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A working group of construction experts has been tasked with taking forward a variety of the ideas set out the Egan Report on the UK Construction Industry, which proposed that effective partnering should allow formal contracts to be dispensed with. The Be Collaborative contract which the group has designed encourages collaborative working and the proper management of risk.
With the publication of the new Major Project Form, the Joint Contracts Tribunal has made radical changes to produce a contract which reflects market needs. Employers will value a form which reflects a risk profile largely in accordance with commercial realities, and experienced contractors will have little difficulty in managing the additional risk.
Under a target cost contract, the actual cost of completing the project is compared with a previously agreed target cost. If the target cost has been exceeded, the cost overrun will be split between the contractor and the purchaser according to an agreed formula. If the actual cost is lower than the target cost, the savings will similarly be divided between the two parties.
If contractors are delayed in their work by events which entitle them to compensation, they must produce a claim linking a given event with a delay which gave rise to additional costs. However, contractors often submit global claims in which numerous events are relied upon as causing one single period of delay. The correct approach to such claims was the main issue in a recent case.
Many clients of the construction industry are not knowledgeable in construction matters. In the absence of professional advice, procurement of the works is often informal - all the more so if the parties are personal friends. However, this informality, while providing a degree of flexibility, can cause significant difficulties if a dispute arises, as a recent Court of Appeal case shows.
The long-awaited Version 2.0 of the Technology and Construction Solicitors Association Adjudication Rules was recently published. The rules have proved popular as they take every step to ensure that the dispute is actually resolved notwithstanding the short time limits laid down by legislation, as well as to ensure the enforceability of adjudication decisions.