Five Legal issues in the Building and Construction of Large Format Retail Stores

1. Choosing the right construction contract:

Choosing the correct form of building contract is critical when procuring the construction of Large Format Retail Stores (LFRS). There are a range of risks that exist that need to be mitigated and managed.

The right contract will provide a clear roadmap at the commencement of a project as to how each party will carry out the work, help safeguard the project to maximise the prospect that it will run smoothly and lower the overall risk level of the project, which is why financiers will often review and require amendment to the construction contracts of LFRS. Legal advice should be sought on the most appropriate form of construction contract for the specific project: for example, should it be a design & construct contract or is a construct only contract more appropriate in the circumstances.

2. The procurement process:

The process by which a principal/owner will (in this case) procure and appoint a builder and/or consultant (such as an architect, engineer and other services consultants) for a project.

Choosing an appropriate procurement process can significantly impact on the profitability and success of a construction project. A satisfactory procurement process for a LFRS project will seek to, amongst other things, appoint consultants and/or a builder to meet the project’s goals and objectives. A well-structured process can reinforce the Project’s objectives such as team continuity, supplier performance, risk management and contract fulfilment.

3. Finding the right project manager:

Finding and appointing a suitable project manager is often a deciding factor in the success (or otherwise) of a project. The project manager may be responsible for issues including the timeliness of a project, coordinating the consultant team (prior to novation in the case of many D&C contracts) adherence to the project’s budget, monitoring compliance of the works as against the design and contract, the execution and oversight of the works and maintaining a dialogue and relationship between the parties to the project.

4. Disputes:

When a dispute arises, it is essential to obtain legal advice as soon as possible. Legal advice puts a principal/owner in a position to make informed decisions regarding rights, liabilities, and risks when dealing with the dispute. There are many factors within a construction project that can cause disputes. Some of the most prevalent are uncertainties about the terms of the contract (or problems with the drafting or application of the contract’s terms), the behaviour of a party and differences of opinion about the design, specifications and time and/or money issues generally. This potential for dispute underscores the importance of choosing a suitable construction contract at the outset.

5. Find the right lawyer:

Anyone seeking to embark on the construction of a LFRS will benefit from engaging a construction lawyer. A construction lawyer will provide assistance in selecting an appropriate form of construction contract, drafting and negotiating the construction contract, preparing execution copies of the construction contract, advising on contract implementation and interpretation, and if necessary, assist in resolving disputes.

Addressing each of the above legal imperatives will assist in lowering the level of risk associated with the construction of a LFRS and benefit in delivering the project on time, on budget and to the necessary design and other requirements.

Authored by Bridget Cullagh (intern) and Richard Hutchings (Partner)

Disclaimer
This article is general commentary on a topical issue and does not constitute legal advice. If you are concerned about any topics covered in this article, we recommend that you seek legal advice.

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For further information please contact the author or any member of our Building and Construction team.

The Author

Richard Hutchings

PARTNER, MELBOURNE