| A global construction project is a construction project that involves parties from several different countries. An owner of a global construction project may hire general contractors, subcontractors, engineers, and suppliers from different countries in order to complete the project. The owner may enter into contracts with the general contractors, the subcontractors, the engineers, and the suppliers, each of whom may or may not enter into contracts with each other.
There are several reasons that a construction project becomes a global construction project. First, an owner may want to take advantage of a greater number of competitors for the project in order to obtain the lowest price for the project. Second, because most large construction projects involve several different aspects of construction, the owner may want to look to international sources in order to complete the project in the most efficient manner. Third, because of the size of the project, the owner may want to spread the risk among various entities and to obtain the best financing. Lastly, the owner may want to secure labor from another country in order to reduce the cost of the project.
Because many different entities may be involved in a global construction project, an owner may be faced with unfamiliar laws and practices on the part of its general contractors, subcontractors, engineers, or suppliers. This has led to a need for standard procedures and contracts. International institutions, such as the World Bank and the United Nations, have developed standard forms and model laws that can be used for these projects. Such forms and model laws include standard practices, such as competitive bidding and performance bonds, and include standard contract provisions, such as arbitration clauses and damages clauses. These forms have also recently started dealing with ways to eliminate corruption and bribery in the construction process.
Even though there are currently no laws that have been enacted regarding international construction law, the standardized forms and model laws that are being developed by the World Bank, the United Nations, and other international institutions will make it easier for an owner to engage in a global construction project. The owner and its participants in the project will also have a better understanding of their roles in the project and their remedies in the event that problems are encountered with the project.
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