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Building contracts - good practice and inspections

07 August 2019

This guide will look at how employers, contractors and consultants can form, improve and maintain good relationships. Many of these tips are not exclusive to building contracts, but are especially important in construction projects due to the number of parties involved and the often complex nature of the work. Good faith and alliancing provisions are outside of this note.

Certainty

Wherever possible, a formal contract should be entered into rather than a letter of intent or a verbal agreement. The contract should set out in detail exactly what each party is expected to do, how and when they are expected to do it and what to do if something does go wrong.

The parties should make sure the contract they propose to enter is suitable for that project and covers everything that is or may be required in the course of the whole project.

The key points will be:

  • the correct identity of the parties;
  • what works/services are to be performed;
  • how and where they are to be performed;
  • the start and end dates;
  • how much they will cost;
  • how the employer will pay for the works/services;
  • the impact of variations (and how they are instructed);
  • what is to happen in the event of a delay; and
  • how disputes will be resolved.

Having spent time and money drafting and negotiating a contract, the parties should make sure that all the key people involved actually read and understand the contract and their duties and obligations under it. Rather than filing the contract away, use it as a management tool to carry out the project. This is particularly important with contracts such as the NEC or PPC forms with detailed ‘management’ processes and consequences for not following them.

To read the full inbrief please click 'download files'.

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