Curious how construction contract agreements work in Kenya?
Or, perhaps wondering where you can find a suitable contractor agreement sample for your building project in Kenya?
Well, worry no more – you’ve found just the right resource.
As a leading construction project management firm in Kenya, Integrum has been providing contract administration services in both private and public building projects across the country. And while at it, our project managers have had the chance to manage construction contract agreements on not just the developer’s side, but also the contractor’s side.
As such, you can count on us to walk you through all the basics of construction contract agreements in Kenya. This guide provides both developers and building contractors with insights into:
- What construction contract agreements are all about.
- When to use construction contract agreements in Kenya, and how to leverage them in your building project.
- Where to find an ideal construction contract agreement for your building project.
- All the essential terms you should include in your building contract agreement.
- The standard conditions of contract for constructions in Kenya.
Then to top it off, we’ve also featured sample construction contractor agreements for both private and government projects, along with their accompanying conditions of contract. You can use them as templates for developing your project’s contract agreement and conditions.
What Are Construction Contract Agreements?
A construction contract agreement is a legal document that spells out the scope, terms, and conditions for a building project.
The agreement itself is usually made between the contractor and the party that commissions them to carry out the construction works.
As such, it sets the conditions for engagement between the two parties, including the responsibilities of both the employer and the contractor.
All these are broken down into clauses that define, for instance:
- The works that will be carried out.
- The costs of the building materials and labor.
- The payment schedule and terms.
- The construction commencement date.
- The projected construction completion date.
- The parties that will be involved throughout the construction period.
- The communication procedures to be used throughout the construction period.
- The procedures for changing the works or other conditions of the agreement.
- The dispute resolution mechanisms in case any disagreements arise during construction.
Other terms that people commonly use in Kenya to describe such construction contract agreements include:
- Service Agreement for Construction.
- Construction Contractor Agreement.
- Construction Contract.
- Contract for Construction.
- Construction Services Contract.
- Construction Management Agreement.
- Construction Contract Document.
- Construction Agreement.
- Standard Forms of Contract.
- Standard Contract Documents for Construction
Now, make no mistake about them. Construction contract agreements and conditions don’t come in the form of a simple single-page document. Rather, they are published as booklets that cover everything, down to the last detail.
The goal here is to comprehensively outline the scope and terms of the project, leaving little to no room for confusion on either side. You’ll also notice that the conditions are often written in an unambiguous manner to avoid misinterpretations that may compromise the works, or lead to disputes. (Find out the Common Forms Of Construction Fraud In Kenya)
Ok, now that might get you wondering where you can get such a solid contractor agreement.
Is there a specific source for construction contract agreements in Kenya? Maybe a website for downloading a construction contract agreement template? Or should you just draft your terms from scratch based on what you want from your employer/contractor?
Also, who should provide the building contract in the first place – is it the employer or the contractor? And, who’ll follow up after the signing to ensure that each party abides by the contract terms?
Here are the answers…
Where To Get Building Contract Agreements In Kenya
One place you can find a comprehensive construction contract agreement for your building project in Kenya is JBCC.
The Joint Building and Construction Council is a collaborative body that was formed by the Architectural Association of Kenya (AAK) and the Kenya Association of Building and Civil Engineering Contractors (KABCEC).
Among its publications is a document known as the JBCC Standard Form of Contract, which spells out the industry-accepted agreement and contract conditions. This is what is popularly adopted in construction sites across the country, as it safeguards the interests of not only the developer, but also the contractor – while spelling out the roles of the building professionals involved.
A word of caution, though. Don’t rush into adopting the terms. Instead of blindly applying such a contract document to your construction project, you ought to have it tweaked based on your specific project requirements.
Now that’s where we come in. As a construction project management firm, Integrum helps its clients by developing and implementing proper contract agreements based on their specific project scope, plus industry standards and legal guidelines in Kenya. This is part of our contract administration services.
And to give you an idea of what to expect, here is a brief summary of the fundamental terms that come with construction contract agreements.
15 Critical Clauses To Include Your Construction Contract Agreements
For any construction contract agreements in Kenya to be considered complete, the following key clauses must be included within the conditions of engagement:
#1. Stakeholder Roles: This is where you provide guidelines on the obligations of all the primary stakeholders involved in the administration of the construction project. That includes the developer, contractor, subcontractors, project managers, architects, and quantity surveyors. (Check out the Architectural Fees In Kenya).
#2. Contract Documents: This outlines all the key project documents that the contractor and subcontractors will be using as guidelines during the entire project. They include; the articles of agreement, the accompanying contract conditions, contract drawings as prepared by the architect and engineers, building specifications as prepared by the design team, plus the contract bills of quantities that break down the scope of work and the rates for the construction materials.
#3. Contract Price: This states the agreed price of engaging the contractor in the construction project, and then proceeds to spell out the circumstances that may or may not affect the final price during and after construction.
#4. Liabilities: The Liabilities section outlines the culpability of each party during and after construction, especially as it pertains to common risks such as personal injury and property damage.
#5. Insurance: This is where you get into detail about the insurance covers that each party will be required to purchase as protection against the liabilities. You can, for instance, require the contractor to purchase a Contractors’ All Risks Insurance policy that adequately covers all the typical risks. (Check out this article on How To Prevent Prilferage Of Your Construction Materials).
#6. Performance Bond: The Performance Bond clause states the obligations of the contractor in providing a bank/insurance company surety – as a guarantee that they’ll perform their duties accordingly during the period of the construction contract. Generally, such Performance Bonds come with a surety of about 10% of the total value of the contract.
#7. Site Possession and Works Programme: This section specifies when the construction works should commence, the period for construction, who takes possession of the site during the project, and the parties that’ll be allowed to access the building works.
#8. Site Instructions and Specifications: This sets out the procedure for issuing instructions to the contractor and subcontractors during the project, and then provides guidelines for the standards that’ll be expected of the materials used. (Here are insights into Roofing Materials In Kenya).
#9. Material Testing: This states all the tests that’ll be carried out on various materials to confirm their performance, plus the general procedure for collecting and handling the test samples. (Here’s a complete guide to Preventing Building Collapse).
#10. Payments: This is where you clarify the payment procedure that’ll be followed before, during, and after the construction works have been completed. Construction contract agreements usually provide even the details of the accompanying contractor payment certificates – including Interim Certificates, Certificate of Practical Completion, Certificate of Making Good Defects, and the Final Certificate.
#11. Variations: The Variations section should contain guidelines on how changes to the design, materials, or works will be handled during and after construction.
#12. Nominated Subcontractors and Suppliers: This is all about the entire process of nominating, managing, and paying subcontractors and suppliers.
#13. Suspension of the Works: This outlines the specific circumstances that allow either party to suspend the works, the subsequent procedure for suspending the works, as well as the mitigation measures that follow.
#14. Contract Termination: This is the clause that provides guidelines for premature contract termination by either party.
#15. Dispute Settlement: In case disputes arise during and after the building project, this is the clause you’ll refer to. It clarifies all the procedures that should be followed from raising a claim to engaging external arbitrators.
(You might also want to check out the guidelines for building from the Kenya diaspora.)
Construction Contract Agreement Samples [PDF] – For Projects In Kenya
JBCC Construction Contract Agreement Sample
Here’s the construction contract agreement template recommended by the JBCC:
JBCC Standard Form Of Contract Sample
The JBCC Articles of Agreement is usually accompanied by the following contract conditions:
PPRA Construction Contract Agreement Sample
When it comes to public projects, government bodies and agencies usually apply the standard construction contract agreement recommended by the Public Procurement Regulatory Authority (PPRA). You’ll find it in the Standard Tender Document For Procurement Of Building Works.
PPRA Standard Form Of Contract Sample
The PPRA Contract Agreement for Building Works normally goes hand in hand with the following Conditions of Contract:
Over To You
The principal objective of construction contract agreements is to streamline delivery and guide all the key stakeholders towards successful project implementation. Therefore, it goes without saying that the accompanying conditions ought to be as explicit as possible, leaving no room for ambiguity or assumptions. (Find out How Not To Invest In Kenya’s Real Estate).
You can go ahead get in touch with us today for professional assistance in drafting the contract documents, tender management, plus contract administration during the entire project.
And yes, in case you’re wondering, these services don’t apply to developers alone – Integrum is open to representing construction contractors too. Well help you with bidding, contract negotiation, procurement planning, building works management, subcontractor management, project cost tracking, schedule planning, payment applications, cash flow management, and contract administration.