Fairness in Risk Transfer for Differing Site Conditions in Road Construction
Abstract
When performing a contract, a contractor must assure the scope of work in terms of expressed terms of the contract and the implied terms represented by the bill of quantities, technical specifications, drawings, instructions to tenderers, and supplements. The scope of work and work items are involved in the construction cost and planning. While the contract explicitly states that the risk of significantly differing site conditions will be borne by the contractor, the risk has exceeded the range that can reasonably be foreseen by an average contractor with experience. As it is not included in the bill of quantities, such excess will constitute additional cost that exceeds the amount in the tender submitted by the contractor. The court ruling in such regard was based solely on the risks borne by the parties to the contract and judged that the contract is not grossly unfair and does not violate the principle of good faith. Such ruling neglects the relationship between the construction cost and planning and determination of the scope of work. This paper aims to examine the dispute in the fairness of the standard contract and the effectiveness of the risk transfer clause.
Keywords
Scope of work, Bill of quantities, Expressed terms of contract, Implied terms, Additional cost
DOI
10.12783/dteees/peem2016/5055
10.12783/dteees/peem2016/5055
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