TECHNICAL UNIVERSITY OF KENYA

SCHOOL OF CONSTRUCTION AND PROPERTY STUDIES

DEPARTMENT OF CONSTRUCTION ECONOMICS AND MANAGEMENT
BACHELOR OF THE BUILT ENVIRONMENT IN
CONSTRUCTION MANAGEMENT

UNIT

EACQ 4111 – LABOUR MANAGEMENT

NAME: DUNCAN OTIENO OGENDO

REG NO: EABQ/03458P/2020

ASSIGNMENT 1

TUTOR:
QS – F.M. GITAKA

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Define the term contract.
A contract is a legally binding agreement between two or more parties that creates an obligation
to do or not do something.
A contract typically includes the offer, acceptance, consideration, and mutual assent of the parties,
and may be enforced through legal remedies in the event of a breach.
In construction, a contract is a legally binding agreement between two or more parties that sets out
the terms and conditions for a construction project. The contract outlines the scope of work,
specifications, schedule, payment terms, and other important details related to the project. It may
also identify the roles and responsibilities of the owner, contractor, subcontractors, and other
parties involved in the project. Construction contracts can take various forms, such as lump sum,
cost plus, time and materials, and design-build, and may be standard or customized based on the
specific needs of the project.

Describe the essentials of a valid contract.

For a contract to be considered valid, it must contain certain essential elements, which are:

• Offer
One party must make a clear and definite proposal to another party.

• Acceptance
The other party must accept the offer as presented without any modifications.

• Consideration
Both parties must exchange something of value, such as money, goods, or services.

• Competent parties
Both parties must be legally capable of entering into the contract, which typically means
they are of legal age and mentally sound.

• Mutual assent
Both parties must understand and agree to the terms of the contract.

• Legality of purpose
The contract must not involve any illegal or unethical activity.

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 • Proper form
The contract must meet any required formalities, such as being in writing or signed by the
parties.

If any of these essential elements are missing or defective, the contract may not be legally
enforceable.

Which parties/players in the construction industry enter into contracts.

Below is a brief description of common parties that enter into contracts in construction projects.
The employer.
The ‘employer’ is the contracting party for whom the work is carried out and is typically the owner
of the land upon which the work is carried out. The employer can also be referred to as the ‘owner’,
‘client’, ‘purchaser’ or even the ‘developer’. For the purposes of this assignment, the term
‘employer’ will be adopted.
An employer can take many different forms and is largely dependent on the nature and scope of
the construction project being undertaken. The employer need not be a professional construction
or development organization. Indeed, in some circumstances the employer is not a professional
construction or development organization and is, rather, represented by a professional team to
undertake the role of the employer under a contract. This is not an uncommon situation and is
reflective of the need to have competent and appropriately skilled construction contract
professionals filling the shoes of an unsophisticated employer. This situation is also reflective of
the need to have such a skillset when dealing with sophisticated contracting, building and
engineering organizations.
The role of the employer varies depending on the nature of the contract entered into. For example,
an employer could be expected to play a more passive role under a design and build lump sum
contract, whereas it could be expected to play a more active role in a cost reimbursable or, indeed,
a front-end engineering design contract.
The contractor
The ‘contractor’ is the contracting party responsible for carrying out the works. Depending on the
type of construction contract, the contractor can either perform the works itself or elect to
subcontract part of the works to specialist subcontractors and designers. The nature and scope of
works under the particular construction contract will dictate the role and responsibilities of the
contractor. However, where an element of design is involved, it is quite common for the contractor
to subcontract this role out to a specialist designer, architect or engineer.

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Architects
The traditional role of the architect was that of the principal’s representative as well as the designer
of the works. The law regarding the obligations on construction professionals has, therefore,
developed from this initial position. However, the role has evolved over time and in larger projects,
it is usually performed by other construction professionals such as engineers or project managers.
While not an exhaustive list of all activities an architect could be expected to undertake, the duties
of an architect could be expected to include the following:
• undertaking a review and assessment of the site (in particular, geological and geotechnical
characteristics of the site) to advise on ground conditions;
• advising an employer to the use of the land and any limitations thereon, such as planning
and development matters, rights of adjacent owners or restrictive covenants and other
access issues that may have an impact on the performance of the works;
• advising the employer of project execution issues, such as design development, cost
planning and indicative programming;
• preparing preliminary concept designs and initial specifications for the performance of the
works, whether for an approval process, cost planning or for tender purposes;
• advising on project risk identification and potential contracting methodology;
• preparing documents for and thereafter managing the tender process for the works,
including a review of the submitted tenders and providing recommendations and analysis
of the submitted tenders; and
• monitoring the execution of the works by the contractor and, in some situations, acting as
a certifier of the works.

Quantity surveyors
The role of a quantity surveyor is to estimate the quantities for the works to be performed (i.e., to
survey the quantity of material, equipment etc. required in order to execute the works). A quantity
surveyor can be engaged at the beginning of a project to assist the employer in preparing the tender
documents or to review tender submissions where a bill of quantities has been prepared. This role
is particularly important if the employer is seeking a fixed-price, lump-sum contract. A quantity
surveyor can also be engaged to assist with the ongoing needs of the project, such as assessing the
measurement of payment claims and claims for variations to the scope of works.

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Project managers
In larger or long-running construction projects, project managers are often retained by both the
employer and contractors in order to assist in the day-to-day running of the works and the
management of the contract. While a project manager is someone who has originally trained as an
engineer or quantity surveyor, the role of a project manager is administrative and managerial.
The role of a project manager may cover many of the activities traditionally performed by an
architect. For example, project managers may have a greater role in cost planning and analysis
from a project feasibility perspective, have a contract management role and may well indeed have
a level of input from a procurement aspect. These duties are, of course, variable and are dependent
on the contracting framework with the contractor.

Subcontractors
Subcontracting the works to trade or design subcontractors is a common feature in modern
construction contracts. This may be for reasons attributable to the specialist nature of the works or
simply the need for additional resources or labour. Whatever the reasons may be, the requirements
and restrictions around subcontracting are typically dealt with in detail in the contract. For
example, rarely is the contractor allowed to subcontract the entirety of the works to another
contractor. Furthermore, requirements may be placed on the engagement of lower-tier
subcontractors, such as flowing through key contract terms, requirements for collateral warranties
or additional guarantees, or even a requirement to allow the employer to audit the books of account
of the lower-tier subcontractor.

Financiers and insurers

The increase in complexity and risk associated with projects, the growth of ‘mega projects’ and
the differing and varying roles of parties and third parties in construction projects has led to the
importance of appropriate risk identification and insurance coverage. Indeed, the construction
industry is subject to higher degrees of uncertainty and risk than many other sectors.
In planning projects, employers, insurers and their respective specialist advisers ought to consider,
inter alia:
• what the nature and likelihood of the risks relevant to the project are;
• how risk is to be allocated between the parties – will it be transferred, shared or assumed;
• what insurance protection is to be provided by the employer and what is to be provided by
the contractor; and
• when the insurance programme is to start and finish.

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There are obviously a range of insurance policies available in the construction market and these
can be customised to suit the needs of the particular project. The most common policies are
‘contractor’s all risk’ policies, typically covering physical damage to the works, as well as
professional indemnity insurance policies, which are typically intended to cover professional
design issues. Other insurance policies cover public liability, workers’ compensation and, in some
Middle Eastern countries, decennial liability insurance may also be necessary.
The complexity and risk associated with certain projects also impacts on the potential funding that
may be available. Typically, the long-term financing of infrastructure and industrial projects is
based upon the projected cash flows of the project and is secured by the project assets. The level
of funding and how it is provided is again driven by the specific project and its circumstances.

The Engineer
Engineers are one of the parties in the construction industry that enter into contracts. Engineers are
typically responsible for designing and planning the construction project, and may be involved in
various stages of the project, from conceptualization to completion. In many cases, engineers work
under contract with the owner or contractor to provide professional services, which may include
feasibility studies, site investigations, design and drafting, cost estimating, construction
administration, and project management. These services are typically provided under a
professional service contract, which outlines the terms and conditions of the services to be
provided, as well as the compensation to be paid. The contract may also include provisions related
to liability, warranties, intellectual property, and dispute resolution, among other topics. By
entering into a contract, both the engineer and the contracting party can clarify their respective
roles and responsibilities, manage risks, and ensure that the project is completed in a timely and
cost-effective manner.

Government Agencies
Government agencies are also a party in the construction industry that enters into contracts.
Government agencies may initiate construction projects for various purposes, such as
infrastructure development, public works, housing, and other facilities. These projects may be
contracted out to private entities, including contractors, architects, engineers, and other
professionals, through a competitive bidding process or direct negotiation. The contracts entered
into by government agencies typically include provisions related to project specifications,
compliance with regulations and standards, quality control, progress reporting, payments, and
dispute resolution. In Kenya, the public procurement process is governed by the Public
Procurement and Asset Disposal Act, 2015 and its associated regulations, which aim to ensure
transparency, fairness, and accountability in government contracting. These laws and regulations
include provisions related to procurement methods, eligibility criteria for bidders, subcontracting,

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and local content, among others. Government contracts in Kenya are typically awarded through a
competitive bidding process, which may be open to both local and international bidders, depending
on the nature of the project.

You have been recruited as a Site Manager for a construction project involving the
construction of a level four hospital in Garissa County. Describe the factors you would take
into account in advising the contractor on issues relating to safety of workers and security
on the site.
As a Site Manager for a construction project involving the construction of a level four hospital in
Garissa County, I would take the following factors into account when advising the contractor on
issues relating to the safety of workers and security on the site:

• Compliance with legal requirements

It is essential to ensure that the construction site complies with all legal and regulatory
requirements regarding worker safety and security. In Kenya, this includes the
Occupational Safety and Health Act (OSHA), which sets out standards and guidelines for
ensuring worker safety in construction sites.

• Site-specific hazards
Each construction site has its own unique set of hazards that can pose a risk to workers'
safety and security. As a Site Manager, I would identify and assess the specific hazards on
the Garissa construction site, such as excavations, confined spaces, and working at height,
and advise the contractor on appropriate measures to mitigate the risks.

• Safety training
It is crucial to ensure that all workers on the site receive appropriate safety training before
commencing work. This should include training on the proper use of personal protective
equipment, working at height, and handling hazardous materials.

• Safety equipment
The contractor should provide adequate safety equipment, such as hard hats, safety glasses,
earplugs, and safety harnesses, to all workers on the site. It is also essential to ensure that
the equipment is regularly inspected and maintained.

• Site access and security

The construction site should be properly secured to prevent unauthorized access and theft
of equipment and materials. This may include installing fencing, gates, and security
cameras, as well as employing security personnel to monitor the site.

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 • Emergency response plans
In the event of an accident or emergency, the contractor should have appropriate response
plans in place to ensure the safety of workers and prevent further harm. This may include
having first aid facilities, fire extinguishers, and emergency evacuation plans.

• Safety audits and inspections

Regular safety audits and inspections should be carried out to identify potential hazards
and ensure that safety procedures are being followed. This can help to prevent accidents
and improve the overall safety of the construction site.

By taking these factors into account and advising the contractor on appropriate measures, it is
possible to ensure the safety of workers and the security of the construction site during the
construction of the level four hospital in Garissa County.

THE END