BUSINESS AND TRAINING 15
Failing construction contracts ( Part 2 )
By
Uwe Putlitz
In this second part of Uwe Putlitz ’ s three-part series on construction contracts , he leads us through the murky waters of scope creep and scope freeze .
In part one , we took a look at the first two stages of projects , with a focus on parameters and requirements . It is important to examine and analyse project stages and situations . We pick up with what happens in work stage three .
During work stage 3
• All design consultants must be formally appointed and integrated into the project team .
• Specialist subcontractors may be involved to provide unique design information for coordination / integration within the whole works .
• Develop the chosen ‘ optimum ’ solution after evaluating options in work stage two , refined in detail , involving the OH & SA agent to review the buildability of aspects of the works .
• During this work stage , the employer and the ultimate beneficiaries should finally review the brief , specifications and design details and formally confirm their agreement or essential modifications .
• Confirm that the ultimate user requests for a ‘ deluxe ’ solution can be changed to a ‘ lower standard ’ without negative consequences .
• Any changes after this work stage will delay the execution stages and add to the cost of the project .
• After stage two , a scope freeze for the works should be enforced . After incorporating any stage three refinements , a design freeze should be implemented .
• Scope creep is due to the omission of requirements not originally identified during the preliminary stages ( site surveys , local community , proper planning , etc ) or the late involvement of end users with new requirements or conditions unknown ( natural events e . g . sinkholes ) at the time the project was conceived or the contract was signed
• After stage three ( the first ?) accurate costing can be prepared . The stage two feasibility study and viability assessment must be reviewed and accepted or modified for acceptance by all project participants .
Employer : Directly involved – confirmation ‘ scope and design is correct ’ Proceed to the next work stage ( with additional instructions ) Contractor : Not involved – unless as ‘ design + build ’ shared with employer Constr . Project Manager : May be involved Architect : Developing optimum design solutions after exploring different concept designs OH & SA Agent : Review the buildability of aspects of the works , H & S specifications Principal Consultant : Directly involved in co-ordinating the work of the design team ‘ Expert ’ consultants : Input will be required Principal Agent / CA : Not involved
During work stage 4
• All project ‘ scope ’ and ‘ design ’ criteria are ‘ frozen ’. The procurement and construction documentation is prepared following an agreed documentation programme .
• Any changes during this stage will delay the project and almost certainly increase costs .
• The chosen procurement strategy must be implemented .
• All statutory approvals should have been obtained or be finalised during this stage .
• The professional team must evaluate the received tenders and prepare a recommendation for the employer to accept the ‘ least risk of failure ’ option = the lowest cost submitted by a compliant contractor , not the lowest cost as the only criterion .
• The project team should prepare for possible scope / design changes to meet budget criteria if tendered prices exceed the budget .
Employer : Directly involved – acceptance of tendered contractor ’ s price Proceed to the next work stage ( with additional instructions ?) Contractor ( s ): Prepare and submit a tender to CA , state
Uwe Putlitz is a registered professional Architect and Construction Project Manager , a Fellow of the Royal Institute of Chartered Surveyors ( RICS ) and is a visiting lecturer at the School of Construction Economics and Management at the University of the Witwatersrand . Having recently retired as the Chief Executive Officer of the Joint Building Contracts Committee ( JBCC ) he specialises in the avoidance of construction disputes by way of lectures , technical articles dealing with aspects of contract administration for various industry publications arising from the use of Standardform Contracts including the Federation Internationale des Ingenieurs-Conseils ( FIDIC ), the General Conditions of Contract ( GCC ), the JBCC or the New Engineering Contract ( NEC ) to find an acceptable settlement without resorting to legal processes , where possible . More info : info @ buildstrat . co . za
“ The employer and the ultimate beneficiaries
should finally review the brief , specifications and design details and formally confirm their agreement or essential modifications .”
April 2024 Volume 30 I Number 2 www . plumbingafrica . co . za