Construction Contracts and Claims

The law relating to 
Construction Contracts and Claims

Duration 

2 – 3 Days

Course Overview

This course deals with the law relating to construction contracts and ‘claims’ under construction contracts.

Engineers and other built environment professionals provide services, project management and works under contracts using a variety of contact forms such as FIDIC® NEC3® JBCC® GCC®. This necessitates that both consultants and contractors have to have a working knowledge of all these various forms and the law relating to them.

A major feature of modern construction contracts is their ‘deterministic’ nature. This means that they are all designed to adapt to change in the scope of works, change in completion time and change in price. Changes opportunities for more work for contractors, ‘cost growth’ and the risk of ‘cost overruns for the Employer. 

 

The processes that provide for such changes are often called the ‘claims process’ (compensation events in NEC)

Benefits of attending this course

  • The workshop is presented in clear simple language
  • The material is presented in an easy to understand manner building on the simple logical common legal framework
  • Complex ideas are simplifies and explained with clear illustrations
  • FIDIC, JBCC and NEC3 contracts are used to illustrate major points
  • The similarities and difference the standard forms are clearly explained
  • Claims are compared and the law of evidence is explained
  • Other aspects of law relevant to construction contracts are considered and discussed.

Outcomes

Learners completing this workshop will be able to describe and explain

  • The requirements of enforceable contracts
  • The essential and traditional terms of contracts for the letting & hiring of works, and mandate contracts under which consulting services are provides
  • How the incidental terms of works contacts implement scope, time and cost controls
  • How the incidental terms of works contracts manage risk, breaches and disputes
  • Typical issues in works contracts including but not limited to warranties, guaranties, liens, ownership and quality 
  • The underlying legal framework underpinning construction contracts
  • The elements of a contract in general and construction contracts in particular and how these are implements in FIDIC NEC JBCC and GCC contracts
  • The law relating to offers and tenders and the formation of contracts and how these pertain to FIDIC NEC JBCC and GCC contracts
  • The three phases of the contract Lifecyle and the important legal best practice that inform each stage and contracting step
  • The events and circumstances that give rise to claims in construction contracts and the processes provide for in FIDIC NEC JBCC and GCC that have to be followed when such events occur.
  • The consequences of not following the contractually prescribed claims processes and agreed and time limits
  • How additional time, and costs are assessed under the contracts and the law of evidence.                                    

Your facilitator(s)

Gavin Weimanis an attorney, non-practising, and contract consultant with over 30 years practical legal contracting experience and 18 years facilitation and lifecycle contract consulting experience. Gavin regularly facilitates CPD aligned training events for contractors, consultants and other built industry stakeholders on industry contracts such as GCC®, FIDIC®, NEC® & JBCC®. Gavin provides contact consulting services on pre-award contracting risk, contract administration, claims and disputes. Where Gavin is not available his associate facilitator Albert (details below) will facilitate this event.

Albert van der Bilt(associate facilitator where Gavin is not available)is a practicing attorney and contract consultant with over 30 years practical legal contracting experience and 8 years facilitation and lifecycle contract consulting experience. Albert regularly facilitates CPD aligned training events for contractors, consultants and other built industry stakeholders on industry contracts such as GCC®, FIDIC®, NEC® & JBCC®. Albert provides contact consulting services on pre-award contracting risk, contract administration, claims and disputes.

Course Outline

1.  Legal foundations of construction contracts and contract claims

  • Legal Systems, Common and Civil law, and Choice of Law
  • General requirements of contract and delict
  • The Common law construction contract and the extension and modifications by standard forms (FIDIC , NEC JBCC & GCC)
  • Partnering and fiduciary obligations (the case of the NEC and Professional Services)
  • Establishing contracts: Offer and acceptance
  • The FIDIC Tender Documents
  • The CIDB/SANS tender documents and forms
  • The Promotion of Administrative Justice Act, 2000 

Case Study: Haw & Inglis (FS 2009)

2. Aspects of law affecting construction contracts

Including but not limited to…

  • Time of completion, delay and penalty clauses
  • Contract & Tort/Delict  
  • Occupational Health and Safety
  • Environmental and nuisance law
  • Property law, fixed & unfixed materials and intellectual property
  • Liens
  • Warranties
  • Guarantees
  • Misrepresentation

3.  Parties in construction contract and involved in claims

  • Employers, contractors & clients, 
  • Agents, engineers, architects, project managers
  • Juristic enmities, partnerships, Joint ventures, 
  • Subcontractors

4. Variations (Scope, Specification, Employers Requirement and Works Information)

  • Documents that both specify the work undertaken by the Contractor AND contain constraints and work related contractual provisions
  • Contracts types, work and design responsibilities
  • Specifications: design, performance and functional specifications
  • Scope change and its effect on time and cost
  • Scope verification, defects and breach of contract
  • Damages & Penalties
  • Comparing the scope change provisions in FIDIC NEC3 JBCC & GCC 2010

5 Time in construction contracts and delay claims

  • Time definition and risk
  • Commencement, extension, and completion
  • Time for Communications, and administrative tasks
  • Time control and management
  • Penalties and damages
  • Time-related costs
  • Additional activity costs
  • Establishing reductions in productivity
  • Off-site overheads and costs
  • Costs of holidays encountered as a result of prolongation
  • Recovery of costs for general site management and support
  • Loss of profit and opportunity costs
  • Liquidated and ascertained damages

6. Communication

  • Communication definition and risk
  • Communication language methods: written and verbal communications
  • Specification of communication place and form
  • Control of communication and effect of no compliance with communication protocols
  • Case studies in drafting communications clauses from FIDIC NEC3 JBCC & GCC 2010

7. Cost

  • Cost, pricing types and risk
  • Pricing types and contract forms
  • Contract types and cost management
  • Effects of time and scope changed on cost
  • Determining costs of variations
  • Drafting pricing provisions: FIDIC NEC3 JBCC & GCC2010
  • Claims for additional payment under FIDICN NEC3 JBCC & GCC

8. Risk & Quality

  • Risk management
  • Contract administration
  • Insurance
  • Indemnities
  • Relationship of risk to scope, time & cost

9.  Claims under standard form of contract

  • FIDIC contracts (Red, Orange, Silver and White books)
    • Employers Claims
    • Contractors Claims
    • Time claims
    • Time and costs claims
    • Time, costs and profit claims 
  • NEC3 (Main Options and Secondary Options)
    • Works information related events
    • Employer’s default events
    • Employer’s risk events
    • Project manager/supervisor related events
    • Physical conditions
    • Test for entitlement
    • Adverse weather
    • Prevention
    • Measurement related events
    • Secondary option clause events
  • JBCC claims
    • Contractor’s Claims
    • Claims for Extension of Time
    • Claims for Extension of time and adjustment to the contract value
    • Procedure
    • Employers Entitlement
    • Penalties
  • GCC 2010 claims
    • Extension of Time Claims
    • Claimable uncontrollable events
    • Claimable controllable events

 

10. Claims Preparation

  • The contract provisions 
  • Loss and expense 
  • Misstatements and misrepresentation
  • Mistakes in tenders
  • Invoices and cost records
  • Identification of invoices
  • Cost transfers and accruals
  • Final accounts and economic duress
  • Accounting information
  • Financial accounts
  • Management accounts
  • Exceptional items

 

11.  Breach of Contract Claims

  • The standard of proof
  • Direct and indirect consequences
  • Risks and records 
  • Sources of change and disruption 
  • The process of analysis
  • Claims arising from contract
  • Planned change
  • Unplanned change

12. Termination and Disputes

  • Breach
  • Convenience
  • Agreement
  • Force Majeure
  • Settlement of claims
  • Litigation
  • Arbitration
  • Continued performance of obligations
  • Survival of dispute-resolution clause
  • Mediation
  • Adjudication
  • Arbitration