SWITZERLAND Law and Practice Contributed by: Francis Nordmann, Johannes Bürgi, Christian Eichenberger and André Kuhn, Walder Wyss Ltd
7. Construction 7.1 Common Structures Used to Price Construction Projects As consideration for the services performed by the contractor, prices are usually agreed as unit prices ( Einheitspreise ) or lump sums ( Globalpreise ), or at a flat rate ( Pauschalpreise ). These prices are normally considered as fixed prices. Due to the war in Ukraine and increased inflation,some total contractors have started to renegotiate fixed prices. Unit prices determine the consideration for indi - vidual services that are listed as separate items in the schedule of services. They are defined for the individual units of quantity, so that the consideration owed for a service is computed after its completion. The quantities of services performed at unit prices are determined accord - ing to the terms of the contractor agreement, in accordance with their actual measure (by measurement, weighing or counting) or with their theoretical measure based on the underly - ing designs. A lump sum may be agreed for individual ser - vices, for part of the project or for the whole of the project carried out by the contractor. It shall consist of a fixed amount of money. Agreements on lump sum payments should be made only on the basis of complete and clear documentation (detailed project specifications, designs, etc). Flat rate prices differ from lump sum payments solely in that they are not subject to price adjust - ment clauses. 7.2 Assigning Responsibility for the Design and Construction of a Project General and total contractor models are often used.
In the general contractor model, the owner uses an architect and engineering team for the plan - ning. The owner either enters into a single plan - ning contract with a consortium of planners/ designers (often in the form of a simple partner - ship) or concludes individual contracts with each architect or engineer involved. For the execution of the construction work, the owner enters into a contract with a contractor who, in turn, uses subcontractors. In the total contractor model, the owner con - tracts with a single company that assumes full responsibility for the planning and realisation of a project. 7.3 Management of Construction Risk The contractor is liable for ensuring that the pro - ject is carried out free of defects, and bears such liability regardless of the cause of the defect (eg, negligent workmanship, use of unfit mate - rials, unauthorised deviation from designs and instructions of the construction manager), and independently of fault. If defects occur, the owner is entitled to defect warranty rights, such as the right of remediation, deduction and/or rescission. Unless otherwise agreed, the owner is to notify defects immedi - ately (ie, within seven days). However, the own - er and contractors often agree on an extended notification period of two years. The owner’s defect warranty rights are subject to a limitation period of five years following accept - ance of the project or a certain part of a project, respectively. 7.4 Management of Schedule-Related Risk Parties are allowed to agree that an owner is enti - tled to monetary compensation if certain mile -
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