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Article
Publication date: 13 April 2012

Daniel Brawn

The purpose of this paper is to examine the relationship between extensions of time and payment of liquidated damages under construction contracts in English law.

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Abstract

Purpose

The purpose of this paper is to examine the relationship between extensions of time and payment of liquidated damages under construction contracts in English law.

Design/methodology/approach

This paper sets out the law relating to granting extensions of time and liquidated damages and examines the effect of one upon the other. The JCT form of contract is used as an example, although it is submitted that the position is the same under other forms of contract. Case law is examined to illuminate the judicial approach and highlight inconsistencies, and consideration is given to the position in other jurisdictions.

Findings

This paper examines the effect of delaying events in particular circumstances, including where time is “at large”, sectional completion, partial possession, set‐off of liquidated damages and liquidated damages after termination of the contract. Particular attention is paid to concurrent and sequential delays; where both parties are at fault, it may be appropriate to deny the employer any entitlement to liquidated damages and deny the contractor any entitlement to loss and expense.

Practical implications

An understanding of the effect that delaying events have upon the contractor's right to an extension of time and the employer's entitlement to liquidated damages is critical for successful project completion. This relationship is not always straightforward and judicial approach is not always consistent. Clarification is required as to the effect of sequential delays.

Originality/value

This paper is of value to researchers and practitioners in establishing the legal position in an area that is often complex and obscure.

Details

International Journal of Law in the Built Environment, vol. 4 no. 1
Type: Research Article
ISSN: 1756-1450

Keywords

Article
Publication date: 12 July 2011

Maree Chetwin

The paper aims to examine the judicial approach to some aspects of contract damages in England and Wales, Australia and New Zealand.

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Abstract

Purpose

The paper aims to examine the judicial approach to some aspects of contract damages in England and Wales, Australia and New Zealand.

Design/methodology/approach

The paper is an analysis of judgments of the three jurisdictions and academic commentary.

Findings

Generally, there is uniformity in the assessment of damages in the jurisdictions discussed as is illustrated with liquidated damages and the adherence to the judgment of the House of Lords. However, the same adherence is not evident in the case of lower court judgments in the controversial area of “consequential loss”. Although not a remedy, it is an integral part of the assessment of damages process when included in exception clauses.

Originality/value

The research highlights the need for knowledge of the legal issues to ensure that the contract covers what is intended so that a party is not without a remedy when the contract fails.

Details

International Journal of Law in the Built Environment, vol. 3 no. 2
Type: Research Article
ISSN: 1756-1450

Keywords

Case study
Publication date: 2 April 2018

Akhileshwar Pathak

The Supreme Court judgement, Kailash Nath Associates v. Delhi Development Authority consolidates the law on award of liquidated damages and stipulations on penalties…

Abstract

The Supreme Court judgement, Kailash Nath Associates v. Delhi Development Authority consolidates the law on award of liquidated damages and stipulations on penalties. Contractual damages are to cover losses and not to profit from or penalise the party in breach. Stipulated amounts in damages or penalties are appraised by the courts and only a reasonable compensation is given. Earnest money, and its forfeiture, stood distinct. It could be forfeited without appraisal. The case integrates the different categories and re-states the principles for award of damages.

Details

Indian Institute of Management Ahmedabad, vol. no.
Type: Case Study
ISSN: 2633-3260
Published by: Indian Institute of Management Ahmedabad

Keywords

Content available
Article
Publication date: 12 April 2013

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Abstract

Details

International Journal of Law in the Built Environment, vol. 5 no. 1
Type: Research Article
ISSN: 1756-1450

Keywords

Article
Publication date: 1 April 2017

Youssef G. Saad

A considerable proportion of donor aid is dedicated to technical assistance to support developing countries in their development initiatives. The majority of this aid…

Abstract

A considerable proportion of donor aid is dedicated to technical assistance to support developing countries in their development initiatives. The majority of this aid comes from globally-operating international donors including the World Bank and the European Union. In spite of several harmonization attempts, there still exist major differences in their procurement regulations and standard contracts. Based on an extensive literature review on consulting services and an in-depth analysis of the standard forms of contract, it was found that divergence between both forms is not only clear but also paradigmatic owing mainly to market orientation paradigm differences. The findings and recommendations help advance research on and practice of various types of consultancy services in general.

Details

Journal of Public Procurement, vol. 17 no. 4
Type: Research Article
ISSN: 1535-0118

Article
Publication date: 11 February 2019

S.M. Reza Alavipour and David Arditi

Planning for increased contractor profits should start at the time the contract is signed because low profits and lack of profitability are the primary causes of…

Abstract

Purpose

Planning for increased contractor profits should start at the time the contract is signed because low profits and lack of profitability are the primary causes of contractor failure. The purpose of this paper is to propose an integrated profit maximization model (IPMM) that aims for maximum expected profit by using time-cost tradeoff analysis, adjusted start times of activities, minimized financing cost and minimized extension of work schedule beyond the contract duration. This kind of integrated approach was never researched in the past.

Design/methodology/approach

IPMM is programmed into an automated system using MATLAB 2016a. It generates an optimal work schedule that leads to maximum profit by means of time-cost tradeoff analysis considering different activity acceleration/deceleration methods and adjusting the start/finish times of activities. While doing so, IPMM minimizes the contractor’s financing cost by considering combinations of different financing alternatives such as short-term loans, long-term loans and lines of credit. IPMM also considers the impact of extending the project duration on project profit.

Findings

IPMM is tested for different project durations, for the optimality of the solutions, differing activity start/finish times and project financing alternatives. In all cases, contractors can achieve maximum profit by using IPMM.

Research limitations/implications

IPMM considers a deterministic project schedule, whereas stochastic time-cost tradeoff analysis can improve its performance. Resource allocation and resource leveling are not considered in IPMM, but can be incorporated into the model in future research. Finally, the long computational time is a challenge that needs to be overcome in future research.

Practical implications

IPMM is likely to increase profits and improve the chances of contractors to survive and grow compared to their competitors. The practical value of IPMM is that any contractor can and should use IPMM since all the data required to run IPMM is available to the contractor at the time the contract is signed. The contractor who provides information about network logic, schedule data, cost data, contractual terms, and available financing alternatives and their APRs can use an automated IPMM that adjusts activity start times and durations, minimizes financing cost, eliminates or minimizes time extensions, minimizes total cost and maximizes expected profit.

Originality/value

Unlike any prior study that looks into contractors’ profits by considering the impact of only one or two factors at a time, this study presents an IPMM that considers all major factors that affect profits, namely, time-cost tradeoff analysis, adjusted start times of activities, minimized financing cost and minimized extension of work schedule beyond the contract duration.

Details

Engineering, Construction and Architectural Management, vol. 26 no. 1
Type: Research Article
ISSN: 0969-9988

Keywords

Article
Publication date: 5 February 2018

Akintayo Opawole

The purpose of this study is to develop penalty measures against concessionaires’ defaults as a mechanism for protecting the interests of parties (public and private) in…

Abstract

Purpose

The purpose of this study is to develop penalty measures against concessionaires’ defaults as a mechanism for protecting the interests of parties (public and private) in public–private partnership (PPP) contracts for enhancing project delivery.

Design/methodology/approach

The research methodology is a mixed qualitative and quantitative approach. This study commenced with an in-depth literature review, which provided the basis for identification of penalty measures in construction contract management. The qualitative assessment was based on semi-structured face-to-face interviews, which were aimed at identifying the underlying pattern of the penalty measures, and the quantitative assessment was based on a structured questionnaire. In both cases, respondents were stakeholders’ organizations that had been involved in PPP contracts in the southwestern region of Nigeria. These include industrial practitioners from government-based organizations (ministries, agencies, corporations/parastatals, etc.), private developers/concessionaires, law firms, banks, etc. The sample size was selected using a respondent-driven sampling approach, as the comprehensive lists of the participants in PPP contracts are not readily available in the Nigerian construction industry. Responses from the interview were analysed using interpretative phenomenal analysis via ATLAS.ti7. The quantitative data were analysed using percentile for flexibility between “most” and “more” preferred mechanisms.

Findings

This study developed mechanisms that defined the rights of the public party to redress underperformance of PPP contracts consequent to the defaults of the private party. “Step-in-right” and “termination of the contracts” were preferred against specific cases of “delayed execution”, “abandonment of the project”, “bankruptcy of the concessionaire” and “non-compliance with design and specifications”. With respect to “shortfall in performance against established dates”, the results converged on “monetary fine” and diverged on “step-in-right” and “termination of the contracts”.

Practical implications

The study contributes to literature on mechanisms for enforcing PPP project performance. Besides, defining rights and obligations of the parties in specific events of underperformance of the concessionaires in PPP contracts is a significant step towards the development of standard conditions of contract for managing PPP projects in which the model is being newly adopted.

Originality/value

Project management studies on PPP were extended by defining the liabilities that are consequent to the defaults of the private party and the mechanisms for their enforcement.

Details

Journal of Engineering, Design and Technology, vol. 16 no. 1
Type: Research Article
ISSN: 1726-0531

Keywords

Article
Publication date: 26 April 2013

Issaka Ndekugri, Hannah Daeche and Diwei Zhou

Project insurance is designed to get over the perceived deficiencies of the conventional insurance practice. It involves the entire project supply chain being insured…

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Abstract

Purpose

Project insurance is designed to get over the perceived deficiencies of the conventional insurance practice. It involves the entire project supply chain being insured under a single policy taken out by the project owner. The purpose of this article is to report the outcomes of a study aimed at developing understanding of project insurance practice and how it compares with the conventional system.

Design/methodology/approach

The study consisted of a questionnaire survey across four sectors of the construction industry.

Findings

Direct experience of project insurance is still very patchy. They also raise doubt whether project insurance offers significant benefits to the supply chain members with direct responsibility for designing or executing projects. The main advantages of project insurance over the traditional fragmented insurance products reported by respondents were: avoidance of litigation to determine which member of the project supply chain should ultimately be liable when loss or damage occurs; the ability to obtain cover for projects too large for the insurance capacity of some members of the supply chain; ability of the project owner to purchase customised cover.

Research limitations/implications

The disadvantages were: there is duplication from contractors, sub‐contractor and designers still having to purchase the traditional products for projects on which project insurance is not implemented; the levels of excess in the available project insurance products are too high; there is little reduction in the annual insurance premium bills of contractors, sub‐contractors and designers.

Practical implications

Universities and other educational institutions can contribute to developing wider awareness by including project insurance in not only their educational curricula but also their research priorities. The UK Government's decision to implement project insurance on some demonstration projects is a step in the right direction but needs to involve the research community who are better able to distil the experience for dissemination to the wider industry. The insurance industry needs to play a more proactive role by reassessing the levels of excesses in their project insurance policies and collaborating with the research community to develop more detailed knowledge of the technique.

Originality/value

This is the only reported empirical study into the use of project insurance in the UK construction industry.

Details

Engineering, Construction and Architectural Management, vol. 20 no. 3
Type: Research Article
ISSN: 0969-9988

Keywords

Article
Publication date: 7 September 2015

Lars-Henrik Kvist Nielsen, Abiola Akanmu and Chimay J. Anumba

“Back-to-back” contracts are widely used in the engineering and construction industry and are recently spreading into the telecommunication industry. In back-to-back…

Abstract

Purpose

“Back-to-back” contracts are widely used in the engineering and construction industry and are recently spreading into the telecommunication industry. In back-to-back contracts, the principals require the main contractors to assume majority of the liability in delivering a project and in turn, the main contractors try to allocate most of that liability to their subcontractors. The successful delivery of the projects hinges on how the contracts are drafted and risks are allocated between the parties involved. The purpose of this paper is to undertake a comparative analysis of “back-to-back” subcontracts in the telecommunication and construction industries.

Design/methodology/approach

By examining contracting practices and texts from contract documents for the telecommunication and construction industries, this paper reveals how certain aspects of “back-to-back” contracts lose their meaning when seen out of context. Using comparative research method, this paper discusses reasons why the adoption of “back-to-back” contracts should be a matter of degree, based on the business strategy and relevance to the intended transactions rather than on the typical model of “back-to-back” contracts.

Findings

Good contracting practices should be such as to enable parties negotiate the contract terms to ensure clarity and common understanding before commencing the project. Construction universally adopts back-to-back even for minor straightforward works, an approach supported by readily available industry model contracts as well as the traditional tender process (design before construction). In telecoms, back-to-back is mainly desired where the subcontractor has a major part of the scope, whereas minor subcontractor scope is considered “leverage commodity” where suppliers are engaged using in-house contract templates, often in a frame contract arrangement, to satisfy corporate strategies for supplier management and pricing.

Originality/value

This paper provides value by presenting an insightful review of the nature of back-to-back contracting practices in the telecommunication and construction industries. The paper outlines advantages, disadvantages and opportunities for improving “back-to-back” contracting practices in the telecommunication and construction industries.

Details

Built Environment Project and Asset Management, vol. 5 no. 4
Type: Research Article
ISSN: 2044-124X

Keywords

Article
Publication date: 10 July 2007

Florence Ling and Hwee Loon Lim

The aim of this research is to investigate how foreign firms manage financial and economic risks when operating in China's construction industry. The specific purposes of…

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Abstract

Purpose

The aim of this research is to investigate how foreign firms manage financial and economic risks when operating in China's construction industry. The specific purposes of the paper are to: identify the types of financial and economic risks foreign firms face and the frequency and severity of these risks; examine how foreign firms manage these risks; and recommend a risk management framework that can be adopted by foreign firms to mitigate financial and economic risks in China.

Design/methodology/approach

The data collection instrument was a questionnaire which had open‐ended questions. The data collection method was face‐to‐face in‐depth interviews with 22 experts from Singapore who have experience in China's construction industry.

Findings

Nine economic and financial risks affecting foreign firms that operate in China's construction industry are found. Of these, the risks that occur frequently and are severe are: labour and material price fluctuation; and contractors/subcontractors' default. Eighteen contractual and general measures were found to be useful in mitigating these risks.

Research limitations/implications

The findings may not be readily generalized because interviews were conducted with 22 China experts, all of whom are from Singapore.

Practical implications

Foreign firms could use the findings to help them decide on the most appropriate measures to adopt, to overcome financial and economic risks that they face when operating in China's construction industry.

Originality/value

The research proposed a framework for foreign firms to use in managing financial and economic risks in China. It recommends different measures to mitigate different types of risks.

Details

Engineering, Construction and Architectural Management, vol. 14 no. 4
Type: Research Article
ISSN: 0969-9988

Keywords

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