Construction Contracts can often be heavily negotiated, and as well as the Employer and Contractor can often involve input from a Funder. The following are some matters for consideration:-
- Fixed Price Contract
Consider whether to proceed by way of a fixed price contract or based on quantities. If proceeding by way of a fixed price contract, careful consideration should in particular be given to the ground condition as unexpected costs could arise, for example if there is rock. Funders however typically insist on a fixed price contract.
- Liquidated damages
Consider a daily amount for insertion in the contract. This is the daily amount to be paid by the Contractor to the Employer if the completion date is not met, and should be a genuine pre-estimate of the costs.
- Performance Bond
An Employer typically seeks a bond for a certain percentage of the contract value. However these can be expensive, and should be factored into costings.
- Percentage of Certified Value Retained
This is an agreed percentage to be retained by the Employer.
- Collateral Warranties
Funders usually have their preferred forms of Collateral Warranty, and also typically resist insertion of a net contribution clause. A Contractor should pay careful attention to the level of Professional Indemnity Insurance provided for and that the party proposing to provide such warranty has the required level of insurance.
- Payments/Collateral Warranties
An Employer will often seek not to make any payments or only a percentage of payments under a Contract until such time as duly executed Collateral Warranties have been delivered. This is particularly important where there is a funder.
- Variations
The language around variations tends to be formulaic with prescribed timelines and should be carefully considered by a Contractor, for example if the written confirmation of the Architect is required as a condition precedent to being paid.
For more information on this topic, please contact Godfrey Hogan on godfrey@gibneyhogan.ie
The content of this article is provided for information purposes only and does not constitute legal or other advice.
