Construction Business and Law: Group Report

This study provides insights into the legal, management, and procurement aspects of construction in the UK. It discusses the choice of procurement route, standard form of contract, obligations and liabilities of related parties, and contract documents for tender.

Construction business and law 1
CONSTRUCTION MANAGEMENT: GROUP REPORT
By (student name)
Professor (tutor)
School (university)
Location
Date

Construction business and law 2
Contents
Introduction......................................................................................................................................3
1. Choice of most appropriate procurement route...........................................................................3
2. Standard form of contract..........................................................................................................10
3. Obligations, power and liabilities of related parties..................................................................11
4. Contract documents to be prepared for tender...........................................................................12
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

Construction business and law 3
Introduction
This study avails an insight to the different legal, management and procurement aspects that need
consideration for development of a construction product in the United Kingdom. Based on the
given case different aspect of contract, tendering and procurement has been evaluated.
1. Choice of most appropriate procurement route
Traditional method
The traditional method or the general contracting method is sequential in nature as the initiator,
the employer or in this case the developer, works on the scheme or the plan to an advance level
before approaching a contractor.
Figure 1: Links in rational procurement rout
(Source: Brook, 2016)
Employer
Contract administrator /
Quantity surveyor
Contractor
Supplier Sub-contractor

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As has been observed in the given case, the developers have little experience in management and
procurement, yet have a detailed understanding of the development and design therefore this
procurement route might be suitable for the development. However evaluation of the route based
on its advantages and disadvantages is essential. The following table avails an insight to the pros
and cons of the traditional method:
Pros Cons
 Certainty in terms of quality
 Highly competitive (Bako, 2016)
 Provides the client or contractor a clear
understanding what the builder plans to
offer
 Popular method
 Accountability is certain
 Attractive to clients due to certainty
 High sale (Brook, 2016)
 Time consuming
 Provides less scope for improvisation
 Changes or variations in the plan causes
huge impact on the cost
 Has an adversarial tone (Bako, 2016)
 Fails in addressing the issues like
controlling the disputes or issues
 Lack of awareness of the work of
design and construction departments
(Brook, 2016).
Table 1: pros and cons
(Source: created by student)
From the table above it is evident that lack of interaction between departments might be a
hindrance in successful completion of the project. However, appointment of an in-house project
manager might be helpful in mitigating this issue as here the project manager might be utilized as
a management tool instead of a procurement instrument like a consultant.

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Design and build
Design and building offers simpler contractual links than the traditional procurement route,
hence appealing more to the clients. It allows the contractor to take responsibility of the design
and construction.
Figure 2: Contractual links in design and build procurement rout
(Source: Brook, 2016)
As can be seen from the figure above, the entire operation is controlled by a single entity, hence
leaving little chance of conflict. Result of such link might be explained better through the
following table:
Pros Cons
 Single-point control and responsibility
 Less time consuming
 Contraction can start early
 Better link between design and
 Sole control is in contractor’s hands
 Whole risk is also attributed to the
contractor
 As one entity control design and
Employer
Employer’s agent
Contractor
Design team Sub-contractor

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construction (Bako, 2016)
 Ability to deliver a semi-standardized
product, customized partially as per
client’s preference
 Less adversarial relationship
construction, it can raise cost issues
 Client enjoys little say in design
without a consultant
 Making changes is expensive and
sometimes impossible (Bako, 2016)
Table 2: advantages and disadvantages
(Source: Created by student)
From the table presented above it can be noticed that the developers or the client would have
little control over the operations during the development or the construction. As can be noticed in
the given case, the builders might be in-experienced in the management or procurement of the
building process they have a sound understanding of the design and construction. Hence this rout
might not be suitable for the current case.
Management contracting
In such type of contract procurement emphasis is given on the design as the contractor is
responsible for development of an urgent design.

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Figure 3: Links in management contracting procurement rout
(Source: Brook, 2016)
Contractor here serves as the agent of the designer team and overlooks the entire process of the
construction as the different sub-contractors undertake specific tasks. While this allows
dispersion of the responsibilities among different teams it also allows a tight hold on the
schedule and budget.
Pros Cons
 Construction can start before
completion of design
 Better scope for updating and
improvement (Bako, 2016)
 Better coordination between specialist
and facilities
 Tight control over budget
 Does not provide price-certainty
 Expensive due to high scope for
updating (Brook, 2016)
 Client faces the risk and uncertainty of
expenses
Employer
Consultant team
Management contractor
Works contractors

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Table 3: Pros and cons
(Sourced: created by student)
Management contracting might provide the builders considerable amount of liberty to complete
the construction in terms of flexibility of the design and time. However the lack of experience in
part of builders might prove to be a hindrance in this process as the builders might not be able to
manage the entire construction process by connecting different specialist groups.
Construction management
In this procurement path the client or the project manager of the client takes an active part in the
construction phase. This might be better understood through the following figure:
Figure 4: Contractual link in construction management
(Source: Brook, 2016)
Though in UK the client sometimes might not be interested indirectly interacting with the sub-
contractors, appointment of a project manager caters to this requirement.
Employer
Consultant Team
Construction manager
Works Contractor

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Pros Cons
 Certainty of time
 Certainty of cost
 High quality achieved (Bako, 2016)
 Value for money spent
 Flexible in terms of making changes
 Allows the construction manager pre-
entry in the design process (Bako,
2016)
 Allows the clients a chance to evaluate
the risk of the project
 Client faces the risk of the project
 The client needs to be extremely
specific in terms of brief
 Needs close supervision and effective
control (Brook, 2016)
 Client needs to have background of
construction
Table 4: Advantages and disadvantages
(Source: Created by student)
Through the comparison of different procurement route it is evident that the traditional method
and construction management is the two best suited procurement routes for the given case as it
allows the maximum scope for the builders to use their strengths as designers and their
experience in construction. However, their lack of experience calls for participation of an
experienced entity in form of a consultant or project manager that would allow them better
participation in the construction process. Therefore, construction management is a better suited
procurement route for the given situation.

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2. Standard form of contract
Several different forms of contract are used in the United Kingdom for the construction
purposes. The following chart compares these forms of contract on different criteria to identify
the best suited standard form of contract for the given situation.
JCT 98 ICE
conditions
of contract
ACA FIDIC
Conditions
of
Contract
GC/
Works/ 1
(1998)
0
2
4
6
8
10
12
14
Variation capacity
Speed
Clarity of remedies
Cost certainty
Complexity
Client involvement
Design - management separation
Chart 1: Comparison of different standard forms of contract
(Source: Constructing Excellence, 2015)
Comparing the different forms of contract it can be identified that the ACA form of the
Association of Consultant Architects is the most suited one for the given situation. While it
allows the considerable amount of client involvement, it is also capable of addressing the aspects
like complexity, capability for variation clarity of remedies, cost certainty and speed
(Constructing Excellence, 2015). On the other hand it is also capable of availing the scope for a
moderate level of separation between the design and management which ensures independence

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of the specialists without cutting them completely from the construction. It provides a
considerably less complex variation of the rather complex forms that are used for the contracts.
As the developers in the given case are inexperience in such aspects, utilization of a simpler form
of contract might be helpful in maintaining the transparency and for effective communication.
Another reason for choosing it is its lack of amendments, which makes it easier to keep up with.
Its simplicity can also be observed in the fact that it offers standard clauses as alternatives that
might be modified for meeting the specific requirements of the parties. This flexibility and
simplicity of ACA contract makes it a preferred option for this particular case as it would be
easier to understand for the rather inexperienced builders of the given case.
3. Obligations, power and liabilities of related parties
As per the standard conditions of the Association of Consultant Architects standard form of
contract the risk to a large extent is to be borne by the building team. This also allows the
building team to enjoy much control over the decisions. It also limits the design liability to the
contractor through the clause of “reasonable care and skill” (Hughes, Champion and Murdoch,
2015). It also seeks the contractors to take responsibility of the design as a part of the work. The
obligation of the employer included payment for not just the work assigned at the beginning of
the contract but also for the extra work assigned to the contractor or the sub-contractor (Hughes,
Champion and Murdoch, 2015). The client is also obliged to inform the contractor of the details
of the design and the condition of the premise. In addition the client also has the obligation
regarding the health and safety of the individual employed for the construction work. Similarly
the contractor is obliged to take responsibility for any defect to the work and make
improvements to meet the contractual standards. Completion of the work within the given time is
another obligation of the contractor; however insufficient completion of such terms would not

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lead to termination of the contract. Rather the contractor would be held liable to complete the
missed marks.
The sub-contractor is liable to the employer for completion of the task assigned to them and for
explanation in case of failure in doing so. Both the parties are liable under the tort law in case the
obligations created by the contract. Along with the liabilities and obligations the contract
administrator enjoys certain powers. For instance the contract administrator enjoys the power of
issuing variations in the design based on the potential improvement of the primary design
(Hughes, Champion and Murdoch, 2015). Government on the other hand also enjoys power over
the operations as the government has the power to redesign the employment and contractual
regulations, forcing both the parties to reconsider the contractual terms. On the other hand the
construction manager, on behalf of the employer enjoys the power to overlook and control the
operations and call for explanations in event of violation of the terms.
4. Contract documents to be prepared for tender
Following are the contract documents that would be needed to tender the building development
work:
Documents required Need for the documents Content
Invitation to tender This invitation is essential for
making an offer and acquiring
information regarding the other
party involved (Constructing
Excellence, n.d.)
A prequalification questionnaire
Invitation for pre-tender interviews
Preliminaries It provides a description of the Preconstruction information, waste

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project, letting the other party
know about what is expected
(Korytárová et al. 2015)
management plan of the site, method
statements, a summary of the project,
quality management process,
description of the schedule,
collaborative practices (Constructing
Excellence, n.d.)
Form of tender It serves as a formal
acknowledgement that the
tenderer has understood and
accepted the conditions as
mentioned in tender document
Date, name, address, reference
number of tender, price, date of
validity, time allocated to the work,
terms and conditions. Reference to
other documents, proposal, costs
(Turner, 2014).
Pricing document It lays the way in which the
design team and the client intends
to observe the breakdown of the
pricing (Constructing Excellence,
n.d.)
Includes a cost plan
Employer’s
information
Informs the employer of the
details of the competence that the
tenderer offers (Eadie et al. 2013)
Information management details
Commercial management
Assessment of competence (Turner,
2014)
Design Helps to communicate ideas
about the design that is
Technical design, detailed design,
construction, installation and shop

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developing. drawing, tender drawing, concept
drawing, evaluation of options and
feasibility study (Constructing
Excellence, n.d.)
Specifications Enlists the resources required for
the development (Turner, 2014)
Material in description and quantity,
workmanship, schedule and
performance specification
Return slip It is a slip attached to the tender
for tis return after review to the
tenderer
Contract title, address of return,
checklist for the tender
Table 5: contract document required for tender
(Source: created by student)
Conclusion
Completion of this study provides an understanding that choice of procurement and contract
paths depend on the requirement of the development work undertaken and the client’s
requirement. It also helps in understanding how the cons of certain math can be underplayed and
pros can be utilized for maximum value generation.

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References
Bako, S. S., (2016). An Overview of Procurement Methods and Techniques for Effective
Delivery of Construction Projects, International Journal of Advanced Research in Engineering,
2(3), pp. 1-5
Brook, M., (2016). Estimating and tendering for construction work. 5th ed. London: Routledge.
Constructing Excellence, (2015) A guide to standard forms of construction contract [online].
Available from:
http://constructingexcellence.org.uk/wp-content/uploads/2015/03/standard_forms.pdf [Accessed
15 March 2019]
Constructing Excellence, (n.d.) Tender documentation for construction projects - Designing
Buildings [online]. Available from:
https://www.designingbuildings.co.uk/wiki/Tender_documentation_for_construction_projects
[Accessed 15 March 2019]
Eadie, R., Browne, M., Odeyinka, H., McKeown, C. and McNiff, S., (2013). BIM
implementation throughout the UK construction project lifecycle: An analysis. Automation in
construction, 36, pp.145-151.
Hughes, W., Champion, R. and Murdoch, J., (2015). Construction contracts: law and
management. 3rd ed. London: Routledge.

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Korytárová, J., Hanák, T., Kozik, R. and Radziszewska–Zielina, E., (2015). Exploring the
contractors’ qualification process in public works contracts. Procedia Engineering, 123, pp.276-
283.
Turner, D.F., (2014). Design and build contract practice. 2nd ed. London: Routledge.