Question #6 (Private):
We are the Developer; we have engaged a well-known Architectural Firm to design our 30 Storey Commercial Building with 4 Storey Basement Car-park. How can we review and check his design so that we can optimize the entire design and construction in-order to minimize cost?
From what you have described, we presume that presently your project is still in the planning stage, where you have many opportunities to review and change the various design and construction items within the limited time you have before you finalize them for tender and construction.
It is common these days, a developer would engaged an experienced In-house Consultant / an In-house Team to help to study the various design aspects so as to ensure that you could have an optimal design with the incorporation of all your needs, and assist you in Project Management work which includes ensuring a most suitable Main Contractor is selected, and continue to lead the entire construction team and your external Consultants in the execution of the work according to design, so that you could complete in time and avoid unnecessary delays, which is equivalent to cost savings and avoiding financial loss. We have served Employers / Developers in such work; however we are unable to give you their names as we are engaged by them to check on their external Consultants’ and Main Contractor’s work, and their various submissions as in-house Consultants, which they want to remain anonymous.
Project Design and Construction Optimization
Basically, you need to know that in Project Design and Construction Optimization, cost savings could only be achieved with the proper integration of Good Architectural Design, with Civil & Structural (hereinafter referred to “C&S”) Design, and Mechanical & Electrical (hereinafter referred to “M&E”) Designs. This means that during Architectural design in the planning stage, you need to understand the implication of each Architectural provision as it would definitely affect the costs of various C&S and M&E items. You would only be able to achieve Design and Construction Optimization when you are able to reduce the C&S, M&E & other installation costs with your optimal Architectural Design, that’s how we achieve cost savings.
With your 30 Storey Commercial Building consisting of 4-Storey Basement, we would assume that the project cost could be in the range of $300-500 million, depending on the Architectural Finishes to be installed and other M&E variables, probably with “Design & Construction Optimization” (hereinafter referred to as “D&C Optimization”). The reality is, if you are able to achieve “D&C Optimization”, you could even save up to around $50 million as what we have helped Employer and Developer Clients in our previous projects – that’s how an optimal Architectural Design could be achieved, taking into consideration the various inputs of an experienced Professional Engineer who has a good C&S background, with proper understanding of Architectural, M&E works, Interior Design (hereinafter referred to “ID”) and Landscaping works.
What we have done in our past projects with our Developer / Employer Clients are: We have helped them to decide on the Architectural changes to be made on the design of the Architect, so that that we could minimize the C&S, M&E, ID and Landscaping costs (hereinafter referred to “the various costs”), in order to achieve an economical design to minimize construction cost.
Obviously, every change that is proposed by your Professional Engineer to be made on the Architectural Design for D&C Optimization should not compromise on the aesthetic aspect of the Building. It should as far as possible adhere to the Architectural Design Theme. We firmly believe that every building that is constructed needs to blend well with the surrounding environment, and it should make people feel elated, refreshing and peaceful / happy when you look at it and when you are in it, that’s how you attract your potential customers.
With the above mentioned in mind, you proceed with the various steps in D&C Optimization. As experienced Professional Engineer (hereinafter referred to as “PE”), I have helped our clients to ensure that the Architectural Design of the Building satisfy the basic stability requirements easily, and not by any other “complicated ways” which would definitely jacked up the construction cost. These includes the positioning of the Stair-Cores and Lift-Cores, lift pits and possibly ejector pits and others, deciding on the structural layout of each storey, deciding on the most suitable and efficient Foundation System, Retaining Wall System, deciding on the structural load paths, the supporting systems, anticipating the method of construction to ensure that the most cost effective and efficient temporary works could be used etc… and propose to the Employer the various construction materials to be used according to the Design Intentions, and ensuring their durability and ability to serve their intended purposes, etc. etc... A good PE would also advise you on what kind of structural elements to be used for any particular element, I always believe in proper “mix & match” to achieve a most cost effective, efficient and safe design, such as combining Reinforced Concrete Design with possible Prestressed Combination, Steel Structures etc. to achieve the Architectural Design look, or using wooden structures, Aluminium and other materials for other elements. I would always produce a cost effective and safe C&S schematic design so that the Employer’s External Consultants could proceed further with all the detailed calculations and drawings. If you engaged a good C&S PE with good Architectural, M&E, ID and Landscaping knowledge, he /she would be able to do the same for you.
Project Management and Construction Contracts
In addition, the In-house Consultant / In-house Team that you engage need to have a good understanding of Project Management, Contracts and Construction Law. The reality is: Many times, the project cost is jacked up because the Main Contract is “incomplete”. This would invite the Contractor you eventually engage to start claiming for additional cost due to Additional Items that he needs to complete, these we called “Variations”. The unwelcoming fact for Employer /Developer is that the Law would look favorably on the Contractor’s Claim if you have instructed him to do any work which is not within the Main Contract concluded earlier by both parties.
Well, the fact is any layman would never know if the Contract is really “incomplete” until it is being tested when the project starts and the Contractor proceeds with his Claim for completed works. A cautious Employer would normally engage a Competent Construction Contracts & Claims Consultant well verse with Engineering & Construction Law to work on the Contract or to have him / her review the final draft of the Contract produced by his External Consultants, to ensure that all the missing terms and conditions are carefully inserted to protect his own rights and financial interest.
What is a good Construction Contract?
A good Construction Contract has the following basic characteristics:
a) It is one which incorporates all the construction items, to allow the tenderers to provide proper costing for your review, consideration and eventual decision &
b) It should have proper construction of the Contract Clauses which help to protect all your needs, your rights & financial interest.
Everyone knows that every Construction Contract concluded in Singapore is written in English. However, do you know that it is a well-known misconception by many “to assume that the English language that is used in the Construction Contract is the same as what we use every day in work”? If you think so similarly, then it would be a big mistake, and this mistake could cost you possible financial loss. We are telling you now to give you a gentle reminder, so that you would not lose your money for nothing.
The English Language that is used in a good Construction Contract is always drafted according to proper legal language which normally has a meaning for each word used. That meaning may not be that same meaning that you find in the English Dictionary.
The construction of each contractual clause normally comes with a meaning and it would be advisable for you to engage a competent Contracts and Claims Consultant in the Construction Industry, who is experienced in engineering and law to help you on the drafting of the Construction Contract, which we have done it for Developers and Employers. We always draft it to cater for the contractual requirements that would protect the Client’s interest, based on the specific characteristics the Project. Clearly, this is not a layman’s work; it should be done by someone who has undergone proper legal training in the University, with long experience in the Construction Industry and have good understanding of the exact operations of Construction Projects.
Well, the aforesaid is definitely a non-exhaustive answer to your various queries, there are many other contractual considerations in addition to the aforesaid which I will not discuss further in order not to confuse you.
When should the Contract be given to the Contractor?
All the Contract Clauses and Provisions, Specifications and Drawings concerning the Project Work should be completed before you call for Tender. Your Tenderers would then submit their offers and the moment you have appointed one of them as the Contractor to proceed with the work, the Contract is then concluded based on what you have stated in all your tender documents and his pricing breakdown with possible qualifications etc..
It is common for Employer / Developer to proceed to issue your Contractor with the “Contract Document” with possibly having other Terms, Conditions and Specifications inserted. But a careful Contractor may refuse to sign on such a Contract Document if he considers them too draconian. If you want to remove him after he refuses consent, the law protects him and he could proceed to claim for work-done, mobilization cost, and possibly “loss of profits” based on Common Law Precedents outside the ambit of your earlier contractual agreements with him.
Thus, dear Employer / Developer, be very careful!
What is good Project Management?
Obviously, good Project Management as an Employer / a Developer would mean to complete the project on time with no unexpected cost.
The reality is: There is “No Possibility of Good Project Management” if the Construction Contract has been drafted badly.
The effects of badly drafted Contract are obvious: one would invite the Contractor to claim for work-done outside the ambit of the Contract concluded by both parties earlier as discussed. As such, no matter how hard you try, there is no way to evade the cost if you want him to construct that particular item outside the contract provisions, as he would be protected by Law if he has done that additional work. Now with the implementation of the Security of Payment Act 2004, the Employer / Developer would need to explain in the Payment Response to be issued to the Contractor why he is not paid for the amount claimed for each item. The law now protects him so that he would be paid equitably for work done.
There are also other complex considerations which I would not elaborate here.
In addition to the above mentioned it would be advisable for a Developer / Employer to engage a good and experienced PE for this work, as we normally help our Clients to check on the C&S Consultants’ calculations and drawings to ensure that they tally with the Architectural Drawings which have been issued for construction. Every Employer / Developer would obviously bear the liabilities of his External Consultants, the moment the Contractor’s work is delayed due to any delay of the Employer’s Consultants, he would be entitled to claim for “Extension of Time” and also “Loss & Expense” subjected to the provisions of your Contract with him, obviously these would also jack up the project cost to the detriment of the Employer / Developer.
Well, besides what was being mentioned above, it is common that the Contractors could make mistakes in their work and your PE who is experienced should be able to help, in order to minimize possible project delays.
Based on the aforesaid, you understand that to proceed with a Construction Project is definitely a complex process and the aforesaid is just a small portion of it, you need to have competent Professionals who are good technically, contractually and also legally to help you, so that you could complete the project on time and to save cost. Thus we wish you all the best.
Er. Goh Cheow Leng Maria
First drafted on 10 September 2008.