Construction law in UAE
What Is The Factors Influent Construction Industry UAE?
The subject matter of the case is based on the construction law. In this law, matters on the building construction or engineering works have been discussed. Various legal provisions such as negotiation, negligence, tortuous liabilities, guarantees and other claims have been discussed under this legal branch. All the construction related construction law affects personalities and institutions. There are certain grounds dealt by construction law such as Alternative Dispute Resolution, bankruptcy issues, contract law, tendering issue, construction design, employment law, false claim, insurance issue, labor issue, Occupational Health and Safety, sustainable construction and construction litigations. Every country is following their construction law. However, the construction law in UK is followed by countries like Australia, Hong Kong, Singapore and UAE. In UAE, when a construction has been contracted, certain management has been done in between the developer and other related persons. Those agreements contained certain terms, which are written or inserted at the time of construction[1]. However, certain changes can be observed when the construction work proceeds. This report discusses about the reasons behind it. Further, a detailed construction process has been discussed here. In addition to this, a brief discussion on FIDIC has also been done here.
It is an international federation that has been established in 1913. The main aim of the institution is to promote and implement certain tactical goals for the member associations and broadcast information for securing the interest of the members[2]. It has been observed that many countries have been included under the shadow of the institution. it has implemented certain standard form of contract for constituting works and for all the related persons of the construction projects. There are certain objectives lied down under the FIDIC that are as follows:
- The main objective of the institution is to work as an authority to regulate the practices of engineers;
- The second objective of the institution is to promote the idea of ethics and integrity among the workers and stakeholders with an intention to develop the base of construction globally;
- This institution is working as a consulting industry that represent the industrial enrichment among the members;
- The image and nature of the engineering industries has been widen by the institution;
- The standard construction rules have developed the matter of engineering contract. FIDIC helped the industries regarding the same;
- The new generations are quite influenced by all the steps taken by the institution relating to engineering and construction.
In 1999, FIDIC has been published Conditions for Construction or the Red Book. There are two more books such as yellow book deals with the Conditions of Contract for Plant and Design-Build and Silver book deals with the Conditions of Contract for EPC/Turnkey Projects. The main objective of Red book is to make a balance in between the risks generated by the employers and contractors in a project[3]. The project should be based on the construction design made by the employer and worked by the contractor. The nature of the design can be civil, mechanical, and electrical and construction related. There are two edition of the book and the second edition deals with the fundamental principles of balanced risks.
FIDIC and Standard Conditions
Before a building has been concocted, necessary plans are required to this effect. However, it could be seen that certain conditions of the plan has been changed while the construction works started. This process is known as deviation. It is to be stated that when any change has been taken place, the paying capacities should be evolved with usual rate of charging. However, there are certain differences in between the variation and deviation. The term variation denotes certain things that are added when the quantity or scope of an item will be increased or decreased[4]. On the other hand, deviation means anything that is differed from the standard of the act. However, make changes in the construction contract is a very common practice and there are certain reasons behind the same.
One of the inherent parts of the construction industry is change orders. The term change order means an agreement that has been entered in between the owner and the contractor and the same has been obtained by the consent of both the parties. Further, the consent could be taken for any modification or alteration regarding the scope and applicability of the existing contract. Further, certain amendments have been done by inserting new provisions and items and sufficient changes have been made in the payment sections too. However, there are certain rules mentioned for the changes. It has been stated that all the changes should be made by maintaining the necessary provisions of the code of conduct. Further, all the legal precedents should be taken into consideration[5]. Before changing the scope of the works, the contractors are required to serve a notice and make inform all the related persons regarding the proposed changes. Further, the owner could make change or investigate into the matter in concern so as to make effective change in the matter. However, there are certain essentials to the term changes order that should be included under the same:
- A description regarding the proposed changes should be mentioned in the agreement;
- The proposed costs of the subcontractors should be mentioned in the agreement;
- Total costs for the proposed changes has also to be mentioned;
- Contractual changes and impacts of the changes on the original contract should have to be mentioned in the agreement.
In construction works, there are no repetitions and all the items are changed time to time. Further, it can be observed that most of the construction designs are quite similar in nature. Therefore, changes in the plans are required and the parties should have to make certain deviation regarding the same. Parties to the contract want to reserve their rights for making any changes regarding the contractual terms and objects. Further, it can be observed that when the works have begun, changes become necessary to certain extent. Changes regarding the condition of the modified work has been included any addition or substitution of works, changes regarding the material, act or omission regarding any states or condition, changes regarding the contracted schedule, changes on the sequence in the activities, and other necessary changes.
Reasons for Change Orders
However, the impact of the changes should be mentioned appropriately and the impact could be imposed on the time and money. Therefore, proper planning implementation is required regarding the same. Further, the changes should be fair in nature and should be cost effective. A mutual consent should be obtained from the parties and the effect for the modification should have to be mentioned appropriately[6]. According to Ossman et al., 2015, ““Change Order” conjures strong feelings of negativity for all involved in construction projects. Owners do not like them because they generally feel they are paying for other’s mistakes. In some cases, contractors believe that Change Orders disrupt workflow and require additional paperwork and time.”
Though changes are required in construction works, there are certain loopholes regarding the same. It has been observed that changes cause delay in the projected works and this process has spent money. A negative relationship in between the workers and the other related person could be seeded[7]. Therefore, an attempt has been made by the FIDIC through the red book, where a balance has been made in between them.
There are certain reasons behind making the changes in the original construction agreement. The changes can be short listed as under:
- Change in the plans by the owner;
- Errors in the design;
- Changes in the material;
- Poor working drawing;
- Disputes in the construction site;
- Technical changes;
- Change in the working schedule;
- Additional enhancement regarding the projected work;
- Undefined working scope;
- Poor planning by contractors;
- Changes in the processes;
- Different design made by the contractors;
- New government regulation;
- Contradiction in between the contractual documents;
- Adverse weather;
- Unavailability of equipments and tools;
- Lack of required skills;
- Economical problems; and
- Safety consideration
Henceforth, it can be stated that there are many reasons where change in the original plan become necessary and certain changes in the construction works become necessary regarding the initial requirements[8]. In certain circumstances, it can be observed that the owner of any construction project has changed the design of the project. This makes the changes necessary. further, in certain circumstances, certain new requirements or governmental requirements have been inserted and it becomes necessary to make certain changes in the original construction project. If necessary changes could not be preceded, ambiguity regarding the plan could be cropped up. Further, the drawing could be illegible in nature. In addition to this, unforeseen difficulties could be resulted.
It has been observed that variations are made in respect of certain terms of the original construction agreement. The reasons behind the same have been discussed. However, there is a controversy whether variation could make any extra work for the contractors or not. It has been mentioned in sub-clause 12.3 that certain changes become unprofitable for the contractors and that cause extra works for them. In the case of Thorn v London Corporation[9], the contractors are empowered to refuse or take the changed documents if the variations are unforeseeable in nature. This process has been known as cardinal change to certain countries. Further, in Luria Brothers & Company Inc v United States[10], in case of make any cardinal change, the scope of the works should be pointed out and the nature of the work will decide whether the changes constitute extra work or altered work. In ICS (Grenada) Limited v NH international (Caribbean) Limited[11], it has been held that an implied agreement regarding acceleration of work could not fall under the sphere of variation and it will be regarded as separate contract. In Plc v Holland Dredging Co Ltd[12], it has been observed that the varied provision should have certain relation with the original works and in case of any adverse situation, the changes will be considered as new requirements.
Controversy Surrounding Variation of Terms
There are certain effects regarding the changes made as against the original requirements in the construction works. The price of the construction project could be increased and the duration of individual activities could be incremented. Further, it can be stated that changes will make obstacles regarding the original flow of the work and therefore, delay in the completion of scheduled work is possible. Further delay regarding the payment can be observed. In certain circumstances, it can be observed that the owner or the contractors have changed the design of the construction. In such cases, there is a necessity for the demolition of the building or rework. Further, certain variation in the construction work can lead to decrease in the productivity of the workers. There are certain other work related expenses increased due to the changes in the original plan. It can be stated that the quality of the work could be hampered due to the same. Further, in case of any supply of related materials and equipments, the process could be delayed. Disputes in between the owners and contractors could be observed. Additional money can be spent behind the contractors.
Conclusion:
Therefore, it can be stated that most of the effects are negative in nature and proper planning regarding changes in the original requirements should be taken. In this report, an investigation regarding the causes and effect of the changed order has been made. Further, an attempt has been made regarding the controversy of constructional change that whether the changes constitute extra works or not in the constructional agreement. A brief introduction regarding the FIDIC has been made to demonstrate the effectiveness of Red Book to make a balance between the owner and contractors so that necessary conflicts could be avoided during the change order.
Reference:
Almarri, Khalid, and B. Hijleh. “Critical Success Factors for Public Private Partnerships in the UAE Construction Industry-A Comparative Analysis between the UAE and the UK.” Journal of Engineering, Project, and Production Management7.1 (2017): 21.
Al-Sabek, Firas Mohamad. “Critical factors affecting the implementation of total quality management in the construction industry in UAE.” Global Journal of Human-Social Science Research (2015).
Gunduz, Murat, and Ahmad Mohammed Ali Yahya. “Analysis of project success factors in construction industry.” Technological and Economic Development of Economy(2015): 1-14.
Hsu, Pei-Yuan, Marco Aurisicchio, and Panagiotis Angeloudis. “Investigating Schedule Deviation in Construction Projects through Root Cause Analysis.” Procedia Computer Science121 (2017): 732-739.
ICS (Grenada) Limited v NH international (Caribbean) Limited [2004] TTHC 6
‘International Federation Of Consulting Engineers | The Global Voice Of Consulting Engineers’ (Fidic.org, 2018) <https://fidic.org/> accessed 5 May 2018
Luria Brothers & Company Inc v United States (1966) 369 F 2d 701
Ossman, Ghassan. “Profitability Variations Across Construction Firms in the UAE: Assessing Industry Contributions to National Economic Growth.” Annual Switzerland Business Research Conference. 2015.
Plc v Holland Dredging Co Ltd (1987) 37 BLR 40
Sayah, Elias, and M. S. Ranadive. “A Study on Factors Influencing the Construction Industry of UAE.” Vimarsh (2017): 24.
Tamimi, A. A., et al. “Application of “TQM” and “TSM” in UAE Construction Safety Management.” Ind Eng Manage 6.220 (2017): 2169-0316.
Thorn v London Corporation (1876) 1 AC 120
‘UAE | Construction Law’ (Klconstructionlawblog.com, 2018) <https://www.klconstructionlawblog.com/tag/uae/> accessed 8 May 2018
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