Contract Administration

Contract Administration

Building Design

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Building designs
by Dennis Brand
Perhaps the best way to describe design and build contracts is to explain what they are not. The traditional design-bid-build contract is a sequential process of phases or stages in which the owner or developer first contracts with a design professional to prepare a concept or basic design, then later a detailed design that is suitable for construction. This will include plans and specifications that when complete will be used to solicit competitive bids and finally the award of a construction contract to the lowest bidder.
In design and build contracts, one entity performs both the design and construction under a single contract. Often the contract is awarded by some process other than competitive bidding, thus it differs from traditional design-bid-build in two ways. First, the design and construction components are packaged into a single contract; second, it is not necessarily awarded to the lowest bidder after competitive bidding.
Why use design and build?
Design and build contracts have the potential to reduce the overall project costs as the contractor performing the design has a better appreciation of the construction costs of the various alternatives. They can therefore produce a design that is less expensive to build and they have an incentive to do so.
Another way to look at this advantage is that it moves value engineering from after the contract award, where the contractor proposes cost reduction ideas and shares the savings with the owner, to pre-award, where the owner enjoys most of the savings.
Design and build contracts may also result in the earlier completion and occupancy of a project as there is no downtime between the completion of a design and start of construction. Furthermore, the contractor can begin construction of early phases of the project, such as grading and foundations, before the design of later phases like the building envelope and MEP systems are complete.
This process is sometimes referred to as fast-track. It eliminates the traditional liability gap that can occur when the design is produced by a consultant and the contractor constructs the design under a separate contract. Design professionals can obtain insurance coverage for professional liability insurance only, which covers negligence, error and omissions. Virtually all design contracts limit their liability to this.
However, there can be non-negligent errors and omissions on the part of the designer that cost the owner money, but for which the designer is not liable. One example of this is where the designer undertakes reasonable subsurface investigations but fails to detect a rocky outcrop that will require additional work on the part of the construction contractor.
In the traditional design-bid-build approach, the owner warrants the correctness of the plans and specifications to the construction contractor. In the event of an error where the contractor incurs additional costs, these are met by the owner with little prospect of recovery from the designer. Design and build contracts eliminate this gap because the is solely responsible for defective plans, specifications or differing site conditions.
When a project is designed around current generation products, any proposed substitution of new or alternative items following bidding may require revisions to the structure, mechanical or electrical components to accommodate the new design. In such occasions the question arises: who will pay for the resulting charges? Design and build contracts solve this problem: the contractor selects the equipment then designs the building around this, which seems a more logical way to proceed.
The traditional design-bid-build method of contracting can suffer from under-optimisation when individual project participants seek to optimise their own positions. For example, the total cost to the owner of a building’s steel frame includes the cost of the engineering to determine the required steel sections plus that of the steel. The designer has little incentive to minimise the amount of structural steel, their concern is only to spend sufficient design time to ensure that there is enough steel to meet both gravity and seismic loads.
With design and build contracts, the contractor has an incentive to use additional engineering in order to achieve the optimum amount of steel required for the structure. That is not to say that this type of contract results in unsafe or less efficient structures, rather that it reduces unnecessary quantities of materials and equipment that do not necessarily add to the robustness of the structure.
Design and build contracts may reduce the administrative burden on the owner as there is one award and one contract to administer. The total cost of the project becomes apparent earlier. In traditional design-bid-build jobs, construction costs are not known until bid opening and it is possible to spend money on a design that the owner may not be able to build. Frequently construction bids exceed the project budget, which results in it having to be redesigned, thus delaying completion.
The risk factors
Under a traditional design-bid-build contract arrangement the owner has full control over the details of the plans and specifications. It does not publish them for bids until it is satisfied that they reflect their requirements. With design and build contracts the owner gives up some of this control.
Moreover, the owner must confirm its needs much earlier. With traditional design-bid-build contracts, if the owner is indecisive on its needs, it can clarify them during the design phase. With design and build projects, however such changes can be very expensive and disruptive, impacting on both costs and completion.
To summarise, if the owner is not certain what they want, due to the expense in making changes after contracts are awarded, the more traditional design-bid-build method may be the best choice.

Building designs

by Dennis Brand

Perhaps the best way to describe design and build contracts is to explain what they are not. The traditional design-bid-build contract is a sequential process of phases or stages in which the owner or developer first contracts with a design professional to prepare a concept or basic design, then later a detailed design that is suitable for construction. This will include plans and specifications that when complete will be used to solicit competitive bids and finally the award of a construction contract to the lowest bidder. …

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Contract Administration

Asbestos management in the UAE

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Asbestos management in the UAE
by Charles Faulkner
Each year almost 100,000 people die worldwide due to asbestos related disease, which is more than the number of lives taken by skin cancer. Asbestos related diseases are now the greatest occupational killer in world history and the figures continue to rise.
In the UAE there is a commonly-held belief that asbestos is only a problem in Europe and North America, where the horror stories of exposure, litigation, compensation and death – not necessarily in that order – are well publicised. But, asbestos is not perceived as an issue for the Emirates.
As a construction risk management consultant, it initially shocked me to find out that there was not an absolute prohibition against the use of all Asbestos Containing Materials (ACMs) in the UAE as recommended by the World Health Organisation, especially as the UAE is at the forefront of many aspects of building design and new technology. It is still legally permitted to import asbestos for the manufacture and subsequent use of asbestos cement pipes for the purpose of water supply and sewerage.
Furthermore the use of asbestos board in the Emirates has only been banned since November 2006, shattering the myth that asbestos is only present within older buildings. In fact over 17,000 tonnes of asbestos was imported and consumed in the UAE in 2007* – its most evident utilisation being the construction industry.
Any work with ACMs can present a risk to human health, and it is well established that there is no known safe level of exposure to any type of asbestos fibre. Those most at risk from the harmful effects of asbestos include construction workers, particularly those involved in demolition and refurbishment activities and asbestos water pipe installation, and tradesmen such as electricians, plumbers and carpenters.
It is not uncommon for those unknowingly exposed to asbestos to spread the deadly fibre through contaminated equipment and clothing, leading to the so called “secondary exposure” of work colleagues, family and friends. The American and European press regularly report the tragic stories of families whose lives have been devastated by asbestos related deaths, usually in women and children, attributed to contaminated clothing and second hand asbestos exposure.
The only way to reduce the hazards of ACMs in the construction industry is to prohibit the use of ACMs (voluntarily and legislatively), use safer substitute materials, and proactively manage the remaining residual risk from each of the activities that are associated with asbestos exposure.
From a legal and ethical point of view, employers must understand that prevention to exposure is paramount and where this is not possible they must assess the work and provide their employees with the appropriate procedures, control measures, personal protective equipment and respiratory protective equipment. Current legislation must be adhered to, and a best practice guideline implemented.
WSP Environment and Energy in association with the non-profit health and safety organisation Buildsafe UAE will form a focus group this month to produce workable guidelines that will not only comply with both local and federal legislation but also develop industry health and safety best practice procedures. The procedures will detail the safe systems of work for asbestos related activities and then be distributed to Buildsafe UAE members.
Only by collectively acknowledging that there is a risk from ACMs in the UAE construction industry and addressing that risk can we play our part in putting an end to unnecessary asbestos related deaths.

by Charles Faulkner

Each year almost 100,000 people die worldwide due to asbestos related disease, which is more than the number of lives taken by skin cancer. Asbestos related diseases are now the greatest occupational killer in world history and the figures continue to rise. …

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Contract Administration

Proactively Manage Small Change Requests Using Alternative Processes

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Everyone can recognize and appreciate that a scope change request process must be invoked for large changes to the project. However, you may encounter resistance to formal scope change management for small requests. The client and other project team members may consider this to be unnecessary overhead for such small decisions. …

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Construction Law, Contract Administration

Surviving the Slowdown: A Current Analysis of the UAE Construction Industry

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by Omar Al Saadoon

The title of this article does not suggest the fear of stakeholders in the construction industry in the UAE or any other country affected by the global downturn is wholly irrational. No, on the contrary, the fact the UAE is currently experiencing a dramatic and unprecedented slowdown in its construction industry (which apparently accounts in part for Dubai’s first budget deficit in 2009) is symptomatic of the global fear of the instability of global financial markets and the ability of banks to lend to the public and each other. It is difficult to guage the actual effect of the downturn on the local construction industry given the UAE does not publish its GDP date on a quarterly basis. …

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Contract Administration

Manage Political Problems as Issues

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The larger your project gets, the more you will find that the issues you encounter are more and more political in nature. The issues have to do with the use of resources, project direction, project deliverables, how the project should be run, how the project impacts people, etc. The resolution of these issues requires you to gain consensus among people that have differences of opinion. In other words, the resolution requires you to recognize and work in office politics. …

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