January 16, 2023
Brownfield and Greenfield sites each present unique considerations which should be reflected in the given construction contract and understood by all relevant parties. Where parties fail to adequately address project specific requirements in contractual drafting, it can often result in disputes or disagreements, as the parties attempt to devise an interpretation favouring their own interests.
Contractual Points to Consider
Last week’s article provided a deep dive into how latent conditions function in construction contracts and the relevant drafting to keep in mind. However, latent conditions are not the only thing which parties should keep in mind when assessing the appropriateness of contractual drafting for a given project.
Contamination
Contamination is a risk which parties should give particular attention to when looking at brownfield developments. Namely, the parties should agree on who is responsible for contamination and ensure this is accurately reflected in the contractual drafting.
Such responsibility may extend to existing site contamination that is either known or unknown, as well as contamination which may spread from a neighbouring site or is introduced by the contractor.
A tailored approach to contamination risk will often be required, as parties seek to allocate risk in a manner which aligns with the given site conditions. While latent conditions may address unknown contamination on a given site, the parties should ensure drafting reflects any known contaminated or hazardous material, and what happens for contamination introduced or exacerbated by the contractor;
Existing Infrastructure
A brownfield site may have previous infrastructure present that needs to be removed or integrated into the new project. Where this is the case, it is important the contract is prescriptive in dealing with the specific requirements of such.
Where demolition work is required, the party undertaking such works, and who bears responsibility for any associated risks should be clearly provided for, as well as any relevant requirements or standards which apply to such.
Similarly, where existing infrastructure is to be integrated into a new project, it is important for the contract to set out the associated risks that each party is responsible for. This might include any restoration works which need to be undertaken on the existing infrastructure, warranties and undertakings with respect to quality and appropriateness for the project, and what happens in the event those warranties or undertakings are breached.
By addressing potential risks flowing from the integration or removal of existing infrastructure at a contract level, parties can be sure the agreed risk position has been appropriately reflected and minimise the potential for ongoing disputes.
Public Utility Plant
Public Utility Plant, or PUP, has the potential to impact various aspects of brownfield projects if not properly identified and accounted for during design and construction stages.
The risks presented by PUP may include the need liaise with relevant utility owners to arrange for the relocation of the given PUP or ensure that sufficient cover requirements are met.
Furthermore, PUP that has not been sufficiently identified during the preliminary stages of a project may present ongoing concern, as design clashes or constructability limitations can result in significant issues.
Given this, it is important that where PUP may be a risk to a given project, such risks are dealt with to mitigate the potential for delays and disputes moving forward.
Disputes
Construction contracts will ordinarily provide a means of alternative dispute resolution be undertaken prior to litigation being commenced. While the parties are free to elect to include such provisions and prescribe the means of dispute resolution, project specific factors may influence the agreed mechanisms.
Namely, where there are specific risks presented by a project, such as those arising in connection with brownfield developments, disputes associated with such may be best dealt with by an expert in that field. Given this, parties may elect to refer certain disputes, whether classed generally as “technical” disputes, or those which specifically relate to certain issues, to expert determination. Expert determination facilitates a process where the parties can elect an individual who has specific knowledge over a given subject area to assist the parties in resolving the dispute and deciding accordingly.
Parties may also choose to adopt a tiered system to dispute resolution or provide that in only certain circumstances decisions will be binding. Doing so allows the parties to develop an approach with is tailored to their specific requirements.
LPC Lawyers
LPC Lawyers has extensive experienced in drafting and negotiation contracts on both brownfield and greenfield sites. Our team can utilise their experience and understanding of projects to ensure contracts are drafted in such a way which accurately reflects the risks of a given project.
If you require assistance with your next project, please do not hesitate to contact our team.
Contact: Peter Lamont or Ryan Bryett
Email: [email protected] or [email protected]
Phone: (07) 3248 8500
Address: Suite 1, Level 1, 349 Coronation Drive, Milton Qld 4064
Postal Address: PO Box 1133, Milton Qld 4064