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Four types of Contract documents to resolve Retainage Conflicts

A Multi-Attribute Decision Analysis

 

STUDENT PAPER

By Rony Al Helou

SKEMA Business School

Paris, France

 



ABSTRACT

Project management practice did not evolve knowing that the number of disputes is increasing in terms of time and money. This paper addresses the problem by choosing the best contract provoking the least of disputes in terms of Retainage.

The method used is first to address and view the problem and clauses related to it in four different contract types and second, compare in a qualitative matter the four types of contracts to be able to do a clearer choice. As a third step the paper’s objective is to choose one single contract type that suit best our objective and this choice is made by using the non-compensatory model of disjunctive reasoning.

As a final answer, one contract that replies best to the objectives set is chosen, therefore it is the best contract dealing with conflict avoidance in regards of Retainage clauses. >

Key words: Retainage; Post-Completion Obligations; Performance; Retention Clause; Romalpa; Guarantees; Protecting Sellers.

INTRODUCTION

Statistics show that the number of disputes in contracts is largely increasing. The average dispute value has increased from 31million dollars in 2012 to over 42.8 million in 2016; in the same manner, the length of disputes has tremendously increased throughout the years to get to an average of 12.8 month in 2012 and 14 month in 2016 these numbers are not necessary focused in a certain part of the world but the numbers are representative samples from all the continents where the four types of contracts addressed in this paper are highly present and being worked with.  Although project and contract management is evolving in terms of number of people having degrees and certifications but the practical part seems to fall away and Winston Churchill’s famous quote “Let our advance worrying become advance thinking and planning” doesn’t seem to be applied when dealing with project management conflicts.

Further research have shown that “Failure to administer contract” is the top cause mentioned in the 2016 Construction Dispute report; therefore, Project delays, or end phase conflicts are considered to take a big share of the overall conflict percentages, while contractors are not payed but they managed to finish the work on time, or clients trying to delay final payment times by looking to hit on small specific technical issues. In this regard this paper’s purpose is to solve the issue of Retainage / Post completion guarantees and protection of the client and seller.

All in all, this issue had been targeted for a long time and till now no clear solutions were advanced. Therefore It is of major importance to review the four types of contracts: FIDIC, ConsensusDocs, EJCDC, AIA Contract Documents. To have a clear view on the topic and settle a certain benchmark, the CSI manual practice is used as a comparative basis in order to find the most appropriate context resolving this kind of issues.

Step 1: Problem Definition:

In this manner the objectives of this paper are:

  • Advance/State the least conflicting Retainage/Post Completion Payment clause in form and sentence.
  • Investigate and give a brighter view of the retention clause in the four types of contracts.

More…

To read entire paper, click here

 

Editor’s note: Student papers are authored by graduate or undergraduate students based on coursework at accredited universities or training programs.  This paper was prepared as a deliverable for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development.  http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director [email protected].

How to cite this paper:

Al Helou, R. (2018). Four types of Contract documents to resolve Retainage Conflicts: A Multi-Attribute Decision Analysis, PM World Journal, Volume VII, Issue 5, May 2018. https://pmworldjournal.net/wp-content/uploads/2018/05/pmwj70-May2018-Al-Helou-contract-documents-to-resolve-retainage-conflicts-student-paper.pdf



About the Author


Rony Al Helou

Paris, France

 

 


Rony Al Helou
is a student at Skema Business School (Paris) Msc Project and Programme Management and Business Development (PPMBD). He joined Skema for an Exchange Semester and through those years he enhanced his knowledge in Civil Engineering, Contracting and Contracts analysis before deciding to focus on project management. He also had the opportunity to develop his professional experiences through jobs he had in the civil engineering field. His last achievement was launching his own company in 2015, specializing in Contracting and consulting for construction projects. Practicing project management in the company helped him to decide his orientation in the PPMBD Msc and Complete his Knowledge.