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ASSIGNMENT TITLE: - “Principle of Contract Law ”
Scenario
“A Successful project is dependent upon Post Tender and Contractual obligations being in place on behalf of the Main contractor and Subcontractors to avoid Claims and Arbitration. Write a report demonstrating how the use of supply chain management can avoid such disputes.”
1.0 Overview
1.1 Introduction
Construction disputes have their connection in disagreement among the parties. It is often assumed disputes arise when a claim refused, or it is rejected for unreasonable long scope of work. However the rejection does not make disputes in to continuation, as the party they accept rejection. Thus for disputes still can occur, supply chain management is a legal system supports alternative dispute resolution involving contract agreement, individual injury, dispute policy, compliance issues and personal obligations. The use of mediation, arbitration and litigation as a disputes resolution alternative method for court law, to avoid court law supply chain management disputes can be settle SCM Arbitration and SCM Mediation. Law suits are slow and it is take long years to settle or resolving the problems.
Post tender
Discussion between the client or contractor and the supplier after receipt of tender before awarding the tender, post tender negotiation is important due to competitive tender progress, which may be secure value for money. Only the senior management trained and experiences staff should undertaken post tender. Post tender must conduct scope of procurement.
Post tender process
Fig.01 Post tender process
1.2 Construction Claim
Normally construction claims resulting from construction delay, disruption and loss of productivity, nature of contract and variation of contractor. The client and the contractor entitle to follow their respective rules to progress the construction work claim free.
The claims are classified into three main types. That are,
Fig.02 Diagram of construction claims
Loss and expense claim
Normally loss and expense claim may arise in every construction project. Loss of expense claims arise Clause 26 or 34 JCT80 condition of contract. This claim is direct reference to condition of contract. Where a contract sign by two parties, the information supplied through drawings and specification, where a work constructed by under different condition this is may change obvious cost of the project.
Extension of time
This claim arise from clause 25 of the JCT, clause 23, where it is require the contractor finish the work before completion date. Time and money are completely linked. In such case providing extension of time it will free the contractor.
1.3 Dispute resolution method
Fig.03 Dispute Resolution Method
Different between Adversarial and Non-adversarial Dispute Resolution
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Adversarial |
Non-Adversarial |
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1) Binding
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Non binding |
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2) Process long and expensive
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Process short and expensive fewer |
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3) Decision will be given by court
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Decision will be made by both parties |
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4) It will damage business relation ship
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Not damage business relation ship |
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5) Third-party involving like judgment
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Third-party act as a neutral facilitator |
Fig.04 Adversarial, Non-Adversarial Dispute Resolution
Adjudication
Adjudication is agreed and inexpensive way to resolve disputes. Disputes may arise in three ways. Under clause parties agree that disputes will be referred to adjudication. In any absence which not covered that construction Act. If there is disputes rises parties have to refer the disputes to adjudication. The adjudicator named in the subject subsequence agreement of the party, he or she deal with the dispute clause 3.18.4 JCT2005, the instruction should be appropriate expertise and experience the nominated body for adjudication is RICS, RIBA the form to be completed and decision taken 28days by the adductor or he /she can secure an extra 14days approval to refer both party.
Arbitration
In the construction industry arbitration is one of the processes to resolve disputes. Many of them believe arbitration is faster and cheaper rather than litigation and mediation. Although the best thing is to avoid disputes over the construction process, the different practice adopted for purpose of arbitration the purpose is deal with complexity of disputes. Arbitration is a form of alternative dispute resolution between the parties. Traditionally heard in the court, building contracts more often chosen method known as arbitration, This contracts comes following agreement of the parties, when dispute arise for instance all provider of JCT forms contract parties call for arbitration which is outside of the court, by who decision parties agree to bond, settlement technique in which third party review. Parties must agree within 14days from the issue of the arbitration notice. Although the decision legally binding for the both side. Arbitration is cheaper and faster than courts. Arbitration itself has some disadvantages it may produce high complex among the parties. If there any several number of related arbitral arises these may deal with separate arbitration agreements, after Rule 2.6, 2.7 and 2.8 will apply.
Litigation
Litigation is one of the disputes resolution method under adversarial method, normally which will take place in court, solution from the judicial progress, dispute resolve rather than arbitration, JCT2005 suit of contract. Litigation is expensive dispute resolution method and it is take long lengthy period to solve, some time it takes years to settle.
Litigation advice given on according to the dispute including using the most appropriate procurement system, the most litigation advice require dispute arise in the building project which is related to payment, termination and other practical complexion.
2.0 Outline
2.1 Supply chain management
Supply chain management is network all parties involved directly or indirectly, in fulfilling a need, managing flow, materials and services across any activity. Which maximize the efficiency effectiveness of the activity, Successful supply chain management depends on reliable supply chain network. Using supply chain management over construction industry there are lot of benefits such as minimize construction delays, enhanced collaboration, reduce cost and most important reduce construction disputes. The supply chain management is a legal system supports alternative dispute resolution system involving contract agreement, individual injury, dispute policy, compliance issue and personal obligations. The use of mediation, arbitration and litigation as a dispute resolution alternative method for court law, to avoid court law supply chain management dispute can be settle supply chain management arbitration or supply chain management mediation.
The legal process of alternative dispute resolution known as mediation and arbitration, Throughout the supply chain management mediation and arbitration are cheaper, fast and less adversarial method legally use in us, European countries and Asia. Supply chain management arbitration and mediation as an out of court settlement process, to avoid legal lawyer and court cost.
The different between the supply chain management mediation and arbitration is straightforward. Mediation is voluntary, known as the fair dispute resolution method parties mutually agree upon mediation, arbitration is the final which is quicker and cheaper.
2.2 Supply chain manager
The role of the supply chain manager is important to solve current disputed and future dispute among the construction industry. Monitoring level of stock is most important part, tracking the movement of goods and materials, he has to improve the supply chain networks, prepare charts, planning tables and scheduling delivery is advance.
2.3 Component of supply chain management
The concept of supply chain management is managing the chain of events, a successful supply chain which accomplish by speed. Successful supply chain management suggest various components:
ü Plan and control
ü Various work structure
ü Organizational structure
ü Management method
ü Leadership structure
ü Structure of Risk
The key element of supply chain management
Fig.05 Element of Supply Chain Management
2.4 Dispute resolution through supply chain management
The client should finding and summarise the key feature of dispute resolution techniques. Dispute resolution method depends upon certainty of quality and speed in every situation. The client should also known about differing dispute resolution and the publicity each party avoid their publicity, to avoid the reputation for these reason dispute sold by ADR (Alternate Dispute Resolution) under supply chain management.
3.0 Understanding procedures
3.1 Mediation
Mediation is one of the formal process where a mediator to help people reach agreement and to come conclusion. Mediation process indentified important issues, misunderstanding, and solution and negotiates settlement. The mediator should have extra skill to problem solving knowledge. The person who involve in the mediation presents his or her point of view. The mediator wait and take decision their by allowing them to face, mediator meet each party and after meet individually. The mediation time variety depends on the complexity of the issues. According to the problem parties have to meet the mediator more than once, cost of the mediation is to be taken by the both parties. The party possibility to consider mediation as a mean of dispute resolution under clause 9.1 JCT2005,
3.2 Benefit of mediation
ü The parties keep contract of their own problems
ü Cost of the mediation is less
ü Mediation promotes better relationship between the parties
ü Non adversarial method of dispute resolving
ü Non bidding
ü Mostly same process in conciliation
3.3 The mediation Process
Fig.05 Mediation Process
3.4 The role of the mediator
The primary role of the mediator is to mediate from a position to get and focus each party main interest and get common conclusion. The mediator and the parties have to move rules before process begun. The rules are more important mediator identify and accepted behaviour of the causes. confident and impartiality are essential, another important role of the mediator is listen and understand the party and act without conflicts of interest, the way Trent to get agreement by the parties.
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3.5 Causes of dispute and their duty to avoidance
The contractor must disclose about potential disputes to the client in a certain ways. Which depends upon the type and scale of the proposal and that can affect the tender selection. All the parties are involved in construction unique operation or set of operations, which is the major process is that, whatever the project. Each party disclose the potential dispute arise and thus, problems usually give rise to extra scope of work or extra cost, both of which can give rise dispute over process.
4.0 Potential Disputes
4.1 Introduction
Disputes are common factors of the construction industry, from time to time the Quantity surveyor, construction manager they find themselves as much as they can solve. Disputes occur daily in many areas, which were solved between the parties within the site.
Why disputes arise
Construction industry is a risky project. There are many different parties involving, every individual have duties and responsibilities. Even many civil engineering projects that have been constructed different areas create special circumstance, use of labour cost is differ, some variety of site conditions. The contractors have face financial difficulties even the notifiable project constructed and adjacent site by a different contractor. By the way disputes arise, even the want the best plan and specification, reliable subcontractor, contractor. The parties involving in construction industry they are possibility to disagree some time or potentially eliminated therefore dispute can still occur.
4.2 Form of contract
Within the construction industry there are large number of standard forms of contact, the route adopted by many parties depend procurement system. These all contain process for identifying and solving situation where the contractor entitles additional payment due to him normal course of valuation of the work. Most forms will be similar; the process of work might be outline the following example will explain:
Example 1
JCT2005 standard form of building contract explains relationship between the employer and the contractor, before possible to eliminated, but some still remain if such a condition of contract not available. Then the anxiety between the employer and the contractor would be even greater. There might be risks involved are shared between the parties. Claims may arise between the parties known as loss and expense claim, also which arise due to breach of contract. The contractor must prepare a written document and let to know the architect , contractor state the any refurbish under the term of contract soon as possible, these information given to the architect by the contactor.
Case study 01
The client had to commissioned to build a 2storery house, with exclusive bedrooms the contractor completed the work within the agreed time, the client hold the payment until it was examine by the professional. The engineer examines and found it is well built but somewhat untidy. The client agreed with the contractor spends further day on the site to tidy up the work, the final payment made by the client promptly.
4.3 Potential disputes
Plan & specification
Disputes were the plan and specification; scopes of work are must significant area of disputes arises. Which is typically occurring between the client, contractors and design professionals, the client, subcontractors have to check plan and specification are correct, adequate and accurate. The client shifts the responsibilities to the contactors.
Delay- extra scope of work
Managing time for construction work will be more important to both the client and the contractor. The client should have to know the project period, how long it going to take and to complete in order to arrange the plans and specification also the contractor cost will be affected by the time. The project should include project schedule to the time. Generally disputes arising from delay by the contractor, subcontractor is entitling to extra time. In order the client requests pricing for alternation, modification after disagree with the price and delay time. Also disputes were arising there is many changes in order.
5.0 Conclusion
Commonly, much as possible continues disputes will be avoided; disputes were resolved with the time being discussion between the parties. There will not settle which require more systemic and formal ways must be adopted. The formal process for dispute resolution depend upon the procurement selection , proper plan the form of contract operation available route to be taken in seeking to resolve every dispute. Thus, for example traditionally JCT have, until JCT 05, the parties go through adjudication, then arbitration and then to litigation.
A successful project always depends on claim free, where only parties can reach their goals. Supply chain management lawsuit help to resolve ultimate dispute resolution, strategic and systemic figure and the purpose of SCM is long term performance driving out cost through SCM is less and more fesible, Alternative disputes resolution method are more better to solve or avoid disputes over the construction process, typically process are much shorter than the litigation, and it is formal and reliable, better chance to save the relationship among the parties.
Throughout Alternative dispute resolution it is best practice to use the mediation. Median is faster, less stressful and cheaper than court cost. The outcome of mediation is some think court could not order. Mediation is the best way to resolve the dispute.
References
1. Willis, D. (2007) New Aspects of Quantity Surveying Practice: 2nd edn. Oxford: Butterworth.
2. Seeley, I., Bowden, P.and Verster, J.J.P. (2008) Quantity Surveying Practice. New York: Macmillan Press.
3. Ndekugri, I., Rycroft, M. (2008) The JCT05 standard Building Contract Law and Administration: 2nd edn. Oxford: Butterworth.
4. Ramus,J.W(1981) Contract Practice for Quantity Surveyors:1st edn.London:Guildford & Kings Lynn Publishers.
5. Ashworth, A. and Hogg, K. (2007) Willis`s Practice and Procedure for the Quantity Surveyor.12th Edition. Blackwall publishing: Britain.
6. Royal institute of Charted Surveyors (2011) Dispute Resolution. Available at: http://www.rics.org/drs (no date) (Accessed: 10 May 2011)
7. Royal Institute of British Architects (2011) Dispute Resolution. Available at: http://www.architecture.com/UseAnArchitect/GuidanceAndPublications/PracticalMatters/DisputeResolution/DisputeResolution.aspx (no date) (accessed: 10 May 2011)
