Contract documents are an important set of essentials for any construction project. The construction of any building or civil engineering structure involves multivariate teams and a large number of people coming together. To govern their relationships and ensure the smooth execution of the project, a construction contract is drafted and signed.
By definition, a construction contract is a legally enforceable agreement between the client (who is the owner of the project) and the contractor to carry out works on a construction project. The contractor undertakes to construct and complete the project for payment by the client, as submitted and agreed upon during the tender award.
The tendering process is beyond the scope of this article. However, I will consider writing more about it in this blog. In simple terms, it is the process of selecting a contractor to undertake construction works.
Construction Contract Documents
A sound understanding of contract law is important for anyone that wants to involve themselves in the business of construction as that is what governs everything.
Various standard forms of construction contracts have been developed and customised to suit the business environment of the regions in which they operate. In Kenya, the most popular with private projects is the “Agreement and Conditions of Contract for Building Works” published by the Joint Building Council, Kenya.
However, most standard forms of construction contracts recognise these as the most essential contract documents every construction project should have:
- Form of Tender
- Agreement and Conditions of Contract
- Contract Drawings
- Bills of Quantities
They are explained in detail below.
1. Agreement and Conditions of Contract
This included a dedicated page where the parties agree to enter into a contract, list their names, embedded their signatures and state the name, description and location of the project concerning which they are entering into a contract.
Further, the conditions of the contract define the terms under which the construction work is to be undertaken; the relationship between the client, contractor and consultants; the duties of the client, contractor and consultants; and the terms of payment.
Also, it prescribes how disputes should be handled in case they arise.
2. Form of Tender
The form of tender is the one filled and submitted by the contractor when they are bidding for the project. It contains the tender sum, which after the tender has been accepted becomes the contract sum after negotiations and reaching an agreement.
It constitutes the formal offer to construct and complete the contract works per the various contract documents for the tender sum.
In a contract with bills of quantities, the specifications may or may not form part of the contract depending on what the agreement and conditions of the contract prescribe. Where they form part of the contract, they may be included as a separate document or inserted as part of the bills of quantities in the form of preambles.
Specifications serve to amplify the information given in the contract drawings and bills of quantities. They describe in detail the work to be executed under the contract and the nature and quality of the materials, components and workmanship.
For example, a specification of the quality of concrete for casting beams, slabs and columns may be given in terms of the concrete class or mix ratio to be achieved.
4. Bills of Quantities
A bill of quantities consists of items of work to be carried out under the contract with quantities entered against each item, and a detailed description of the work methodology, materials and workmanship to be achieved.
Bills of quantities are prepared by professional quantity surveyors, who are licensed by the Board of Registration of Architects and Quantity Surveyors, Kenya. Additionally, a standard method of measurement (SMM) is used to guide the process.
There are close to six types and formats of bills of quantities.
5. Contract Drawings
Drawings may include architectural, structural, mechanical, electrical and plumbing drawings depending on the nature and scale of the project.
They depict the details and scope of the works to be executed under the contract.
Contract drawings must be prepared accurately and in sufficient detail to enable the contractor to satisfactorily price the bills of quantities.
The JBC Contract recommends that the original contract documents remain in the custody of the project architect or project quantity surveyor during the construction period. However, the employer and the contractor should be allowed reasonable access to these original documents for their inspection.
Once the contract is closed, the original contract documents are handed over to the employer/client.
Construction contracts are documented in a set of documents that serve to complement and amplify each other. Also, they set the terms to be followed. These include the relationship between the project owner, the contractor and the project consultants and how work done is to be valued and paid for.
The 5 most essential contract documents in a construction project are contract drawings, specifications, bills of quantities or schedule of rates, a form of tender, and agreement and conditions of contract.
Anyone in the business of construction must seek to get a better understanding of these for them to manage their contracts effectively and efficiently.