow ground< an appro-ed de"ign in outline or e-en in de)tail 5 hi" own, or a con"ultant, architect ma5 e a-ailale<a udget price fied< "peciali"t" lined up to do ancillar5wor6< a full "pecification ma5 e to hand< an agent of theclient ma5 e engaged and read5 to o-er"ee the whole

&n oth the ao-e ca"e", and in an<3 permutation e)tween the two, the .CT Standard Form of de"ign3uildcontract accommodate" the client>" contractual reuire)ment" and "afeguard" to a con"iderale etent hi" intere"t"which are to ha-e, for a lump "um price, the 6ind of uild)ing he want", uilt well, and completed when he want" it:

The .CT contract doe" not pre-ent con"truction dela5":&t doe", howe-er, reduce the chance of completion eingdela5ed: amage", prefied 5 the client, will in the u"ualwa5 ari"e unle"" certain "tipulated e-ent" ha-e cau"ed thedela5: The contract could uite ea"il5 ha-e di"pen"ed withthe"e and other "afeguard" of the contractor 5 placingthe"e ri"6" upon hi" "houlder", ut a price would of cour"e

e paid 5 the clie nt whether or not tho"e ri"6 " mate )riali"ed: The .CT rec6oned when putting together theircondition" that optimi"ed ri"6)"haring would gi-e the clientthe "afe"t "et of term" for the lowe"t initial co"l id" 5 non)gamling idder": The"e condition" do not therefore offerclient" ri"6)free arrangement":

The ri"6)"haring to e found in all .CT contract" i"freuentl5 attac6ed 5 contract commentator" who ha-edifferent -iew" on tiie "hare to e carried 5 the client:The5 would prefer io "ee mo"t ri"6" orne 5 the con)tractor:

Such a polic5 ignore" it" ine-itale effect< the higher theri"6 the higher the id" from non)gamling idder": Shrewdclient" want to ta6e certain ri"6" for the5 6now there lie"

1



a chance of gain a" well a" lo"": A client ma5 prefer theopportunit5 to carr5 the ri"6 of inflation for in "o doinglie will enefit from lower initial id" and in hi" e"timation

ear a rea"onale chance of low lo""e" in honouring hi"commitment" to pa5 co"t increa"e":

#oading the non)gamling contractor with >"peculati-e>ri"6" offer" him eclu"i-e right" :to the certainty of either

a profit or lo"": &n the former ca"e the client will ha-e paidmore for hi" uilding than it i" worth and in the latter ca"ethe contractor ma5 at wor"t ecome in"ol-ent or at lea"t

ecome aniou" to reduce hi" lo""e" 5 cutting e-er5 cornerhe encounter":

Competition

&t i" "ometime" claimed that ecau"e de"ign3uild arrange)ment" reduce the numer" competing the5 there5 reducecompetition: 8owe-er, con-entional tendering procedure"in the call for competition on one front onl5 = namel5,

price, wherea" de"ign3uild arrangement" generate compe)tition, to the client>" ad-antage, on two if not three front"E

(i% Price (ii% e"ign (iii% #ife)c5cle co"t" (thefuture u"er>" co"t"%:

Contractor" will readil5 accept defeat if their price i"too high ut will not ea"il5 continue to accept reDection onground" of inferior de"ign"< nor will the5 e plea"ed if theirlowe"t id" are ignored in fa-our of higher initial co"t id"which promi"e lower life)c5cle co"t": #o"ing idder" will"oon re"pond 5 impro-ing their de"ign", ma6ing it harderfor ineperienced gamling cut)price contractor" to enterthe arena or gain an5 foothold at the epen"e of un"u"pect)ing client": The poor de"igner will tend to "ta5 in the fieldof >uild> onl5 where hi" lower)than)co"t id" will entice

the unwar5:

The de"ign and it" life)c5cle co"t"

The contractor>" id i" onl5 part of the picture: The ad-an)tage of a low initial tender ma5 e off"et 5 a -i"ion ofhigh freuent maintenance and repair co"t": A more com)

ple attracti-e de"ign or la5out ma5 generate higher "taffrunning co"t" or ma5 dimini"h the efficienc5 potential ofa uilding:

&f the client, or hi" ad-i"er, add" together the initial uilding co"t", future maintenance co"t" and running co"t",then ta6e" account of intere"t charge" with inflation on the"um" concerned, a much clearer picture emerge" in whichhe ue"tion" whether to accept a higher initial id for ade"ign with lower future co"t", or to ta6e a lower initial idwith higher future co"t" to e paid at "ome time other than

the pre"ent:&n commercial con"truction" the"e con"ideration"

ecome e-en more important "ince differential tae" ma5appl5 or ta conce""ion" ma5 e there for the ta6ing:7rant" or low intere"t loan" ma5 ec6on the client tocon"ider carefull5 what he uild" and where he uild" it:The"e factor" "hould influence udget", de"ign" and id":The de"ign3uild contractor mu"t tune in carefull5 to theta world, the land of lea"e)ac6, and the range of wa5" toreduce a client>" financial commitment in a uilding he ma5onl5 wi"h to ha-e for a fraction of it" e-entual life)"pan:The mar6eting of uilding ha" hardl5 egun unle"" it canoffer client" a choice of product, price, pa5)ac6 term" and

warrantie" on ualit5, longe-it5 and recurring co"t":The principle" in-ol-ed in life)c5cle co"ting are tied

clo"el5 to time, intere"t pa5ment" or receipt", and inflation:

&ntere"t and inflation

Mone5 mu"t either incur intere"t charge" if it i" orrowedor gain intere"t if it i" "a-ed: The "um" of client"> monie"in-ol-ed in future maintenance, repair" or running co"t"mu"t therefore carr5 thi" urden of their" from the momentthe5 are >orn>: From the da5 the de"igner concei-e" theirfuture tho"e -ariou" co"t "um" mu"t egin to accumulatetheir intere"t: An account of e-er5 future pound to e

"pent mu"t e drawn up and con-erted (di"counted% hac6into it" pre"ent)da5 -alue after allowing for it" intere"t andthe effect" of inflation:

There are, a" e-er5 "choolo5 6now", tale" a-ailale(Compound &ntere"t Tale"% to "how the future worth of

present mone5: There are al"o tale" a-ailale (i"countTale"% to "how the present worth of future mone5:

&t can e "een at a glance from compound intere"t tale"that G100 of pre"ent)da5 mone5 will amount to G110 inone 5ear>" time at 10H intere"t: &f the "um of G110 remain"

where it i" for a "econd 5ear the original G100 will ha-egrown to G1!1 and "o on:

2n the other hand, it can e "een from di"count tale"that G100 in one 5ear>" time i" future mone5 whh at 10Hintere"t ha" a pre"ent)da5 eui-alent of G90:909 ecau"ethat i" the "um needed at 10H intere"t to amount to G100in one 5ear>" time: Similarl5 G100 di"counted for two 5ear"

at 10H ha" a pre"ent -alue of G/!:+$$ and "o on:

Compounding put" a future -alue now on a pre"ent "umof mone5: i"counting put a pre"ent -alue now on a future"um of mone5:

Tale" are al"o a-ailale to con-ert a 6nown annualfuture "um reuired at the end of e-er5 5ear of a uilding>"life into an eui-alent pre"ent)da5 lump "um (Pre"ent alueof G per annum Tale"%:

The ao-e principle" are all in-ol-ed in a""e""ing de"ign3co"t alternati-e" enaling the future ependiture" of differ)ing propo"al" to e compared upon an eual footing of

pre"ent -alue" 5 di"counting:

For eample, if two de"ign3uild id" ha-e widel5differing de"ign propo"al" the id" will al"o differ widel5:Iithout clo"er eamination of the "umi""ion" it i" impo")"ile to "a5 at a glance which id i" e"t: The cheaper id>A> will lead to hea-ier maintenance co"t" "ooner and willha-e onl5 half the life)"pan of id >B>: 8owe-er, the fir"tco"t compari"on (elow% "till "how" id >A> to e etterthan id >B>:

Thi" fir"t co"t compari"on ha" o-iou" fault" in that ita""ume" pre"ent pound" are the "ame a" future one"< it al"oignore" the point" made earlier that an5 "a-ing in initial co"tor the time dela5 in "pending mone5 on maintenance etc"hould e reflected in the intere"t "a-ed if that mone5 wa"

orrowed, or the intere"t earned if that mone5 wi" in-e"tedel"ewhere: Thu", the "econd co"t compari"on (Tale 1%u"ing a *H rate of di"count "how" id >A 1 to e 5 far the

e"t:

Thi" will not "urpri"e entrepeneur" for the5 ha-e 6nownfor 5ear" it pa5" to dela5 all "um" pa5ale for a" long a"

po""ile when the mone5 i" eing orrowed (a" it often i"%and "imilarl5 "o when the "um" are owned "ince intere"twould e recei-ed or profit" would e earned 5 the mone5concerned:

$



The ue"tion = which di"count rate "hould e u"edJ =depend" upon the client>" "tore of mone5, "ource of or)rowing and the u"e" he could otherwi"e put "a-ed mone5 to<there i" al"o the prolem of inflation trend" and taationrate" in the future: The"e po"e difficultie" for tho"e whoma5 wrongl5 thin6 di"counting pre"ent" a"olute an"wer":

i"counting in principle and the rate cho"en in practice are"impl5 an open declaration of "e-eral a""umption" = thatta6ing into account e-er5thing we 6now aout the client>"

orrowing power, or profit potent ial, together with theero"ion in -alue epected = a figure of *H compo"itel5repre"ent" a fair allowance to e made on the capitalconcerned:

Table 1 Comparisons of proposals 'A' and 'B'

Proposal %A % &nitial id G10 000 '"timated maintenance co"t"G!000 e-er5 1* 5ear"

#ife)"pan 40 5ear"

Proposal %B% &nitial id G!* 000

'"timated maintenance co"t" G1 000 e-er5 !0 5ear"#ife)"pan +0 5ear"

&st comparison 'o(er )* years+ Bid%A%

Bid%B%

$nd comparison 'o(er )* years+discounting monies , -

Bid%A%

Bid%B%

&nitial co"t 10000 !*000 10000 !*000

maintenance cost after 1* 5ear" !000 nilThe pre"ent -alue (P% of ,: K ,

G!000 (1*5r"L 0:$/1

9+!

after !0 5ear" 1 000 ,on , G1000 (!05r"L

0:4

4

remo-e and recon"truct after 40 5ear" 1!000 nil ,an , G1!000225r"% 0:!41

!!

maintenance co"t after $0 5ear" 1 000 ,,ft , G1000$O5r"L 0:1$!

1$!

after $* 5ear" !000 nil , : K , G!000 t$* 0:111

!!!

G !+000 !000 G 149*+ !* *19

heating3cooling3lighting "5"tem $0H #e"" co"t efficient inrunning term" than idder >Q>: &f idder >?> rede"igned hi""5"tem to produce a per annum running co"t of aoutG!! 000 in"tead of G!* 000 he would once again e thelowe"t all)round idder: The fact that >?> had al"o aninferior roof needing replacement after thirt5 5ear" wa" far

le"" co"t "ignificant "ince the "um in-ol-ed would not ari"efor thirt5 5ear" wherea" hi" inferior heating "cheme meantannuall5 pa5ing more than the "um under id >Q>:

The net real intere"t rate" (ie, net after ta, real = allow)ing for inflation% u"ed in co"t comparing i" important: #i6emone5 -alue", rate" are not "tatic nor are the5 -alid o-erlong)term period": Ihere the pace of inflation o-erta6e" therate of intere"t pa5ale the client>" real rate of intere"t will

ecome negati-e, meaning the in-e"tment of capital into proDect" i" more than worth while, particularl5 "ince theactual recurring amount" of the future running co"t" areli6el5 (ecau"e of the high inflation% to increa"e "harpl5:

Client" ma5 prefer to u"e a "pecial rate or >opportunit5

co"t> rate in id compari"on", ta6ing the cold -iew the5need not uild at all if a compari"on "how" the propo"ed

proDect would unprofital5 tie up monie" that could e putto etter u"e in other acti-itie": Thu" the di"count rate ma5well e up to *H higher than normal ri"6)free in-e"tmentrate":

The client>" life)c5cle co"t" will include not onl5 hi"operating "taff co"t" ut al"o operating "er-ice" (cleaning,"ecurit5, etc% and operating charge" (rate", in"urance",water, etc%: &n thi" re"pect each idder>" de"ign "hould e-etted for efficienc5 in "a-ing" achie-ale 5 each de"ign:For in"tance, the client ma5 normall5 "pend l)!R$Hof hi"u"er co"t" in the replacement or maintenance of furniture:

Now if a idder can "how de"ign" incorporating uilt)infurniture at co"t" lower than the client>" per annum charge",ta6ing into account a net real rate, ie after ta allowance"etc, then the idder>" id concerned will come to the fore:

Bidder" who can con-ince client" their particular de"ign"contain lower per annum recurring co"t" will "core e-enmore: For in"tance, interior cleaning co"t" will amountgenerall5 to aout !*)40H of all the u"er>" future co"t",thu" an5 de"ign impro-ement in thi" area will "how great"a-ing": A carpeted floor de"ign ha" an initial co"t eual to

Tale 1 "how" that de"ign3uild id" mu"t e carefull5compo"ed and Dudiciou"l5 "elected: The de"ign3uild

philo"oph5 i" reputed to gi-e the client greater certain t5of recei-ing what he want" when he want" it ut thi" willnot lead to long)term client "ati"faction unle"" the life)c5cleco"t" re"ulting from the cho"en de"ign are al"o introduced

into the euation on a di"counted a"i":

Tale ! illu"trate" the"e point", "howing al"o the "tronginfluence of regularl5 recurring (annual% "um" cropping upo-er a long life)"pan:

&t can e "een from Tale ! that idder >?> ha" puthim"elf out of the running mainl5 ecau"e he proffered a



onl5 $0H of the total life)c5cle co"t, the remainder eing$0H "pent on cleaning it and !0H on replacement:

2n a roader "cale the initial co"t of a uilding ma5 al"o,a" in the ca"e ao-e, amount to onl5 $0H of the total life)c5cle co"t, the remainder eing ta6en up 5 fuel co"t"(10H%, maintenance and repair" (10H%, in"urance", rate",water, etc (10H% and cleaning (40H%:

Thu" the capital co"t committed to acuiring an a""et,though a "maller proportion of the whole life)c5cle co"t,

commit" the client to further una-oidale future pa5ment":The de"ign3uild idder who recogni"e" thi" and regu)

larl5 remind" him"elf to de"ign accordingl5 and to pre"enthi" id in a wa5 that demon"trate" thi" ma5 "ucceed whereother" fail:

Foreca"ting trend" and life)c5cle co"t"

The de"ign3uild idder, to e "ucce""ful, need" to o"er-eand ac6nowledge within hi" de"ign" change" or trend" in"ocial and economic field":

The mo"t o-iou" of the"e lie" perhap" in productioncharge" which ma5 affect fuel and power: Climatic change"or trend" toward" colder winter"3hotter "ummer" wouldinfluence hi" de"ign": Age di"triution change" ma5 al"oreuire marginall5 higher or lower heating "5"tem", a-eragetemperature calculation", etc: 'mplo5ment and incomele-el" need to e o"er-ed, "o too do con"umption andependiture rate"< population change"< production anddi"triution change"< political change" and mar6etingtechniue":

Foreca"ting and >mar6et re"earch are clo"el5 related:There are leading, coincidental, and lag indicator" toguide de"ign3uild idder" in the right direction": Forin"tance, irth rate" and geographical di"triution" areleading indicator" for (de"ign3uild% "chool and home

idder": Coincidental indicator" include unemplo5mentrate", retail inde rate" and crime rate": The >Ban6 @ate> i"an important lag indicator:

The"e all pro-ide a lurred picture of what i" happening:&f crime rate" again"t propert5 increa"e de"igner" mu"t

ac6nowledge the"e trend" in their propo"al": &f the un)emplo5ment rate increa"e" di"proportionatel5 in certainarea" the de"ign3uild idder ma5 incorporate propo"ition"including "pecial go-ernmental conce""ion" and financialinducement" to client": &f the econom5 mo-e" into higherBan6 @ate" the idder>" de"ign and life)c5cle co"t calcula)

tion" will reflect the"e monetar5 trend":&f an5 factor relied upon in the id change" the con)

tractor and client "hould react and reapprai"e the de"ign3co"t picture, ma6ing "uitale change" earing in mind totallife)c5cle co"t" can amount to man5 time" the initial co"tconcerned:

There i" generall5 an increa"ing tendenc5 for laourco"t" to ri"e fa"ter than material co"t": #aour al"o pla5" a

prominent and often irreducile part in the client>" futureco"t": &f "uch trend" continue and we continue to demandhigher "tandard" of comfort and cleanline"" then the initialcapital co"t i" li6el5 to "hrin6 a" a proportion of the totallife)c5cle co"t: The amount of capital needed to e "pent

to "a-e future more epen"i-e man)hour" therefore call"for clo"e correlation ut it i" not worth "pending capitalindi"criminatel5 "impl5 in the lind pur"uit of "a-ingfuture running co"t": The rate of intere"t must appear inthe picture when optimi"ing de"ign", initial co"t" and futureco"t":

e"ign factor" which influence life)c5cle co"t"

The de"ign3uild idder i" aniou" to lower hi" >free> de"ignco"t" and to rai"e hi" id "ucce"" rate< the client on theother hand i" aniou" to recei-e lower id" for etterde"ign" ha-ing lower life)c5cle co"t": Both ha-e "imilaroDecti-e" in 6eeping down initial co"t": The idder, to"ucceed, mu"t economicall5 propo"e efficient cheap uild)

ing", ae"theticall5 plea"ing, and li6el5 to la"t 40)+0 5ear":8e ma5 al"o put forward alternati-e" to the 'mplo5er>"@euirement" within hi" Propo"al", or different de"ign"ha-ing different ualit5 "tandard" and different completiondate": Furthermore, he mu"t ma6e certain he a-oid" de"ignerror" and omi""ion" "ince the ogre of de"ign liailit5 underclau"e ! ho-er" o-er all hi" propo"al" whate-er he doe" orthe 'mplo5er reuire" him to do: The con"euence" ofde"ign error" or omi""ion" ma5 amount to enormou" "um"if, -iewed o-er their long)term future, left unremedied toaffect ad-er"el5 life)c5cle co"t":

/ender comparisons 'o(er )* years+discounting rate 0 -

Bid Bid

%1% %"%

&nitial id" 1 000 000 1 !00 000

2esign differences (u"er co"t"% (a%8eating3cooling3lighting "5"tem =e"timated co"t" per annum :

Bid %1% Bid %"% 2ifference!*000 1* 000 10000

(% Planned maintenance)e"timated co"t" per annum : / 000 * 000 4 000

14000

di"counted per annum pa5ment" o-er +0 5r" *H 1 /,9!9 !$+ 0

(c% @emo-e and recon"truct roofco-ering after 40 5ear" 1!000 nil

di"counted to pre"ent -alue , *H 0:!41 !!

G 1 !$/ /$9 1 !00 000

1

Tale ! Compari"on of propo"al" >?> and >Q>



The"e matter" might weigh hea-il5 to influence de"ignand in turn dictate life)c5cle co"t": The 'mplo5er>" @e)uirement" ma5 howe-er reuire idder" to inno-ati-el5mo-e awa5 from >"afe> de"ign", rai"ing the ri"6" of failure:&n "uch ca"e" the increa"ed ri"6" will increa"e id" unle""the increa"ed ri"6" are "hared euall5 or carried altogether

5 the 'mplo5er:@ather than e hea-il5 in-ol-ed in dictating de"ign" the

'mplo5er ma5 prefer to "ta5 at arm>" length, "tipulating inhi" >@euirement"> the are"t one" of hi" need" in term"of uantit5, ualit5 and econom5 ("ee al"o Practice NoteC31A%:

3uantity

The "tatement of uantit5 would includeE

(a%Area of accommodation, detailing the purpo"e3"(%An5 particular height" (factor5 clearance" etc%(c%Floor loading"

(d%Particular in"ulation" needed ("ound3thermal etc%(e%Air change rate" (du"t le-el", air conditioning reuirement" etc%(f%8eating3hot water load"(g%#ighting need"(h% 'lectrical load"3"upplie" ("lngle34 pha"e etc% (i%'ternal need" (car par6", loading facilitie" etc% (D%>7reen> area", pa-ed area":

3uality

The "tatement of ualit5 would includeE

(a%'ternal ele-ation3roof de"cription and life epectanc5

(%&nternal fini"he"(c%Iindow", door" etc:

2ther element" (eg, "tair", lift" etc% ma5 e included:

4conomy

The "tatement concerning econom5 ma5 e-en include a udget "um, ie, a figure e"tali"hing the limit of ependi)ture "et 5 the client: Clearl5 thi" will re"ult in id" eing

Dudged on the merit" of their de"ign" and ualit5 "tandard"offered for the "um "ugge"ted or a figure elow or clo"e tothe udget "et:

A "tatement concerning life)c5cle co"t" ma5 al"o emade detailingE

(a%maintenance co"t limit" (annual and intermittent%

(%operating co"t limit"E(i% cleaning

(ii% careta6ing3"ecurit5(iii% gardening(i-% rate", water (-% in"urance"

(-i% energ5, fuel

(c% @epair and renewal co"t limit"E(i% roof co-ering"(ii% eternal wall"

(iii% window", door"(i-% interior floor fini"he"(-% interior wall", partition"

(-i% ceiling"(-ii% heating3cooling euipment and hot water (-iii% light3power euipment(i% eternal wor6"

The cho"en Contractor could al"o e reuired to pro-idedetail" of anticipated ca"h flow to corre"pond with hi" pro)gramme for con"truction to completion:

The ao-e li"ted parameter" though rea"onal5 compre)hen"i-e hardl5 touch upon the uilding>" appearance, "hape,colour, character and form< the5 are -irtuall5 all functionalremar6" collecti-el5 communicating the client>" need" interm" of "ie, purpo"e and general le-el of ualit5:

8owe-er, the"e initial and earlie"t remar6" or deci"ion"concerning a uilding>" "ie, purpo"e and general le-el ofualit5 ha-e a pronounced effect upon the id price for

the5 ma5 well account for /0=90H of the total concerned:

The mo"t influential "tatement in "etting co"t concern""ie, ie, 7ro"" Floor Area: 2ther factor" will of cour"einfluence the total, "uch a" "hape, location, inflation,mar6et condition" and ground condition", ut none willgenerall5 mo-e the initial price to e paid uite a" mucha" >area>:

There follow" a rief apprai"al of the more influentialof co"t indicator" which ma5 e written into an >'m)

plo5er>" @euirement"1 or >Contractor>" Propo"al">:

) 'a+ 5ross 6loor Area

Thi" factor dictate" oth initial and recurring co"t" (clean)ing, maintenance, etc%: &t include" circulation "pace: #owercirculation area" generall5 "ignif5 more economical de"ign"

ut an ultimate >open)plan> ma5 pro-e unacceptale orcounter)producti-e:

Commercial client" "olel5 intere"ted in net or u"alefloor area" ma5 e hea-il5 influence in their choice oracceptance of id" if wide -ariation" appear etween gro""and net area": For in"tance, if the gro"" floor area (7FA%co"t in the id of idder >A1 eual" GS22 m! and contain"!*H circulation area the client>" profitale "pace co"t ri"e"to (G/00 130:*% G10+ m!: &f the id of idder >B>eualled G/*0 m! ut contained onl5 !0H circulation "pacethen the client would prefer id B on the a"i" (G/*0 130:/0% of G10+! m! eing a lower "am for the rentalearea:

The initial co"t per m! wilR tend tc reduce a" the 7FAincrea"e"< wall to floor ratio" will reduce< lift3"tair area tofloor area ratio" will reduce and in general id" epre""edin term" of net floor area co"t per m! will fall a" the floorarea increa"e":

&n the ca"e of hou"ing idder"> comparati-e co"t" for!, 4 and $ edroom unit" will "how ittracti-e reduction"

per m! a" the numer of edroom" increa"e" and e-en etter co"t "a-ing" if epre""ed per occupier:

Client" "hould therefore interpret figure" gi-en inContractor>" Propo"al" or id" with care, chec6ing the

idder lia" not gone too far in cutting down circulation"pace or in propo"ing an unalanced mi of !, 4 and $

edroom unit" ignoring the "ocial, functional and ae"thetic

rea"on" for limiting co"t "a-ing":

'b+ Storey heights

Thi" factor mo"tl5 affect" wall and partition co"t" withtheir recurring maintenance co"t" ut it al"o of cour"eaffect" energ5 ependiture: &t ma5 marginall5 influence"tair and lift co"t", and, 5 increa"ing loading", affectfoundation co"t":

ariou" "tore5 height" within one uilding po"e anno5)ing prolem" to de"igner", who ma5 tend to "mooth thing"out 5 choo"ing one all)purpo"e height le"" co"t efficient



than a multiplicit5 of height": 8eight" in factorie", go-erned 5 production need", clearl5 command careful con"idera)tion to enale the client to fleil5 change hi" production

plan" without rai" ing the roof 5et not "pending "um"initiall5 upon unnece""ar5 height:

'c+ S7uare Inde8The mo"t efficient plan "hape of all lie" in a circle ut the

e"t practical plan "hape egin" of cour"e with the "uare:The Suare &nde i" a numer indicating the etent towhich the perimeter of a particular uilding eceed" thatof a uilding of the "ame area on plan which i" a perfect"uare:

n

Suare &nde

where P perimeter a ) area on pl an (not the 7FA%:

"#"""""""$%&9'1"""""""""(&

$ !*:9/1

Bidder" 6now the co"t of enclo"ing uilding" ma5 eual!*)40H of the id total: Plan" B and C are therefore $9Hle"" co"t efficient than Plan A in re"pect of the eternal wallelement:

8owe-er, Plan" B and C ma5 lend them"el-e" to moreeconomic di-i"ion wall arrangement", circulation area" and"tructural co"t decrea"e" due to decrea"ed "pan" ut the"egain" mu"t e weighed again"t the hea-ier ependiture inenclo"ing the "pace concerned:

Bidder" ma5 therefore e more inclined to >"uare up> uilding" unle"" the5 can otherwi"e achie-e co"t "a-ing"el"ewhere 5 u"e of "tandard "pan component", etc:

&n the ca"e of hou"ing >"uaring up> will howe-er ha-ethe oppo"ite effect where terrace" are concerned for it willincrea"e the eternal portion of the wall enclo"ing the plan:

'd+ 2ensity of (ertical di(ision

The amount of enclo"ing wall", load)earing wall" and parti)tion" within a uilding i" co"t "ignificant: The >den"it5> of"uch wall" can e epre""ed in the form of an inde whichta6e" account of the contriution made to the enclo"ure ofroom" 5 the perimeter wall"E

en"it5 of ertical i-i"ion ))))) ))))))))

where p ) perimeter length at each floor# length of partition wall" A gro"" floor area:

Certain "hape" lend them"el-e" to more economicaldi-i"ion of area"E

)7&%**

1 * &

* * *

+

1 )'&7% , - .B.

1**% U 40

)7%

Although Plan B economicall5 achie-e" the di-i"ion offour area" 5 u"ing onl5 40 metre" of di-i"ion wall the>poor> &nde gained of 0:1*9 "how" it otained it" di-i"ionat the epen"e of u"ing more eternal wall than Plan A:

2ptimi"ing plan "hape" and comparing their -erticaldi-i"ion den"it5 &ndice" can profital5 lower id" andlower future running co"t" to the "ati"faction of oth clientand contractor:

(! +:*00% U(! 10:000% K

$?+*

*

+oo/

&

C0)7%,1

\o o 2 )CM

1

A(+*m!% " ) r M 1:00

)7&%**"

B

0)7% ,3

) 0:1*9d

!*:9/1)



c :::

1*&***0$?1044!$%U *1:9+!

2 3

1:$9



CHOOSING THE RIGHT BID

Introduction

8a-ing earlier empha"i"ed the importance of life)c5cle co"t"and the le"" important role pla5ed 5 initial co"t" it i" clearthe client "hould not nece""aril5 accept the lowe"t id: Norindeed "hould he accept an5 id at all if the de"ign" pro)ferred commit him to irreducile and una-oidale ece""ependiture into the long)term future:

A rational wa5 of Dudging oth idder" and their id" i"needed:

Selecting idder"

2nl5 if the client "elect" the right "ort of idder" &n theright numer" will he recei-e the >right> id: There i" noad-antage at all in the client recei-ing a low id from acontractor who ha" in"ufficient eperience, "6ill", integrit5or competence to carr5 out the proDect:

Client" who regularl5 place con"truction contract" willha-e li"t" of appro-ed1 companie" and need no informationto enale a choice of right idder" to e made: 8owe-er,>one)off client" ought to "elect with great care their idder"

5 reuiring them to pro-ide informati-e detail" ofE

1, Technical eperience!: Managerial re"ource"4, Financial re"ource"$: Safet5 record and indu"trial relation"*, Punctualit5 record+: @eputation for ualit5:

&. /echnical e8perience

Vue"tion" here "hould "ee6 to di"co-er how well euipped

the contractor concerned i" in term" of eperti"e and pre)-iou" eperience of proDect" "imilar to the one propo"ed:

$. 9anagerial resources

Thi" enuir5 will eamine "taff ualification", their e) perience, organi"ational "tructure and "pan" of control:Particular information "hould e "ought on the per"on"(and their calire% who would e made directl5 re"pon"ilefor the propo"ed proDect:

. 6inancial resources

Balance "heet information and the financial relation"hip" etween a parent compan5 and it" "u"idiarie" ma5 eeamined together with the rate" of euit5 to loan capitaland amount of fied intere"t loan capital a""e""ed: An5impo"ition or managerial re"triction" in force 5 the com)

pan5>" Ban6 "hould e in-e"tigated in greater detail:

Performance ond" appear the an"wer to an5 financialunea"e ut the >premium1 co"t would of cour"e e in)directl5 paid 5 the client:

;. Safety record and industrial relations

The"e matter" ma5 appear of no concern to the client,howe-er he doe", in clau"e !*, ta6e the ri"6 that dela5"cau"ed 5 an5 local comination of wor6men, "tri6e orloc6)out ma5 reuire an eten"ion of time to e granted

5 the cli ent to the contractor: &n an5 ca"e no client"hould accept the id of an5 contractor ha-ing a 6nown

ad "afet5 record re"ulting from inefficient "afet5 manage)ment:

-. Punctuality record

Completion on time ma5 e crucial to the client: &n "uchca"e" great weight will e rightl5 gi-en to a pa"t record of

punctualit5: &n thi" connection detail" of the companie"> planning department, their u"e of CPM techniue" , andtheir u"e of time control "5"tem" will teach the client muchaout the idder"> attitude to timel5 completion:

). <eputation for 7uality

The right ue"tion" here "hould di"clo"e the "ort of reputa)tion the contractor ha", the wor6 entru"ted to him ecau"eof lii" high "tandard" and an5 in-ol-ement in aritration orlitigation in re"pect of alleged defect": The latter mu"t e-iewed with great care particularl5 if the ca"e" concernedin-ol-e proDect" the contractor did not de"ign, "ince theline etween fault5 wor6 and fault5 de"ign i" freuentl5

lurred:

8a-ing "elected idder" he can rel5 upon the client mu"tfinall5 choo"e no more than aout "i and no le"" thanaout four of tho"e to compete again"t one another: 'ffi)cient non)gamling idder" will in normal time" decline to

participate in a de"ign3uild competition if more than "i idder" are in-ited: The5 6now the higher the numer of idder" the lower will e the id and if an >open competi)tion i" allowed the lowe"t id i" uite li6el5 to e below cost=

2n the other hand, the lower the numer of idder" elow aout $)+, the higher the winning id:

&f a con"iderale amount of de"ign wor6 i" in-ol-ed in idding the client ma5 find few idder" prepared to ri"6 the

7



chance of failure unle"" the odd" are con"ideral5 reduced 5 a reduction in the numer of idder": Ihen a low num) er i" decided upon the client then epo"e" him"elf furtherif one idder withdraw" hi" id or fail" to "umit one: &n"uch ca"e" a Bid Bond ma5 e called for from tho"e few

participating to protect the client if a withdrawal occur":

8owe-er, the co"t of "uch ond" get" added to each id,re"ulting in the client pa5ing a fee for hi" own protection:

Ranking the bids

The man5 attriute" reuired of the idder mu"t e com) ined with the attriute" of each id and ran6ed in a"5"tematic wa5 efore the client can choo"e the e"t id:

Bidder%s attributes=. Technical eperience 1:!:Managerial re"ource" !:4:Financial re"ource" 4:$:Safet5 and indu"trial $:relation" record

*:Punctualit5 record *:+:@eputation for ualit5 +:

Tale 4 "how" a wa5 in which the"e attriute" can e puttogether and weighted 5 the client according to hi" need":The client ma5 wi"h to encourage, or hope to recei-e, an

Table 3

out"tanding de"ign or potentiall5 low life)c5cle co"t", inwhich ca"e he can inform idder" of the particular weight)ing" he propo"e" to emplo5 in ran6ing their id": Thu" a

idder "uch a" >C> in Tale 4 6now" he can "till "ucceed inlanding the Do e-en though hi" price ma5 e 10H ao-ethe lowe"t:

nle"" the client "tipulate" in the 'mplo5er>" @euire)ment" the relati-e importance of price, de"ign, punctualit5,etc, idder" will "impl5 concentrate upon price, caring le""for ae"thetic matter" and the client>" crucial commitmentto pa5 for running the uilding for the net 40=+0 5ear":

A""ume the id" recei-ed in Tale 4 amounted a" fol)low"E

Bidder A G1 000000 Bidder B G10*0 000 (ie, U *H% Bidder C G1 100000 (ie, U 10H% Bidder G1 1*0000 (ie, U 1*H%:

Bidder >A> would e ran6ed at 100 ecau"e he ha" the

lowe"t id< it follow" id >B> would arithmeticall5 eran6ed at 9*,>C>at 90 and >>at/*:

@ating the de"ign cannot "imilarl5 e arithmeticall5 "et:The client mu"t "uDecti-el5 "elect the >e"t> de"ign andma5 rate thi" at 100, gi-ing the other" relati-e award":

@ating the life)c5cle co"t" can e done arithmeticall5 a"in the ca"e of the initial price, awarding top mar6" to thede"ign "howing the lowe"t potential u"er co"t", then ran6ingthe other" in a "imilar wa5:

The remaining factor", technical eperti"e, managerialre"ource", etc, will e dealt with 5 awarding rating" out of

100 on each to the idder" concerned:

2n re-iewing the id" in Tale 4 it can e "een idder >C>ha" the e"t all)round id "o far a" the client for thi" par)ticular proDect i" concerned "ince price wa" regarded a""econdar5 to future running co"t" and de"ign (appearance%ran6ed third: The"e could of cour"e ea"il5 e re-er"ed to

ring out a new winner:

The client ma5 on reflection wonder wh5 he cannotha-e the lowe"t price" of idder >A>, the e"t de"ign of

idder >B>, the lower life)c5cle co"t" of idder >C> and themanagement, "afet5 record, punctualit5 and ualit5 of

idder >>: 8e ma5 e-en go "o far a" to "ugge"t idder >A>u"e" the Propo"al" of idder >B>: Apart from reache" ofcop5right "uch a mo-e would incur the wrath of all con)cerned (ecept perhap" >A>% and might re"ult in a Dointaction to reco-er their "u"tantial id epen"e" from theclient:

The client "hould in an5 ca"e ear in mind that, once theContract i" entered into, clau"e *:+ forid" him di-ulginginformation to other" and limit" the u"e of the "ucce""ful

idder>" document" to the proDect concerned:

Finall5, it "hould e reali"ed the idder ma5 ha-e "u)mitted the lowe"t price 5 errorR A clo"e eamination ofeach idder>" Contract Sum Anal5"i" "hould therefore emade efore an5 acceptance or reDection of id" i" made:

&deall5 a procedure "hould e incorporated into thein-itation" to id dealing with the ue"tion of erroneou"

id": The"e are particularl5 importan t under the de"ign3 uild arrangement" where the "tructure of the ContractSum Anal5"i" i" left to the partie" and the application ofa formula to adDu"t co"t fluctuation" i" a"ed upon tho"efigure" to e found in the Anal5"i":

6actors >eigh ting Bid %A %

<ating <esult Bid %B%

<ating <esult Bid %?%

<ating <esult Bid %2% %

<ating <esult

Price !0 100 !0:00 9* 19:00 90 1/:00 /* 1:00

e"ign 1* 90 14:*0 100 1*:00 /* 1!:* 9* 1$:!*#ife)c5cle co"t" !* /* !1:!* 9* !4:* 100 !*:00 90 !!:*0Technical eperience 4 /0 !:$0 90 !:0 /* !,** 90 !:0Managerial re"ource" 10 9* 9:*0 /* /:*0 90 9:00 100 10:00Financial re"ource" * 9* $:* 90 $:*0 9* $:* 9* $:*Safet5 record 4 100 4:00 * !:!* 100 4:00 100 4:00Punctualit5 9 /* :+* * +:* 9* /:** 100 9:00&ndu"trial relation" 4 /0 !:$0 /0 !:$0 90 !:0 9* !:/*Vualit5 record 9* +:+* /* *:9* : 100 :00 100 :00

91:10 90:/0 94:40 94:0*

Bid attributesPrice e"ign#ife)c5cle co"t" Speedof con"truction

Pa5ment arrangement"

Con"truction techniue"



THE RISKS INVOLVED

Introduction

Client" ma5 wi"h to 6now what "ort of ri"6" the5 run underthe .CT de"ign3uild Contract and reuire their ad-i"er"to inform them: There are four cla""e" of ri"6 identifialeunder the ContractE

1:Fundamental

!:Pure4:Particular $:Speculati-e

1. undamental risks

The"e include the ri"6 of war, nuclear fall)out, and other"imilar unli6el5 e-ent": No in"urance" are reuired< thego-ernment "tand" an5 reparation co"t" that might ari"e:

!: Pure ri"6"

amage to the Ior6" 5 fire, lightning, "torm, etc, i" a>pure ri"6>: &n"urance" are reuired under clau"e !!: The

premium" pa5ale form part of the price to e paid 5the 'mplo5er (client%:

3. !articular risks

The"e ri"6" ma5 ari"e from particular con"truction tech)niue" to e emplo5ed in eecuting the Ior6", "uch a"

piling:, demolition or dewatering, which ma5 una-oidal5cau"e damage to propert5 other than the Ior6":

&n"urance" are to e maintained 5 the Contractorunder clau"e !1 for certain Particular @i"6" for an amount

of indemnit5 the 'mplo5er ma5 "pecif5 in hi" @euire)ment" to co-er the"e ri"6": The client "hould "ee6 epertad-ice on the"e matter": The premium" (and an5 "pecial"ur-e5 fee"% will form part of the price to e paid 5 the'mplo5er (client%:

"# $peculati%e risks

The"e ri"6" are uite unli6e the pre-iou" three categorie"which if the5 occurred would cau"e lo"" onl5, no enefit"would accrue:

Speculati-e ri"6" differentl5 offer the certainty of either profit (enefit% or lo"":

Both partie" are (or "hould e% therefore intere"ted inta6ing the"e ri"6": The 'mplo5er ta6e", for in"tance, theri"6 of e8ceptionally ad-er"e weather dela5ing completion:8i" potential enefit lie" in lower id"< hi" potential lo"" lie"in lo"t liuidated damage": The Contractor ta6e" the ri"6of ordinary ad-er"e weather dela5ing him: 8i" potential

enefit lie" in the lap of the god" who ma5 "end down fair

weather< hi" potential lo"" ari"e" if hi" allowance within hi" id for ad weather i" more than con"umed 5 the weatheractuall5 encountered: &t can e "een the .CT ha" "hared theri"6" of weather etween the partie" granting them oth thecertaint5 of either profit or lo""< the more li6el5 e-ent ofordinar5 ad-er"e weather eing carried 5 the Contractor:

2ther eample" of ri"6 "haring ei"t in the Contract:8owe-er, commentator" "ometime" "ee> the arrangement"a" one)"ided ia" again"t the 'mplo5er: Somehow the5 "eeonl5 the certaint5 of lo"" for the 'mplo5er wherea" he

"tati"ticall5 "tand" to enefit from lower id" e-er5 timeand "ometime" to doul5 gain if the ri"6 he carrie" mani)fe"t" it"elf onl5 mildl5, or not at all:

@i"6" of intere"t to the partie" includeE

(a%the ri"6 of de"ign fault"(%the ri"6 of ad ground condition"

(c%the ri"6 of change"(d%the ri"6 of dela5 in completion and di"ruption toregular progre""(e%the ri"6 of defecti-e wor6 (f%the ri"6 of inflation:

'a+ /he ris# of design faults

The .CT ha-e, in clau"e !:*, marginall5 lowered the Con)tractor>" liailit5 from the "tandard normall5 to e epectedof de"ign3uild contractor" to a le-el epected of an5 archi)tect or profe""ional de"igner: The 'mplo5er ma5 if hewi"he" go e-en further and limit the Contractor>" liailit5 toa fied ceiling ecepting where dwelling" are concerned:

2-iou"l5 an5 lowering of liailit5 mu"t not e con)"idered unle"" the potential ri"6 can e accommodated andthe re"ulting lower id enefit" are "u"tantialR The detail"of clau"e ! liailitie" are di"cu""ed further in Chapter $:

'b+ /he ris# of bad ground conditions

The "tate of the "ite and it" "u)"trata are crucial to theIor6" and "urrounding": The 'mplo5er mu"t (clau"e %define the oundarie" ut need do no more:



The Contractor mu"t ha-e "ati"fied him"elf on all a"pect"of the "ite, including unfore"eeale difficultie" that ma5ei"t in the "u)"urface and h5drological condition":

Bidder" will not normall5 in-e"tigate the "u)"trata:The5 epect the 'mplo5er to pro-ide them with "u)"trata "ur-e5" "ufficient to a"e their id upon, includingthe de"ign of foundation", drainage, etc: &f no "uch detail"

are made a-ailale the5 will ualif5 their id to ecludeunderground wor6 or will ma6e a""umption" concerning theground and a"e their id" accordingl5:

The 'mplo5er "hould therefore commi""ion the nece")"ar5 data and ma5e a con"ultant 'ngineer>" interpretationand pre"entation of that information concerned:

Ihether or not the data are "ufficient and repre"entati-eof the ground etween orehole" for their purpo"e" mu"t

e a matter for deci"ion 5 the idder": The idder" willal"o decide the ground>" condition and it" "uitailit5 forcon"truction purpo"e": The5 will decide for them"el-e" howto deal with an5 groundwater, roc6 or "and, unle"" the'mplo5er>" ad-i"er particularl5 "pecifie" otherwi"e:

The 'mplo5er>" ad-i"er will write into the "u"oil "ur-e5a di"claimer "tating the information i" not guaranteed tomatch the condition" encountered nor i" the information to

e ta6en a" a warrant5 of the ground>" "uitailit5 for an5 particular purpo"e:

The 'mplo5er and hi" ad-i"er or agent "hould al"o a-oidgi-ing an5 further or unintended a""urance", written or oral,in"ide or out"ide the 'mplo5er>" @euirement" in re"pectof the "u"oil>" condition or "uitailit5 for an5 particularde"ign:

Ihere factuall5 correct data are pro-ided the idder"carr5 the ri"6" of the ground>" condition: 8owe-er, if the

fact" in a "u"oil "ur-e5 gi-en to idder" are found to eincorrect a ue"tion of negligence ari"e": The Contractormi"led would "ee6 compen"ation from the 'mplo5er, whowould in turn "ee6 reco-er5 of the "um from the con"ultantwho produced the erroneou" report: 8i" profe""ional in)demnit5 polic5 would come into pla5 in "uch circum"tance":

'c+ /he ris# of changes

Change" and pro-i"ional "um in"truction" tend to di"rupt

the regular rh5thm and progre"" of the Contractor>" wor6:Change" al"o up"et hi" arrangement" to carr5 out hi" otherwor6 not part of the Change 2rder it"elf:

The .CT recogni"ed the po""iilit5 of ordered change"coming at an inopportune time for the Contractor: &tarranged it" Contract>" term" (in clau"e 1!% in "uch a wa5a" to allow the Contractor to re-iew hi" rate" and price", to

charge the 'mplo5er accordingl5, and to reco-er (underclau"e !+% an5 lo"" and3or epen"e cau"ed 5 the irregula)rit5 ari"ing: Furthermore, the Contract allow" the time lo""(under clau"e !*% to e added to the time for completion:

The mone5 in-ol-ed i" (under clau"e 4% to e paid o-erto the Contractor a" "oon a" it i" in whole or in part a"cer)tained:

The 'mplo5er can a-oid the clau"e !+ pa5ment of lo""and3or epen"e in an >open)ended> wa5 5 negotiating andagreeing in writing a "um in ad-ance for a change to einclu"i-e of an5 rate or price change together with the di")ruption that ma5 e cau"ed: 8owe-er, if no "uch agreementi" po""ile then the Contract>" term" mu"t e adhered to:

Ihene-er a change or pro-i"ional "um in"truction re)uire" wor6 not similar in character to, or significantlychange" the uantit5 of, wor6 originall5 laid down, or ifthe wor6 mu"t e eecuted under di""imilar condition" totho"e pre-ailing prior to the change order or pro-i"ional"um order, then a re-iew of the rate" and price" for thechanged or pro-i"ional "um wor6 i" called for:

The 6e5word" "imilar and "ignificantl5 in clau"e1!:*:1 are therefore crucial "ince the5 form the ench)mar6" from whence the Contractor>" entitlement to a newrate or price i" Dudged and allowance" made whene-er achange or pro-i"ional order ring" aout wor6 of di""imilar

character to that originall5 en-i"aged or "u"tantiall5change" the condition" under which it i" to e carried outor -arie" the uantit5 of wor6 to a "u"tantial etent:

Clau"e 1!:*:4 al"o pro-ide" for an allowance to e madefor an5 nece""ar5 additional "um for "ite admini"tration,"ite facilitie" and temporar5 wor6": 2n the other hand, tothe 'mplo5er>" ad-antage, an5 reduction of "uch facilitie",temporar5 wor6" or admini"tration, entitle" the 'mplo5erto an allowance for the "a-ing" that ma5 e rought aout

5 certain change":

None of the 6e5word", referred to ao-e, ha-e in theContract een defined: &t ha" een left to the partie" tou"e the plain and literal meaning of the word" "imilar,"ignificantl5, "ite admini"tration : : : etc to arri-e atagreeale rate" etc or fair allowance": &f the5 fail to agreeamong"t them"el-e" the Contract reuire" them to go toaritration on the matter":

'd+ /he ris#s of delay in completion and disruption toregular progress

&f the 'mplo5er want" completion >at all co"t"> 5 a parti)cular date, he will not wi"h to accept the operation ofclau"e !* in it" "tandard form: 8owe-er, "tri6ing out theclau"e, apart from putting up the price, might rai"e pro)lem" for the 'mplo5er if "u"euentl5 he wa" in "ome wa5the cau"e of dela5 to the Contractor:

Clau"e" !* and !+ recogni"e that oth partie" ma5 ene)fit from their content" and thu" an optimum alance ofri"6 and price "hould en"ue: The 'mplo5er concede" thatcertain e-ent" (@ele-ant '-ent"% will Du"tif5 an eten"ionof time, al"o certain matter" (li"ted matter"% are toDu"tif5reimur"ement to the Contractor of an5 lo"" and3or epen"eari"ing due to material di"ruption to regular progre"":

Not e-er5 reader of contract" "ee" an5 fairne"" toward"the 'mplo5er in clau"e" !* and !+: The5 appear not tocon"ider full5 the implication" of the alternati-e"< that non)garnling contractor" would rai"e their id" a" their ri"6"ri"e regardle"" of the po""iilit5 that no dela5 or di"ruptionmight e-er occur:

A claimed lo"" might in it" "imple"t, form occur directl5and clearl5 from a clau"e !+ li"ted matter: But more com)

plicated circum"tance" ma5 ari"e in-ol-ing a chain of e-ent"initiated perhap" 5 an 'mplo5er>" reach in-ol-ing e-ent"at the Contractor>" ri"6 or reache" of the Contractor:Multiple" cau"e" and effect" of o-erlapping or concurrente-ent" might generate intertwined liailitie" difficult tounra-el, or a"certain, for the 'mplo5er to -erif5:

ntil the lo""e" are a"certained the Contractor cannotrecei-e their addition to the Contract Sum (clau"e !+:4% norwill he e entitled to their inclu"ion in the net &nterimPa5ment unle"" a di-i"ile part of the claimed lo"" can ea"certained (clau"e 4%:

10



The word a"certain ha" the following plain meaningE

to ma6e one"elf certainto e"tali"h a" a certaint5to find out or learn for a certaint5to ma6e "ure of, get to 6nowto ma6e certain, or definite< to decide, fi, limit:

Clearl5, certainty i" the 6e5note of the Contract>" atti)tude to lo"" and3or epen"e: The 'mplo5er ma5 howe-er e pre"en ted with uncer tain claim" in which ca"e he i"under no oligation to pa5 an5thing until it i" e"tali"hed(at lea"t in part, "ee clau"e 4% a" a certaint5: The onu" ofcon-incing the 'mplo5er of the claim>" -alidit5 re"t" withthe Contractor (clau"e !+:1:1 W :!%:

An 'mplo5er>" agent ma5 e capale of -etting "uchmatter" ut where "u"tantial "um" and difficult matter"are in-ol-ed a profe""ional uantit5 "ur-e5or eperiencedin "uch claim" ma5 e reuired to ad-i"e on the ue"tion"rai"ed,

'e+ /he ris#s arising from defecti(e wor#

The 'mplo5er run" the ri"6 that defect", "hrin6age" orother fault", which are the Contractor>" liailit5, ma5 en)title the Contractor to the Contract>" (clau"e 1+% right" toenter and remain upon the Ior6" to remed5 them at a timeafter Practical Completion when the 'mplo5er ma5 ha-eepected to ha-e hi" uilding" to him"elf:

Thi" ri"6 can e curtailed if the 'mplo5er u"e" hi" right"to ha-e an5 wor6 or material" not in accordance with theContract remedied "traightawa5 rather than allow them toaccumulate at the proDect>" end:

If+ /he ris#s of inflation

Tlie 'mplo5er ma5 well "ee6 the ad-ice of a uantit5"ur-e5or efore deciding which clau"e of tho"e a-ailale(4+, 4 or 4/% "hould e utili"ed: The 6ind of proDect, it"time)"cale, and future co"t trend" need to e con"idered

prior to adopting one or other of the"e clau"e":



11



A COMMENTARY ON THE CLAUSES

Introduction

Thi" chapter eamine" the content" of certain clau"e" andcomment" upon their function and wor6ing in conDunctionwith other clau"e" of the Contract:

Clause & Contractor's obligations

The heading i" mi"leading: A" can e "een from the "u)

heading" the clau"e deal" not onl5 with the Contractor>"oligation" ut al"o with document "tatu" (!:!%, di")crepancie" (!:$%, and the treatment of error" within or

etween document" (!:4%: Furthermore, an 4mployer%soligation i" al"o referred to within the clau"e, ie to gi-ewritten notice of an5 di"crepanc5 or di-ergence" he ma5find: The 'mplo5er mu"t al"o ma6e deci"ion" in re"pectof di"crepancie" and i""ue in"truction" to correct an5di-ergence concerning "ite oundarie",

8owe-er, the clau"e doe" principall5 "et down two mo"timportant matter"E

1: The Contractor>" oligation to carr5 out and com) plete the Ior6"

and !: The Contractor>" oligation in re"pect of an5 defector in"ufficienc5 in the de"ign:

The Contractor>" dual oligation epre""ed fir"tl5 inArticle 1 and in more detail in thi" clau"e i" to carr5 outand complete the Ior6" referred to in the 'mplo5er>"@euirement" and Contractor>" Propo"al" and for that pur)

po"e to complete the de"ign for the Ior6": The clau"erecogni"e" the important word de"ign u"ed in Article 1 i"

on it" own not preci"e and that the partie" ma5 for in"tanceha-e agreed that the Contractor will e re"pon"ile forgaining initial planning con"ent" (e-elopment Control@euirement"%: Thi" ma5 therefore e "aid to e part of theContractor>" de"ign oligation: The 'mplo5er>" @euire)ment" or Contractor>" Propo"al" ma5 on the other hand"tate the Contractor i" not to do e-er5thing or decide e-er5)thing nor to choo"e the 6ind, ualit5, teture and colour ofe-er5 concei-ale material, nor all of the good", nor to "et"tandard" of the Ior6" in e-er5 detail: There ma5 therefore

e -ariale arrangement" concerning matter" of gaining"tatutor5 con"ent" or choo"ing thing": Matter" ma5 efurther complicated where the 'mplo5er intend" to partl5de"ign in detail a particular element or to put forward hi"outline de"ign for the whole of the Ior6" or if he pro-ide"hi" own "oil report" or ha" him"elf gained outline planningcon"ent: The 'mplo5er cannot under thi" Contract nomi)nate "u)contractor" or "upplier" of hi" own choo"ing uthe ma5 re"er-e the right to Dudge certain "tandard" 5 wa5of >on)the)"pot> in"pection" a" and when the particularwor6 i" carried out or when certain material" or good" aredeli-ered:

&t i" intended that an5 "uch di-er"e arrangement" arewritten into the 'mplo5er>" @euirement" or the Contrac)tor>" Propo"al": Ihate-er then remain" to e done, otherthan de"cried or "tated in either of the"e two document",

5 wa5 of de"ign i" 5 thi" clau"e ! made the Contractor>"re"pon"iilit5: The Contractor ha" a dut5 therefore to doe-er5thing in the wa5 of de"ign nece""ar5 for the purpo"eof carr5ing out and completing the Ior6" "o far a" he i"not "pecificall5 relie-ed of that oligation 5 an5 particular

de"cription or "tatement to e found in the 'mplo5er>"@euirement" or Contractor>" Propo"al":

elineating where one part5>" or the other>" de"ignoligation" egin and end ma5 howe-er "till pro-e to e

lurred in practice : 2-iou"l5 the "imple"t arrangementwill in thi" re"pect pro-e e"t, where tie Contractor doe"a"olutel5 e-er5thing, including gaining planning con"ent",de"igning e-er5thing, deciding the "uitailit5 of the "ite

and it" "u)"trata:&n"ofar a" the de"ign of the Ior6" i" the re"pon"iilit5 of

the Contractor he carrie" the "ame liailit5 to the 'mplo5era" would an architect or engineer or other profe""ional de)"igner wor6ing in the con-entional independent wa5: Thi"reuire" the u"e of rea"onale "6ill anc care 5 the Con)tractor in hi" de"ign wor6 ut will not impl5 the re"ultingIor6" will e fit for their intended purpo"e", &n a con-en)tional de"ign)and)uild Contract where the 'mplo5er doe"not put forward hi" own choice of material" or good" orde"ign ut Du"t ta6e" what he i" offered 5 the Contractorthi" would normall5 inipliedl5 promi"e aot onl5 rea"onale"6ill and care in de"ign ut al"o the fini"hed Ior6" would

e fit for their purpo"e,

8owe-er, whene-er the 'mplo5er in hi" @euirement"ma6e" hi" intended purpo"e" 6nown to the Contractorthere will e ground" to claim a failure to u"e rea"onale"6ill and care if the de"ign fail" to enale the"e 6nown

purpo"e" to e achie-ed:

The Contractor>" liailit5 for an5 .o"" of u"e of theIor6" due to hi" de"ign defect" or for lo"" of the 'm)

plo5er>" profit" or other con"euential lo""e" ma5 in thi"

14



Contract e epre""l5 limited 5 agreement etween the partie" to a particular amount to e named in the Appen)di 1: &f "uch an amount i" written into the Appendi,

putting a ceiling upon the Contractor>" liail it5 (thu"indirectl5 lowering the Contract Sum%, the arrangementwill not relie-e the Contractor of hi" una-oidale clau"e+ oligation to compl5 with all Act" and "tatutor5 rule",nor hi" "eparate clau"e !$:! liailit5 to pa5 or allow tothe 'mplo5er liuidated damage" (al"o to e "tated inAppendi 1% for an5 failure to complete the con"truction

5 the Completion ate or an5 etended ate:

Ihere the Contract in-ol-e" wor6 for or in connectionwith the pro-i"ion of a dwelling or dwelling" (new or reha>including flat"% the partie" cannot rel5 on an5 arrangementat all to re"trict or eclude the Contractor>" de"ign liaili)tie": There are una-oidale and more onerou" reuirement""tatutoril5 impo"ed 5 law under the efecti-e Premi"e" Act("ection 1(1%% which reuire" the Contractor additionall5 tocarr5 an a"olute liailit5 to "ee that an5 wor6 of hi" for orin connection with the dwelling3" re"ult" in place" fit forhaitation when completed: Furthermore, the dut5 i" owed

not onl5 to the 'mplo5er ut to e-er5 purcha"er and "u)"euent purcha"er" of "uch dwelling":

&f the 'mplo5er>" Agent impo"ed Change" ("ee C $!%in de"ign which re"ulted in defect", undetectale efore)hand 5 a rea"onal5 competent Contractor, it ma5 e

po""ile for the Contractor to u"e part of the Act ("ection1(!%% to "ee6 relief from the re"pon"iilit5 impo"ed in thi"wa5 upon him:

The otherwi"e una-oidale efecti-e Premi"e" Act>""ection 1(1% can alternati-el5 e replaced 5 an >appro-ed"cheme> of protection for the dweller, "uch a" the N8BC"cheme which ma5 e written into Appendi 1 where5(under "ection 1(!% of the Act% there i" arranged a parti)cular contract (eg, N8BC Agreement 8B*% to e made

etween the 'mplo5er or Contractor and each dwelling purcha"er pro-iding for a written warrant5 to uild in anefficient and wor6manli6e manner, of proper material", "oa" to e fit for haitation: Ihere "uch a "cheme i" in-ol-edthe 'mplo5er>" @euirement" "hould include it" applicationthu" ringing clau"e !:*:! into pla5 adding an oligationupon the partie" to each do e-er5thing nece""ar5 for the"cheme>" document" to e i""ued:

Although e-er5thing written ao-e indicate" how im) portant the 'mplo5er>" @euirement" and Contractor>"Propo"al" are in "etting out oligation", "tatement C 1+clearl5 "tipulate" the content" of the 'mplo5er>" @euire)ment" or Contractor>" Propo"al" or the Contract SumAnal5"i" cannot o-erride or modif5 an5 pro-i"ion" in theArticle", Condition" or Appendice":

Nothing ont!in"# in th" E$%&o'"()*

R"+,i("$"nt* Con&(!&o()* P(o%o*!&*

o( th" Cont(!t S,$ An!&'*i* $,*t

o."((i#" o( $o#i/' th" !%%&i!tion o(

int"(%("t!tion o/ th" A(ti&"* o/ Ag(""

$"nt Con#ition* o( th" A%%"n#i"*

CD 10 2

Thu", although the 'mplo5er>" @euirement" or Con)tractor>" Propo"al" ma5 e "peciall5 drawn up to epre""the partie"> intention", if the"e intention" run again"t theCondition" etc a" the5 "tand then "tatement C 1+ willrender the word" within the 'mplo5er>" @euirement" orContractor>" Propo"al" ineffecti-e: &f the @euirement" andPropo"al" are united in placing an oligation upon the Con)tractor, or granting him "ome "pecial relief, in contradiction

to the Condition", Article", or Appendice" then whate-er i"contained in the Condition", Article" or Appendice" will

pre-ail: The partie" mu"t therefore en"ure C 1+ doe" notnegate their real intention": The5 mu"t al"o en"ure correctcompletion of the "tandard Article" and Appendice" ta6e"

place: &f the5 wi"h to enter into non)"tandard arrangement"C 1+ mu"t e "uital5 altered:

For eample, the partie" ma5 intend to limit the Con)tractor>" liailit5 for the con"euence" of hi" de"ign error"and ma5 ha-e written thi" into the 'mplo5er>" @euire)ment" and3or Contractor>" Propo"al" with an amount "tateda" a limit to the liailit5: 8owe-er, failure to enter thi"amount or the correct amount in the proper place in the

Appendi will re"ult in C 1+ negating the non)"tandardarrangement a" written in the @euirement" or Propo"al"and in the a"ence of an5 "um written into the Appendiwill open the Contractor to a no)limit liailit5:

Clauses 3 and 1 Contract $um ( Interim !a)ments

Clau"e" 4 and 1* when comined with clau"e" 1!:+ and 40are collecti-el5 concerned with prompt pa5ment to theContractor of monie" a" he progre""e": The Contract>"

polic5 of prompt, and almo"t full, regular pa5ment to theContractor 5 the 'mplo5er of a"olutel5 e-er5thing "tatedin the Condition", on the dot, e-er5 month, can e a-oidedto a limited etent 5 the u"e of Alternati-e A in clau"e40 wherein predetermined "tage pa5ment" of "tipulatedamount" cumulati-el5 recorded in Appendi ! can ewritten into the @euirement" and3or Propo"al" after agree)ment 5 the partie", prior to entering into the Contract:

The oDecti-e of clau"e" 4, 1*, 1!:+ and 40 remain"howe-er to en"ure the Contract Sum, together with an5amount" to e added (or deducted% a" laid down in theCondition", i" to e doled out to the Contractor in a "trictl5regular wa5 under either Alternati-e >A> or >B> a" he pro)ceed" toward" practical completion: Man5 of the amount"to e added (eg, for clau"e 1! Change" or clau"e !+ lo""e"%are difficult to a"certain: &t i" thi" difficult5 that clau"e 4recogni"e": &t permit" partial a"certainment" to e ta6eninto account 5 the Contractor in hi" computation of the&nterim Pa5ment due to him from the 'mplo5er: Thi"

partial a"certainment doe" not encompa"" gue"")wor6 orapproimation": &t mean" the a"certainmen< (e"tali"hinga" a certaint5% of part" of the whole concerned:

&f the Contractor doe" not properl5 add or deduct partor whole amount" in the computation of hi" &nterim Pa5)ment Application" the 'mplo5er i" entitled to utili"e C+01, i""uing a notice to the Contractor gi-ing hi" rea"on"for "tating the Contractor>" -er"ion of the total amount"tated a" due i" not in accordance with the Contract:Simultaneou"l5 the 'mplo5er mu"t pa5 the amount hehim"elf rec6on" i" due:

&f the 'mplo5er doe" not recogni"e the Contractor>"right to ta6e into account a"certained amount" in part orin whole in hi" &nterim Pa5ment Application" the depri-ed

Contractor mu"t wre"tle not onl5 with the preci"e meaningof the word a"certained in clau"e 4 ut al"o with theword" properl5 due found in hi" "afet5 net remedialclau"e !/:1:1:

&t i" ne-er ea"5 to e a"olutel5 right aout an5thingother than the "imple"t of i""ue": 'actitude in ma6ing e-enfinal -aluation" i" difficult< in &nterim -aluation" their tern)

porarine"" and limited life lead practitioner" ine-ital5 toapproimation: There are good rea"on" to do "o for wor6 i"

13



in progre"" and incomplete, furthermore the word" u"ed inthe Condition" though "uperficiall5 clear often rai"e dout",a" for in"tance in the word" total -alue of the material"and good" deli-ered: o the word" total -alue here in)clude the Contractor>" e"timated co"t" of unloading, "torage,wa"tage, rea6age", etcJ &t "eem" "ome ineactitude i"una-oidale and ine-itale in an5 &nterim "um" cho"en forthe purpo"e of "etting a -alue at a particular moment duringthe progre"" of a proDect: &t i" the claiming of "um" impro@

perly due rather than marginall5 ineact "um" that C +01i" aimed at:

The Contractor mu"t of cour"e compl5 with an5 "tipu)lation" written into the @euirement" concerning an5accompan5ing detail" to e pro-ided to the 'mplo5er("ee C +$! or +/4% with each Application for interim

pa5ment:

Clause " *mplo)er's instructions

Practice Note C3&B gi-e" a li"t of clau"e" under which the'mplo5er i" empowered to i""ue in"truction" ("ee page +%:

Thi" li"t i" not comprehen"i-e: Further right" are containedin the Condition" and the"e are laid out in the Flowchart"under C +9:

An5 in"truction" gi-en 5 the 'mplo5er to the Con)tractor>" per"on)in)charge are deemed to ha-e een gi-en tothe Contractor: The per"on)in)charge mu"t therefore en"urehe immediatel5 complie" with in"truction" of the 'mplo5er(or hi" Agent% pro-ided the Condition" epre""l5 empowertheir i""ue:

Thi" "trict oligation to re"pond immediatel5 to all "uchi""ued in"truction" ha" four "afet5 de-ice" a-ailale to theContractorE

1:A right ei"t" (in C +9% to uer5 the -alidit5 of an5in"truction:!:A fight ei"t" (in C 4% to treat all unwritten in"truction" a" in-alid until the5 are put into writing:4:A right ei"t" (in C +4=+$% to rea"onal5 oDect toa propo"ed Change in pre-iou"l5 impo"ed oligation"or re"triction" under clau"e 1!:1:!:$:A right ei"t" (in C 190=19!% to rea"onal5 refu"ean in"truction in-ol-ing an unrea"onale Change inthe de"ign of the Ior6":

Mo"t in"truction" are li6el5 to ari"e from the 'mplo5er>"de"ire to change hi" original @euirement" or to change"omething the Contractor would, according to hi" Propo"al",otherwi"e carr5 out: Clau"e 1! empower" the 'mplo5erto ma6e "uch change" and define" (-er5 widel5% the termChange to include matter" concerning impo"ed oliga)tion" or re"triction" on acce"" to or u"e of the part" of the"ite, wor6ing "pace and hour", and the order of wor6ing:8owe-er, clau"e $ place" a ra6e on the 'mplo5er freel5and unrea"onal5 ma6ing "uch particular change" if theContractor ma6e" rea"onale oDection:

&f an i""ued in"truction i" empowered, i" in writing, andi" not one the Contractor can oDect to under C +4=+$ orC 190)19! then the Contractor mu"t "et to immediatel5and compl5: Vue"tion" concerning the time (eten"ion%needed and an5 mone5 (etra% in-ol-ed if the in"tructioni" a Change are all "econdar5 to the oligation to compl5,although the Contractor i" oliged to "imultaneou"l5 gi-ewritten notice to the 'mplo5er under clau"e !* if it i"immediatel5 apparent hi" Ior6"> progre"" will e dela5ed:

No financial deal i" nece""ar5 efore the oligat ion to

compl5 come" into force: Mone5 matter" in re"pect ofChange" are ta6en care of under clau"e 1!:$ whereinthe partie" ma5 agree if the5 wi"h a >lump "um> deal onthe Change, otherwi"e the5 are oliged to "ettle an5 dif)ference" u"ing the detailed rule" of -aluation written intoclau"e 1!:*:

The word forthwith, meaning immediatel5 and with)out dela5, "hould e read rea"onal5 of cour"e in each

particular circum"tance: ('g, 8ow "oon could the reuiredre"ource" e a""emled and put to wor6J Ihat "tatutor5notice" would ha-e to e gi-en or permit" "ecuredJ Ihatreorgani"ation or recon"ideration of the Contractor>"original plan", programme, de"ign" and arrangement" would

e neededJ% A minor Change "ought 5 the 'mplo5er ma5ha-e maDor repercu""ion" on the Contractor>" otherwi"eregular progre"": The 'mplo5er mu"t ma6e due allowancefor the"e thing" efore turning to C +*3++:

The 'mplo5er "hould al"o e war5 of clau"e" !* and !+:The former pu"he" the completion date onward" and thelatter entitle" the Contractor to recoup from the 'mplo5eran5 direct lo"" and3or epen"e he ma5 incur if hi" regular

progre"" ecome" materiall5 affected: 8owe-er, clau"e 1!:$

Te E,2loye5 ,6y e,2lo !n# %!.o8e5 2e5sons 8o eec:8e 6ny ;o5<;68soee5 n""**!(' 8o =>e e??ec8 8o 6ne25essly "$%o4"("# in*t(,tion •

CD 05

i/ 4ithin 6 #!'* !/t"/ (""i%t o/ !4noti" /(o$ th" E$%&o'"( ("+,o$%&i!n" th" Cont(!to( #o"o$%&'CD 00

(itt"n(ing *not3212

pre"ent" a po""ile "afet5 net for the 'mplo5er if he can per"uade the Contractor to freel5 ma6e an agreement o-erthe de"ired Change (efore the wor6 commence"% in whichthe "um agreed upon will e in full and final "ettlement,including an5 "um that ma5 ari"e under clau"e !+:1 to :4,al"o to include the right" under clau"e !+:$:

Prior financial agreement" o-er Change order" are un)fortunatel5 a rarit5: There i" a tradition in the con"tructionindu"tr5 of getting on with the wor6 fir"t and arguing it"

-alue later ("ometime" 5ear" after%: &f the 'mplo5er wi"he"to a-oid thi" he "hould "tipulate in the @euirement" whataction i" to follow the i""uing of Change order", earing inmind of cour"e that C 1+ will not allow an5 o-erriding ofthe "tandard rule" where the @euirement" conflict: &n an5ca"e the 'mplo5er ma5 utili"e hi" right" under clau"e 40:4:$to refu"e pa5ment of an5thing not in accordance with thi"Contract, "tating a" hi">rea"on" that the word" of clau"e 4(C *$=*+% reuire the partie" to e"tali"h the amount a"a certainty efore it i" to e ta6en into account in an5&nterim Pa5ment:

&t i" important to note that although under clau"e 1!:1:1the 'mplo5er ma5, "uDect to the four right" of the Con)tractor to re"i"t (referred to ao-e%, ma6e wide)ranging

change" in the de"ign, ualit5 or uantit5 of the Ior6",there are re"triction" under clau"e 1!:# :! concerning an5de"ired Change" in impo"ition" pre-iou"l5 entered in the@euirement" in re"pect ofE

:1 acce"" to the "ite or u"e of an5 "pecific part":! limitation" of wor6ing "pace ):4 limitation"of wor6ing hour":$ the eecution or completion of the wor6 in an5

"pecific order:

1*

3- 12



Te Con856c8o5 ,:s8 con?>5, >n ;5>8>n= 8o8e E,2loye5 ;>8>n 7 /6ys >? 8eE,2loye5 2:52o58s 8o >ss:e 6n >ns85:c8>ono8e5;>se 86n >n ;5>8>n=

CD 77

Clau"e $ endea-our" under C and C 9 to copewith the difficult ue"tion" of purported, unwritten, un)

noticeale, or unintended Change": &t doe" "o 5 gi-ing theContractor a right to ue"tion their -alidit5 and reuiring

oth partie" to put unwritten matter" into writing: &t e-enrecogni"e" that de"pite "uch rule" in"truction" ma5 "till egi-en and carried out without them ha-ing een eforehand

put through the proper paper wor6: &n "uch ca"e" C 9grant" the 'mplo5er a di"cretionar5 right to confirm hi"appro-al retro"pecti-el5: 8e can do "o at an5 time prior tothe Final Account and Statement ecoming conclu"i-e:

I ? ne>8e5 Con856c8o5 no5 E,2loye5 con?>5, s:c 6n >ns85:c8>on >n 8e ,6nne5 6n/ 8>,e s8>2:l68e/ @:l nee58eless 8eCon856c8o5 co,2l>es ;>8 6n >ns85:c8>ono8e5;>se 86n >n ;5>8>n= 8en 8e E,2loye5 ,6y con?>5, 8e s6,e >n ;5>8>n=CD 79 4&3&$&$

Failure to re"pond forthwith to an 'mplo5er>" in)"truction (which clear" the four hurdle" li"ted in the third

paragraph under thi" "u)heading% entitle" the 'mplo5erto emplo5 other" to carr5 out the particular ignored in)"truction: &f the Contractor more "eriou"l5 default" inwa5" de"cried in clau"e ! then the latter right" ecomeoperale rather than tho"e in clau"e $:

ifficultie" for the 'mplo5er ma5 ari"e e"peciall5toward" the end of a proDect, particularl5 one which forthe Contractor ha" turned out to e unprofitale: Themore Change" the 'mplo5er order" the le"" inclined theContractor will e to carr5 them out: The more wor6 and

admini"tration the more lo"" the Contractor ma5 fore"eeand the more -igorou"l5 therefore he will pur"ue underclau"e 1!:* an allowance for the latene"" of Change"on ground" the condition" under which the wor6 i" to

e carried out ha-e changed: 8e will under clau"e 1!:*:4"ee6 an allowance for hi" etended admini"trati-e co"t"that go with the etra wor6 and under clau"e 1!:*:+ ma5"ee6 a fair -aluation of de"ign wor6, in"urance premium"and other co"t" not otherwi"e included for in the normal-aluation of the Change" ordered:

Clau"e * Cu"tod5 and "uppl5 of document"

The 'mplo5er "hould con"ider carefull5 prior to ma6ingthe Contract whether upon completion the Contractor>"drawing", "pecification" and detail" u"ed for the purpo"e"of the Ior6" will e "ufficient for the 'mplo5er>" futureneed" in connection with the maintenance, alteration" or

repair" of the uilding concerned:&f the 'mplo5er con"ider" other drawing" and technical

information "hould e produced detailing the Ior6" >a" uilt> then "uch reuirement" "hould e "pecificall5 referredto in the 'mplo5er>" @euirement" and3or Contractor>"Propo"al":

Thi" clau"e * ma6e" no mention of an5 >ma"ter> plan or programme eing "upplied to the 'mplo5er e-en though hei" epected under clau"e !* to operate comple pro-i"ion"for con"idering and in appropriate ca"e" granting eten"ion"of time to the Contractor: Furthermore, under clau"e !+the 'mplo5er i" reuired to ma6e Dudgement" on matter"of lo"" and epen"e emanating from di"ruption to the Con)

tractor>" regular progre"": A >ma"ter> programme would atlea"t outline the intended regular progre"":

Time, under clau"e !*, and mone5 matter", under clau"e!+, are not nece""aril5 unified ut the5 do freuentl5 gotogether: &t i" difficult to "ee how an 'mplo5er i" to duti)full5 ma6e hi" Dudgement" without (from the commence)ment% ha-ing in hi" hand the Contractor>" ona fide ma"ter

programme: The annotation following C /$=// refer"further to thi" prolem:

Clau"e + Statutor5 oligation", notice", fee" and charge"

The importance of the Contractor>" o-erriding oligation, inC 104 to compl5 with, and gi-e all notice" reuired 5,

an5 Statutor5 @euirement" i" irreducile and cannot ea-oided: No matter what the 'mplo5er>" @euirement""pecif5, including hi" de"ign" or Change order", the Con)tractor i" to)a"certain for him"elf, and en"ure compliance

Te Con856c8o5 ,:s8 co,2ly ;>8+ 6n/=>e 6ll no8>ces 5e:>5e/ @y& 6ny S868:"8o5y Re:>5e,en8s

with, the Building @egulation reuirement", Con"truction

@egulation reuirement", planning appro-al", and an5other rele-ant "tatutor5 reuirement":

Furthermore, the Contractor mu"t do "o without an5right to reimur"ement of an5 unfore"een co"t" ari"ingunle"" a new or altered "tatutor5 regulation come" intoforce after the ate of Tender or unle"" certain planningreuirement" are in-ol-ed in which ca"e "ee C 141 = 14+:

Clau"e / Material" good" and wor6man"hip etc

The Contractor "hould precon"ider his promi"ed "tandard",or the 'mplo5er>" @euirement", of wor6man"hip andchoice" of material" or good": The5 mu"t e technicall5"ound, commerciall5 "en"ile, attainale, and at all time"

procurale, otherwi"e the Contractor mu"t gain the 'm) plo5er>" con"ent in writing efore eing allowed to ma6ean5 change" in "tandard" of wor6man"hip or choice" ofmaterial" or good": The Contractor mu"t al"o ear an5co"tlier procurement co"t and wor6man"hip co"t" re"ultingfrom "uch change":

The word" "o far a" procurale are not defined: The5grant relief to the Contractor from endea-ouring to otainthe unotainale: &t i" up to the Contractor to "how the'mplo5er "ound ground" for "ee6ing the relief promi"ed:&f "ati"factor5 e-idence "how" certain material" or good" areunotainale the 'mplo5er ma5 either "it ac6 and awaitthe Contractor>" "ugge"ted alternati-e or he ma5 ta6e the

initiati-e 5 ordering a Change: The fir"t cour"e of actionwould e ri"6)free wherea" in the latter he mu"t acceptthat a formal -aluation of hi" order would follow with it"

po""ile con"euence" of de"ign change" and planning per)mi""ion" with the po""iilit5 of dela5" and di"ruption" tothe Contractor>" regular progre"":

1+

All ;o5<,6ns>2 ,68e5>6ls 6n/ =oo/s,:s8 so ?65 6s 25oc:56@le @e o? 8es86n/65/s CD 13' '&1

" s2ec>?>c6lly /esc5>@e/ >n 8e E,2loye5.sRe:>5e,en8sCD 139 '&1

"

/esc5>@e/ >n 8@e Con856c8o5.s P5o2os6ls CD

14* '&1

" /esc5>@e/ >n 8e s2ec>?>c68>ons 5e?e55e/ 8o>n cl6:se %&3CD 141 '&1

4&3&$



&f the 'mplo5er promptl5 and rea"onal5 refu"e" hi"con"ent to an5 "ugge"ted "u"titution 5 the Contractor theue"tion of lo"t time will not ari"e under clau"e !*: TheContractor, with reue"t" for con"ent to ma6e a "u"titu)tion, ma5 howe-er gi-e each time a notice under clau"e!S:$:10:1 and3or :!: An5 dela5 5 the 'mplo5er in gi-inghi" con"ent to a "ugge"ted "u"titution would gi-e ri"e to

a further notice = thi" time under clau"e !*:$:+, followed perhap" 5 a written application under clau"e !+:!: "tatingthe Contractor wa" li6el5 to incur lo"" and3or epen"e dueto M" regular progre"" eing affected materiall5 5 thedela5 in recei-ing con"ent:

The 'mplo5er ma5 therefore e on a tight)rope: 2n theone hand he ha" a clear right to a rea"onale time to Dudgewhether a preferred "u"titution i" acceptale: 2n the otherhand he i" not oliged to accept or con"ent to an un)rea"onale "u"titution: &f he promptl5 and rea"onal5refu"e" hi" con"ent to a fir"t "ugge"ted "u"titution thecloc6 mu"t then e "et to "tart again, granting the 'mplo5era new rea"onale time in which to Dudge the "econd "ug)ge"ted "u"titution and "o forth, 2-iou"l5 the Contractor

ma5 per"i"t in putting forth the cheape"t "u"titute he canfind until he gain" the 'mplo5er>" con"ent: 8owe-er, pro)-ided the 'mplo5er react" promptl5 to each and e-er5"u"titution preferred the time lo"t 5 the Contractor ine-entuall5 gaining the 'mplo5er>" con"ent will not ualif5for an eten"ion to the completion date under the pro-i)"ion" of clau"e !* "ince the clau"e>" word" eclude timeta6en up 5 rea"on" within the Contractor>" control:

Thi" "ame principle would den5 the Contractor>" claimfor incurred lo"" under clau"e !+:!: "ince the due timereferred to there would e Dudged not from the fir"t "ug)ge"ted "u"titution ut from the moment when the fir"trea"onal5 acceptale "u"titution wa" preferred:

Aritration i" under Article *:!:1 operale immediatel5on ue"tion" concerning the refu"al of con"ent 5 the'mplo5er:

Clau"e / al"o grant" the 'mplo5er di"cretionar5 right"

Te E,2loye5 ,6y >ss:e5e :>5>n= 8e Con856c8o5 8oCD 147

ns85:c8>ons

'&3

to in"truct the Contractor to open up wor6 done and3orto carr5 out te"t" upon that, or upon other wor6 or an5material" or good" awaiting incorporation into the Ior6"or in "itu in the Ior6": Thi" right cannot e interpreteda" an oligation upon the 'mplo5er to detect an5 of theContractor>" fault", error" or omi""ion": 8owe-er, if the'mplo5er doe" order wor6 etc to e opened up or te"ted

and the finding" "how the wor6man"hip, material" andgood" to e faultle"" then the 'mplo5er will e reuiredto pa5 the Contractor hi" co"t of opening up and3orte"ting, together with the co"t of ma6ing good:

ifficult ue"tion" ari"e if fault" are found which are nota" eten"i-e a" the degree of or etent of opening up calledfor< or if the etent or nature of te"t" "u"euentl5 pro-ed:The mere fact that fault wa" found will of cour"e Du"tif5 theopening up ut whether it can Du"tif5 all of the opening upor te"ting demanded i" difficult to Dudge: The line etween

proper precautionar5 eamination" and the unnece""ar5 aring of con"truction ma5 e lurred in certain ca"e" utthe enefit of remo-ing dout mu"t e granted to the'mplo5er whene-er rea"onale dout ei"t":

Clause 1+ !erson,in,charge

The per"on)in)charge, a" the authori"ed repre"entati-e ofthe Contractor, i" oliged to recei-e an5 in"truction" of the'mplo5er: Ihen an5 in"truction ha" een deli-ered to theper"on it i" deemed to ha-e een gi-en to the Contractor:Thi" applie" onl5 in the ca"e of an in"truction: A notice,"uch a" one under clau"e !4:! formall5 informing the Con)tractor of a failure to complete in time, would ha-e to edeli-ered to the Contractor, not hi" per"on: Similarl5, anotice under clau"e ! "pecif5ing "eriou" default" or gi-ingnotice of determination would, to e -alid, ha-e to e

"er-ed upon the Contractor him"elf, not hi" per"on:Clau"e $ deal" with the 'mplo5er>" empowered notice",

the wa5 in which the5 are to e i""ued, the Contractor>"right" to ma6e rea"onale oDection, and "o forth: The

per"on)in)charge mu"t clearl5 under"tand hi" "pecial po"i)

tion and 6now he i" the official recei-er of in"truction">,not notice":

The Contractor ma5 delegate to hi" per"on additionaland wider authorit5 ("uDect to 8ead 2ffice "uper-i"ionand control% than "impl5 to recei-e in"truction": Theper"on ma5 e authori"ed to ma6e agreement" on the-alue" of Change" (under clau"e 1!:$% and to agree with the

'mplo5er the Final Account and Statement under clau"e40:*: 8owe-er, if the per"on i" not authori"ed to ma6eagreement" ut ne-erthele"" doe" "o the5 ma5 ecome

inding upon the Contractor if it appeared to the 'mplo5erthe per"on had authorit5 to ma6e "uch agreement":

&f the 'mplo5er or hi" agent gi-e" in"truction" in theform of "6etche" or drawing" the5 ma5 well con"titute anin"truction in writing if the5 clearl5 "how in an in"truc)ti-e manner whate-er the 'mplo5er wi"he" the Contractorto do:

The 'mplo5er>" power to in"truct doe" not etend todictating the Contractor>" "peed, method" or "euence ofwor6ing, unle"" the Contractor>" wa5" and mean" do notcorre"pond with matter" laid >down in the document"referred to in C 1, or if the Contractor i" not con"tantl5u"ing hi" e"t endea-our" to pre-ent dela5 ("ee clau"e!*:4:$:1% in which ca"e the 'mplo5er would e entitled toreuire e-er5thing rea"onal5 po""ile to enale the Ior6"to proceed, under C $4/:

Clau"e 11 Acce"" for 'mplo5er>" Agent etc to the Ior6"

The right for the Agent and other" to "ee the Ior6" in progre"", and for the Agent (under clau"e *:$% to "ee thedocument", and enter wor6"hop" etc where wor6 i" eing

prepared doe" not reduce in an5 wa5 the Contractor>"

oligation to compl5 with all the reuirement" and "tan)dard" of the Contract:

The nomination of an Agent or an5 replacement wouldma6e that per"on an official recei-er of an5 application,notice, reue"t or "tatement of the Contractor: &t wouldal"o ma6e the per"on an official gi-er of con"ent", in"truc)tion" and notice", unle"" the 'mplo5er "pecificall5 cutdown the per"on>" authorit5 5 a written notice to theContractor: &n the a"ence of an5 "uch written notice theContractor would e entitled to (and mu"t% a""ume the

1

o2en :2 lo5 >ns2ec8>on 6ny ;o5<coe5e/ :2CD !B '+3

" 6556n=e ?o5 6ny les8 o? 6ny eec:8e/;o5< o5 o? 6ny ,68e5>6ls o5 =oo/s0;e8e5 o5 no8 6l5e6/y >nco52o568e/ In8e Wo5<sCD U9 '&3

c655y o:8 6ny 8es8 o? 6ny eec:8e/ ;o5<o5 o? 6ny ,68e5>6ls o5 =oo/s 0;e8e5o5 no8 6l5e6/y >nco52o568e/ >n 8e Wo5<sCD 1%* '&3



Agent ha" full authorit5 a" granted to him under Article 4,to act for the 'mplo5er and to ind him:

8owe-er, the Contractor "hould reali"e where the Agenti" an architect or uantit5 "ur-e5or that in their po"ition a"Agent the5 are entitled to openl5 di"pla5 their partialit5:Thi" ma5 lead the Contractor to wonder Du"t how he i" to

profital5 "ettle clau"e 1! -aluation"R

Clau"e 1! Change" in the 'mplo5er>" @euirement" and pro-i"ional "um"

1$&$

There are re"triction" upon and limit" to Change" the 'm) plo5er ma5 order: Fir"tl5, the 'mplo5er i" not allowed toeffect a Change which i", or ma6e" nece""ar5, an unrea"on)ale alteration or modification in the de"ign of the Ior6":For eample, an order to a Contractor, who "peciali"e" in

"tandardi"ed reinforced concrete uilding", changing the"tructural frame and cladding to "teel ma5 e rea"onal5refu"ed: Aritration i" in an5 ca"e a-ailale, to "tart imme)diatel5, to decide whether "uch a refu"al "hould "tand:

Secondl5, rea"onale oDection" ma5 e rai"ed 5 theContractor if in"truction" are i""ued to change an5 oliga)tion or re"triction pre-iou"l5 impo"ed 5 the 'mplo5er (inthe @euirement"% in regard to acce"" or u"e of part" ofthe "ite, limitation" on "pace and hour", or change" in the

pre-iou"l5 "pecified order of wor6ing or completion:

Thirdl5, the 'mplo5er ma5 not 5 Change order funda)mentall5 alter the character of the Contract to "omethinguite different from that which the Contractor had ar)gained o-er in the fir"t place:

8owe-er, the clau"e i" uite open on the ue"tion ofwhen the right to order Change" come" to an end: &t i" notclear whether the 'mplo5er i" entitled to i""ue in"truction"for etra wor6 or to omit wor6 after the Contractor ha"

pa""ed the ate of Comple tion or an5 eten"ion to it:There are no re"triction" on late order"< in an5 ca"e theContract would ecome unwor6ale if necessary order" hadto cea"e once a particular date had pa""ed:

The 'mplo5er ma5 i""ue all manner and an5 numer ofempowered Change order" up to the Contractor achie-ingPractical Completion, e-en if the Contractor ha" o-errunhi" time: The etra time that ma5 e needed to eecutethe wor6, cau"ing the completion date a" it then "tand" to

ecome unattainale, ma5 e granted under clau"e !*:$:*:1(C $1$% ut an5 "imilar time "pent merel5 awaiting an5Change in"truction "hould e "eparatel5 awarded underclau"e !*:$:+ (C $19% pro-ided the Contractor ha" appliedin writing for the in"truction in ue"tion:

Ihether or not "uch eten"ion" of time ma5 rightl5 eawarded or indeed need e accepted once the Contractori" in reach 5 o-errunning time i" a deatale matter: Agreat deal ma5 depend upon whether the Contractor had,in accordance with C 499, u"ed con"tantl5 hi" e"tendea-our" to pre-ent dela5 during the progre"" of theIor6": &f, for eample, there i" clear e-idence of earlierdilatorine"" cau"ing "ummer wor6 to run into winter)timean eten"ion for eceptionall5 ad-er"e weather ari"ing inthe o-errun period ma5 e preDudiced: 2n the other hand,an earlier lac6 of e"t endea-our" ma5 later gi-e the 'm)

plo5er the right to "et a later ate under clau"e !* due to@ele-ant '-ent" ari"ing later than the5 might otherwi"eha-e done if onl5 the Contractor had earlier done hi" dut5under the Contract (C 499% to pre-ent dela5":

Certain Contractor" ma5 refu"e proferred eten"ion" onground" the in"truction" i""ued in the o-errun period ha-e"et time at large and the liuidated damage" clau"e ha"

ecome inoperale: @e"ol-ing "uch contention" ma5 reuireepert legal ad-ice: There ma5 ha-e een oth nece""ar5and unnece""ar5 Change" ordered: There ma5 ha-e eenin"truction" &""ued at the "ame or different time" a" Changeorder": Pro-i"ional "um in"truction" i""ued ma5 ha-e eenone" which could not ha-e een gi-en earlier and "ome

pro-i"ional "um in"truction" ma5 in-ol-e much more ore-en le"" wor6 than fir"t en-i"aged when the "um wa" "et:

&f no agreement can e reached concerning eten"ion" oftime and the deduction or pa5ment of liuidated damage"then the 'mplo5er "hould "et aout pro-ing the lo""actuall5 "uffered, due to an5 alleged late completion, ratherthan rel5 upon getting predetermined clau"e !$ liuidateddamage" from the date alleged 5 the 'mplo5er to e theoperati-e completion date through to Practical Completion:

Further difficultie" ma5 e encountered where latene""ha" een cau"ed 5 an interwo-en "et of circum"tance" in)-ol-ing fault" or dilatorine"" 5 the 'mplo5er, dilatorine""on the Contractor>" part, and factor" out"ide either part5>"control: &n "uch in-ol-ed circum"tance" the -alidit5 ofdeduction" made 5 the 'mplo5er for damage" due todela5 i" difficult to Dudge, particularl5 if an5 of the rea"on"for dela5 doe" not fall clearl5 under an5 of the clau"e !*@ele-ant '-ent":

Ihen a Change i" ordered the Contract Sum Anal5"i"will e referred to in order to rec6on up the Change>" -alue:aluing Change" i" (a" "tated in the commentar5 to clau"e$% rarel5 "wiftl5 achie-ed: Clau"e 4 comined with clau"e1!:+ (C 199% anticipate" oth dela5 and difficult5: The5

permit partial pa5ment" and pro-ide (in 1!:*% a "et of rule"for ma6ing detailed -aluation", pro-ided the Contract SumAnal5"i" i" comprehen"i-e enough:

8owe-er, the "implified alternati-e clau"e 1!:$ wa5 i"open to the partie" rather than the "la-i"h rule" of clau"e1!:*:

Ihiche-er wa5 i" cho"en, a" "oon a" an5 part of theamount in-ol-ed ha" een a"certained then that "um,when e"tali"hed a" a certaint5, "hall e paid under clau"e40:!A:1:! or40:!':l:l,le"" @etention:

The greate"t difficult5 ma5 ari"e under "tatement C19/, where an allowance mu"t e included for the additionor omi""ion of the rele-ant de"ign wor6:

Te 6l:68>on o? C6n=es ,:s8 @e ,6/e

>n 6cco5/6nce ;>8 8e 25o>s>ons o? cl6:se 1$+%

CD 19) 1$&4

I

o8e5;>se 6=5ee/ 6n/

CD 197 1$+4

1

s:c 6l:68>on ,:s8 >ncl:/e 6 lo;6nce?o5 8e 6//>8>on o5 o,>ss>on o? 8e

5ele6n8 /es>=n ;o5<

CD19B 1$&4

1/



The ao-e principle" (and prolem"% appl5 euall5 tothe ependiture of pro-i"ional "um" (if an5% included in the'mplo5er>" @euirement":

Clause 1 -nfied materials and goods

Building material", and to a le""er etent good", are con-en)tionall5 to e found depo"ited all around a uilding whil"t

under con"truction: A minorit5 will at an5 one time ha-e een paid for 5 the Contractor whil"t the maDorit5 ha-enot< a minorit5 of "upplier" will ha-e retained title to theirchattel" whil"t other" ha-e not< "ome of the chattel" ma5ha-e complicated >retention of title> clau"e" attached tothem whil"t other" ha-e the "imple"t form po""ile:

Mo"t of thi" commercial >"afet5)netting> cea"e" to matteronce the material" or good" ha-e ecome part of the Ior6"for then the title)holder" are generall5 rec6oned to ha-e lo"ttheir re"er-ed right" "ince the chattel" ha-e lo"t their iden)tit5 (a" material" etc% and ha-e ecome a permanent part ofthe Ior6":

8owe-er, a few "eller" ma5 go a "tage further 5 writing

into their "uppl5 contract clau"e" granting them"el-e" right",when unpaid, to enter upon the "ite and to remo-e ("e-er%their good" e-en if the5 ha-e ecome part of the Ior6":

None of thi" need concern the 'mplo5er unless the Con)tractor ecome" in"ol-ent, and ha-ing no title or mone5 ha"unpaid "eller" wa-ing retention of title clau"e" o-er certainmaterial" or good": '-en then, a retention of title clau"ewould not matter unle"" the 'mplo5er had alread5 paid theContractor earlier for tho"e material" or good"< or, in therarer ca"e" of right" to "e-er, had paid the Contractor forincorporating the particular material" or good" into theIor6":

The element of ri"6 for the 'mplo5er "hould e put into per"pecti-e: Fir"tl5, no ri"6 at all ari"e" where there i" no ri"6of the Contractor ecoming in"ol-ent: An5 alleged right totitle or to repo""e"" applie" onl5 to unfied material" orgood": A "light further ri"6 of claim" etending to material"or good" incorporated into the Ior6" ma5 al"o ari"e: Thedegree of ri"6 for the 'mplo5er depend" therefore upon thefinancial "trength of the Contractor:

nder clau"e 40:!A, where "tage pa5ment" are arranged,"eparatel5 identified pa5ment for material" and good" doe"

not ari"e: nder the alternati-e clau"e 40:!B the total-alue of material" and good" deli-ered to or adDacent theIor6" i" to e "eparatel5 "ummed up and -irtuall5 all paidfor a" the Ior6" progre"", ecepting for a percentage @eten)tion held ac6 5 the 'mplo5er:

nder clau"e 40:!B the 'mplo5er ma5 in -iew of theremar6" ao-e concerning the ri"6" of >retention of title>

reuire prior proof of owner"hip 5 the Contractor of allor ma5e the mo"t important material" and good", to e

pro-ided a" part of the detail" a" ma5 e "tated in the'mplo5er>" @euirement" (clau"e 40:4:!% to accompan5each Application for &nterim Pa5ment: 8owe-er, the ta"6of "crutini"ing the -ariou"l5 worded "mall print clau"e" ofeach "upplier and deciding whether or not the Contractorha" the right to "ell on or whether right" ha-e een merel5re"er-ed again"t the proceed" of re)"ale without a rightto repo""e"", and "o forth, ma5 pro-e all too difficult,uncertain and time)con"uming:

The .CT ha-e in an5 ca"e con"idered the whole ue")tion of title retention and it" ri"6": The5 appear to ha-e

concluded the ri"6" do not warrant the eclu"ion of theContractor>" con-entional right" to interim pa5ment" forunfied material" and good": The .CT pre"umal5 "ee'mplo5er" enefiting from lower id" where idder" are

promi"ed a right to pa5ment" for on)"ite material" etc a"the5 proceed: '-en >etter> id" ma5 re"ult if the 'mplo5er

promi"e" interim pa5ment" for off@site material" or good":&f thi" i" done the condition" "et out in the Appendi mu"t

e strictly o"er-ed to "afeguard the 'mplo5er>" right" tothe paid for material" or good" in ca"e of in"ol-enc5:

Clauses 1 and 10 !ractical Completion# partial possession

and efects 2iabilit)

Practical ?ompletionThe 'mplo5er &" gi-en the ta"6 of declaring in writing theIor6" ha-e reached Practical Completion: &f he fail" todo "o at the right time, or refu"e" to do "o at all, he i" in

Th" E$%&o'"( $,*t ;en 8e Wo5<sh!." ("!h"# P(!ti!& Co$%&"tiongi."th" Cont(!to( ! 4(itt"n *t!t"$"nt toth!t "//"t7

CD 58 1021

reach: 8owe-er, nowhere in the Contract, lea"t of all inthe definition clau"e 1:4, i" the 'mplo5er gi-en an5 te"t toappl5 in determining whether or not "uch completion ha"

een achie-ed: Annotation to a""i" t the 'mplo5er i" gi-enin the Flowchart" elow "tatement" C !*031)

The 'mplo5er in Dudging Practical Completion "houlddi"regard the ate actuall5 fied and "tated in the Appen)

di 5 the partie" for Completion, "ince the Contractor i"entitled to complete efore then and the 'mplo5er i"oliged to etend the ate onward" if an5 @ele-ant '-entoccur" to dela5 the Ior6"> completion e5ond the ate:

The 'mplo5er "hould therefore loo6 at the Ior6" withone ue"tion in mind: &" e-er5thing -irtuall5 fini"hed in a"ati"factor5 wa5 (apart from trifling matter"% "o that full

enefic ial occupation can ta6e place &f the an"wer i"Qe", the 'mplo5er mu"t promptl5 write to the Contractor "tating The Ior6" reached Practical Completionon::::::::::::::::::::::::::::::::(ate%:

Partial Possession

Statement C !0 indicate" the 'mplo5er ma5 with theContractor>" con"ent ta6e earlier po""e""ion of an5 part or

part" of the Ior6": &t i " al"o thought po""ile ("ee @ef ! para (!% p 440% a Contractor who i" o-errunning the atefor completion ma5 e entitled to a proportionate reduc)tion in the damage" pa5ale for hi" dela5 if an5 di-i"ile

part or part" of the Ior6" could e enefic iall5 occup ied 5 the 'mplo5er, thu" mitigat ing the lo"" from the dela5:

Te Con856c8o5 ,:s8 $!9" goo# th"#"/"t* s5>n<6=es 6n/ o8e5 ?6:l8s*%"i/i"# >n th" Sce/:le o? De?ec8s+;>8>n 6 5e6son6@le ti$" !/t"( (""%t7

102 : 1M2

&f predetermined "ectional completion i" de"ired a "pe)cial "upplemental agreement ("imilar to the one puli"hedin 19* 5 the .CT for u"e with their 19+4 Contract%"hould e u"ed "etting out the -ariou" amount" of liui)dated damage" to e paid if the "ection" concerned aredela5ed e5ond their particular completion date":

&f under the "tandard pro-i"ion" of clau"e 1 partial po""e""ion of the Ior6" occur" with the Contractor>" con)"ent the e"timated -alue of the part ta6en i" to e declared

19

CD 68



within da5" 5 the Contractor, "ince the 'mplo5er on po""e""ion ta6e" "ole ri"6 of Clau"e !! Peril" and the Con)tractor>" in"ured ri"6 i" therefore reduced 5 the amountconcerned for the part po""e""ed: 2-iou"l5 prior arrange)ment" 5 the 'mplo5er to in"ure Clau"e !! Peril" "houldoccur efore po""e""ion of an5 part goe" ahead:

2efects Liability

From po""e""ion onward" each rele-ant part i" then treateda" if it wa" a miniature Ior6" which ha" reached PracticalCompletion: efect" (including de"ign fault"% ari"ing fromthe Contractor>" failure under the Contract ma5 appear,in which ca"e C !+1 enale" the 'mplo5er, whene-erhe con"ider" it timel5, to in"truct the Contractor to putthing" right during the period called the efect" #iailit5Period:

The phra"e :X mi"leading "ince it implie" the Contractor>"liailit5 etend" onl5 for the Period "tated wherea" hi" liai)lit5 run" on for 5ear": Ihat the Period doe" do i" to "et atime)"cale during which the Contractor ha" the dut5, rightand pri-ilege to remed5 an5 fault" or defect" appearingduring that Period: To formali"e thi" the 'mplo5er mu"ti""ue a" an in"truction a "chedule (li"t% of all fault" anddefect" etc, not later than 1$ da5" after the Period epire":Thu" a li"t "howing all defect" etc which appeared in thePeriod will e drawn up: Thi" li"t of matter" i" then re"er-edfor the Contractor to remed5 rather than the 'mplo5er

eing allowed to in"truct another part5 to do the wor6 andcharge it to the Contractor:

8owe-er, the 'mplo5er ma5 in"tead of ha-ing the fault"remedied in"truct the Contractor to "u"titute other wor6in it" place a" a etter remed5 and at the 'mplo5er>" addi)tional epen"e, or, in the ca"e of irremediale defect", tolea-e well alone:

The 'mplo5er doe" not ha-e to await the latter "tage" togain rectification of un"ati"factor5 matter": Statement C1$+ enale" him to in"truct the Contractor at an5 time (theearlier the etter%, during the progre"" of the Ior6", toremo-e from the "ite or to rectif5 an5 wor6, material" orgood" not in accordance with the Contract:

The procedure" outlined ao-e appl5 euall5 when theIor6" a" a whole are complete: Statement C !* (and C! in the ca"e of a rele-ant part% i" merel5 a mile"tone "ig)

Te E,2loye5 ,:s8 ;en 6ny /e?ec8s+s5>n<6=es o5 o8e5 ?6:l8s ;>c e ,6y6e 5e:>5e/ 8o @e ,6/e =oo/ 6e @een,6/e =oo/+ >ss:e a no8>ce 8o 868 e??ec8

C !*

nif5ing among"t other thing" the retention mone5 alanceremaining with the 'mplo5er i" to e relea"ed to the Con)tractor: The notice" do not put an end to the Contractor>"

liailit5 for an5 other defect" etc which ma5 "u"euentl5materiali"e:

Clau"e !0 &nDur5 to per"on" and propert5 and 'mplo5er>"indemnit5

Thi" clau"e declare" the indemnitie" pro-ided 5 the Con)tractor to the 'mplo5er to eE

(i% for per"onal inDurie" to or the death of an5 per"on (n%damage to propert5 when cau"ed 5 negligence etc:

unle""6ny e2ense l>6@>l>8y loss cl6>, o5 25o"cee/>n=s 65e /:e 8o 6ny 6c8 o5 ne=lec8 o?8e E,2loye5 o5 6ny 2e5son ?o5 ;o, 8eE,2loye5 >s?es2ons>@le

CD 3*9 $*+1

The fir"t indemnit5 doe" not howe-er ("ee C 409%co-er inDurie" etc due to an5 act or neglect of the 'mplo5eror an5 per"on for whom the 'mplo5er i" re"pon"ile: The"eeemption" would include inDurie" etc ari"ing from acti-itie"of the 'mplo5er under clau"e" !9 and 4$ a" well a" inDurie"

etc due to the other per"on" referred to in clau"e" !9:4 and4$:!: The 'mplo5er>" Agent in hi" acti-itie" would al"o fallinto the eempt categor5:

The "econd indemnit5 i" confined to claim" ari"ing outof negligence, omi""ion or default on the part of the Con)tractor or an5 "u)contractor or an5 "er-ant or agent ofeither, 'cluded from the indemnit5 i" an5 lo"" or damagea" ma5 e at the "ole ri"6 of the 'mplo5er if either clau"e!!B or !!C i" operati-e,

#!$!g" 4hih i*

E$%&o'"( ,n#"(

!%%&i!;&"<- !n

CD ==0

!t th" *o&" (i*9 o/ th"

&!,*" 0 o( C >i/

122123

/6,6=e 65>s>n= ?5o, 6 n:cle65 5>s< o5 :

;65 5>s< o5 son>c @oo,s

2-iou"l5 from clau"e !0 it can e "een there are area"of ri"6 to e carried 5 the 'mplo5er: The"e area" "hould

e co-ered 5 in"urance" arranged for the 'mplo5er 5 e) pert" in the"e matter" in the field of con"truction in"urancefollowing an apprai"al of the other area" of ri"6 to e car)ried 5 the 'mplo5er under whiche-er of the alternati-e"of clau"e !! i" to e in operation:

Clau"e" !1 and !! &n"urance again"t inDur5 to per"on" and propert5, al"o in"urance of the Ior6" again"t Clau"e !!Peril"

Con"truction in"urance i" comple: Clau"e !1:1)! reuire"the Contractor to produce for in"pection 5 the 'mplo5ere-idence of adeuate in"urance": The e-idence produced"hould therefore e eamined 5 an epert in the field whowill predetermine for the 'mplo5er the in"ured minimumco-er "um to e "tated in the Appendi 1 under "tatementC 4!/, al"o the mo"t "uitale of the alternati-e" underclau"e !!, and the "uitailit5 of the in"urance" to e main)tained 5 the Contractor in Doint name" under clau"e !1:!:1("ee the detailed annotation on thi" under C 441%:

The liailit5 of the Contractor to indemnif5 the 'm) plo5er run" on after Practical Completion for 5ear" ("uDectto the Statute of #imitation" Act 19/0%: Thu" there i" anece""it5 to arrange in"urance to co-er thi" protractedliailit5:

Clau"e !4 ate of Po""e""ion, completion and po"tpone)ment

The 'mplo5er "hould ne-er lightl5 commit him"elf to gi-ein the Contract po""e""ion of the "ite to the Contractor 5a particular date: 8e mu"t e certain po""e""ion can e

$*

1+:$



Th" Cont(!to( $,*t ;" gi."n 2ossess>on o?

8e s>8e on 8e D!t" o/ Possess>on

gi-en in "ufficient time for the Contractor to complete the

Ior6" 5 an5 go-erning date: 8e mu"t al"o en"ure po""e")"ion of the entire "ite can e gi-en from the date to e "etin the Appendi for po""e""ion through to the propo"edate for Completion< if not, clau"e 1!:1:! de"crie" re"tric)tion" the 'mplo5er ma5 in hi" @euirement" impo"e uponthe Contractor in re"pect of confined acce"" or re"trictedu"e of an5 "pecified part" of the "ite together with an5limitation" on wor6ing "pace or an5 oligation flowingfrom the re"triction" reuiring eecution or completionof the wor6 in an5 particular order:

The importance of eing doul5 certain of eing aleto hand o-er the "ite upon the ate of Po"""e""ion ecome"apparent if failure to compl5 occur": The 'mplo5er ma5

then findE1): a claim 5 the Contractor i" made for damage" due

to the reach of the term for po""e""ion

!:a "tatement 5 the Contractor that the ate of Com plet ion ha" ecome inoperat i-e< that no right toliuidated damage" remain" for the 'mplo5er< thata new oligation ari"e" for the Contractor to com

plete in a rea"onale time in the circum"tance"

4:an application 5 the Contractor to the 'mplo5er under clau"e !+ to prepare the ground for the Contractor to recoup an5 direct lo"" and3or epen"ehe ma5 incur due to hi" progre"" eing materiall5affected 5 an order to po"tpone wor6:

There ha-e een dout" epre""ed o-er the effecti-ene""in thi" "ituation of an5 order that ma5 e gi-en 5 the'mplo5er to the Contractor to "u"pend wor6 a" an antidoteto a failure to grant po""e""ion: There i" howe-er no rea"onto pre-ent the 'mplo5er in thi" predicament endea-ouringto gain a formal inding agreement with the Contractorto -ar5 the Contract 5 the "u"titution of new "tart andfini"h date", 6eeping the liuidated damage" clau"e effec)ti-e, and "ettling an5 damage" ari"ing:

Clause &" amages for non,completion

Th" Cont(!to( $,*t %!' o( !&&o4 to th"

E$%&o'"( th" 4ho&" o( %!(t o/ a *,$

!&,&!t"# !t th" 568e s868e/ in A%%"n#i? 1

!* &i+,i#!t"# !n# !*"(t!in"# #!$!g"*7

CD =@ 3221

/o( th" %"(io# @e8;een th" Co$%&"tion

D!t" !n# th" /68e o/ P(!ti!& Co$%&"-

t ion7

The 'mplo5er i" 5 thi" clau"e gi-en a con-enient proce)dure to collect a predetermined amount a" "oon a" theContractor fail" to fini"h the Ior6" 5 the predeterminedate for Completion or an5 eten"ion of that ate:

The damage" will continue to e collected until PracticalCompletion actuall5 occur": The predetermined amountmu"t not e an eoritant "um pluc6ed from the air: &t

mu"t e a"certained a" the amount genuinel5 rec6oned eforehand a" the "um li6el5 to e "uffered a" damage" ifdela5ed completion occur": The 'mplo5er "hould thereforecalculate, liuidate, and a"certain hi" li6el5 damage" (pre)"er-ing hi" calculation"% efore entering "uch "um" in theAppendi:

The 'mplo5er mu"t in writing gi-e notice to the Con)tractor under C 491 of an5 failure to complete 5 theCompletion ate (or eten"ion to it%, otherwi"e the 'm)

plo5er>" right to " tart ta6ing hi" liuidated damage" fromthe Contractor cannot egin:

Te E,2loye5 $,*t >ss:e 6 noti" in

4(iting to th" Cont(!to( i& th" Con-

t(!to( ?6>ls to o$%&"t" th" on*t(,tion

o/ th" o(9* ;' th" Co$%&"tion D!t"

CD =@1

2nce the 'mplo5er under clau"e 1+ ("tatement C !*0%i""ue" (promptl5% a written "tatement to "a5 PracticalCompletion ha" een achie-ed then the right" to the pre)determined damage" immediatel5 clo"e down:

Statement C 49$ grant" the 'mplo5er di"cretion whe)ther to claim pa5ment or to deduct the whole or Du"t part

of the liuidated and a"certained "um pro-ided he notifie"the Contractor in writing of hi" intention" efore the i""ueof the Final Account and Statement: &f partial po""e""ion ofthe Ior6" ha" under clau"e 1 ta6en place prior to the dueCompletion ate the Contractor ma5 claim a reduction inliuidated damage" mu"t follow: Prolem" ma5 ari"e once

the ate for Completion ha" pa""ed if the 'mplo5er i""ue"Change or pro-i"ional "um in"truction" in-ol-ing etra wor6to the Contractor: The"e and other difficultie" are di"cu""edfurther on p 1/ (clau"e 1! earlier%:

Clause & *tension of time

Thi" clau"e i" a"ed upon the premi"e (C 499% the Con)tractor "tri-e" con"tantl5 to pre-ent dela5 and to pre-entan5 o-errun of the Completion ate: &f de"pite hi" e"tendea-our" the Contractor find" the progre"" of the Ior6"toward" completion i" eing or i" li6el5 to e dela5edhe must write to the 'mplo5er gi-ing the cau"e: &f an5cau"al e-ent i" one he rec6on" i" a @ele-ant '-ent (li"ted

in clau"e !*:$% he mu"t include thi" opinion in hi" writtennotice to the 'mplo5er: All thi" mu"t e done a" "oon a"it ecome rea"onal5 apparent to the Contractor that

progre"" i", or i" li6el5 to e, dela5ed:

Thu" we find the Contractor mu"t e on hi" toe" andalert to e-er5 cau"e of dela5, including hi" own fault": 8emu"t tell the 'mplo5er eactl5 what i" going on unle"" he i"either on time or ahead of it:

&f the Contractor fail" to constantly u"e hi" e"t endea)-our" to pre-ent dela5 the granting of an eten"ion of timefor a later @ele-ant '-ent cau"ing dela5 ma5 e preDudiced:For eample, if dilatorine"" in getting on with >"ummerwor6> cau"e" the Contractor to run into winter)time and

into dela5 due to ad-er"e weather then hi" earlier reach ofC 499 would den5 him the right to e awarded an5 eten)"ion of time: Furthermore, under C $4/ the 'mplo5erwould e entitled to reuire a dilator5 Contractor to do"omething po"iti-e aout it: The mo"t rea"onale thing todo aout it would e to accelerate or proceed at a pace

Th" Cont(!to( $,*t ,*" cons86n8ly his

;"*t en/e6o:5s to %("."nt /el6y >n th"%(og("** o? 8e o(9* ho4*o"."( c6:se/

52=2321

1

321

CD =@@



T?>e Con856c8o5 ,:s8 /o 6ll 86> ,6y5e6son6@ly @e 5e:>5e/ 8o 8e s68>s?6c"8>on o? 8e E,2loye5 8o 25ocee/ ;>88e Wo5<s

52=232

"ufficient to eliminate the effect" of hi" lagging >"ummerwor6 1, thu" a-oiding the on"et of winter, although the

'mplo5er "hould carefull5 en"ure he clarifie" that hi" re)uirement" are not to e mi"con"trued a" an order underclau"e 1! or a" a promi"e to pa5 an5 of the Contractor>"acceleration co"t": All thi" ma5 howe-er pro-e difficultwithout a programme of the Contractor ha-ing een madea-ailale to the 'mplo5er under clau"e *:

The Contractor i" reuired 5 C $043$3* to gi-e inwriting full particular" and e"timate" of the etent (if an5%of dela5 e5ond the due Completion ate, "orting out eachand e-er5 @ele-ant '-ent to gi-e the 'mplo5er a clear

picture of what i" happening, ha" happened, or i" li6el5 tohappen: The Contractor mu"t al"o 6eep the picture up todate:

Te Con856c8o5 ,:s8+ >? 256c8>c6@le >ns:c no8>ce+ o5 o8e5;>se 6s soon 6s 2os"s>@le 6?8e5 s:c no8>ce =>e >n ;5>8>n=2658>c:l65s ol 8e e2ec8e/ e??ec8s o?e6c 6n/ ee5y Rele6n8 Een8 6n/

CD38= 52221

CO 385

pon receipt of all thi" the 'mplo5er i" oliged to gi-ethe Contractor an eten"ion of time which i" fair andrea"onale if<

1: dela5 i" attriutale to a @ele-ant '-ent and !: thedela5 i" li6el5 to cau"e the completion of the Ior6" too-errun e5ond the due ate:

The 'mplo5er doe" not ha-e to ma6e hi" deci"ion thereand then upon receipt of the information de"cried ao-e

ut (dependant upon the "uffic ienc5 of the deta il" etc%mu"t do "o not later than 1! wee6" later, or, if there i" le""than 1! wee6" to go efore the Completion ate, the'mplo5er mu"t, if he i" of the opinion that oth 1 and !ao-e are e-ident, fi a new ate for the Contractor towor6 to and mu"t do "o no later than the Completion ate:

&f the 'mplo5er i" not of the opinion that the matter"under 1 and ! ao-e are e-ident he i" not reuired 5 theContract to formall5 reDect the ca"e in an5 particular wa5

ut o-iou"l5 "hould inform the Contractor of hi" -iew" a""oon a" hi" opinion i" formed:

2nce one eten"ion of time ha" een formall5 made it i"open to the 'mplo5er to ta6e into account the omi""ion ofwor6 later cau"ing "a-ing" in time, ut onl5 tho"e occurringafter the la"t eten"ion granted: Thu" a "hortening of thetime can occur ut not "o a" to e-er e unfair or unrea"on)ale nor to "horten time to a date efore the original ate

for Completion written into the Appndi 1:A re-iew of the whole ue"tion of time and Completion

mu"t ta6e place not later than 1! wee6" after PracticalCompletion ("ee C $**)$+1%:

Summari"ing, the Contractor i" the watchman in chargeof time: 8e ear" re"pon"iilit5 for rai"ing the alarm a" "oona" an5 time at all will e or ha" een lo"t, e-en if he him"elflo"e" it: 8e mu"t promptl5 pro-ide the 'mplo5er with thelate"t picture in clear form concerning the cau"e and effect"of the dela5:

All the 'mplo5er ha" to do i" to promptl5, carefull5 andfairl5 Dudge whether on the information gi-en to him he i"

oliged to "hift the ate for Completion onward" ecau"eof a @ele-ant '-ent to allow more time to elap"e efore theright to reco-er liuidated and a"certained damage" for an5o-errun come" into pla5: &f the 'mplo5er lac6" the infor)mation or if the information lac6" e-idence of a @ele-ant'-ent eing the cau"e, or if an omi""ion of wor6 reduce"time rather than increa"e" it, the 'mplo5er ma5 (ut i" not

ound to% inform the Contractor accordingl5) Such actionwill confirm the 'mplo5er ha" not failed to con"idertheContractor>" notice and information which, if he did, would

e a reach:

2nl5 when cau"e" of dela5 are cla""ed a" @ele-ant '-ent"i" the "etting of a new Completion ate -alid and onl5 thenif dela5 actuall5 pu"he" wor6 e5ond the otherwi"e dueate: A Contractor who i" well ahead of time ma5 negatethe Du"tification for an5 new ate:

@ele-ant '-ent" are therefore the 6e5 to the clau"eE

6orce maeure

?o5ce ,6-e:5e

CD 4*'$%+4&1

Thi" epre""ion i" terminolog5 of the legal profe""ion heremeant to co-er dela5ing e-ent" unpredictale 5 the partie"and out"ide their contemplation when the5 made theirAgreement: &t follow" that if an etremel5 unu"ual e-entoccur" ut that e-ent i" alread5 contained in the clau"e it

cannot e cla""ed a" a force maDeure "ine" it wa" pre)dicted 5 the partie" when the5 made their Contract: Forin"tance, if an earthua6e (ie, a Clau"e !! Peril% de"tro5ed

part or the whole of the Ior6" it would not e a forcemaDeure (a" it might well e in other contract"%, it would

e a @ele-ant '-ent (C $10%:

&f a totall5 unepected and etremel5 unu"ual dela5inge-ent ari"e" out"ide either part5>" control which cannot e"lotted into clau"e !* with it" li"ted @ele-ant '-ent" thenlegal ad-ice "hould e "ought if the effect" are "u"tantial,

particularl5 if clau"e !/:1:!:1 ecome" applicale, and nodeci"ion 5 the 'mplo5er under either clau"e "hould eta6en until "uch ad-ice ha" een recei-ed:

48ceptionally ad(erse weather

The operati-e word" here are eceptionall5 and ad)-er"e: There i" nothing to re"trict the etraordinar5condition" to the "ite of the Ior6": There i" no right togrant an5 eten"ion of time due to ordinar5 foul weather:

!!

CD 438



&f the Contractor i" due to hi" own dilatorine"" or faultalread5 in dela5 cau"ing an o-errun into winter)time, withit" greater chance of or incidence of eceptionall5 ad-er"eweather, the 'mplo5er face" a difficult prolem: The word"of C $09 do not, a" the5 well could, epre""l5 dear theContractor from an5 award in "uch circum"tance": 8ow)e-er, it "eem" wrong to grant an eten"ion of time whereearlier mi"demeanour" or lac6 of endea-our can e con)nected directl5 to the e-ent: &t would appear po""ile toutili"e C 499 to di"ualif5 the Contractor from an5award of time for eceptionall5 ad-er"e weather whichcould ha-e een a-oided ut for earlier dilatorine"":

More comple circum"tance" ma5 ari"e in which differ)ing @ele-ant '-ent" are intertwined with C $09 and withdela5 cau"ed 5 the 'mplo5er him"elf: &n "uch ca"e" the'mplo5er "hould in"i"t the Contractor, under C $043$3*,openl5 la5" out all the cau"e" and their effect" upon eachother ta6ing into account the -ariou" '-ent" and othercau"e", their effect", the Contractor>" own dilatorine"", hi"

reach of C 499, the fault" of the 'mplo5er and theireffect" upon the matri of matter": Thi" picture to e

produced 5 the Contractor "hould enale the 'mplo5erto form hi" own opinion in the wa5 reuired of him underthe Contract in matter" of dela5 to the Ior6":

?lause $$ Penis

loss o5 /6,6=e occ6s>one/ @y 6 F oneo5 ,o5e o? 8e Cl6:se $$ Pe5>ls

CD 41* $%&4 3

The Peril" that ran6 a" @ele-ant '-ent" are tho"e li"ted inclau"e 1:4 that cau"e an5 lo"" or damage: C $10 de" not

re"trict the lo"" or damage to wor6 eecuted or to unfiedmaterial" or good":

&f lo"" or damage i" cau"ed to an5 wor6, temporar5 uilding", plant, or unfied material" etc 5 an5 rea"onunli"ted in the definition under clau"e 1:4 (eg, -andali"m,theft% then the cau"e i" not a @ele-ant '-ent under C $10:

Certain of the li"ted rea"on" which ran6 a" a @ele-ant'-ent could occur due to the Contractor>" (or hi" "u)contractor>"% negligence (eg, fire, flood%: &n "uch ca"e"

clau"e !!B or !!C if operale would place the lo""3damageri"6 upon the 'mplo5er>" "houlder" ut the ue"tion oftime would remain open: The word" of C $10 contain noeception or pro-i"o concerning negligence to di"ualif5the Contractor from an eten"ion: Such word" do appear inclau"e !/:1:!:! (C **9% and their omi""ion therefore fromC $10 mu"t e delierate and aimed at allowing eten)"ion" of time where Peril" cau"e dela5 e-en if negligenceon the part of the Contractor (or M" "u)contractor% i"e-ident:

Ihere lo"" or damage occur" to the Contractor>" (or hi""u)contractor>"% own or hired temporar5 uilding" or plantthere are no word" in C $10 confining lo"" or damage tothe Ior6" (or unfied material" or good"% in the wa5 clau"e!! intended: Thu", if a Contractor>" tower crane "uffer"damage due to a Clau"e !! Peril and dela5 en"ue", itwould appear the Contractor i" entitled to an eten"ion oftime:

8owe-er, the "eparate oligation of the Contractor tou"e con"tantl5 hi" e"t endea-our" to pre-ent dela5 in the

progre"" of the Ior6" "tand" a" a limiting de-ice for the'mplo5er faced with application" from a Contractor underclau"e !* for more time where dela5" are a"icall5 of hi"own ma6ing:

?i(il commotion . . . stri#es etc

Ci-il commotion" are uncommon ut "tri6e" are not: A ci-il

c>>l co,,o8>on+ loc6l co,@>n68>on o?;o5<,en+ s85><e o5 loc<"o:8 6??ec8>n=6ny o? 8e 856/es e,2loye/ :2on 8eWo5<s o5

CD 411

i.i& o$$otion loc6l co,@>n68>on o? 4o(9$"n *t(i9" o( &o9-o,t 6??ec8>n=6ny o/ th" t(!#"* "ng!g"# in th" %("%!(!tion $!n,/!t,(" o( t(!n*%o(t!tion o/ !n' o/ th" goo#* o( $!t"(i!&* 5e:>8e/?o5 th" o(9*CD 31 52323

c>>l co,,o8>on+ loc6l co,@>n68>on o?;o5<,en+ s85><e o5 loc<"o:8 6??ec8>n=6ny 2e5sons en=6=e/ >n 8e 25e26568>ono> 8e /es>=n o? 8e Wo5<sCD 31=

commotion which cau"e" lo"" or damage ma5 ran6 a" a C$10 @ele-ant '-ent:

&f a "tri6e affect" one particular ma6er >A> of "tandardgood" ut not another ma6er >B> of the "ame good" the'mplo5er ma5 under C 499 and C $4/ e entitled toreuire the Contractor to go to ma6er >B> e-en if that"ource i" more epen"i-e and not to grant an5 eten"ion

unle"" the entire "uppl5 "ituation wa" affected 5 the "tri6e:8owe-er, the po"ition under C $14 i" uite different

where a de"ign team go on "tri6e, ne-erthele"" the word" ofC $!/ are "trong one" and difficult to ignore:

&f a ci-il commotion affected trade" under C $113! or per"on" engaged under C $14, cau"ing the whole or "u)"tantiall5 the whole con"truction of the Ior6" to e "u")

pended for a continuou" period li6el5 to eceed the lengthnamed in the Appendi 1, the 'mplo5er would e Du"tifiedin -igorou"l5 emplo5ing C $4/, particularl5 in the lightof clau"e !/:1:!:4:

?ompliance with 4mployer%s instructions

The dela5" ari"ing from in"truction" li"ted in C $1$ are to e "egregated 5 the Contractor from tho"e (if an5% ari"ingunder C $1*3+ and $13/: Furthermore, an5 dela5 ari"ingfrom "impl5 awaiting "uch an in"truction i" to e "egregatedand made under C $193!03!1: nder pro-i"ional "umclaim" care mu"t e ta6en to ma6e due allowance onl5 forthe etra time, ie additional to that alread5 en-i"aged 5

the Contractor for the wor6 pro-i"ionall5 included at the id "tage:

&f in"truction" cau"e an5 "eriou" "u"pen"ion clau"e!/:1:!:$ ma5 loom efore the 'mplo5er to gi-e the Con)tractor a right to determine hi" own emplo5ment once the

period of "u"pen"ion named in Appendi 1 i" eualled:

Careful "egregation of the cau"e" of dela5 and tlieireffect" i" e""ential in -iew of the Contractor>" right" torecoup lo"" and3or epen"e in certain ca"e", under clau"e

$3

$%&4&4

!*:$:$



!+, although it mu"t e empha"i"ed that time award"granted under clau"e !* do not automaticall5 open thedoor to clau"e !+:

The two clau"e" are uite capale of operating indepen)dentl5 of one another ut ma5 on occa"ion" e unified inmatter" of time and mone5: &n the ca"e of the di"co-er5of antiuitie" clau"e 4$ clearl5 operate" uite "eparatel5

e-en from clau"e !+, dealing within it" own wall" with thelo"" and3or epen"e ari"ing from di"co-erie" of oDect" ofintere"t etc, reuiring the 'mplo5er to declare what eten)"ion he award" "o clarif5ing the ue"tion" to e an"weredin a"certaining the lo"":

?ompliance with instructions to open up or test

co,2l>6nce ;>8 8e E,2loye5.s >ns85:c"8>ons :n/e5 s868e,en8s CO 147' >n5e=65/ 8o 8e o2en>n= :2 ?o5 >ns2ec8>on o?6ny ;o5< coe5e/ :2 0>ncl:/>n= ,6<>n==oo/ >n conse:ence o? s:c o2en>n= :2CD 41% $%&4&%&$

co,2l>6nce ;>8 8e E,2loye5.s >ns85:c"8>ons :n/e5 s868e,en8s CD 1479 6n/ 1%*>n 5e=65/ 8o 8e 8es8>n= o? 6ny ;o><+,68e5>6ls o5 =oo/s 0>ncl:/>n= ,6<>n==oo/ >n conse:ence o? s:c 8es8>n= CD417 $%&4&%&3

:nless

8e >ns2ec8>on so;e/ 868 8e ;o5<+ 8e 8es8 so;e/ 868 8e ;o5<+ ,68e5>6ls

,68e5 >6 ls o5 =oo/s ;e5e no8 >n 6cco5" o5 =oo/s ;e5e no8 n 6cco5/6nce ;>8/6nce ;>8 8>s Con856c8 8>s Con856c8

CD41) $%&4&%&$ CD 41' $%&4&%&$

Statement C $1* doe" not appl5 to wor6 wrongfull5co-ered up 5 the Contractor (eg, in contra-ention ofthe Building @egulation"%: The pro-i"o" in C $1+ and$1/ are crucial: The in"pection or te"t ma5 not reall5 andcomprehen"i-el5 "how the wor6 etc when epo"ed to -iewi" clearl5 to lame or at fault: 'pert technical opinion"ma5 e needed to determine whether or not, on alance,

the wor6 i" at fault and whether the etent of opening upand3or te"ting wa" entirel5 nece""ar5 or Du"tified:

The time ta6en in "uch ta"6" ma5 need to e partl5 con)"idered a" ualif5ing for an eten"ion of time: Furthermore,under clau"e !+ the Contractor ma5 ualif5 for reimur"e)ment of lo"" and3or epen"e ari"ing from unDu"tified e)

po"ing or te"ting:

&f "eriou" "u"pen"ion of wor6 occur" due to a >fal"ealarm>, in"pection or te"t the Contractor ma5, under clau"e!/:1)!:, claim entitlement to terminate hi" own emplo5:

8owe-er, the ri"6" for the Contractor in emar6ing upon"uch a cour"e are etremel5 high where technical di"agree)ment ei"t": The uncertaint5 generall5 render" the rightineffectual:

instructions decisions etc from the

in&,#ing !#"i*ion ,n#"

*t!t"$"nt CD =17

CD 38 52320

The pro-i"o in C $!1 i" clearl5 crucial here: &f dela5 i"e-ident, and the reuirement" of the pro-i"o ha-e een metin full, the Contractor i" clearl5 entitled not onl5 to an5due time eten"ion ut al"o (if application i" made% to re)coup under clau"e !+:!: an5 "uffered lo"" and3or epen"e:&f on the other hand a dilator5 Contractor in dela5 wa"further dela5ed 5 in"truction", deci"ion", information etcnot eing promptl5 i""ued 5 the 'mplo5er and the pro-i"oC $!1 had not een complied with, the po"ition i" not atall clear:

&f the Contractor in-enti-el5 refu"e" an eten"ion oftime preferred 5 the 'mplo5er, to co-er the 'mplo5er>"own dilatorine"", the Contractor ma5 (particularl5 wherehea-5 liuidated damage" are pa5ale and high inflationi" occurring% claim that time i" at large due to the 'm)

plo5er>" reach: The Contractor ma5 al"o "tate clau"e !*cannot e operated without the Contractor>" C $!1application":

The word" of C $1* ma5 re"cue the 'mplo5er in thata failure to appl5 for nece""ar5 in"truction" could:amount

to a reach of the Contractor>" oligation to di"tantl5u"e hi" e"t endea-our" to pre-ent dela5 in the progre""of the Ior6": Thi" would al"o preDudice the Contractor>"

po"ition under clau"e !+, although he could pur"ue lo""etc at common law:

The 'mplo5er "hould, howe-er, e war5 if an applica)tion to reco-er lo"" etc i" made promptl5 5 the Contractor

under C $+4 ut no formal notification of dela5 i" madeunder C $00 uoting C $19 a" a @ele-ant '-ent: An5"eriou" reach of the 'mplo5er under clau"e !*:$:+ ma5

ring clau"e !/:1:!:* into pla5:

2elayed permissions or appro(als of any statutory body

/el6y >n 5ece>28 o? 6ny necess65y 2e5",>ss>on o5 6225o6l o? 6ny s868:8o5y@o/y ;>c 8e Con856c8o5 6s 86<en6ll 256c8>c6@le s8e2s 8o 6o>/ o5 5e/:ce

C $!!

The word" in C $!!, reuiring the Contractor to ta6e all

practicale "tep" to a-oid or reduce dela5, lin6 up with theword" of C 499 and po""il5 tho"e of C $4/: &f theContractor doe" not con"tantl5 pur"ue the "tatutor5

od5 he ma5 lo"e hi" right to an eten"ion of time: &n an5ca"e the Contractor ear" the ri"6 of an5 lo"" and3or epen"ehe ma5 incur:

>or# 'not part of this ?ontract by the 4mployer or othersemployed or engaged by the 4mployer

Thi" pro-i"ion "lot" directl5 into clau"e !9 where the 'm) plo5er, in hi" @euirement", either ha" re"er-ed right" toha-e wor6 going on, or, with the Contractor>" con"ent,arrange" for wor6 not part of the Contract to go on:

Ie eec:8>on o? ;o5<+ no8 ?o5,>n= 2658o? 8>s Con856c8+ @y 8e E,2loye5 >,"sel? 6s 5e?e55e/ 8o >n s868e,en8 CD %93&o5 ?6>l:5e 8o eec:8e s:c ;o5< o5

5232S21

8e eec:8>on o? ;o5<+ no8 ?o5,>n= 2658o? 8>s Con856c8+ @y 2e5sons e,2loye/o5 o8e5;>se en=6=e/ @y 8e E,2loye5 6s5e?e55e/ 8o >n s868e,en8 CD %9%+ o5?6>l:5e 8o eec:8e s:c ;o5<

CD 4$4

$4

Awaitingnecessary

$%&4&7

CD 4$3

5232=21



nder C $00 the Contractor i" oliged to notif5 the'mplo5er of the li6elihood of dela5 to the Ior6"> progre""due to failure" under clau"e !9: &f the 'mplo5er engage"other" who cau"e dela5 he "hould e ale to pa"" thedamage" down to the one cau"ing the dela5:

&f a "eparate application under clau"e !+:!:4:1 i" pro) perl5 made the Contr actor i" enti tled to recoup hi" lo""

etc, and if a "eriou" dela5ing reach occur" under clau"e!9 then clau"e !/:1:!:+ ma5 e rought into pla5:

6ailure or delay by the 4mployer in /he supply of mate@rials etc

The 'mplo5er ma5 write into hi" @euirement", or therema5 e written into the Contractor>" Propo"al", an arrange)ment where5 the 'mplo5er "upplie" certain material" orgood" for the Ior6":

The 'mplo5er "hould in the"e circum"tance" en"ure ifhe purcha"e" "pecial material" etc, unotainale el"ewhere,that the contract of "uppl5 co-er" the ri"6 he run" in thisContract, of an eten"ion of time eing reuired andliuidated damage" lo"t, al"o lo"" and3or epen"e eingcau"ed the Contractor due to hi" regular progre"" eingaffected if the material" are awaited, and in "eriou" ca"e"clau"e !/:1:!:+ might e in-o6ed to rai"e enormou" liai)litie":

5o(ernment imposed restrictions

The important word" in thi" pro-i"ion areE

laour which i" e""ential (C $!+% andmaterial" fuel or energ5 e""ential : : : (C $!%

The pro-i"ion deal" with the indu"trial difficultie"eperienced in the recent pa"t of fuel "hortage, powercut" and re"triction" in the "upplie" of energ5 e""entialto con"truction wor6: An5 order impo"ed 5 the 7o-ern)ment to affect the a-ailailit5 of essential laour, material",fuel or energ5, will, if cau"ing dela5 in progre"", e cla""eda" a @ele-ant '-ent:

Inabilities to secure essential labour materials or goods

8e Con856c 8o5.s >n6@>l>8y ?o5 5e6sons@eyon/ >s con85ol 8o sec:5e l6@o:5 essen8>6l 8o 8e 25o2e5 c655y>n= o:8 o? 8e Wo5<s+ ;>c le6sons 8e Cont(!to( co:l/ no8 5e6son6@ly H6e ?o5eseen68 8e D68e o? Ten/e5 o5 CD 4$' $%&4+1*&1

/he word" e5ond hi" control are crucial, "o too are theword" could not rea"onal5 ha-e fore"een: Both phra"e"mu"t appl5: Not onl5 mu"t the inailit5 to "ecure e""entiallaour, good" or material" e e5ond the Contractor>"control ut al"o it mu"t e a "tate of affair" he could notrea"onal5 ha-e fore"een at the ate of Tender, which atemu"t e in"erted in Appendi 1 5 the partie":

Thi" ate ma5 e "et efore the da5 for handing in theTender: An5 e-entualitie" undeclared or not 6nown of 10

da5" prior to the date for handing in the Tender ma5 there)fore ualif5, "ince from footnote (-% in the Appendi it"eem" intended an inailit5 fore"eeale from 10 da5" eforethe Tender ate until the ate of Tender would ran6 a"

eing unfore"eeale: 2-iou"l5 in "uch ca"e" the 'mplo5erma5 reuire the Contractor to negotiate and "ettle thefinancial effect" with him efore their "igning of the Agree)ment:

C 499 and C $4/ ma5 e utili"ed 5 the 'mplo5erif the Contractor complain" of dela5 due to "hortage" of

e""ential" ari"ing during the progre"" of the Ior6": The Con)tractor i" under C 499 epected to e on hi" toe" andaware of "hortage" trend", and if nece""ar5 "hould u5 inmaterial" etc ahead of time or re"chedule ta"6" in-ol-inge""ential laour to a-oid or reduce dela5: There i" a difficultline etween the e"t endea-our" of the Contractorwhich would not co"t him an5 direct increa"e in epen"e

and tho"e endea-our" which would co"t more: Neither C499 nor C $4/ "pecificall5 mention" whether the Contrac)tor i" epected to "tand an5 unfore"een co"t" incurred in

pre-enting dela5 or in en"uring hi" progre"" i" maintained:Ihere the 'mplo5er i" not to lame the 'mplo5er certainl5cannot e reuired to "tand an5 "um" ari"ing under C 499or $4/ unle"" he epre""l5 agree" to do "o:

There i" a lin6 etween thi" pro-i"ion and clau"e / underthe word" "o far a" procurale: The 'mplo5er "hould ewar5 where the Contractor "tate" certain e""ential material"ha-e ecome unprocurale rather than difficult to otain("ee commentar5 on thi" under clau"e / earlier%:

Statutory obligations by local authorities or underta#ings

Care "hould e ta6en in differentiating where a local autho)

rit5 or "tatutor5 underta6ing i" carr5ing out wor6 in pur"uance of it" "tatutor5 oligat ion" or i" otherwi"ecarr5ing out non)"tatutor5 acti-itie" under contract withthe 'mplo5er:

&n the former ca"e their dilatorine"" or failure to carr5out "uch oligation" i" to e con"idered under C $4031:&n the latter ca"e their dilatorine"" or failure would fallunder C $!$ (clau"e !*:$:/:1% pro(ided the5 were pro)

perl5 emplo5ed under clau"e !9< if not, the 'mplo5erwould ha-e no right to operate clau"e !* at all and the

$%

JCT Design and Construction Contract - New Approach

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Transcript of JCT Design and Construction Contract - New Approach