LITHUANIA Law and Practice Contributed by: Evaldas Klimas and Mantas Lideika, WALLESS
to general contracting. Other structures would be priced using the maximum guaranteed price and unit price. The market trend was to employ a construction management company that employs several contractors, or to employ one general contractor with a nomination of suppli - ers or contractors of certain works for a fixed price. The changes in construction regulation which will come into force as of November 2024 will secure the market model of working by a form of general contracting. 7.2 Assigning Responsibility for the Design and Construction of a Project Control and full responsibility for the design pro - cess are usually assigned to the designer until the construction permit is received. The owner is only required to provide initial information and to approve the solutions. After the construction permit is issued, the prep - aration of the work’s design documentation is usually assigned to the contractors who perform the construction works. During the construction, the contractors are responsible for the proper performance of the construction. However, the construction results are reviewed by the technical engineer and the designer, who ensure that the construction fol - lows the solutions of the design documentation. The market trend is to employ a design and con - struction management company that not only selects the designers and contractors, but also supervises them. 7.3 Management of Construction Risk Market players use various methods to manage construction risks. Employers request contrac - tors to secure all risk (CAR) insurance to cover their damages. A wide list of insurance and
warranties over standard representations and warranties (REPs) is requested. Employers also request an advance payment guarantee and a contract implementation guarantee (5% to 10% of the contract price), and retain 5% to 10% of the contract price, which is released when a three-year guarantee is presented – this is usually a 5% warranty issued by the insurance company. The parties’ liability is usually limited to 10% of the contract prices. The limitation of liability can - not be applied when there is gross negligence, where the damage was caused intentionally or when there is loss of life or health, or non-mate- rial losses. 7.4 Management of Schedule-Related Risk Schedule-related risks are among the most dis - cussed in the market. Some employers insure this risk, but usually monetary compensation is awarded in cases when the contractor fails to achieve certain milestones on the critical path to the development of the project. However, the parties can agree on much stricter terms. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance The construction market uses all basic forms of security that are known in other contractual relations. The employers usually request that the contractors provide an insurance compa - ny’s performance warranty or, in some cases, even the first-demand guarantee issued by the bank. Escrow accounts are not so popular in the market. Mother-company surety is also widely used, on the contractor’s side when the devel - opment budget is tight, and on the employer’s side when a general contractor or supplier has doubts about the development of a special-pur - pose vehicle’s future performance.
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