Transparency in Construction Contracts

Louise Flynn
There has been a change in the perceived importance of having clear and unambiguous construction contracts.

Pre-contract processes impact directly on post-contract outcomes, and there is growing awareness of the need for effective contract drafting, administration and management throughout the project lifecycle. Any ambiguities in the tender documents in the early stages may have potentially disastrous results later on. The most influential and efficient method of contract management is getting the contract documents right in the first instance.

The most influential and efficient method of contract management is getting the contract documents right in the first instance.

Generic contracts lead to gaps

It has been common practice for contracts to be put together quickly using generic information. This tended to leave gaps in scope, risk, responsibilities and obligations – wide-open routes for claims. With organisations placing more emphasis on audits and accountability for money spent, the industry is being forced towards more frequent use of formal dispute resolution processes such as mediation, adjudication and litigation. 

More transparency = tighter contracts + fewer disputes

The increased focus on audits and transparency has, to an extent, reduced the opportunity for quick settlements with minimal supporting evidence. However there is a potentially high cost involved in pursuing the formal dispute resolution route. A tighter and effectively managed contract should form part of an effective dispute avoidance strategy, helping prevent claims arising and assisting in resolution should a dispute occur.

More individually tailored contracts = more cost certainty

Within our own client base, we are seeing a move towards more individually drafted contracts documents and a greater understanding of the benefits. A contract, and not simply the terms and conditions, more specifically tailored to the project allows more accurate scoping of the design and construction works and better alignment of risk and responsibilities. This leads to enhanced levels of cost certainty, typically a key priority for clients.

...we are seeing a move towards more individually drafted contracts documents and a greater understanding of the benefits.

Faithful+Gould’s multidisciplinary team includes specialists in procurement and contract strategies, training, contract management, cost management, facilities management, whole life costing, claims and dispute resolution and dispute avoidance strategies. We can offer, amongst other things, high level reviews on your existing tender documents. A "dispute avoidance audit/health check" can highlight and identify areas of risk within your existing documents.

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