In the initial stage of the project, the client awards an architect with a consultant contract, where the architect is responsible for preparing drawings, specifications, and contract documents for general contractors to bid on. The winning general contractor is awarded the main contract for the project. The main contract is a business agreement between the general contractor and the client, where the general contractor agrees to carry out the main construction works in the project. The general contractor (now main contractor) may subcontract one or more trade contractors to carry out specific works in the main contract.
The design party includes the architect, specification writers (consultants), engineers (structural, services, mechanical), interior designers, quantity surveyors and other participants the architect considers necessary for completing the project. Depending on the client’s involvement in the decision making, the architect is able to act as the client’s representative and also for reviewing contract documents.
The client is responsible for providing the location of a project (the site) and the contract documents to the main contractor, providing the architect with the budget, and funding the project (paying the main contractor and the architect). The budget is an important part of the project as it allows the architect to design a building that meets the client’s requirements and it determines the scope of the project.
A turnkey contract is a business arrangement between the client and the general contractor. To commence the project, a client awards the general contractor a turnkey contract, where the general contractor (now turnkey contractor) is responsible for the design, engineering, construction and management of the project.
Note: The client can award the turnkey contract to either the architect or a general contractor, however the researcher will continue on the premise that the contractor is awarded the turnkey contract to remain consistent with the research for this part of the study.
The turnkey contract is a product of the Design-Build (DB) project delivery system; it is another method the client gets the project from start to finish.
In a DB project, the turnkey contractor may award an architect/engineer a consultant contract to perform the design work. The turnkey contractor is also able to subcontract trade contractors to perform specific works in the turnkey contract.
One of the differences between a main contract and a turnkey contract is that in a DBB project the client has a direct relationship with the architect and the main contractor (where the architect and contractor have an indirect relationship), whereas in the DB project the client has a direct relationship with the turnkey contractor, as illustrated in Figure 1 (insert graphic).
The construction management project delivery system consists of the construction manager (CM) providing the client with professional staff from both office and site. The professional staff includes project-control personnel, subcontract administrators, and craft specialists to meet the project’s quality, planning, and budget goals.
The CM acts as the client’s representative to assist in design and construction issues through services provided during either (or both) the design phase and construction phases of the project. During the construction phase, the work will be fully subcontracted to other trade contractors under the direction of the construction management firm. The CM co-ordinates the planning, quality control, and work execution through the subcontractor’s site superintendents.
To expand on that definition novation is the process of replacing the original contract with a new contract between the original parties involved. Alternatively novation is also used to replace an original party with a new party under the original contract. Once the original party is replaced, the original party’s obligations are discharged, whereby the new third party is responsible for the replaced party’s obligations. Novation can occur when all the parties involved agree to replacing a party or replacing a contract.
For example, by replacing the obligations of the original party – the main contractor – all the parties involved (client, architect/engineer, and main contractor) in the original contract must agree for the replacing to take place. If the agreement to replace comes into effect, the new party will take over the responsibilities and obligations of the replaced party, i.e. the new general contractor will become a replacement to the original main contractor.
“Novation is a mechanism whereby one party can transfer all its obligations under a contract and all its benefits arising from that contract to a third party. The third party effectively replaces the original party as a party to the contract. When a contract is novated the other contracting party must be left in the same position as they were in prior to the novation being made.” (Rowlinson, 2010)