Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?
The main parties involved in a construction project are:
This is the party procuring the work (typically, a landowner or developer).
A main building contractor is engaged by the owner to carry out and complete the works. This contractor will usually, in turn, engage sub-contractors to carry out and complete separate parts of the works. The contractor may also take on responsibility for design (either directly or through a sub-contractor).
The engineer or architect in charge of drawing up the plans and specifications for the implementation of the development.
The usual parties are the contractor (the party who performs the work, it may do it directly or by engaging subcontractor) and the client (the party who hires the contractor and will own the construction). Professional services are usually hired directly by the client pursuant to a separate agreement. Contractors deal with employment, supply and subcontractor agreements.
The main parties involved in a construction project are:
This is the party procuring the work (typically, a land owner or land developer). In relation to building contracts, this entity is usually referred to as the employer or the principal. In relation to the contracts of appointment of the professional consultants, this party is commonly referred to as the client.
A main building contractor is engaged by the employer to carry out and complete the works. This contractor will usually, in turn, engage sub-contractors to carry out and complete separate parts of the works. Contractors may also take responsibility for the design of all or part of the works they are to execute, depending on the procurement method and contract used.
This is the term used to describe the banks and other institutions and parties (for example, government or charitable organizations in the case of urban regeneration, infrastructure and cultural/sports projects) who provide finance to the employer towards the development (and require security in return). Depending on the size of the project, there might be a single bank or a syndicate of banks.
A construction contract is generally concluded between a contractor and the client (or principal). An engineering contract is generally concluded between an engineer and the client (or principal), or the main contractor or architect.
The relationship between the principal and the engineer or contractor is in essence contractual in nature, implying that the parties are free to contractually determine each other’s rights and obligations, subject to applicable mandatory laws.
In principle, the client or principal must enable or authorize his co-contractor (being the engineer or contractor) to carry out the work. Furthermore, the principal must accept or approve the work and will be required to pay the agreed price.
The engineer or the contractor must carry out the work in accordance with:
Unless explicitly prohibited by the contract, the engineer or the contractor can work with sub-contractors. In such a situation, the engineer or contractor will bear full responsibility towards the principal for the execution of the work.
An architect will be responsible to the principal and will come under the control of the contractor during the execution of the works. The architect will also have the assistance of the principal at the point of acceptance or approval of the work.
Under Belgian law, the builder and the architect need to be completely independent of one another. Contracts that do not guarantee such independence (e.g. with the builder appointing the architect), are voided.
These types of contract are governed by the Law on Obligations and are concluded between the client (ie the developer) on one side, and the general contractor, on the other side. The general contractor is responsible to the developer.
The contractor and the employer are the two main parties to a construction contract. The contractor will be responsible for the building, especially the supervision of the work and the risks arising from it and may also hire subcontractors to assist in the fulfilment of its obligations. On the other hand, the employer, who is usually the owner of the property, consists of the person who hires the contractor's services for a fixed price, paid in instalments, or by a percentage of the cost of the works, by means of a management contract, as detailed below. A project manager is often adopted by the employer, who plans and controls the execution of the project (including the compliance with schedules and approving payments), giving instructions to the contractor and acting as an intermediate between the employer and contractor.
Depending on the type of project, and the project delivery method selected by the owner, the main parties to a construction or engineering contract include the following:
A party who owns or develops a project, engages parties to design and construct the project, and compensates those parties for their services and work.
A party engaged by the owner to design the project. An engineer is required to design and engineer specialized projects, such as public works (ie bridges, highways) or plants (ie manufacturing facilities, utilities).
A general contractor is a party engaged by the owner to construct the project. The general contractor typically hires subcontractors to perform and complete separate parts of the project. Those subcontractors, in turn, may hire sub-subcontractors to perform a portion of the part of the project for which the subcontractor is responsible.
Construction management structures are widely used in Canada. A construction management contract is entered into by the owner and construction manager and can take the form of either a construction management contract for services only, in which case the owner hires all of the trades directly; or a construction management contract for services and construction, in which case the trades are retained by the construction manager, as subcontractors.
A party engaged by the owner to design and construct the project. A design-builder takes responsibility for both the design and construction functions, either with respect to the entire project or a portion of the project. A design-builder is sometimes a joint venture made up of a contractor and design consultant.
A party typically engaged by the owner to provide design services and/or assistance regarding a particular aspect of the work. For example, an owner might hire an architect to design and administer the project; an architect might hire a specialty engineer; a contractor might hire a remediation consultant; a design-builder might hire an MEP (mechanical-electrical-plumbing) engineer. Several consultants may render professional services on a single project, each engaged by and responsible to a different party.
A project manager is commonly hired by an owner to represent the owner’s interests in overseeing the entire project and managing the owner’s relationship with its general contractor, construction manager or consultants, as the case may be. This can be a particularly important role for a specialized project, such as a water park, golf course, or manufacturing facility.
An entity from whom materials are obtained that will become part of the project; for example, those who supply the steel, cement, wood, glass, tiles, and electrical and plumbing fixtures.
The main parties involved in a construction project are:
This is the party procuring the work (typically, a land owner or land developer). In relation to construction project contracts, this entity is usually referred to as the 'employer'. In relation to contracts for works, this party is commonly referred to as the 'customer'.
A main building contractor is engaged by the employer to carry out and complete the works. This contractor will usually, in turn, engage sub-contractors to carry out and complete separate parts of the works. Contractors may also take responsibility for the design of all or part of the works they are to execute depending on the procurement method and/or contract used.
In a construction or engineering contract in Colombia, the main parties are usually the:
This is the party procuring the work (typically, a land owner or land developer).
The project is made by the project designer, who may not be an employee of the contractor. If the main project provides for project supervision, the investor has to entrust the project designer with the project supervision of the works.
A main building contractor is engaged by the employer to carry out and complete the works. This contractor will usually, in turn, engage sub-contractors to carry out and complete separate parts of the works. Contractors may also take responsibility for the design of all or part of the works they are to execute depending on the procurement method and/or contract used.
The investor has by law to appoint a supervising engineer who shall supervise the works on behalf of the investor. The supervising engineer has to be either an authorized architect or an authorized engineer.
The main project has to be revised by a reviser, who may not be a person participating in the development of the main project.
The main parties involved in a construction contract are:
This is typically the land owner or developer.
A contractor is engaged by the client/employer to carry out and complete the works. This contractor will usually engage sub-contractors to carry out and complete separate parts of the works. Contractors design all or part of the works depending on the procurement method or contract.
The team of professional consultants.
This is the term used for the bank or other institution or party (for example a government or charitable organisation in the case of urban regeneration, infrastructure or a cultural or sport-related project) which provides finance to the employer for the development.
The main parties involved in a construction project are:
The party procuring the work. In building contracts this party is referred to as the 'employer'.
Typically a main building contractor is employed to carry out and complete the work for the employer/client. Contractors may also take responsibility for the design of all parts of the works and often engage sub-contractors to carry out and complete separate parts of the work.
Where there are faults or defects in the construction the contractor can incur liability to remedy the defects after delivery. This follows from the AB 92 and from the basic principles of contract law to the effect that the employer has a right to have the contract performed.
Typically, a main building contractor is employed to carry out and complete the work for the employer/client. Contractors may also take responsibility for the design of all (turnkey contractor) or parts of the works and often engage sub-contractors to carry out and complete separate parts of the work.
Where there are faults or defects in the construction the contractor can incur liability to remedy the defects after delivery. This follows from ABT 18/AB 18 and from the basic principles of contract law to the effect that the employer has a right to have the contract performed.
Contract administrator, project manager, etc.
The main parties involved in a construction project are:
This is the party procuring the work (typically, a landowner or developer). In relation to building contracts, this entity is usually referred to as the 'owner'.
A main building contractor is engaged by the owner to carry out and complete the works. This contractor will usually, in turn, engage sub-contractors to carry out and complete separate parts of the works. It is also possible for the owner to enter into several contracts, each contractor being responsible for part of the works.
The architect is the party in charge of drawing up the plans, and is responsible for the implementation of the project.
This is the term used to describe the banks who provide finance to the owner.
The instructing party who develops the construction project.
A contractor who has to provide all construction works and services to produce the entire building project and to perform the main part of the construction work itself.
A contractor who must provide all construction works and services required for the entire building project but only performs minor works or no work at all itself: most of the work is performed by third parties (sub-contractors).
A general or prime contractor who must not only provide all construction works but also all the planning work required for the construction project at the point the contract is entered into.
A contractor assigned by the general or prime contractor to perform parts of the construction works; sub-contractors may again contract other sub-contractors (sub-subcontractors) etc.
The party responsible for all matters relating to the planning and implementation of the building project, in co-operation with contractors, engineers and technical specialists, the architect develops the project and brings it to completion. At the same time the architect can be regarded as an agent promoting the interests of the principal.
The principal has no direct contractual claims against any subcontractor. Claims must always be asserted down the contract chain. The contractor may, however, assign his contractual claims against the subcontractors to the principal.
The principal may conclude the contract with a single contractor or with a consortium (ARGE), ie several companies. Whereas a single contractor is generally engaged for small construction projects or for the performance of some parts of larger construction projects, a consortium is normally involved for larger projects.
The main parties involved in a construction project are:
This is the party procuring the work (usually a land developer). With respect to building contracts, this entity is usually referred to as the 'employer'. In relation to the contracts of engagement of professional consultants, this party is usually referred to as the 'client'.
The employer will usually enters into a contract directly with the main contractor, who will then be responsible directly to the employer for building the project in accordance with the plans, specifications, and the laws. Main contractors seldom employ a large standing workforce. Instead, they subcontract separate parts of the construction works to different subcontractors.
The team of professional consultants usually appointed are as follows.
Authorized Person (AP)
The role of an AP is governed by the provisions of the Buildings Ordinance (Cap. 123 of the Laws of Hong Kong). An AP may be an architect, engineer or surveyor by profession. An employer who wishes to carry out building works or street works must appoint an AP as the co-ordinator of such works. All plans submitted to the Buildings Department for approval must be prepared and signed by the AP.
Registered Structural Engineer (RSE)
The role of an RSE is also governed by the provisions of the Buildings Ordinance. An RSE must be a structural engineer. An employer who wishes to carry out building works or street works, must also appoint an RSE for the structural elements of such works. Plans relating to foundation or containing structural details or calculations are usually prepared and signed by the RSE.
Architect
Any person in Hong Kong involved in the design construction or fitting out of buildings and describing himself as an ‘architect’, ‘registered architect’ or ‘RA’ must be registered under the Architects Registration Ordinance (Cap. 408 of the Laws of Hong Kong). As well as being responsible for the design of the work on an ongoing basis, the architect is often also appointed under many standard forms of building contract, as contract administrator. Frequently, the architect is also the authorized person who has to ensure compliance with planning requirements and building regulations, and to supervise and monitor works.
Engineer
A person is not entitled to describe himself as a ‘registered professional engineer’ or to use the initials ‘RPE’ with or without a qualifying discipline unless he is registered under the Engineers Registration Ordinance (Cap 409 of the Laws of Hong Kong). The nature of the construction contract will determine which area of specialization or discipline the engineer will require (eg structural, electrical and mechanical or geotechnical) and the manner in which he is employed (eg independently by the employer or as a consultant to the architect).
Quantity surveyor
A person is not entitled to describe himself as a ‘registered professional surveyor’ or to use the initials ‘RPS’ with or without qualifying divisions unless he is registered under the Surveyors Registration Ordinance (Cap 417 of the Laws of Hong Kong). A quantity surveyor’s role has traditionally involved measuring and valuing work, both prior to the commencement of construction (ie assembling bills of quantities for the employer or pricing bills of quantities for the contractor) and during the course of construction. The surveyor’s role has now also been extended under some contracts to advise architects or engineers on the amount payable under interim or final certificates.
Project manager
Where a project manager is appointed in a large construction project, his role is to organize and coordinate the activities of the contractor and the professional team (ie architect, engineer, quantity surveyor, etc). The precise scope of these obligations will depend upon the terms of his appointment and the nature of the construction project.
Funder
This is the term used to describe the banks and other institutions and parties (for example, government or charitable organizations in the case of urban regeneration, infrastructure and cultural/sports projects) who provide finance to the employer towards the development
The typical parties are:
The party procuring the works being either the owner of the real property or a developer.
The party engaged by the employer/client to carry out the works. In practice, the contractor (also known as the main contractor) usually engages sub-contractors.
The parties engaged by the (main) contractor to carry out separate parts of the works.
A professional consultant who is sometimes appointed to act as a third-party certifier in relation to completion of the works.
Usually involved in more complex projects where his main tasks are to coordinate all parties involved and enter into contracts on behalf of the developer.
Employed by the Contractor, his or her main roles are to coordinate and manage the construction works on site and to ensure that the works are in full compliance with the applicable laws and regulations.
Banks or other financial institutions providing finance to any of the parties.
Involved if the works are subject to ‘project fund management’ under the Construction Act (Act LXXVIII of 1997), the project fund manager distributes the funds provided by the client to the contractor, monitors the invoicing and payment of contractors’ fees within the subcontractor chain and through various tools ensures that all subcontractors are paid for approved performance.
In general,the parties to a construction contract are:
This is the party procuring the work (typically, a land owner or land developer).
This is the main building contractor engaged by the employer to carry out and complete the works. Depending on the project procurement method, the contractor may be responsible for merely the workmanship and materials (ie the build), or the design and the build.
Subcontractors are engaged by the contractor to carry out and complete separate parts of the works. Some may also have design roles, for example, mechanical and electrical contractors.
The team of professional consultants for a project are generally as follows:
Other:
The main parties involved in a construction project are:
To appoint the most suitable construction professional for a specific project, the client generally either:
The main parties involved in a construction contract are a building owner and a construction company. Designers and other professionals are sometimes retained directly by an owner and sometimes by a main construction company. In most large-scale constructions, sub-contractors and/or a construction joint venture is used. In the case of sub-contract, master-contractor is usually responsible for all of sub-contractors' work.
The main parties involved in a construction project are:
This can be a developer or an owner.
This is the party that carries out the works. A contractor can engage sub-contractors to meet its obligations.
This is the party that has taken on the obligation to design the method of construction for the works.
This is the party that must design the works.
This is the representative of the client on the construction site. The construction supervisor inspects the works on behalf of the client.
This is the party procuring the work. They are typically the landowner or the developer. The owner/principal has various obligations to the contractor, including granting access to undertake the works, paying the contract price and in most cases obtaining any required resource consents.
This is the party engaged by the principal to carry out and complete the work. They may in turn engage sub-contractors to carry out distinct parts of the project. In larger projects the sub-contractors will commonly be asked to enter into direct agreements with the principal to ensure continuity/enforceability of sub-contractor warranties. The contractor is responsible to the owner/principal for undertaking the works.
Under most of the NZS suite of contracts, the Engineer is a suitably qualified person appointed by the Principal. They handle the administration of the Contract. They have a dual role: they must give directions to the Contractor on behalf of the Principal as an expert advisor, and, independently of both the Contractor or Principal, fairly and impartially make decisions entrusted to them under the contract – such as valuing work and issuing certificates/making decisions including relating to variations, extensions of time and practical completion.
This is the party or parties financing the project. This is typically a private financier such as a bank, but public funding of projects is also a feature of New Zealand’s construction industry. Depending on the financing structure, the contractor may enter into a direct agreement with the financier.
Generally, the nature and size of a construction project will to a large extent, determine the parties to the contract for the project and the responsibilities. The main parties involved in a construction contract are:
The main parties involved in a construction project are:
This is the party who procures the work (typically, a land owner or land developer). In relation to building contracts, this entity is usually referred to as the 'employer'. In relation to contracts of appointment of the professional consultants, this party is commonly referred to as the 'client'.
A main building contractor is engaged by the employer to carry out and complete the works. The contractor will usually, in turn, engage sub-contractors to carry out and complete separate parts of the works. Contactors may also take responsibility for the design of all or part of the works they are to execute, depending on the procurement method and/or contract used. The contractor is responsible to the employer.
A team of professional consultants, including different engineers, architects and a project manager. The consultants are responsible to either the employer or the contractor, depending on which of the two has responsibility for the design.
This is the term used to describe the banks and other institutions and parties (for example, government or charitable organizations in the case of urban regeneration, infrastructure and cultural/sports projects) who provide finance to the employer to assist with the development (and who will require security in return). Depending on the size of the project, there may be a single bank or a syndicate of banks.
In a construction project the following entities are usually involved:
The party procuring the work and typically a land owner or land developer.
Engaged by the employer to carry out and complete the works.
Comprising architects, civil and structural engineer and project manager.
Provides finance to the employer towards the development for example a bank. Depending on the size of the project, there might be a single bank or a syndicate of banks.
The main parties are the employer and the contractor. The contractor may be responsible for both construction and engineering services (either directly or through a sub-contractor) or just for the construction. If the employer contracts the construction and the engineering services to the contractor, the latter will be the sole responsible towards the employer. On the other hand, if the engineering services are let directly by the employer, the contractor will have no contractual relationship with the engineering company and, therefore not be responsible for providing those services. The construction has to be carried out in accordance with the employer's specifications.
The parties to such a contract are:
This is the beneficiary of the construction works, usually the owner of the land or an investor. The employer gives the contractor the right of access to, and possession of, all parts of the site. The employer (where he is in a position to do so) provides reasonable assistance to the contractor at the request of the contractor in order to obtain all the necessary authorizations and permits.
This is the person empowered by the client to perform the construction works at his own risk. The contractor designs (to the extent specified in the contract), executes and completes the works in accordance with the contract, and remedies any defects in the works. The contractor is responsible for the adequacy, stability and safety of all site operations and of all methods of construction used.
This is the person appointed by the employer to supervise the construction works. Subject to the specific conditions of the construction contract, the engineer is generally required to obtain the approval of the employer before exercising any specific authority. The engineer may from time to time assign duties and delegate authority to assistants, and may also revoke that assignment or delegation.
This is the person authorized by the State Inspectorate for Construction as required by the law to perform various activities such as: verifying the quality of the construction materials, the proper performance of the construction works and the fulfilments of all the requirements imposed by the law.
Usually the lender, namely, the institution providing financial support for the project, will not be a party to the construction contract.
The main parties involved in a construction project are:
The Spanish Building Act lists the main parties involved in a construction project, who will also be the parties to the various contracts involved, as follows:
The party carrying out the project and procuring the work (typically, a landowner or professional developer).
The party who prepares the plans and specifications for the implementation of the development.
The contractor engaged by the developer to carry out and complete part or all of the works. This contractor will usually, in turn, engage sub-contractors to carry out and complete specific parts of the works. One main contractor or various contractors may be involved in the works depending on the development and the contract procurement method used.
Responsible for the implementation of the project and very important from a practical point of view and in relation to the construction agreement, as the completion of any part of the works must be certified by the works manager.
These technicians assess whether the works comply with technical regulations. They must be involved in the construction process for the relevant building to obtain decennial insurance (a 10-year insurance policy giving cover against defects arising in the works).
The contractor and the employer are typically the two parties to an engineering or construction contract. Other professional consultants are used to design engineering works and produce drawings.
The following parties are generally involved in construction contract:
This is a party procuring or instructing the construction of the building by a contractor (commonly referred to the project owner or project developer).
A main contractor is hired to carry out all construction works involved in the building in accordance with the construction contract and is directly liable to the Employer in the event of any dispute which occurs in relation to the construction of the building. Most main contractors usually engage a sub-contractor to carry out certain parts of the construction works. The sub-contractor will be directly liable to the main contractor in the event of any dispute which occurs in relation to the construction of the building.
The main parties involved in a construction project are normally:
The team of professional consultants appointed can be broken down into two categories, the principal consultants being as follows:
| Designers |
Non-designers |
| Architect | Quantity surveyor |
| Civil and structural engineer | Contract administrator (or Engineer under FIDIC-based contracts) |
| Mechanical and electrical (or building services) engineer | Project manager (usually in larger projects only) |
The vast majority of projects in the UAE have been delivered using the traditional construct only contract method. This means that the parties designing and constructing the works are engaged under separate contracts.
The main parties involved in a construction project are as follows:
This is the party procuring the work (typically, a land owner or land developer). In relation to building contracts, this entity is usually referred to as the 'employer'. Generally regarding contracts of appointment of professional consultants, the party is commonly referred to as the 'client'.
A main building contractor is engaged by the employer to carry out and complete the works. This contractor will usually, in turn, engage sub-contractors to carry out and complete separate parts of the works.
The team of professional consultants appointed can be broken down into two categories, the principal consultants being as follows:
| Designers |
Non-designers |
| Architect of record | Quantity surveyor |
| Civil and structural engineer | Contract administrator |
| Mechanical and electrical (or building services) engineer | Project manager (usually in larger projects only) |
This is the term used to describe the banks and other institutions and parties (for example, government organisations in the case of urban infrastructure and cultural/sports projects) who provide finance to the employer towards the development (and require security in return). Depending on the size of the project, there might be a single bank or a syndicate of banks.
The main parties involved in a construction project are:
This is the party procuring the work (typically, a land owner or land developer). In relation to building contracts, this entity is usually referred to as the ‘employer’. In relation to the contracts of appointment of the professional consultants, this party is commonly referred to as the ‘client’.
A main building contractor is engaged by the employer to carry out and complete the works. This contractor will usually, in turn, engage subcontractors to carry out and complete separate parts of the works. Contactors may also take responsibility for the design of all or part of the works they are to execute depending on the procurement method and/or contract used. The main contractor will usually assume the Principal Contractor role, which involves managing health and safety risks under the CDM Regulations 2015 and ensuring compliance with building regulations under the Building Regulations 2010.
The team of professional consultants appointed can be broken down into two categories, the principal consultants being as follows:
| Designers | Non-designers |
| Architect | Quantity surveyor |
| Civil and structural engineer | Contract administrator |
| Mechanical and electrical (or building services) engineer | Project manager (usually in larger deals only) |
| Principal Designer (a designer who performs a health and safety role under the CDM Regulations 2015 and ensures compliance with building regulations under the Building Regulations 2010) |
Building Information Modelling (BIM) Manager (required for public sector projects) |
This is the term used to describe the banks and other institutions and parties (for example, government or charitable organizations in the case of urban regeneration, infrastructure and cultural/sports projects) who provide finance to the employer towards the development (and require security in return). Depending on the size of the project, there might be a single bank or a syndicate of banks.
The main parties involved in a construction project are:
This is the party procuring the work (typically, a land owner or land developer). In relation to building contracts, this entity is usually referred to as the 'employer'. In relation to the contracts of appointment of the professional consultants, this party is commonly referred to as the 'client'.
A main building contractor is engaged by the employer to carry out and complete the works. This contractor will usually, in turn, engage subcontractors to carry out and complete separate parts of the works. Contactors may also take responsibility for the design of all or part of the works they are to execute depending on the procurement method and/or contract used.
The team of professional consultants appointed can be broken down into two categories, the principal consultants being as follows:
|
Designers |
Non‑designers |
|
Architect |
Quantity Surveyor / Cost Consultant |
|
Civil and structural engineer |
Principal Designer (who performs a statutory health and safety role under the CDM Regulations) |
|
Mechanical and electrical (or building services) engineer |
Contract Administrator / Employer’s Agent (who administers the building contract) |
|
Specialist designers (lifts, IT/comms, fire safety, interior design, landscaping etc) |
Project Manager (usually in larger projects only) |
This term is used to describe the banks and other institutions and parties (for example, government or charitable organizations in the case of urban regeneration, infrastructure and cultural/sports projects) who provide finance to the employer towards the development (and require security in return). Depending on the size of the project, there might be a single bank or a syndicate of banks.
The main parties to a construction or engineering contract in Ukraine are:
If the parties use a single general contract, a contractor may sub-contract the performance of separate works. The general contractor remains responsible to the developer for the carrying out of all works, including those carried out by sub-contractors. The parties are also entitled to enter into a multilateral construction/engineering contract.
Depending on the type of project, and the project delivery method selected by the owner, the main parties to a construction or engineering contract include the following:
A party who owns or develops a project, engages parties to design and construct the project, and compensates those parties for their services and work.
A party engaged by the owner to design the project. An engineer is required to design and engineer specialized projects, such as public works (eg bridges, highways) or plants (eg manufacturing facilities, utilities).
A general contractor is a party engaged by the owner to construct the project. The general contractor typically hires subcontractors to perform and complete separate parts of the project. Those subcontractors, in turn, may hire sub-subcontractors to perform a portion of the part of the project for which the subcontractor is responsible. A phrase commonly used to describe the subcontractor and its sub-subcontractors is ‘subcontractors of any tier’.
A party engaged by the owner to design and construct the project. A design-builder takes responsibility for both the design and construction functions, either with respect to the entire project or a portion of the project.
A party engaged by the owner, architect, engineer or contractor to render professional assistance regarding a particular aspect of the work. For example, an architect might hire a specialty engineer; a contractor might hire a remediation consultant; a design-builder might hire an MEP (mechanical-electrical-plumbing) engineer; an owner might hire a construction manager to oversee the entire project or a professional to provide expertise regarding a specialized project, such as a water park, golf course, or manufacturing facility. Several consultants may render professional services on a single project, each engaged by and responsible to a different party.
An entity from whom materials are obtained that will become part of the project; for example, those who supply the steel, cement, wood, glass, tiles, and electrical and plumbing fixtures.
While not parties to the design or construction contract or any subcontract, the following are key parties in the process:
An entity providing funds to the owner for the project, which funds the owner must repay. Depending on the size of the project, a single bank or a syndicate of banks could loan the owner funds.
The lawyers assisting each of the parties above with the negotiation and drafting of the contracts. In order to avoid a conflict of interest, a lawyer may only provide advice to one of the parties. Legal advice also may be provided for legal issues arising while the project is being constructed, such as delays, labour issues, or defective work. Finally, legal counsel may assist a party should dispute resolution become necessary, for example, by negotiating with the other party or parties to the dispute or assisting with mediation, arbitration, or litigation.
The insurers who provide insurance for the project in order to assist in managing risk. Contractors generally obtain coverage such as commercial general liability insurance, workers’ compensation, employers’ liability, and vehicle insurance. Owners may obtain property insurance, referred to as builder’s risk or all risk insurance.
A guarantor of the obligations of the principal – in this case, the contractor – in the event the construction contract requires the contractor to obtain performance or payment bonds. Subject to the terms of the bond, the surety guarantees to the owner that the contractor will perform and complete the project and pay for the labour, material, and other items the contractor is obligated to pay for under the contract. In the event the contractor fails to perform its obligations, the surety becomes responsible for the losses incurred by the owner to the extent those losses are covered by the bond. The surety then is entitled to obtain reimbursement from the contractor.
The parties to a construction contract are the employer and the contractor. The structure may vary depending on the required works. Commercial structures usually involve the following parties:
