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Construction Management Contract Template for Indonesia

A Construction Management Contract governed by Indonesian law that establishes the legal framework for the relationship between a Project Owner and a Construction Manager. The agreement details the Construction Manager's responsibilities in overseeing and managing construction projects in accordance with Law No. 2 of 2017 on Construction Services and related Indonesian regulations. It covers project planning, coordination, scheduling, cost control, quality management, and compliance with local building codes and safety standards. The document includes specific provisions for risk allocation, payment terms, and dispute resolution mechanisms aligned with Indonesian legal requirements.

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What is a Construction Management Contract?

The Construction Management Contract is a specialized agreement used in Indonesian construction projects where professional construction management services are required. It is particularly suitable for complex projects where the owner needs expert oversight of multiple contractors and construction activities. The contract, governed by Indonesian law and complying with Law No. 2 of 2017 on Construction Services, establishes the Construction Manager's role as the owner's representative in managing and coordinating all aspects of the construction process. This includes project planning, contractor coordination, schedule management, cost control, quality assurance, and compliance with local regulations. The document is structured to address the unique aspects of Indonesian construction law while incorporating international best practices in construction management. It includes detailed provisions for risk allocation, payment mechanisms, change management, and dispute resolution, making it suitable for both domestic and international construction projects in Indonesia.

What sections should be included in a Construction Management Contract?

1. Parties: Identification of the Principal/Owner and the Construction Manager, including their legal details and representatives

2. Background: Context of the project, purpose of the agreement, and brief description of the construction works

3. Definitions: Definitions of key terms used throughout the contract

4. Appointment and Scope of Services: Formal appointment of the Construction Manager and detailed scope of construction management services

5. Construction Manager's Obligations: Core responsibilities including project management, coordination, scheduling, cost control, and quality assurance

6. Principal's Obligations: Owner's responsibilities including provision of information, approvals, and payment obligations

7. Project Timeline: Key milestone dates, project schedule, and completion requirements

8. Compensation and Payment: Fee structure, payment terms, and invoicing procedures

9. Changes and Variations: Process for managing changes to scope, timeline, or costs

10. Quality Management: Quality standards, inspection requirements, and quality control procedures

11. Health, Safety and Environment: HSE requirements and compliance with Indonesian regulations

12. Subcontracting: Rules and procedures for engaging and managing subcontractors

13. Insurance and Indemnity: Required insurance coverage and indemnification obligations

14. Intellectual Property: Ownership and usage rights of project documentation and designs

15. Confidentiality: Protection of confidential information and trade secrets

16. Term and Termination: Contract duration, renewal terms, and termination provisions

17. Dispute Resolution: Dispute resolution procedures including mediation and arbitration requirements

18. Governing Law: Confirmation of Indonesian law as governing law and jurisdiction

19. General Provisions: Standard boilerplate clauses including notices, assignment, and severability

What sections are optional to include in a Construction Management Contract?

1. Performance Security: Requirements for performance bonds or bank guarantees, optional for larger projects

2. Force Majeure: Specific force majeure provisions beyond standard terms, recommended for complex projects

3. Building Information Modeling (BIM): BIM requirements and protocols, needed if BIM is used in the project

4. Sustainability Requirements: Green building and sustainability obligations, included for projects with specific environmental targets

5. Local Content Requirements: Provisions for local content and technology transfer, relevant for projects subject to Indonesian local content regulations

6. Anti-Corruption: Detailed anti-corruption provisions, recommended for international projects or those involving public funds

7. Step-in Rights: Principal's right to step in and take control, relevant for critical infrastructure projects

8. Parent Company Guarantee: Required for projects where the Construction Manager's parent company guarantee is needed

What schedules should be included in a Construction Management Contract?

1. Schedule 1 - Scope of Services: Detailed description of construction management services

2. Schedule 2 - Fee Schedule: Detailed breakdown of fees, rates, and payment milestones

3. Schedule 3 - Project Program: Detailed project timeline, milestones, and critical path

4. Schedule 4 - Key Personnel: List of key personnel and their roles/responsibilities

5. Schedule 5 - Site Information: Site details, access requirements, and existing conditions

6. Schedule 6 - Forms and Procedures: Standard forms for variations, claims, and reports

7. Schedule 7 - Quality Management Plan: Detailed quality management procedures and requirements

8. Schedule 8 - HSE Requirements: Detailed health, safety, and environmental requirements

9. Appendix A - Project Drawings: Reference drawings and specifications

10. Appendix B - Permits and Approvals: List of required permits and responsible parties

Authors

Alex Denne

Advisor @ GenieAI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Indonesia

Publisher

GenieAI

Document Type

Project Agreement

Cost

Free to use

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