Delivering the construction phase in Portugal

The construction phase is won or lost in the two months before mobilisation. By the time machinery arrives, the design should be complete, the contract signed, the programme agreed, the supervision team appointed and the site obligations discharged. Sites that open with an incomplete design spend the rest of the project pricing changes.

WHAT SHOULD BE CLOSED BEFORE MOBILISATION

• the construction licence collected and the associated charges settled
• the execution design complete and coordinated across disciplines
• the bill of quantities measured and reconciled with the cost plan
• the contract executed, with programme, payment terms and security agreed
• the site opening notices and technical responsibility declarations lodged
• the health and safety plan and coordination appointments in place
• insurances confirmed and in force
• utilities, access and any temporary occupation permissions arranged.

The procurement route determines who carries design risk, how price certainty is achieved, and how quickly the site can start.

• **Traditional (design then build).** The developer completes the design, tenders it, and the contractor prices a defined scope. Best price certainty, slowest start, requires design discipline.
• **Design and build.** The contractor takes responsibility for completing the design against a performance brief. Faster, fewer interfaces, but specification control has to be written into the employer's requirements or quality drifts.
• **Construction management.** Packages are let separately under the developer's management. Flexible and fast on complex or phased schemes, but the developer retains coordination risk and there is no single point of price responsibility.

Selecting a contractor is not only a price exercise. Verify licensing and classification for the works in question, financial standing, current workload, the team actually assigned to the project, and comparable completed schemes visited in person.

Whatever form is used, the commercial terms that matter are consistent:

• the priced scope and what is expressly excluded
• the mechanism for valuing variations, with agreed rates
• the payment cycle, retention percentage and release conditions
• the programme, sectional completion dates and delay damages
• extension of time grounds and the notice regime
• performance security — bond, parent company guarantee or retention
• defects liability period and the process for rectification
• suspension and termination rights on both sides
• insurance obligations and the allocation of site risk.

A lump-sum contract against an incomplete design is the most common source of dispute on Portuguese development sites. The contractor prices what is drawn; everything else becomes a variation at a rate negotiated from a weak position.

Portuguese practice attaches formal responsibilities to the works themselves:

• designated technical responsibility for execution, and for site direction, by qualified professionals
• the site notice displaying the licence details, visible from the public way
• health and safety coordination during execution, with the safety plan kept current
• communication of the site opening to the competent authorities where required
• waste management arrangements for construction and demolition waste
• control of noise, working hours, access, and protection of neighbouring properties
• accurate site records: instructions, valuations, tests, inspections, and daily records.

Failures here rarely stop a project immediately. They surface as enforcement notices, as inspection findings, or as gaps in the handover pack at the moment the utilisation permit is needed.

Monthly cycle on a financed scheme:

1. contractor submits the valuation of works completed;

2. project supervision verifies quantities and quality on site;

3. the monitoring surveyor certifies progress for the lender;

4. drawdown is released, net of retention and any conditions;

5. payment is made to the contractor within the contractual period.

Because certification precedes payment, the developer must fund the working-capital lag. Because certification depends on quality, a persistent defect can stop the entire cash flow, not merely the disputed element.

Every project changes. The discipline is not to avoid change but to control it:

• no instruction without a written variation order
• every variation priced and dated before it is executed where at all possible
• a single live register showing cost, time impact and approval status
• contingency drawn against the register, with visibility of the remaining balance
• monthly reconciliation of the register with the cost report and the cash flow.

Where a change also alters the approved project in planning terms, treat it as a licensing item first and a cost item second. Building it and regularising later is the expensive order.

• materials approvals and sample panels agreed before ordering
• inspection and test plans covering structure, waterproofing, thermal and acoustic performance, and building services
• commissioning schedules for mechanical, electrical and plumbing installations
• accessibility and fire safety compliance verified against the approved project, not assumed
• snagging carried out progressively as areas complete, not left to a single end-of-works exercise
• photographic and documentary records maintained throughout, including works that will be concealed.

Concealed works are the recurring problem. Anything that will be covered — waterproofing, drainage, reinforcement, insulation — must be recorded before it disappears, because the alternative later is opening up finished work.

The documentation assembled during the works is what supports the utilisation permit and, later, the sale. Assembling it retrospectively is slow and incomplete.

• as-built drawings for all disciplines
• certificates and declarations of conformity for installations
• energy certification
• infrastructure and utility connection confirmations
• test, commissioning and inspection records
• materials data, warranties and maintenance instructions
• the technical file expected for the completed building
• the variation register reconciled with the approved project.

Completion in commercial terms and completion in regulatory terms are not the same date. The utilisation permit follows the completion of the works, the submission of the required declarations and certificates, and — depending on the municipality and the use — inspection.

Model that gap deliberately: finance continues to accrue, and units generally cannot be transferred to purchasers on normal terms until the permit position is resolved. Sponsors who plan sales completions against practical completion rather than against the permit consistently miss their own deadlines.

• contractor insolvency mid-works, and the cost of remobilising a replacement
• material and labour cost escalation over a long programme
• archaeological or ground conditions discovered after excavation begins
• utility connection lead times outside the developer's control
• weather and seasonal restrictions in coastal or protected locations
• neighbour complaints and consequent restrictions on working hours
• divergence from the approved project accumulating unnoticed until inspection.

Each of these has a mitigation — performance security, indexation, ground investigation, early utility applications, realistic programming, community engagement and a live change register. None of them has a cure available at the point where the permit is being requested.