Business Procurement and Contractual Practice

This document discusses business procurement methods and types of contracts, as well as different types of civil tort in the construction phase of a project and their remedies. It also evaluates provisions in three forms of contracts and how they are handled. Additionally, it discusses the golden principles of FIDIC and factors for selecting types of contracts.

Business procurement and contractual
practice
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Table of Contents
Question 1........................................................................................................................................3
As senior manager advise him procurement method and types of contracts...............................3
Question 2........................................................................................................................................4
Discuss four types of civil tort in construction phase of project and remedies...........................4
Question 3........................................................................................................................................5
Critically evaluate provision in three forms of contract and how they are handled....................5
Question 4........................................................................................................................................6
a) Discuss golden principles of FIDIC........................................................................................6
b) Evaluate three factors for selection of types of contracts........................................................7
Question 5........................................................................................................................................7
a) Discuss principles of NEC contracts.......................................................................................7
b) Discuss contribution of Donoghue and Stevenson to tort of negligence................................7
REFERENCES................................................................................................................................9
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Question 1
As senior manager advise him procurement method and types of contracts
Procurement refers to obtaining of goods, services, etc from third party or external vendors. It is
essential to select a proper method so that materials can be occupied at low cost and quality is
also maintained. Besides that, there are various other factors as well which needs to be take into
consideration such as risk, quantity, etc. so, basically procurement method depends on type of
contract. Similarly, as per case study of Mr. khan there are different types of methods available..
they are as follows (ALABI, 2018 )
Open tender – as name shows this method allows companies to openly bid for tender. But there
is intense competition in it. the bidding is done on cost and on low cost company bid is selected.
Restricted tender- it is also known as selective tendering method as here, there are only few
number of companies that are allowed to bid for tender. Thus, the bidding is done on basis of
cost fixed by service provides.
Request for proposal- it is a type of method in which company review proposal sent by client
and after analyzing it company give response. Usually, it is time consuming process as there
are various stages to be covered in it. at first stage only financial info is sent.
Request for quotation – the method is simple as there are limited suppliers and their quotation
are selected. Thus, after reviewing it on basis of cost and terms and conditions quotation is
finalized.
Thus, in Mr Khan case, open tendering method is suitable. This is because as he is not
having any knowledge in it. here, contractor can be allowed to bid for tender. So, by analyzing
the lowest cost tender mr khan can select it. besides that, he can engage with contractor and
design interior of building. With that it will be easy for him to proceed in systematic way
(Baranovsky, Tkachenko, and Zelenitsa, 2020). Moreover, he can do planning with supplier as
this is a large project so cost can vary. Along with it, there are different types of contracts as
well which needs to be selected in construction project. The contract must be suitable as per
client needs. Thus they are mentioned below (4 common types of construction contracts, 2016,)
Fix price- here, contract of overall project is fixed. But there are some benefit and penalty
included in it as well. generally, in this scope of project is fixed and there is high risk for
builder. The terms and conditions are specified clearly.
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Cost plus- in this method cost of project consists of direct and indirect cost. The project scope is
not fixed.
Unit price – it is a type of method in which unit price of project is set while bidding. So, when
project scope is changed the prices are modified as well.
Time and material contract- the method is suitable when project is small. In this owner and
contractor agree of indirect and direct cost to be incurred on daily rate.
So, in case study of Mr khan unit price contract method is suitable. This is because it
will enable in fixing price of each house. Also, if khan wants to construct only 3- 4 house then
project scope is modified. So, on basis of that unit price can be changed. Furthermore, it will be
useful for him as he will get overview about how much each house will cost. Alongside, there
is chances of risk is for both owner and contractor. So, in this way it becomes easy to manage
risk and completing project on time (Israel, and Curkovic, 2020).
Question 2
Discuss four types of civil tort in construction phase of project and remedies
In a construction project there are various kind of issues which care faced. This highly
impact on project. Similarly, owner may face tort issue that can led to rise in cost of project.
Basically, tort refers to causing harm or injury to others. Thus, in this case injured person may
sue other party in legal way to cause damage. So, there are plaintiff and defendant in tort case.
The law state that whether any liability needs to be paid by party for causing injury or not. In
addition, it also state what type of compensation is to be paid. There are 4 element in it that are
duty, breach of duty, cause and injury. However, civil tort is common in construction. Besides
that, there are various types of tort which can occur. They are specified as below: (Types of tort,
2019)
Negligence- this is a type off tort in which there is careless damage done. The omission is
made due to which a person guide on some consideration which regulate human conduct. In this
there is breach of duty done by owner. Due to carelessness damage is done and this leads to
impact on project as well. hence, there is breach of duty of care in it (Mchopa, 2019 ).
Nuisance- in this there is unlawful interfere of land with another person. This may include
certain rights with neighbor land. It is known as nuisance. This is categorize into 3 that is
public, private and statutory. Private nuisance occurs when individual claims to occupy his or
her. For that there must be substantial proof. It will restrict in interfere of land. Generally, it
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happens in construction project. But it is not done intentionally in it. however, public nuisance
occurs as criminal offence and government pursue person. Here, it impact on comfort as well as
convenience of particular group. At last statutory nuisance comes under environment protection
act 1990. This state to pollute the environment surrounding that is water or air. So, during
construction there any damage done to it results in taking legal action against it.
Trespass to land- this type of tort occurs when there is unlawful entry to another person land
even if land is being ceased. It also contain of throwing raw material on others land
intentionally. Thus, it results in taking legal action against it (Rane, and Thakker, 2019).
Strict liability- here, injury is caused by doing wrong or having no proof of negligence in it. so,
in this case action is taken against that person. in this there are many types of liability as well.
negligence liability refers to when person gives info which falls into duty of care. apart from
that, vicarious and occupiers are some types of liability in it.
Therefore, these are some types of tort which occurs during construction. They are
based on different basis and duty of care in it. besides that, in all tort legal action taken is based
on damage or injury done to person. however, there are different terms and conditions as well
that is applied in tort. So, according to injury done in tort action is taken. It binds owner to be
legally liable for tort done.
Question 3
Critically evaluate provision in three forms of contract and how they are handled
Generally, there occurs delay in construction project due to several reasons or factors. due to
this delay there is increase in cost as well. Therefore, it is difficult for contractor to manage it
and complete within specified time. so, in order to do so there are certain provision which can be
applied in it. this enables contractor to handle and manage project in effective way. Also, with
help of that provision contractor can claim for money . they are explained as below (Roberts,
Menna, and Finucane, 2019)
JCT SBC/Q 2016- there are many provision in it as under section of 2. 27 notice is given in
case of delay by builder to owner. In this it includes all info regarding reason for delay and
events occurred. Along with it, as per section 2. 27. 2 builder has to provide info that how
event will impact on project and what measures is to be taken to prevent it. in addition, under
JCT SBC owner is entitled to give some relaxation to builder to complete project under clause
2. 29.
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NEC4 ECC- in this there are certain terms included related to delay of project. So, here
contractor has to give notice prior to 8 weeks of time in case of any delay. But there may arise
issue in case contractor fails to do so. However, as per section 31 builder program is rejected
if response is not given within specified time period.
FIDIC red book 2017 - the book consists of various methods of setting of claim between owner
and builder. So, as per section 20 the methods are. In first one owner is allowed to make
payment and for that additional time is given. The second method allows in setting of claim
which does not fall under first method. So, for that 28 days is given in case event occurs.
Thus, it can be stated that different provision are applied within contract. So, they vary
from one another and is also dependent on what type of event has occurred. Accordingly,
measures are taken in regard of builder and owner. With help of provision it become easy to
negotiate between them and completing project on time. Alongside, it gives overview to owner
that what event has occurred due to which project is delayed (Baranovsky, Tkachenko, and
Zelenitsa, 2020).
Question 4
a) Discuss golden principles of FIDIC
The main purpose of FIDIC is to ensure that all contract must comply with needs of
project and follow laws and regulation and contract law. Golden principles are followed in that
and they are non avoidable. Thus, GP are discussed as below
The first principle state that roles and responsibility of party needs to be applied in general
condition. Also, it must be as per requirement of project.
Second principle state that any change in contract needs to be specified in clear way. Moreover,
it must be explicit.
The time period within contract must be clearly specified with reasons
No changes should alter original balance of risk allocated in general conditions.
If conflict arise is related to contract law than it must be considered as dispute avoidance or
dispute adjudication board. So, with that it will be easy in taking decision and then it can be
considered as arbitration. This must be intend to operate as condition precedent (Israel, and
Curkovic, 2020).
Furthermore , it has been mentioned that FIDIC needs to be comply with golden
principles which are in practice. But there is no contractual effect on non binding on those GP
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practices. However it is critiqued that FIDIC needs to manage party with help of general
conditions. Also, during press release for GP language used in it was interesting. This was
done to maintain integrity and privacy of FIDIC contracts and to ensure that client are not given
any false or wrong information. Basically, FIDIC is contract which support the conditions
mentioned in it. the conditions are used as base in it. So, those who are involved in
construction will be able to know principles of contract and how to manage it. usually, it is a
form which must be adhered to fulfill competing interest of parties engage in transaction. It
fundamentally alters the originally intended risk balance and is that standard form the acceptable
starting point (Rane, and Thakker, 2019).
There is impact of GP as shift in previous user of FIDIC in regard to customize contracts
which allows party to deal with actual need of project in flexible way. However, as long as party
agree on liberal terms, they keep contract simple and easy to be understood.
b) Evaluate three factors for selection of types of contracts
There are many levels of contract necessary for the contracting officer to have the proper look
out in item of the selecting and negotiating the contract types.
Price competition and cost analysis
Normally, effective price level competition results in term of realistic pricing and fixed price
contract turned out to be part of government interest. there is need for the proper price analysis
with or without competition by providing a significant basis for selecting the different contract
type. In addition, degree price analysis help in providing the realistic pricing standard for the
careful consideration (Ceil, 2019). It is essentials to have clear lookout over different possible
uncertainties cost identification and evaluation. This makes the contract to have reasonable
degree of cost responsibility upon the contractor for the proper negotiation.
Type of complexity of the requirement
The existence of complex requirements especially unique to government have been resulted in
greater level of risk assumption. There is need for truthful complex research and development
contract under different condition. The contract should have proper estimation of the
performance cost in advances as it is very difficult to have look over performance uncertainties.
as the requirements have recur or quantity production have started, in that situation there cost
risk is properly shifted to the contractor and only fixed cost is needed to be considered.
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Urgency of the requirement
On the other hand, it is important for proper notes in term of urgency, as there is the greater
level of assumption in proportion of risk. It can have the proper offering of incentives tailored
toward the performance outcomes. In the time of the economic uncertainties, the respective
contract which have been tended to relatively longer may have clear requirements over the
economic price adjustments or price redetermination clauses.
Extent and nature of proposed subcontracting
It is possible in the nature of contract proposes the extensive level of subcontracting, there
should be proper reflecting of contract types with actual risk to the prime contractor. Contractor
risk tends to be usually have decrease in the repetitive requirements. It is also important to have
note contract involves concurrent operations under other contracts, the impact of those contracts,
including their pricing arrangements, should be considered.
Question 5
a) Discuss principles of NEC contracts
NEC is the family of contract which helps in the application of good management principles and
practices defining the legal relationship. NEC take in clear vision to be became global leaders by
promoting best available practices, procurement of works, services and supply. This type of
contract is considered to be suitable for procuring the diverse range of works, service and
respective supplies (Tan, 2018). The work is ranging from major level of projects a through
minor working such as the purchasing of supplies and goods. This category contracts are helpful
in producing major benefits from national and international projects in term of managing time,
cost, saving and improvement in quality.
On the other hand, for more restricted interpretation in term of handling mutual trust and
cooperation’s have intended level of support and encouraging the open, proactive, project
focused and problem-solving mentality embedded in NEC. The doesn’t have the requirements in
parties to give significant fundamentals right by looking the providence over privilege of over
the other. The principle is such as-
 Mutual trust and good faith
The principle have been the approach to be good faith over enterally in line with the recent
overall approach of the English courts. These have been various emphasized that’s the good
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faith did not blurt with hard edged contractual rights or requiring the parties to have their
own commercial interest.
 Uneasiness on “fairness”
As per the principles have unwillingness to give proper concept of fairness role in the
interstation. Commercial common sense and surrounding the cases with the differ
interpretation. On other hand their commercial common sense and the surrounding
circumstances which have been deployed to clarify the party deals. The same point has to be
in reaches for any broad level of concepts in fairness included in contract. this is no be used
to have unseat to specific terms.
b) Discuss contribution of Donoghue and Stevenson to tort of negligence
Donoghue and Stevenson are also known as the ‘snail in the bottle case’ as significant case in the
western law. The ruling case have clear establishment of civil tort of negligence’s and obliges
level of business by observing the duty care towards the customer. This case has been
landmarking for ort law as wider importance’s with establishment in general principle. This is
duty of care concept in the law as generally referred to the “neighbor test” or “neighbor
principle”. Similarly, owner may face tort issue that can led to rise in cost of project. Basically,
tort refers to causing harm or injury to others. Prior to Donoghue v Stevenson, liability for
personal injury in tort usually depended upon showing physical damage inflicted directly
(trespass to the person) or indirectly (trespass on the case). The decision has the several level of
component contributions as negligence is distinct and sperate. Moving on second, they don’t
have the need to be contractual relationship for the dusty establishments (Bell, 2018). At last, the
third manufactures have owned the duty to the consumer who have the intended to make usage
of product. Donoghue was not the first case to attempt to sever the dependence of negligence on
contract; a few years previously by appearing the reasonable and equitable circumstance part
altogether form the contracts. There is development of neighbor principles which have major
level of concern over the economic loss. It has been emerging addition to the foreseeability of
damage necessary involvements of the ingredients. This have been certain degree of overlap
between the requirements and the pursuit of an unrestrained culture of blame and compensation
has many evil consequences and one is certainly the interference with the liberty of the citizen.
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REFERENCES
Books and journals
ALABI, S.O., Factors Militating Against Efficient Procurement Processes in Small and Medium
Enterprises. Editorial Board, p.324.
Baranovsky, A., Tkachenko, N. and Zelenitsa, I., 2020. Non-Price Criteria for the Evaluation of
the Tender Offers in Public Procurement of Ukraine. International Journal of Financial
Studies, 8(3), p.44.
Israel, D. and Curkovic, S., 2020. Indirect Procurement: A Literature Review and Study of
Trends. American Journal of Industrial and Business Management, 10(04), p.775.
Mchopa, A.D., 2019. BOOK REVIEW PROCUREMENT RISK: SHORT GUIDE TO
BUSINESS RISK BY RICHARD RUSSILL. ASHGATE PUBLISHING LIMITED,
FARNHAM–ENGLAND, 2010. ISBN: 978-0-566-09218-3. 132 PP.
Rane, S.B. and Thakker, S.V., 2019. Green procurement process model based on blockchain–IoT
integrated architecture for a sustainable business. Management of Environmental Quality:
An International Journal.
Roberts, A., Menna, B. and Finucane, T., EFFICIENCIES IN PROCUREMENT AND
LICENSING OF TYPE B FISSILE PACKAGE.
Ceil, C., 2019. Tort of Negligence, Caparo Test and Alternative Dispute Resolution. Caparo Test
and Alternative Dispute Resolution (September 17, 2019).
Tan, B., 2018. An Unwanted Child: Awards for Damages in the Tort of Negligence. Sing. Comp.
L. Rev., p.97.
Bell, A.J., 2018. Damages for non-pecuniary loss in the tort of negligence: a reconceptualisation
(Doctoral dissertation, University of Birmingham).
Online
Factors in selecting contract types, 2017. [online] Available through :
<https://www.law.cornell.edu/cfr/text/48/16.104 >
4 common types of construction contracts, 2016, [online] Available through :
<https://www.thebalancesmb.com/common-types-of-construction-contracts-844483 >
NEC contract, 2018. [online] Available through : <https://journal.iaccm.com/contracting-
excellence-journal/nec-contracts-are-they-right-for-you >
Types of tort, 2019, [online] Available through : <https://www.injurylawcolorado.com/legal-
library/tort-law-types.html >
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