Amongst disputes that have been referred for dispute resolution, it has been determined that several construction projects are being executed either without a contract or with only a signed quotation. This quotation usually consists of one or two pages without any other supporting documents.

The challenge encountered with this position is that there are no terms or conditions that deal with the most pertinent contractual aspects of a project and therefore affect the dispute.

These aspects include:

• Variations in terms of changes to the scope of works,
• Delay claims due to the fault of one of the parties and also include instances where there is no fault by either party,
• Additional costs for delays where the delay can specifically be attributed to the client/employer,
• Pricing basis, especially where the quotation makes reference only to one price since this presents disputes and ambiguity with regards to what was included, what was excluded or what the rate for variations was,
• It clearly identifies the roles and responsibilities of the parties,
• The reporting structure on the project is stipulated,
• Well-structured dispute resolution processes are included,
• Schedule for the works including penalties where applicable.

There are standard form contracts that are widely available to contractors for use on their projects, with the most common standard form contracts used by our members being the JBCC or MBSA agreements.

The benefits of utilizing standard form contracts are:

• They are formulated by industry experts from various disciplines and cater for the evolving needs of parties to a construction contract through industry scrutiny.
• Each form of the contract consists of a suite for the parties to select the most suitable contract for a project.
• The common aspects affecting construction projects are well defined and the methodologies for resolving these issues are elaborated upon.
• These contracts are regularly updated and by utilizing the latest versions the parties ensure that best practice applicable at the time of entering into the agreement is adhered to.
• Through continuous practice, they create consistency in managing a construction contract.

Following the spirit of good practice, inter alia, the following is recommended once a contract has been selected:

• It is imperative to have a proper understanding of the contract.
• Both parties should physically sign the agreement after the project has been awarded.
• All annexures and contract data should be properly populated to avoid any ambiguity. For example, we have seen contracts where the contract data is blank and is therefore unable to give effect to the contract.
• As good practice, initial each page of the contract.
• Ensure a well-defined project is included in the contract document to remove any unambiguity.
• Ensure all pricing information is correct and included in the contract, together with the pricing basis thereof and any inclusions/exclusions.
• A clearly defined scope of work and applicable drawings are included in the contract.

Whereas the quotation leaves a plethora of matters open for interpretation during the dispute resolution process and requires reliance on common law principles, a standard form contract in most instances provides guidelines on addressing unforeseen issues on a construction project. Therefore, contractors are encouraged to familiarise themselves with construction contracts and thereafter utilise them.

Victor Smith

Membership Manager