CONTRACTUAL RESPONSIBILITIES: THE ‘SPIRIT OF THE CONTRACT’
Ethics, professionalism and communication. These are the pillars of a successful project - especially when considering its all-important, and equally onerous, contract and terms. As in most industries there’s a hierarchy of stakeholders involved in construction projects and egos can often get in the way of doing the right thing; sadly, often at the expense of the communities who rely on the project to be delivered on time and in budget.
Most people are irked by workplace phrases loaded with corporate jargon, passive aggression and, sometimes, pure nonsense. Thinking out the box; I’m no expert, but…; if you want it done right, do it yourself; and off the record. Why can’t we just say what we mean instead?
Personally, my favourite is ‘in the spirit of the contract’ when discussing a potential claim! I like to keep things uncomplicated so, really, what does this phrase mean in practical terms? Without a mutually agreed definition of what the spirit of the contract should be, this could mean many things to different stakeholders! Can each stakeholder honestly say they’ll be totally unbiased during a project dispute?
The contracts engineer is the custodian of the project contract and, as the appointed person, acts on behalf of the client to administer the project according to its contractual conditions. The contract will also include a formalised working agreement between the engineer and the client, outlining roles and responsibilities.
The tricky part, however, is that there’s no contractual arrangement between the engineer and the contractor, despite the engineer being authorised on behalf of the client to adjudicate claims submitted by the contractor. The problem comes when contractors aren’t clued up on the claims process or its intricacies because without guidance they stand to lose, time and time again.
Inexperienced, SME or rural contractors who aren’t au fait with their contract’s conditions often lack the acumen to formulate and submit a contractually-sound claim. Timing is a massive stressor too, and it’s always in short supply on a construction project! Claims must generally be submitted within 28 days of the incident; whether there’s been a flood or a strike, there’s absolutely no flexibility. The contract ‘must go on’ and the red tape has been laid.
All too often the dreaded time-barred clause is applied to a contractor who submits a late or contractually incorrect claim. I question the ethics of the engineers who sit idly by, in the knowledge there is a legitimate claim on the table, and choose not to inform or encourage the contractor to do the right thing. Have they acted in the ‘spirit of the contract’? In these instances I truly believe they prefer to wield a big stick as the ‘almighty engineer’. When the claim is submitted late, they slap the contractor with a time-barred clause and feel their job is done.
Trust and communication
While I understand the purpose of a time-bar is to resolve issues quickly, I believe certain contract conditions are relatively weak – especially when it comes to communicating the likelihood of a potential claim and the process to see it appropriately submitted. Surely the primary objective of any contract is to avoid disputes altogether, and in so doing encourage trust and communication between all parties.
Let’s work together to remove the negative stigma of a claim and foster open, honest professionalism – the true ‘spirit of the contract’. We should do more to proactively discuss concerns and delays, outside of the contractual claim scenario, with the intention to mitigate issues before they become claims.
Putting egos aside
I was recently involved in a case that illustrates this exact point. At first the engineer verbally agreed that the contractor could claim an extension, however no formal intention was submitted. When the claim was finally submitted the engineer ruled it as time-barred, despite earlier assurances. This action, although 100% contractually correct, is hardly an example of avoiding conflict and prioritising what’s fair.
This decision wasn’t in the interest of the project, client, contractor or even the engineer. It certainly wasn’t in the interest of the local community waiting for the much-needed services the project promised! Forget completing the project on time, without resolution it now wouldn’t be completed at all.
On the flip side, I've also been approached by a contractor who’d like help putting together a claim after being encouraged by the contract’s engineer to do so. The engineer has recognised the contractor has a legitimate claim and that without guidance on how to submit correctly, it would likely be rejected – despite its validity. Yes, there may still be lengthy negotiations on the claim, and it probably won’t be straightforward; but isn’t this professionalism from both parties so encouraging!
Let’s do more to act fairly and ethically – and most of all, let’s leave our egos outside of the contract!
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