Construction Documents Analysis

CHAPTER ONE

Introductio

Among the essential commercial documentation required at the pre-start stage of a construction project and that are effectively analyzed and evaluated in this report include a construction contract agreement, the bills of quantities as well as insurance coverage documentation. The report will also analyze on-site documentation for the projects including any addendums such as the Cost Value Reconciliation

Construction Contract Agreement

A major document for any construction project is the contract Agreement, mainly between the owner of the structure being constructed (herein referred to as the client) and the company that engages in the actual construction of structure (Contractor). According to Rodriguez (2019), the contract agreement represents the principal agreement between a private property owner and a construction company establishing all the essential aspects of the agreement including the offer, consideration and acceptance of parties as well as the terms and conditions for the fulfillment of the contract. Among the key features of the contract agreement that were developed to ensure the achievement of effective financial objectives by both the client and contractor include the construction contract, a Bills of Quantities as well as insurance coverage of the project. All the three aspects were adequately prepared and developed as different sections of the contract for which both the client and contractor are free to referee to at any point within the contract to certify and ascertain financial liabilities and obligations. The construction contract was adopted from Building Cost Information Services (BICS) provided by the Royal Institute of Chartered Surveyors (RICS) (Rics.org, 2021) and highlighting the different roles and responsibilities of all the stakeholders involved in the project. The contract as such outlines what is expected of both the client and the contractor and any other parties’ attached to the two and involved in the project. The contract also outlines processes and procedures for the construction project and for transferring responsibilities and roles. In this way, to effectively realize ones commercial objectives then each stakeholder has to adhere strictly to the set out responsibilities and roles.

Bills of Quantities and Insurance Coverag

Another significant pre-start documentation developed for the project includes a Bills of Quantities and cost estimates. Rodriguez (2019) defines a Bills of Quantities (BoQ) as a document comprising a list of various materials and trades making up part of the construction project. It is an itemized list of the different parts, materials and labor that make up part of a construction project alongside a corresponding cost based on the BCIS. In addition to allowing contractors to effectively develop their bids while managing cost for effective financial objective success, the Bills of Quantities gives the client a tentative cost estimate for which they can develop their project plans around. The Bills of Quantity is often carefully developed taking into account all the required resources and materials for the project and as such the final figure developed will often be significantly close to the actual cost of the project. However the document also includes a significant percentage for contingency plans in case of any unforeseen developments and occurrences that may require additional resources. Ultimately the Bills of Quantities not only serve as a cost estimate for the project but also serves as a guide for construction given that the itemized documents are often arranged in relation to various aspects of the construction developed in chronological order during actual construction. Contractors often develop monthly evaluations of the work done for payment based on the BoQ, highlighting the already done work for approval and payment. Contractors can use this process to effectively appraise their financial expenditure in construction and expected incomes. In this way the contractor is able to effectively keep track of their financial undertakings in relation to the ultimate financial objectives set out in the projects beginning. Clients equally cross check the cost of the work done against the costs within the BoQ as the project progresses. This enables them to effectively keep up with the financial expenditure and objectives. On account of the data set acquired from BCIS highlighting detailed elemental breakdown and specifications, and the developed Bills of Quantities and Cost estimates a significant approximation of the projects cost was developed and adopted in procuring insurance coverage for the project. The insurance documentation as such makes up another significant pre-start stage documentation. Stromberg (2020) provides that due to the large scale nature of construction projects involving multiple aspects and elements including use of machinery, transportation, employees as well as the quality of the product developed eventually, multiple types of insurance coverage are required for adequate realization of eventual commercial objectives of all involved stakeholders. Rodriguez (2018) highlights six key construction insurance policies to include Professional Liability Insurance, Commercial Liability Insurance, Builders Risk Insurance, Pollution and Environmental Insurance, Inland marine insurance and Workers compensation insurance. All the six insurance coverage’s were taken up for the project to ensure effective coverage of all stakeholders within the project and ensure ultimate realization of commercial objectives. Rodriguez (2019) also highlights that insurance coverage is significant in a construction project to guarantee both the owner and the contractor that they both posses the means and economic backup to perform and deliver under the developed terms of a contract. As such, acquisition of the insurance covers both the client and stakeholder from unforeseen liabilities ensuring the achievement of effective financial objectives and overall realization of the construction project’s commercial objectives.

Addendum and Cost Value Reconciliation (CVR

According to Upcounsel.com (2020), an addendum refers to an attachment to an initial contract spelling out any modifications or changes that are developed within the course of the project and that often significantly impact at least one section of the contract. Addenda are significant in contractual agreements especially within a construction to enable the accommodation of changes that come up as a result of unexpected scenarios and circumstances. As a result of the unforeseen ground condition of a backfilled concrete pit, a necessary redesign of the substructure was necessary leading to additional costs that had initially not been accounted for. These costs can often engage additional work or additional cost such as cost of machinery or materials to be used in the redesign. Developing addendums enables these changes to be effectively integrated into the original contract thereby enhancing effective realization of the ulrimate set out objectives. Given the inclusion of a contingency sum and plan in the BoQ tender sum, the amount was rescheduled towards the necessary costs required to carter for the redesigning of the project. As such while no money was added into the original contract document, a sum of the contingency percentage was redirected towards the management of the emerged redesign section. The addendum developed in this phase as such included the Cost Value Reconciliation which indicated the contingency amount diverted to the emerged redesign, ultimately balancing it out to the initially developed tender sum showing reconciliation for the value of the contingency amount used.

Achieving financial Objectives

The ultimate financial objectives of both the client and the contractor are often dependent on the tender sum and contractual agreement. As such close attention to the above described documents pre start and in the course of the project enables both the client and Contractor to effectively achieve their financial objectives. For the contractor to achieve effective and expected financial objectives, all aspects of the construction contract must be adhered to in relation to their duties and responsibilities. This requires an effective understanding of the various aspects of the construction and optimizing the use of resources to enhance adequate and efficient outcomes. Stagliano (2020) highlights that for effective financial management, contractors should effectively understand all the elements of the project and the contract, strive for commonality of goal between all personnel within the team, manage effective cash flow and maintain effective records of the finances and their utility. this ensures that all aspects of the [project are managed effectively and as planned thereby contributing to the achievement of the intended financial objectives. Clients equally have to be effectively aware of the exact product they want and the processes and procedures required as well as the cost of its achievement. Often, financial objectives for clients within a construction project are to ensure adequate utilization of available finances and avoiding extra spending unless completely necessary, Clients are often looking to get a delivery of their expected projects within the cost estimates and budgets developed. As such through maintaining a significant track of the contractors’ project and only paying for high quality and well done work while managing any unforeseen incidents that mat impact increased costs, clients can effectively manage and achieve their financial objectives. In a different setting however I would develop not just a contractual agreement between us and the client but also foster a significant professional relationship. Professional relationships are effective in developing a much cohesive understanding between the client and the contractor and ultimately serve to hasten different processes and procedure enabling the saving of both time and costs. Developing a professional relationship would also enable much smoother and effective communication which serves to enhance the ultimate effectiveness and efficiency of the construction process towards achieving financial success for both customer and client.

Personal Evaluation

The pre-start information and documentation from the contractors perspective is significant not only to be able to familiarize with the project and its various requirements in general, but also to develop effective plans and work schedules to ensure a smooth running of the construction process contributing towards the achievement of eventual financial objectives. My personal experience in the course of the documentation preparation and the first three months of the project was significantly overwhelming, but full of rich teachable and learning moments that enhanced my perspective and grasp of the construction process. For instance, the contractual agreement development process helped me understand the various aspects of a construction project as well as their connection and significance. Understanding the relation between the BoQ providing the tender sum, development and procurement of the relevant insurance coverage and maintaining a constant re evaluation of the financial aspects to ensure effective spending on the project provided a wholesome understanding of the large scale and complex nature of construction contracts. Feedback from workers in the ground and procurement officers further enhanced my understanding of additional documentation such as work breakdown schedules and cost estimates. These documents help breakdown the requirements from the BoQ and other resources into the most critical urgent ones enabling timely planning and procurement of such resources. Through a work breakdown structure, one can effectively understand the day to day requirements of the projects execution enabling adequate planning for procurement and transportation among other aspects of the project. I was also able to learn more about the complexity of the construction process and why it is necessary to work in collaboration with one another as a team. Construction ultimately entails assembling of different materials and components together in the building of a structure. Effective collaboration ensures all components are sourced and transported to the site on time enabling the achievement of set milestones and effective progression of the construction process. This ultimately contributes to an enhanced quality of the work and significant savings in both time and costs which enhances effective achievement of financial objectives by all involved stakeholders. I was also able to use the feedback received such as the issue of the unforeseen concrete filled pit in the site of the project to develop changes in contracts and eventually consolidate the changes within the initial contract leading to the development of a Cost Value Reconciliation (CVR). Ultimately being a part of this project and contributing towards its different aspects has provided enhanced experiences and insight with regards to the process of construction. I now have a much better understanding of the various stakeholders involved in construction processes, the various processes and resources that are key as well as the different ways of ensuring efficiency and optimum use of resources for effective outcomes both for the client and the contractor.

Continue your journey with our comprehensive guide to Considerations for Verbal and Written Interaction in Diverse Environments.

References

Rics.org, 2021. BCIC Data Products. [online] Rics.org. Available at: [Accessed 15 March 2021].

Rodriguez, J., 2018. 6 Construction Insurance Policies You Should Know About. [online] Plan Academy. Available at: [Accessed 15 March 2021].

Rodriguez, J., 2019. 10 Documents to Include in Your Construction Contracts. [online] The Balance Small Business. Available at: [Accessed 15 March 2021].

Stagliano, T., 2020. Construction Financial Management: 5 Essential Rules for Non-Financial Leaders. [online] conexpoconagg. Available at: [Accessed 15 March 2021].

Stormberg, M., 2020. Types of Construction Insurance - The Complete Guide | Construction Coverage. [online] Construction Coverage. Available at: [Accessed 15 March 2021].

UpCounsel.com, 2020. Contract Addendum Definition: Everything You Need to Know. [online] UpCounsel. Available at: [Accessed 15 March 2021].