Construction Law/Design-Build Contract
Hope you are doing fine.
I am really having the benefit of your advice.
My question today relates to a Design and Build project.
Just to give you background information: The Employer’s requirement lists co-ordinates of the extremities of the project; i.e. the beginning and terminal points, termed control points within the contract.
There were two junctions [FIRST JUNCTION and SECOND JUNCTION]. The name given to the project indicated that the project would start from the FIRST JUNCTION. However, the co-ordinate given in the Employer’s requirement was such that the project would start from the SECOND JUNCTION. There is a difference of 4km between the two junctions.
The Employer’s representative required that the starting point of the project shall be the FIRST JUNCTION, the coordinates of which does not match with what was given in the Employer’s requirement. By the way, the concept design and the Contractor’s alignment submitted at the time of the bid showed the starting point at the SECOND JUNCTION.
The Employer’s representative view was that the contract requires the Contractor to make consultation of stakeholders, local people and administrators. The preference of the stakeholders, local administration and the Employer was that the project starts from the FIRST JUNCTION as the name also implied and as the roads should pass through settlement areas.
1. However, the Contractor claims that the starting point should be the SECOND JUNCTION as described by the coordinates given in the Employer’s requirement [despite the naming] or otherwise variation should be initiated under Clause 14 for the starting point to be the FIRST JUNCTION. What is your view- was the Employer’s representative obliged to initiate Variation or not?
2. The Contractor states that as the Design-Builder, he should be free to select the best and economical route as far as the proposed route fulfills the requirements of the contract in relation to the control points, which the contractor has to connect. Issuing a center-line and additional control point other than the original control points named in the contract is a change of the contract requirements.
The Employer’s representative’s advised the Contractor to make the route pass through additional control points not mentioned in the Employer’s requirements and also follow in some sections as the Contractor submitted ‘prescribed and fixed cent-reline’ based on the consultation of the stakeholders.
The Contractor submits that under the term of consultation, the Employer’s representative instructed the Contractor to change the original design route from that upon which the contract was based. And this constituted Variation under Clause 14. What is your view- was the Employer’s representative obliged to initiate Variation or not?
3. Because of the above, the Contractor submits that significant increases in quantities, no and types of structures and length of the project would ensue.
How would an increase in the length of the project from the Contractor’s proposal be dealt with? Would quantities be the bases for determining the effect of the increase? If so,
• does it mean that it has to be waited until the design is completed; and
• does this not change the essence of the contract to a re-measurement type [especially if it is a simple increase in length than what was projected].
I am deeply indebted in advance for your expert advice.
Nice hearing from you again and thank you for your question.
1. From what i could read from you, it is evident that employers requirement has changed because the "express provisions" that stated that the start of the control point should be SECOND JUNCTION is now changed to FIRST JUNCTION. If the Employers representative still want to proceed with the FIRST JUNCTION, then, he must be willing to initiate a variation.
2. Regarding selection or determination of routes, from your question, i see that, there is again an express contract provision that, the routes would be determined along the control routes "based on the consultations with the stakeholders". It is my opinion that the contractor would be bound by whatever sections / routes are determined for the road to pass through "based on the consultations with the stakeholder, as long as the sections / routes are not outside the control points. It would be difficult to assume that the contractor can just choose any sections he likes because, the intent of the clause "...based on consultation with the stakeholders" has placed as restriction on contractor unilateral liberty to choose his own sections. But if the result of the consultation produced sections outside the routes / control points or indicates additional routes / control points, then, the ER would need to initiate a variation.
3. If based on the above, it can be established that, change has occurred in the employers requirement, then, contractor would be justified to seek for relief in form of proposal for ER consideration. if the change therefore increases the length of the road and widens the scope, then, the following steps must be followed:
a. Contractor to submit a proposal to achieve the changed scope. The proposal to include; full description of the change, Proposal for execution plan / methodology, List of investigations and studies required to be carried out in their sequential order, any concept, preliminary and detailed designs requirement and approvals, statutory documentation, submittals and approvals. b. Design Consultants and fees agreement, Professional Indemnity insurance and collateral warrantees.
c. Bill of Quantities, costs (based on schedule of rates)and execution and construction duration, impact on the completion date.
You need to know therefore that the process above has not changed the contract to re-measurement type because the variation should be evaluated independently and added as a net figure to the original contract.
I hope this is okay?