A quick guide to the legal aspects of a construction or engineering project, useful for first-time employers or users of construction services, who have not built a project before. The note covers a number of issues, including the parties to the contract, procurement, insurance and regulation. It also sets out some of things that can go wrong with a project, like defects or delayed completion.
This is one of a series of quick guides, see Quick guides.
"Procurement" in a construction project refers to the process of the purchase of goods and services from conception to completion. It is a vital part of the overall construction process (see Practice note, Procurement: an overview of common construction procurement methods (www.practicallaw.com/9-329-1308)). Historically, the responsibility for the design of a project was split from the responsibility for its construction. Today, "design and build" contracts, where the contractor both designs and constructs the project, are also common (see Practice note, Procurement route: design and build procurement (www.practicallaw.com/6-376-3535)).
Professional institutions and trade bodies produce standard form construction contracts (see Practice note, Construction standard form contracts: what are they and where can I buy a copy? (www.practicallaw.com/3-502-2528)).
Employers often ask for changes to standard form building contracts, particularly as some standard form contracts favour one of the parties to that contract. (For example, see Standard document, Schedule of amendments to JCT Standard Building Contract, 2011 edition (www.practicallaw.com/3-507-1222).) Many employers use bespoke professional appointment contracts to appoint professional consultants. (For example, see Standard document, Professional appointment (www.practicallaw.com/5-382-5666).)
A typical construction project also uses bonds (www.practicallaw.com/0-107-6503), parent company guarantees, collateral warranties (www.practicallaw.com/1-107-5937) (or schedules of third party rights), deeds of assignment and deeds of novation. (See Key reading: Contracts.)
Precise and detailed insurance arrangements are a vital component of a construction project. Employers must understand any insurance requirements imposed on them. Often, an employer will jointly insure the construction of a building in its own name and in those of its contractors and sub-contractors. (See Practice note, Insurance in construction and engineering projects (www.practicallaw.com/3-383-2074).)
While any construction project will benefit from specialist legal advice, the cost of that advice may be disproportionate on a small project. Consider instructing a construction lawyer if you have:
If you need a specialist construction lawyer, consult one early.
Disputes on construction projects usually relate to:
Construction disputes may be referred to adjudication by either party "at any time". Adjudication is the quick fire statutory construction dispute resolution mechanism (see Quick guide, Adjudication (www.practicallaw.com/8-381-7429)). It is not compulsory to refer a dispute to adjudication, but one party cannot stop the other party from doing so. The parties cannot opt out of the statutory adjudication rules.
If adjudication does not settle the dispute, the parties may use any method of commercial dispute resolution, including arbitration (common on international construction disputes) or litigation.
Construction litigation in England and Wales takes place before the Technology and Construction Court (TCC), a specialist division of the High Court (see Practice note, Technology and Construction Court (www.practicallaw.com/0-382-9940)). The parties must comply with the Pre-Action Protocol for Construction and Engineering Disputes before they start court proceedings in a construction dispute (see Practice note, Complying with the Pre-Action Protocol for Construction and Engineering Disputes (www.practicallaw.com/6-382-4020)).
Construction disputes can be expensive because they often involve detailed factual analysis and require expert opinion to guide the court.