Now that contractors and the general public are becoming aware of the benefits of trenchless technology for the purpose of pipeline and cable installation, the use of trenchless construction and rehabilitation methods are on the rise. Not only do trenchless projects involve lesser time and minimal disruption, they also provide an effective solution for issues relating to land acquisition. Legalities related to any construction project are always challenging, and needs to be dealt with before a project is begun, to minimize loss in terms of time and money. Legal issues not only take up money, they also take a lot of time once caught in the crosshairs of the legal system. Time lost in a construction project is a financial loss in terms of hired men and machinery, in addition to fines imposed for overshooting project deadlines. The first step to a successful trenchless project is planning.
The most challenging part in the planning phase is land easement acquisition. Thanks to trenchless technology, land owners are more comfortable handing over their land to a contractor. Easement is basically an agreement between the land owner and the contractor for use of the owners land for a specific period of time. Easements can be temporary or permanent. Permanent land acquisition may be required where permanent structures such as valve chambers or block valve stations and manholes, related to the project will have to be erected. Temporary easements will have to be acquired when the land has to be used for allowing activities related to construction and installation like creating entry and exit shafts for the purpose of placing materials, machinery and men for carrying out the project. Sometimes in temporary easement there may be a need to move structures, if any exists over the planned route. Costs related to land easement are usually made during the analysis stage, however; delays related to easement, indirect costs and legal issues should also be considered.
Based on state guidelines, land acquisition is done either as ‘Acquisition by agreement’ or ‘Compulsory acquisition’. Before compulsory acquisition is resorted to, all means to reasonably negotiate with the landowner is undertaken. Once the land requirements are identified by the council dealing with such matters, the landowners are contacted with a letter requesting access for a council appointed valuer to the land for the purpose of assessing compensation payable to the owner. If the landowner permits access, a negotiable deal is offered based on the valuers assessment. Once the deal is finalized, the owner makes an agreement either to acquire easement or to acquire land for public purposes. Further legal procedures are to be followed depending on the agreement.
As with all construction projects, trenchless projects also involve many phases and activities. All these activities though interconnected, need different types of suppliers, equipment and manpower skills. Relying on a single contractor for the purpose of executing an entire project can prove to be a disaster. It is the responsibility of the project manager to appoint a contract officer for the purpose of employing different contractors, to work in coordination, under his jurisdiction, to complete the project.
Prior to commencing the search for contractors, a cost analysis is carried out to determine a negotiable position that permits the contracting officer and the contractor to reach a reasonable price. It rests on the contracting officer’s best judgment to negotiate either within his quoted price or to stretch it further so as to reasonably accommodate the contractors deal because the contracting officer knows the actual price that the government will pay.
A contracting officer may have to consider many factors while selecting contractors and negotiating. To get the best contractor for a project, a fixed price deal with effective price competition will result in realistic pricing, for which price analysis can provide the basis for selecting the type of contract. When price analysis is insufficient or when there is ineffective price competition, the basis of negotiation is taken to be the cost estimate of the government or the company offering the contract. As far as possible the contracting officer tries to establish a fixed price contract for the entire contract unless unforeseen changes are expected or performance uncertainties make it difficult to estimate costs in advance. In some cases, such as when a project has to be urgently completed, the Government may shoulder the greater risk and may also offer incentives to ensure the project is completed on time.
The contract price includes the project cost, profit, and overhead expenses imposed by the contractor. This cost should be legally documented and should be binding between the owner and the contractor. Contracts are awarded either through the bidding process or by negotiating. During the bidding phase, detailed plans and estimates are submitted by the engineering department, however; once the work is completed, the selected contractor is paid based on the actual quantities of work. Sometimes owners do not undertake the bidding process rather employ a more flexible pricing arrangement by selecting their own contractors and negotiating with them. These contractors are often those that have successfully worked for the owner previously, or have an excellent track record.
Four different types of contracts are used:
Fixed Price Contracts
This includes all the costs related to the construction activity and may include benefits for early completion or penalties for delay in project. This contract is generally used when the scope and cost of work is clear. The risk is on the contractor’s side, and that should be taken into account at the time of negotiation.
This involves payment of incurred cost from construction activity either as direct or indirect cost. Overheads and profits have to be specifically mentioned by the contractor in a pre-negotiated amount. This contract is applied when the scope of work is undefined.
Time and Material Contracts
This involves an agreement between the owner and the contractor for an hourly or daily rate including additional expenses. This contract is used when the scope of work is not clear.
Unit Price Contracts
This type of contract has a predetermined set of quantities that have been priced, which enables the owner to check for price inflation of services or goods that he is hiring. Unit pricing can be adjusted when there is a change in scope of work.
Trenchless technology has made construction related legalities, especially those related to acquiring land for easement much easier than those associated with open cut installation projects. It also causes minimal excavation of ground surface and helps in a relatively quicker completion of construction activities. Knowing legal formalities and implication are essential to complete a project in the given time frame. Often delayed projects are a result of incomplete legal paperwork and incorrect methods of acquiring land for easement or purchase. Hiring a legal consultant well versed with related issues can ease the legal burden from any construction project and ensure timely completion.