PERFORMANCE BONDS AND GUARANTEES: CONSTRUCTION OWNERS AND PROFESSIONALS BEWARE
Performance bonds and guarantees have been the subject of considerable litigation in recent years in not only the United Kingdom but also some other common law jurisdictions. The aim of this research is to identify the issues most commonly in dispute and the legal principles governing their resolution. Possession of knowledge of the issues and principle should alert the construction and engineering industries and their legal advisers to the matters that need serious attention in the drafting and negotiation of these instruments. Clarity in the legal principles should also contribute to a reduction in litigation. The issues identified include whether an instrument is a conditional or an on-demand bond, the effect of failure on the part of the beneficiary to give notices, availability of an injunction to restrain the surety from paying after a call has been made by the beneficiary, availability of an injunction to restrain a beneficiary from receiving payment after a demand has been made, availability of an injunction to restrain a beneficiary from making claim, availability of a Mareva injunction to freeze the fruits of a call, meanings of certain phrases used in the instruments, and a duty to account for proceeds of a call. The principles governing their resolution were also identified. Particular attention must be paid to any ambiguity whether a surety is liable is always construed in the surety's favor, and prejudicial conduct by the beneficiary releases the surety unless the instrument provides expressly to the contrary.
Effectiveness of economic incentives on clients’ participation in health and safety programmes
The use of economic incentives to improve health and safety (H&S) performance in the construction industry in general has been investigated by various scholars. However, few studies have looked at the impact of economic incentives on construction clients, especially in the developing world. This paper reports findings on the feasibility of incentives to influence construction clients to perform on H&S.
The investigation was conducted using a Delphi technique to determine the impact significance of economic incentives or disincentives on construction clients' H&S performance. A panel of experts in construction H&S was assembled from most regions of the world. A threeround iterative Delphi study aimed at establishing consensus from the expert panel was then conducted.
The study found that economic factors have critical impact significance on clients' H&S performance, and that clients were 'very likely' to implement various H&S elements as a result of the economic incentives and or disincentives.
There is little research on the use of incentives to influence construction clients' H&S performance and the effectiveness of such incentives. This gap in literature, and the need for improvement in construction H&S performance, motivated the current study. Therefore it was necessary to investigate specifically the extent to which economic incentives could be used to influence construction clients to become involved in H&S programmes. Economic incentives are considered to be a proactive way of improving H&S performance among other key parties, such as employees in the construction industry.
The paper reports on the findings from an analysis of the impact significance of economic incentives on clients. It underscores the point that economic incentives or disincentives for construction clients are necessary to encourage them to actively participate in H&S programmes, hence resulting in performance improvement.
Contractor Financing, Public Works in Saudi Arabia
In recent years many changes have occurred in the construction industry in Saudi Arabia, caused by the switch in emphasis from new onstruction—building the infrastructure—to operation and maintenance, the declining revenue from oil sales, and the planned privatization of many aspects of construction. Contractor financing has changed from interest-free loans provided by the government—in the form of large advance payments—to short-term, fee-bearing loans provided by commercial banks. A commercial banking system, established under strict government regulation, is providing loans, bonding, leasing, letters of credit, hedging and other financial services to contractors. Commercial banking in the Kingdom faces various problems not present in western countries, in complying with Islamic mores. This paper discusses the financial requirements set by the Saudi Arabian government for contractors engaged in public works, the establishment of, and the financial services offered by, the commercial banks in the Kingdom, and the cost and qualifications for obtaining these services.