The Construction Industry in Zimbabwe

Introduction

The construction industry presents a number of challenges to its participants, and a significant one is its reliance on human interactions for effective project management. As a complex industry, construction involves the collaboration of various professionals who work together to deliver a final product that meets the client’s requirements. Given the intricate nature of construction projects, which often encompass complex designs, intricate schedules, and numerous stakeholders, effective communication and coordination among team members is crucial.

However, differing views, conflicting interests, and varying approaches can often lead to conflict. Disputes can arise from disagreements over design specifications, project timelines, cost overruns, quality control, and contractual obligations. The involvement of multiple parties, such as architects, engineers, contractors, quantity surveyors, subcontractors, and suppliers, increases the likelihood of diverse viewpoints and potential conflicts. This article explores the benefits of using standard forms of contracts in the construction industry with a focus on the contract between the Client and the Contractor (builder).

Types of Standard Contracts Within the Zimbabwean Construction Industry

Standard contracts are pre-drafted contract templates that enjoy broad recognition and acceptance within the construction community. They serve as standardized frameworks for creating legal agreements between various parties participating in a construction project. These contracts generally delineate the rights, obligations, and responsibilities of each party, along with the terms and conditions that govern the project. By utilizing these standard contracts, parties can establish a clear and consistent contractual foundation, promoting understanding and alignment among all stakeholders involved in the construction process.

In Zimbabwe, several standard contracts between clients and contractors (builders) are used, the most common being the Agreement and Schedule of Conditions of Building Contract Suite. This suite has been approved by the Institute of Architects of Zimbabwe (IAZ), the Zimbabwe Institute of Quantity Surveyors (ZIQS) and the Construction Industry Federation of Zimbabwe (CIFOZ). Under this form of contract, the Architect is the Principal Agent. This contract includes various contract documents tailored for different construction project types, such as the Principal Building Agreement, Nominated/Selected Subcontract Agreement, and Minor Works Agreement. The Agreement and Schedule of Conditions of Building Contract Suite provides comprehensive provisions covering areas such as payment, dispute resolution, variations, and completion.

The Zimbabwean Procurement and Construction (ZPC) Contract is another type of standard form of contract specifically designed for use in Zimbabwe. ZPC Contracts are often used for public sector construction projects and incorporate local legislative requirements and industry practices. They cover areas such as contract administration, payment mechanisms, variations, and dispute resolution.

Other standard forms of contract that are increasingly becoming popular include the NJPC 2000 Contract, the NEC Suite and the International Federation of Consulting Engineers (FIDIC) Contracts. These contracts are internationally recognized and provide a standardized framework for construction projects. They incorporate provisions related to project administration, risk allocation, claims, and dispute resolution.

The Benefits of Using Standard Forms of Contracts

Standard forms of contracts in the construction industry are widely recognized and accepted due to their inclusion of industry practices and customs. This familiarity plays a crucial role streamlining negotiations and facilitating smoother interactions between the various parties involved in a construction project. The aforementioned contracts further provide a benchmark against which contract terms and conditions can be compared. Parties can make reference to these widely recognized contracts to ensure that their own contract provisions align with industry standards and best practices. This helps in identifying any deviations or modifications required to suit the specific needs of a project, whilst still maintaining a solid foundation based on industry-accepted standards.

Further, standard contracts consider various types of risks commonly encountered in construction projects, such as design changes, delays, unforeseen site conditions, and performance issues. Such contracts typically include provisions that allocate risks between the parties involved. They provide a balanced approach to risk management and ensure that risks are appropriately distributed among the owner, contractor, and other stakeholders. This can help in minimizing disputes and conflicts arising from unclear risk allocation. Parties can assess and understand the risks they are assuming, enabling them to make informed decisions and take appropriate measures to manage those risks effectively. This balanced approach to risk management fosters a more collaborative environment among the parties, as everyone is aware of their respective risk responsibilities, leading to a smoother project execution process.

The familiarity with clauses in standard contracts improves communication and efficiency of contract administration between client, contractor and the contract administrator. Standard contracts provide clear and standardized language, definitions, and terms. This reduces ambiguity and promotes consistency in contract documents used across different projects. It helps all parties involved to have a common understanding of their rights, obligations, and responsibilities.

In a competitive tendering environment, standard forms of contracts provide a uniform basis for pricing by incorporating clear and transparent provisions related to cost and pricing. These provisions help to minimize the risk of hidden costs and provide a level of certainty to the parties involved in the project. Standard contracts commonly incorporate a well-defined scope of work, which serves to clearly outline the specific tasks, deliverables, and services that each party is responsible for in the project. By detailing the scope of work, these contracts ensure that there is a comprehensive understanding of the project's requirements among all involved parties. This clarity in project requirements enables accurate cost estimation and pricing, as all necessary work and associated costs are accounted for within the scope of work. Consequently, the risk of hidden costs is minimized, as the scope of work serves as a reference point for determining the pricing and expectations of the parties involved.

Transaction costs involved in negotiating contracts are reduced through the use of standard contracts as they provide an additional significant advantage by streamlining the construction process. By utilizing standard contracts, all parties involved in the construction project have access to the same information and terms. This shared understanding reduces the necessity for repetitive negotiations and discussions among themselves or through lawyers, as the contractual provisions are already established and agreed upon in advance. As a result, the construction process becomes more efficient, saving time and reducing costs. The elimination of redundant negotiations allows for a smoother workflow and facilitates better coordination among the project participants, contributing to improved overall project efficiency.

By using these standard contracts, contractors and owners can ensure that their contracts are legally sound and in line with local requirements as they are designed to comply with relevant laws, regulations, and industry practices. This reduces the risk of non-compliance and potential legal disputes.

Lastly, standard contracts commonly incorporate dispute resolution mechanisms, such as mediation or arbitration, which play a vital role in resolving disputes efficiently. These mechanisms provide a structured and agreed-upon process for addressing conflicts that may arise during the project. By including predetermined dispute resolution procedures, standard contracts enable parties to address disagreements in a timely and organized manner. It also enhances overall project management and fosters a more cooperative and collaborative environment among the involved parties. This helps to prevent disputes from escalating into lengthy and costly legal battles, promoting quicker resolution and minimizing disruptions to the project.

Whilst the use of standard contracts offers several benefits to parties including clarity, consistency, risk allocation, and time and cost savings, it is important to note that they may not address the specific needs or unique circumstances of every construction project. Therefore, it is advisable to seek legal advice and make necessary modifications to standard contracts to suit the requirements of a particular construction project.

Conclusion

The use of standard contracts in construction certainly assists parties to reduce the amount of time spent in negotiating clauses, as well as the cost of lawyers drafting the contracts from scratch. All parties involved have access to the same information and terms, and in turn, understand each party’s roles, responsibilities and risks. What’s more is that the standard contracts used in Zimbabwe incorporate local legislative requirements and industry practices, and are also internationally recognized as they provide a standardized framework for construction projects.