Ghana: Construction Comparative Guide

1 Legal framework

1.1 Which legislative and regulatory provisions govern construction projects in your jurisdiction?

The key laws governing construction projects in Ghana are:

• the Contracts Act, 1960 (Act 25);
• the Local Governance Act, 2016 (Act 936);
• the Land Use and Spatial Planning Act, 2016 (Act 925);
• the Land Use and Spatial Planning Regulations, 2019 (LI 2384);
• the Building Regulations, 2022 (LI 2465); and
• the Ghana Building Code, 2018 (GS 1207:2018).

Under the Local Governance Act, a building permit must be obtained from the relevant local authority prior to:

• the commencement of the construction of a building or other structure; or
• the undertaking of any other work relating to the construction of a building or structure.

The Land Use and Spatial Planning Act also requires that an appropriate land use certificate be attached to the building permit by the local authority. A development permit – which gives due consideration to planning matters including land use, building lines and setbacks and physical accessibility to the site, facilities and utilities – must also be obtained for a construction project.

The Building Regulations prescribe standards that must be adhered to in the design and development stages of construction projects. Upon completion of construction of a building used for any purpose, the local authority will issue a completion certificate and a certificate of habitation must be obtained from the local authority. The Ghana Building Code, 2018 establishes minimum requirements for buildings and ensures uniformity of standards in the building construction industry in terms of:

• public health;
• general safety;
• fire protection;
• structural efficiency and integrity; and
• environmental integrity and sustainability.

1.2 What other legislative and regulatory provisions have relevance for construction projects in your jurisdiction?

The Land Act, 2020 (Act 1036) governs the acquisition and perfection of interests in land. The land for the construction project must be acquired and registered in accordance with the terms of the Land Act.

Under the Environmental Protection Agency Act, 1994 (Act 490) and the Environmental Assessment Regulations, 1999 (LI 1652), an environmental permit may be required for a construction project if the project has or is likely to have an adverse effect on the environment or public health. An application for an environmental permit must be accompanied by an environmental impact assessment if the project falls within a list specified in the second schedule of the Environmental Assessment Regulations, which includes:

• housing developments;
• hospitals;
• airports;
• roads;
• railways; and
• petroleum and mining projects.

The Insurance Act, 2021 (Act 1061) requires that commercial buildings be insured during construction and use with a licensed insurer.

The Fire Precaution (Premises) Regulations, 2003 (LI 1724) provides that:

• a fire permit must be obtained for the development of a project site; and
• a fire certificate must be obtained upon completion of the project where the building is a place of work or premises which is accessed by the public.

The Factories Offices and Shops Act, 1970 (Act 328) regulates occupational safety and health and requires:

• compliance with respect to:
• • sanitary facilities; and
  • fire detection and firefighting equipment; and
• the reporting of accidents to the appropriate authorities.

When required:

• the project site must be registered with the Department of Factories Inspectorate; and
• the building plans and other documentation must be submitted to the chief inspector.

An air safety permit must also be obtained from the Ghana Civil Aviation Authority if the construction project:

• lies within an airport zone; and
• has an overall height that exceeds the prescribed level necessary to prevent obstruction of the navigable air space.

The Architects Act, 1967 (NLCD 357) and the Engineering Council Act, 2011 (Act 819), together with the Engineering Council Regulations, 2020 (LI 2410), regulate the practice of architecture and engineering respectively.

1.3 Which bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?

The regulatory bodies responsible for enforcing the laws and regulations referred to in questions 1.1 and 1.2 are:

• the local authority (ie, the metropolitan, municipal or district assembly) within whose jurisdiction the project is located;
• the Environmental Protection Agency;
• the National Insurance Commission;
• the Ghana National Fire Service;
• the Department of Factories Inspectorate;
• the Ghana Civil Aviation Authority;
• the Architects Council; and
• the Engineering Council.

There are also sector-specific ministries and agencies that will have legal and regulatory requirements regarding construction projects within their respective sectors.

Generally, these bodies have the power to:

• inspect sites;
• suspend, cancel or revoke permits or licences; and
• impose fines for regulatory breaches, in accordance with relevant law.

Under the Constitution of Ghana, 1992, the attorney general is responsible for the initiation and conduct of all prosecutions of criminal offences on behalf of the state.

Key ministries that have oversight of public sector construction and infrastructure activities include:

• the Ministry of Roads and Highways;
• the Ministry of Transport;
• the Ministry of Railways Development;
• the Ministry of Works and Housing;
• the Ministry of Sanitation and Water Resources;
• the Ministry of Health; and
• the Ministry of Education.

1.4 What is the general approach in regulating the construction sector?

There is an established legal and regulatory framework, but it is widely accepted that improvement is required in terms of implementation, monitoring and enforcement.

The construction sector lacks a single regulatory authority. However, there is a proposal to enact the Construction Industry Development Authority Bill, which is currently being drafted by the Ministry of Justice and Attorney General's Department. Upon passage of this bill, a statutory regulatory body will be established to serve as a one-stop shop in the implementation of enforcement measures, standards and best practices in the building, civil and built environment industry.

2 Procurement methods

2.1 What procurement methods are most commonly used in your jurisdiction? Do these vary depending on whether international parties are involved?

The public sector and larger private sector employers typically undertake procurement through a formal competitive tender process.

Where the project employer is a public entity and the works are to be financed in whole or part by public funds, the following are the common methods of public procurement adopted under the Public Procurement Act, 2003 (Act 663), as amended by the Public Procurement (Amendment) Act, 2016 (Act 914):

• competitive tendering, which includes:
• • international competitive tendering;
  • national competitive tendering;
  • requests for quotations; and
  • restricted tendering;
• selection of consultants determined by:
• • quality and cost-based selection;
  • quality-based selection;
  • selection based on consultants' qualifications;
  • least cost selection;
  • fixed budget selection; and
  • single source selection; and
• single source procurement in exceptional circumstances where:
• • goods, works or services are only available from a particular supplier or contractor and a reasonable alternative or substitute does not exist;
  • there is an urgent need for the goods, works or services and using other procurement methods would be impractical; or
  • the goods, works or services relate to a contract for involving research, experiment, study or development or there is a need for discreet procurement due to matters of national security.
• A public entity that wishes to engage in single source procurement must obtain approval of the board of the Public Procurement Authority.

The involvement of international parties does not affect the procurement methods adopted. However, the law provides for both national and international competitive tendering.

2.2 What are the advantages and disadvantages of these different methods?

Competitive tendering:

• promotes value for money, as it provides the owner with a range of capable contractors to choose from; and
• promotes competition among contractors, leading to better price, quality and service delivery.

Conversely, competitive tendering:

• may be costly and time consuming; and
• is not ideal if the cost and time required to examine a large number of tenders are disproportionate to the value of the goods, works or services to be procured.

Selective tendering:

• saves time and resources compared to competitive tendering by ensuring that only competent contractors or suppliers are invited to tender; and
• potentially avoids the need for a pre-qualification process.

On the other hand:

• this method is likely to exclude smaller contractors or suppliers and new entrants into specific markets; and
• the tender price may be higher than it would have been in competitive tendering.

Single source procurement:

• ensures contractor accountability, which promotes effective and efficient delivery services as well as supplier commitment;
• is timely and saves costs, as there is no need to review bids from multiple suppliers; and
• promotes cooperation between the owner and the contractor, leading to long-term relationships based on trust.

Conversely:

• there may be a risk of interruption of the project if there is high demand and the contractor is unable to deliver; and
• the owner is usually very dependent on the contractor, which may increase the vulnerability of the supply of goods, works or services.

2.3 What other factors may influence the choice of procurement method?

Other factors that influence the choice of procurement method include:

• the client and the nature of the project;
• the financing structure;
• the estimated project cost and time for completion;
• design risks;
• site issues;
• construction, operation and maintenance requirements;
• the public interest; and
• national security concerns.

3 Project structures

3.1 How are construction projects typically structured in your jurisdiction? Does this vary depending on whether international parties are involved?

Construction projects are typically structured as follows:

• Traditional build: The design and construction of the project are separate, with the roles carried out by different parties. The employer may appoint a professional consultant to design the project and separately appoint a contractor to construct the project in accordance with the design provided by the employer. Certain contracts may also require the contractor to have a limited design responsibility.
• Design and build: The contractor is responsible for both the design and construction of a project, with the contractor building the project in accordance with the employer's requirements.
• Build-operate-transfer (BOT): This structure is typically used for a traditional government project whereby a government entity grants the right to a private sector party to construct a project according to agreed design specifications and to subsequently operate the project for a specified time.
• Engineering procurement and construction (EPC): The contractor delivers a complete facility on a turnkey basis.

Project structures under public-private partnership (PPP) arrangements typically include:

• BOT;
• build-own-operate-transfer;
• design-build-finance-operate; and
• build-own-operate.

Similar project structures are adopted where international parties are involved.

3.2 What are the advantages and disadvantages of these different structures?

For traditional procurement:

• the contract specifies the client's design requirements;
• there is greater certainty with the construction period following completion of the design; and
• a lump-sum contract will also provide cost certainty.

The main disadvantage is the separation between the design and construction parties to the project.

For design and build contracts, a key advantage for the client and also a lender is that a contractor may be the single point of responsibility under the contract for the design and construction of the project. This type of contract may be more expensive than a traditional contract and any client variations may significantly increase the contract price.

For BOT contracts, the comments above relating to design and build contracts also apply here. The advantage of this arrangement is that the project sponsor – which may be a consortium – also operates the project for the concession period and then transfers ownership of the project back to the original client in accordance with the handover provisions in the concession agreement.

EPC contracts also have a single point responsibility from an experienced contractor with a firm price and programme for delivery. However, this comes at a cost, with limited client involvement in the process.

An operations and maintenance agreement is a key project agreement between the project company and the operator. It is important that it fits together with the other project agreements, including the concession agreement. The operator manages, operates and maintains the project on behalf of the project sponsors. It is important that the operations and maintenance operator is experienced in operating similar projects. The operator may be an affiliate of a project sponsor but this is not always the case.

PPP projects have the following advantages:

• the delivery of efficient infrastructure and services with assured quality;
• the promotion of local participation in partnership projects;
• the promotion of technology transfer, local industries and the private sector;
• optimal risk allocation in a PPP project, which reduces the government's risk management expenditures;
• access to private sector finance for the public sector; and
• a broadened focus not only on the delivery of public infrastructure or assets, but also on the maintenance of the assets throughout their operational lifecycle.

Overall, the public sector benefits from private sector expertise and experience in the implementation of PPP projects and the private party receives long-term remuneration.

However:

• infrastructure or services delivered under a PPP may be comparably expensive; and
• PPPs have lengthy and costly procurement procedures as compared to traditional procurement, and are associated with high transaction costs.

3.3 What other factors may influence the choice of project structure?

Factors that influence the choice of project structure include:

• the client and the nature of the project;
• the financing structure;
• the estimated project cost and time for completion;
• design risk;
• land ownership;
• site issues;
• construction, operation and maintenance requirements; and
• external factors such as:
• • political influence;
  • environmental considerations;
  • labour issues; and
  • technology.

4 Financing

4.1 How are construction projects typically financed in your jurisdiction? Does this vary depending on whether international parties are involved?

Construction projects are typically financed as follows:

• For public sector projects, the government usually provides the funds by way of:
• • central government support;
  • external funding from multilateral and development banks; or
  • internally generated funds raised by the metropolitan and municipal district assemblies.
• For private sector projects, financing is usually obtained by a mixture of debt from commercial and development banks and equity. A project finance structure is typically used for long-term projects.
• For public-private partnership (PPP) projects, both the government and the private sector contribute to the project, typically on a project finance basis. In Ghana, the government's contribution includes government support such as viability gap funding, which supports projects that are technically, economically, socially and environmentally viable but not financially viable.

Financing is also available from the Ghana Infrastructure Investment Fund (GIIF), which is a body corporate wholly owned by the Ghanaian state and established pursuant to the Ghana Infrastructure Investment Fund Act, 2014 (Act 877). GIIF's mandate is to mobilise, manage, coordinate and provide financial resources for investment in a diversified portfolio of infrastructure projects in Ghana for national development. GIIF invests in non-recourse or limited recourse projects. These include:

• public or private infrastructure or infrastructure-related investments that have received (or will receive prior to disbursement) the relevant approvals, permits, licences and concessions from the relevant government agency;
• commercially viable infrastructure projects of state-owned enterprises; and
• partnerships in infrastructure projects through strategic investment vehicles such as special purpose vehicles, joint ventures and PPP arrangements.

Generally, the involvement of an international party in a construction project does not affect the financing of projects in Ghana, but the structure will typically be determined based on the size and complexity of the project.

4.2 What are the advantages and disadvantages of these different structures?

For publicly financed projects, the government can generally borrow more cheaply than the private sector. However, challenges include:

• funding constraints;
• allocation of scarce resources to inadequately prepared projects;
• ineffective management of projects; and
• cost and time overruns.

In recent years, the government has embarked on reform programmes in public financial management to enhance fiscal discipline, resource allocation and efficient service delivery through strengthened systems and procedures. As part of the reform agenda, the Ministry of Finance made the Public Financial Management (Public Investment Management) Regulations, 2020 (LI 2411) to guide the delivery and management of public investment.

For larger private or PPP projects on a project finance basis, the typical structure involves the borrower (usually a special purpose vehicle) raising finance through a combination of equity – provided by the project company's shareholders – and debt provided by banks. The financing is usually on:

• a limited recourse basis (ie, the risk of the project to the shareholders is limited to the equity it puts into the project company); or
• a non-recourse basis. In this case, from the shareholders' perspective, their risk is minimised as the project company's obligations are ring-fenced and debt is secured on the cash flows and assets of the project. Therefore, lenders can only be paid from the project company's revenues and cannot demand compensation from the shareholders. As a result, lenders will undertake detailed due diligence on the project, particularly on the contractual structure and cash flow; this benefits the project in the long run, but it is a lengthy process.

4.3 What other factors may influence the choice of financing structure?

Factors that may influence the choice of financing structure include:

• the client and the nature of the project;
• the allocation of risk, including price, design, planning, operations and time;
• the position of the government towards the project – that is, whether the project is considered a priority; and
• tax considerations.

4.4 What types of security and other protections are available to lenders to safeguard their position?

Lenders may safeguard their position in a variety of ways, including the following.

Financial securities: These include:

• mortgages over land;
• fixed and floating charges over:
• • the land and project assets such as machinery, plant and equipment;
  • the shares of the project company; and
  • the project company's bank accounts and deposits; and
• security by way of assignment of the borrower's present and future rights, title and interest in, under and to the construction and other project agreements, including:
• • performance bonds and collateral warranties;
  • receivables of the project company; and
  • insurance proceeds.

In the case of secured transactions, the creation, validity and enforcement of the security are governed by:

• the Companies Act 2019 (Act 992);
• the Borrowers and Lenders Act, 2020 (Act 1052);
• the Mortgages Act, 1972 (NRCD 96); and/or
• the Land Act, 2020 (Act 1036) (as applicable).

Where a mortgage is created over land, the Land Act and the Mortgages Act require that the particulars of the mortgage be registered with the Lands Commission. The mortgage has no effect until it is registered.

Where the party creating the security is a company incorporated in Ghana, the Companies Act requires that the particulars of the security be filed at the Office of the Registrar of Companies (ORC) in an ORC prescribed form (Form 9) within 45 days of the creation of the security. Failure to register the security invalidates it, unless an application is made to the High Court for an order for extension of time to register the security and such application is granted.

Under the Borrowers and Lenders Act, all types of security created in Ghana (whether over movables or immovable property) must be registered at the Collateral Registry for enforceability within 28 days of creation of the security.

The Contracts Act, 1960 (Act 25) governs guarantees. The key requirements are that a guarantee:

• should be in writing; and
• should be signed by the surety or guarantor.

There is no requirement for the registration of guarantees at any statutory registry.

Contractual protections: These include:

• direct agreements that give lenders rights including step-in rights to temporarily step into the role of the employer in respect of key project documents;
• a completion guarantee from the sponsors of the project to guarantee that the project will be completed within a certain timeframe and cover the costs of any shortfall to complete the project; and
• collateral warranties from professional consultants.

All documents require stamping under Section 32 of the Stamp Duty Act, 2005 (Act 689) for the purpose of enforcement to render them admissible as evidence in civil proceedings in Ghana and to be used for any purpose:

• In the case of security documents (and guarantees) on a primary security, the duty chargeable is 0.5% of the secured amount.
• In the case of an auxiliary security, the duty chargeable is 0.25% of the secured amount.
• The penalty for late stamping is GHS 30.
• Where the unpaid duty exceeds the equivalent in value of GHS 30, there is an additional penalty by way of interest on the unpaid duty at 5% per annum from the date on which the agreement was first executed up to the time when the interest is equal in amount to the unpaid duty.

4.5 What law typically governs project finance agreements in your jurisdiction? Do any specific requirements apply in this regard?

The parties to a project finance agreement are at liberty to choose either domestic or foreign law as the governing law of their agreements. For the facility agreement, it is usual for the parties to select the law of the jurisdiction in which the lenders are located. Ghanaian security must be governed by Ghanaian law.

5 Bribery and corruption

5.1 What measures are in place to combat bribery and corruption in your jurisdiction?

Ghanaian laws on bribery and corruption are not consolidated but are set out in a number of statutes. The main legal framework governing anti-bribery and corruption in Ghana does not apply to private individuals, private companies or foreign investment, unless bribery and corruption occur in the dealings of a private person or entity with a public officer. Under the Constitution of Ghana, 1992:

• the government must eradicate corrupt practices and the abuse of power; and
• public officers must avoid conflicts of interest or the likelihood of same in performing their functions.

Ghanaian criminal law criminalises the acceptance by or giving of bribes to influence a public officer. Other acts which constitute corruption offences include:

• the dishonest receipt of property;
• extortion; and
• the use of public office for profit.

The Office of the Special Prosecutor is mandated to investigate and prosecute incidents of bribery, corruption and related offences by public officials, politically exposed persons and persons in the private sector involved in the commission of the offence under any other relevant law. The Commission on Human Rights and Administrative Justice has the mandate to investigate:

• the abuse of power and instances of alleged or suspected corruption; and
• the misappropriation of public monies by public officials.

Agencies such as the following also aid in the fight against corruption:

• the Economic and Organised Crime Office;
• the Bureau of National Investigations; and
• the Financial Intelligence Centre.

In respect of contracting among public entities, the Public Procurement Authority is also pursuing a policy on preventing, detecting and remediating fraud and corruption in works contracts.

6 Standard form contracts

6.1 Which standard form contracts are typically used for construction projects in your jurisdiction? Does this vary depending on whether international parties are involved?

The most commonly used standard form construction contracts in Ghana are the International Federation of Consulting Engineers (FIDIC) suite of contracts. FIDIC has essentially dominated for about 20 years as a result of the adoption of FIDIC standard forms by development finance institutions which provide significant support to public sector construction finance.

For public sector projects, the Public Procurement Authority utilises standard contract forms for major, medium and minor works.

Similar standard form contracts are adopted where international parties are involved.

6.2 What are the advantages and disadvantages of using the different standard forms?

The standard form contracts are generally industry standard and most participants in the construction industry will have some familiarity with them. They:

• provide certainty and a benchmark for negotiation; and
• reduce drafting, negotiating time, transaction costs and disputes.

It is important for parties to:

• be conversant with the standard terms of the contract; and
• ensure that the specific conditions of contract are completed to fit the specific circumstances of the project.

6.3 What other factors may influence the decision to use standard form contracts and the choice of standard form?

The choice of which standard form contract to use depends on various elements, including:

• the parties;
• the nature, complexity and size of the project;
• the allocation of project risks; and
• the contract value.

6.4 Where standard form contracts are used, do parties typically modify their provisions?

Yes, parties usually modify the provisions of the standard form contracts to:

• suit the requirements of the project; and
• conform to the applicable law governing the contract.

7 Contractual issues

7.1 Is a choice of foreign law or jurisdiction valid and enforceable? In the case of a choice of foreign law of jurisdiction, will any provisions of local law have mandatory application?

Yes, generally, the parties to a contract are free to choose their foreign law or jurisdiction in a contract based on the principle of party autonomy. However, in specific cases, such as in a public-private partnership (PPP) agreement, the Public Private Partnership Act, 2020 (Act 1039) requires that the governing law of the agreement be Ghanaian law.

The Courts Act, 1993 (Act 459) and the Foreign Judgments and Maintenance Orders (Reciprocal Enforcement) Instrument, 1993 (LI 1575) will apply to the enforcement of foreign judgments in Ghana. The Ghanaian courts will enforce final and conclusive judgments from the superior courts of specified countries on the basis of reciprocity. An application for registration of a foreign judgment in Ghana must be made:

• within six years of the date of the judgment; or
• where there has been an appeal, after the last judgment given in those proceedings.

If the judgment of a foreign court is not enforceable on the basis of reciprocity, fresh proceedings may be instituted in Ghana and the foreign judgment relied on as evidence at trial.

The enforcement of foreign arbitral awards is also subject to the Alternative Dispute Resolution Act, 2010 (Act 798). Under this act, the High Court will enforce a foreign arbitral award if it is satisfied, among other things, that:

• a reciprocal arrangement exists between Ghana and the country in which the award was made; or
• the award was made under an international convention on arbitration ratified by Parliament.

7.2 What formal, substantive and procedural requirements typically apply to construction contracts in your jurisdiction? Are there any mandatory terms? What terms are typically included? Are any terms prohibited?

Generally, there are no specific requirements in respect of construction contracts. Construction contracts must, however, comply with the general principles of contract law to ensure enforceability. It is usual for construction contracts to include terms on:

• the project description and scope of work;
• the obligations of the owner and contractor;
• the contract price and the basis of payment;
• the construction schedule;
• risk allocation;
• insurance;
• tests on completion;
• taking over;
• defects liability;
• force majeure;
• termination; and
• dispute resolution.

Common law provisions such as limitation and exclusion of liability in the event of fraud, injury and death will generally not be enforceable.

7.3 How is risk typically allocated between the parties? What steps can the parties take to mitigate these risks?

The procurement method chosen by the client will play a role in determining the allocation of the key risks between the parties. However, most construction contracts tend to shift the risks to the contractor. Where standard form contracts are used, parties may choose to be bound by how risk is allocated in such contracts with little or no modification, since standard form contracts usually contain balanced risk allocation provisions.

Parties can mitigate their risks by:

• taking out relevant insurance policies with licensed insurers; and
• developing a risk management strategy to be implemented throughout the construction process.

7.4 How can liability be excluded or restricted in your jurisdiction? Are parties able to cap their liability?

Liability can be excluded or restricted by incorporating express provisions in the parties' agreement. Parties may exclude liability for:

• indirect or consequential losses or damages;
• loss of use; and
• loss of profits.

Parties may also specify liability caps in such agreements.

However, common law principles on limitation of liability apply. Under common law, liability is limited to:

• losses that were reasonably foreseeable as likely to result from the breach of contract; and
• losses that could not have been avoided by taking reasonable steps in mitigation.

Also, where the innocent party contributed to the default, the liability of the party in breach may be reduced by the extent of the contribution.

7.5 In the event of delay to the project, what consequences will this typically have for the parties?

The consequences of delay largely depend on:

• the type of delay; and
• the party responsible for the delay.

Generally, where the delay is an employer risk or liability event or an excusable delay, a contractor is entitled to an extension of time for completion of the project where the extension request is made within the stipulated time under the contract. Depending on the type of delay, a contractor may also be entitled to costs and reasonable profit. Where the delay is a contractor risk or event or a non-excusable delay, the employer may be entitled to delay liquidated damages for the period of the delay, if liquidated damages are provided for in the contract.

7.6 Is the concept of force majeure recognised in your jurisdiction? If so, what are the typical implications for the parties?

The concept of force majeure is recognised in Ghana. Force majeure provisions are commonly included in construction contracts and will typically excuse one or both parties from performing the contract in some way when an extraordinary event or circumstance beyond the control of the parties – such as an act of God, earthquake or other natural disaster – prevents one or both from fulfilling their obligations under the contract. A clause may list examples of what constitutes a force majeure event.

The affected party is normally excused from, or entitled to suspend performance of, all or part of its obligations while the force majeure continues and will not be liable for its failure to perform the obligations. Parties are typically required:

• to use commercially reasonable efforts to mitigate the cause and effect of the force majeure event; and
• to resume performance of their obligations once they are able to do so.

Depending on the terms of the clause, a contractor may be entitled to an extension of time/and or costs as a result of a delay arising due to a force majeure event.

A clause may also provide the unaffected party or both parties with a right to serve notice terminating the contract after a specified period of non-performance by the affected party due to the force majeure event.

A force majeure clause may also exclude specific circumstances or events from qualifying as a force majeure event, which will not excuse a failure by a party to perform its contractual obligations.

In the absence of a force majeure provision in a contract, a party may rely on the doctrine of frustration (available under both common law and statutory law (Contracts Act, 1960 (Act 25)) to avoid liability for failing to perform its obligations under a contract.

7.7 What scope do the parties typically have to make material variations to the works?

Construction contracts typically contain express provisions entitling the parties – mainly the employer – to make variations to the works. The variation clause may include matters such as:

• which party can propose variations and whether such proposal must be communicated and confirmed in writing before becoming effective;
• whether a party can object to a variation and on what grounds;
• which changes constitute a variation to the works and give rise to an entitlement of additional cost and time;
• how variations are to be valued or determined; and
• the dispute resolution mechanism in the event of any dispute that arises as a result of the variation.

7.8 Are there any particular requirements for completion or taking-over in your jurisdiction?

Construction contracts generally contain provisions relating to completion or taking over. Completion is generally when the works have been completed by the contractor in accordance with the terms of the contract and any inspection/tests on completion have been passed. The employer will usually issue a practical completion certificate and/or a taking over certificate at the relevant stages.

A developer must obtain a certificate of habitation for a building from the local authority following the completion of construction and before the use of the building.

7.9 What requirements and restrictions typically apply to the termination of the construction contract in your jurisdiction?

Construction contracts may be terminated by either the employer or contractor in accordance with the terms of the contract. Common grounds entitling an employer to terminate the contract include where the contractor:

• fails to provide a performance bond;
• fails to commence the works or remedy a defect within the required time;
• abandons the project;
• subcontracts or assigns the contract without approval; or
• becomes bankrupt or insolvent.

A contractor is generally entitled to terminate if:

• a prolonged suspension affects the whole of the works; or
• the employer:
• • substantially fails to perform its contractual obligations; or
  • becomes bankrupt or insolvent.

An election to terminate the contract does not generally prejudice the rights of either party.

7.10 How are delay or liquidated provisions dealt with in your jurisdictions?

Provisions that require a contractor to pay liquidated damages for failure to complete work by the completion date or for any other specified breach are enforceable if:

• the quantum of damages is a genuine pre-estimate of the employer's possible loss in the event of the breach; or
• the liquidated damages are specified in the contract.

The Ghanaian courts are reluctant to enforce provisions on liquidated damages where the damages are punitive in nature and greater than any possible loss that might be occasioned by the breach.

8 Subcontractors and suppliers

8.1 Are there any particular issues which arise when dealing with subcontracts and/or subcontractors which are different from the issues discussed elsewhere?

No, similar issues arise when dealing with subcontracts and/or subcontractors in Ghana.

8.2 Are there nominated subcontractors in your jurisdiction?

Yes, the use of nominated subcontractors is becoming more prevalent for specialist works on larger construction projects.

9 Payment

9.1 Are there any statutory or other requirements which govern how parties are paid?

No, parties are paid according to the terms of the contract. For public sector projects, the Public Procurement Authority's Contract Administration Manual provides guidance on payments.

9.2 Are 'pay when paid' clauses valid? In what circumstances?

Yes, 'pay when paid' clauses are valid and enforceable in Ghana. There are currently no statutory restrictions.

9.3 How are retentions typically dealt with?

Retentions are dealt with in accordance with the terms of the contract. While parties are free to agree the amount of any retention, a retention is typically in the region of 5% of the contract amount, which is retained from the milestone payments due to the contractor.

On practical completion of the project, 50% of the amount retained is released to the contractor and the remainder at the expiry of the defects notification period. On completion of the whole project, the contractor may substitute retention money with an 'on demand' bank guarantee in a form issued by a bank acceptable to the employer.

10 Health and safety

10.1 What key health and safety requirements apply to construction projects in your jurisdiction?

The key health and safety laws applicable to all construction projects are as follows:

• The Local Governance Act, 2016 (Act 936), the Land Use and Spatial Planning Act, 2016 (Act 925) and the Land Use and Spatial Planning Act, Regulations, 2019 (LI 2384) contain provisions relating to the control of construction activities by district planning authorities before, during and after completion of construction activities and obtain the necessary building permits and certificates.
• The Labour Act, 2003 (Act 651) generally imposes certain duties on both employers and employees to ensure health and safety conditions at workplaces including construction sites.
• The Factories, Offices and Shops Act, 1970 (Act 328) provides for contractors to inform district inspectors of the Department of Factories Inspectorate of the commencement of construction work with detailed particulars of:
• • the project;
  • any mechanical power to be used; and
  • the nature of works to be carried out.
• The Ghana Building Code, 2018 specifies the minimum requirements for instituting levels of safety and public health through structural strength, fire protection and life safety systems.
• The Environmental Protection Agency Act, 1994 (Act 490) and the Environmental Assessment Regulations 1999 (LI 1652) require that parties:
• • register projects that are likely to have a significant impact on the environment with the Environmental Protection Agency; and
  • obtain environmental permits before the commencement of construction and operations.
• The Fire Precaution (Premises) Regulations, 2003 (LI 1724) provide that:
• • a fire permit must be obtained for the development of a project site; and
  • a fire certificate must be obtained upon completion of the project where the building is a place of work or premises which is accessed by the public.

There will also be health and safety requirements under sector-specific laws and regulations.

10.2 What reporting requirements apply with regard to construction site accidents in your jurisdiction?

Every construction site or workplace must have a general register in a prescribed form, with an attachment of prescribed particulars of every accident and hazard and case of occupational diseases which occurs at the site. Accidents and hazards at the workplace must be properly recorded and investigated, and contractors must submit to an inspector the extracts from the general register. When any person is injured or killed, the district inspector must be notified in writing.

10.3 What are the potential consequences of breach of these requirements – both for the contractor itself and for directors, managers and employees?

Breaches of the statutory requirements under the various laws are criminal offences and can attract imprisonment, a fine or both.

10.4 What best practices in relation to health and safety should construction contractors consider adopting in your jurisdiction?

Recommended health and safety practices for construction contractors include the following:

• Comply with all health and safety legislation and policies relevant to a project;
• Ensure that appropriate insurance is in place for the project, workers and third-party liability;
• Establish a health and safety policy and standard procedures to ensure that the policy is implemented;
• Appoint a health and safety officer; and
• Provide appropriate training programmes for managers, supervisors and workers specific to the construction sector and the particular project, including in relation to:
• • personal protective equipment;
  • safety on a project site;
  • operating machinery;
  • handling hazardous materials or chemicals; and
  • reporting incidents.

10.5 Which bodies are responsible for enforcement of health and safety obligations?

The Ministry of Works and Housing is responsible for overseeing safety standards in the construction industry. It is mandated to ensure that every building project satisfies relevant legal requirements, including planning and building regulation.

The Department of Factories Inspectorate is a department under the Ministry of Employment and Labour Relations. It is the agency responsible for ensuring that employers provide and maintain plants and systems of work that are safe and ensure the health and safety of employees. Specifically, the Department of Factories Inspectorate, through the chief inspector, has the statutory responsibility for the enforcement of occupational health and safety in Ghana. District inspectors must report any dangerous conditions, practices and premises to the district court for a prohibition or compliance order. Contravention of such order by a person is an offence liable on conviction to a fine of not more than GHS 200,000 and/or not more than three months' imprisonment. Any person aggrieved by an order of the district court may appeal to the High Court.

The Ghana National Fire Service ensures the safety and protection of persons and property in the event of a fire.

District planning officers and other personnel under the local government system ensure the proper monitoring and enforcement of health and safety in all operations and at the workplace.

The Environmental Protection Agency discharges several functions with regards to health and safety. These include ensuring compliance with conditions specified in an environmental permit, such as waste management and control.

The Ghana Police Service is also responsible for maintaining the safety of persons and property.

10.6 What is the general approach in regulating the construction sector from a health and safety perspective?

Please see question 10.1.

11 Environmental and sustainable development issues

11.1 What environmental authorisations are required for construction projects in your jurisdiction? Do these vary depending on the type of project or the location of the site?

The Environmental Protection Agency Act, 1994 (Act 490) and the Environmental Assessment Regulations require that parties:

• register projects that are likely to have a significant impact on the environment with the Environmental Protection Agency (EPA); and
• obtain environmental permits before the commencement of construction and operations.

Other permits and reports that may need to be obtained and submitted under the Environmental Assessment Regulations include the following:

• An environmental certificate must be obtained within 24 months of the date of issuance of the environmental permit;
• An environmental report must be submitted annually; and
• An environmental management plan must be submitted within 18 months of commencement of operations and thereafter every three years.

The conditions attached to an environmental permit will vary depending on the type of project and the location.

11.2 What is the process for obtaining environmental authorisations?

The applicant must register the proposed undertaking with the EPA. The EPA screens the application and, within 25 days, informs the applicant of whether:

• the application is approved or rejected; or
• the applicant must submit a preliminary environmental report (PER) or environmental impact statement (EIS).

Where a PER is required, the EPA may:

• approve the application after review of the PER; or
• require that the applicant submit an EIS.

The EPA will request the applicant to submit an EIS outlined in a scoping report if it is satisfied that a significant adverse environmental impact is likely to result from the undertaking. The scoping report must include draft terms of reference indicating the essential issues to be addressed in the EIS. The EPA will review the scoping report and inform the applicant within 25 days whether it is acceptable. If it is acceptable, the EPA will inform the applicant to submit an EIS based on the scoping report.

The EIS must:

• indicate a clear assessment of the project on the environment; and
• address any direct or indirect impact of the project on the environment at the pre-construction, construction, operation, decommissioning and post-decommissioning phase of the project.

The applicant must also circulate the EIS to the relevant stakeholders, including:

• the municipal or district assembly;
• the relevant government department; and
• the sector ministry responsible for the project.

The EPA will publish the EIS in the mass media for a period of 21 days for public comments and suggestions, after which a public hearing will be held if:

• an adverse reaction is received; or
• the EPA considers that the project will have an extensive and far-reaching effect on the environment.

After the public hearing, the EPA may issue an environmental permit if it finds that the EIS is acceptable. If it finds it unacceptable, the EPA may ask the applicant to submit a revised EIS or conduct further studies as the EPA considers necessary.

11.3 What environmental requirements must the contractor observe while the site is operational?

Requirements that contractors must observe vary based on:

• the type of project; and
• the location of the site.

Generally, contractors that have obtained an environmental permit must commit to addressing all direct and indirect impacts on the environment at the pre-construction, construction operation, decommissioning and post-decommissioning phases. These may include:

• impacts from pollution of air, water and land;
• direct ecological changes resulting from pollutant concentrations; and
• noise and vibration levels.

A contractor that obtains an environmental permit must also submit an environmental management plan in respect of its operations within 18 months of commencement of operations and thereafter every three years. A contractor must also submit an environmental report annually.

11.4 What are the potential consequences of breach of these requirements – both for the contractor and for directors, managers and employees?

The EPA may suspend, cancel or revoke an environmental permit or certificate if a contractor:

• breaches any of the conditions to which the permit is subject; or
• fails to comply with mitigation commitments in the environmental management plan.

A contractor that commits an offence where it:

• commences operations without a permit;
• fails to conduct an EIA where required; or
• breaches any of the regulations of the EPA.

On summary conviction, it will be liable:

• to a fine not exceeding GHS 200, imprisonment for a term not exceeding one year or both; or
• in the case of a continuing offence, to a further fine not exceeding GHS 20 for each day the offence is continued.

11.5 What environmental requirements apply to new buildings?

The Ghana Standards Authority has issued the Building Code, 2018 to promote energy efficiency and green building practices in the design and construction of structures.

11.6 Which bodies are responsible for enforcement of environmental obligations?

The EPA is the main agency responsible for enforcement.

11.7 What is the regulators' general approach in regulating the construction sector from an environmental perspective?

The EPA enforces environmental requirements in the construction industry primarily through the use of enforcement notices. The board of the EPA issues notices of enforcement to persons engaged in activities that the board considers a threat to the environment, requiring such persons to take steps indicated by the board to prevent or stop the activities. Failure to comply with an enforcement notice is a crime which attracts a fine of up to GHS 3000, a term of imprisonment of up to one year or both.

The EPA may suspend, cancel or revoke an environmental permit or certificate issued under the Environmental Assessment Regulations if the permit holder is in breach of:

• the Environmental Assessment Regulations; or
• any other enactment relating to the environment or any of the conditions to which a permit is subject.

11.8 What is the impact of Net Zero in your jurisdiction?

Ghana is committed to reducing its carbon emissions. As a signatory to the Paris Climate Agreement on Climate Change, Ghana launched its nationally determined contribution (NDC) in 2020. Ghana's emission reduction goal is to unconditionally lower its greenhouse gas (GHG) emissions by 15% relative to a business-as-usual scenario emission of 73.95 million tons of carbon dioxide equivalent (MtCO2e) by 2030. However, in November 2021, Ghana submitted its revised NDC and increased its target to cut emissions by 64 MtCO2e by 2030. The implementation of policy actions is expected to help achieve climate resilience through effective adaptation and GHG emission reduction in the energy, transport, waste, industry and agriculture, forestry and other land use sectors.

12 Insurance

12.1 What types of insurance arrangements - whether compulsory or optional - are typically put in place for construction projects in your jurisdiction?

Under the Insurance Act, 2021 (Act 1061), insurance must be obtained for the construction of commercial buildings. The Insurance Act requires that insurance be taken with registered insurers within Ghana. Taking insurance from a foreign entity for projects in Ghana or contracts to be performed in Ghana is subject to prior written approval of the National Insurance Commission.

The Insurance Act specifies that for commercial buildings under construction, the insurance must provide an indemnity against liability for loss or damage caused to a person by the negligence of the owner, contractor or any employee or agent of, or consultant to, the contractor in connection with the construction. For commercial buildings in use, the insurance must provide:

• cover against the hazards of collapse, fire, earthquake, storm and flood; and
• an indemnity against the liability of the owner or occupier of the building for loss or damage caused to any person using the premises.

Other common types of insurance for construction projects include:

• contractors' all risks insurance, which covers physical damage to the works and materials; and
• employer liability/workmen's compensation insurance, which covers bodily injury or loss of life of any workmen in connection with the construction.

The provision of collateral warranties by contractors to third parties, such as lenders, is also becoming more common.

12.2 If local insurance is required, can local insurers assign reinsurance contracts in your jurisdiction?

A local licensed insurer can enter into a reinsurance contract with a foreign reinsurer or an underwriter that is a member of a recognised association of underwriters, subject to the prior written authorisation of the National Insurance Commission.

12.3 Is it possible to obtain insurance for fitness for purpose design obligations?

This is not common in Ghana. There is no specific law that requires insurance to be obtained for fitness for purpose design obligations.

The main forms of insurance are referred to in question 12.1. The provision of performance bonds is also common.

12.4 What other forms of insurance feature in construction projects in your jurisdiction?

No answer submitted for this question.

13 Employment

13.1 What legislation must employers and contractors be aware of when hiring labour?

Employers and contractors must be aware of:

• the Labour Act, 2003 (Act 651);
• the Labour Regulations, 2007 (LI 1833); and
• the Workmen's Compensation Act, 1987 (PNDCL 187).

The Labour Act is the main legislation that governs industrial relations. It established the National Labour Commission and provides for matters including:

• general conditions of employment;
• termination of employment;
• unfair labour practices; and
• the formation of trade unions.

The Labour Regulations address issues including:

• occupational safety and health at work;
• medical examination of workers;
• employment of persons with disabilities; and
• employment of foreign nationals.

The Workmen's Compensation Act addresses the liability of employers for payment of compensation to employees arising from injuries and fatalities in the course of employment.

14 Tax

14.1 What issues must be considered from a taxation perspective in relation to construction projects in your jurisdiction?

A company undertaking construction in Ghana:

• must be registered with the Ghana Revenue Authority (GRA); and
• will be subject to corporate income tax charged at 25%.

A foreign contractor providing services in Ghana or undertaking a construction, assembly or installation project for more than 90 days or supervisory activities in relation to that project in Ghana will be regarded as a permanent establishment and will thus be subject to tax in the same manner as a business incorporated in Ghana.

An employer in the construction sector must withhold tax on salaries of its employees at graduated rates in accordance with the Income Tax Act, 2015 (Act 896). A contractor must withhold tax, where there is an obligation to withhold such tax, from any payments to third parties, including:

• fees for the supply of works;
• fees for the supply of services/for management and technical services;
• fees or allowances to a director, manager or board member of a company that is a resident individual;
• payments of interest and rent that have a source in Ghana; and
• dividend payments to shareholders.

In such instances, the contractor must pay the same to the GRA within 15 days of the end of the month in which the taxable payment was made. The withholding tax rate applicable to the fees of a contractor for technical or management services on a construction site may differ for foreign contractors that are resident in countries which have double tax treaties (DTTs) with Ghana. In such cases, the withholding tax rate specified in the DTT will apply.

All payments made to a service provider will be subject to:

• a statutory value-added tax of 15%;
• a National Health Insurance Levy of 2.5%;
• a Ghana Education Trust Fund Levy of 2.5; and
• a COVID-19 Health Recovery Levy of 1%.

Customs and excise duties are imposed on prescribed goods imported into Ghana, at the rates of duty specified in the Harmonised System: ECOWAS Common External Tariff and Other Schedules Ghana, 2017.

14.2 Are any exemptions or incentives available to encourage construction in your jurisdiction?

There are no general exemptions or incentives available to the construction industry in Ghana. However, the income of a company certified by the minister of works and housing as a low-cost housing business constructing low-cost, affordable residential premises for sale or letting is subject to tax at the rate at 1% for a period of five years of assessment, commencing from the first year of operation.

The government is also introducing the National Affordable Housing Programme, which uses an appropriate mix of public and private sector investments to develop affordable housing. The government intends to contribute land and on-site infrastructure such as roads, drainage, electricity and water, which will:

• reduce the construction cost by up to 40%; and
• attract housing developers to finance and build on a cost-recovery basis.

Developers must be pre-selected by the government to participate in the programme.

The Tax Exemptions Act, 2022 (Act 1083) was passed in September 2022 and streamlines when and how tax exemptions are granted. It provides for:

• an exemptions regime;
• the scope of exemptions;
• criteria for exemptions; and
• the administration, monitoring, evaluation, reporting and enforcement of exemptions.

The Tax Exemptions Act provides for two regimes of exemptions in the forms of:

• general incentives for industry-specific or programme-specific investments; and
• specially negotiated exemptions for strategic investments in priority sectors of the economy.

The grant of general incentives for industry-specific or programme-specific investments must be based on regulations issued by the minister for finance, upon the recommendation of the relevant sector minister and with the approval of Cabinet. There are currently no regulations that authorise the grant of such incentives. However, we anticipate that the construction and real estate sector may benefit from incentives when the regulations are issued by the minister for finance.

The Tax Exemptions Act indicates that the priority sectors of the economy are to be determined by Cabinet and published:

• in the Gazette;
• on the website of the Ghana Investment Promotion Centre (GIPC); and
• in a national daily newspaper.

While the priority sectors of the economy have not yet been published in the Gazette, the website of the GIPC consistently indicates the real estate and construction sector as a priority area for strategic and major investment. An application to invest in a priority sector of the economy and to obtain special exemptions may be made to the GIPC stating the cost of the investment and the exemptions required.

14.3 What strategies might parties consider to mitigate their tax liabilities in the construction context?

A contractor that is required to pay tax in Ghana may deduct from its income in the year of assessment or for a part of that year expenses that are wholly, exclusively and necessarily incurred by the contractor in the production of the income from the business during the year. A deduction is not allowed for an expense that is of a capital nature, including expenses that secure a benefit that lasts for more than 12 months.

As indicated in question 14.2, if the real estate and construction sector is designated as a priority sector of the economy, a contractor may also seek to apply for specially negotiated exemptions for strategic investments in construction projects.

15 Technology

15.1 How is Building Information Management (BIM) dealt with in your jurisdiction? Does the government mandate any particular BIM standards or other requirements?

BIM is not used extensively in Ghana as there is no specific policy requiring all construction projects and asset documentation to be fully collaborative with BIM. However, awareness and usage of BIM are increasing, particularly on larger projects; it is mainly used during the construction stage of the project.

15.2 Are smart contracts used in your jurisdiction? Are there any special restrictions or regulations?

Smart contracts are not regularly used in the Ghanaian construction sector and there are no special restrictions or regulations in relation thereto. However, their use is advocated in land transactions. The Land Act, 2020 (Act 1036) provides for the transfer of an interest in land by electronic conveyance, although regulations providing specific details have not yet been included in the Land Act. Such contracts are expected to employ the use of block chain technology and smart contracts to:

• accelerate the processing of transactions; and
• enhance the accuracy of documentation.

The Lands Commission is also expected to utilise blockchain technology to develop a land information registry system to facilitate electronic conveyancing.

15.3 What developments in digital technology do you see having a major impact on the construction industry?

Three-dimensional (3D) printing, artificial intelligence (AI), virtual reality, robotics, machine learning, increased use of BIM and drone technology are emerging digital technology developments that will have a major impact on the construction industry. It is expected that they will increase speed and efficiency and provide cost savings in the industry. For example, using 3D printing to develop prefabricated components for use in the construction of a building will take less than half the time it usually takes to construct most buildings. AI, robotics and machine learning will likely replace traditional artisans and local craftsmen in the trade, as these:

• do not require remuneration;
• are more efficient; and
• can multi-task better than craftsmen.

The increased use of BIM will enable professionals to plan, design, construct and document buildings and infrastructure more efficiently. It will assist in creating visualisations that will help stakeholders to understand what a building will look like before it is built.

Remote access to buildings through virtual reality and drone technology will allow both stakeholders and project managers to move through the building to evaluate their experience of it and make decisions to perfect their requirements. This will reduce both the number and cost of building alterations, as alterations can be done and evaluated in real time before any actual resources are used.

16 Disputes

16.1 In which forums are construction disputes typically heard in your jurisdiction?

In Ghana, construction disputes are typically heard in:

• the courts;
• the Ghana Arbitration Centre; or
• any institution referred to for arbitration, such as:
• • the Ghana Institution of Engineering; and
  • the Institute of Surveyors.

16.2 What issues do such disputes typically involve?

Construction disputes in Ghana usually involve issues such as:

• late payments and non-payment;
• conflicts over timelines and delays in completing project milestones;
• construction project abandonment;
• design and specification oversights;
• poor construction quality;
• poor material quality;
• disputes over contract terms and non-compliance with contractual terms; and
• errors in submitting claims.

16.3 How are disputes typically resolved?

Construction disputes are generally resolved through:

• litigation;
• arbitration;
• adjudication; and
• sometimes mediation.

16.4 Is the use of alternative dispute resolution common and/or encouraged by legislation or the courts?

The use of alternative dispute resolution (ADR) in resolving construction disputes is becoming increasingly common and is encouraged by both legislation and the courts. The ADR Act, 2010 (Act 798) provides that parties to an agreement may specify under the agreement that their disputes be resolved by arbitration. In addition, the court is mandated to refer a dispute to arbitration, by application or on its own motion, where:

• there is an arbitration agreement between the parties; or
• the court is of the view that the action or part thereof can be resolved through arbitration.

16.5 Is the use of dispute boards common in your jurisdiction?

It is not very common for dispute boards to settle disputes associated with small-scale construction projects in Ghana. However, some large-scale construction projects may require disputes to be referred to dispute boards constituted in accordance with the terms of the construction contract. These construction contracts mostly utilise International Federation of Consulting Engineers standard form contracts, which include the use of dispute avoidance/adjudication boards in the dispute resolution process. Most construction disputes for small/medium-scale construction projects are settled either:

• by the Commercial Division of the High Court; or
• through arbitration by experts appointed by professional bodies such as:
• • the Ghana Institution of Engineering; or
  • the Ghana Institution of Surveyors.

16.6 Have there been any recent cases of note?

Yes.

In Environmental Development Group Limited v Provident Insurance Co Ltd (Civil Appeal J4/21/2019; 18 March 2020; SC), the plaintiff failed to complete and hand over the hostels to the third defendant within the time specified in the agreement and thus applied for an extension of time to complete the works. However, the third defendant failed to expressly grant the extension of time as specified under the construction contract.

On the issue of whether the third defendant's refusal to expressly grant the extension constituted a fundamental breach which resulted in the termination of the contract, the court held that the third defendant was under an obligation to grant the plaintiff a reasonable extension of time to complete the works. The court opined that the use of the word 'shall' in the agreement connoted a mandatory requirement which entitled the plaintiff to an extension of time under the terms of the agreement. Although the third defendant was entitled to a right to reject the plaintiff's extension application because the issues being relied on occurred more than 28 days before the extension application was submitted, the third defendant failed to exercise this right. Accordingly, by accepting and considering the plaintiff's request on its merits, the third defendant was deemed to have waived its right of rejection. By failing to expressly grant the extension, the third defendant was in a clear fundamental breach of the agreement, because without the extension, it was impossible for the plaintiff to discharge its obligations under the agreement. The plaintiff was therefore entitled to accept the contract as terminated and to sue for damages.

Further, in Nyagsi Engineering Ltd v Ghana Highway Authority (unreported; Suit OCC/34/15; 15 March 2018; HC), the plaintiff tendered for and won a competitive bid for the upgrading of the Yendi-Gushegu road in Northern Ghana and was awarded the contract by the government. According to the plaintiff, after arranging a performance bond from an insurance company, it received a letter from the Ghana Highway Authority (the defendant) suspending the commencement of the contract. The plaintiff claimed against the defendant for general and punitive damages for breach of contract.

The court held that there was a valid contract existing between the parties at common law and under the Public Procurement Act, 2003 (Act 663) (as amended) when the defendant accepted the plaintiff's tender and gave notice of its acceptance. The defendant, by not completing the process of signing the contract and handing over the site to the plaintiff, was in breach of its obligation under the contract; and the plaintiff was entitled to special and general damages for the costs incurred in the acquisition of machinery in preparation for the project.

17 Trends and predictions

17.1 What has been the impact of the COVID-19 pandemic on construction in your jurisdiction?

The impact of the COVID-19 pandemic on the construction sector included:

• supply chain disruptions and material shortages;
• delay, suspension, postponement and termination of projects;
• delays in payments;
• redundancies;
• increased costs and reduction in turnover;
• liquidity challenges for contractors; and
• increased health and safety measures for the workforce.

Post-pandemic, it is clear that companies should focus on matters such as:

• digital construction;
• smarter project management; and
• better health and safety processes.

17.2 How would you describe the current construction landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Ghana's construction sector was worth about $10 billion in 2021. Between 2013 and 2021, it contributed an average of 7.2% to gross domestic product. Over the last year, the sector has contracted as a result of:

• the COVID-19 pandemic;
• the destabilising impact of the Russian-Ukraine war on global prices and supply chains;
• the impact of elevated costs for materials, energy and labour;
• rising inflation; and
• high interest rates.

Generally, 2022 was a difficult year for Ghana although the Ghana Statical service advised that the construction sector recorded a growth of 0.1% in the 2nd quarter of 2022. The country's fiscal and debt vulnerabilities worsened amid an increasingly challenging external environment. The government requested assistance from the International Monetary Fund in early Summer 2022, a staff-level agreement was reached in December 2022 and a $3 billion extended credit facility was announced in May 2023, with immediate disbursement of $600 million. Debt restructuring agreements are required for the successful implementation of the arrangement.

Despite the above, the outlook for 2024-2027 is for a return to growth in the construction sector.

The government is the largest infrastructure provider in Ghana and relies heavily on public-private partnership projects and concessional financing for infrastructure development.

Infrastructure as a top priority for the government includes a focus on:

• water resource management;
• the management of protected areas;
• coastal and marine erosion;
• provision of transport infrastructure;
• information and communication;
• construction industry development;
• drainage and flood control;
• infrastructure maintenance;
• rural and urban development management;
• disaster management; and
• health infrastructure.

Various construction activities are ongoing and planned in these areas.

The government is investing in ongoing initiatives and programmes aimed at the development of infrastructure, including:

• One District One Factory, to provide at least one factory in each of Ghana's 216 districts;
• One Region, One Industrial Park, to develop an industrial park for each of Ghana's
• regions; and
• AGENDA 111, for the construction of 111 hospitals throughout the country.

There have been calls by civil society activists for the government to streamline the construction industry and develop a comprehensive regulatory regime for Ghana's construction industry in order to:

• ensure safety;
• increase professionalism; and
• promote industry best practices.

After repeated pressure from stakeholders, the Construction Industry Development Authority (CIDA) Bill is likely to be passed into law. The CIDA Bill is expected to bring increased safety and professionalism to the construction industry.

There are also proposals to develop a local content policy for the construction sector. This will ensure that Ghanaians are prioritised in terms of employment in the construction industry. A local content law will make collaboration essential between local and foreign firms.

18 Tips and traps

18.1 What are your top tips for smooth completion of construction projects in your jurisdiction and what potential sticking points would you highlight?

• Undertake thorough due diligence on all aspects of the project during the planning stage.
• Enter into a well-drafted construction contract.
• Ensure appropriate and fair allocation of risks in the construction contract between the parties.
• Adopt a construction management plan that follows the main stages of a project, from initiation to handover.
• Ensure regular and transparent communication with all stakeholders involved in the project.
• Provide effective leadership.
• Ensure effective project management and invest in good project management software to stay organised and monitor every aspect of the project.
• Monitor construction costs, including through investment in good software, to ensure that the project stays on track and on budget.
• Utilise quality management systems to assist with keeping track of the project and quality control.
• Adopt effective technology for the project to save time and costs.
• Ensure a safe working environment for the project by providing adequate and periodic training for staff. The emphasis on safety is important to minimise injuries and avoid project delays.
• Undertake accurate and effective record keeping.

Sticking points include:

• inadequate preparation of projects;
• poorly drafted contracts;
• poor payments and cash flow; and
• poor project management.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.