Which contract is more appropriate?
FEATURED PAPER
By Yi Wang
SKEMA Business School
Paris, France
ABSTRACT
Construction projects will encounter various accidents during the construction process, resulting in disputes over construction delays and cost losses. In recent years, construction claims have received increasing attention from the constructing industry in China. However, the weak sense of claims and the low level of claims management are still common phenomena in Chinese construction enterprises. This shows that the claims management of Chinese law is still not perfect, so this paper will refer to the four internationally mature construction contracts to find the one that is most suitable for China’s national conditions.
This paper uses Multi-attribute Decision Making and Additive Weighting Technique to rank the four claim terms, and concludes that the FIDIC contract is the best standard for dealing with claims in the construction industry. Its contract clause can reasonably and fairly discriminate the responsibility of the parties and protect their legal right to a large extent.
Keywords: Xiaolangdi Dam Project; Construction project; contract management; claim; counterclaim; construction industry; Stakeholder
INTRODUCTION
Project contract management is a complex and comprehensive system engineering. Construction project contract is a type of economic contract and a branch of the whole contract management system. The success or failure of contract management is directly related to the smooth operation of the whole project and the ultimate goal. As a code of conduct with legal effects, the contract largely restricts the behavior of the contractor to the construction project, and at the same time clarifies the responsibilities and obligations of both parties. Any party to the contract shall violate the contents of the contract during the construction period and shall bear corresponding legal liabilities. Construction engineering itself is a very complicated behavior, so the related contract management is a huge and complicated project. Figure 1 shows the contract system of a certain engineering construction project in China. Observing the figure we can find that in the process of contract management if no effective measures are taken, it will inevitably lead to many problems and contradictions.
Figure 1. The contract system of engineering construction project in China[1]
In today’s increasingly fierce competition in the international construction market, China’s construction industry has clearly exposed more and more drawbacks. “Throughout the “Ertan Hydropower Project”, “Wanjiazhai Dam Project”, “Hong Kong International Airport Project”, so much of disputes shows the low level of engineering claims in China, seriously lagging behind the international developed countries is the most prominent problem.”[2] Because of the lack in laws and regulations related to counterclaim in China, the process of claim and counterclaim cannot be guaranteed to proceed smoothly and effectively, which leads to the development of claim and counterclaim cannot proceed smoothly and rapidly.
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Editor’s note: This paper was prepared 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 paul.gardiner@skema.edu.
How to cite this paper: Wang, Y. (2019). Claims and Counterclaims in China — Which contract is more appropriate? PM World Journal, Vol. VIII, Issue IV (May). Available online at https://pmworldlibrary.net/wp-content/uploads/2019/05/pmwj81-May2019-Wang-Claims-and-Counterclaims-in-China.pdf
About the Author
Yi Wang
Paris, France
Yi Wang, Chinese, 24 years old, major in Project and Programme Management & Business Development (PPMBD) at SKEMA Business School in Paris, France. She graduated from Shanghai Institute of Technology University in China and held a Marketing engineer Bachelor diploma. In 2016, she went to the University of Strasbourg in France to participate in the exchange program for one year and successfully obtained a degree in International Economics and Management. She chose to pursue a project management degree in France because there is not a fully mature system in project management in China. The project management knowledge is more professional and authoritative in France. She has three major internships experience in Internet industry, Publishing industry and Real estate industry. Yi Wang has good project management experience during her time at university in Student Union, and she has the potential to become a competitive project manager. She said: “I have my own understanding and mastery of marketing knowledge. Now I am studying project management graduate professional knowledge in order to cultivate my project management ability and think about the status of project management in the market. So that I can get help with my project management skills and marketing skills in my future career and become an excellence manager.”
She lives in Paris, France now and can be contacted at yi3.wang@skema.edu and
https://www.linkedin.com/in/%E6%87%BF-%E7%8E%8B-033b0316b/
[1] By author.
[2] Angelo Kakolyris (13 Oct. 2009) A New Asian Dispute Resolution Tool? Retrieved from https://www.squirepattonboggs.com/en/news/2009/10/a-new-asian-dispute-resolution-tool-english-vers__
