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Assignment

BUIL 1286: Procurement Contract Law & Practice.

The administration of traditional and collaborative contracts in a given

construction scenario requires distinct approach. For instance, variation due to

design changes, delay due weather conditions, delay due changes of supply chain,

defect due poorly specified materials may attract different remedies and

administered differently according to contractual approach. Discuss the key

differences between the two approaches and for each of the scenario mentioned

advise the parties their entitlements (remedies) under both approaches.

Student ID Number: 001231424

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TABLE OF CONTENTS

Background Research...............…..................................………………….…………...3

Analysis and synthesis of the task……….……...……………………………………..4

The Difference in Administration of Traditional and Collaborative Contract………...7

Conclusion and Recommendation……………………………………………....……11

References………………………………………………………………………...….12
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INTRODUCTION

BACKGROUND RESEARCH

In the decades after the nineteenth-century industrial revolution, the United

Kingdom used traditional construction procurement as its primary method for

acquiring newly built facilities. Customers who just need a building once or twice

often choose this method. Recent years have seen a decline in the traditional

construction procurement strategy's use in the UK to acquire newly built buildings.

This decline can be attributed to the fact that the adversarial nature of the current

construction procurement method has led to an increase in disputes, a general lack of

cooperation, a disregard for the needs of customers, and a general inability to meet

those demands in the UK construction industry (Klakegg, Pollack and Crawford,

2020).

Limitations should be taken into account when interpreting the results of this

study. Most of the information in this work is limited to the UK.The majority of the

data in this paper is restricted to the contractor point of view. A more well-rounded

view of the topic can be gained through a study that similarly examines data from

client’s point of view.

The aim of this research is to gain insight into how traditional and

collaborative contracting practices are administered in the building sector. The essay

compares and contrasts the various types of formations and structures of both
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contracts.

Objectives:

i. compare the traditional and collaborative contracts in line with their formation

and structure.

ii. explain the differences between traditional contract and collaborative contracting

practice.

ANALYSIS AND SYNTHESIS OF THE TASK

Traditional construction procurement has been the primary method for

acquiring newly built facilities in the United Kingdom from the early nineteenth

century, when the industrial revolution was in full swing. Customers who just need a

building once or twice often choose this method. To begin, the customer hires experts

to carry out a thorough design of the project and to draft the necessary tender

documents, such as construction drawings, work schedules, and bills of quantities.

Next, competitive bids for the project's construction are solicited from contractors,

typically in a single round (Bethany Scott, 2020).

The term "conventional contract" could be used to describe this type of

agreement. Traditional contracts typically do not require the contractor to design any

of the works (beyond any temporary works), although some may allow the contractor

to design certain aspects of the works (Denis-Smith, 2021). During the construction

phase, the client typically keeps the design consultants on retainer to provide any

further design information that may be needed, review any designs that may be

generated by the contractor, and inspect the works. Contract administration is

typically delegated to a single consultant (the architect, though this is not always the

case). For "conventional" projects in which design and construction are carried out in
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distinct phases, a lump sum contract is the most typical form of construction contract

employed. Buyers with or without prior experience will find this method of

purchasing to be convenient. Since the contractor is not brought in until the design is

complete, they are unable to provide input on how to improve the buildability and

packaging of proposals as they are formulated. However, the client is assured of a

high-quality design at a fixed price. As the contractor bears the financial risk of

building, this style of contracting is seen as low-risk for the client. There might be

considerable costs to the customer if design information is lacking at tender or if

significant changes need to be made after the contractor has been engaged. This, in

addition to the fact that design and construction are typically handled by different

teams, lends traditional procurement an air of hostility (Stonemark Construction

Management, 2019). The JCT (Joint Contracts Tribunal) Standard Building Contract,

Intermediate Building Contract, and Minor Works Building Contract continue to be

the most popular types of the conventional contract.

Collaborative contracting, on the other hand, is a type of contracting for

building projects that is predicated on the idea that the owner and the participants can

both benefit from a more cooperative working relationship (Klakegg, Pollack and

Crawford, 2020). To be successful, collaborative contracting must be built on a

foundation of confidence and cooperation between all parties involved throughout the

duration of the project. This is especially true for large-scale, complicated

construction projects and long-term development programs. Owners and contractors

can each bring their own set of qualities and skills to a project, and it's not uncommon

for them to be rewarded in a single contract for working together (Willis and Alves,

2019).

The offshore oil and gas industry was the first to employ collaborative
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strategies to speed up development and reduce the likelihood of costly delays. The

retail, medical, and banking industries all adopted equivalent paperwork. Reports

produced in the United Kingdom in the 1990s concluded that the prevalent adversarial

process, which prioritized individual firm gain, was damaging to the construction

sector as a whole, prompting the implementation of these models on building projects

(Bishop et al., 2009).

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The Differences in Administration of Traditional and Collaborative Contracts

The New Engineering Contract (NEC) is a series of contracts designed to

manage a project from start to finish, particularly a civil engineering project, in order

to anticipate and avoid costly arguments (NEC, 2013). In contrast to the more

"conventional" JCT, which has been the industry standard in the United Kingdom for

many years, the NEC "was established for international applicability with a choice of

regulating legislation and terminology" (Institution of Civil Engineers, 2022).

Management

The NEC and the JCT each recommend having an authoritative figure (a

"Project manager" or "Contract administrator") oversee the contractor's activities on

behalf of the employer. The PM takes an active role, acting as a conduit between the

many stakeholders; the NEC's decision to kick things off with a clause encouraging

collaboration [Clause 10, NEC3] fosters a spirit of teamwork.  The NEC's risk register

[Clause 11, NEC3] and compensation event procedures [Clause 61-65, NEC3] foster

responsible management and open communication between all involved parties. The

CA, on the other hand, is more concerned with accounting and process than with

actively leading the parties involved (Rose and Patel, 2018).

Cost and Time

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The NEC implements a compensation event method in the event of an expense

dispute, taking into account both time and money to ensure that issues are resolved as

soon as possible (Patterson, Specialist and Macdonald, 2009). The contractor's failure

to notify the PM within 8 weeks of a compensation event will result in the contractor's

appeal being denied. The parties to the contract now have a vested interest in

mitigating the risks they face within the stipulated time frame. In contrast, JCT treats

cost and time issues independently, and the contractor is required to notify the CA of

relevant events/matters but incurs no liability for failing to do so. [Section 2.4, JCT]

(Navas, 2020).

Compensation Event

The NEC uses condition precedents to guarantee prompt compensation

occurrences are identified[Clause 16, NEC3] (Gould, 2007). Limiting the negative

consequences of conflicts on the project's budget and schedule by working to resolve

them as quickly as possible. The JCT system uses a "pay later" model in which risks

are not settled before a certain time. Therefore, any disagreements are settled through

the contract's final account procedure [Clause 30, JCT], where any necessary

revisions to the contract total are settled and the final payment is confirmed. Because

this is often a contentious and time-consuming process, the NEC's "pay as you go"

provision may be preferable in order to reduce the likelihood of litigation and

facilitate a smoother project close (Dickson and Rowlinson, 2013).

Dispute Resolution

All written agreements must detail a chosen method of resolving any potential

legal conflicts. The NEC, with the stated aim of promoting "mutual trust and
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cooperation," advocates for the use of adjudication and then arbitration as their

preferred dispute resolution mechanism [Clause W, NEC]. These procedures keep

parties out of court by having an experienced, neutral third party member evaluate the

claims made by the contractor and the PM and reach a mutually agreeable conclusion.

In most cases, this procedure is less time-consuming and costly than litigation, and it

also typically results in less dispute between the PM and contractor. However, the

arbitrator's decision is final and binding on both sides. In contrast, in JCT where one

party proposes mediation as a means to settle a dispute, the other party must give that

proposal considerable attention [Clause 9.1. JCT]. JCT also uses litigation, which can

be advantageous if the case has a law focus because an arbitrator's function is

dependent on technical competence around the project. However, litigation's

unfavorable reputation for disrupting plans and harming parties' credibility is making

it less desirable (Carver and Vondra, 2014).

Force majeure

The term "force majeure" is used in the JCT forms without being defined. The

phrase shall consequently be understood in accordance with the usual standards of

contractual interpretation. Despite being referred to as a "Relevant Event" in [Clause

2.26.14, JCT] force majeure is not specifically mentioned as a "Relevant Matter" in

JCT contracts (Salami, Ajayi and Oyegoke, 2021). Either party may cancel the

contract for force majeure under [Clause 8.11.1, JCT] if the entirety of the unfinished

works were halted for more than two months. Force majeure was defined in

Lebeaupin v. Crispin (1920) as any and all events outside of human control.

In contrast to the JCT, which distinguishes between "Relevant Events" and

"Relevant Matters," the NEC allows for "compensation events" (CEs) that entitle the
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contractor to both time and money: in relation to events that prevent the contractor

from completing on time, both aspects (time and money) can be considered together.

[Clause 91. NEC] provides a list of 21 acceptable grounds for dismissal. Some allow

termination by the employer, others by the contractor, and some allow termination by

either party (Nemr, 2017). However, there must be a legal basis for terminating the

contract, and the parties must follow the correct termination procedure (Arijeloye,

2017).
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CONCLUSION AND RECOMMENDATION

Acquiring newly constructed buildings in the UK has traditionally been done

through the use of the more traditional construction contract. Construction projects

that use collaborative contracting are built on the premise that all parties involved,

from the owner to the contractors, can reap benefits from fostering a more amicable

working relationship. The structure and formation of JCT and NEC were dissected to

better comprehend the different methods used to administer the two separate

contracts. Significantly different from the JCT, the NEC stipulates and mandates the

parties' adherence to processes that facilitate a more proactive and collaborative

approach to contract management.

Due to its thorough risk-sharing between Employer and Contractor, the JCT

form of contract is widely used in the commercial development community. On the

contrary, the NEC is the preferred contract for government projects. Despite its

increased administrative risk, the NEC contracting method emphasizes cooperation.

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REFERENCES

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Infrastructural Development in Ekiti State Local Government Areas, Nigeria. FUTY
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Bethany Scott (2020). Traditional Procurement vs Design & Build: Which One is
Better? [online] Urbanist Architecture - London Architects. Available at:
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Bishop, D., Felstead, A., Fuller, A., Jewson, N., Unwin, L. and Kakavelakis, K.
(2009). Constructing learning: adversarial and collaborative working in the British
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Carver, T.B. and Vondra, A.A. (2014). Alternative Dispute Resolution: Why It

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Denis-Smith, J. (2021). Standard Forms of Contract and Bespoke Contracts. Wilmot-

Smith on Construction Contracts, pp.75–132.
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IMPLEMENTATION OF NEC VS TRADITIONAL FORMS OF CONTRACT IN THE
HK CONSTRUCTION INDUSTRY Head of Programme: Alex Copping. [online]
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