RISK MANAGEMENT

CSM 735

ASSIGNMENT 3

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ALEX RIPLEY

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ID 301100680 rs e
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 REPORT

EXECUTIVE SUMMARY

This report aims to summarize how certain contract clauses of CCDC 2 and 3 helps to mitigate and control
risk. A strong fully executed contract plays a vital role in making a project successful. There is a risky
proportion in every construction project and the risks can be for the owner, consultant, contractor or sub
contractor. To some extent these risks can be controlled with a strong contract and it is briefed in this report.

INTRODUCTION

A construction contract is a contractual or legally binding arrangement between two parties based on

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established policies and conditions that outlines the scope of work, risks, duties, and legal rights of both the

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contractor and the owner. A perfectly written contracts mitigates and controls the risks during the project

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period. Lump sum, cost plus, time and materials and unit pricing contracts are the four common types of

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contract used in the construction field. Each contract differs with their variant functions and features.

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Contracts contains clauses which demands certain things need to be carried out before or during the
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execution of the project and here we are looking at the general conditions of CCDC 2 and 3 that helps in
mitigating risks.
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CCDC 2
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2.4 DEFECTIVE WORK

Correcting the defective work is important for a contractor, because if anything built or installed doesn't
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work as it is supposed to, the risk of loss would increase. This ensures that the expense of the project is
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deferred and maximised.

3.6 SUPERVISION
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Supervision can reduce the risk in almost all forms of employment. Having a professional supervisor
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monitoring the employment of a contractor can reduce the probability of creating errors.

5.1 FINANCING INFORMATION REQUIRED BY THE OWNER

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The most apparent danger for vendors, and those who work for them, is that the employer won't pay them.
This clause provides that the owner gives fair proof to the contractor that financial arrangements had been
placed by the owner to satisfy his contractual obligations.

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 6.2 CHANGE ORDER

Any modifications in the work is called a change order, it may be the change in work, schedule, cost, terms
and condition of contract. This clause provides the contractor with the clear written description of the
proposed changes in work made by the owner. This allows the contractor to plan and execute the work
without any further delays.

6.5 DELAYS

This clause helps in extending the contract time if the contractor fails in completing the work due to any
direct or indirect actions caused by owner, consultant or anyone employed. The Owner shall reimburse the
Contractor for affordable rates caused as a result of certain delay.

6.4 CONCEALED OR UNKNOWN CONDITIONS

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This clause helps the contractor to know the working conditions he or she is working. If any subsurface or

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concealed physical conditions which was not observed and registered initially, the observing party should

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provide information regarding the conditions which will enable safe working conditions and reduces risks.

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9.2 TOXIC AND HAZARDOUS SUBSTANCES AND MATERIALS

Toxic and hazardous materials is very dangerous and harmful to human life. The site should be free from
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such materials and the owner is responsible to make sure the site free from such dangerous substances. This
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clause demands the owner to take all reasonable steps to determine whether any toxic or hazardous
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substances are present at the place of work and to provide the consultant and the contractor with a written
list of any such substances that are known to exist and their locations.
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9.4 CONSTRUCTION SAFETY

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This provision ensures that the contractor follow the laws, regulations and procedures of the health and
safety legislation on construction which helps to mitigate risk as the workplace will become a better
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environment for the contractor and the other employees around him.
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10.2 LAWS, NOTICES, PERMITS, AND FEES

The owner is expected to get all the requisite permits and approvals by which the he or she won’t be exposed
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to additional liability and costs. This clause ensure that all the necessary permits and approvals are obtained
before starting the construction.

CCDC 3

10.2 LAWS NOTICES PERMITS AND FEES

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 CCDC 3 allows the contractor to have responsibility for ensuring that the contract agreements follow the
laws and regulations. CCDC 2 however allows contractor only to procure the records, not to check their
compliance. Hence CCDC 3 substantially increases the contractor 's responsibility.

6.4 UNKNOWN CONDITIONS

This provision has a requirement relating to hidden or unknown dangerous substances which will be
regulated by the 9.2 in CCDC 2 in all situations. CCDC 3 doesn’t contain anything that directly relates to
the unknown physical conditions.

2.3 REVIEW AND INSPECTION OF THE WORK

The provision in CCDC2 demands that the contractor should cover the expense of every evaluation or
inspection. However, CCDC 3 probably does not have such terms in the clause indicating that the owner

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may be responsible for this expense.

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REFERENCE

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1 https://e.centennialcollege.ca/d2l/le/content/525944/viewContent/5689992/View
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2 https://en.wikipedia.org/wiki/Construction_contract

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https://buyandsell.gc.ca/cds/public/2014/09/16/f006ce015c8aa1a7f000f10f97954855/201402696_appendi
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x_j_-_ccdc-2_2008_final.pdf
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