Construction Contracts (WASH & otherwise)
We are looking at standardising our construction contracts for work (WASH and otherwise) that we undertake across Sub-Saharan Africa, the Middle East and Asia. I would be interested to know from other NGO engineers/construction experts the type of contracts that you use. Would you use your own standardised organisational contract? Or do you see more standard contracts in use, such as FIDIC, NEC, etc.? Or maybe a mixture of both? I'm aware that the Multilateral Banks tend to use their own standardised FIDIC contracts, but I'm interested from a smaller NGO perspective on what exactly is done?
Hi John, Save the Children has developed a Construction contract template that uses FIDIC short form as basis for the main bulk of the content. We also have strict code of conduct for child safeguarding and other as annexes. Admittedly your question was for small NGO - but sharing in case it useful.
We have experienced trouble with 1. translations 2. governing law (eg Ethiopia) 3. insurance (apparently not standard in all countries) 4. lack of understanding of contract clauses. 5. updating to include the new data protection law
Prior to this, country offices were using localised standard templates, either government mandated or locally drafted. There were inconsistencies in these versions which left us open to poor contractor performance.
The process of developing the Construction Contract Template took a long time with lots of consultation with legal team and we have already had to revise it twice. This raises challenges with version control.
Hi John, I suggest it depends on the nature and value of the work, location, local custom, and your experience with the available contractors. In general it is much more important to have a contract which is properly understood by the contractor and which they are likely to observe, than one which is legally comprehensive and watertight. In general an NGO is unlikely to resort to legal action so apparently tight conditions are likely to be meaningless. So I believe a concise, plain language, simple contract is the most effective with the work well defined in scope, time and quality, milestone payments, and the basic ‘what ifs’ covered - e.g. changes to the work, delays, unforeseen events etc. The important thing is to choose a contractor you believe can get the job done, and you trust to do so, then talk through the contract with the contractor in detail before signing, with practical illustrations of the various sections so that they and you fully understand what is being agreed and believe you can both do your part. Frankly, without capability and commitment, you’re not going to get what you want whatever the contract says. As a reference I believe NEC is the best for ideas. Good luck!
Hi John, There is always standard contract format for each organization but construction is a field where its change as per the situation. In construction more labour involves so some times more focus on safety security and insurance. We have done WaSH and Shelter program in Asian countries where we have hired small contractor and involved beneficiary (community) to sign contractor's work completion certificate and signed payment voucher. Further we have to prepare separate contract format who covers national government policy and organization requirement.
Your request is 100% in line with some donors perpective to use harmonized form of contract in the WASH sector accross the humanitarian response. This is why the International Humanitarian Infrastructure Platform have been created a year ago with special support from the Global Wash Cluster.
More info at www.ihip.earth
IHIP is proposing to build on the FIDIC forms of contract and propose dedicated particular conditions for the WASH sector.
Maybe it would be the right moment to join forces and share our existing views.
I’m a big fan of the NEC. It is well designed and the flow charts make it easy to understand visually. It is also a fundamentally collaborative contract - I used it several times when it was being developed. Having each key issue on stated once avoids conflict and confusion (e.g. “start date” is only given in one place then every reference refers back to this). It is important to have users rather than just lawyers involved from the start - the contract can be a great tool if used correctly. Here’s something I wrote a while ago about a three page long contract developed in Uganda. It was based on a very reduced NEC pattern.
There is an “NEC community” who may be able to give guidance - the ICE should have contacts.
I’d start with countries with similar legal systems- e.g. Commonwealth rather than trying to work across different systems.
Whilst the contract is an important tool, those people using it need to understand it - both client and contractor. Training is needed as often contracts are seen as negative rather than a liberating tool if used properly!
There are lots of different ways to pay for progress, e.g. a bill of quantities, milestones, turnkey based on performance targets- they all have strengths and weaknesses.
A good specification is needed in parallel, setting out appropriate standards etc. This can be a problem as it needs to be detailed but not onerous or impossible to meet. Too long can be as bad as too short.
Hope that helps!
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