1.Contractor claiming three days for inclement weather
Delay in the construction work can be costly as well as frustrating. The longer it takes to complete the project, the more it costs along with the wastage of essential resources. Delays can sometime may result in purchase of additional materials which may be subjected to the constructional work. Generally contractors want to complete their work on time but sometimes they are inevitable due to certain conditions.
Here is one such case in which a contractor is demanding an extension for three days claiming for inclement weather. Change in weather depends on the season and the location of the construction site. The seasons can bring rain followed by scorching heat of summer. Winters bring cooler temperatures along with snow and ice. These conditions are harmful for the machineries as well as the materials and can have potential hazard to the workers working on the site. During rainy seasons it is very difficult to carry out outdoor works as rain makes it difficult. It has been found that many contractors requesting additional time and money to be allocated to them due to rainy or wet conditions. Rainy seasons can also cause potential hazards to the workers working outside as continuous exposure to rain can cause myriad problems to them. Driving to the site with mud can also be dangerous for the driver carrying materials to the construction site. As the rainy reason can have potential hazard to the materials as well as to the workers, the summer season has also its own set of hazards. Extreme hot and humid conditions can put the workers on risk of getting heat stroke. Many workers try to relief them by removing their safety provisions like glasses, gloves and hats. By doing this they get themselves more into the risk of getting heat stroke. Cold weather can also negatively impact the construction site. Equipment’s needs to be lubricated by special oils to withstand low temperatures. Paints as well as water can freeze which makes curing process slower. Mortars as well as grouts are also affected by cold weather.
After seeing all the above parameters it has been found that the weather has affected the critical path of the contractor’s construction program which has been found accurate. As the change in weather is not dependent on the contractor so the claim for extension for three days will be granted to him.
Contractor claiming four days of industrial action
Strike by the workers can also cause substantial delays to the construction work which can result in increased project cost for the owners and the contractors. As majority of the construction works are needed to be completed on time, strikes can cause owners, contractors, subcontractors and suppliers to miss contractual deadlines. The contractor could have resolved the strike by mitigating the labor dispute before it erupted into a big strike. The contractor should have established an efficient, straightforward and cooperative management relationship with the workers. During investigation it has also been found that the contractor employed some unskilled workers in place of skilled ones. The skilled workers demanded higher wages which the contractor refused to pay to them and the skilled workers were not ready to work at lower wages that is provided by the contractor. Finally the unskilled workers were unable to finish the job on time as they have no experience about the job and have substantially lower output than the skilled ones. Due to this the contractor refused to pay them their full wages. These are some of the major causes of the strike that has been discovered during the investigation.
In case of a potential deferral because of a strike, it is the responsibility of the contractor to inform all other relevant parties before time.
Strike by the labors are lawful protests rather than unfair practices. The strike can have many reasons which may include protest for bonus increase, wage increase, diverse benefit programs and provision of different colored hard hats. The strike has been organized by the workers rather than the owner. If the strike was caused by the owner the contractor can claim for time extension as well as time related compensations. As the strike happened due to provisions and benefits that are not provided by the contractor to the workers the claim for four day industrial action will not be granted to the contractor and the contractor will be penalized for the delay in the construction work.
Contractor claiming sixty days for a substantial variation
Variations in the scope of work can cause substantial delays in the construction project. After investigation it has been found that the variations are on the design errors. A design error basically means that there is wrong and insufficient information that has been provided to the contractor. The wrong information led to improper application of the techniques to achieve the desired results. As the design errors are discovered during the actual execution phase of the project and the attempt to correct it will lead to delay in the project delivery time along with cost overruns. Design errors can lead to cost overruns as the estimations that were presented earlier were based on the designs that were produced earlier. So the errors in design in the form of omission will mean that extra work is needed to be done which means that the estimation will include project cost along with the omission costs thereby resulting cost overruns and delays. The errors in the design has led to additional work along with revising the scope of the work. All these faults are out of the radar to the contractor, so the contractors cannot be held responsible for it.
After proper and thorough investigation it has been found that the claim for sixty days for a substantial variation by the contractor is valid as it is not in the hands of the contractor. It has also been found that the variation affected the critical path of the contractor’s construction program which was totally not in the hands of the contractor and the contractor can do nothing about it. So the contractor will be entitled to proper benefits and compensations as per the rules and regulations.
2.Report should explain the relevant laws and common practices in Australia. Advising principle on areas such as practical and legal risks arising from the tender process, performance security, insurance, variations, liquidated damages and defects.
Laws and common practices in Australia
Every country as well as every state inside a country has their own set of construction laws and practices and so even Australia has. The group of laws that applies to any existing or future building project is called construction law. Whether there is a plan to build office, residence, shopping malls or whatever it is, it is important to be aware of the laws and regulations that specifically applies to any kind of construction in Australia. The National Construction Code (NCC) is a code which is issued by the Australian Building Codes Board (ABCB). The national construction code has diagramed the base prerequisites for the outline and construction of new buildings. The national construction code has also emphasized on the safety, health and sustainability of the designed buildings. NCC has three volumes. Volume 1 and Volume 2 contains Building Code of Australia (BCA) and volume 3 contains Plumbing Code of Australia (PCA) in it. The latest NCC version which is used today is the NCC 2016. Each and every state and territory in Australia have adopted the new NCC 2016. Even after the NCC each and every state and territory has their own set of rule and regulation in place which directs the construction industry. These law and regulations mainly cover areas such as registration, licensing, insurance and so on. For example Victoria has Building and Construction Industry Security of Payment Act 2002, Western Australia has Construction Industry Act 2004, and New South Wales has Building and Construction Industry Security of Payment Act 1999 and the Contractors Debts Act 1997. Similarly many other states and territories are there in Australia which has these kinds of rules and regulations to control the construction industry and making sure that all sets of construction work are done following the rules and regulations set by the governing body.
Practical and legal risks that can arise during tendering process
Tendering process is one of the most important activities in construction industry. In order to find who is going to finally execute the project, competitive tendering is done with detailed assessment of the bidders like their experience, past scale of projects and all. As the given project is of very large scale with a budget allocation of around AU$50 million, it is very important to find a suitable contractor having vast experience to execute projects of this scale. But unluckily there is no contractor who can work on the project of this nature. As this project wants to establish a reputation in Australia, it is very important to source a capable contractor from outside of Australia. Other risks that can arise during tendering process can be selecting wrong and incapable contractor, design risks, contract risks, potential conflicts that can arise afterwards and many more.
Risk arising from performance security
As the project is a high valued and reputed project of Australia, so it is very important to maintain the performance of the structure. In order to maintain the performance of the structure it is very important that the contractor use proper material and employs skilled workers so that every work can be finished on time and the structure gains its desired look and strength. In order to secure all these aspects it is important to have performance bonds. These bonds are the guarantees of performance of the third party from which the contractor will be sourcing the materials and labors. Any proof of breach can be treated as crime and the responsible body can be penalized under the laws or under the agreements signed during tendering process.
Advice on insurance
Mishaps and mistakes during construction are general and can happen at any certain moment. Owners should save themselves by having insurance of the ongoing project. Insurance providers are the third party company which protects individuals and firms from risks. Insurances can be done on materials, collateral damages as well as on the whole structure. It would be better to have insurance of the complete building, as this will save the complete structure from the advent of any mishaps. Time delays can also ruin the construction process by draining unnecessarily useful resources. Having an insurance will protect cost overruns that has been faced due to the missed deadline. Damage to the building work, machines, tools, plants should also be covered under insurance to be at a safe side in advent of a mishap.
Risks due to variations
Variations in constructional project can completely make the project off tracked. Variation is the alteration to the scope of work or omission of the original scope of work. Alteration can be in the design, can be in the quality, and can be in quantity, working condition as well as to the sequence of work. In order to get rid of this kind of situations it is very important to award the contract to an organization which as vast experience in handling project of this scale. As the organization with experience will be having a vast set of experienced workforce along with necessary equipment and machineries to handle project of this scale. There is less chance of variation in the scope of work if an organization having vast experience handles such projects.
Risks due to liquidated damages
Failing to complete the work on time can lead to liquidated damages. Reduce in liquidated damage can be averted to a certain amount by awarding the contract to an experienced organization. It is important at the time of signing contract to mention that losses suffered due to the delay in the completion of the constructional activities have to be bared by the organization tasked with the execution of the project. There should be special clauses related to the liquidated damages in the agreements.
Risks due to defects
Defect can arise during the execution of the project, but it is important to have that defect in permissible limits. The job of executing the project should be given to an experienced institution to reduce the amount of defects as they have substantial amount of experience with them. Offering the job to an unexperienced organization may not able to bring the amount of defects under permissible limits which can afterwards create risk to the beauty as well as to the strength of the structure. Defects can range from design till the completion of the project. Defects in designs can reduce the strength of the structure after a certain period of time. Other defects such as electrical defects, plumbing defects, insulation defects, and door and window defects, improper drainage can cause unnecessary problems to the people as well as creating a bad impression of the structure which ultimately can harm the purpose of establishing its reputation of the building.
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