A large number of construction disputes occur in construction projects. On the one hand, it is due to the lack of integrity of the construction party (the so-called Party A). Most of them are due to the lack of risk prevention awareness of construction companies as contractors. This article elaborates on the risks of project negotiation, project construction contract review, project contract performance, project data collection, project payment settlement and collection, etc. in the project management of construction companies one by one, specifies risk prevention countermeasures, and explains it through cases. .
The construction market implements futures trading in which prices are set first and then transactions are completed. Construction projects have characteristics such as large scale, long construction period, large consumption of materials and equipment, fixed products, high mobility of construction production, and large impact from natural and social environmental factors. These characteristics determine the high risks of the construction industry. At present, the construction market is in a buyer's market. Contractors are a disadvantaged group compared with contract developers and bear too many risks, which has seriously restricted the development of construction enterprises. Therefore, preventing and controlling risks in construction contracts as effectively as possible is a difficult problem faced by every construction company. Based on the current status of construction disputes and combined with the actual case handling, the author communicates and shares with colleagues his experience and insights on the risks that may arise in the undertaking and management of projects by construction companies and how to avoid and prevent risks.
1. Risk prevention during project negotiation
Risk reminder: During project negotiation, there are mainly contract fraud, contract fraud, whether the project exists, whether the contractor is suitable, and project funds. Whether it is in place and the creditworthiness of the contractor are other risks.
Preventive measures: Through legal investigation, gain an in-depth understanding of the contractor’s credit standing, operating conditions and the corresponding conditions for entering into a contract. The main contents to understand include the construction drawings designed by the competent department, whether there are project approval documents from the planning department, land, planning, and construction permit procedures, whether the demolition materials to be demolished are in place, whether the preliminary work of the "three connections and one leveling" and other projects are in place, and the creditworthiness of the contractor situation, especially the rate of receipt of special funds for the project (especially the credit standing of the project company), and if it is a development unit, it should understand its main performance. For projects that require bidding, before bidding, the bidding documents should be thoroughly studied and comprehensively analyzed, the bidding documents should be correctly understood, the bidder's intentions and requirements should be thoroughly understood, the instructions to bidders should be comprehensively analyzed, the site should be surveyed in detail, the drawings should be reviewed, and the project quantities should be reviewed. Analyze important terms of the proposed construction contract and formulate bidding strategies to reduce risks after the contract is signed.
Case description: A refractory brick manufacturer in Datong, Shanxi Province wants to outsource the installation project of a refractory brick production line with a daily output of 10,000 bricks to an installation company. In the project construction contract to be signed, the payment terms, project cost and other contract terms are simply formulated. The entire contract contains only two A4 pieces of paper. To be on the safe side, the installation company hired a lawyer to conduct a preliminary financial investigation on the company in Datong, Shanxi. After investigation, it was found that the registered capital of the company was only 500,000 yuan, and the factory was leased, so it had no ability to perform the contract. This investigation effectively avoids the installation company's legal risks of wasting a lot of manpower and material resources due to hasty signing of contracts.
2. Risks and prevention of lax review of contract terms when signing a contract
Risk reminder: Contractors often use their favorable competitive position to design some contracts during the drafting and formulation process Traps or hidden important terms transfer risks to the contractor. The main reasons include: the contract is unilaterally binding, unbalanced liability and rights clauses, unreasonable construction period clauses, the proportion of project advance payment is too low, the project final account clauses are imperfect, and the payment period and conditions of the project payment are unclear. The contract It lacks clauses on liability for breach of contract such as delays in payment and project delays caused by the developer, lacks and imperfect guarantee, claim, insurance and other clauses for transferring risks, and lacks compensation clauses for construction delays or economic losses caused by third parties. There is a lack of restrictive clauses on the inefficiency of the contractor's representatives or supervision engineers at the construction site or the issuance of wrong instructions. Once such a contract is signed, there will be a large number of hidden risks, which will eventually lead to huge losses for the company.
Prevention measures: Both parties should try their best to adopt the model text of construction project construction contracts formulated by the former Ministry of Construction and the State Administration for Industry and Commerce. (GF-1999-0201), based on the general terms in the model text, combined with the agreement and special terms, negotiate with the contractor item by item. If the contract developer provides a valid or non-standard sample text, it must be carefully reviewed. It is best to involve personnel who understand engineering technology, law, operations, management, cost, finance, etc. during contract negotiations. Certain exemption clauses, harsh terms and unreasonable terms from the contractor cannot be blindly accepted.
Case description: Cement Factory A and Installation Company B signed an installation contract for a cement production line with an annual output of 150,000 tons. The construction period, project quality, safety, and project cost are all stipulated in detail in the contract. Among them, the liability for breach of contract during the construction period is stipulated as follows: if the construction period is delayed by one day, a fine of 5,000 yuan will be imposed. The liability for breach of contract on project quality and safety is stipulated as liquidated damages to be paid to Party A in the event of breach of contract, which shall not exceed 50% of the total contract cost. There is no agreement on Party A's liability for delayed payment and breach of contract due to delay in construction period caused by Party A. Before signing the contract, Installation Company B entrusted a lawyer to review the contract. After reviewing the contract item by item, the lawyer concluded that the liability for breach of contract with a fine of 5,000 yuan for one day overdue if the project is delayed is relatively heavy, and the total liability for breach of contract is too high. Generally, the stipulated liquidated damages shall not exceed 30% of the total contract price. According to The principle of reciprocity in the contract must be supplemented by contract terms regarding liability for breach of contract such as delay in payment by cement plant A.
Installation Company B adopted the lawyer's opinion and actively negotiated with Cement Plant A to change the contract. In the end, the liability for breach of contract in the project contract was clearly and reciprocally agreed, so the project contract was successfully performed.
3. Risks and prevention of subcontracting, illegal subcontracting, and issuance of certificates
Risk reminder: my country's "Construction Project Quality Management Regulations" stipulates: Subcontracting refers to the construction contracted by the contracting unit The project fails to perform the responsibilities and obligations stipulated in the contract, transfers all the construction projects contracted by it to others, or dismembers the project and transfers it to other units for contracting in the name of subcontracting. Illegal subcontracting refers to the following behaviors:
1. The general contractor subcontracts the construction project to a unit that does not have the corresponding qualifications;
2. In the construction project general contract contract If there is no agreement or without the approval of the construction unit, the contractor will hand over part of the construction project contracted to other units to complete;
3. The construction general contractor will subcontract the construction of the main structure of the construction project to Other units;
4. The subcontracting unit subcontracts the construction project contracted by it.
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