INSIGHT
Biznews
Influences outside of the construction project, such as labour unrest issues, can have a significant impact on the project’ s contract.
Construction risk management
By Ian Massey
The management of construction contracts is the management of risk, including community unrest, business forum and taxi association activity, all of which are impacting on contracts.
Normally, when we talk about the management of risk on construction contracts, we are referring to commercial or physical risks inherent in just getting the job done. These sorts of risks are allocated( to one or other of the parties) in accordance with the contractual arrangement between the parties. In other words, in accordance with the( usually) standard form contract and the special conditions of contract prescribed by the employer and his professional team. However, there are other risks that are becoming prevalent and which are having a major impact on many of our contracts. Such things as community unrest, business forum and taxi association activity are now common and are a major risk for all contractors.
28- CEC July 2018
Although our locally grown contract forms have been adapted to deal with these sorts of risks, the international forms that we use( FIDIC and NEC) are woefully inadequate to deal with these risks and the contractor is left seriously exposed. Most contracts that are undertaken in the southern African region are what we refer to as adversarial. They adopt a them-and-us approach to implementing the contract. In an environment where conflict is the norm, choosing an implementation strategy that promotes conflict between the parties, may not be the smartest move. The exception( though in practice this does not usually materialise) is the NEC contract, which is intended to be a more collaborative contract implementation strategy. Clause 10.1 of that contract requires the parties to the contract to conduct themselves in a spirit of mutual trust and cooperation. This clause 10.1 is intended to govern each aspect of the NEC contract. Those readers who have had exposure to the NEC contract in the local construction environment will know that this simply does not happen. This is not because the requirement of working in a spirit of mutual trust and cooperation is a bad thing or is an impossible requirement, it is because of the environment in which we work, which is one of extreme polarisation. The parties to construction contracts, being the employers, the consulting groups, the contractors,