Fundamentals

  • Following the outlook into common law on the appraisal of a Contractor’s tortious liability under the tort of negligence in the previous article which can be found here: https://blog.cg.co.ug/appraising-contractors-tortious-liability-under-the-tort-of-negligence/ ,it is important to contrast that with civil jurisdictions like France, Germany or Saudi Arabia among others.

    How different would the Contractors tortious liability be under a civil jurisdiction?

    In this article, while considering how the issue might have been differently addressed in a Civil Code Country, reference is made to the French Civil Code. The structure of French tort law is such that it does not spell out the different torts like negligence, trespass and nuisance but rather provides for them generally in Articles 1240 to 1245 of the Civil Code. There is no limitation on the type of wrong which may arise under these articles since they are drafted to be very wide.

    Article 1245-8 provides that the claimant must demonstrate the harm, the defect and the causal relationship between the defect and the harm. These constitute the three elements of the claimant’s burden of proof in order to prove liability. Therefore, there is no need for a duty of care as would have been required by common law. Additionally, there is no need of application of the neighbour principle under French law. The claimant needs to prove the defect and the damages that he is pursuing. The French Civil code does not show how this link between defect and harm should be assessed but it must be direct causal link between the harm and the defect.

    Based on this, using an example of an Employer on a building project that has suffered structural failure due to defects in construction and (or) design, the Employer could prove that the defect in the construction and (or)design of the Works caused failure of the structure and the Contractor would be liable under French law. Once the claimants (the Employers in this case) ably prove fault, damage and the causal link between the fault and the damage, they can win all their compensation.

    Article 1241 provides that an individual is responsible for harm caused not only by their actions but also by their failure to act or exercise due care. This provision allows one to be liable for one’s omissions which is a departure from common law where in Stovin v Wise[1] it was held that the law does not recognize a duty of care owed to the whole world to take positive action to prevent harm. In Caparo v Dickman[2] terms, imposing such a general duty would be unfair, unjust or unreasonable. Referring to the instant facts, a Contractor would be liable to an Employer for actions that led to structural failure. Additionally, a Contractor would be liable to an Employer due to their inaction or lack of care in ensuring that the structure that was handed over was not under designed and improperly constructed.

    Article 1242 provides that one is not only liable for the harm resulting from one’s actions but also for harm caused by the actions of those for whom they are responsible or by things under their care. From this, where a contractor has subcontractors on site, it can be considered that the Contractor is responsible for the Subcontractor’s actions. The Contractor would be open to multiple fronts of liability as a result depending on the different parties that are affected by the different subcontractor’s actions.

    Article 1244 provides that a building owner, referred to as the Employer in this article, is liable for the harm caused by its collapse when that resulted from a lack of maintenance or construction defect. This indicates that liability arises from lack of maintenance or construction defects even when the owner of the building is not responsible for the cause of the defects. This is a departure from common law where a Contractor would instead be liable under public nuisance.

    In conclusion, in addition to the liabilities of the respective parties already established under common law, French law imposes an additional liability to an Employer where the Employer would be liable to parties that suffer due to the defective building that it owns. The burden of proof required from the claimants differs from that under common law given that the claimants now must fulfil the burden of proof in Article 1245-8. Additionally, Contractors could be open to multiple fronts of liability due to actions of their subcontractors.


    [1] [1996] AC 923 (HL).

    [2] [1990] 2 A.C. 605.

  • Delay Analysis is a contentious issue in claims arising out of construction projects. Often time, there is an argument over the correct or more correct analysis method for delay analysis. The Society of Construction Law Delay and Disruption Protocol (‘SCL Protocol’) sets out the following differing methods of delay analysis that can be used to analyze the impact of a delay event to the critical path of a construction program:

    Delay Analysis Methods as set out in The Society of Construction Law Delay and Disruption Protocol

    On 17 October 2022, the High Court handed down its decision in Thomas Barnes & Sons plc v Blackburn with Darwen Borough Council [2022] EWHC 2598 (TCC), which related to the construction of a bus station in Blackburn.

    The claimant, Thomas Barnes & Sons plc (in administration) (‘Thomas Barnes’) was the contractor employed by a local Council, with the project suffering significant costs increases and delay.  The Council purported to terminate Thomas Barnes’ contract and engage another contractor to complete the works.  Soon after, Thomas Barnes went into administration, with the administrators subsequently seeking approximately £1.7 million in damages.  This included an entitlement to prolongation and delay-related damages, which led the Judge to provide some discussion on the differing forms of expert delay analysis relied on by the parties.

    In Thomas Barnes, the Judge noted that it would be wrong to place too much importance as to whether a particular method of delay analysis had been strictly followed, stating that:

    ‘The SCL Protocol itself discourages such an approach.  It states in the introduction that:

    (a) its objective is to provide useful guidance.

    (b) it is not intended to be a contract document nor to be a statement of the law;

    (c) its aim is to be consistent with good practice rather than to be a benchmark of best practice; and

    (d) its recommendations should be applied with common sense.  It states under paragraph 11.2 that “irrespective of which method of delay analysis is deployed, there is an overriding objective of ensuring that the conclusions derived from that analysis are sound from a commonsense perspective”.

    Thus, it would be wrong to proceed on the basis that, because the SCL Protocol identifies six commonly used methods of delay analysis, an expert is only allowed to choose one such method and any deviation from that stated approach renders their opinion fundamentally unreliable.  It must be borne in mind that the common objective of each is to enable the assessment of the impact of any delay to practical completion caused by particular items on the critical path to completion.  However, I do accept that if an expert selects a method which is manifestly inappropriate for the particular case or deviates materially from the method which he has said he is following, without providing any, or any proper, explanation, that can be a material consideration in deciding how much weight to place on the opinions expressed by the expert.’

    Especially when part of the claim centres around an extension of time, expert delay analysis is commonly relied on in both adjudication or litigation to prove or disprove a claim.  In light of the Judge’s comments in Thomas Barnes, it is not a requirement for a particular method to be strictly followed.  However, delay experts should be conscious of the impact that a deviation from the stated method used or the use of an inappropriate method will have on the weight of their evidence without a reasonable explanation

    Other observations from Thomas Barnes

    Traditional approaches to the main cause of delay have been the ‘dominant cause’ approach, focusing on the main cause of the delay, or alternatively, the ‘first in time’ approach, focusing on the event that occurs first. However, the Judge found that concurrent delays had occurred, even though there appeared to be a dominant delay, separate to one that occurred first. In this instance, the Judge made a finding that ‘depending upon the precise wording of the contract a contractor is probably entitled to an extension of time if the event relied upon was an effective cause of delay even if there was another concurrent cause of the same delay in respect of which the contractor was contractually responsible’. However, the Judge noted that despite being entitled to an extension of time for a dominant cause delay, the Contractor would not be entitled to costs for loss and expense where a separate concurrent delay occurred for which the contractor was contractually responsible.

  • The Contract: the foundation of Construction Projects

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    Introduction

    Construction projects have peculiar characteristics unlike other commercial transactions and these characteristics result in construction projects being particularly sensitive to a large spectrum of risks. The prevailing influencing factor is the parties themselves. International construction projects for example, involve parties from differing cultural and legal backgrounds who bring with them their own ideas of not only how the works themselves should be performed, but also the way in which the parties are to structure and manage their contracting and project management. This is particularly influential when parties from differing jurisdictions enter into joint venture arrangements for the performance of works. The Uganda National Roads Authority (UNRA) project status report of March 2021, for example, showed that 14 out of 31 (45%) of the Upgrading Road Projects were being executed with joint ventures between consultancy companies from differing jurisdictions. More joint venture arrangements are expected with the advent of oil drilling and processing and the push for more involvement of local companies in these undertakings. Key considerations have to be taken, therefore, to consider who will undertake the essential functions required to take the project from concept to completion, and how the project risk including the risk inherent in valuing and paying for the work, will be handled.

    Checking for concrete slump at Drainage Improvement Works Project in Kawempe, Kampala City by CG Engineering Consults Staff and a member of the Consultant’s team.

    Risk management in Construction projects

    Successful project execution dictates that this risk must be managed and that parties settle the issues associated with project risk through contract provisions. These provisions allocate the project risks between the parties and offer specific remedies in the event of breach of contract or the occurrence of specified events. It is in this light, that the modern construction contract has become a sophisticated instrument and one that begs a question about what an ideal construction contract is. Also, important to note is that a project delivery method and a contract type that mirrors the risk profile of the project are congruent with risk allocation strategy.

    Project Delivery methods

    One distinguishing factor between various project delivery methods is who will carry the design responsibility. This concerns the level of the contractor’s involvement during the design phase. The traditional project delivery method is the “design-bid-build” where design and construction are contracted separately. Here, the owner carries out the design and only enters into a construction contract subsequent to the completion of design. The contactor is then selected by a means of competitive tender that includes a fully detailed design. The successful bidder has the obligation to construct the work designed by the owner in accordance with the owner’s detailed specifications and drawings. The March 2021 UNRA Project progress report of the upgrading roads projects showed that over 10 projects are being delivered with this method for instance Civil Works for the Upgrading of Rwenkunye-Apac-Lira-Puranga Road. Alternatively, the owner may allocate the design function to the contractor. This is commonly referred to as the “design-build” where design and construction are combined in a single contract with a single contractor. The design is accomplished in accordance with the Employer’s requirements after the award of the contract, with the contractor given broad leeway to design the job in an efficient manner. Ideally, the contractor is told what is needed, not how to achieve the desired product. This contract places additional risk on the contractor but may also leave the Employer facing a higher contract price as a result. The March 2021 UNRA Project progress report of the Upgrading roads project showed that over 3 projects were being delivered with this method for example Package 3 and Package 5 of the Critical Oil Roads.

    Once the owner has determined the delivery method, the next focus is on the type of contract. The choice of type of contract is linked to the overall payment and pricing structure that will govern the transaction.

    Types of Contracts

    The three basic types of contracts that are most commonly encountered in construction are: fixed price/lumpsum, re-measurement (admeasurement) and cost-plus. Fixed-price contracts are contracts where the contractor is paid a pre-agreed sum of money when they have successfully performed all of his or her obligations under the contract. Payment is made in pre-determined stages and the contractor assumes the risk for both performance and price. Re-measurement contracts involve the contractor having a fixed price for each item of work in accordance with the owner’s estimated quantities. During contract execution, the work completed by the contractor is measured and the amount the contractor is paid is determined as a product of the measured quantities and the contractor’s price for each item. In this, the Employer assumes the risk for the quantity and the contractor assumes the risk for the pricing. Under a cost-plus contract, the owner retains the cost risk, and the contractor is paid his or her costs including overheads and profit. This is more flexible in that it does not require full information at the time of tender, but this flexibility comes at a huge price for the owner. Additionally, administration of these contracts comes at a greater cost because complete records of all time and materials spent by the contractor on the work must be maintained and must be verifiable.

    Contract documents

    Construction contracts must include principal documents that identify and allocate the project risk and describe the works. The principal documents in a construction contract include:

    · The conditions of contract, general and specific

    · Technical documentation

    · Schedules

    · Programmes

    · Bills of quantities

    The contract sets forth the basic terms under which the parties are doing business together for example price and payment terms, commencement date, completion date, description of scope of work, allocation of risks of loss, alternative dispute resolution and indemnification provisions. The general conditions are a set of rules that cover problems such as claims, disputes, sub-contracting, changes, time, warranties, insurance, remedies, and termination that routinely arise in construction contracts.

    Specifications provide even more detail as to the materials to be used, the performance requirements for aspects of the project and the method or techniques of construction to be employed. The specifications fill in the necessary information that is not evident from the drawings and includes materials and workmanship clauses, schedules to provide additional information and provisional sums if required, for instance the General Specifications for Roads and Bridge Works by the Ministry of Works and Transport used in the execution of Road and Bridge projects in Uganda.

    The Employer’s requirements, as explained by Nael Bunni, are the main source of information for the general obligations of the contractor and should be drafted in a balanced manner so as to effectively specify the Employer’s needs, while not limiting the contractor’s flexibility in design to meet those needs. This term is used by FIDIC to denote the document that defines the purpose, scope and design and technical criteria of the works in design-build contracts. In Uganda, these are normally issued by a Procurement and Disposal Entity for example UNRA at the tendering stage.

    The bill of quantities, as used in an admeasured contract, is a list of the materials and their estimated quantities against which the contractors provide their rates during the tender phase. The agreed prices are then used for the periodic valuation of the works that have been executed.

    Conclusion

    In conclusion, the ideal contract -the one that will be most cost effective- is one that assigns each risk to a party that is best equipped to manage and minimize the risk, recognizing the unique circumstances of the project. Therefore, it is important to undertake a comprehensive and systematic approach to identifying, assessing, and developing a risk mitigation strategy which can aid in drafting of proper construction contracts by construction parties and their representatives. It is also important to choose a project delivery system and a contract type that match the risk allocation and mitigation strategy. Drafting construction contracts, therefore, requires party representatives to be well conversant with the construction industry and the risks associated with it in order to avoid the danger that can arise from “copy and paste” of “construction contract templates”.