THE GOLDEN RULE

Updated: Sep 27, 2021


Construction Risk Management, Construction Litigation, ADR, Construction Claim, Construction Law, Construction Contract Management, Construction Project Management


READ YOUR CONTRACT AND MAKE SURE YOU FULLY UNDERSTAND EACH CLAUSE


Construction Contract, Construction Risk Management, Construction Litigation, ADR, Construction Claim, Construction Law


Construction Law, Construction Risk Management, Construction Litigation, ADR, Construction Claim

Documentation

  • Make sure you have all the documentation and information for your review – the contract must be read as a whole!

  • The material information must be filled out (name of the parties, price, terms, governing law, etc.).

  • Schedules must be provided.

  • Documents mentioned in the contract must be obtained and reviewed (i.e., documents incorporated by reference, client’s internal policies, protocols, main contract, etc.).

  • AVOID documents incorporated by reference. If important, attach them as schedules.

  • Make sure to have all the pages and that references to appendices, links or separate documents lead to an existing clause/appendix/document.


Construction Law, Construction Risk Management, Construction Litigation, ADR, Construction Claim

Parties Involved

  • Make sure the contract clearly specifies all of the parties that will involved in the project:

  • Who are the co-contracting parties?

  • Who are the other parties involved in the project?

  • What hired them?

  • Who are they representing?

  • Who is responsible for their acts and omissions?

  • This should not be in appendix or scope of services, but rather in the main agreement.

  • Include a clause indicating that the client is fully responsible for the acts and omissions of its representatives/agents (i.e., if they fail to provide information or access to site, which impacts our ability to deliver the services).


Construction Risk Management, Construction Litigation, ADR, Construction Claim, Construction Law

Schedules

  • AVOID incorporating the proposal or the RFP.

  • Scope of work:

  • The Golden Rule: Be precise, clear, and exhaustive! Most problems/litigation can be directly traced back to a vague or imprecise scope of work.

  • NEVER simply refer to another document (i.e., proposal or RFP).

  • Use the same defined terms as in the contract.

  • Do not include content that is not with the scope of services (to avoid terms that are in contradiction with main contract).

  • Avoid open-ended working (i.e., “including”, “in general”, “not limited to”). Use the word “services” rather than “work” or “product”.

  • Avoid the use of adjectives (i.e., “fully”, “complete”, “best” etc.)

  • A good scope of work need not to have a lot of text.

  • Describe the specific tasks you will perform.

  • Use a “work breakdown structure” to organize the overall project into smaller work packages, and then into detailed task lists.


Construction Risk Management, Construction Litigation, ADR, Construction Claim, Construction Law, Construction Project Management

  • List EXHAUSTIVELY all:

  • Basic services.

  • Additional services.

  • Most importantly, Excluded services.

  • Site supervision, Inspections, Presence on site and Supervision of sub-consultant (which one specifically) should be in one of these categories, and the contract should be priced accordingly.


  • Specify limits on potentially repetitive items and activities we do not control. For example:

  • Number of project meetings.

  • Number of design concepts.

  • Number of public meetings.

  • Duration of construction review.

  • Duration of site observation/supervision.

  • Number and frequency of site visits or reports.

  • Number of client-initiated design changes.


  • Dangerous words:

  • Supervise, control, direct: only for GC.

  • Inspect, attend, review, visit, approve, certify: need to be limited.


  • For multi-year contracts, consider fee escalation provision.


Construction Risk Management, Construction Litigation, ADR, Construction Claim, Construction Law

Time schedule

  • Incorporate it as a schedule to the contract.

  • Make sure all deadlines are reasonable and achievable.

Fees/Prices

  • Are for Basic services.

  • Include price for foreseeable additional services.

  • Specify if it includes/excludes taxes.

  • Specify included/excluded expenses.

  • Fixed fee ≠ forever: indicate in contract that it is for the project and duration as offered and quoted.

Payment

  • Tip: If payment is based on percentage of completion of the work, break down the work in as many steps as possible to trigger faster and more regular payments.

  • Consider asking for mobilization payment(s).

  • NEVER work for too long without a payment – monthly payment or short milestone payments are required.

  • Stop/suspend services.

  • Retain drawings/documents until full payment is received.

  • Terminate the contract in case of non-payment.


  • Specify interest rate for late payment.



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