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Checklist for a Design & Build Project

The 2011-2012 court decisions in Trebor Bassett v ADT Fire and Security1 analysed in detail how two

partners carried out pre-contract processes for the design and installation of equipment. The

judgments are full of tips for those involved in high risk or D&B projects. It should also act as a

warning as the claim for £110m arose out of a contract for the design and supply of equipment

costing a mere £9,000.

The tips, quotes and lessons have been collated into a series of recommendations for partners

entering into contracts for construction projects, particularly those involving hazardous processes.

Risk Analysis

You Should:

Assess and appreciate the risk of each project separately: in this case, the buyer “never fully

appreciated the increased risk” that the project would bring. [55]2

Assess “the risks before the project workscope was defined.” [77]

Avoid preparing “a specification based on a 'minimum spend'” which decision could be

exacerbated by “a refusal to consider any recommendation which might add to the workscope,

even if they provided the only way of truly controlling the risk.” [77]

Never assume that a similar system is appropriate for a similar project. {21}

Ascertain or communicate any history of risk events occurring on similar projects, especially to

the designer of a system intended to protect or minimise the consequences of those risk events.

Your designer should appreciate all significant risks. [140] {21}

Carry out a proper technical appraisal of the risks, ideally in conjunction with the supplier of

relevant risk protection equipment. [75]

Identify precisely the risks and hazards on each project “and/or how those risks could be best

dealt with.”3 This should be done in detail. [61, 367]

Make sure one person within your organisation ‘owns the risk.’ Often this is the project manager

who is responsible for “recognising and then minimising all the risks created by that project.”62]

Check all assumptions made for significant risk factors (i.e. those with potentially catastrophic

consequences). “This erroneous assumption gave rise to the conclusion that there was no health

and safety issue; it follows that, if the [buyers] had bothered to check the as-built drawings, they

would have seen that the assumption was wrong, and that therefore there was a major health

and safety issue.”[88]4

Take advice from risk professionals, but make sure their advice is based on evidence and not

assumptions. [68-69]

Ensure all recommendations from risk managers are properly followed through: “one significant

recommendation made by the [buyer’s own risk managers]…was not followed” and that none

are ignored. [7, 36]

Where the best option to protect against a risk event is not adopted, ensure that the alternative

means of protecting against risk events are adopted. [72]

Keep records of meetings with Fire Officers. [121]

Not “decide what to do and then assess the risk” but the other way round. [77-78]

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Not determine the significance of risks on the “value of the proposed works”5 but on “the value

of the building and equipment at risk if those works were not properly specified and designed.”

[85]

Not assume that Certification by the Fire Brigade is sufficient to establish risks have been

managed and the process is not hazardous, such as “an industrial process involving naked

flames.” [44]

Specifying the Works

You Should:

Decide your objective – you cannot have both high quality, low price and tight timescales: “The

timing was very tight… it was imperative that the new lines were up and running by Christmas

2003, in order to meet the surge in demand for popcorn, particularly for the cinema trade, over

the Christmas period. This timetable could not be changed.” But the same project was costed “on

a requirement of minimum spend to introduce a safe system of work.” [54, 58]

Agree what design responsibility each partner will have: “the most important element of the

workscope was that done by the [sellers’] designers: the decision to use a particular piece of

equipment in a particular place, with the intention of achieving a particular effect.” [215]

Specify the works based on the needs of the project, not on existing experience. [92-96]

Ensure the partners work together on producing the design and specification: “the [buyers’]

haphazard approach at the outset was not picked by the [sellers], and was compounded by the

[sellers’] rather cavalier attitude to what they were being asked to do.” [113]

Avoid using standard form specifications for bespoke projects with significant risks. [107]

Specifying Standards of Quality

You should:

Understand the general standards of quality. A contractor providing design services “will not

generally owe a higher obligation than the duty to use reasonable skill and care.” If you want a

higher standard, you will have to say so, clearly. [217] Be specific if you want quality guaranteed: “one would need to identify with much more

specificity precisely what it is that [the sellers were] alleged to have been impliedly asked to do

and, in consequence, what result it is that it is said to have undertaken to bring about.” {56} State the standards you require. If your contract states ‘good quality’, the court will not imply a

term what the goods will be of satisfactory quality.6 [218-220] Ensure, in a contract for the sale of goods, where you want to rely on an implied obligation as to

fitness for purpose, that you:

o State your particular purpose “must have been made clear… At no stage did the [buyers]

ever indicate any particular purpose” for which the system was being acquired; [223-

224]7

o rely on the sellers’ advice or expertise; in the case, the buyers “did not rely on the

defendant's skill or judgment at all.” [226]

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Set out the standards on quality in the specification: “The specification, with its reference to

British Standard 5306 and other assumptions and requirements, formed the benchmark against

which the [sellers’] obligations were to be performed.” [264]

Understand what any relevant British Standard requires – often it is more a set of

recommendations, which is not sufficient for a guarantee or warranty. [243]

Set out any promise or guarantee in clear words: “[T]he fact that the system had been designed

‘to suit the specific requirements of the risks to be protected’ (to use the words of the

specification) does not mean that the system was guaranteed to eliminate those risks every time.

It was designed, manufactured and installed with those risks in mind, but the obligation as to

design was to take reasonable skill and care and there was nothing in these words to impose

upon the defendant a more onerous obligation. A design intended 'to suit the specific

requirements of the risks' may or may not be done with reasonable skill and care, but it was not a

promise that the design would eliminate all risks. A promise that a particular risk will be

eliminated must say so in clear terms. The specification did not do so.” [242]

Designing and Commissioning the Works

As a designer/D&B contractor, you should:

Use correct and detailed drawings in order to prepare your design. In this case, “the working

documents should have identified the relevant hazards.” [105,111]

Seek “as much information” as you can. Do not design “on assumptions [but]… find out the facts

for itself.” [509]

As your first step, “identify the risks which were to be protected and to design a system that

suited the specific requirements of the risks to be protected.” [510]

Ensure, as “a specialist was providing a design, and then manufacturing and installing the

product so designed…that there was proper communication between the designer and the

installer.” [511]

Ensure any checks of design assumptions by the installer or buyers are followed up: “if the

design engineer worked from drawings, he would need the installing engineer to check that his

design assumptions were well-founded.” [112-113, 138]

Ensure your design is based on detailed accurate information, reviewed and checked. [113]

Obtain good information and corroborate with your partners, to avoid: “the patently inadequate

information which the [sellers] had, and the difference of approach between its two designers

which was its probable result, demonstrates a fundamental flaw at the heart of the [sellers’]

work on this contract.” [140]

Do more than just check “the system had been installed in accordance with the drawings” where

the drawings are inadequate. [145]

Agreeing the Terms and Conditions

You Should:

Keep records to show that previous contracts have been agreed on the same basis, if you want

to establish a course of dealing, and that your T&C are incorporated as a result. [161]

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Ask for a copy of any T&C referred to on any contract document, especially where it states

“already supplied… Additional copies available on request”. You must also respond to any terms

with which you disagree. {27}

Understand the rules relating to incorporation of terms and conditions.8 [172-173]

Ensure your terms and conditions are sensible and certain: a clause limiting liability to a multiple

of an annual service charge is not effective in a contract for the provision of goods and services.

Such a limit “was meaningless, because the limitation was calculable only by reference to the

value of a non-existent contract. That was too uncertain to be enforceable.” [197-198]

Training Staff

You Should:

Use risk identification processes to establish standard operating procedures. [367]

Create clear safety procedures and train operatives accordingly. [367]

Ensure all relevant staff are given a detailed demonstration of all relevant systems as part of the

commissioning or post-commissioning follow-up. Do not leave it to one person. [270-286]

Ensure all operatives are aware of any safety features or procedures on newly installed or

altered equipment: “very few of the operatives in the 'oil pop' popcorn production area were

aware that the CO2 suppression system protecting the elevator and the hopper could be

manually activated, and even fewer knew how that manual activation was to be triggered.”[8]

Ensure the procedures approved by managers are appropriate. [10]

Ensure there is a satisfactory and safe working environment for operatives, and a satisfactory

system to detect and respond to risk events such as fires. [264-266]

Follow up when risks events occur. [269]

Ensure checks required by a manual or users’ handbook are completed as required. [311]

Check whether training is reflected in changed behaviours. [333-335]

Write down all approved procedures for dealing with risk events. [338]

Act on knowledge that operatives are not aware of safety procedures. [346]

Undertake structured and systematic evaluations of processes to identify risk to personnel and

equipment, in a HAZOP format. [349]

The Author

Sarah Fox of Enjoy Legal Learning wrote this note. She is a speaker and trainer who cuts through the

complexities of construction law. She provides confidence to construction companies to read, use

and understand their contracts. She is also author of the 500 Word Contract™.

To find out how Sarah can help you love your terms and conditions, contact her on: 07767 342747 or

by email: sarah@enjoylegallearning.co.uk

Footnotes

1 The first was by Mr Justice Coulson in Trebor Bassett Holdings Ltd & Anor v ADT Fire and Security Plc

[2011] EWHC 1936 (TCC) and the second by the Court of Appeal [2012] EWCA Civ 1158. 2 References in square brackets are to the TCC judgment and in curly brackets are to the Court of

Appeal judgment. 3 TCC, 56.

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4 See also paragraphs 7 “A critical assumption about the existence of fire segregation turned out to be

entirely misplaced”, and 45-49. 5 See e.g. the comments at paragraph 91: the suggestion from the claimant that they “might be over-

spending, by installing a system costing a few thousand pounds, in order to protect building and equipment now said to be worth £110 million, is unfathomable. It betrays an absence of understanding of what the fire risks really were, and restates the false cost=significance proposition.”

6 This term is implied under s4 of the Supply of Goods and Services Act 1982. 7 In the Court of Appeal judgment, Tomlinson LJ said, at paragraph 57: “[The buyers] cannot, for the

purposes of s.4(4) of the 1982 Act, show that it made known to [the sellers] a particular purpose for which the system was being acquired. {The buyers] did not sufficiently explain the process or its hazardous nature…no such absolute but undefined obligation could be undertaken or guarantee given.”

8 A quotation is an offer, and a purchase order with a different set of terms and conditions is a counter-

offer. If this is the ‘last-shot’, then the buyers’ terms and conditions apply. The fact that the buyers’ terms and conditions were not enclosed with their purchase order does not prevent their incorporation if (1) they were incorporated by notice (2) there was no requirement for specific or particular notice as none of the terms and conditions were unduly onerous. [191-192]