Effects Of Amendments To Standard Conditions Of Contracts Construction Essay

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The Construction Industry in UK is flooded with a lot of published institutional standard forms or conditions of contract according to Ashworth (1998) and this has further been reported through some government led reports which has described the situation of having a lot of standard forms of contracts as a major disadvantage (Ashworth, 1998) ,which affects the construction industry and these disadvantages of having too many standard forms lead to but not limited to the following as highlighted by Ashworth(1998):

duplication of effort

wasteful of resources

vested interests

Inconsistency

Conditions of contract seek to establish the legal framework under which the construction work is to be undertaken (Ashworth, 2008) and therefore conditions of contract are a major part of the contract documents. The purpose of conditions of contract is to amplify and explain basic obligations of the parties to the contract and provide administrative mechanisms for ensuring that correct procedures are adhered to by parties (Murdoch and Hughes, 2008)

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Because there are too many construction contracts out there, this research will only focus on the three main contract forms i.e. NEC3, JCT2005 and ICE7.

NEC also known as the Engineering Construction Contract (ECC) was formed by and led by the ICE in late 1992 and was first published in 1993 and is now in its 3rd Edition hence name NEC3 (NEC,2005). NEC3 is currently being promoted and used by the public and local government Clients for most of their infrastructure projects. This form has been endorsed by the Office of Government Commence (OGC) (OGC, 2007).

JCT05 or SBC 05 (standard building contact) formerly known as JCT98 is published and promoted by the Joint Contracts Tribunal (JCT) is well known and widely used in the building section of the construction industry (Murdoch and Hughes, 2008).

ICE7 is the 7th edition of the Institution of Civil Engineers conditions of contract which was jointly published in 1999 by ICE and the Association of Consulting Engineers (ACE) and remains the common and most used form of contract in civil engineering projects especially for private clients (Ashworth, 1998)

In all instances, the above mentioned contracts; whenever there are revised by their respective publishers; they come with guidance notes or amendment notes.

The norm in the construction industry is that before the project is about to be procured or go to tender, the client and his adviser(s) will prepare tender documents which will include a proposed conditions of contract which would be used if the contract is formed.

The good and theoretical practice by Clients and their Advisers is not to try and amend or change the actual clauses within the standard form or conditions of contract, project specific information is supposed to be inserted in the contract particulars or indeed under specifications and drawings, etc and contract data part 1 in case of SBC05 and NEC3 respectively, but in practical terms Clients do amend some of the actual clauses within the conditions of contract to suit specific project objectives, therefore because of the pursuit by the Client to make sure that conditions of contract suit and meet their objectives, this research will go deep in details to find out the effects of such amends from the Contractors’ view point.

Research Hypotheses:

Which standard conditions of contracts are more adaptable or flexible to amendments?1

Can amendments to standard conditions of contract discourage the contractor from tendering or bidding for work?

Can amendments to standard conditions of contract help to promote collaborative working?

Do amendments help to achieve overall project objectives?

Do amendments help to reduce the occurrence of disputes and conflicts during the construction period?

What are the overall benefits of amending standard conditions of contract?

Aim

The main aim of this research title is to analyse the effects of amendments/changes to standard conditions of contract within the construction industry and to show whether such amendments could improve collaborative working

Objectives

To provide a general overview of the common standard conditions of contract in the construction industry

To identify and compare which standard conditions of contract is more flexible and adaptable to amendments and which one has the highest amendments

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To find out whether there is a correlation between the procurement route and the amendments to standard conditions of contracts

To examine the benefits of such amendments

To examine whether amendments could deter the contractor from bidding or tendering for a proposed project

To show whether amendments could help to reduce the occurrence of disputes and conflicts thereby helping to promote collaborative working in the construction industry.

To show why amendments are necessary to standard condition of contracts

Methodology

Step 1: Literature Research

A comprehensive review of various relevant literature including web based assisted search will be undertaken in order to develop an understanding of the subject matter in the field of construction contracts.

Step 2: Exploratory Interviews

This stage will involve exploration which will be achieved through structured interviews and questionnaires to various contract management professionals within the Construction Industry who are known to have witnessed the evolution of standard condition of contracts over the past years.

Step 3: Case Study

In this step, I will then use my own organisation (Carillion Construction) as a case to study possible effects of amendments to standard conditions of contract. Interviews with senior management in the work winning department (tendering departments across the civil engineering section of the organisation) will take place to get an understanding of effects of amendments to standard condition of contract. During this step, I’m hoping to get a list of all the proposed projects/contracts which Carillion Construction have turned down in the last 12 Months and possibly identify reasons which lead to the jobs being turned down in terms of conditions of contract.

Step 4: Evaluation of the Results

This step will bring together and review the information collected in the previous steps in which the effects of amendments to the condition of contracts has to be studied and explored. Interpretation of the results obtained from previous steps will be represented in form of but not limited to both to graphical and tabular representation