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1.1 In the past the rights and obligations of the owners and contractors involved in construction contract used to be verbally agreed. However, with increased pace of development the scope of construction contracts/projects during the past few decades has vastly expanded and become complex in terms of size, scope, complexity, cost and completion periods. In addition there are the many regulatory requirements that need to be complied with. Also the implementation could adversely affect third parties. Thus it became imperative that the rights and obligations of all parties be documented. These documents are collectively called the Contract Documents. This article refers to documents that would form part of the Contract Documents Proper [‘CD’].

2.1 The objective of preparing the Check Lists is to ensure that important aspects are not overlooked and that the individual contents are relevant to the scope of works from the Inception of a Contract to its Post-Completion Stage. The explanatory notes of the individual contents further highlight and assist in prevention of any financial and legal implications that could be costly. It can also assist in identifying fraudulent opportunities and possibilities that can be prevented or mitigated with appropriate remedial actions promptly.

3.1 The ‘CD’ is normally prepared and compiled by the party initiating the contract [‘Owner’]. The representative of the ‘Owner’ [‘Management’] should identify and list the necessary requirements of the works that are contracted and are to be included in the ‘CD’. These should be double checked to ensure relevancy, comprehensiveness and accuracy. The person responsible should provide his/her name, position and dates of such checking to ensure accountability and instill a sense of responsibility in the person involved in checking and double-checking processes. The documents should be issued when due and in the event of any delays in their compilation, checking or dispatch, appropriate remedial action can be taken promptly and the person responsible can be identified.

3.2 It is important that Owners scrutinize the contents of the Check Lists to ensure that they are compatible with their in-house policies, procedures and practices. These should be reviewed and where appropriate revised periodically together with the internal controls for optimum effectiveness.

3.3 ‘CD’ will also provide assurance that the documents [listed in the Check Lists] are forwarded to prospective contractors as scheduled. This is vital as prospective contractors must be aware of their obligations and responsibilities and possess all the information that would be necessary for them to be able to provide a reasonably priced bids for the works to be constructed and a level playing field. This will ensure that the works are constructed at the best possible price and thus contribute to effective management of the contract.

4.1 It is agreed that the ‘Owner’ defines the scope of works and the terms and conditions of the contract. Nevertheless the ‘Contractor’ should scrutinize the scope of the works to be constructed and terms and conditions as prescribed by the ‘Owner’. The objective of the scrutiny should be to ensure that the contractor is fully aware of his obligations, the financial and legal implications of the scope of works for which he bidding. Enquiries/clarifications should be sought from the ‘Owner’ and also from his own team of professionals before pricing and finalizing the bid for submission and if successful, acceptance of the Letter of Award and subsequently signing the Formal Contract Document.

[k] Correspondence pertaining to the Clarifications sought and Responses provided

All documents that form part of the ‘CD’ should be numbered, indexed and initialed including any amendments, in a manner that will ensure that they cannot be tampered or replaced.

5.2 The minimum number of copies of the ‘CD’ should be five of which three copies should be stamped. The stamped copies are for distribution to the ‘Owner’, the ‘Contractor’ and one spare whereas the other two copies are for distribution to the person who is overall in charge of the implementation of the contract and one copy for library as spare. However, the actual number of copies will depend on the number of parties involved in any contract. The ‘CD’ may be bound in one volume where the contract is a simple one with few pages but should be in several volumes for a mega project. One copy should always be in loose form to enable its duplication for distribution to the various parties within the ‘Owner’s organization and similarly within the contractor’s organization who may not need the full set of ‘CD’ and thus can be provided with the relevant sections. As an example the engineer in charge of specific sections would need only the drawings, bill of quantities and specification of that relevant section and the internal auditor would need copies of the Terms & Conditions and Bills of Quantities for periodical audit as the other documents can be sighted as and when necessary with copies being made of specific pages.

6.1 The primary users of ‘CD’ should be all the professionals involved in the planning, implementation and monitoring of the construction contracts. Others who are indirectly involved and should use these Check Lists would include the finance/accounting professionals and the auditors.

[Including Superintending Officer, appointed Professionals and Site Supervisors]

6.2 The objective of the [‘CD’] is to define in writing the rights, responsibilities and obligations of all the parties in any construction contract and to ensure that the contracts are legally binding and enforceable. Thus it is the responsibility of the Management of all relevant parties to ensure that the requirements of the ‘CD’ are practical and enforceable during the construction of the works.

6.3 Sections of the ‘CD’ may also be provided to other non-technical professionals. It is their responsibility to ensure that the terms and conditions with financial, legal and safety implications are complied and enforced. The financial implications, where applicable, are properly computed to ensure correctness to avoid over/under computations/payment/receipt of claims or penalties from any source including regulatory authorities.

7.1 The original copies of the ‘CD’ must be kept and retained in safe custody until such time their need may exist. This period can be up to the expiry of Defects Liability [or Guarantees] Period after completion and hand over of the works or until settlement of litigation if any. It may be noted that the outcome of many disputes between Owners/Contractors have been decided on the availability, comprehensive and accuracy of relevant documents instead of only on legal arguments. The aspect of safe custody and duration, should also apply to other documents relevant to the contract.

8.1 It is emphasized that there are many opportunities for fraudulent practices in the contents and compilation of ‘CD’. Thus it is important that great care is taken in the early stages to ensure that the possibility of such situations is avoided. The time spent in the early stages on the contents and compilation of the ‘CD’ should contribute to the Effective Management of Contracts.

8.2 It has been observed during the audit of some construction contracts that some professionals tend to equate quality with quantity and include documents that may not be relevant to the scope of works. Further they are very confident that the Management of Owners/Contractors will not read or be able to understand the purpose of the proposed documents. This situation continues due to several factors such as blind trust and confidence in the professionals assigned to prepare and compile the ‘CD’ and further absence of interest, lack of self confidence in the ability to vet the contents of these documents and/or unwilling to ask any questions or seek any clarifications. Thus the defective ‘CD’ continues to exist and the defects surface only some years later if there are problems that result in disputes that have to be referred for arbitration and/or subject to legal process. However by then it is too late due to possible changes in management of the relevant parties and the professionals involved and the inadequacy of the ‘CD’..

8.3 The contents of every Check List should be compiled and complied with intelligently and not blindly. It is important that the contents and their function be reviewed regularly and also for all stages including after completion of the contracted works. They should then be revised as appropriate for future contracts. This will ensure that the Check Lists continues to retain its usefulness.

8.4 It is further emphasized again that these Check Lists should be used as a guide only. Users should make necessary amendments to ensure compatibility with the scope of works and the type of contract.

Check Lists are important internal Controls.

Maintenance responsibility rests with the assigned department.

Auditors should ensure that they are maintained and comprehensives for Effective Audits

Note: It is important that Companies involved in the Construction Industry be aware of the various contract documents that would assist in the effective management of the contracts from the inception stage to the stage when the works are completed and used for their intended purpose. The documents relevant to the various aspects would vary but they may be summarized under the following headings:

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