KENYA Law and Practice Contributed by: Anne Kinyanjui and Loice Erambo, DLA Piper Africa, Kenya (IKM)
7.2 Assigning Responsibility for the Design and Construction of a Project The design and construction of a project may be allocated as follows. • The project proponent may undertake the planning aspect of the project in-house in consultation with relevant professionals, including architects and engineers. In the case of government projects, public partici - pation will be required in the design process. Once the design is approved, the project proponent invites bids for construction in accordance with the approved plan. In this case, the contractor’s scope of work is limited and, therefore, the cost of construction is reduced. • The project proponent may invite bids for both the planning (design) and construc - tion of the project. The competitive bidder is selected to undertake both functions. Once the final plan is approved, the contractor pro - ceeds with construction in accordance with the approved plan. 7.3 Management of Construction Risk Construction risk is largely managed as per the terms of the construction contract, which may provide for: • proper risk allocation to the party best suited to manage the risk – usually the contractor; • limitation of the contractor’s liability to the price of the contract; • indemnity and warranty provisions to cush - ion the project proponent from constructions risks; • the requirement for the contractor to take up insurance against construction risks; • force majeure provisions to cushion the par - ties from unforeseen circumstances that may
delay or render the project impossible to implement; and • performance guarantees and bonds, particu - larly in government projects. 7.4 Management of Schedule-Related Risk The parties may agree to a milestone-based construction schedule. The contract may pro - vide for liquidated damages to be paid by the contractor in the event of inexcusable delays in attaining the milestones. In cases of inordi - nate inexcusable delays, the contract may also provide for termination at the discretion of the aggrieved parties. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance Project owners may call for additional security to guarantee a contractor’s performance, including: • guarantees from the contractor’s parent com - pany and third-party sureties; • performance bonds from reputable insurers; • payment guarantees from the contractor’s bankers; • letters of credit from reputable financiers; or • holding the contract sums in an escrow account, with payments being released to the contractor upon the attainment of relevant milestones. 7.6 Liens or Encumbrances in the Event of Non-payment Unless restricted in the construction contract, an unpaid contractor has a builder’s lien over the constructed property so long as they main - tain possession of the property. Financiers may require a contractor to sign a waiver of a build - er’s lien.
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