In a world filled with individuals and corporations who have become “lawsuit happy” and very cost focused, it can be extremely challenging to keep up with the complicated and ever-changing legal landscape of the construction industry. The high value and high risk factors which are associated with construction projects, paired with the wide and varied supply chain involved, all increase the probability of both cost and schedule variations not to mention possible legal trouble and other complications.
Therefore, it is essential that property owners, developers and contractors all recognize potential problems before they arise and take measures to legally avoid them. Here we’ll examine four common issues and identify how MLS Group can help you mitigate these risks.
Problem Area #1: Failure to Keep Contracts Consistent
Interestingly enough, written contracts are not actually legally required between owners and contractors. In spite of this, a written contract is nearly always executed between these two parties to establish a payment agreement, scope of work, and establish liability. Most general contractors will need to enlist the help of subcontractors for trade-specific projects such as electrical packages, plumbing, fire safety features, etc. All too often, an agreement is reached between contractors and subcontractors that is not consistent with the written contract established between owners and contractors.
Thanks to MLS Groups integrated business model, we work within our own supply chain and partners to deliver full projects under existing framework agreements. This ensures standardisation throughout the entire supply chain and simplifies the project structure and delivery for the client.
Problem Area #2: Failure to Document Project Changes
It is very rare for a construction project to make it from start to completion without requiring any changes be made to the original plan. No matter how well contractors, subcontractors, and owners work together, a verbal agreement to make changes or adjustments is never enough.
MLS Group has a change management procedure which require a RFC (Request for Change) Form to be completed and issued for approval. This allows the change to be reviewed and the impact to the schedule and budget assessed before a decision is made. Because of our integrated business model, we are able to quickly asses and advise on the impact due to a streamlined communication plan and stakeholder management.
Problem Area #3: Failure to Document Project Expectations
Throughout initial stages and negotiations, many promises may be made and expectations may be verbally agreed upon. It’s important for all parties to remember that a verbal agreement is not set in stone, and that anything not expressly included in the final written contract is not binding.
At the start of the project there will always be a ‘project kick off meeting’ where a success criteria is drafted, agreed issued to all stakeholders. The project is then measured against this criteria. Should a RFC be approved the project will be re-baselined subject to an amended success criteria where relevant.
Problem Area #4: Payments Terms & Delay’s
When dealing with multiple contracts, sub-contractors and contractors on a project you will often have varied payment terms. There is on occasion issue’s relating to payment milestone type contracts, work not being complete within budget or to schedule or sometimes administration issues which can lead to late payments and in the extreme, contractors stopping work.
MLS Group ‘One Team’ approach allows for simplified invoicing for the client. This means the client received one set of terms, one contract and one detailed invoice. Allowing all party’s to stay focused on the successful delivery of the project. It offers better oversight for the client and management team, improved communication and better coordination of activities.