Construction Contracts and Procurement

Construction Contracts and Procurement Glossary #

Construction Contracts and Procurement Glossary

Adjudication #

A process for resolving disputes in construction contracts where an independent third party, known as the adjudicator, makes a decision that is binding on the parties involved.

Advance Payment #

A payment made by the employer to the contractor before work begins on a construction project. This is usually done to help the contractor cover initial costs such as mobilization and materials.

Arbitration #

A method of dispute resolution in construction contracts where an independent arbitrator makes a decision that is legally binding on the parties involved. It is a more formal process than adjudication and is often used when disputes cannot be resolved through negotiation.

Bill of Quantities (BoQ) #

A document used in construction contracts that lists all the items of work to be completed on a project along with their quantities and prices. It helps in determining the total cost of the project.

Breach of Contract #

A violation of the terms and conditions of a construction contract by one of the parties involved. This can include failure to complete work on time, using substandard materials, or not paying subcontractors.

Change Order #

A written agreement between the parties involved in a construction contract to change the scope of work, time, or cost of the project. Change orders are used to document any modifications to the original contract.

Claim #

A demand by one party in a construction contract for compensation or relief due to a breach of contract or other issues. Claims can be related to delays, defects, or additional work not covered in the original contract.

Collateral Warranty #

A legal document in construction contracts that provides a third party, such as a tenant or funder, with a direct contractual relationship with the contractor or consultant. This ensures that the third party has rights under the contract.

Completion Certificate #

A document issued by the employer in a construction contract to confirm that the works have been completed to the required standard and that the contractor is entitled to receive the final payment.

Contract Administrator #

A person appointed by the employer in a construction contract to administer the terms and conditions of the contract and ensure that the project is completed according to the agreed schedule and budget.

Defects Liability Period #

A period of time specified in a construction contract during which the contractor is responsible for rectifying any defects in the works. This period usually starts after the project has been completed.

Delay Damages #

Compensation paid by one party to the other in a construction contract for delays in completing the project. Delay damages are usually specified in the contract and are intended to cover the costs incurred due to the delay.

Dispute Resolution #

The process of resolving conflicts and disagreements between the parties involved in a construction contract. This can include negotiation, mediation, adjudication, arbitration, or litigation.

Employer #

The party in a construction contract who initiates the project, pays for the works to be completed, and benefits from the end result. The employer can be an individual, company, government agency, or other organization.

Extension of Time (EOT) #

An agreement in a construction contract to extend the time for completing the works due to delays caused by unforeseen circumstances, such as adverse weather or changes in the scope of work.

Final Account #

A document prepared at the end of a construction project that details all the costs incurred, including variations, claims, and additional work. The final account is used to calculate the final payment due to the contractor.

Frustration of Contract #

A legal doctrine that allows a construction contract to be terminated if unforeseen events make it impossible to complete the project. Frustration of contract can occur due to events such as war, natural disasters, or government regulations.

Liquidated Damages #

A predetermined amount of money specified in a construction contract that the contractor must pay to the employer for delays in completing the project. Liquidated damages are intended to compensate the employer for the costs incurred due to the delay.

Nomination #

A process in construction contracts where the employer selects a specific subcontractor or supplier for a particular aspect of the works. Nomination can help ensure quality and coordination in the project.

Novation #

The process of substituting one party in a construction contract with another party. Novation requires the consent of all parties involved and usually occurs when there is a change in ownership or structure of a company.

Performance Bond #

A financial guarantee provided by the contractor to the employer in a construction contract to ensure that the works will be completed according to the agreed terms and conditions. A performance bond is usually issued by a bank or insurance company.

Retention #

A sum of money withheld by the employer from the contractor's payments in a construction contract as security for the completion of the works. Retention is usually released after the defects liability period has expired.

Subcontractor #

A person or company hired by the main contractor to perform a specific portion of the works on a construction project. Subcontractors are responsible for their own employees, equipment, and materials.

Variation #

A change to the scope of work, time, or cost of a construction project that is authorized by the employer and agreed upon by the contractor. Variations can include additions, omissions, or alterations to the original contract.

Withholding Payment #

The act of delaying or refusing to make a payment to the contractor in a construction contract due to incomplete or unsatisfactory work, disputes, or other issues. Withholding payment is usually done in accordance with the terms of the contract.