SLOVENIA Law and Practice Contributed by: Blaž Ogorevc, Miha Štravs and Blaž Murko, Odvetniki Šelih & partnerji, o.p., d.o.o.
of the price-change risk (up to 10% increase in price of elements) to the contractor. 7.2 Assigning Responsibility for the Design and Construction of a Project Responsibility for the design and construction of a project is split between the contractor and the project designer. The contractor and the project designer may be responsible for defects in the structure, which occur due to the building not being constructed in accordance with the design or the professional code of conduct, as well as the defects in the solidity of the structure, which is stricter, as the liability for defects in the solid - ity of the structure extends over a period of ten years after handover and acceptance. If there is a defect in the project design, the pro - ject designer is liable. If the defect is due to the special nature of the site, the designer is liable, as it must take the relevant site conditions into account in the design process. However, the contractor may also be liable if it should have detected the defect due to the special nature of the site if it had acted diligently. In the case of a defect in the material, the designer is liable if it has included inappropriate materials in the build - ing design. The contractor may also be liable for a defect in the material if the correct material was planned but the contractor used the wrong material. For defects in the manner of execution, liability lies with the contractor. 7.3 Management of Construction Risk Construction risk is managed, to a certain extent, through the appointment of a construc - tion supervisor. The construction supervisor is responsible for the supervision of construction works so as to ensure that the statutory require - ments are complied with, that preventative action is taken and that defects are prevented in a timely manner.
Each contractor is also obliged to take out insur - ance against liability for damage in connection with its activity. The liability insurance must cover liability for damage caused to the investor or to a third party in connection with the per - formance of the contractor’s activities and must cover damage caused by negligence, fault or default of the contractor and its employees, up to an annual sum insured of at least EUR50,000. The investors commonly request that their con - tractors conclude insurance policies with higher insurance sums. In addition to the foregoing, construction agree - ments commonly require that the contractor delivers bank guarantees for good performance, return of the advance payment or remediation of defects during the warranty period. 7.4 Management of Schedule-Related Risk Construction contracts commonly foresee con - tractual penalties for delays in the execution of works. The contractual penalties are typically foreseen not only in case of delays in the com - pletion time, but also penalise delays to (certain) interim milestones. In addition, timely comple - tion of construction by the contractor is also commonly secured by a performance bond. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance It is common for investors to seek additional forms of security to guarantee the contractor’s performance on a project. The most common forms of security are (different) bank guaran - tees, bills of exchange, enforcement notes, par - ent company guarantees or use of the retained amounts, etc.
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