AJCEB: Volume 9, Number 2

Essence of Time in Construction Contracts
Tony Lim (Doyles Construction Lawyers, Australia)

The building industry has in recent years seen huge costs incurred due to disputes arising on notice requirement clauses. These claims could have been averted if the parties had been diligent in providing the necessary notices. This article sets out to explore the law briefl y as interpreted by the courts in common law and equity and discuss the possibility of defence under the principle of promissory estoppel. More importantly it also shares the author’s view on how such pitfalls could have been prevented by giving the proper notices within the timeline required by the contract conditions. It cannot be emphasised enough that contractors would be wise to comply strictly with the notice provisions in the contract instead of relying on the estoppel principle or waiver or unconscionability to save their day. Notice clauses essentially require a competent contracts administrator to follow the time line provided in the contract conditions and would be most effective if the project team worked closely with the contracts administrator to ensure that proper notices are given when directions or instructions are received. Although it is common to see notice clauses which make it a condition precedent for a contractor to be entitled to claim for an extension of time or loss and expense claim being interpreted restrictively, in any litigation or arbitration it is always diffi cult to predict how the courts or tribunal would be willing to uphold such notice clause. It is therefore in the interest of the parties that notice clauses should be properly observed. Suffi ce to say, failure to comply with a notice clause and time bar may be fatal to a claim.

Keywords: extensions of time, liquidated damages, condition precedent, estoppel, unconscionability, building contracts.

The Corporate Governance of Australian Listed Construction Companies
Patrick Tait and Martin Loosemore (Faculty of the Built Environment, University of New South Wales, Australia)r

This paper compares the compliance level of Australian Stock Exchange (ASX) listed construction and non-construction companies with the ASX Corporate Governance Council (CGC)recommendations on sound corporate governance. It also examines the difference in board characteristics between the two groups, paying particular attention to differences in board independence. It concludes that compared with the top 20 ASX listed non-construction companies, listed construction companies are less compliant overall particularly with regards to board structure, and have lower levels of independence both in terms of CEO/Chairperson duality, the ratio of executive to non-executive independent directors and independent membership of nomination, remuneration and audit committees. These conclusions are important because sound corporate governance has been associated with higher levels of organisational resilience derived from the reputational and fi nancial benefi ts of greater transparency, market value, investor attractiveness and organisational performance.

Keywords: corporate governance, compliance, resilience, independence, Australian Stock Exchange.

Project Culture in the Chinese Construction Industry: Perceptions of Contractors
Jian Zuo and George Zillante (School of Natural and Built Environments, University of South Australia, Australia) Vaughan Coffey (School of Urban Development, Queensland University of Technology, Australia)

In recent years culture has become one of the most studied topics in project management research. Some studies have investigated the infl uence of culture at different levels – such as national culture, industry culture, organisational culture and professional culture. As a project-based industry, the construction industry needs to have more insight concerning cultural issues at the project level and their infl uence on the performance of construction projects. Few studies, however, have focused on culture at the project level. This paper uses a questionnaire survey to determine the perceptions of Chinese contractors about the impact of project culture on the performance of local construction projects. This is augmented by a series of in-depth interviews with senior executive managers in the industry. The fi ndings indicate that specifi c project culture does contribute signifi cantly towards project outcomes. In particular, goal orientation and fl exibility, as two dimensions of project culture, have a negative statistical correlation with perceived satisfaction of the process, commercial success, future business opportunities, lessons learnt from the project, satisfaction with the relationships, and overall performance. This paper also indicates that the affordability of developing an appropriate project culture is a major concern for industry practitioners.

Keywords: project management, culture, project performance, affordability, construction industry, China.

A Refi ned Basket of Goods Approach for Comparing Construction Costs between Countries

Rick Best (Mirvac School of Sustainable Development, Bond University, Gold Coast, Australia)

Most comparisons of construction industry performance require that construction costs be converted to a common base. Existing mechanisms for such conversions produce unreliable results. A proposed method for producing industry-specifi c conversion factors was tested using a single building type. A basket of materials and labour was identifi ed and weighted to refl ect the cost share of each item in a completed project. Prices for the basket were gathered in three cities and simple construction specifi c conversion indices were calculated based on the construction purchasing power of each currency. The construction purchasing power parities (CPPPs) showed marked differences from other available conversion mechanisms such as exchange rates and general purchasing power parities (PPPs) that have been used in previous international comparison studies. While the study was limited in scope, and is only the fi rst stage of a longer process, the substantial differences in comparative costs based on purchasing power illustrate the problems inherent in international cost comparisons. For example, comparing Singapore and Sydney, Singapore costs appear to be only 40% of those in Sydney (based on exchange rates) about two-thirds the cost of Sydney (using general PPPs) or almost the same (using the preliminary CPPPs). These results illustrate the problems of converting costs from local currencies to a single base currency and suggest that further development is needed to improve the reliability of outcomes.

Keywords: purchasing power parity, construction costs, international comparisons, Australia, New Zealand, Singapore.

Evaluating Levels of Project Planning and their Effects on Performance in the Nigerian Construction Industry
Godwin Idoro (Department of Building, University of Lagos, Lagos, Nigeria)

This study compares the level of project planning on public and private sectors projects and its impact on performance. The purpose is to create awareness of the level and effectiveness of the planning done by public and private clients in the delivery of construction projects. A questionnaire survey administered to a sample of 130 client representatives selected by stratifi ed random sampling from the population of public and private clients in the Nigerian construction industry is used and analysed using descriptive statistics, the t-test and Spearman correlation test. The results show that the level of preconstruction planning on private sector projects is higher than that of public sector projects while the level of contract planning done by the latter is higher than that of the former. Furthermore, the performance of private sector projects is higher than that of public sector projects in many of the parameters used. However, the level of preparation of life-cycle charts that concern project delivery time in both public and private sectors projects is low and the level of project planning in the two categories of projects has a limited impact on project performance. The understanding of how public and private sectors projects perform in planning and its impact are expected to assist public and private clients to know the challenges ahead of them in their effort to improve the planning and performance of their projects.

Keywords: project performance, project planning, client type, construction industry, Nigeria.

An Assessment of the State of Maintenance of Public Hospital Buildings in Southwest Nigeria
Olumide Adenuga (Department of Building, University of Lagos, Lagos, Nigeria) and Abayomi Ibiyemi (Department of Estate Management, Lagos State Polytechnic, Lagos, Nigeria)

This study examines the state of maintenance of public hospital buildings in Southwest Nigeria, and in the process identifi es the signifi cant difference(s) in the operational state of Federal and State-owned public hospitals within the study area. In achieving the aim, the study adopts a survey technique with a total of 552 questionnaires, comprising 206 sampled maintenance staff and 346 users of public hospitals. The survey covers 46 public hospitals representing 40% of the total number of public hospitals existing in Southwest Nigeria. The 46 public hospitals consist of all the 11 Federal-owned hospitals and 35 randomly selected State-owned. Data collected are analysed using the Kendall Coeffi cient of Concordance and Pearson Chisquare. The fi ndings of the study reveal that the state of maintenance of public hospital buildings is good. While the structure/fabric and physical conditions are rated highly, the services are poorly rated. This study, which hypothesises that there is no difference in the state of maintenance, fi nds statistical difference in the performance of the services. It recommends that Federal and State governments address neglect in the services sector and plan their maintenance programmes more effectively.

Keywords: maintenance, public hospitals, services, Federal and State government, Nigeria.