CivDesignr Journal

A collection of articles and ideas on construction and maintenance. By Alan Howard BSc. Civil (UWI - Trinidad), MEng. Civil (U of Toronto)
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Posts tagged "contract"

How to handle changes to your design

Source: http://sharperthink.files.wordpress.com/2011/07/fork-in-the-road2.jpg

Inevitably on any project there are changes. These can be due to changes in design and from the client side or may be due to the conctractor having to make a late change in the products used in the job. Either  way there should be a defined procedure for handling changes and this procedure should be outlined in the contract.

Changes, called change orders, are used by unscrupulous contractors to make more money on a project. This is done by overpricing the change and penalising the client when the changes occur.

By way of example here are a few tips that can help make changes go more smoothly.

1. A change from the client should be passed in writing to the contractor. In the letter the contractor should be explicitly requested to price the change before starting any work. The letter should be dated and signed both by the client and a contractors rep. The client should retain a copy of the letter in their records.

2. When the price is received you should, as client officially give the contractor approval to proceed in writing on the change for the price agreed on.

In monitoring these changes you should make sure that the price is added to your overall cost so you can keep track of your budget.

When your contractor needs to makes a change you should receive a similar notification. however, unless the change is something you requested you shouldn’t feel obligated to pay for any contractor requested change unless it was either the result of something done by the client or something which was unforseen and unforseeable.

Stick to these general rules and changes on your project will be much much smoother.

Important facts about Construction contracts

Source: http://mh-legal.com/wp-content/themes/TheProfessional/timthumb.php?src=wp-content/uploads/2010/10/Contruction-Contract.jpg&h=345&w=943&zc=1&q=90

On one of my earlier posts i spoke about extraordinary or force majeure events in contracts. Now I’d like to go through a few general contract issues and look at what the primary components should be for any minor works/home construction contract.

What is a contract?

A contract is a formalised agreement between persons to do something. There are some legal requirements before a contract can be considered to exist.
1) Offer - This describes what is to be done and the price of the work
2) Acceptance - This is where one party accepts the offer being made
3) Remuneration/consideration - This is another way of saying payment

In construction contracts there is an another phase which precedes these three steps called an invitation to offer. This is the stage at which the client/home owner submits plans to the contractor and requests a price for construction. The contractor then submits a price (the offer) and the client accepts (the acceptance) and pays for the work as the project progresses (remuneration).

Since the contractor has more construction experience they are usually the ones who draw up the contract for the client. The client should however make sure that certain bases are covered.
The contract should include some of the following things:
  1. Payment schedule - This should balance work done by the contractor with payment requests 
  2. Bill of quantities - Priced list of work to be done
  3. Project schedule - A chart showing how long the work should take and indicating any milestones by which client decisions should be made.
With this and solid background checks on your contractor you are will on your way to having a positive experience during your project.

An Explanation of Construction Contract Clauses for Extraordinary Events

Construction contracts can be intimidating things but as an owner of a property you should make an effort to understand some of the contents of the contract. Contracts must be balanced and fair and the only way for an owner to ensure that fairness is being achieved is to read the document and ask questions.

One typical clause in a contract is one to cover extraordinary events. Even the best of contractors can’t predict rare/extreme events. This may be called a “force majeure" clause and basically says:

"We cant be held accountable for your job not being completed if there is a war, riot, prolonged strike" or some other crazy event.

This is just a loose example of a force majeure clause as it is usually written in the obscure language of legalese. The clause can be easily identified by the extreme/rare events mentioned.

After reading the end of the contract there should be a feeling that this document is balanced in terms of its responsibility. There are responsibilities to be upheld by the client and other responsibilities to be upheld by the contractor. In the contract the risk and responsibility should be placed in the hands of the person who can most easily influence events to manage that risk.

For example, it would be unfair to ask a contractor to bear all risks related to late payments by the client. The client is responsible for when the payments are made so risks related to late payments should be borne by the client. Conversely, it would be unfair for the client to be made to pay if the project is completed late because it is the contractor who can most influence progress of work and consequently the completion time of the project.

With this you can get a feel for your contract and its fairness in terms of where responsibilities are placed. I have found that this is the most important factor in determining whether you should decide to sign on the dotted line or ask for an amendment to a clause.

I came across an interesting post on one of the sites i follow forum.homeone.com about home inspections.

Below is a repost of homeowners’ problem:

"We are in the later stages of building and we have had a few issues with our builder so decided to get an independent inspection done. We had one with another inspector at lock up stage.

We had it added to our contract that the builder allow us to have an agent on site for inspections at stages such as frame, lock up and pre handover.

The builder questioned why we wanted this inspection but agreed it was in our contract. The site supervisor organised a time and everything with the inspector only for the building company to then cancel, saying they were refusing the inspection to take place as there had already been plenty of people through the house and there was no need for it. They will only allow it at pre handover.

While pre handover is only a few weeks away, we wanted a few things looked at by an expert beforehand.

Can they refuse this?”

Honestly, i don’t see how they can in all fairness refuse this inspection since there is a provision for such inspections in the contract.
The reality is though, that with completion only a few weeks off it will take to long to force the contractor to allow the inspection and the contractor seems to be capitolising on this. The home owner in this case should have had independent inspections throughout the project so that when issues arose at close-out it would be established that the inspector has right of access and it would be harder for the contractor to go back on his word.
Beyond the legality of it all, however, the contractor should in good will support any third party access and have a representative present to record any issues discovered and answer the inspectors’ questions that the homeowner cannot.