Form of Contract 7/16/2019

Form of Contract
M S MOHAMED MUNAS
B.Sc Hons in QS, MRICS, MCIOB, MCABE, MCInstCES, FCMI, MQSI

Chartered Quantity Surveyor

Chartered Construction Manager
Chartered Manager
Chartered Building Engineer
Member of Chartered Institute of Civil Engineering Surveyor
Quantity Surveying Lecturer
RICS APC Assessor/ APC Counsellor

Contact: [email protected]

Learning Outcomes
Contract Award

Pre Contract Management Post Contract Management

Feasibility studies
Taking-off and BOQ Preparation Payments
Cost Management – Cost (analysis/ advice/ plans • Interim Payment
/Control)
• Statement at Completion
Advice on Type of Contract
Advice on Form of Contract • Final Account
Advice on Procurement Route and Tendering Method Variations
Preparing Tender documents
Tender Floating
Claims
Decision to Tender Sub-contract Management
Subcontractor’s and Supplier’s enquiries Cost Reports
Selection of Suppliers and Subcontractors
Prepare Subcontract documents
Contracts Management
Tender Adjudication & Tender Submission Commercial Management
Tender Receipt and Tender Evaluation
Tender Negotiation Based on FIDIC 99 Red Book
Prepare Contract Documents and Award of the Contract
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Form of Contracts - Learning Outcome

Standard form of Contract

Advantage of Standard form of Contract

Why amend Standard form of Contract

How to choose suitable Standard form of Contract

Form of Contract

Standard form of Contract

 FIDIC forms of contract Suite;
 Joint Contracts Tribunal (JCT) Suite;
 New Engineering Contract (NEC3) Suite;
 Association of Consulting Architects (ACA) PPC Forms;
 Infrastructure Construction Contracts (ICC) Forms; and
 Institution of Mechanical Engineers (MF Forms).
 Infrastructure Conditions of Contract (which replaced the ICE forms in 2011);
 Institution of Civil Engineers (ICE) Forms;
 IChemE - Institution of Chemical Engineers;
 IMechE - Institution of Mechanical Engineers; and
 The Chartered Institute of Building’s Contract for use with complex
projects (April 2013).
 Bespoke contracts - specially drafted to suit the specific requirements of a
particular project.

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FIDIC Rainbow Suits

1. Green Book - Short Form of Contract 1999.
2. Red Book - Conditions of Contract for Construction For Building and
Engineering works designed by the Employer 1st ed.1999 & 2nd ed. 2017.
3. Red Book (MDB edition) - Conditions of Contract for Construction For Building
and Engineering works designed by the Employer MDB Edition 2005.
4. Yellow Book Conditions of Contract for Plant and Design-Build For electrical
and mechanical plant, and for building works, designed by the Contractor - 1st
ed.1999 & 2nd ed. 2017.
5. Orange Book- Conditions of Contract for Design-Build and Turnkey First Edition
1995 (at present could use Yellow Book 1999 for design and build or a Silver
Book 1999
6. Silver Book - Conditions of Contract for EPC/Turnkey Projects - 1st ed.1999 &
2nd ed. 2017.
7. Gold Book - Conditions of Contract for Design, Build and Operate Projects
First Edition 2008.
8. Blue Book - Conditions of Contract for Dredging and Reclamation Works - 1st
ed.2006 & 2nd ed. 2016.
9. White Book for Consultancy Services – 5th ed. 2017.
Form of Contract

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Advantage of Standard form of Contract

 Tried and tested wording aims to reduce both negotiation time and cost and
subsequent disputes.
 To save time in drafting contracts
 Familiarity - most practitioners are familiar with them to well understand the
procedures and will have developed systems around these procedures. This
familiarity improves efficiency and helps to overcome one of the largest
sources of construction dispute
 Act as a checklist of items to be agreed- design liability, insurance, possession
of the site, liquidated damages, payment provisions, and so on.
 balanced approach to sharing of risk between employer and
contractor/consultant than others.
 Best practice - The forms are drafted by contracting experts engaged by the
industry bodies and represent best practice at the time they are issued.
 Flexibility - meet different situations and by producing ‘suites’ of compatible
documents .

Form of Contract

Advantage of Standard form of Contract…

 Updated when required to reflect (among other things) changes in the law.
 Local Democracy, Economic Development and Construction Act
2009 (LDEDC Act)
 Construction (Design and Management) Regulations 2015, which replace
the 2007 CDM Regulations.
 Other industry developments, such as the RICS New rules of
measurement, and development of BIM in the UK
 Standard forms reduce transaction costs both in terms of negotiating contract
documents and administering contracts.

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Why amend Standard form of Contract

1. When the standard form does not fit.
2. To transfer the risk
3. Project-specific, to address the chosen procurement method, pricing,
industry and so on.
4. Governing law-specific, to ensure that provisions such as delay damages,
limitations of liability and indemnities are enforceable in different
jurisdictions.
5. Location-specific, to address local statutory or regulatory requirements.
6. Party-specific, to address the requirements of funders who invariably require
greater certainty in terms of budget and timing.
7. Improvements to the general conditions to fill gaps, tighten up the drafting
and to address omissions or developments in industry practice, for example,
on intellectual property, confidentiality, BIM, early warning, enforcing DAB
decisions and boilerplate clauses.
8. Employer and contractor-friendly amendments (depending on who holds the
pen).

Form of Contract

Why amend Standard form of Contract

9. Negotiated provisions, for example exclusions and caps on
liability, indemnities, securities, force majeure events and the supply of
information.
10. Draftsman preference.

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Key points on amending a Standard form of Contract

 Only make amendments which are strictly necessary to comply with the
parties' requirements;
 Employers will frequently prepare a ‘schedule of amendments’ to a standard
form contract which they will issue with the tender documents, and tenderers
will be asked to tender (and therefore price) on the basis of the obligations
and risk profile in the form as adjusted by the schedule of amendments.
 Check whether the relevant industry body has already drafted an amendment
which meets the particular requirement and, if it is appropriate, follow their
recommended wording;
 if the employer is making amendments, remember these may have the effect
of increasing the contract price;
 amendments to one clause may have a consequential effect on other clauses
including the clause-numbering;
 amendments to the conditions of contract may necessitate amendments to
ancillary documents such as agreements for lease, financing documents,
bonds and guarantees where the same terminology including and for example,
contract periods should be referred to throughout;
 always attach to the contract copies of the agreed forms of ancillary
documents; Form of Contract

Key points on amending a Standard form of Contract

 Amendments can also arise either during the tender period or after the
closing date for tenders prior to contract award. In the former situation the
amendments are often initiated by the employer after further consideration or
in response to queries from tenderers. These amendments are normally dealt
with by way of addenda to the tender documents or letters of clarification
which are sent out simultaneously to all the tenderers.
 Contracts are sometimes for good reason varied by mutual consent after they
have been awarded.
 Contract variation can only be done by mutual consent and must be supported
by consideration or, if there is no consideration, be implemented by way of a
deed of a Variation to avoid any argument over lack of consideration;
 if a contract has to be varied after it has been signed, make sure the variation
is made by authorised representatives of the parties in accordance with the
requirements, if any, specified in the contract;
 Check all ancillary documents such as bonds and guarantees to see whether
they are affected by the variation and notify bondsmen/guarantors;
 Make sure each party to the contract has a copy of the signed contract
documents and any subsequent variations to the contract.
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Key points on amending a Standard form of Contract

 Avoid letters of intent wherever possible and, if it is not possible to do so for
commercial reasons, make sure the letters are preliminary or interim contracts
which can be enforced subject to a financial cap;
 If amending a subcontract, remember to delete inappropriate main contract
terms which may otherwise be incorporated by reference;
 Make sure the subcontract contains appropriate limitations of liability,
normally by reference to the subcontract price;
 Take legal advice on complex amendments or when unsure of the affect of an
amendment;
 Make sure that the Appendix or Contract Particulars and other essential
contract documents are properly completed, otherwise the contract may be
unworkable or ineffective;
 Always ensure that the contract is signed properly by duly authorised
persons, and resist the temptation to sign contracts before all the detailed
terms have been agreed;

Form of Contract

How to choose suitable Standard form of Contract

Step by Step Procedure ...
1. Understand the client's key business objectives.
 particular types of parties,
 Works
 procurement routes involved in projects.
 Etc .
2. Undertake a broad review of standard contracts.
3. Explain the details of the chosen conditions to the client.
4. Circulate the draft amendments for comment.
5. Review comments, incorporate changes as appropriate and re-issue as the
final draft.
6. Advise your client to on the amendments.
7. Sign the Contract!!!.

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Thank You!!!

Any Question ?
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