Forms of contract

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1.0 Introduction – The Scenario

A leading manufacturer of confectionery in the UK suffered a devastating fire at their factory in Sheffield. Their insurers have authorised an immediate commencement of the rebuilding work and have been paying a sum of approximately £1 5m. per month to the insured company as “Business Continuity” insurance to cover both loss of profit and to allow products to be imported from another country for packaging and sale.

The factory site has been cleared using an enabling works contract and it has been decided that an experience single contractor, who is capable of undertaking this type of work would be appointed. It is now the responsibility of an experienced project manager to administer the rebuilding of the factory, which currently is thought to be in the region of £60m worth. The time scale and who the project manager will use to achieve the delivery of the new building and process equipment to enable the manufacture of confectionery to re-start, including any trials, performance tests and commissioning at the earliest possible opportunity is for him/her to decide.

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On this account, time of completion and quality is the primary concern and cost is secondary, thus, a form of contract with a procurement route or strategy that would facilitate the construction of the rebuilding to start immediately, while all other preparations (e.g Engineering works) towards the building objective are going on, would be the appropriate or desired form of contract”.

Chapter 2

2.0 Forms of contract

Standard form of contract for the execution of work and the appointment of consultants are basically used in the construction, Engineering and processing industries. These contracts are prepared by one body in isolation or jointly prepared by bodies representing employers, consultants and contractors. Some of the forms of contracts by these bodies are:

* Joint contract Tribunal (JCT) forms of contract

* Engineering Contract (NEC 3) forms of contract

* Institute of Civil Engineers (ICE) forms of contract

* Association of Consultant Engineers (ACE) forms of contract

* Association of Consultant Architects (ACA) forms of contract

* General Condition/works forms of contact

2.1 Criteria for the Selection of Forms of Contract

According to the office of building and development in Australia (1996), there are a variety of forms of contract and procurement route that are available for acquiring a new or rebuilding of building, facilities or infrastructure, which are basically determined by a number of criteria, which are:

* Type of client

* Level of involvement required by the client

* The project size and complexity

* Speed – Time available for construction

* Risk allocation

* Approach to the design solution

* Cost certainty and method of financing the project

* Specialist input

* Capacity for variations –

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