Construction Contracts Part 1: Contract Obligations at different stages on a Construction Project.

Contracts vary from project to project and once agreed upon are binding on the parties involved. Presence of these contracts and obligations therein helps regulate practice and resolve disputes. 

On an ideal construction project, each stage should have parties involved with these parties having contractual obligations binding in any courts of law.

In a typical or traditional construction project, the following are the basic stages;

        1. Briefing stage, there’s basically exchange of information between the Architect and client. Architects have a goal of trying to interpret and develop the client’s vision while the owner has the task of providing information and paying for the services.

     2. Design stage, there is normally overlap between designing and construction with other parties such as Project managers, structural engineers, quantity surveyors; land surveyors, mechanical engineers, lawyers, city councils also providing services where required. Conditions of Contract are therefore formulated clearly defining work schedules, payment terms, roles and obligations. Once agreed upon, these set precedence for execution of works and dispute solving throughout the project.

  3. Construction stage, the conditions of contract above ideally should be followed to the dot by the contracting parties. Subcontractor obligations are also provided for under the conditions of contracts.

  4. Site handover phase, a number of documents are required to be issued by various parties such as occupational permit, certificate of completion, certificates of making good etc.

However, from a detailed perspective, on a standard or public construction project, contract obligations are clearly defined duties and responsibilities that the parties involved must fulfill at different stages. There are 3 main segments in the project lifecycle categorized as follows;

A. Pre-Construction Stage

This entails 3 key elements i.e.

        I. Contract Formation. Under this, there are 3 key players namely; the ‘Client’ who is expected to have clear project scope, objectives, and requirements; provide necessary project information and documentation.

the ‘Designer/Architect/Consultant Team’ develop complete and detailed design documents that follow all existing building and local/town council regulations.

Last but least, the ‘Contractor’ who is required to review contract documents, clarify ambiguities, and provide a detailed bid.

        II. Permits and Approvals. Here, the ‘Client’ obtains necessary permits and approvals from authorities.

the ‘Contractor’ assists in the permit process as may be required, ensure all legal and regulatory requirements are met.

         III. Mobilization Stage. This is where the ‘Client’ ensures site access and readiness as well as provide initial payments as stipulated in the contract.

the ‘Contractor’ mobilizes labor, equipment, and materials and set up site facilities and temporary works.

 B. Construction Stage

         I. Project Execution. the ‘Client’ provides timely decisions and approvals as well as ensuring that there’s continuous funding.

the ‘Contractor’ executes works according to contract specifications, drawings, and schedules; ensure quality control and safety standards.

the ‘Designer/Architect’ conduct regular site visits, inspections and approvals in the presence of the local or town council ‘Building Inspectors’ plus providing clarification and modifications as and when needed.

         II. Progress Monitoring. the ‘Client’ monitors project progress, addresses contractor queries and/or requests.

the ‘Contractor’ is compelled to submit regular progress reports and updates with adherence to project milestones and timelines.

         III. Testing and Commissioning Stage. the ‘Client’ is expected to participate in inspections and testing and ensure the contractor addresses any defects if any.

the ‘Contractor’ is expected to perform necessary testing and commissioning, rectify defects and ensure all building systems/elements are fully operational.

the ‘Designer/Architect’ will oversee testing and commissioning and verify that the work meets design and performance specifications.

         IV. Completion and Handover Stage

a. Substantial/Practical Completion. The ‘Client’ will conduct final inspections, prepare snag lists for outstanding work.

the ‘Contractor’ completes or addresses the snag list items and prepares as-built drawings and/or operation manuals.

the ‘Designer/Architect’ certifies substantial completion and recommend release of half of the retention funds and issuance of a Practical Completion Certificate.

b. Final Completion. The ‘Client’ accepts the final work and takes possession of the site or product (building, dam etc.) and in the case of the road it is opened up for use and releases the final moiety/ retention payments (if there’s no defects liability period considered).

the ‘Contractor’ Ensure all contract obligations are fulfilled; hand over all project documentation.

the ‘Designer/Architect’ issues final certification and aids and/or offer guidance during the defect’s liability period.

      V. Building Occupation Permit. Here the ‘Building Inspectors’ from the town or local council verify that the building or road etc. is up to the standard as required by the regulations and consequently issue a Permit granting full access or usage of the same to the end users.

 C. Post-Completion Stage

      I. Defects Liability Period. the ‘Client’ notifies the contractor of any defects within this stipulated period and if addressed to satisfaction, releases the final retention payment.

the ‘Contractor’ addresses and rectifies any defects within the specified period.

the ‘Designer/Architect’ verifies the rectification of defects and certifies the completion and ensures the final retention is released including issuance of a Final Completion Certificate.

     II. Warranty Period. the ‘Client’ reports any issues covered under warranty.

the ‘Contractor’ honors warranty obligations and provides necessary repairs or replacements.

Ensuring all parties fulfill their contractual obligations at each stage is crucial for the successful completion of a construction project. Clear communication and documentation are key to managing these responsibilities effectively.