Methods of procurement and types of contract

This document provides information about the different methods of procurement and types of contracts in the construction industry. It discusses the advantages and disadvantages of general contracting and design and build methods, as well as the benefits of lump sum and cost-plus contracts. It also explains the concept of torts and discusses the most common torts in construction projects. Additionally, it covers the provision of contractual delays and the golden principles of FIDIC contracts.

BUSINESS
PROCUREMENT AND
CONTRACTUAL
PRACTICE
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Table of Contents
INTRODUCTION...........................................................................................................................3
QUESTION 1..................................................................................................................................3
Methods of procurement and types of contract...........................................................................3
QUESTION 2..................................................................................................................................5
Law of torts..................................................................................................................................5
QUESTION 3..................................................................................................................................6
Provision of contractual delays....................................................................................................6
QUESTION 4..................................................................................................................................7
Golden principles of FIDIC.........................................................................................................7
Evaluate the three factors for the contracts..................................................................................8
QUESTION 5..................................................................................................................................8
Multi-tiered dispute resolution mechanisms................................................................................8
Principles of NEC contracts.........................................................................................................9
Contribution of Donoghue and Stevenson to the tort of negligence...........................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
In accordance with the construction business as well as for large commercial projects,
procurement tends to be an essential process of collecting a specific products and services. In
fact, it is a way of allocating an effective design and contractual responsibility for the given
projects. Sometimes, the contractors used to organize the entire works as well as at the same time
take entire responsibility as a key professional consultant. However, it entirely relies on the
experience, market knowledge and resources that are used by the project manager during the
construction period (Thai, 2017). Therefore, this project intended to provide specific information
regarding the types of procurement methods along with the type of contracts needed to be use by
the Jim Akis Khan during the time of developing the houses. Moreover, discussion regarding
various torts of legislation that are involve in this process are also been mentioned effectively.
Apart from this, provision of handling delays, FIDIC, NEC principles are some highlight of this
report.
QUESTION 1
Methods of procurement and types of contract
According to the given case scenario, it has been seen that Mr. Jim Akis Khan was
looking to develop one of his land for the construction of 4units of 3-bedrooms terraced houses.
However, they don’t have any specific ideas about the procurement of their property. It has been
analysed that procurement is considered as one of the valuable factor in the overall success of the
contraction projects. It a key throughout the entire project during both design and construction
stages as well as it depends solely on the experience and other vital resources that are going to be
used by the project managers (Naoum and Egbu, 2016). Being a senior legal advisor, it is crucial
to guide Jim Akis on the most reliable procurement methods along with the type of contract
which is more suitable and sure for the Khan project. Here are some essential methods:
General contracting: It happens to be the traditional procurement method which is used
by the contractors to build the design that has been provided by Jim Akis khan. The contractor is
only liable for construction and not for the structure. The price of often depend on a bill of
quantities provided by the employer that is quantifies, so far as possible, every factors of the
work is considered effectively. However, this method of contracting is most popular as well as
favors most employers along with the contractors to gain a lot of experience.
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Justification: This particular method tends to offer huge advantage to Jim Akis khan of having
an independent professional in the role of the contract management monitoring of their project.
Further, the route offers certain price certainty in case the design has been fully scoped out
subsequent to the construction. However, it would also give Akis khan huge control of the design
by controlling the design team.
Design and build: It comes in different form, but is typified through the contractors by
taking both design and construction liability. In fact, with the proper integration of D&B
contracting the contractors tends to develop the design and start constructing the building based
on a set of requirement which was provided by Jim Akis khan (Chasey, Maddex and Bansal,
2012). However, this procurement methods is highly common and shares the benefits that is
more suitable to the Akis Khan along with the contractors that have opportunity to gain good
experience from this project.
Justification: By using this particular method, Jim Akis Khan can get a single point of role by
the contractors and capability to increase the construction work on the right track. However, it
would eliminate that adversarial condition, increase project delivery and develop a strong team
motivation because of single point of responsibility. Therefore, this method is more suitable for
the Khan to begin the construction of their houses.
Types of contract
It has been seen that the building process tends to be legal bound with the certain legal
obligation that can provide proper security to the Jim Akis Khan. Therefore, they need to get
involved in the certain contract so that chances of mistake and capital losses could be controlled.
Here are some contracts that are more suitable:
Lump sum contract: It is known as a traditional means of procuring construction as well
as still considered as most general form of construction contract. In this, a single lump sum cost
for all the activities is been agreed before the construction starts (Edwards, Irani and Sharif,
2012). It can assist Jim Akis Khan to deal with the uncertainty because the actual price which is
involved in the project can easily be analysed unless the changes are been made to it. Apart from
this, it carry certain allowances those are useful in reducing the risks to the contractors, because
in case the cost incurred maximum the risk can only be dealt by buyer.
Cost-plus contract: These type of contractor are generally related to the contractors who
gets paid for their expenses plus and decided profit involve in the construction project. It is
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usually considered as win-win option for the contractor because all type of risk are entirely been
covered as well as expenditure are likely to be paid on the completion of the project. Therefore,
it is less expensive rather than fixed price contract, since a contractor does not require charging
maximum price to deal with the risk.
QUESTION 2
Law of torts
Tort is basically known as the collection of various civil laws remedies that are entitling an
individual to recover their damage for their losses and harm which have been caused by action of
another party. In fact, it is allocated with a particular duty that has been provided remedies for
any unethical conduct that can cause harm to the individual (Karani, 2014). For example, in an
individual is liable for a tort is legally bound to the concern party who intend to offer some kind
of remedy in lawful terms. In respect to the construction project, tort debts will be arises in a
large number of ways. It will be evaluated that the most general kind of tort are, negligence,
breach of duty, nuisance and Trespass to land. These types of torts are discussed more effectively
here,
Negligence: It happens to be more eminent tort for different reason such as it forms the
cause of specific action in the plenty of cases that has been brought in tort. It has been seen that
the scope of this tort is quite large that might be a key element in liability for other torts.
However, it is basically related to the careless infliction of harm occur within the project (Snider
and Rendon, 2012). In this tort, it is vital to prove that the contractor would have no any motive
of preparing out the plan and other valuable aspects involve in the construction. The remedies or
damages incurred of negligence are primarily examined as compensatory damages. At the same
time, the most general negligence defences are contributory and assumption of risk involve in the
project.
Beach of duty: It has been seen that the professionals involved in the construction works
have the entire responsibility to make sure that other tends to be remain safe. In case someone
gets injured, the courts would look for various evidence that a breach of duty has occurred.
However, in this tort, there is no need of remedy in terms of penalty for the party that is involved
in the breach, it would be believe that a concern of civil action must be accrues to an individual
who is liable during the construction project.
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Nuisance: It is an act that is harmful to an individual associated with it and for which
they are legally liable. In fact, it happens to be most important tort that is related with an
unlawful aspect of a person those are using land. The person has entire option to include certain
amount of claim in case the party has been suffered foreseeable harm to liable property. Thus,
removable of nuisance by an individual affected, but the removable need to be peaceful as well
as it should not be endangered. However, the prescription is a being acquire to use and time
which is allowed under the law (Morledge and Smith, 2013).
Trespass to land: It refers to a common law tort that is committed in case an individual is
intentionally enters the land of another without his/her permission. Henceforth, the party those
are entered without the right or no actual harm has been sue for their actions. The remedies
commonly related to the parties or principles on which granted in trespass actions or suspension
of injunction is applicable. There are various defences to trespass to land such as licenses,
necessity and verification by legal authority.
Kelsen v Imperial Tobacco Co [1957] 2 QB 334
According to this particular case, the defendant has owned the freehold in premises from
that he operate a wholesales tobacco business. However, he leased some part of their premises to
the claimant from which he operate a tobacconist shop as well as had a flat in which he resided.
Moreover, the defendant tends to erect a sign that can protrude onto the claimant’s airspace by
total of four inches (E-lawresource, 2014). The court injunction was able to grant to deal with
the trespass of land. As per section 76 (1) of civil aviation act 1982, it provides that no action
shall be lie in nuisance by reason of an aircraft over any land at a given height above the property
which is reasonable. Moreover, S76 (2) confers that a statutory right of action in respect of
physical harm would cause by aircraft actionable without having any proof of negligence.
QUESTION 3
Provision of contractual delays
In the construction project, a compensable delays are basically those that are remain
unforeseeable as well as beyond the contractors control, but it is entitled not only for a time
extension, while also extra compensation. Basically, these are caused by legal authorities under
whom the construction has been planned (Loosemore, 2016). Henceforth, the provision for
establishing a delay claim will be getting harder. It is essential to have effective knowledge of ins
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and outs of delays clause that are associated with the construction. In the red books of FIDIC,
sub-clause 20.2 provides a specific sign or validation of delay claims. In fact, the contractor will
be liable for the claim for their enlargement of project time or any other amount, whereas as per
sec 20.2.1, it required to be delivering directly to the engineer with never less than 28days time
after the project has been finalized.
J-Corp Pty Ltd v Mladenis [2009] WASCA 157
According to this case that highlights the manner under which the builder uses the clause
of liquidation harm in respect to exclude him from any claim arising out of non-completion of
the contract in the allotted timeframe. The case serves as appropriate reminder of the requirement
of the concern party to be clear as well as concise while sending message of liquidation
implication in the contract (E-resource law, 2015). The clause 11.1 of the contract guide that the
contractor is being obliged to start the work within 21 day of issuing license as well as finish
within 52 weeks. However, clause 11.2 tend to provide that a contractor was not being liable for
any kind of delays over which it has no any control. As per the provision 11.9, in case the
contractor is responsible for breaching the obligation through no accomplishing the work on
time, J-crop Pty ltd will be liable to pay Mladenis liquidated harm at certain rate per day till the
date of project completion.
QUESTION 4
Golden principles of FIDIC
The GP tends to provide specific guidelines on different modification under the general
condition in the construction project. The provision of a contract that are relies on the un-
amended GCs would be comply with the GPs (Flynn and Davis, 2016).
Golden principles 1 (The duties, right, obligation and responsibility of the contract
participants):
This particular principle is associated with the primary role, responsibilities and rights of
the contract party that are not significantly varies from their expression in the GCs. However, it
also needed that the contract participants may be reliable to the requirements of the contract
details. This qualification is vital in ensuring a valuable FIDIC contract is being taken into
account for the particular project. The transfer of risk involve as unforeseeable physical situation
to the contractors will be mentioned under a Yellow book contract, whereas silver books is
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related to the contract form to be involve with the employer who is not willing to take the risk.
However, the employers must be obliged to clear payment under the mentioned terms and
condition in the contract, irrespective of their party financing arrangements. The freedom of a
wide interdisciplinary construction projects consists of a complex involvement between the
contract parties. Every member of the contract must have their own right, duty and obligation
that are interface with the duties and roles of other participants. According to FIDIC contract are
taken into account as more reliable to the efficient delivery of the contractual goal as well as
suites to the ability posses by the contract participants.
Evaluate the three factors for the contracts
As per the present analysis, it has been seen that the primary factors that impact the
construction project is related to the cost predication decision that are tough according to the
project, scale and nature of construction as well as market situation (Caldwell and Howard,
2014). In fact, the completion of a construction project is basically involved various factors and
attributes of several aspects that can contribute to their extended impacts on the project. Here
mentioned are some of them:
Early involvement: It happens to be an utmost valuable factor that is associated with the parties
along with the other team members involve in the project planning. It intends to include
maximum focus on the early phase of the project so that a proper base structure could be design
for the project.
Qualification-based selection: It is essential to look after the various employees or workers
those are associated with the construction work. The company need to hire those staffs which are
having a valuable qualification and experience in their construction project. The motive behind is
to get maximum potential from them so that success in the project could be attain.
Cost transparency: Cost is another important factor that is incurred during the project planning.
Therefore, the contractors need to maintain flexibility in the flow of cost so that maximum output
could be generating at the end of the project (Baker and et.al., 2013).
QUESTION 5
Multi-tiered dispute resolution mechanisms
For any project, it is important to have a proper dispute resolution process to that the
grievance of their staffs and workers could easily be resolved. Therefore, the contractors need to
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include some specific dispute resolution clause in the contract so that the party need to take
action against their team members. Moreover, the traditional importance of engineer is based on
the national construction dispute body that intend to determine the technical problems involve in
the construction project planning. Here are some key ADR techniques that will effectively
considered in construction work.
Arbitration: It happens to a form of alternative dispute resolution method which is
responsible for analysing the problems that are arises within the construction work. It will
determine by more than one person that renders the arbitration award. They are legally award is
legally binding on either side of the matters. The clauses will be both essential and voluntary in
case of binding and non-binding situation (Rubino-Sammartano, 2014). As per the FIDIC
policies, the dispute resolution intends to deliver a final outcome to the concern party. The
decisions tend to be delivered simple and easy effects on the involved party. In accordance with
the commercial agreement, it forms a dispute resolution pattern that is managed by the arbitrator.
It will provide a valuable solution against the matters that was arises between the party and
contractors.
Principles of NEC contracts
It tends to be associated with the family contract that is related to formulate an efficient
construction project evaluation principle. It is considered as a valuable step along with the
diverse range of staffs, material and works those are involved in the large projects. Some key
principles are;
Flexibility: It provides more flexibility to the parties in order to promote the easy access to
the procurement of the project and regular management of the construction project.
Clarity: There should be a clear communication between the parties those are involve in
the project. It will be available with a proper structure along with the flow charts that is done to
control the overall success of the project (Davis and Thurlow, 2016).
Stimulus to project management: This principle tends to be a large range of mechanism
in respect to promote an efficient management of the project. Hence, it has valuable estimation
of time, cost and other important aspects those are related to the construction work.
Contribution of Donoghue and Stevenson to the tort of negligence
Donoghue v Stevenson [1932] UKHL 100
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Under this case, Mrs Donoghue went to a café along with their friend. In fact, the concern person
has brought her a bottle of ginger beer with an ice-cream. The bear came in an opaque bottle
therefore the content could not be analysed effectively. She poured half of the content from the
bottle over her ice-cream as well as drank some of them. After that, Donoghue intend to suffer
from an individual injury as a final outcome. However, she decided to file a claim against the
producer those are producing ginger beer (E-resource law, 2015).
The court has considered the claim effectively. In this case, it has been established the
modern legal law of negligence as well as determine the neighbour test. It has been decided that
a legal responsibility of concern has been examined by the Lord of house. Moreover, it was
directly transfer this particular case to the Scottish cort to be tried on the specific matter related
to duty of principles. Because Stevenson was died earlier, hence the entire sum as settlement has
been beard by Mrs Donoghue. The final amount paid is disputed, while it was finalised with a
total amount of £ 200 as compensation. The contribution made by the Donoghue was justified
under the tort of negligence.
CONCLUSION
From the above the above project report, it has been articulated that the procurement
within any business operation is more valuable factor for the organization. It will intend to
deliver a key platform for the concern party to take action against the contractors for their
mistakes that was involved in the construction project. However, it is important to make use of
effective method, type of contract that can positively deliver maximum solution to Jim Akis khan
for their future planning process. Further, it will be covered with the concern tort of law, FIDID
and NEC principles. Henceforth, it is crucial to have better understanding of legal terms
associated with the construction project so that future obligation can be justified effectively.
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REFERENCES
Books and Journals:
Baker, E., and et.al., 2013. FIDIC contracts: law and practice. CRC Press.
Caldwell, N. and Howard, M., 2014. Contracting for complex performance in markets of few
buyers and sellers: The case of military procurement. International Journal of
Operations & Production Management. 34(2). pp.270-294.
Chasey, A.D., Maddex, W.E. and Bansal, A., 2012. Comparison of public–private partnerships
and traditional procurement methods in North American highway
construction. Transportation research record. 2268(1). pp.26-32.
Davis, T. and Thurlow, P.N., 2016. Briefing: Good faith obligations in NEC
contracts. Proceedings of the Institution of Civil Engineers-Management, Procurement
and Law. 169(4). pp.145-146.
Edwards, D.J., Irani, Z. and Sharif, A., 2012. Participatory action research approach to public
sector procurement selection. Journal of Construction Engineering and Management.
138(3). pp.311-322.
Flynn, A. and Davis, P., 2016. The policy–practice divide and SME-friendly public
procurement. Environment and Planning C: Government and Policy. 34(3). pp.559-578.
Karani, B.K., 2014. Procurement methods and procurement performance amongst state
corporations under the national treasury of Kenya (Doctoral dissertation, University of
Nairobi).
Loosemore, M., 2016. Social procurement in UK construction projects. International journal of
project management. 34(2). pp.133-144.
Morledge, R. and Smith, A.J., 2013. Building procurement. John Wiley & Sons.
Naoum, S.G. and Egbu, C., 2016. Modern selection criteria for procurement methods in
construction. International Journal of Managing Projects in Business.
Rubino-Sammartano, M., 2014. International arbitration law and practice. Juris Publishing,
Inc..
Snider, K.F. and Rendon, R.G., 2012. Public procurement: Public administration and public
service perspectives. Journal of Public Affairs Education. 18(2). pp.327-348.
Thai, K.V., 2017. International public procurement: concepts and practices. In International
handbook of public procurement (pp. 33-56). Routledge.
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Online
NEC principles, 2015.[Online]. Available through: <
http://www.civil.hku.hk/cicid/3_events/20190625/presentations/Updating_from_NEC3_
to_NEC4_Dennie_Li.pdf>.
FIDIC principles, 2016.[Online]. Available through: < https://fidic.org/>.
E-resource law, 2015.[Online]. Available through: <
http://www.e-lawresources.co.uk/Donoghue-v-Stevenson.php>.
E-resource law, 2014.[Online]. Available through: < http://e-lawresources.co.uk/Land/Kelsen-v-
Imperial-Tobacco.php>.
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