• With autumn underway and winter rapidly approaching, many farmers are considering how best to store grain and foodstuffs for the winter. Business needs may also necessitate the construction of further farm buildings. Whilst it is true that many farm buildings are pre-fabricated and can be constructed off-site, care must be taken to ensure that the construction process is properly documented and the on-site aspects are well-managed.

    So what are the key things to consider if embarking on a construction project?

    • How much design will there be – Firstly, you should decide whether you intend to appoint an architect, a structural or a mechanical and electrical engineer. You should ensure that the appropriate form is used. Whilst professional bodies such as the Royal Institution of British Architects and the Association of Consulting Engineers publish suggested templates, these will inevitably reflect the interests of the consultant and may require amendment in favour of the employer.
    • Use the right contract – Most construction projects are carried out using one of the major industry standard forms published by The Joint Contracts Tribunal (JCT). However, the initial choice can be bewildering as there are around 144 documents. In practice, these are variants of four main types. For larger jobs, i.e. over £2m, the design and build contract (where the contractor is responsible for design, work and materials), and the “traditional” contract (where the contractor is just responsible for work and materials) tend to be the norm. For smaller projects, the intermediate form (between £100,000 and £2m) and the minor works form (less that £100,000) are more appropriate. Both contracts have with and without design versions.
    • Check the contract fits your job – Whilst the above are all excellent starting points, they require amendment for individual projects to ensure that the requirements of funders and prospective purchasers are addressed. Moreover, financial security by way of performance bounds and parent company guarantees is important in a still rather tricky financial climate. The underlying risk allocation will also need some tweaking.
    • Maximise price certainty – The majority of work on a construction project (up to as much as 80%) is sub-contracted. Subcontractors, especially those involved in mechanical and electrical works, have been among the chief casualties of the construction recession. Consequently, prices for some packages are up to 30% above expectations and contractors are often unwilling to commit to prices. Reduce this uncertainty by ensuring that there is enough tender information for contractors to price accurately. You should also allow time for value engineering to reduce costs.
    • Be innovative in your approach – Use new forms of procurement such as “partnering”, which provides for design development with both contractor and sub-contractor input, and for a direct relationship between the client and the supply chain. Aim for risk reduction, value engineering and value management to reduce risk contingencies and prices.

    Following the above should help you achieve a fully-functional project on time and within budget. If you have any questions regarding construction contracts, please contact Michael Janney, Partner at Brachers.

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