Utilize important clauses present in built environment contracts to support project delivery

In the field of construction project management, understanding contractual clauses is fundamental to achieving successful project delivery outcomes. When studying for the PMI-CP examination, students are exposed to various substantial contractual clauses embedded within Built Environment Contracts (BEC) that can significantly impact project delivery. This article aims to discuss some of these pivotal clauses, providing examples to illustrate their implications.

1. Scope of Work Clauses:

The Scope of Work is probably the most crucial clause in a contract, outlining exactly what work will be done under the contract’s terms. This clause contains the description of the services the contractor will provide, including design plans, materials, labor, and the final outcome. An accurately defined Scope of Work can prevent misunderstandings and disputes.

Example: A contract might specify the construction of a two-story office building, listing out components like the type of windows, the color of paint, and even the specific brand of light fixtures that will be installed.

2. Payment Terms:

The contract must clearly dictate when and how the contractor and subcontractors will be paid. This section should detail the amount of the initial down payment, the subsequent payments, and the final payment due upon completion of the project.

Example: A payment schedule in a contract may include 20% upfront, 30% upon completion of the foundation, 30% when the building is ‘watertight’, and the remaining 20% when the project has been completed and signed off by the building inspector.

3. Change Order Clauses:

A change order clause allows alterations in the scope of work after a project has begun. It serves to protect both the owner and the contractors, ensuring additional work is paid for and reducing potential conflict.

Example: If the owner decides they want an additional room added while the construction is ongoing, the change order clause will guard the contractor, ensuring they receive payment for this extra work.

4. Delay Clauses:

This clause protects all parties involved when there are unavoidable delays in the project. It explains the conditions under which an extension of time can be considered, which protects the contractor from having to pay penalties for late completion.

Example: If there is a delay in the delivery of essential building materials due to a supplier’s mistake, the delay clause can allow the completion date to be moved, not penalize the contractor.

5. Termination Clauses:

There should also be provisions in the contract for when either party can terminate the agreement. Situations may arise where a contractor fails to deliver on their obligations, or a client fails to pay for the services provided.

Example: If a client defaults on payment for more than 60 days, a termination clause could allow the contractor to halt services and determine the contract as ended.

6. Dispute Resolution Clauses:

In the unfortunate event of disagreements, dispute resolution clauses provide a mechanism to manage conflicts. This could range from negotiation and mediation to arbitration or litigation.

Example: A dispute resolution clause could stipulate that both parties will seek to resolve any disputes through mediation firstly, then proceed to formal litigation if a resolution is not found.

Conclusion

In conclusion, by grasping these essential clauses and how they work within the built environment contracts, aspiring project managers can manage project risks better and ensure successful project delivery. Remember, a well-prepared contract aligns the expectations of all parties involved, ensuring smoother implementation of the project, reduction of conflicts, and most importantly, the delivery of desired project outcomes.

Consider these key contractual clauses as pillars to your PMI-CP exam preparation and your future professional endeavors in project delivery.