CHAPTER - 1

CHAPTER 1 - INTRODUCTION

1.1 Background

Conditions o f contract for works of building and civil engineering - Sri Lanka was prepared by

the Institute of Construction Training And Development (ICTAD) and the Government of Sri

Lanka had approved the adoption of the said conditions of contract (Commonly referred as

I C T A D conditions of contract) for state sector construction activities since August 1988. It can

be seen clearly that the ICTAD conditions of contract is very similar to the International

Federation of Independent Consulting Engineers (FIDIC) conditions of contract (International)

for works of civil engineering construction (Third edition), March 1977 (Commonly referred as

FIDIC conditions of contract third edition) except few modifications to suit local conditions.

In the United Kingdom(U.K.), there are different standard conditions of contracts used for

building and civil engineering works. At the same time there are instances when the FIDIC

conditions of contract (Third edition) which was specifically developed for civil engineering

works, is being used for building works in many countries.

One could argue whether it is right to use one standard conditions of contract for both building

and civil engineering works as there are some differences in the construction and administration

of these two types. On the other hand, as the ICTAD conditions of contract is based on

conditions of contract specifically applicable for civil engineering works, the argument seems

justifiable.

The private sector consultants in Sri Lanka have been slow to adopt the I C T A D conditions of

contract for building works. Different conditions of contracts are being used by different

consultants in the private sector. Some are modified Joint Contracts Tribunal (JCT) conditions

of contract and some are Royal Institute of British Architects (RIBA) conditions of contract.

1
A s there are large scale investments by the private sector in the building industry it is very

important to have a standard conditions of contract acceptable to private sector consultants in Sri

Lanka.

Therefore, it is considered appropriate to undertake a study to look into the problems of using

I C T A D conditions of contract for both building and civil engineering works. Necessary action

can be initiated by the relevant authorities if a change is required for the development of the

construction industry.

1.2 Objectives

The main objectives of this study are

(i) T o investigate the available procurement methods and types of conditions of contracts for

building construction works.

(ii) T o assess the applicability of the ICTAD conditions of contract for building construction

works.

(iii) T o propose revisions or modifications to the ICTAD conditions of contract to suit local

building construction works.

1.3 Methodology

The methodology adopted to achieve the objectives stated in 1.2 are briefly described

below.

(i) L i t e r a t u r e survey

A detailed literature survey was carried out by referring books, journals, publications etc.

to investigate different procurement methods and conditions of contracts available for

building construction works.

2
(ii) S t u d y o f various conditions of contracts a n d comparison

A number of different conditions of contracts were studied and compared in detail to

identify the differences of those conditions for building and civil engineering works.

(iii) Q u e s t i o n n a i r e survey

A questionnaire was developed (See Appendix A) to get information from various

organisations involved in building construction on the acceptability and problems

associated with the ICTAD conditions of contract.

(iv) Interviews

Senior professionals in the industry were interviewed for their views on the acceptability

of I C T A D conditions of contract for building construction works and to ascertain whether

there is a need for a different conditions of contract for building construction works.

1.4 G u i d e to t h e R e p o r t

The report is structured as follows to present the findings of this study.

Chapter 1 - Deals with the reasons to undertake this study specifying the problem and

outlining the method adopted to achieve the desired results.

Chapter 2 - Deals with various procurement methods and types of contracts for building

construction works in the U.K. and in Sri Lanka.

Chapter 3 - Deals with various conditions of contracts for building construction works used

in the U.K. for different types of contracts and historical background of the J C T

conditions of contract.

3
Chapter 4 - Deals with historical development of FIDIC conditions of contract and its

acceptance for building construction works.

Chapter 5 - Deals with the history of building construction industry from ancient times in Sri

Lanka, role of ICTAD and ICTAD conditions of contract together with its

acceptance for building construction works.

Chapter 6 - Deals with the results of questionnaire surveys and interviews.

Chapter 7 - Deals with the comparison of conditions of contracts and modifications proposed

to ICTAD conditions of contract.

Chapter 8 - Covers the conclusions and recommendations made from the research study.

1.5 S u m m a r y o f M a i n Findings

From this research work it is identified that various procurement methods and types of contracts

are available in the international construction scene to cover the various value of works and

scope of works for the building construction works. To achieve a balanced contract management

these are also different standard conditions of contracts available for building construction

works.

In Sri Lanka, the I C T A D 89 is now mostly used for all building construction works, except in

some private organisations, which is based on the FIDIC 3 . From the survey it is found that

most of the professionals involved in the building construction works are preferable to use

FIDIC 3 (now FIDIC 4) rather than ICTAD 89 due to some errors in wordings, headings,

changes made in Part I and Part II. Another important factor is that FIDIC 3 is 17 years old

document which is the base document for ICTAD 89.

There are also some notable differences found in the character and contents of building and civil

4
engineering construction works.

Most of the professionals have indicated very few ICTAD 89 clauses for modification which are

general and not specific for building construction works. The notified clauses are 1, 15, 5 1 , 5 2 ,

5 6 , 6 0 , 67 and 7 0 .

There is a considerable outcome from the comparison of selected conditions of contracts rather

than literature survey, questionnaire survey and interviews. As a result of this comparison it is

identified that 25 clauses of the ICTAD 89 can be used without any modification, 12 clauses of

the I C T A D 89 have to be replaced fully by the relevant clause of FIDIC 4 and 35 clauses of the

I C T A D 89 have to be modified/revised.