In this article, Andy Hewitt considers what happens when project processes and documents are in conflict with the contract. Read on to discover when to use standard forms and processes and when they can create problems.

Many projects have procedures for administration and management purposes. These are often introduced by the project participants and can include standard forms and/or document templates. Contractors often have company-wide procedures so that staff moving from project to project will always find that things are done the same way. This standardisation is a great idea because the procedures can be improved upon over time. Users become familiar with them, and all this leads to familiarity and increases in efficiency.

It is vitally important to ensure that whatever procedures you use on the project, are compatible with the conditions of contract. If this is not done, the results could be serious. I will give a couple of examples.

Example 1 – Requests for Information

The contractor’s procedures include a form for Requests for Information (RFI) from the engineer. The procedures include an RFI log in which the details of the RFIs are recorded along with the issue and response dates.

The contractor issues an RFI on an important matter which is required urgently to avoid delay. The engineer responds after a considerable period and the contractor is delayed. The delay affects the time for completion.

The contractor submits a claim for an extension of time and the payment of prolongation costs.

The contract provides that if the contractor requires any information from the engineer, they must give notice to the engineer. This notice must state the information required, when by (which must be a reasonable period) and the consequences if the information is provided late. The contract also says that notices should be specifically identified as notices, citing the clause under which they are issued.

We can see here that if you don’t identify the RFI as a notice and include the information stipulated in the contract, it will not be regarded as a notice. The claim may be rejected on the grounds that the engineer was not given formal notices of the matter.

There may be grounds to contest a rejection of the claim in dispute proceedings. However, had the project procedure been changed to ensure that RFIs were issued by way of a notice, a dispute could have been avoided.

Example 2 – Non-Conformance Report

The engineer has a number of forms and documents that they use to administer projects. These have developed over several years and include a Non-Conformance Report (NCR). This advises the contractor that something has been carried out or executed not in accordance with the contract. The NCR contains standard wording that instructs the contractor to remedy the matter.

The contract provides that if the engineer discovers something that is not in accordance with the contract, they are obliged to issue a ‘Notice to Correct’ to the contractor. This should state the details of the non-compliance and a time-scale for the matter to be remedied. If the contractor fails to remedy the matter the employer may arrange for the matter to be remedied by others at the cost of the contractor.

We can see here that the term ‘Non-Conformance Report’ does not exist in the contract. Consequently, the issue of such a document has no contractual merit. Whilst the contractor may be obliged to act on the instructions of the engineer, the issue of an NCR instead of a Notice to Correct would negate the employer’s rights to use others to remedy the non-conformance and to claim the costs from the contractor.

The solution to avoid such a conflict is simple. The engineer must change their Non-Conformance Report to a Notice to Correct. If the Notice to Correct contains a reference to the clause under which it is issued, then that would be even better.

In Conclusion

The use of project procedures is to be encouraged. But, such procedures must be reviewed at the very beginning of the project by a someone suitably qualified to do so. You must ensure that all parts of the procedures are in compliance with the contract and if not, the procedures must be revised accordingly.

If you are looking for practical advice on drafting documents to avoid these issues, you can read this article we wrote on the subject. Or, our Effective Contract Administration E-Course might be helpful.