ADMINISTERING CONSTRUCTION CONTRACTS (CONDITIONS OF CONTRACT REVIEW AND

APPLICATION) TERMINATION, DISPUTE RESOLUTION MECHANISMS ETC

1. CONTRACT ADMINISTRATION

Definition
Contract administration refers to the task or function of ensuring that a construction
contract (the contract between the client and the contractor) is executed in
accordance with the terms of the contract
Is the management of the contract between the employer, or client, and the building
contractor.
In summary, contract administration involves the planning, negotiation, execution and
performance of any contact with customers or vendors.

Contract Administrator – is a professional person responsible for administering the

construction standard contracts.

Contract administrator are appointed by the client, but when certifying or giving
an assessment or decision, they should act honestly and reasonably and their decisions
are open to challenge via the dispute resolution procedure unless the contract makes
their decisions final and conclusive

Roles of Construction contracts administrator

• Inviting and processing tenders.
• Preparing contract documents for execution.
• Administrating change control procedures.
• Seeking instructions from the client in relation to the contract.
• Issuing instructions such as variations, or relating to prime cost sums or making
good defects.
• Considering claims.
• Chairing construction progress meetings.
• Preparing and issuing construction progress reports.
• Co-coordinating and instructing site inspectors.
• Agreeing commissioning and testing procedures.
• Agreeing defects reporting procedures.
• Ensuring that project documentation is issued to the client.
• Issuing certificates of practical completion and interim certificates.
• Collating and issuing schedules of defects.
• Issuing the certificate of making good defects.
• Issuing the final certificate.

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 1.1. CONTRACT ADMINISTRATION PROCEDURE(STAGES)

Tendering and contract award

i. The tender is advertised by the employer or his or her representative;

ii. Contractors submit their tenders by the required date;
iii. The tenders are evaluated, and a tender evaluation report is produced
recommending the preferred tender bid;
iv. The employer reviews the tender evaluation report and awards the contract;
v. The contract is negotiated and eventually signed by both the contractor and
the employer;
vi. The contractor is responsible for the provision of insurance and the surety/
guarantee as stipulated in the contract;
vii. The site is officially handed over to the contractor;
viii. The contractor establishes his or her camp and site office and orders the
materials required to start construction;
ix. The contractor sets out the work and starts construction.

Monthly activities during the contract(Construction)

i. Daily, weekly or monthly site meetings between the employer and the
contractor and inspection of the work by the employer’s representative to
ensure quality;
ii. Preparation of monthly payment Valuations and certificates by QS & Architect
respectively.
iii. Review and certification of the payment certificate. Queries are referred to the
contractor;
iv. The certified payment certificate is submitted for payment by the employer;
v. Payment is made to the contractor within the period specified in the contract
(14 days as per JBC, 30days as per PPOA & 58days as per FIDIC).

Handover procedure

i. The contractor requests the Architect and team to inspect the completed
project prior to handover;
ii. The Architect and team inspects the project, identifies outstanding items to be
completed by the contractor prior to the handover of the project and issues a
“snag list” to the contractor listing the outstanding items;
iii. The contractor completes the outstanding items and notifies the Architect that
the project is complete and ready for a final inspection;
iv. The employer (or his or her agent) carries out a final inspection. If he or she (or his
or her agent) is satisfied that the works/ project is now substantially complete, he
or she or his or her agent will certify/ confirm that the works/ project is ready to
be handed over;

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 v. The contractor hands the works/ project over to the employer (that is, the
employer takes possession of the works/ project).

Final account

i. The contractor or the employer representative that is the QS (as required in terms
of the contract) prepares the final account during the handover period and
submits it to the employer;
ii. The final account is certified and issued to the employer once the employer has
issued a (practical/ taking-over) completion certificate;
iii. The employer pays the final account less the retention money (1st moiety
released that is 50% of retention);
iv. This retention money is released to the contractor at the end of the defects
liability period.

Defects liability period and final completion

i. The contractor is responsible for making good items which show defects during
the defects liability period;
ii. Near the end of the defect’s liability period, the contractor formally requests the
Architect (with copies to Client & QS) to inspect the project and identify any
defective items which the contractor is responsible for making good in terms of
the contract;
iii. The money held in retention by the employer will only be paid when the
contractor has properly completed the list of defects and after issuance of
certificate of making good defects by the Architect;
iv. Once the Architect has issued a copy of the final completion certificate, then
final Valuation and payment certificate (release of 2nd moiety) are prepared
based on agreed final account, the client is required to pay the retention
money due to the contractor.

Latent defects inspection and certification

i. The contractor is usually still liable for the repair of any latent defects for several
years. Latent defects are defects which were not apparent and which a
reasonable inspection would not have revealed during the defect’s liability
period. Different contracts deal with the liability for latent defects differently.

ii. For latent defect liability not to apply it must be expressly excluded. If nothing is
said about latent defect liability, the common law applies; namely the employer
has a right to hold the contractor responsible for a latent defect within three
years of the date on which he or she became or ought to have become aware
of the latent defect.

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 1.2. FORMS OF CONTRACT
JBC/JBCC contract – Bears agreement and conditions of contract for Building and
related civil works in Kenya

FIDIC - FIDIC contracts represent agreements in the construction and installation field,
used as standards in the international arena. FIDIC contracts can easily and effectively
be applied to the majority of construction and engineering projects and are trusted by
many international bodies and jurisdictions. FIDIC contract conditions
use remeasurement contract, which means that the final cost of the works is established
on the basis works that have been carried out

PPOA - Bears agreement and conditions of contract for Building and related civil works
for Government and state corporations’ projects in Kenya

Special contracts (UN) - Applicable to UN projects where special conditions are

prescribed therein.

Common parts to a Construction contract (Documents forming contract)

• The Agreement- The agreement is the most fundamental document in a

construction contract bundle.
• General Conditions- an integral part of the construction contract, which consist of
items and resources needed for project completion that will not be part of the
finished product that is turned over to the owner.
• Special Conditions- terms and conditions, which may be unique to the Project, and
have precedence over these Uniform General and Supplementary Conditions
• Scope of Work- Description of works to be performed that is milestones, reports,
deliverables, and end products that are expected to be provided by the
performing party
• Contract Drawings- Are diagrammatic or pictorial description of the construction to
be furnished, or copies thereof, and are included as a part of the Contract
Documents or as modified by Addenda and Change Orders to the Contract as the
case maybe.
• Specifications- Notes in the tender Bills of quantities that describe the products,
materials, and work required by a construction contract.

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• Priced Bill of Quantities- Document with an itemized list of particular works
description with their corresponding quantities priced by the Contractor to arrive at
the contract price. This document will be used in re-measurable contracts, it also
contains schedule of rates.
• Means the document drawn up by the Quantity Surveyor and priced by the
Contractor to arrive at the contract price. This document will be used in re-
measurable contracts.
• Construction Schedule- a schedule of construction progress with the anticipated
commencement and completion dates of each phase of construction
• Construction programme- outlines a project's scope of work, identifying timescales,
lead times, development phases and durations, as well as the sequence of activities
and the human and material resources needed to reach each milestone. Project
budgets and cashflow can also be incorporated.
• Project quality management plan -Documents the necessary information required to
effectively manage project quality from project planning to delivery, that it defines
project's quality policies, procedures, criteria for and areas of application, and roles,
responsibilities and authorities.
• Methodology (Method statement) - document showing the planned method of
construction, taking into account all contractual and legal requirements,
construction constraints, risks, and opportunities.
• Project health and safety plan- Document describing what kind of hazards are
involved/expected in a project, how they can be eliminated or controlled, and
what sort of equipment will be used to ensure the safety of the workers

1.3. DEFINITIONS OF CONTRACT TERMS

The following terms are key and regularly used in construction contracts administration.
It is therefore very important that Learners/Students know and understand their
meaning:

Architects’ instructions - Means instructions issued by the Architect to the Contractor in

accordance with conditions of contract and include instructions issued by any other
agents of the Employer as maybe prescribed in the contract.

Bills of quantities or contract bills - Means the document drawn up by the Quantity
Surveyor and priced by the Contractor to arrive at the contract price. This document
will be used in re-measurable contracts.

Certificate of practical completion - Means a certificate issued by the Architect to the

Contractor to signify a state of completion where, in the opinion of the Architect, the
Works are substantially complete and can effectively and conveniently be used for the
intended purposes.

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Final certificate - Means a certificate issued by the Architect to the Contractor signifying
that the Works have been carried out and completed in accordance with the terms of
this contract and that all adjustments to the contract price have been made in
accordance therewith.

Contract period - Means the period agreed for the construction of the Works and
stated in the appendix to these conditions or extended in accordance therewith.

Contract price - Means the price for the Works as stated in the contract or as adjusted
in accordance to the contract.

Contractor: Means the person or firm named in the articles of agreement with whom
the Employer has entered into contract and includes the legal successors in title and
permitted assigns.

Defects: Defects are aspects of the works that are not in accordance with the contract.
They usually occur because of design deficiencies, material deficiencies, specification
problems or workmanship deficiencies.

Defects liability period: The period for which the contractor is required to “guarantee”
the completed works and to rectify any defects that may be discovered or appear. The
defect liability period starts when the employer is satisfied that the works are complete
and takes delivery. The defects liability period varies, depending on the nature of the
work, and can range from three to 12 months.

Deviation- When a plan, design or specifications agreed by the parties is not followed
during the construction process.

Disputes- Unresolved matter of dissatisfaction or difference.

Employer- Also known as the client, the employer may be a person or a government
agency or a corporation, and is the party who wants the project constructed and who
will pay for the work. The employer also signs the contract.

Employer’s representative: A representative of the employer, usually a professional

architect, engineer, project manager or quantity surveyor. This is the person with whom
the contractor will have the greatest contact during the contract.

Escalation/Fluctuation clauses: Caters for the rise and fall of economic factors, where a
project/ contract exceeds duration of one year, e.g., labour rates, commodity prices,
etc.

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Extension of time (EOT)- An extended time for completion of the works, relieving the
contractor from having to pay penalties for the delay.

Force majeure - An exceptional event or circumstance beyond a party’s control that

renders performance of the works impossible for a period of time or forever (e.g., war,
terrorism, etc).

Patent defect - Means a defect which a reasonable inspection by the Architect would
disclose.

Latent defect - Means a defect which a reasonable inspection by the Architect would
not disclose.

Performance guarantee (Contractor performance bond)- A guarantee procured by the

contractor from a financial institution in favour of the employer as security for the due
performance of the contractor’s obligations under the contract. The employer can
claim against this security should the contractor fail to perform the obligations for which
the security has been given. The security is returned when the contract is satisfactorily
completed. The terms of the guarantee will determine the nature thereof, and the
instances in which it can be called, and must for that reason be read very carefully.

Payment guarantee (Client performance bond)- A guarantee procured by the

employer from a financial institution in favour of the contractor as security for the
employer’s compliance with its payment obligations under the contract. The contractor
can claim against the guarantee where the employer has failed to make due payment
to the contractor in terms of the contract. This security is returned when the employer’s
payment obligations have been fulfilled. The terms of the guarantee will determine the
nature thereof, and the instances in which it can be called, and must for that reason be
read very carefully.

Limitation of liability- This is usually a clause in the contract which apportions liability
between the parties. It is an attempt to limit, define, estimate and manage liability
between the parties themselves and third parties. A cap on damages may be used.

Final account - Means the document prepared by the Quantity Surveyor containing all
the adjustments to the contract price in accordance with the conditions of contract
and which in his opinion is the total value of the Works at final completion.

Prime cost sum - Means a sum included in the contract bills for works or services to be
executed by a nominated sub-contractor, statutory or other authority or for materials or
goods to be obtained from a nominated supplier.

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Provisional sum - Means a sum included in the contract bills for the execution of work
which cannot be entirely foreseen, defined or detailed at the time the tender
documents are issued.

Penalties- Most contracts contain a penalty for failure to complete the project within
the contracted period or a failure to achieve certain guaranteed levels of
performance of the works. Penalties are an agreed upon amount of money which is
deemed to cover the innocent party’s loss in respect of the breach for which the
penalty is imposed. In agreeing a penalty, it should be considered whether the penalty
proposed bears some measure of potential harm to the innocent party and the
innocent party should be made to explain the amount proposed, if it is proposed.

Pricing options- Options available to a contract when pricing a particular contractor

(e.g. lump sum, measurable, activity based, time-based etc.).

Retention- This is money, usually from 5% to 10% of the value of the work done that is
held back by the employer to correct defective work. When the project is delivered to
the employer, part of the retention money is returned to the contractor, and the
balance is released at the end of the defects liability period.

Subcontractor- Usually appointed managed and paid by the contractor; enters into a
contract with the contractor.

Variation- Any change to the contract which is instructed or approved. Most standard
form contracts provide for a procedure to be followed when such a change is required.

Thus, Contractors and Client should ensure that after the award of a tender the
agreement tendered for is the agreement that they sign.

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CONSTRUCTION CONTRACT CLAIMS

Definition of a claim.

A claim is a demand or assertion by one of the parties seeking, as a matter of right,

adjustment or interpretation of contract terms, payment of money, extension of money,
extension of time or other relief with respect to the terms of the contract. It also includes
other disputes and matters in question between the owner/client and the contractor
arising of or relative to the contract.

Types of construction claims

Construction claims usually arise because one of the parties asks for
compensation that is outside the provisions of the contract

i. Injuries -When accidents happen on the construction job site, a claim is often filed
against not following site safety standards, the accident could be involving construction
workers or bystanders.

ii. Change of Work -This is one of the most common types of claims in the construction
industry. This claim arises when the contractor receives a change order from the client
when the project has started. The disputes occur when the client and the contractor
disagree about what does and doesn’t fall within the scope of the contract.

iii. Damage - Construction claims are also filed when construction activity causes
damage to the commercial site or any adjacent property. In such cases, the client
suffering property damage can file a claim against the contractor.

iv. Schedule Acceleration -Under certain circumstances, the contractors are

demanded or need to exceed the budget that was agreed upon during the bidding
and contract to stay on schedule. In such cases, when the contractor and the client
don’t agree to cover the extra costs, a schedule acceleration claim is filed.

v. Change in Site Conditions- This type of claim occurs because of differing site
conditions. This happens when the conditions at the construction site differ from what is
specified in the contract, or the actual conditions are not encountered in the area.

vi. Construction Defects -Construction defects claim is often filed long after the
contractor has finished the job. The client files the claim alleging that the contractor’s
work has some errors that are causing issues and damage to the building or the
construction property.

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vii.Delay -These are the most common types of claims in construction contracts. It
occurs when the project takes too long to complete as opposed to what was agreed
in the contract. Delay in construction results in a loss in productivity and also financial
loss. This can also occur due to a situation that is out of the contractor’s control, such as
weather, a pandemic like the COVID-19, or an earthquake.

Causes of contractual claims in construction industry

i. Delays in construction and completion of the contract.

ii. Delays in the delivery and supply of materials.

iii. Weather which slows down or prevents construction from proceeding.

iv. Owner requested changes.

v. Changes which occur not at the request of the owner.

vi. Poor management and administration of the construction site.

vii. Site conditions which differ from those expected.

viii. The work becomes impossible to perform.

ix. Insufficient plans and specifications.

x. Failure of any one party to disclose information which is material to the

construction.

xi. Conflicts between those involved in the construction of a project.

xii. Termination of the contract by the owner or the contractor.

xiii. Acceleration of the work.

xiv. Failure to adequately schedule and coordinate the work; and

xv. Failure of parties to cooperate with each other in the performance of the work.

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General recommendations for avoiding construction claims

i. The best way to ensure that something occurs or does not occur is to put it in the
contract. Obtain good legal advice before entering into the contract in order to
ensure that your interests are properly and adequately reflected in the contract.
The standard general conditions may not be adequate for your needs. This is
particularly true of public entities which have special and diverse needs and
interests;

ii. Owners should try to hire contractors and consultants with whom they have a
good relationship and who have a good reputation in the industry;

iii. Owners should realize that the lowest bid is not always the best bid;

iv. Owners should ensure that the contract allows them to have some say in the
general contractor’s selection of its sub trades;

v. Each party to a contract should ensure that they understand their duties and
obligations under the contract and that they have the ability to perform these
duties and obligations as required by the contract;

vi. Owners should ensure that a project is well planned from the outset to minimize
the need for change orders or change directives. At least one study has shown
that changes to the contract work increase the risk of construction claims and
decrease productivity;

vii. Both owners and contractors should do what they can to ensure proper
management and administration of the project, including proper and adequate
staffing and co-ordination of the project and trades.

The Role of Architect in dealing with Claims

• Written application for claims must be made in the first instant to the Architect. It
is the Architect’s responsibility to form an opinion as to whether or not “the
contractor has incurred or is likely to incur direct loss and/or expense.”

• The Architects may request for any additional information required to from the
opinion. Architects are under obligation to ascertain the contractors “direct loss
and/or expense” which can be delegated to the quantity surveyor.

The Architects obligation to operate as per provision contract is absolute and the
•
employer may be liable in damages for breach by the Architect of his duty. It is
the employer’s responsibility to ensure that the Architect operates within the
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 provisions of the contract including the loss and expense.” The Architects failure,
to ascertain of instruct the Quantity Surveyor to ascertain the amount of direct
loss and expense incurred by contractor was a breach of contract for which the
employer is liable.

Important to note- However in claims negotiations the Architect and Quantity Surveyor
should occupy neutral positions.

2. TERMINATION CONSTRUCTION CONTRACT & ADR

Termination - When a contract is terminated, the parties to the construction contract

are no longer obliged to perform their obligations under the contract.

Thus, the clause allowing either or both the parties to rescind/terminate a construction
contract should be considered prior to signing the agreement. In the legal world, this
clause is known as the Termination of the contract

Top Reasons to Terminate a Contract- by client

Without prejudice to any other rights and remedies which the Employer may possess, if
the Contractor shall make default in any one or more of the following respects, that is to
say,

i. When the contractor without reasonable cause wholly suspends the carrying out
of the Works before completion thereof, for a period exceeding fourteen days,
or
ii. Contractor fails to proceed regularly and diligently with the Works, or
iii. When contractor fails to commence the Works within thirty days of the date for
commencement.
iv. If contractor refuses or persistently neglects to comply with a written notice from
the Architect requiring him to remove defective work or improper materials or
goods, and by such refusal or neglect the Works are materially affected.
v. If the event that the contractor sublets the whole works without a written consent
from the Employer and the Architect.
vi. If despite previous notices from the Architect in writing the contractor persistently
or flagrantly neglects to comply with any of his obligations under the contract.
vii. In the event of the Contractor becomes bankrupt or declared bankrupt.

Then the Architect may give to the Contractor a notice by registered post or recorded
delivery specifying the default, and if the Contractor either shall continue such default
for fourteen days after receipt of such notice or shall at any time thereafter repeat such
default then the Employer may within fourteen days after such continuance or
repetition by notice by registered post or recorded delivery, forthwith terminate the
contract, provided that such notice shall not be given unreasonably or vexatiously.

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Termination by Contractor

i. Without prejudice to any other rights and remedies which the Contractor may
possess, if:
The Contractor does not receive a payment certificate which he applied for in
accordance with clause 34.1 of these conditions within fourteen-days of the
application and the default continues for sixty days after expiry of the stated
period, or

ii. When the Employer does not pay to the Contractor the amount due on any
certificate within the period for honoring certificates as stated in the contract
and continues such default for a further duration (sixty days-JBC contract) after
expiry of that period as may be stipulated in their contract.

iii. When Employer interferes with or obstructs the issue of any certificate due under
this contract, and continues such act for sixty days after a notice of default has
been issued by the Contractor, or
iv. Delay in receiving possession of or access to the site,

When terminating contracting agreement, it is always best to seek professional and

legal advice on the issues being faced, and what the next steps are. If a contract
agreement is not properly terminated, this could lead to additional lawsuits, liens, high
legal fees and costs endless amounts of time. Consulting with Professional and legal
representation is the safest way to express concerns to come up with an action plan.
Unless Client and contractor have the same concerns and have mutually expressed in
no longer working with each other, taking the steps to individually terminate the
agreement would not be in best judgment.

Thus, should party to contract have a specific contract concern, it is advisable and
encouraged to seek and obtain qualified professional/legal feedback on specific
contractor terms and agreements, as they apply to specific situations. And anytime
either party is terminating a contract, it must do so in accordance to the terms and
conditions, or it may unintendedly terminate contractor wrongfully.

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EFFECT OF TERMINATION

Termination of Obligations. Subject to the parties' payment obligations, on the

expiration or termination of this agreement, each party's rights and obligations under
this agreement will cease immediately.

Payment Obligations. On the expiration or termination of this agreement, each party

will

• Pay any amounts it owes to the other party, including payment obligations for
services already rendered, work already performed, goods already delivered, or
expenses already incurred, and
• Refund any payments received but not yet earned, including payments for
services not rendered, work not performed, or goods not delivered, expenses
forwarded.

2.1. DISPUTES IN CONSTRUCTION CONTRACTS

Construction disputes are disagreements between the parties to a construction

contract, or

Disagreement between the parties to construction contract that cannot be resolved by

on-site project managers

Causes of Construction disputes

i. Contract errors or omissions
The biggest reason for construction disputes is one that can be perhaps most easily
avoided. A thoroughly vetted contract that is fully agreed upon by all parties can save
a huge headache down the line
ii. Differing site conditions
While a construction bid is based on the assumption that site conditions are reflected
within the initial package, this is often not the case. Subsurface condition differences
and other unexpected changes can be a large cause for constriction disagreements.
iii. Noncompliance of contractual obligations
While a well-worded contract can be a difference maker, it’s sometimes not enough. If
a contractor, sub-contractor, employer or any other party fails to comply with their
obligations, the other parties involved will generally try to seek recourse.

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 iv. Failing to correctly administer the contract
Again, a contract issue is at the heart of the disagreement, underscoring the
importance of drafting a strong, agreed upon and respected contract.
v. Claims errors

Whether a claim is poorly drafted or even unsubstantiated can make a big difference.
Attorneys often define claims in contracts for this very reason.

DISPUTE RESOLUTION MECHANISM

A dispute mechanism is a structured process that addresses disputes or grievances that

arise between two or more parties engaged in business, legal, or societal relationships

Alternative Dispute Resolution

ADR - Alternative dispute resolution (ADR) refers to the different ways parties in a
contract can resolve disputes without a trial. Common ADR processes include
mediation, arbitration, and neutral evaluation.

Alternative Dispute Resolution (ADR) Procedures

Alternative Dispute Resolution (ADR) is any procedure or combination of procedures

entered into voluntarily by the parties to a dispute or disagreement. ADR can also be
described as Appropriate Dispute Resolution.

Alternative Dispute Resolution (ADR) methods

Negotiation – this is the method wherein the parties to the dispute themselves would
settle their disputes. The negotiation process provides the parties an opportunity to
exchange ideas, identify the irritant points of differences, find a solution, and get a
commitment from each other to reach an agreement.

Mediation- involves the amicable settlement of disputes between the parties with the
help of a mediator. The task of the mediator is to bring the parties together to the
process of amicable settlement of their disputes. A mediator would influence the
parties to cut down their demands with a view to reaching a mutually acceptable
solution. Hence, the mediator plays the role of a facilitator in attaining cooperation
between the parties to the dispute. Mediation lays emphasis on the parties’ own
responsibilities for making decisions that affect their lives instead of a third party judging
the fate of parties to the dispute.

Conciliation - is a private, informal process in which a neutral third person helps

disputing parties to reach an agreement. It is a process whereby the parties, together
with the assistance of the neutral third person or persons, systematically isolate the issues
involved in the dispute, develop options, consider alternatives and reach a consensual

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settlement that will accommodate their needs. Usually, the conciliator in this process
would independently investigate the dispute and draft his report indicating the method
of settlement of disputes.

Arbitration- is a process for settlement of disputes fairly and equitably through a person
or persons or an institutional body without recourse to litigation by the disputing parties
pursuant to an agreement. It may be ad-hoc, contractual, institutional, or statutory. A
neutral third person chosen by the parties to the dispute settles the disputes between
the parties in arbitration. Though it resembles the courtroom-based settlement, it
involves less procedure and parties’ choice of arbitrator. It exists with the established
less cumbersome process and it is quite useful in resolving different kinds of disputes
including international commercial disputes. At present, arbitration is the only legally
binding and enforceable alternative to ordinary court proceedings.

Litigation – the formal process whereby claims are taken through the civil courts and
conducted in public. The judgments are binding on parties subject to rights of appeal.

Construction Arbitration Process

The parties must first opt into the use of Arbitration in construction; a written clause is
required in the construction contract, with the agreement stipulating the procedure to
be adopted.

An arbitration clause in a construction contract can take many forms, from a simplistic
declaration that the parties agree to refer any dispute arising between them to
arbitration, to a more detailed agreement containing not only the consensus of the
parties to arbitrate disputes, but also outlining the governing law

Process as follows

i. Initiating the Arbitration

One party makes the request for a construction dispute to be referred to Arbitration.

ii. Appointing an Arbitrator

Once a construction dispute has been referred to Arbitration and the process initiated,
the parties must agree on the procedures to be adopted, deciding whether a single
Arbitrator or a panel of Arbitrators is to be appointed. This will depend on the type of
dispute to be resolved.

There are several ways to appoint an Arbitrator, either directly by the disputing party, a
combination of the parties, or through an external party, for example ADR specialists.

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 iii. Preliminary Meeting

Once the Arbitrator has been appointed, a preliminary meeting will take place
between the parties, giving the Arbitrator the opportunity to issue instructions on how
the Arbitration is to be conducted, stating the timescale, pleadings and the
appointment of Experts.

iv. Hearing

Each party submits all relevant documents and once the Arbitrator has studied the
evidence, an Award will be made. Hearings can often be document only, although
complicated cases may require an oral hearing.

v. Arbitration Award

The award is usually in writing, signed by the Arbitrator, unless the parties have agreed a
different form that the award should take. Reasons for the award will be included, and
the ‘seat’ defined. The ‘seat’ is confirmation of the place the award was made,
regardless of where it was signed, dispatched, or delivered to any of the parties.

The Arbitrator’s decision is final, and the award is legally binding.

Advantages of construction arbitration?

Arbitrators have technical expertise - Since disputes in the construction industry involve
technical matters, the arbitrator(s) with the requisite technical knowledge can settle
disputes as efficiently and equitably as possible.

Parties choose the arbitrators - Since the parties are given the opportunity to choose
the arbitrator(s), they can designate those whom they deem to be qualified to conduct
the proceedings.

Parties choose the terms of reference- Parties to a contract may specify the scope or
nature of the dispute. They can choose from either broad or limited arbitration and
stipulate the terms under which proceedings shall be conducted.

Proceedings are simple, faster and less expensive - Disputes can be resolved through
arbitration much faster, simpler and less expensive than it would take if the parties’
resort to court action. Being contractual in nature, arbitration permits the parties to
specify the time and place for hearings. No special form is required in presenting a
demand for arbitration or in responding thereto.

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Proceedings are confidential - Arbitration is held in private; Pleadings are confidential
except to the parties themselves. Awards are unpublished.

Arbitrator's decision is binding - The arbitrator or arbitral tribunal is vested with the
authority to decide, and such decision is binding on the parties. No appeal may be
made from an award or a decision handed down by the arbitrator except on questions
of law which are appealable to the high Court.

A single forum may be convened for all parties- One attractive feature of arbitration is
the possibility of bringing together in one proceeding all the parties that may be
involved.

Choice of counsel is not limited to lawyers- License to practice law is not required for
counsel to appear before an arbitrator or arbitral tribunal. The parties, consequently,
are not limited in the range of choice of who should represent them in arbitration.

Work on a contract may continue as arbitration proceeds- Since some construction

projects cover large expenses and employ many people, it is often important to add in
the contract a provision that work shall continue while arbitration proceeds. Such
stipulation may not be effective when the parties’ resort to regular court hearings.

Arbitration preserves friendly relations - Arbitration proceedings are less formal, less
adversarial and speedier than court proceedings, thus helping to preserve a friendly
relationship between disputants.

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