The Civil Engineering Contractor July 2018 | Page 28

INSIGHT
Biznews
Influences outside of the construction project , such as labour unrest issues , can have a significant impact on the project ’ s contract .

Construction risk management

By Ian Massey
The management of construction contracts is the management of risk , including community unrest , business forum and taxi association activity , all of which are impacting on contracts .

Normally , when we talk about the management of risk on construction contracts , we are referring to commercial or physical risks inherent in just getting the job done . These sorts of risks are allocated ( to one or other of the parties ) in accordance with the contractual arrangement between the parties . In other words , in accordance with the ( usually ) standard form contract and the special conditions of contract prescribed by the employer and his professional team . However , there are other risks that are becoming prevalent and which are having a major impact on many of our contracts . Such things as community unrest , business forum and taxi association activity are now common and are a major risk for all contractors .

28 - CEC July 2018
Although our locally grown contract forms have been adapted to deal with these sorts of risks , the international forms that we use ( FIDIC and NEC ) are woefully inadequate to deal with these risks and the contractor is left seriously exposed . Most contracts that are undertaken in the southern African region are what we refer to as adversarial . They adopt a them-and-us approach to implementing the contract . In an environment where conflict is the norm , choosing an implementation strategy that promotes conflict between the parties , may not be the smartest move . The exception ( though in practice this does not usually materialise ) is the NEC contract , which is intended to be a more collaborative contract implementation strategy . Clause 10.1 of that contract requires the parties to the contract to conduct themselves in a spirit of mutual trust and cooperation . This clause 10.1 is intended to govern each aspect of the NEC contract . Those readers who have had exposure to the NEC contract in the local construction environment will know that this simply does not happen . This is not because the requirement of working in a spirit of mutual trust and cooperation is a bad thing or is an impossible requirement , it is because of the environment in which we work , which is one of extreme polarisation . The parties to construction contracts , being the employers , the consulting groups , the contractors ,