Construction Contract Special Conditions
Where the contract does not make express provision for an eventuality or the allocation of risk, the circumstance will be provided for by common law. In other words, if the contract is silent on some of the common issues, the parties will be obliged to revert to common law for the outcome of their dispute. The main source of common law in relation to construction law is case law, of which there is a complete lack in South Africa on the many issues that arise from construction projects. This fact has been confirmed by Judge Hugo’s ruling in the Ovcon (Pty) Ltd v Administrator, Natal 1991 (4) SA 71 (D) case, where he stated “Counsel has informed me and I accept that no case law on the topic G could be found. I certainly have found none.” Accordingly, it is of cardinal importance for contracts to expressly provide for specific risk allocations pertaining to possible time and cost risk events.
The short comings in standard construction contracts fall into two categories;
Firstly, express terms in the contract itself that are ambiguous, conflicting and inconsistent and Secondly, contracts do not provide for Best Practice Project and Risk Management principles.
Every construction contract is also unique and risk should be allocated to the best party in the position to control, manage or insure the risk.
Instrument also follows the practice in the UK where Contract Supplements are used with the Standard Contracts to incorporate Best Practice Project and Risk Management principles. Particularly in the area relating to the award of extensions of time and prolongation cost there are vast inconsistencies in applying the contractual terms if the determination of claims, mediations and adjudications in the industry is used as yardstick.
The benefit to the Employer that the use of the Supplement to achieve conformity with the incorporation of Best Practise Project and Risk Management principles will bring is the power to manage his own risks of change during the construction period with the assistance of current approved Programmes reflecting the true status of the project. In the absence of aforesaid management tools and information, the Employer needs to depend upon the Contractor either to manage the Employer’s risks for him under the aegis of contractual provisions requiring the contractor to proceed industriously with due diligence to complete the works or some similar expressions. Alternatively, the Employer’s risks are not managed at all during the contract period with the resultant inevitable overrun, compensation claims, penalties and the disputes that often follow.
The benefit of the use of the Supplement to the Contractor and Consultants is that in following the Best Practice Project and Risk Management he will be able to manage the Works better, able to manage his own risks better and, where his processes are interfered with by the Employer, he will be able to secure the speedy resolution to questions of extensions of time and compensation and thus improve his ability to manage the future Works and improve his cash flow.
By expressly including Common Law requirements for proving extension of time claims will assist the ignorant Contractor by giving him guidance to ensure compliance with same. Many unwary Contractors’ claims have been rejected and held to be unsuccessful for not using legally acceptable methods, critical path, updated programmes indicating actual progress, contemporary record keeping etc to prove these claims.
