AUSTRIA Law and Practice Contributed by: Christoph Urbanek, Irena Gogl-Hassanin and Mario Schiavon, Urbanek Law
7.2 Assigning Responsibility for the Design and Construction of a Project In Austria, project responsibilities can be assigned through several models. The tradi - tional model separates design and construction, with the client hiring an architect and a contrac - tor independently. In the principal model, one company handles the entire process. General contractor agreements involve a single com - pany managing the project, often delegating tasks to subcontractors. For complex projects, the Design & Build model combines design and construction under a general contractor, stream - lining co-ordination and reducing client risk. Responsibilities are typically well-defined, with the client holding overall accountability and each party liable for its specific role. 7.3 Management of Construction Risk Various instruments are used for risk manage - ment in construction projects, including: • indemnifications (exemptions); • guarantee declarations; • liability restrictions; and • waivers of certain claims for damages. These serve to regulate risks in relation to the following: • construction errors; • delays; • unforeseen costs; and • liability exclusions. Indemnifications relieve a party of liability for certain damages, while guarantees ensure the quality of the work or materials performed. Limitations of liability restrict liability for certain damages or set caps on damages. Waivers may exclude certain types of damages (such as con - sequential or indirect damages). However, these
loss incurred by the landlord as a result of the breach of contract. In addition, the landlord can claim outstanding rent, but lump-sum penal - ties or excessive compensation are usually not allowed. In addition to back rent and the tenant’s eviction, the landlord may also claim expenses for re-letting or renovating if these become nec - essary due to the breach of contract. Usually, landlords hold security deposits as a security deposit, which is usually deposited in cash, but bank guarantees or sureties in the form of letters of credit are also common practice. The security deposit serves as security against rent losses or damage and, according to the German Tenancy Act, must be deposited within a certain range (usually a maximum of three months’ rent). 7. Construction 7.1 Common Structures Used to Price Construction Projects The most common pricing model structures for construction projects are fixed-price contracts and cost-plus contracts. In a fixed-price con - tract, the total price for the construction project is agreed in advance, with the client bearing the risk of cost overruns. This type of contract is par - ticularly common for clearly defined projects with well-delineated services. In a cost-plus contract, on the other hand, the client covers the actual costs of the project (eg, materials, labour) and pays the construction company a fixed margin or a fixed surcharge on top of that. This model is often used for less predictable projects where the exact costs are difficult to calculate. Both models offer advantages and disadvantages, depending on the type of project and the risk appetite of the parties involved.
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