Case Analysis
The project was a contract for construction which was administered under the provisions of NEC 3 contracts. Even prior to resumption of the work, the contract was faced with challenges of lodging the 10% bond which was not lodged subsequently. In addition, the issue of time caught up with the contract execution whereby the project manager, contractor and the client agreed on a prescribed time frame for execution of the project but unfortunately, the project took longer period of time to complete than the agreed time. The issues of time that the project was supposed to be completed and how payment should have been made as well as violation of contractual obligation of not being present at the site to supervise the work and issue timely communication regarding the update on execution of the project.
In the course of project execution, different types of delays occur, such as delays in activities for which there is a program float available and delays that often impact the project’s completion date, despite concurrent delays being experienced in construction projects. Delays during contract administration without proper communication are regarded as a breach of contractual terms. Based on the Henderson court ruling case, one can sue for violating contractual obligation (Henderson v Merrett 1994). In addition, that wrong can be categorized as a tort of negligence, a civil wrong caused to another person. In Hedley’s case, the project manager can be held liable for not fulfilling the requirements of finishing the project on time as agreed in the contract and not lodging the 10% bond in no time (Hedley Byrne v Heller & Partners Ltd). However, before filing a case complaining about delivery delays, the client must provide proof of privity of contract with completion and signing of JCT 2011/NEC3 form of contract that will show there was an agreement between the parties to enter the contract with adherence to the prescribed contractual terms. A project manager is therefore required to submit a project program which details the current completion date and the contractor’s actual completion date (Clause 31.2). In regards to this case, they complied with this provision only that they did not adhere to the start and completion date as promised.
First of all, a contractor is not supposed to work on an historical artifact such as antiquities from the construction site without the consent of project manager Clause 60.1 (7). In an event that the contractor decides to remove the feature without giving such a notice as it was done by Dollar company, that is a breach of The Contractual Regulations (Clause 73.1). Such an act of deciding to remove the antiquities without notifying the project manager is a violation of provisions of article 73.1 of NEC 3 regulations and therefore, it cannot be used as an excuse to claim for time compensation and delays in the construction (Clause 73.1).
Issues to Address
Extension of project completion date is granted if a reasonable excuse or explanation is provided. In the case of Royal Brompton vs Hammond (2001), the court ruled that the contractor can be granted a time extension due to reasons of occurrence of relevant events that can make the project delivery be extended. When analyzing the cause of delays, it should also be noted that issues of concurrent delays need to be adopted when measuring the extension of time when there are concurrent delays that are delaying the execution of projects (City vs. Shepherd 2007). Whereas completion date for the project can change based on circumstances, NEC regulations does not allow change of completion date through authorization of project manager only without consent of principal client (Cla 11.2 (3). Despite the project manager asking for time extension, the communication should not make the contractor to be reluctant to deliver the work as required (Clause 14.1).
On special occasions, the employer is not entitled to liquidated damages if his act of omission prevented the main Contractor from completing the work by the deadline agreed earlier. Only if there is a possibility that the delay was caused due to the employer adding more instructions as it was in this case whereby the University issued more instruction of developing a sprinkler to the building that was not earlier on proposed in the project. The contractual terms can be amended through express terms of a contract (Percy v GLC 1982).
The amount due for a contract is the price to be paid for the work that has been done to the last date less the amount to be paid to the contractor as a total value of the contract. To assess the amount due, the university should follow the defined costs agreement which according to (clause 11.2.23) is the amount due to submission to the contractor for work submitted beside the deductions. However, since the principal is interested to understand how to pay for the PWDD, clause 11.2(29) will apply whereby it states that the cost to be paid is up to the work done until the date of inspection plus other prescribed fee that must be paid. Therefore, the amount due should be total cost of work done until that period of inspection plus other amounts to be paid to the contractor you less amount retained by contractor as provided in the contract (Clause 50.2).
Assessing Payments
Since it’s the role of the project manager to update the principal on the progress of the project and when they anticipate completing the project, it’s a breach of contractual regulations agreement for the project manager not to update on the progress of the project. Moreover, the project manager should issue progress reports which should be accurate and inform the client on the financial status of the project and future cash flows. In the spirit of working together to deliver the project, the project manager is supposed to promote the spirit of trust and cooperation (Clause 10.1). Contractual obligations of the contractors are to submit a 10% bond, a mandatory provision for construction contracts applied uniformly to all construction contracts. There is no negotiation on this aspect of bond payment. It acts as a commitment fee that contractors must pay before commencing to construct the project to ensure that they showcase seriousness on the delivery of the project.
In ensuring that the regulations and agreement set to administer the contract, core clause 10.1 of the NEC provides that the employer, Contractor, project manager, and the supervisor to the project must all work in th spirit of mutual trust and cooperation in ensuring that they can deliver the project. This clause provides obligations to the parties in the contract administration, and therefore, the parties should act with each other in the spirit of trust and cooperation. Regarding the execution of this contract, the parties are supposed to have a mutual consensus because any attempt to have disagreement issues will delay delivery of the project hence escalating the duration in which the project was expected to be completed (Clause 10.1).
Payment mechanisms to be applied in a contract. The financial cap is the highest value to be paid in the contract which in this case was not mentioned in the contract. The omissions of the financial cap and payment mechanism therefore makes the university to follow the provisions of NEC3 contractual terms in breaking down the payment terms and set a financial cap on the work done. In this case, provisions of clause 11.2(29) on breaking down the payment will be applied to the contract to determine what should be paid based on the work done. Despite absence of payment mechanisms nor financial cap made, the contract is still enforceable as work has already been done on the site hence it’s the law provisions that will be applied to determine the financial cap to be set at what limit and what payment mechanisms should be used.
NEC 3 provisions acknowledges that bilateral engineering and construction contracts are all cooperative ventures in which parties must reach an agreement before executing these contracts. Therefore, honoring such contract as it’s in the case of this type of contract is not a matter of one party to the contract pursuing their selfish interest but rather, it should be a mutual effort in which all parties must be working towards fulfilling the project as proposed in the agreement. In ensuring that quality delivery is provided, it’s against the wishes of the stakeholders when the project is not delivered according to the requirements that are, when the estate officer visited the site and found out that there were quality issues, such as an indication that the parties in the NEC contracts were not acting in good faith and in mutual consensus to deliver the project according to the needs of the client. This act, therefore, provides an opportunity for the University to sue the contractor and project manager for liquidation damages on account of shoddy work being conducted and lack of communication as to when the entire project is expected to be delivered.
To avoid incidences of inconsistency in determining how the contract was to be executed, the case of Npower can help in unmasking how the relationship between the parties. Justice Akenhead ruled that the agreement between the parties should be read as a whole to avoid inconsistencies that might arise between the parties and which can affect the execution of the contract (RWE v. Bently 2014). This case implies that before the contract was implemented, the parties should have read the agreement and ensured that it was enforceable before they could sign and ascent its implementation. Any dispute that was to arise from the case, such as the evidence of quality and non-performance issues, is easily tackled by the court when there is evidence that the parties to the contract had agreed on the terms before engaging one another. This can best explain that the fact that the main Contractor has not issued the bond implies that there is a possibility that the parties did not read and sign the agreement before executing the contract. And in any case, if they read and understood it, this is a violation of contractual obligations, which calls for the need of the University to sue for damages of non-performance.
When a project is delivered with defects or has not yet been completed by the agreement, such an act is regarded as a defect to the construction project. Clause 11.2 (5) defines a defect as part of the works designed by the Contractor which is not by the applicable law or the Contractor’s design which the Project Manager has accepted” (Clause 11.2.5). Defects will arise due to lack of supervision as it was in this case whereby the delay in delivery was because the project manager was not on-site to inspect the project and issue guidelines on how it was to be delivered. The breach of these contractual terms calls for compensation therefore due to lack of adherence to obligations of the contract (Gear v McGee 2010).
Conclusion
Since the project has not been delivered following the agreement whereas the University has conducted its obligation of complying with the contractual terms, this act provides the University with an opportunity to sue the Dollar construction limited contractor and Alpha design and project management for their laxity and failure to comply with the contractual obligations. They were supposed to ensure that they delivered the project within the allowed time of 52 weeks after incorporating the additional time adjustment made to accommodate any certainties that might arise in the process. Therefore, the university should take action and sue the project manager and the contractor for failure to deliver the project on time as they had agreed and their failure to address issues of defects and delays without issuing proper communication to the university.
Reference List
- City Inn Limited v Shepherd Construction Limited [2007] CSOH 190
- Clause 11.2 (23)
- Clause 11.2(29)
- Clause 11.2(3)
- Clause 14.1
- Clause 31.2
- Clause 50.2
- Clause 60.1 (7)
- Clause 73.1
- Core Clause 10.1
- Hedley Byrne v Heller & Partners Ltd [1964] AC 465
- Henderson v Merrett Syndicates Ltd [1994] UKHL 5
- Clause 11.2(5)
- Percy Bilton Ltd V Greater London Council[1982] 1 WLR 794 at 801
- Royal Brompton Hospital NHS Trust v Hammond and Others(No. 7) [2001] 76 ConLR 148.
- RWE Npower Renewables Ltd V J N Bentley Ltd[2014] EWCA Civ 150.
- WW Gear Construction Limited v McGee Group Limited [2010] EWHC 1460.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
