Operating the contract…don’t be afraid to do what you have been asked to do…
By VOLOCO LLP, Mar 29 2019 03:41PM
All forms of construction contract set out the roles and responsibilities for each party, albeit some more clearly than others. This article explains why it is important to do as you have been asked to in the contract or be prepared to face the consequences.
The procedures set out in the contract with roles and responsibilities for each party being defined are there for a reason. It is intended to allow each party to notify the other of events that may or do have implications for time and/or cost. Timely notification will facilitate a number of things…
• Informed early decision making
• Managing expectations of your client to avoid last minute “surprises” (consequences of this could be delays to their or their tenants move, increased costs that a funder may need to be aware of etc)
• Done in the right way, will encourage an open collaborative working method
HOW NOTICES NEED TO BE ISSUED…
Contracts contain clauses generally outlining what the correct format, delivery method and recipient for notices are. Make sure you familiarise yourself with what these requirements are and stick to them (nothing stops you from also sending by other methods and copying other relevant parties in).
Not following the procedure may mean the very people that need to know about these issues, don’t get informed and a failure in this regard could render a notice invalid.
Some forms of contract clearly set out a procedure for Early Warnings. Where this is the case, make sure you follow it within the prescribed time-frames or you may be giving up the certain entitlement to time/money. This will include the issue of the form itself, any follow up / risk reduction / risk management meetings etc. Even if the contract itself does not prescribe a procedure for Early Warnings, adopting a collaborative approach giving Early Warnings of issues that may impact time/cost/performance of the completed works and discussing ways to resolve the issue, can have advantages for all.
Most contracts will have a procedure for giving notice of an event that has occurred which has or is likely to have an impact on the date for completion of the project or any contractual sections. If you fail to do this in the timeframe set out in the contract, it will most likely impede your ability to obtain an extension of time. What could make this worse would be that failure to secure an extension of time in the event of a late completion, may mean you are deemed culpable for the delay and suffer damages being applied in addition to your own costs incurred as a result of the delay. You have been warned.
EXTENSION OF TIME CLAIMS…
Following on from the above, make sure that in the event of a delay occurring that you feel you are entitled to an Extension of Time for, ensure you follow what the contract says about what to submit and when and that any relevant EWN’s and/or Delay Notices have been issued as required.
VARIATIONS / COST NOTIFICATIONS…
Some contracts may require the contractor to notify if there is a cost impact from an event/instruction. Make sure you do so on time. Again, not following the procedure may lead to an inability to claim any cost impact.
APPLICATIONS FOR PAYMENT…
Make sure that each application for payment
• Follows the rules that the contract sets out.
• Adheres to the “Construction Act”.
• Sets out the value of the work being applied for with a calculation for that value
• Makes the date of the application and the period being valued clear
• Lists all items that may constitute variations (complete with references) collating all those items notified previously (even if there is not yet a value calculated – it helps to manage expectations and client cashflows)
NOTIFY AMBIGUITIES, INCONSISTENCIES, DISCREPANCIES AND DIVERGENCES…
Building contracts are usually a collection of documents that together, set out your obligations as the Contractor. Unfortunately, it is not uncommon for them to contain conflicting information.
A previously published article in Builders’ Volume 7 (November 2018), which is available on the website at www.voloco.co.uk/builders-volume, sets out what can happen and how to deal with it in a way that will protect your business.
PROGRESS REPORTS AND MEETINGS…
Ensure that any progress reports, programmes or meetings that are held delivered are both a reflection of events that have occurred and are consistent with each other and any notifications etc that may have been issued.
Inconsistency will be both confusing for all and potentially cause harm to any claims for time and/or money that are being made.
You will never be wrong to operate the contract as intended, but may well be criticised or worse suffer financial harm and perversely reputational harm for not doing so.
The contracts are chosen by your customers, the procedures to follow are there for a reason and for the benefit of both parties. Don’t be afraid to follow them. Doing so will not be a problem if it becomes part of your rhythm and routine.
Provided it is done correctly, most customers will be glad. It will allow them to make early and informed decisions. However, ensure that messages are clear, polite, written in a way that is not adversarial and it’s always good to talk with the Employer’s Agent / Contract Administrator / Project Manager as issues become apparent so that any written/formal communications are not entirely a surprise.
A conclusion to this subject that is a reoccurring element of many of the best practices, is to make sure you “know the deal”. That is to say, have read, clearly understand the roles and responsibilities for each party, and follow the procedures.
At VOLOCO, we can provide the total service solution from reviewing your contractual arrangement, providing both guidance and support on the communications etc you should be issuing.