Appropriate-contract-selection-2nd-edition

Introduction

  • This practice information outlines appropriate contract selection for construction projects in the UK.

  • It is geared towards assisting clients (employers) and their advisers in choosing suitable contracts when engaging contractors for private and public sector projects.

RICS Standards Framework

  • The RICS Standards and Regulation Board (SRB) governs standards setting to ensure public interest and professional competency.

  • RICS professional standards guide members in ethical practice and technical competence.

Document Definitions

  • RICS Professional Standards: Set baseline requirements and guidelines for members, ensuring ethical behaviour and competent service delivery.

  • RICS Practice Information: Offers non-mandatory information to support the performance of RICS members.

General Principles (Level 1 - Knowing)

Procurement Routes

  • Understanding procurement is crucial; it involves the strategy for sourcing construction services and obtaining the right contractual agreements.

  • Procurement can influence contract types and necessitate careful analysis before decisions are made.

Types of Procurement Routes

  • Traditional (‘design-bid-build’): Contractor and design team are separately appointed by the employer; the contractor takes responsibility for construction based on the design provided by the professional team.

  • Design and Build: The contractor bears responsibility for both design and construction, streamlining accountability.

  • Construction Management: Separates risk and responsibility; employs a construction manager to administer construction contracts.

  • Management Contracting: Similar to construction management but the management contractor does not perform construction.

  • Partnering and Public-Private Partnerships (PPP): Focus on collaborative frameworks and risk-sharing arrangements.

Practical Applications (Level 2 - Doing)

Factors Influencing Contract Choice

  • Consider works required, project size, employer's sophistication, and industry familiarity with contract types.

  • Balance of risk and potential design responsibilities primarily influences contract selection.

Construction Contracts for Common Procurement Routes

  • Traditional Route Contracts: JCT Standard Building Contract, NEC ECC Option A, GC Works, etc.

  • Design and Build Contracts: Include JCT Design and Build Contract, NEC ECC Options A-E, and FIDIC Yellow Book.

  • Management Contracting: Utilizes JCT Management Building Contract and NEC.

Practical Considerations (Level 3 - Advising)

Essential Elements Required to Create a Contract

  • Must include offer, acceptance, consideration, certainty of terms, and intention to create legal relations.

  • Proper execution is important, especially the inclusion of necessary agreements.

Amending Standard Form Construction Contracts

  • Common amendments may involve altering risk allocations, inserting obligations, or addressing project-specific requirements.

  • Amendments should be proportionate relative to the project scale and complexity.

Contract Execution and Duration of Liability

  • Contracts can be executed as a deed (12-year liability) or as a simple agreement (6-year liability) in England and Wales.

  • Ensure the execution aligns with proper authority and legal requirements.

Jurisdictional Considerations

  • Contracts must comply with local laws and conditions, especially when working across different regions of the UK.

  • Specific adjustments may be needed for contracts used in Scotland or Northern Ireland.

Conclusion

  • The document serves as a guide to selecting appropriate construction contracts, emphasizing informed decisions based on thorough understanding and analysis of various factors influencing contract choice essential for project success.