Legal contract management of construction projects

Koh Samui

Koh Samui

Endless opportunities for the construction sector of Thailand

Asia continues to be the world’s fastest growing region, and the region is forecast to grow at a yearly rate of around 7 percent. Thailand praises itself as the Asian investment hub and the building and construction sector has a great impact on its future growth with Thailand having a yearly output of roughly 50 million tons of cement. Although the Thai government currently initiates mega infrastructure projects, there is obviously a need and great opportunities for private investors for new construction projects, not driven by state-funded ventures.

Although Thai construction marketís growth prospects by sector, project type, and type of construction activity, Thailand’s construction sector will see a busy time during the next years. The share of construction spending in Thailand can be roughly summarized as 50% infrastructure (and other, mainly public projects), 30% residential and 20% non-residential. While the residential sector is deemed to be the fastest growing segment, the infrastructure sector will certainly be more profitable in the next years.

Cost increases and delays are customary but avoidable

In Thailand, even big construction projects typically base on a merely cursorily documentation and insufficient definition of the terms and conditions, timelines and responsibilities of the parties involved. Competitions and tender procedures are poorly prepared, arranged and managed. Lack of knowledge and ignorance of construction laws and industry practice go hand in hand with a willingness to look for silly shortcuts and an unlawful circumvention of the laws and regulations. This all results in a situation where the investor is not armed and prepared to fight against delays, cost increases and a poor quality of design and construction practices.

Scope of legal services

  • Support and assistance regarding legal aspects of tender documents for architectural and construction contracts
  • Legal assistance regarding private and public building and construction law and architects law of Thailand. Contract management: Design, preparation and negotiation of Thai construction contracts and supportive documents including change order management.
  • Claim and anti-claim management: Enforcement and defense of performance, warranty, deficiency remediation, liability and payment claims. The construction-related legal advice in the pre-construction phase and the course of the construction project.
  • The construction-related legal advice in the pre-construction phase and the course of the construction project.
  • Preservation of evidence, pre-trial discovery, negotiation, and litigation or arbitration in construction, architectural and legal distribution disputes.

A reasonable contract management of construction projects should cover the following aspects::

  • Contract adjustment, the coordination and calibration of the bundle of contractual agreements with separate partners regarding (i) performance profiles and scope of work, timeline and deadlines, (ii) liability and warranty clauses, avoidance of double payment terms and (iii) exit and rescission clauses.
  • Change order management: Qualities, deadlines, costs by (i) pro-active and preventive contract design to avoid the necessity of change orders and (ii) a continuous adjustment of ongoing contracts to implement and define change orders
  • Claim management: Defaults and delays, unilateral performance determination or third-party fault by (i) contractual claim avoidance and reduction strategies and (ii) documentation, preservation of evidence.

What makes the difference is the involvement of an experienced international lawyer to incorporate, integrate and monitor Western standards in Thai construction contracts, procedures, and process engineering. PUGNATORIUS Ltd. is a Bangkok-based specialist provider of bespoke transactional legal and tax advice in the corporate and property legal and taxation industry sectors. Feel free to ask PUGNATORIUS for a particular consultancy offer. 

Disclaimer:A little knowledge is a dangerous thing. This low-resolution high-level outlook constitutes neither legal advice nor an attorney-client relationship.  

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