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Part 3 – Study Notes – 10.03

Professional Practice 1 Architects’ Appointment 3 2 Architects’ Collateral Warranties 9 3 Architects’ Liability 12 4 Architects’ Registration 16 5 Copyright 17 6 Professional Conduct of Architects 21 7 Programming 24 8 Responsibility for Design 26 9 Structure of Architectural Practices 29

Procurement 10 Construction Management 39 11 Contract Choice 42 12 Contract Documents 46 13 Design and Build 50 14 General Contracting 55 15 Management Contracting 60 16 Partnering 63 17 Private Finance Initiatives 68 18 Selecting Procurement Methods 70 19 Rethinking Construction 83 20 Risk 86 21 Specification 91 22 Tendering 95

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Law 23 Constructing the Team 107 24 Contract Law 113 25 Health and Safety 115 26 Housing Grants, Construction and Regeneration Act 1996 121 27 Land Law 123 28 Law of Tort 127 29 Party Walls 132 30 Planning Law 134 31 Statutory Authorities 146

Insurance 32 Bonds and Guarantees 151 33 Contract Insurances 152 34 Law, Insurance and Liability 164 35 Professional Indemnity Insurance 165

Site Operations 36 Certificates 170 37 Possession and Completion 178

Dispute Resolution 38 Adjudication 186 39 Arbitration 192 40 Litigation 196 41 Alternative Dispute Resolution 197

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1 - ARCHITECTS' APPOINTMENT

The appointment When considering an offer of appointment, an architect must: • Be satisfied that the client has the authority and resources to commission the

work • Appreciate the background to the proposal and understand its scope • Be aware of any other consultants who have been or are likely to be associated

with the project • Be satisfied that he has the experience and competence to undertake the work • Be satisfied that the office has the necessary finance, staff, and other resources • Be satisfied that the proposal will not conflict with any relevant codes of

professional conduct, other commissions and commitments in the office and the policy of the practice

The architect must consider his position in relation to any other architect who may have been involved in the same scheme: • An employer can offer the commission to whomever he wishes to obtain

alternative schemes • However the architect must ensure that he acts fairly in his dealings with other

architect • An architect who is approached by a potential client in connection with a project

with which another architect has already been concerned has a duty to inform the other architect of his involvement

Agreement of appointment • The authority of the architect is strictly limited to the terms of his appointment • The form of services can be varied with changing circumstance during the work,

but it is essential that these changes are formally confirmed in amendments to the form of agreement

• Where a commission arises out of a recognised competition, the competition conditions usually form the conditions of the appointment

• The form of the appointment should be signed by both parties, witnessed and dated, each keeping a copy

• The architect's contract of engagement is usually personal to him: he cannot delegate his duties completely, but he is under no obligation to carry out all of the work personally

• May be made by either an informal exchange of letters (frequent, but not recommended) or an exchange of a formal memorandum or agreement, in each case supported by appropriate supplementary material such as conditions of engagement

• Various institutions publish standard forms of agreement and their use is strongly recommended

Where a standard form is not used, it is suggested that the following matters should be clearly identified in any exchange of letters: • The date of the agreement • The name and address of the employer • The name and address of the architect • The title and address of the project • The formal agreement to the appointment of the architect • The basis of remuneration for the architect and the arrangements for payment • The form and scope of services to be provided by the architect • The appointment procedure for a quantity surveyor, other consultants and the

clerk of works as appropriate • The procedure to be followed in the event of the architect's incapacity

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• The procedure for the termination of the agreement • The procedure for resolving disputes between parties • The name of an agreed adjudicator or the agreed nominator of an adjudicator

Termination • The contract of engagement between the architect and the client may be

terminated by either party at reasonable notice • In the event of termination, any outstanding fees for work properly carried out

become due to the architect • In the event of death or the incapacity of the architect, it is usually held that the

client is entitled to the use of the drawings to complete the work, provided payment has been made

• The death of either party generally dissolves the contract, but it is usually possible for a thirds party to assume responsibility for the completion of the contract

• In the event of termination on the ground of bankruptcy or liquidation, the contract can be continued if both parties wish to do so and the receiver agrees

• The Scheme for Construction Contracts and the standard forms of appointment make provision for the suspension of work in the event of non-payment of fees

Standard Forms of Agreement for the Appointment of an Architect Forms of Agreement introduced in 1999: • Standard Form of Agreement for the Appointment of an Architect (SFA/99) • Condition of Engagement for the Appointment of an Architect (CE/99) • Employer's Requirements Supplement (Design and Build) for use with SFA/99 or

CE/99 (DB1/99) • Contractor's Proposals Supplement (Design and Build) for use with SFA/99

(DB2/99) • Form of Appointment as Planning Supervisor (PS/99) • Form of Appointment as Sub-Consultant (SC/99) • Form of Appointment as Project Manager (PM/99) • Small works Conditions (SM/99) The Forms • SFA/99 is suitable for use where the architect provides service for a fully

building project of any size or complexity and can be used where other professional services are provided

• CE/99 and SM/99 are devised for use with letters of appointment for projects which are not regarded as being large enough to justify the full documentation of SFA/99

• DB1/99 and DB2/99 include replacement Service Supplements or use where the 'consultant switch' is envisaged

• Where the architect is commissioned as both architect and planning supervisor, it is strongly recommended that the two appointments should be clearly separated: as 'designer' the architect should draw the client's attention to PS/99

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RIBA Plan of Work 1999 • A revised version of the original Plan of Work was produced with the intention of

forming a closer relationship between the schedules of service and the Plan of Work

Traditional Plan of Work Revised 1999 terminology terminology terminology Briefing A Inception A Appraisal B Feasibility B Strategic Briefing Design C Outline Design C Outline Proposals D Scheme Design D Detailed Proposals E Detail Design E Final Proposals Working Drawings F Production Information F Production Information F1 F2 G Bills of Quantity G Tender Documentation H Tender Action H Tender Action Contract J Project Planning J Mobilisation K Operation on Site K Construction to Practical Completion L Completion L After Practical Completion M Feedback

SFA/99 Recitals make provision for: • Date of the agreement • Details of the client and the architect • Title or description of the project and its address Articles of Agreement make reference to: • Date • Conditions • Schedules • English or Scottish Law • Settlement of disputes Optional provisions for: • Limitation of the time during which action or proceedings may be opened • Limitation of the amount of liability • Limitation of the amount of PI insurance Schedule 1: Project Description could refer to: • Phasing or sectional completion • Special submissions and negotiations • Site information (ownership, boundaries, easements etc.) • Health and Safety matters provided by client • Organisational or operational matters • Accommodation, space and use requirements • Cost limits • Key dates and programme requirements • Initial brief if it exists Schedule 2: Services, Revised Plan of Work Stages, other activities - offers four options which have to be selected by deleting those which are not required: • Perform the services as designer, design leader, lead consultant, during pre-

Construction and Construction Work stages OR

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• Perform the Service for the Work Stages indicated below (i.e. Plan of Work Stages)

• Make visits to the Works at the anticipated frequency indicated below • Perform any other service identified below Schedule 3: Fees and Expenses – parties have to agree on: • Method for calculating fees for normal services in relation to the services

described in Schedule 2 and percentage or lump sums involved Provision is made for: • Annual review of certain lump-sum figures and time charges • Additional fees • A fixed interest rate on late payments • Expenses and disbursements • Mileage rates • In-house printing costs • Hourly rates or other bases for different categories of staff • Instalment payments Client should be reminded that the architect’s fees are: • Nett and do not include VAT • VAT is chargeable at the current rate regardless of the VAT status of the

building Schedule 4: Other Appointments • Provides for the names and addresses of other consultants Services Supplement: Design and Management Architect's Design Services • Uses the revised form of the Plan of Work to detail the possible services of the

architect in relation to each of the stages offering options for: • Alternative A, where the architect provides cost advice, and • Alternative B, where the architect provides information to enable the QS to

provide cost advise Architect's Management Services • Groups and details the services under three headings which can be offered

singly or in combination to suit the particular procurement arrangement The architect can be appointed as: • Design leader and/or • Lead consultant and/or • Lead consultant and contract administrator Conditions

Speculative work and tendering for architectural services • Speculative work in which the architect undertakes work at risk on the basis

that payment will only be made in the event of the work proceeding is now widespread

• Competitive fee tendering has also become commonplace The extent to which an architect is prepared to undertake speculative work must depend upon many factors such as: • The policy of the practice • The architect’s knowledge of the potential client • The nature of the proposed project • The likelihood of its success • The architect’s existing commitments

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• The capacity of the office now and in the foreseeable future • The possible income and profit from the commission if it proceeds • The extent of competition for the work Regardless of these conditions: • It is important that there should be an agreement between the architect and the

client defining the extent of service and the commitment of the client to the architect in the event of the project proceeding

• In the event of the project proceeding, it is usual for the architect to be reimbursed for the initial work

• It is important that the practice should budget for non-fee-earning speculative work, fixing a limit to the amount it does

Appointments required by statute • Statutory duties may be specified in detail as part of the schedule of services, or • Reference may be made to the relevant statute • It has to be recognised by both client and architect that statutory duties are

non-negotiable • If the architect cannot or is not allowed to comply, he must withdraw, advising

the client of the reasons for termination of the appointment

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March 2001 Set out an agenda for the first client meeting following your selection as architect, assuming you have very little information about the project. For each item list out the key points you would wish to discuss. (20) Appointment (if not already agreed) • Scope of services • Fee/expenses • Conditions of engagement Nature of project • Typology • Location • Size • Client's/architect's previous experience Nature of Site • Topography/geology • Restrictions - rights/restrictive covenants • Accessibility - connections Consents • Have any statutory approvals already been sought/granted? Timescale • Start date • Completion date Budget • Outline budget already established? • Can any grants be obtained? Quality • Client's aesthetic aspirations • Client's technical requirements Clients obligations under CDM Regs • Appointment Planning Supervisor Other consultants • Architects - has previous design works been done? • Quantity Surveyor • Structural Engineer • M&E Engineer • Who will be required? • Are any already appointed? • Will they be employed by client or architect? Procurement • Most appropriate method for requirements of project • Client's/architect's previous experience • Any strategic partnering arrangements already in place? Project Strategy • Management of communications client/design team • Resourcing - availability of staff • Programming - critical path analysis

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2 - ARCHITECTS' COLLATERAL WARRANTIES

The obligation to provide collateral warranties • There is no legal duty on anyone to agree the terms of or to enter into a

collateral warranty in favour of a third party • If collateral warranties are required, the employer is well advised to ensure that

there is a binding obligation imposed by the terms of the consultancy agreement with the architect to grant collateral warranties

• SFA/99 defines a ‘third party agreement’ as: ‘an agreement between the architect and a third party existing in parallel with the agreement between the architect and the client’

• Clause 5.6 states that if the architect is involved in extra work or incurs extra expense he is entitled to additional fees calculated on a time basis

• Clause 7.5 states that ‘where the client has notified, prior to the signing of this agreement, that he will require the architect to enter into an agreement with a third party, the terms of which and the names or categories of other parties who will sign similar agreements are set out in annex to this agreement’

• Clause 7.6 states that ‘for the avoidance of doubt, nothing in this agreement shall confer on any third party any benefit or the right to enforce any term in this agreement’

The client will want collateral warranties in favour of: • Any person providing finance • Any future purchaser of the project • Any tenant of the project • If the nature of the profit-sharing or other arrangements for the project require,

freeholders or borough councils or other third parties who may have a loss if the project is negligently designed or constructed

But architects should not accept open-ended provisions which raise the prospect of their being required to enter into collateral warranties with, say, 60 tenants Enforceability of obligation • Will courts order the architect to enter into the collateral warranty, or • Will they suggest that damages for breach of the contractual obligation

undertaken by the architect is adequate remedy for the client? The latter is most widely held, and for this reason, powers of attorney are frequently inserted into tailor-made consultancy agreements in addition to the basic obligation to provide the collateral warranty, which authorises the client to execute the collateral warranty on behalf of the architect if the architect in breach of contract, fails to execute it himself

The terms of collateral warranties: CoWa/P&T Clause 1: The Warranty • Consultants generally warrant that they will exercise reasonable skill and care in

the performance of their duties • Consultants do no guarantee results • The warranty relates to the duties under the consultancy agreement Clause 1(a): The Exclusion of Economic and Consequential Loss ‘The firm shall be liable for the reasonable costs of repair, renewal and/or reinstatement of any part or parts of the development to the extent that: • the purchaser/tenant incurs such costs and/or • the purchaser/tenant is or becomes liable either directly or by way of financial

contribution for such cost The firm shall not be liable for other losses incurred by the purchaser/tenant’

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• If this limitation on the basic warranty did not appear, then the architect would be liable to the purchaser/tenant for the damages for breach of contract assessed in accordance with the normal rules

• According to the BPF, for clients who wish to extend the consultant’s responsibility to cover economic and consequential loss and can persuade the consultants to provide adequate insurance cover should delete the last sentence and replace it with: ‘The firm shall in addition be liable for other losses incurred by the purchaser/tenant provided that such additional liability to the firm shall not exceed £x in respect of each breach of the firm’s warranty’

Clause 1(b):’The Contribution Clause’ • To ensure that if there is a latent defect in the building and the

purchaser/tenant wants to sue, his recovery against the architect is assessed on the assumption that the architect is only liable for his ‘share’ or the contribution to the loss

• Even if the purchaser/tenant is unable to recover from the contractor who may have also contributed to the loss either because the contractor has not given a collateral warranty or because the contractor is insolvent

Clause 1(c): ‘Defences of Liability’ • To ensure that if, for example, the consultancy agreement contains a limitation

on the architect’s liability for negligence, that limitation is also imported into the collateral warranty

Clause 1(d): ‘Independent Enquiry’ • To prevent a contribution claim by the architect arising from the involvement of

an independent surveyor to carry out any independent enquiry by the purchaser/tenant in the development

Clause 5: ‘Copyright’ • Obliges the architect to give the purchaser/tenant as wide-ranging licence to

copy and use the documents for any purpose related to the premises • The licence extends to the copying and use of documents for an extension ,but

not a right to reproduce the design for an extension Clause 6: ‘Professional Indemnity Insurance’ • The architect should check that his PII corresponds to the obligation in the

collateral warranty, but the obligation is largely academic because: • The obligation is too uncertain to be enforceable since it is qualified with the

proviso: ‘provided always that such insurance is available at commercially reasonable rates’, and

• There is no effective sanction for a breach by the architect of his obligation to maintain PII

• Most PII policies contain a specific endorsement about collateral warranties stipulating the number which may be given and the terms which are insured

Clause 7: ‘Assignment’ • Blanks are included so that the agreement can prohibit assignment altogether

or the number of assignments can be restricted • Two or three assignments are usually permitted • An assignment does not create new rights • It extinguishes the assignor’s rights and, from the date of assignment, give the

assignee the rights which the assignor would otherwise have had • It does not mean that the limitation period starts again

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Clause 9: ‘Limitation’ • ‘No action or proceedings for any breach of this agreement shall be commenced

against the firm after the expiry of x years from the date of practical completion’

• Usually six years for agreements under hand and twelve years if executed as a deed (under seal)

CoWa/F • Confers on the funders ‘step-in’ rights entitling the funder to ‘take over’ the

appointment and to receive prior notice of termination of the appointment • Clause 5 entitles the funder to serve notice on the architect upon termination of

the finance agreement • Clause 6 requires the architect to give notice to funder before terminating the

appointment for breach by the developer • Clause 7 requires the funder to accept liability for fees payable to the architect

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3 - ARCHITECTS' LIABILITY

Different sources of liability An architect may be liable to his client for: • Breach of contract • Through the tort of negligence, or • Under statute The question of professional liability can be approached under the following headings: • A minimum standard of reasonable care is to be exercised in the discharge of

professional duties carried out under the contract • A higher duty to achieve particular results, comparable with the duty generally

placed upon a builder, may be contracted for • Duties under the law of tort to third parties may also be owed to a client

concurrent with a contractual duty • A more specialist duty may be owed in tort when giving advice whether to a

client or to a third party • Additional duties may be imposed by statutes

Contractual Duty of Care • An architect has a duty to use reasonable skill and care in the course of his

employment • An architect will be tested against the conduct of other architects • The courts recognise that failure is not conclusive evidence of breach of duty:

‘The surgeon does not warrant that he will cure the patient, nor does the solicitor warrant that he will win the case’

Contractual duty of result • An architect can under the express terms of his contract take on the

responsibility to ensure that the end product will perform as required • This is much more onerous and it is difficult to get PII for it • Such a duty is most likely to arise in design and build contracts where the

architect is employed by the contractor, who generally has a duty to achieve a certain result

• If the architect involvement is either as part of a package deal to design, supply and erect an end product, or to design something to comply with stated performance criteria then he may be obliged to ensure that the finished article is fit for purpose

Concurrent duties in tort and contract • A contracting party might choose to rely on tort because it may extend the time

within which legal action has to be started

Duties in tort to clients and third parties Murphy v Brentwood District Council 1990 • Severely limited the remedies available to third parties by restricting the losses

which can be recovered in tort • Recoverable losses are now limited to personal injury and physical damage to

property • Pure economic loss cannot be recovered including reduction in the value of

property as a result of damage

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• No duty owed in tort to protect building owners/occupiers from the cost of repairing defects in their buildings or financial losses incurred by reason of remedial works

• However, if a building has defects that threaten the safety of passers-by, the owner may be able to claim the cost of repairing or demolishing the building so as to make it safe

• Also, if damage to the building causes damage to other property of the claimant, costs can be recovered in respect of the other property

• As a result, subsequent owners have relied upon collateral warranties • Contracts (Rights of Third Parties) Act however, confers rights to enforce

contractual terms on perties who are not party to that contract

Duty in tort to clients and third parties when giving advice Hedley Byrne & Co. Ltd v Heller & Partners Ltd • The professional may owe a duty when giving advice to avoid causing economic

loss to third parties who rely upon that advice

Liability for breach of contract • The architect’s promises are both express and implied Express terms • Incorporated by the use of standard forms of appointment • Made orally or in correspondence Implied terms • Implied by the Supply of Goods and Services Act 1982 to use reasonable skill

and care, and • In the absence of express terms as to time, to carry out the work within a

reasonable time • The court can also imply terms into a contract if they are necessary to make it

work nd were contemplated by the parties at the time they made the contract

Breach of Contract • If an architect does not do what he undertook to do, in the absence of defence,

he will have committed a breach of contract which makes him liable to the person who engaged him

• Liability will be measured in damages as a sum of money • That sum may wipe out the architects fees, but is not limited to that amount • The extent to which the architect is liable may be limited by a limitation clause • Liability for breach of contract includes liability for consequential loss in so far as

those losses are of a reasonably foreseeable type

The scope of the duty of care owed to the client in contract • There are few aspects of an architect’s work for which he cannot in principle be

held liable to his client if he does not take reasonable care Site investigation • If the job of ascertaining the nature of the site is beyond the architect, then he

should advise the client to engage a specialist Design • An architect may be liable to his client if errors or omission are made in the

drawings or specifications • Clients may rely upon failure to comply with Codes of Practice, BRE

recommendations and British Standards. Failure to follow such guidance is

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unlikely itself to establish liability, but may persuade the court that there has been negligence

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March 2001 Explain the Architect’s duty of care when issuing Interim Certificates. (6) • Duty to use reasonable skill and care • Duty to act impartially - the architect would be liable to the client in contract for

over-payment and the contractor could sue in the tort of negligence for under-payment

• Clause 30.1.1: issue interim certificates stating the amount due to the contractor from the employer specifying to what the amount relates and the basis on which the payment was calculated

• Clause 30.2.1.1: the total value of the work properly executed by the contractor - the architect should carry out an inspection before issuing an interim certificate to ascertain this

Explain the Architect’s duty when visiting site. (6) • Duty to visit the visit in accordance with what has been set out in his form of

appointment • Duty to inspect, but not supervise • Inspections should be carried out at appropriate points during the construction

(eg before something is about to be covered up) rather than periodically • Duty of skill and care to employer to detect defects but failure of detection will

not amount to negligence • Duty to warn the contractor if he is making a mistake, but not dictate the

method of construction • Duty to warn the contractor if he is breaking statutory obligations, particularly

CDM Errors have been discovered in the steel subcontractor’s fabrication drawings after they have been commented on by the Architect. The errors have involved the re-fabrication of a number of steel members causing delays to the contract. Write a letter to the contractor in response to a notification of delay describing the Architect’s duty in relation to shop/fabrication drawings. (8) • The Architect is responsible for the co-ordination of sub-contractor's design but

not for the design itself • If the design is beyond the reasonable skill of an architect, he cannot be held

responsible for it • The Architect may have a system of commenting on a drawing with a scale of A,

B or C, where A signifies 'good - progress to manufacture', B 'okay' and C 'poor' • 'A' is only used rarely, and with extreme caution • Even if 'A' is used, it is still only a comment and not an approval • Check with Structural Engineer as to cause of the error • The contractor is responsible for the design of sub-contract works, and must

seek any damages form him directly(assuming the sub-contractor is not nominated)

• An error in sub-contract design work does not constitute a Relevant Event (unless the sub-contractor was nominated) and therefore does not give rise to an Extension of Time

• An error in sub-contract design work does not constitute a Matter and therefore the Contractor is not entitled to Loss and/or Expense

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4- ARCHITECTS' REGISTRATION

Architect's Registration Act 1931 and amending Acts of 1938 • Provided for the setting up of a register of architects to protecting the use of the

title 'architect' • But does not prevent others from carrying on the practice of architecture • Provides for the maintenance of proper standards of professional conduct • Provides for limited financial assistance for some students • Funded by an annual fee of those on the register

Architects Act 1997 repealed the Architect's Registration Act 1931 and 1938 • Replaced the large former Architect's Registration Council with the small

Architect's Registration Board, consisting of seven members elected by persons on the register and eight persons appointed by the Privy Council in consultation with the Secretary of State

• The Act makes registered people ineligible from being appointed persons, therefore there must always be a lay majority on the board

• The Act makes provision for a Statutory Professional Conduct Committee which is responsible for disciplinary matters

Eligibility for registration • Persons are eligible for registration if they hold such qualifications and have

gained such experience as the Board may prescribe or if they have an equivalent standard of competence

• The existing Joint ARCUK/RIBA Validation arrangements continue to operate and admission to the register follows the well-established procedures of certified success in recognised examinations at levels 1, 2 and 3

• As courses in architecture increasingly adopt modular structures and the subjects of study become more diversified it is likely that the board's involvement in validation will increase in order to enable it to meet its statutory obligations as the profession evolves and changes

• An application fee and an annual retention fee is payable for registration • It is an offence to become registered or attempt to become registered by

making false or fraudulent representations or declarations • It is also an offence for an unregistered person to practise or carry on a

business under the title containing the word 'architect'

Removal from register A person's name can be removed from the register permanently or up to a period of two years if: • the Professional conduct Committee makes a disciplinary order, or if • the person fails to notify the registrar of a change of address, or if • the person fails to pay the annual retention fee Disciplinary Orders may be made in the event of a registered person being found guilty of: • Unacceptable professional conduct (in relation to the Code of Professional

Conduct and Practice), or • Serious incompetence, or • A criminal offence relevant to the fitness of the person to practise as an

architect

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5 - COPYRIGHT

The sources of copyright • Copyright, Designs and Patents Act 1988 • The UK is party to a number of conventions dealing with international copyright

recognition: the Berne Copyright Convention and the Universal Copyright Convention

Basic rules • Architectural works come under artistic works • Architectural works include: buildings, models, plans, sketches, drawings,

reports (under literary works) and all the typical output of an architect's office • For this category, copyright subsists for 70 yeas from the end of the calendar

year in which the author died • There is no copyright of ideas, only the manner of their expression • There is nothing in the notion of copyright to prevent a second person from

producing an identical result (and himself enjoying a copyright in that work) provided it is arrived at by an independent process

• To acquire copyright protection, works must be recorded in a material form • Literary, dramatic, musical and artistic works must be original in order to be

entitled to copyright • The works does not have to be published, nor does it have to be registered, for

it to have copyright protection

Restricted acts If material is entitled to copyright, the right vested in the copyright owner is that of preventing others from doing certain 'restricted acts', except under certain circumstances: • Fair dealing (for purposes of research, private study, criticism or review) • Use of less than a substantial part of a work or incidental inclusion • Use for certain educational purposes • Use for certain library and archival purposes • Use in parliamentary and judicial proceedings and certain other public

administration functions Restricited acts: • Copying the whole or a substantial part of the work • Publication: issuing copies of the work to the public

Originality and artistic content • In order to obtain copyright protection as an artistic work, buildings and models

are required to have some artistic character • The test for originality is low • No architect has failed to prove an infringement even though the original

building was so ordinary that it might be thought that someone would design something substantially similar

• The inclusion of some distinctive design detail will make the architect's task of proving infringement much easier

• It could otherwise be proved that the person sued was without previous knowledge of the plaintiff's prior design

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Publication • In the case of architecture in the form of a building or an artistic work

incorporated into a building, construction of the building shall be treated as equivalent to publication of the work

• However the issue to the public of copies of graphic work representing, or photographs of, a work of architecture in the form of a building, or a model for a building, does not constitute publication

Ownership of copyright • Ownership of copyright in the plans resides with the architect who actually drew

the plan, drawing, sketch or diagram • Being personal property in law, it passes to its owner's personal representatives

after his death • With regards to the artistic copyright in the buildings or models themselves, the

author and therefore the owner, will be the person who was the effective cause of the shape and design or the building

• This is most likely to be the same person as owns the copyright in the plans, but if a builder constructs the building without reference to any plans he will be the author and owner of the work of architecture

• However, the copyright in architect's drawings, buildings, or models produced by an employee in the course of his employment automatically vests in his employer

• A partner of a firm is not an employee of the partnership, and hence will own the legal title to a work created by him.

• However, if the work in question is created in the ordinary course of the partnership, the copyright in the work will be considered as a partnership asset

Ownership of drawings • Upon payment of the architect's fees, the client is entitled to physical

possession of all the drawings prepared at his expense • In the absence of agreement to the contrary, copyright remains with the

architect who also has a lien on (right to withhold) the drawings until his fees are paid

• If all copyright is assigned to the client, he may make such use of it as he wishes

• Even if architects have assigned the copyright, they may still reproduce in a subsequent work part of their original design provided they do not repeat or imitate the main design

• The allows architects to repeat standard details

Exceptions from infringement of architect's copyright • Contractors do not need permission to use photographs of buildings they

constructed as part of advertisements • Making a graphic work representing a work of architecture is not an

infringement of copyright • However, copying the drawing or plan from which is was constructed remains

an infringement • Anything done for the purposes of reconstructing a building does not infringe

copyright

Infringement To prove infringement, the plaintiff must show: • Copyright subsists in his works • The copyright is vested in him

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• The alleged infringement substantially reproduces his work in material particulars

• The alleged infringement was copied from his work • No action can succeed if the person who is claimed to have infringed had no

knowledge of the existence of the work of the owner • It is the nature of architects' copyright that the person allegedly infringing must

have had access directly or indirectly to the drawings • Infringement can therefore take three forms: Copying in the form of drawings: • Infringement is not avoided if some of the details are altered • Reproduction includes reproduction of a substantial part, referring to quality

rather that quantity Copying the drawing in the form of a building • The plans can be copied in the form of a building, which reproduces the plans Copying a building by another building Meikle v Maufe • Meikle successor to original architect, Smith and Brewer, of building for Heal

and Son Ltd in 1912 • At the time, difficulties over land acquisition prevented any opportunity for

extension • 1935 Heals employed Maufe to extend the building • Maufe admitted that he had reproduced the southern section to continue the

façade • Meikle sued for infringement of copyright • The judge provided that the copyright remained with the original author, unless

he had agreed to pass the right to another • Heals contended that Smith and Brewer had impliedly consented to the

reproduction because they knew of the possibility of an extension • However, it was held that because of the land acquisition situation, he could not

imply such a term

Licences Paragraph 6.1 of the conditions of Engagement of RIBA Standard Form of Agreement states: • Copyright in all documents and drawings prepared by the architect remains the

property of the architect • The Act permits prior assignment of future copyright so that it will vest in the

client Paragraph 6.2 modifies paragraph 6.1to give the client licence to use the architect's design in certain circumstances: • The entitlement applies only to the site or part of the site to which the design

relates • Any fees due to the architect have been paid • The entitlement applies to the operation, maintenance, repair, reinstatement,

alteration, extension, promotion, leasing and sale of works • The entitlement excludes the reproduction of the architect's design for any part

of any extension of the project or any other project Copyright may be expressly assigned to the client at some later stage, but it is usual to grant the licence subject to conditions

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Implied licence • Situations may arise where the RIBA Architect's Appointment does not form part

of the contract with the client • Problems may then arise as to what rights the client has to use the architect's

drawings • Before any term can be implied into a contract, the courts must consider what

the parties would have decided if they had considered the question at the time they negotiated their terms

• Application of these rules to an architect's engagement would suggest that it is reasonable to infer that the architect impliedly consents to the client making use of the drawing for the purpose for which they were intended

• The preparation of drawings for obtaining planning permission does not carry the right to use them for construction of the building without the architect's express consent, which ought not to be reasonably withheld

Remedies for infringement • An injunction can be obtained to prevent the construction of a building that

would infringe the copyright in another building even if that building is part-built • However, there is a general principle in law that an injunction will not be

granted if damages are adequate • In Chabot v Davies the court held that the measure of damages for

infringement of the designer's copyright was the amount which he might reasonably have charged for granting a licence to make use of his copyright

Moral rights There are four basic categories of moral rights contained in the Act: • The right to be identified as the author - whenever copies of a graphic work

representing it are issued to the public, or on the building as constructed • The right to object to derogatory treatment of the work - any addition to,

deletion from or alteration to or adaptation of the work if it amounts to distortion or mutilation of the work or is prejudicial to the honour or reputation of the author. This does not apply to architecture in the form of a building - here the architect may have his identification removed form the building

• False attribution of work • The right of privacy of certain photographs and films

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6 - PROFESSIONAL CONDUCT OF ARCHITECTS

Codes of Professional Conduct • Codes are devised in the interest of clients and less directly in the interests of

its members through the maintenance of the status of the profession in the eyes of society

• The integrity of purpose of the codes and the impartiality of their enforcement is crucial to the public's perception of the profession

• The requirements of the codes change and evolve in response to changing circumstances and attitudes and emerging economic, political and social pressures

• They have to reflect the attitudes of the members and the consequences of legislation and litigation, and expectations of an increasingly sophisticated clientele

• Architects in the UK are subject to the CODE of Professional conduct and Practice of the Architect's Registration Board

• In addition architects can choose to join other professional bodies such as the RIBA and become subject to their codes

• Failure to comply with the ARB code could result in the removal of the person's name from the register, terminating the person's right to use the title 'architect', and possibly leading to the person's loss of livelihood

• Failure to comply with the institution's code may lead to suspension or loss of membership, but provided that the person is not in breach of the ARB code, the right to practise under the title of 'architect' remains

• The extent to which a person feels that it is necessary to take up and retain the right to title or to continue institutional membership is a matter for the commercial and professional judgement of the individual

ARB Code of Professional Conduct and Practice • Consists of an Introduction, twelve Standards, and Guidance notes

The Introduction • The architect is expected to act competently and with integrity in carrying out

professional work • Although a particular course of conduct is not mentioned in the code, it does not

mean that it could not lead to disciplinary proceedings: there is a need to have regard to the spirit of the code

Cases of criminal convictions that could be materially relevant to an architect's fitness to practise, if: • It constitutes an offence under the Architects Act 1996 or other legislation

directly affecting architects • It arises directly out of his professional activities • It results in a sentence of imprisonment, whether suspended or not • It constitutes an offence or dishonesty • It is otherwise of a nature which calls into question the architect's integrity If the architect's duty as an employee conflicts with the architect's duty under the code, the primacy of the code is stressed and it emphasises that in the last resort, the architect must withdraw from the work

The Standards • Standard 1: Architects should at all times act with integrity and avoid any

actions which are inconsistent with their professional obligations

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• Standard 2: Architect's should only undertake professional work for which they are able to provide adequate professional, financial and technical competence and resources

• Standard 3: Architects should only promote their professional services in a truthful and responsible manner

• Standard 4: Architects should carry out their professional work faithfully and conscientiously and with due regard to any relevant technical and professional standards

• Standard 5: In carrying out or agreeing to carry out professional work architects should pay due regard to the interests or anyone who may reasonably be expected to use or enjoy the products of his work

• Standard 6: Architects should maintain their professional service and competence in areas relevant to their professional work and discharge the requirements of any engagement with commensurate knowledge and attention

• Standard 7: Architects should preserve the security of monies entrusted to his care in the course of their practice or business

• Standard 8: Architects should not undertake professional work without adequate and appropriate professional indemnity cover

• Standard 9: Architects should ensure that their personal and professional finances are managed prudently

• Standard 10: architects should promote the Standards set out in this Code • Standard 11: Architects should organise and manage their professional work

responsibly and with regard to the interests of their clients • Standard 12: Architect should deal with disputes or complaints concerning

their professional work or that of their practice or business promptly and appropriately

RIBA Code of Conduct • Latest version came into effect in April 1997 • Consists of: a Preface, three Principles, Standard of Professional Performance,

and Member's Rules for Clients' Accounts

Preface • Objectives of the RIBA: 'the advancement of architecture and the promotion of

the acquirement of knowledge of the Arts and Sciences connected therewith' • Objectives of the Code of Professional Conduct: 'the promotion of the standard

of professional conduct, or self-discipline, required of Members of the Royal Institute in the interests of the public'

• Members are required to act in the spirit of the code as well as its precise terms • In meeting their obligations under the code, members are expected to have due

regard to the need to conserve and enhance the quality of the environment, its natural resources and cultural heritage

• A member found in breach of the code is liable to reprimand, suspension or expulsion

The Principles • Principle 1: A member shall faithfully carry out his duties applying his

knowledge and experience with efficiency and loyalty towards his client or employer, and being mindful of the interests of those who may be expected to use or enjoy the product of his work

• Principle 2: A member shall, at all times, avoid any action or situation which is inconsistent with his professional obligations or which is likely to raise doubts about his integrity

• Principle 3: A member shall in every circumstance conduct himself in a manner which respects the legitimate rights and interests of others

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Standard of Professional Performance • Devised as a level of competence which the RIBA requires its members and

their practices to uphold in the interests of clients and the reputation of the profession

• Its primary objective is to offer advice to its members who may find themselves in difficulty

It is supported by eight undertakings concerning the carrying out of work honestly, competently, diligently, and expeditiously in accordance with the time scale and agreed cost limits • The fulfilment of CPD obligations • When employing other members, the allowance of time for them to fulfil their

CPD obligations • The operation of a formal internal client's complaints procedure • The arrangement of appropriately qualified persons to run offices and to

administer contracts during periods of absence • The taking of appropriate advice when needed • The sole practitioners establishment of contacts with other members • Proper regard for the experience and capability of staff when delegating

responsibility • The need to ensure that untrue claims to experience are not made and that

commissions are not accepted without the necessary skills and experience being available

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7 - PROGRAMMING

March 1997 Your practice has acted for a major supermarket company for 15 years and has recently been appointed on a full SFA Terms of Engagement for a project valued at about £5million, which will be procured under a JCT 80 contract As Project Architect the Partners have asked you to prepare a programme and assess the resources that would be required to carry out your appointment Discuss the factors that you would consider in preparing your programme (12 marks) Research • Working for them for 25 years, therefore have extensive past history • Research previous job records to discover:

1. Original planned design/construction programmes 2. Original resource allocations 3. Agreed fees and proposed fee allocation 4. Estimated profit

• Compared to: 1. Actual programme achieved 2. Actual resource allocation - check old time sheets 3. Percentage of fee actually spent at what stages 4. Recommended allocation of fees as suggested in SFA 99 guide 5. Actual profit (or loss)

• Discuss with colleagues who previously worked on job • Were the previous jobs of the same size and same procurement method? • If not, do similar research into other past projects that were of a similar nature Programme • Break project down into stages and tasks • Establish network diagram to illustrate dependency of tasks - in conjunction

with client and colleagues with previous experience • Allocate an estimated time period for each task, based on research described

above • Determine the critical path • Check whether this met the client's timescale requirements Resourcing • Allocate an estimated number of staff for each task, based on research describe

above • Determine manpower loading • Check with personnel manager/partners in office whether this number staff will

be available at these times • Check whether there are sufficient fees to cover the required manpower What methods of programming and monitoring would you use for a project of this nature. (8 marks) Programming methods • To establish the programme I would use the method described above • I would initially do this by hand • Rough logic diagrams that can be easily understood and modified

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• Moveable 'post-it' notes to establish logic diagrams and dependency of tasks • Once established in principle, the information can be fed into the office

computerised programming system, for example, Hydra • Easy to update Monitoring methods • If using a computerised programming tool, electronic time sheets can be feed

back into the programme • Therefore able to compare estimated programming and resourcing with actual

programming and resourcing • At the outset I would establish with the in-house team, the design team, and

later with the contractor, a strategy for monitoring progress • At the agreed times with the various team, I would have meetings to discuss:

1. What has been achieved 2. What was supposed to have been achieved 3. What we plan to achieve before the next meeting or deadline 4. How we can maximise on benefits from tasks being achieved ahead of

programme 5. How we can make up for tasks that are behind programme

• This information can be used to update the programme and resourcing needs on a regular basis

For a project of this nature • Project will be procured on a traditional basis

1. Architect will manage the design and construction 2. Architect will have a higher degree of control than experience in other

procurement methods 3. Although the contractor will be responsible for his own programme, the

architect can ask for evidence of similar research as described above to prove it's validity

• Major supermarket company and large store: 1. Experienced and knowledgeable client 2. Will have established methods of procurement and construction 3. Will have preferred contractors and suppliers 4. Ensure that all this information is obtained at an early stage to be able to

incorporate it into the programme

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8 - RESPONSIBILITY FOR DESIGN

Design duties in law Standard of liability • A guarantee of ‘fitness for purpose’ will fairly readily be implied into a design

and build package deal contract • Under such a contract the contractor will be strictly liable to the client for any

defect resulting from an error of design • If the design has not been carried out in-house by the main contractor, but has

been subcontracted to either an architect or a specialist sub-contractor, the main contractor will seek to pass liability down the line to the actual designer

• This can only be done if the designer’s liability on the sub-contract is at the same level as the contractor’s liability on the main contract

• While it may be easy for a court to imply the higher standard of obligation into a package deal contract, this cannot override any contrary express terms

• It should be noted that both JCT CD 98 and JCT CDPS 98 make it clear that the main contractor’s liability goes no further than that which would be incurred by an architect or other appropriate professional designer holding himself as competent to take on work for such design

• For traditional contracts, the court is highly unlikely to hold the main contractor responsible for a defect resulting from the nominated sub-contractor’s design

• It is very important for the employer to ensure that the sub-contractor undertakes direct design responsibility by entering into a collateral warranty

Duration of liability • The architect remains under a continuing responsibility beyond the signing of

the contract to see that the design will work • This obligation probably lasts through to the issue of the final certificate Techniques and materials • Where an architect specifies materials, there will be no implied warranty from

the contractor that the materials used will be fit for their purpose • Therefore it is important for the architect to ensure the suitability of any new

product to be specified • It would be sensible to obtain some collateral warranty from the supplier as to

the product’s performance if possible Compliance with statutory requirements • A designer impliedly undertakes only to use professional skill and reasonable

care and does not warrant that the design will not contravene any relevant legal principle, however

• Where traditional contracts are used responsibility for a building which contravenes the law will usually fall upon the designer rather than the builder

• JCT 98 Clause 6.1.1: the contractor is generally responsible for ensuring that all statutory rules are complied with, but

• JCT 98 Clause 6.1.5: a contractor who has merely worked in accordance with the contract drawings or bills is protected from that liability

• This is subject top the proviso that upon discovering any discrepancy between these documents and the legal requirements, the contractor immediately notifies the contract administrator

• JCT CD 98 Clause 6: gives no such protection – the contractor must bear any cost involved in making the work comply with the law, even when the employer’s requirements are at fault

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Legal responsibility for design Architect • The overall responsibility for the design of the project will usually be borne by

the architect if there is one • An architect cannot delegate any part of the design work • An architect who lacks the ability or expertise to carry out part of a design job

has three choices: 1. To refuse the commission altogether 2. To persuade the employer to employ a specialist for that part of the work 3. To employ and pay for a specialist personally, knowing that any liability for

defective design can then be passed along the chain of contracts • The complexity of construction technology has meant that the employer

frequently gives the architect the authority to delegate specified parts of the design and it may even be implied from the circumstances of the case

• In recommending the appointment of a particular specialist architects owe their clients the usual duty to use reasonable skill and care

• They will not automatically be responsible for the defaults of the people they recommend but if their recommendations are negligent they may become liable for their clients’ losses

• When appointing a specialist, he architect’s responsibility will normally be confined to directing and co-ordinating the expert’s work

• However, if a problem arises the architect is not entitled to rely blindly on the expert on matters which should have been apparent to him, but must warn the client

Contractor • Under normal circumstances the contractor’s responsibility is merely to build in

strict accordance with the designer’s specification • However, contractors and sub-contractors tend to take on a measure of design

responsibility in the following ways: • Where the contract documents do not give sufficiently fine detail – this may

become a workmanship issue, but a contractor who uses initiative in such circumstances instead of seeking an architect’s instruction will incur responsibility for any defects that ensue

• Contractors and sub-contractors are often asked their opinion – if such advice is given a duty of care arises

• A term is often implied into contracts requiring the contractor to warn the employer of any defects in design

• Where contractor, sub-contractors or suppliers are required to produce drawing for the architect’s approval, any matters of design that are included may be a source of liability – this is despite the possibility that the architect may also be liable

• Apart from these hidden forms of liability there are certain situations in which a contractor specifically undertakes responsibility for design as well as construction

• JCT 98 Clause 42: performance specified work makes provision for the contractor to assume some design responsibility for part of the work

• Specification has two aspects: 1. The decision about the required performance 2. The way in which the performance will be achieved

• In performance specified work the contractor undertakes the second part Sub-contractor • The direct warranty agreement NSC/C which is entered into between the

nominated sub-contractor and the employer does not warrant that the sub-

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contract works will be fit for purpose, but merely that the sub-contractor will exercise reasonable skill and care

• JCT 98Clause 35.21 provides that the main contractor shall not be responsible to the employer for anything contained in NSC/C

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8 - STRUCTURE OF ARCHITECTURAL PRACTICES • Successful management of an architect’s business is an essential part of

architectural projects and as such, is part of an architect’s duty of care • The Architect’s Act 1997 permits registered persons to practise as partnerships

or companies, limited or unlimited provided that their work, insofar as it relates to architecture. Is under control and management of a registered person

Sole Traders • About 50% of all practices • In times of recession, may be only way of getting employment • Some architects become sole practitioners by purchasing a practise from a

retiring architect • Some architects move from being a member of staff into a partnership

temporarily before the old sole practitioner retires • Architects will often build up a sizeable private practice before becoming a sole

practitioner • Can be very rewarding financially and personally • Hard work and take enormous self-reliance • When a practice expands beyond a certain point the principal will not have full

knowledge of every project nor the ability to give proper supervision • Can either employ an experience architect on a high salary to help with

administration, or share the burden with a partner

Partnerships • Provide the breadth of expertise that a sole trader cannot provide without the

formality of incorporating a registered company • Provides economy of expenditure and more capital for expansion • The law of partnership is governed by the Partnership Act 1890 • ‘The relation which subsists between persons carrying on a business in common

with a view to profit’ • Unlike a company, a partnership has no legal personality – it is nothing more

than the sum of he individuals comprising it Formation of partnership • A partnership is in the form of a contract • The existence of a partnership can sometimes be inferred by law • To join a partnership, a new partner has to buy a share of the goodwill - the

benefit which a practice acquires by virtue of its prestige and the fact that clients return for further commissions

• It is common that goodwill is now given a 'nil' value - more emphasis is placed on attracting a person with the right professional attributes

Importance of clarity • In a case of negligence, all individuals in the partnership may be liable Sharing facilities and profit • If this occurs, the individuals must take great care to avoid the possibility of

leading others to believe that they practise together as a partnership Types of partner • The law is not concerned with distinctions between senior and junior partners –

it is up to the partners to decide how to share profits • The particular term ‘salaried partner’ should be avoided – all partners should

share in the decision-making and have access to information

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Associates • It is common practise to recognise the status an contributions of senior staff by

describing them as ‘associates’, but the title has no meaning in law • The term ‘associate partner should be avoided Rights of partners • Every partner has the following rights unless there is an agreement to the

contrary • To take full part in the management of the business • To have an equal share in the profits and the capital • To inspect the partnership books • To dissolve the partnership at any time by giving notice to the other partners • To be indemnified in respect of payments made and personal liabilities incurred

by them in acting as necessary or in the ordinary and proper conduct of the business

• Not to have new partners added without their consent • Not to have the fundamental nature of the partnership changed without their

consent • Not to be expelled without express agreement • There is no right to interest on capital subscribed by a partner • There is no right to remuneration for acting in the partnership business Liabilities of partners • Legal action may be taken against a partner jointly, or jointly and severally • Every partner is liable jointly with all other partners for all debts and obligations

incurred by the firm while he is a partner • Every partner is jointly and severally liable for wrongs done by other partners

acting in the course of the business of the firm • If a partnership is sued jointly, one or more partners can be sued at the same

time • If a partnership is sued jointly and severally, the partners may be sue singly or

together • Partners are not liable for the criminal actions of the other partners unless they

contributed to them or had knowledge of them • Partners may be liable for breaches of their codes of professional conduct by

other partners • A new partner does not normally become liable for debts, obligations or wrongs

incurred or committed before his entry • If a partner retires, he will still be liable for debt or obligations incurred before

his retirement • If he dies, his estate will be liable for such debts • Every partner is an agent of the practice and any action undertaken by any

partner in carrying out of the business of the partnership will bind the practice Dissolution of partnerships • At the end of a fixed term if it has been so set up • At the end of a specific commission if it has been so set up • On the death or bankruptcy of any partner unless the partnership agreement

makes provision for the continuity of the partnership • If any partner gives notice • By mutual consent • By dissolution by the courts

Limited liability partnerships • Governed by the Limited Partnerships Act 1907 • Rarely used due to disadvantages under the Act

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Companies • For the purposes of suspension or expulsion from the RIBA an architect who is a

director of a company may be held personally responsible for the acts of the company

• However, he will not be held responsible in law for the acts of the company A separate legal persona • In relation to third parties, only the company is normally liable, not the

shareholders or directors Types of company • A company may be limited (by shares or guarantee) or unlimited Formation of companies • Formed by registration under the Companies Act 1985 • Any two people can register as a company • The Registrar of Companies will issue a Certificate of Incorporation as evidence

that the company is legally registered Public and private companies • Whether limited or unlimited, companies may be public or private • A public company is permitted to offer its shares to the public • An architect’s practice will normally incorporate as a private company Profits • Distributed among shareholders in accordance with the rights attached to their

shares • In most architectural companies, profits are normally small because directors

are remunerated by salary under their service contracts with the company Rights of shareholders • Shareholders with voting rights have the right to supervise the management of

the company Liabilities of shareholders • Shareholders cannot make contracts binding on a company, nor are they liable

personally for debts or obligations of other shareholders • If the company is unlimited, shareholders will be liable for the debts and

obligations of the company in the event of its winding up Rights of directors • Directors are given the power to manage the company under the supervision of

the shareholders • Directors are not servants or agents or a company and can only bind it if some

organ of the company had conferred appropriate authority on them Duties of directors • Under companies Act 1985 and Insolvency Act 1986: • Directors must prepare and disclose company accounts • Directors must prepare an annual report reviewing the business of the company

and recommending the amount of dividends to be paid • The company must be audited annually if its turnover exceeds £350,000 • The report and accounts must be filed with the Registrar of Companies • The company may need to hold an AGM • The company must keep a register of directors

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• Directors have no right to remuneration except that specified in the Articles • Directors owe the company a fiduciary duty of loyalty and good faith • Directors owe a duty to the company to exercise reasonable care in the conduct

of the business Dissolution • By winding-up under the Insolvency Act 1986 voluntarily or compulsorily • By being struck off the Registrar under the Companies Act 1985

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Partnerships v Companies Partnerships Companies No separate legal personality No separate legal personality from its

shareholders Partners have unlimited liability Shareholders may be liable only to the amount

unpaid on their shares but may be liable on personal guarantees

Partners interests may be difficult to transfer Interests of shareholders are their shares which can be easily transferred

May be difficult for a young architect to join a partnership since sufficient capital will be needed to buy a share

It is easier to join a company because it does not involve buying in

Only promotion is to become a partner so career prospects may be limited

More kinds of promotion possible

Difficult for partners to resign Easy for directors to resign Management through meetings of partners Management through Board of Directors

supervised by shareholders meeting annually Partners share profits equally unless there is an agreement to the contrary

Company profits are divided according to the rights attached to the shares

Can be formed informally Must be registered No restriction on powers of partners, subject to agreement

A company only has powers in the objects clause of its Memorandum

Each partner can bind a partnership No shareholder can bind a company, but directors can

Partnership details cannot be inspected by the public

Matters filed with the Registrar of Companies are open to the public

Accounts need not be publicised Accounts must be filed annually with the Registrar of Companies

No audit required Annual audit may be required Partnership must take annual tax returns but partners are liable individually for declaring and paying their own tax

Company liable for all declarations and payments of tax

Less administration required More administration required Death or departure of a partner can cause dissolution of the partnership unless otherwise agreed

Transfer of shares will not end a company’s existence

Many ways to dissolve a partnership including instantly by agreement

A company is dissolved only by liquidation in accordance with the Companies Act and Insolvency Act or by winding up

'Professional' 'Unprofessional'

Group practice and consortia Group practices • Practice may be brought together for their mutual benefit and to give better

service while each retains some independence Consortia • The association of practices with different professional skills acting as one in

carrying out projects jointly yet retaining their separate identities and each with their own responsibility to the building owner

Difficulties • Any association of practices must be carefully planned • Specific agreement is necessary on debts, including liabilities relating to

previous contracts Agreements • If practices are to preserve their own identities and to continue to practice in

their own right as well as together on common projects the form of agreement becomes critical and complex

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• It must resolve how far assets of member practices are brought in, the extent of the liabilities of the group and the degree of independence retained by each member practice to carry on its own activity

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March 2000 Discuss the principle advantages and disadvantages of both partnership and incorporation (such as forming a limited liability company) for an architectural practice (12) Partnership Advantages • Can be formed informally • Seen by some clients as the 'professional' set up as partners willing to take

responsibility for their judgements • Accounts and partnership details do not have to be filed, giving privacy • No audits are required • Partners manage and control their own business • Many ways to dissolve a partnership Disadvantages • Partners are jointly and severely liable for their actions and omissions, including

debt, negligence, obligations, etc • Death or departure of a partner may cause dissolution of the partnership • May be difficult to transfer partnership interests • May be difficult to young a partnership if it involves buying in • Limited promotional opportunities, unless set up within partnership Limited Liability Company Advantages • The company is a separate legal entity - it is the company who is sued, rather

than the individuals and the liability is limited to the share value • Death or departure of a director will not cause dissolution of the company • Shares are easily transferable • Do not need to buy in to become a director • Promotional opportunities usually more apparent Disadvantages • Can only be form by registering with the Registrar of Companies • Seen by some clients as the 'unprofessional' set up as directors/shareholders

limit their liability to the value of their shares • Accounts have to be filed yearly with the Registrar of Companies causing extra

admin, and company matters are published • The company has to be audited yearly • Directors are ultimately responsible to the supervision of the shareholders • Companies can only be dissolved according to the Insolvency Act and

Companies Act, or by 'winding-up'

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Discuss the probable differences in the Conditions of Engagement/Contract of Employment for an Associate by comparison to a Partner/Director and to an employee (8) Partner • Based on partnership agreement • Partnership interest • Share of profits • Policy regarding new partners, retirement/death of old partners, dissolution of

partnership • Hours/holiday etc. probably unspecified Director • Based on Conditions of Engagement • Salary • Share interest • Specific duties • Hours/holiday etc. probably unspecified Associate • Salary • Contracted hours • Policy regarding overtime • Holiday entitlement • Sickness benefit • Maternity benefit • Policy regarding training Possible extras • Pension • Company car • Telephone Employee • Salary • Contracted hours • Policy regarding overtime • Holiday entitlement • Sickness benefit • Maternity benefit • Policy regarding training

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March 1996 You are employed as a senior architect in a Public sector Utility Company which, following flotation on the Stock Exchange, intends to close your department and procure its Architectural services from private practices. Your Employer offers a redundancy package to you that would provide a small capital sum, and guarantee a workload at an agreed fee for the next three years. You would then be invited to bid for further works. Along with another senior Architect, you consider that if you jointly form a Practice, there would be sufficient work for you both, plus one other Architect and four technicians, as well as two secretarial/administrative staff. Explain the principle issues you would consider and: The form of practice you would create with the other senior Architect (12 marks) Type of practice - partnership or company? Liability • Partnership - joint and several liability of partners • Company - liability is limited to limit of share value • Joint and several liability requires trust - have know and worked with other

senior architect, therefore this could be acceptable Control • Partnership - partners control and manage business • Company - as directors we would probably also be shareholders therefore would

be in control of business but power would be limited to that stated in Memorandum

Simplicity/admin • Company - need to register company, file accounts annually and be audited. • Involves extra admin and public knowledge that is not necessary for a practice

of this size • Partnership simpler Image/marketing • Partnership regarded as a more professional practice set up for architects so

could help image of practice • Whichever form we chose, must consider marketing strategy to ensure work

after initial workload has dried up The form of appointment and contracts that you would offer to prospective Employees. (8) Forms of appointment • Traditional

1. Daily contracted hours plus policy regarding overtime 2. Predictable and reliable, but inflexible 3. More appropriate for admin to ensure they are there during normal office

hours • Flexi-time

1. Contracted number or hours, but 2. Staff in control of when they work them

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3. Requires dedicated and responsible staff otherwise could be abused 4. Could be used for staff with particular needs - childcare etc

• Annualised hours 1. Contracted number of hours per year 2. Staff required to work hours in tune with work load 3. Busy - long hours, quiet - short hours 4. Good for architects and technicians

Conditions • Salary

1. What can we afford? 2. What is necessary to attract high quality staff?

• Hours 1. What is reasonable?

• Overtime 1. Unpaid? - could be construed as unfair 2. Paid? - could lead to inefficiency 3. Paid plus? - could lead to abuse

• Holiday entitlement 1. Incremental to reward loyalty?

• Sickness/maternity benefit 1. What are statutory requirements? 2. Are these adequate?

• Training 1. Paid for by practice? 2. Time allowed by practice?

• Perks? 1. What incentives are appropriate and affordable? 2. Pension?

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10 - CONSTRUCTION MANAGEMENT

Employer

Architect/ Designers

Quantity Surveyor

Structural Engineer

Services Engineer

Trade Contracto

rs

Construction

Manager

General • The employer places a direct contract with each of the specialist trade

contractors • To co-ordinate these contracts, the employer utilises the expertise of a

construction manager who acts as a consultant • Overcomes the problem of management contracted where there is no direct link

between the employer and the trade contractors

Use of Construction Management Contracts Circumstances where construction management contracts are suitable: • The employer is familiar with construction and knows some or all of the

professional team (The employer must take an active role in the management of the project)

• The risks associated with the project are dominated by timeliness and cost (The need for speed may compromise decisions about cost. Fast project require decisive project team members and a responsive client)

• The project is technologically complex involving diverse technologies and sub-systems (Complex projects need to be managed with dynamic and flexible working relationships. Construction Management is equally suited to technically simple projects)

• The employer wants to make minor variations to requirements as the project proceeds (Changes can be accommodated during the process before individual packages are let)

• There is scope for separating responsibility for design from responsibility for management of the project (Where design is not an overriding feature of the project, the problem of co-ordination ceases to be a design problem and becomes a pure management problem)

• The employer requires an early start on site (If the project must generate an income at the earliest possible opportunity, the employer cannot afford the luxury of having a comprehensive design statement translated into a sophisticated architectural concept)

• The price needs to be competitive, but value for money is more important that simply securing the least possible cost (To compete successfully in the market, business premises must be attractive, integrated with their surroundings, flexible and timely)

Characteristics of Construction Management Contracts Impact of Construction Management Philosophy on Contracts • The employer contracts directly with the trade contractors and the co-ordinator

of the construction work has no contractual responsibility for their performance

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• When the time comes to work up the initial proposals into detailed packages, it is sensible that the construction manager takes a more dominant role and the architect remains a consultant

• Design co-ordination remains the responsibility of the design manager • The proposed JCT contract will include many clauses with alternatives to ensure

flexibility • The appointment of the construction manager removes the supervisory and

management responsibility from the architect • However an inherent problem of separation of design from construction is who

signs certificates: usually both designer and construction manager play a central role in certification

Typical Contractual Provisions • The construction manager has the responsibility for co-ordinating the different

work packages and therefore must be named in the contract between the client and the trade contractor

• All instructions come through the construction manager • Since many of the trade contractors will be for specialist work, there needs to

be some provision for the trade contractor's liability for design • The interaction between various trade contractors is critical • A clause is needed to make it the responsibility of the contractor to warn the

construction manager of potential problems before starting work • It is quite common for work to be let on a performance specification basis • In most projects, each package is signed off as it is completed, and the defects

liability period runs until the whole project is completed

Risk in Construction Management The apportionment of risk is substantially the same as management contracting Time • The obligations as to time are entirely related to the construction manager's

programme • Too ambitious a programme will result in inflated tenders and too conservative

will result in a slow project • The risk of delay lies entirely with the defaulting trade contractor, therefore they

are required to have guarantees Money • The direct contract between employer and trade contractor ensures prompt

payment, which should improve performance ands minimise cost of finance to the trade contractor

• It also means that there is confidence in the contract sum Default • The design liability is no different to that undertaken by sub-contractors in

traditional procurement methods • There is no need for collateral warranties, except to benefit third parties, such

as funders Completion • Each trade contractor is not only obliges to complete the works, but has a right

to do so • Although the employer is obliged to complete each active work package, there

is no obligation to finish the entire project • The employer's risk is thus reduced without a corresponding increases in the

risk to individual contractors

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Quality • The extent to which the employer is protected from having to accept inferior

work depends on the adequacy of the architect's description and specification of the works to be carried out

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11 - CONTRACT CHOICE

Use of Standard Documents Legislating for the industry • Drafting committees often express the sentiment that they are legislating for

the whole industry • Such an aim is way beyond their remit as it is a well-established doctrine that

the parties to a contract are free to choose the terms of their contract. Similar projects demand similar contracts • Following Banwell and Latham, there has been a pursuit of a universal standard

for the whole industry • This is simply unrealistic • There is a need among clients and contractors for different contracts to suit

different situations and this conflicts with the equal need for standards to be applicable to as wide a range of projects as possible

Equitable distribution of risk • One purpose behind using standard form contracts is to allocate risks fairly

between the parties • When choosing a procurement method the allocation of risk should be made

explicit, rather than implicit • This leads to one of the strongest criticisms of standard form building contracts:

the apportionment of risk is rarely questioned and, therefore, becomes implicit Difficulty of understanding contract complexities • Many in the industry feel that the use of a standard form will help to increase

familiarity with all the contract provisions • But people often amend the printed form and various groups of consultants can

fall into the trap of only knowing one standard form • Answer: understand the principles of contract law first and then apply them to

the standard forms Purpose of contract documentation • Contracts are drawn up with the intention of relying upon them in a court of law

at some point in the future • There is a fine balance between under-emphasis and over-emphasis on contract

terms during the negotiating process Appropriateness of contract form • Standardising contract terms enables parties to reduce the emphasis on specific

contractual terms during the bargaining process • But the danger is that standardisation goes hand in hand with an adherence to

outdated methods of organisation and professional patterns of responsibility, regardless of whether these are appropriate to the needs of a particular project or client

Contract Drafting • Many undertake their own revisions to the standard forms and make the

situation worse by producing conflicting clauses • A solution is to develop a library of standard approaches to the main issues of

risk apportionment and choose the most appropriate for each project • One advantage would be the discussion that would be precipitated during the

negotiating stages of the project

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JCT Contracts JCT 98: Standard-form building contract • It is a consolidation of the JCT 80 with its amendments and accommodating

changes initiated by the Latham Report and the Housing Grants, Construction and Regeneration Act 1996

• Published in six versions with additional supplements and sub-contract forms: 1. Local authority edition with quantities 2. Private edition with quantities 3. Local authority edition with approximate quantities 4. Private edition with approximate quantities 5. Local authority edition without quantities 6. Private edition without quantities

• An architect (or a ‘contract administrator’) must be appointed with wide but strictly defined powers, including issuing instructions, certifying payments, certifying the quality of work etc.

• A quantity surveyor must be appointed for the valuation of the work and the valuation of variations

• JCT 98 makes provision for the nomination of sub-contractors IFC 98 Intermediate form of building contract • Its aim was to bridge the gap between the JCT 98 and the Minor Works form • Flexible and can be used for either local authorities or private sector employers

either with or with quantities • There is no provision for nominating sub-contractors, but a different mechanism

for achieving a similar result is the ‘naming’ of a sub-contractor JCT MW 98 Agreement for minor works • This contract is designed for use on only very small and simple works. PCC 98 Prime cost contracting • For situations where it is not possible to obtain a precise definition of the

works prior to their commencement on site, including repairs or alterations to an old building or work following a fire or other damage

• Conditions require an outline description of the works and estimate of the prime cost

• The contractor will use this to quote a fixed or percentage fee and in addition will be paid the full cost of the resources validly used in the discharge of the contract

• As a precise definition of the work is not available, the contractor does not carry out any work without the instruction of the architect

CD 98 Standard form with contractors design • There is no provision for the appointment of a contract administrator or quantity

surveyor, although there must be an ‘employer’s agent’ • The contract is let on the basis of a document called the ‘employer’s

requirements’ • ‘Contractor’s proposals’ are submitted to comply with these proposals, and the

winning contractor’s proposal document is then used as the major control document

MC 98 Management contract • All work is sub-contracted and the main contractor acts in a managing and co-

ordinating role.

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MTC 98 Measured term contract • Single contract to cover a number of separate jobs, where an employer requires

regular maintenance (or some other kind of minor work) to be carried out, and wishes to engage only one contractor for a specific period

JCT Construction management contract • Due to be published and will contain a large number of provisions that offer

alternative clauses JCT Building contract for a home owner/occupier • This is for individual owner/occupiers contracting with small building firms for

home improvements, extensions or repairs which is written in plain English.

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Other Standard Form Contracts ICE conditions of contract • There is only one version, for use with public or private clients, and is intended

for use on major civil engineering projects • It provides a contract between a promoter (who becomes the employer) and a

contractor. The engineer is not a party to the contract and thus has no legal rights or obligations under it. Engineers have their own conditions of engagement with the employer

• The conditions create a re-measurement contract ICE minor works contract • Based on ICE conditions but is much simpler FIDIC conditions of contract • Based on the ICE 4th edition, but modified to enable it to be used anywhere in

the world ACA/2: The ACA Form of Building Agreement • The conditions use standard alternative clauses, which can be used in a variety

of combinations to provide a range of contract types GC/Works/1 98: Conditions for building and civil engineering major works • The documentation is intended primarily for government contracts New Engineering Contract/ Engineering and Construction Contract • It was published as a response to growing discontent with contractual

procedures and the prevailing adversarial attitudes in the construction industry. • Various optional clauses are offered so that it can be used in different

procurement methods. • All legalistic jargon has been avoided, but probably to the detriment of clear

litigation routes. • The procedures in the contract should form a stimulus to better management

practice and a forward-looking co-operative team spirit. However, the use of the contract as a management manual may preclude its use as an effective means of applying sanctions to non-performers.

• Latham recommended that the NEC be slightly revised ad adopted by the whole industry

• There is also a professional services contract, engineering and construction sub-contract and adjudicator’s contract.

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12 - CONTRACT DOCUMENTS W

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Articles of Agreement CD CD CD CD Conditions CD CD CD CD Appendix CD CD CD CD Drawings CD CD CD CD Bills CD CD Priced Specification, or Priced Schedule

CD

Specification CD Contract Sum Analysis, or Schedule of Rates

R

Priced Activity Schedule (optional)

R R R R

Information Release Schedule (optional)

R R R R

Employer's Requirements

CD

Contractor's Proposals CD Contractor's Designed Portion Analysis

CD

'Listed Items' and related Bond

cl 30.3 cl 30.3 cl 30.3 cl 30.3

Advance Payment Bond (private only)

cl 30.1.1.6

cl 30.1.1.6

cl 30.1.1.6

cl 30.1.1.6

Collateral Warranty Health and Safety Plan cl 8.1.3 cl 8.1.3 cl 8.1.3 cl 8.1.3 KEY CD = termed 'Contract Document' R = referred to in the recitals cl = referred to in the conditions Articles of Agreement • Contain the attestation that must be signed by both parties and witnessed • Article 1: The contractor undertakes to carry out and complete the works shown

upon, descibed by, or referred to in the Contract Documents • Article 2: The employer undertakes to pay the contractor the contract sum as

adjusted in accordance with the conditions Contract Drawings • Should be identified precisely with all revision numbers Contract Bills • Must be prepared in accordance with the Standard Method of Measurement of

Building Works, 7th Edition • Normally prepared by the QS, but this does not reduce the architect's

responsibility for them (see Co-ordinated Project Information)

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Specification • Should become a core document, as recommended by the CPI, either bound in

as a section of the bills or as a separate document referred to in the bills • The drawings and the bills should refer to clauses in the specification Activity Schedule • Prepared and priced by the contractor prior to the contract being executed • Each activity priced making up the Contract Sum (provisional and prime cost

sums etc. excluded) • If included is used to ascertain the value of work properly executed for

certification purposed • Useful where tender package consists of drawings and specification alone Information Release Schedule • Should state what information the architect will release and the time of that

release • Enables the contractor to programme work more effectively, but if any

information is provided later than stipulated, it is a relevant event in relation to an extension to time

• An adjustment to the completion date will mean a negotiated adjustment to the schedule

Sectional Completion Supplement • Allows for phased completion of the works • Conditions are modified so that they operate independently with respect to each

section • Separate certificates of practical completion are required for each section, but

only one final certificate Contractor's Designed Portion Supplement • Provides for the contractor to design and construct a part of the works • Employer's Requirements are sent out with the tender documents • Contractor's Proposals and CDP Analysis.are returned with the tender • An entry is required in the appendix stating the limit on contractor's liability for

design Bonds • Arranged by the contractor where required • Advance Payment Bond, where advanced payment is to be made to the

contractor • Bond in respect of payment for off-site materials and/or goods (‘Listed Items’) Collateral Warranty • MCWa/F for use where a contractor is required to give a warranty to a

company providing finance for building works • MCWa/P&T for use where a contractor is required to give a warranty to a

purchaser or tenant of the building works Health and Safety Plan • Not a contract document and not referred to in the recitals • Nevertheless a statutory obligation for the employer to have had one prepared

and passed to the principle contractor under Regulation 15 of the CDM Regulations 1994

• Before construction work can begin, the contractor must have developed the plan to comply

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Health and Safety File • Compiled by the planning supervisor • Contractor must provide information for it and ensure that any sub-contractor

also complies • Architect must ensure that the contractor has sufficiently complied before

issuing the Certificate of Practical Completion

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Use of Documents Priority of Contract Documents • Nothing contained in the Contract Bills shall override of modify the application

or interpretation of that which is contained in the Articles of Agreement, the Conditions or the Appendix

Inconsistencies, errors or omissions • Any error in the contract bills shall be corrected • Not explicit, but normally be the responsibility of the employer and carried out

by the QS • Correction is treated as if it were a variation required by and architect’s

instruction • No express requirement to issue an instruction, but correction should be

confirmed in writing • Contractor is under an obligation to point out, but not to search for, any

discrepancy or divergence within or between the contract documents • If the contractor fails to point out any discrepancies that he has or should have

noticed and the work has to be rebuilt as a result, he may lose the right to extra payment, extension of time and loss and expense

Custody and control of documents • Contract drawings and contract bills remain in the custody of the architect or QS • Contractor must be provided with one certified copies and two further copies • All drawings that bear the name of the architect should be returned upon final

payment • At Practical Completion the contractor must provide copied of all drawings and

information relating to performance specified work

Sub-contract Documents Domestic sub-contracts • JCT Ltd does not currently publish a standard form of use with domestic sub-

contractors, although one is published by the Construction Confederation (DOM/1, 1998)

Nominated sub-contracts • JCT Ltd publishes five documents for use with the sub-contract provisions • NSC/T: form of tender • NSC/W: warranty entered into between the employer and the nominated sub-

contractor • NSC/N: standard form of ‘Nomination Instruction’ sent by the architect to the

main contractor • NSC/A: form of agreement between the main contractor and the nominated

sub-contractor • NSC/C: conditions of contract between the main contractor and the nominated

sub-contractor Nominated Suppliers • JCT Ltd publishes a form of tender (TNS/1) and a warranty (TNS/2) for use with

nominated suppliers • Not in line with other JCT 98 documents

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13 - DESIGN AND BUILD

Employer

Design & Build

Contractor

Employer's Advisors

Architect/ Designers

(Quantity Surveyor)

Structural Engineer

Services Engineers

Sub-Contractors

General • Design and Build is what would happen if the construction industry were

suddenly to come into being without the evolution of professional institutions that pre-define certain roles

• JCT WCD 98 is for use where the contractor's design responsibility extends over the whole of the works, even though significant parts of the design have already been done

• JCT CDPS 98 is a set of modifications to be made to the JCT 98 when the contractor's design responsibility is only for a portion of the works, the remainder of which will have been designed by the consultants in the usual way

• At one end of the scale D&B is the type of package deal where the client selects the contractor before any consultants have been approached

• At the other end, where the actual design work is minimal

Features of Design and Build Contracts Employer's Requirements and Contractor's Proposals • Employer approaches contractor with set of requirements • Contractor responds with proposals, which include production as well as design • Some negotiation with the aim being to settle on an agreed set of contractor's

proposals • The proposals include the contract sum as well as the manner in which it has

been calculated • The contractor will be totally responsible for undertaking the design work

outlined in the contractor's proposals, for fabricating the building, and for co-ordinating and integrating the entire process

Price • A guaranteed maximum price helps to reassure the employer • Savings from completing the project for a price below the GMP can e shared

between the contractor and employer • The price is governed by a contract sum analysis, which can be presented in any

form appropriate the circumstances • The CSA is used to calculate stage payments, valuations of employer's change

instructions and fluctuation clauses where applicable Roles and Responsibilities • There is a lack of an independent certification role in the contract • There are many consultants who are qualified to advise the employer during the

process, commonly quantity surveyors • The most important advantage of D&B is that the contractor is responsible for

everything

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• Programmes and budgets are more likely to be adhered to as there are no blocks to effective communication

• Increases the opportunities for harnessing the contractor's experience during the design stages of a project - buildability

• A disadvantage is the where there is a conflict between aesthetic quality and ease of fabrication, ease of fabrication will dominate

• The employer may employ consultants to work up initial proposals for the employer's requirements, or may approach a contractor with in-house designers

• The design team can be novated over to the contractor, whereby the contractor takes on the responsibility for the design without having had any previous involvement with it

• The widespread use of novated design obscures the true impact of integrated design and build

Use of Design and Build Characteristic of a project where design and build would be suitable: • The clients' familiarity with construction • The relative importance of client priorities

(Cost certainty is an advantage. Contractor's proposals include design solutions to problems posed in employer's requirements, therefore the contractors are not only competing on price but on any criteria that the employer thinks is important. However, the employer's requirements must be very clear and unambiguous)

• The technical complexity of the project (D&B is not conducive to the employer's selection of specialist sub-contractors)

• The need to make variations to requirements as work proceeds (A client who wishes to reserve the right to alter the requirements during the fabrication process should not use D&B. The valuation of variation can be difficult without a comprehensive CSA and the employer's insistence on time and cost targets becomes less convincing if the requirements are altered)

• The patterns of responsibility and communication (D&B is a method to be used where it makes sense to combine the responsibility for design and the responsibility for fabrication. The communication patterns observed in D&B projects are the most effective found in any form of procurement)

• The need for an early start on site (Since the contractor is undertaking the design there are opportunities for overlapping the design and construction processes and making an early start on site. However too much overlapping will give rise to problems of having to revise early design decisions and work may have to be undone before further progress can be made)

Characteristics of JCT WCD98 Articles of Agreement • If there is any divergence between the employer's requirements and the

contractors proposals, the former shall be revised to ensure there is no divergence

• Clause 2: the contractor must carry out and complete the works referred to in the employer's requirements, the contractor's proposals and other contract documents

• Therefore the employer's duty to check that the contractor's proposals match the employer's requirements does not absolve the contractor of his liability for any of the work to be done

• Third article: names the employer's agent

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Conditions of Contract • Clause 30: interim payments can be made by means of stage payments or

periodic payments • Since there is no contract administrator, the contractor makes application for

payment to be made, and the employer is obliged to pay subject to the right to object in writing with reasons

• Immediate arbitration is available as a method of resolving dispute over payment

Risk in Design and Build Money • The price is for the whole of the contractor's responsibilities, including design,

production and any necessary statutory approvals unless expressly mentioned in the employer's requirements

• The clients financial commitment is very clear and there is not much risk associated with this for the client

• D&B offers the highest confidence in the contract sum Completion • The contractor is committed to complete the project and the employer is

committed to allow the contractor to complete the project • There are circumstances in which the contract can be determined Default by employer or contractor • Any fault in the finished building will be the liability of the contractor • It is not necessary for the employer to distinguish whether it was a design or

fabrication fault Time • The contractor is responsible for completing on time • Any delays beyond the control of the employer would be the risk of the

contractor in the absence of express provisions to the contrary • Clause 25: There is a list of relevant events dealing with extensions of time Quality • Quality is not compromised simply by using D&B • There are D&B contractors who do not understand aesthetics just as there are

clients who do not understand these things • The reputation of D&B has suffered from criticisms of projects involving system

building and standardisation which often leads to very poor buildings • The only reliable way to encourage quality is to obtain a clear statement about

what constitutes quality for a particular client and to have that statement embodied within the employer's requirements

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March 1999 8a) The JCT Standard Form of Building Contract, with Contractor’s Design 1998 refers in Article Four to the Employer’s Requirement, the Contractor’s Proposal and the Contract Sum Analysis. Describe what these are and what they would consist of for projects of differing size and complexity. (10) Employer's Requirements What? • What the employer requires from the contractor • The brief • Makes up the tender package • Should state the priorities to the contractor, whether they be time, functional

requirements, capital cost, lifespan, flexibility of use, quality, appearance, maintenance costs, etc

What do they consist of for different size and complexity? • Can consist of a brief written description of the project and a schedule of areas • This would be the case for very simple projects, or for projects where the client

was very uninterested in aesthetic or quality, but simply wanted a certain area for a certain price

• Could be drawings and/or a specification produced by a design team up to the end of stage C, D, or even E

• This would be for larger more complex projects where the client had more specific requirements

Contractor's Proposals What? • How the contractor intends to satisfy the employer's requirements • The tender • Includes design and fabrication information • Negotiated until agreed What do they consist of for different size and complexity? • The tender sum • Could be simply the employer's requirements unaltered • This would be for very simple projects • Could be key details to illustrate the approach and the quality of design and

fabrication • This would be for more complex project where quality was more of an issue • The information produced would depend upon the amount of time given to the

contractor to produce his tender Contract Sum Analysis What? • Prepared by the contractor • Whatever is appropriate • Used to calculate stage payments • Used to calculate valuations of client change instructions • Include fluctuation clauses where applicable What do they consist of for different size and complexity? • Could be a full set of bills for a large, complex project • Could be a priced activity schedule for a simpler project

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8b) Outline the different roles an architect may fulfil for a Design and Build project with particular regard to contractual roles and responsibilities. (10) i) Architect employed by client up to tender Responsibilities would depend upon how much preliminary design work the client wanted produced, but could include: • Brief preparation • Feasibility studies • Outline design • Detailed design and specification • Obtaining Planning Permission • Obtaining Building Regulations approval • Preparation of Employer's Requirements ii) Architect employed by client up to tender as Planning Supervisor • Informing the client of his obligations under the CDM Regulations • Co-ordinating the designers' work • Identifying hazards and reducing risks • Preparing the pre-tender Health and Safety Plan iii) Architect employer by client beyond tender as Employer's Agent • Advising client on contractual issues with contractor iii) Architect employed by contractor • Either novated over from client or as in-house architect or independent architect

contracted-in • Continuing duties from those which have already been carried out as described

above in (i) • Production information iv) Architect employed by contractor as Planning Supervisor • Either novated over from client or as in-house architect or independent architect

contracted-in • Continuing duties from those which have already been carried out as described

above (ii) Preparation of Health and Safety File

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14 - GENERAL CONTRACTING

Employer

Architect/ Civil

engineer

Quantity Surveyor

Structural Engineer

Services Engineer

General Contractor

Domestic

Sub-Contractor

Nominated

Sub-contractor

General • Designers, on behalf of the employer, produce the documents • The contractor agrees to produce what has been specified in the documents • The contractor should be invited to price a complete set of documents that

describe the proposed building fully - if design is only partially complete, general contracting begins to break down, as there will be a high demand for communication and information which is difficult to manage

• The contractor has no responsibility for design • The contractor's offer of price is based on the bill of quantities, a document that

itemises and quantifies every aspect of the work • The bill also forms an important mechanism for controlling costs as the project

progresses • Therefore the QS has a central role • Structural and services engineers provide specialised services that are co-

ordinated by the architect

Use of General Contracting Typical circumstances in which general contracting is used: • The employer has caused the design to be prepared and for the purposes of the

building contract takes responsibility for it • The employer's designer is sufficiently experienced to co-ordinate and lead the

design team and to manage the interface between design and production • The design is substantially complete when the contractor is selected

(A fully measured bill can only be prepared from a complete design: a bill of approximate quantities can be used for an incomplete design. The contract then becomes a re-measurement contract: the work is specified in approximate measure for the purposes of tendering and after execution is measured again for the purposes of payment. There is also a without quantities version of JCT 98)

• An independent quantity surveyor will be used to plan and control the financial aspects of the project

• The contractor is selected on the basis of the contractor's estimate and carries the risk that the estimate may be wrong (If firm quantities are used, the work is not re-measured and the contractor is paid on the basis of the quantities in the bill, unless the work has been subject to a variation)

• The employer reserves the right to select sub-contractors for certain parts of the work (A contractor will be paid whatever nominated sub-contract work costs: such work falls into the category of prime cost or cost reimbursement. Therefore,

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the risks for the contractor are different to hose associated with the employment of domestic sub-contractors, where the contractor pays them from within the contract price)

• 'Prime Cost Sums', including employer-selected sub-contracts, do not form the major proportion of the contract sum (If a large proportion of the work is in prime cost sums, the contract will be unsuitable because the contractor is reduced to a co-ordinator and accountant and the clauses do not reflect that role)

• The employer's agents feel that it is important to use an acceptable negotiated form to ensure a fair an familiar distribution of risk

• The employer makes no explicit choice and the advisors do not raise the issue

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Basic Characteristics Design and Workmanship • The design must be documented in order for the contractor to be able to tender

for the work, but it will not cover everything • Many detailed aspects are within the skill and knowledge of the contractor • There are also many factors which are not documented simply because no-one

thought of them before site work started • In these cases it is essential for the contractor to seek clarification: a contractor

who makes assumptions will incur design liability for these choices and will be exposed as he will probably not carry PI insurance for such decisions

Contractor's Obligations • The contractor undertakes to do the work described in the documents • It is rare that the contractor is placed under an obligation of fitness for purpose • Certain items specified as such in the bills have to be done to the reasonable

satisfaction of the architect Nominated Sub-contracting • A mechanism for ensuring that the contractor employs sub-contractors of

adequate standing • Without nomination, contractors would use high calibre sub-contractors when

tendering to keep the bid price high, but on winning may re-negotiate to find the cheapest sub-contractor

• One abuse of nomination is to relieve the architect of the burden of having to detail the design and specification fully

Variations • There are detailed provisions for valuing the financial effect of variations and

are based upon the contractors' original price: the contractor should be paid according to what would have been included in the bills had the contractor known about the varied work at the time of tendering

• Only in exceptional circumstances should the basis of payment be total cost reimbursement

• Variations allow the design team to refine the design, but are often abused by client making arbitrary changes: this leaves the client exposed to contractor claims

Payment • The contractor will typically be paid in instalments • Interim certificates, issued by contract administrator, state how much is due to

the contractor • A small amount is retained by the employer on each interim certificate in a

retention fund to cover the employer in case of the contractor's insolvency and encourages the contractor to remedy any defects after completion

Completion • When the work is substantial complete, a certificate of practical completion is

issued • A defects liability period, usually of twelve months, then commences, during

which time the contractor has the right to remedy any defects that become apparent in the building

Extensions of time and liquidated damages • The contract period may be extended for various specific reasons • Such an extension will relieve the contractor of liability for liquidated damages

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Fluctuations • A financial provision related to changes in the market prices of the contractor's

resources • In periods of high inflation it is more economical for the employer to absorb the

risk of price rises, in which case the fluctuation clauses are used

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Risk in General Contracting Money • The employer is entitled to expect the building to be completed on time • Failure to achieve this will render the contractor liable to pay liquidated

damages • The employer should ensure that all contractors and sub-contractors are backed

up by financial guarantees and bonds, otherwise the liquidated damages may be worthless

• The primary element of the tender price is the cost of labour and materials plus office overheads

• Premiums are added onto this which reflect the market situation and the level of risk associated with the project

• The allocation of certain items of risk to the contractor will greatly affect the contract sum

Default • The risk of default lies with the contractor as all work must comply with the

contract documents • The contractor is responsible for every person on site, whether directly

employed, a domestic sub-contractor or a nominated sub-contractor • There is a danger that a contract can result in the employer having no recourse

when a nominated sub-contractor fails to perform. • If a nominated sub-contractor causes delay, the contractor can claim an

extension of time and will not have to pay liquidated damages, therefore the contractor will have suffered not loss.

• Having suffered no loss, the contractor cannot sue the nominated sub-contractor

• Unless there is a direct agreement between the employer and the nominated sub-contractor there is no route for the defaulting sub-contractor to be penalised

• This underlines the importance of strictly following the procedures for the nomination of sub-contractors

• Since general contracting does not provoke fundamental questions about risk it is rarely priced for and if contracts are amended, it can lead to bankruptcies

Completion • The contractor has a right to complete the works • The employer has the power to determine the contract if the if the contractor

fails to make regular and diligent progress, suspends the works or becomes insolvent

• A contractor has the right to suspend the contract if the employer obstructs the issue of certificates, continually suspends the work or becomes insolvent

Time • General contracts are very specific about time • Certain types of delay are permitted, provided that specific events are identified

in a clause which entitled the contractor to an extension of time • They include some items that do not entitle the contractor to loss and expense Quality • General contracting is ideal for documented control systems • The client can pre-define the contractor's targets and have a legal recourse in

the event of them not being achieved

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15 - MANAGEMENT CONTRACTING

Employer

Architect/ Designers

Quantity Surveyor

Structural Engineer

Services Engineer

Management Contractor

Works

Contractor Works

Contractor

General • Client engages the management contractor to participate in the project at an

early stage, contribute construction expertise to the design and manage the construction

• The management contractor is not employed for the undertaking of the works • Management contracting is a procurement method of 100% sub-contracting • The opportunity for the contractor to become part of the design team arises not

from the contract structure, but from early appointment and the pattern of liability outlined in the contract terms

• These seek to establish the management contractor's participation on a level that can be equated to a professional consultant, and the management contractor's risk is reduced as such

• The aim is to distribute the contractual risk associated with construction entirely between the client and the works contractors

• The standard form of management contract distinguishes the pre-construction stage form that of construction to give the employer the opportunity of terminating the relationship after design stage

Use of Management Contracting Circumstance where a management contract should be used: • The employer wishes the design to be carried out by an independent architect

and design team (Management contracting is offered as an alternative to D&B)

• There is a need for early completion (However, fast-track construction with too much overlapping of design and construction causes severe problems of communication, and therefore information needs to be very carefully co-ordinated. Management contracting is designed to avoid these problems)

• The project is fairly large • The project requirements are complex • The project entails changing employer's requirements during the building period

(Allow changes should be avoided, the fact that work is let in packages allows the freezing of design decisions to be left to a later stage)

• The employer requiring early completion wants the maximum possible competition in respect of price for the building works (As works packages are let separately, the lowest price for each package can be chosen. However, as the works contractors are only invited to tender for a package start-up costs will be multiplied)

Characteristics of JCT MC 98 Schedules 1st Schedule - description of the project

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2nd Schedule - definition of 'prime cost' • MC 98 is not a lump sum project • The amount paid to the management contractor is the prime cost of all work

done under the contract plus the management contractor's fee • There is no contract sum, but there is a Contract Cost Plan, prepared by the QS • However, the management contractor has no responsibility if the prime cost of

the project exceeds the contract cost plan 3rd Schedule - service provided by management contractor • Pre-construction period: advisory role in relation to breakdown of work

packages and assistance in negotiations • Construction period: programming and planning, monitoring off-site preparation

work, instituting effective cost control techniques, labour relations and site management

4th Schedule - list of project drawings 5th Schedule - site facilities and services Conditions of contract • Variations to the works contract are allowed under the contract in a similar way

to JCT 98 • A 'project change' allows the employer to change the scope of the work: allows

for changes after the appointment of the management contractor, but not after the works contracts have been let

Risk in Management Contracting • The kind of project regarded as most suitable for a management contract

involves a degree of commercial risk • If an experience and competent general contractor tendered for a general

contract for such a project, here would be a significant premium on the price to absorb the risk

• Many users or management contracts are developers, clients who are well placed to absorb risk

Money • The contract is a cost reimbursement contract • Cost are certified by the contract administrator and payment is made on interim

certificates which apportion money between works contractors • The management fee is also apportioned and included in the interim certificates • If a works contractor claims from the management contractor as a result of a

default by another works contractor, the management contractor is committed to pursuing the recovery from the defaulting works contractor

• If this is not possible, the employer has to make up the shortfall Completion • At no stage is there a legal requirement for the employer to proceed either with

the project of with the particular management contractor Default by employer or management contractor • The employer may at any time determine the employment of the management

contractor Default by works contractors • If a management contractor has a right to be reimbursed by the employer for

all losses, he suffers no loss, and so how can the works contractor be liable for more than nominal damages?

• JCT 98 works contract conditions state that a works contractor shall not raise this 'no loss' arguments against the management contractor

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Time • Management contracting is designed to encourage overlap • Acceleration clause: there is a preliminary instruction from the contract

administrator, an opportunity for the management contractor to object, withdraw or modify the instruction.

• After acceptance the management contractor has to inform the contract administrator of the amount of money required by the works contractor in order to achieve the new completion date

• The contract administrator must then confirm that the employer is willing to pay the price

• The clause can be brought into effect to cancel a previously granted extension of time

• The employer can only recover liquidated damages from the management contractor to the extent that the management contractor can recover them from the works contractor

Quality • No independent liability can be attached to the management contractor for any

defects in workmanship and materials on the basis that it is the works contractors who are the parties responsible for the completion of the works

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16 - PARTNERING

Trusting the Team, 1995 • Partnering involves two or more organisations working together to improve

performance • To make partnering work those involved need to agree a set of mutual

objectives, devise a way for resolving any disputes and be committed to continuous improvement

• Partnering can be applied to one-off schemes (project partnering), or can be on-going over a series of developments (strategic partnering

• Typically, with project partnering, cost savings or 2-10% are achieved; with strategic partnering savings of 30% are realistic over time. The cost of undertaking partnering is very small, adding less than 1%

• In addition to reducing costs partnering can also improve service quality, deliver better designs, make construction safer, meet earlier completion deadlines and provide everyone involved with bigger profits

What is Partnering?

Mutual

Objectives

Problem

Resolution

Continuous Improveme

nt

• First, there must be an acceptance by the partners that it is worth making the

investment in building a partnering arrangement • Second, there must be potential for improvement in the product or service

which is the subject of the partnering arrangement • Third, it must be recognised that for the full benefits of partnering to be

achieved, it has to be a medium to long term strategy because it takes time for benefits to emerge

• Fourth, long term commitment to strategic partnering arrangements by senior management is an essential prerequisite

• The organisations should have the same basic culture, work with people in a compatible, preferably a co-operative manner and be financially stable

• They should have good quality management and a potential for undertaking research, development and innovation

• The partnering arrangement should be based on equality rather than being a one sided paternalistic relationship

• In creating a partnering arrangement it is important not to create a monopoly by adopting single sourcing

Mutual Objectives • The process of agreeing mutual objectives recognises that everyone wants to do

a good job • It is more difficult to find mutual objectives when the client is not involved in

the partnering arrangement. This is because the client uniquely has he ability to balance cost and value

• Profit sharing is an effective way of achieving this change in attitude

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• Mutual objectives include: improved efficiency, cost reduction, guaranteed profits, reliable product quality, fast construction, certain completion on time, continuity of workload, shared risks, reliable flow of design information, lower legal costs

Problem Resolution • Good practice provides a clearly defined system of referring problems that

cannot be resolved to a higher level of management • This usually provides three levels comprising technical, managerial and political • Problem resolution processes should be designed to find permanent solutions to

problems Continuous Development • Best practice suggests that in selecting construction firms, it is sensible to have

three or four options available • The existence of alternatives provides the competitive element that produces

challenging and ever tougher targets • Benchmarking is increasingly being used to provide a guide to the standards

that should be set for construction projects • Key subjects for continuous improvement include: quality, certainty of delivery

in terms of time and cost, fast project completion, • Better value, lower costs, efficiency in all stages of the construction process,

profit levels, continuity of resource use, product development, staff development

The decision to use partnering • Do you accept that adversarial attitudes breed inefficiency? • Are you personally prepared to adopt different attitudes in exchange for

improved performance? • Are you willing to take into account regular objective reports of measured

project performance in making your management decisions? • Are you personally willing to spend your own time in ensuring the success of

partnering? • Are you prepared to help fund the preparatory stages involved in partnering? • Are you prepared to accept the need for internal partnering? • Are you prepared to commit your organisation to jointly agreed mutual

objectives? • Are you willing to play your part in an agreed problem resolution process? • Are you willing to commit your organisation to a search for continuous

improvements? • Are you prepared to devote resources to agreeing performance measures? • Do you accept that everyone is entitled to a second chance and so should not be

sacked for their first mistake? • Do you accept that everyone is entitled to a profit and that risks and rewards

must be shared fairly? • Do you accept that efficiency comes from concentrating on quality and certainty

rather than from focusing directly on narrow cost cutting?

Towards Positive Partnering, 1997 Benefits of Partnering • Reduced disputes, a better working environment and improved communication • More effective use of personnel • Closer relationships that helped to provide feedback • Promotion of innovation and organisational learning • Reduced costs and better project quality

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Pitfalls of Partnering • Disproportionate increase in amount of time spent on communication • Clients able to demand more • Organisational roles more blurred leading to ambiguities in individual

responsibilities • Collaboration could undermine competitive advantage Factors behind successful Partnering • Development of greater levels of interorganisational trust • Openness and willingness of individuals to accept and share mistakes • Presence of more open and flexible communications between organisations • Introduction of gain-sharing mechanisms create a financial incentive for

partners to reduce project costs and improve performance • Presence of key 'champions' who pushed for partnering, securing the

commitment of senior management and reinforcing the partnering process

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The Seven Pillars of Partnering, 1998 • Partnering is a set of strategic actions that deliver vast improvements in

construction performance. It is driven by a clear understanding of mutual objectives and co-operative decision making by a number of firms, who are all focused on using feedback to continuously improve their joint performance

• Extensive research into the leading firms involved shows that the approach explained in Trusting the Team was merely a 'first generation' of partnering

• A 'second generation' of partnering has now emerged that requires a strategic decision to co-operate in improving joint performance by a client and a group of consultants, contractors and specialists engaged in an ongoing series of projects. Second Generation Partnering is underpinned by 'Seven Pillars'

• Each pillar represents a set of management actions that provide an essential element of Second Generation Partnering. The pillars are used strategically by strategic teams and on individual projects by core teams

• Second Generation Partnering is tough but those firms who have all Seven Pillars in place find that cost savings of 40% are not uncommon, and time savings of more than 50% are achievable

• The research also identifies the beginnings of a third generation of partnering in which the construction industry becomes a truly modern industry producing and marketing a range of products and services that clients are eager to invest in

• The resulting Third Generation Partnering delivers even greater benefits - cost savings of 50% or more, and where speed is crucial, construction timeframes can be reduced by 80% or more

• The dramatic improvements in performance delivered by Second and Third Generation Partnering enable construction firms to meet the demands of their customers - whether they need greater certainty, better designs, faster delivery, lower costs, zero defects, guarantees or sophisticated after-care services

Second Generation Partnering

Strategy

Membership

Equity

Integration

Benchmarks

Feedback

The Seven Pillars are: • Strategy: developing the client's objectives and how consultants, contractors

and specialists can meet them on the basis of feedback • Membership: identifying the firms that need to be involved to ensure all

necessary skills are developed and available • Equity: ensuring everyone is rewarded for their work on the basis of fair prices

and fair profits • Integration: improving the way firms involved work together by using co-

operation and building trust • Benchmarks: setting measured targets that lead to continuous improvements in

performance from project to project • Project Processes: establishing standards and procedures that embody best

practice based on process engineering

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• Feedback: capturing lessons from projects and task forces to guide the development of strategy

Membership

Equity

Strategy

Integration

Feedback

Benchmarks

Project Processes

Third Generation Partnering

Use

Developmen

t

Production

• Third Generation Partnering is founded on three principles: use, development

and production

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17 - PRIVATE FINANCE INITIATIVES

Public/Private Partnerships • Partnerships between the public and private sectors are central to the

Government's aims of establishing first-class public services and infrastructure, and promoting economic growth and regeneration

• There is no one model of what an effective public/private partnership should look like: different circumstance will require different solutions

Private Finance Initiatives • Private Finance Initiatives (launched in 1992): partnership takes place in the

form of a long term contractual arrangement • PFI give local authorities the opportunity to deliver higher quality and more

cost-effective public services by giving authorities access to new sources of capital investment and management skills for new or improved facilities, such as schools, roads, police stations, museums and leisure centres

Design Build Finance Operate • Design Build Finance Operate: involves the various responsibilities and risks

relating to the procurement and operation of a capital asset being transferred to the private sector

• The level of payment by the public sector is based on the performance of the private sector operator against agreed levels of service

• Where sufficient risk is assumed by the private sector, the DBFO contract can be regarded as reflecting the purchase of access to and use of serviced assets by the public sector, rather than the procurement of a capital asset

• The capital investment undertaken by the private sector will not score against public sector capital spending limits

PFI in Local Government The introduction of measures to facilitate PFIU and other PPPs in local government seeks to bring the following benefits: • To promote private investment in the capital assets required to deliver public

services efficiently • To improve value for money by allocating risks to those best able to manage

them in the public and private sectors, thereby providing incentives for sustained and effective performance over time

• To encourage the upgrading and rationalisation of local authority property, including the need for service delivery and office accommodation

• To allow the transfer to the private sector of trading assets, which would benefit from better utilisation and of surplus operational land and buildings

• To facilitate joint ventures to give authorities new scope to participate in companies led by the private sector

• To remove unnecessary obstacles to partnerships in the areas of economic development and regeneration

Principle of PFI PFI projects should be structured to provide incentives for the private sector supplier to perform efficiently and effectively: • Genuine risk transfer • Output specification: contracts should specify the service outputs required by

the public sector client from the private sector rather than the configuration of the capital asset itself or how the service is to be delivered

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• Whole life assets: contracts commonly require the contractor to take responsibility and assume risk for the performance of the asset over a long term, at least for a significant part of its useful life, so that efficiencies arising from long term asset management can be realised

• Performance related reward: payments to the contractor under a PFI contract are characterised as a regular 'unitary' fee for service and will be subject to performance in relation to specific and quantified criteria in the contract

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18 - SELECTING PROCUREMENT METHODS The most important criteria for choosing procurement methods are: • Involvement of the client with the construction process • Separation of design from management • Reserving the clients right to alter the specification • Clarity of client’s contractual remedies • Complexity of the project • Speed from inception to completion • Certainty of price

Involvement of the Client Least Most

GC DB CM • GC demands the least from clients because it involves delegating most of the

management functions to an architect or civil engineer • DB places extra demand on the employer • CM removes the role of the main contractor completely and thus the client takes

on the most active role

Separation of Design from Management Least Most

GC DB

CM • GC unites management with design by of the position of the architect (or civil

engineer) as design leader and contract administrator • DB contracts should exhibit no separation of design from management since

both functions lie within the same organisation. However, because DB contractors are typically contractors first and designers second and because DB projects are let on a lump sum, DB contractor will focus on time and cost parameter over other considerations

• CM involves a clear separation of design from management. The design leader has a role in co-ordinating design work, but the contract manager must insure that design information is available at the right time and that trade contractors’ design is properly integrated

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Reserving the Client's right to alter the Specification Least Most GC

DB CM

• GC contains detailed clauses defining what would be permitted as a variation,

but common law restricts the real scope of variation clauses to those that could have been within the contemplation of the parties at the time the contract was formed

• DB contracts lack the detailed contractual machinery and bills of quantities for valuing variations. Further, as a lump sum contract for an integrated package, variations to the specification are awkward and best avoided

• CM involves a series of separate packages, each of which can be finally specified quite late in relation to the project’s overall start date, but before the individual package is put out to tender

Clarity of Client's Contractual Remedies Least Most

GC DB

CM • GC is the least clear because the contractor is employed to build what the

client’s design team has documented. Therefore any dispute first has to be resolved into a design or workmanship issue before it can be pursued. (Complicated further when nominated sub contractors are involved)

• DB with its single point of responsibility carries the clearest contractual remedies, although it is compromised when a large amount of design work is done before the contractor is appointed

• CM involves direct contracts between client and trade contractor which help clear lines of responsibility, but the involvement of the design team and a variety of separate trades, some with design responsibility, make the situation more complex than DB

Complexity of the Project Least Most

GC DB

CM • GC involves fully designing or specifying all of the work before a contractor bids

for it, which assumes that the design is beyond the skill of the contractor • DB is ideal for simple jobs with its single point of responsibility. Many DB

contractors may not have the experience and skill needed for the high levels of co-ordination that will be required for organisationally complex projects

• CM is most suitable for very complex projects. The construction manager has no vested interest in any of the conflicts between design and fabrication demands or between trade contractors. This independence, coupled with the professional management role, render CM ideal for dealing with organisational complexity

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Speed from Conception to Completion Least Most

GC DB

CM • GC is the slowest because of the need to design and specify the whole of the

works before inviting tenders. There are techniques for starting on site early, such as the letting of enabling contracts, or including large provisional sums in the bills so that detailed design can be carried out after the contract has been let

• DB is quicker as the projects are generally straightforward and as the contractor will be undertaking the design, early assumptions are generally safe

• CM involves relationships that are conducive to quick working and overlapping

Certainty of Price Least Most

GC DB

CM • GC tends to be more certain but there is a huge range of variability in this

because the final price depends on many other factors, such as the adequacy of the initial budget, the quality of the design.

• DB is a contract for a lump sum for all the work required • CM consists of a series of contracts, which are let as the work proceeds.

Therefore it is impossible to be confident about the final price until the project is nearly completed

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March 2001 2) Compare and contrast the following methods of procurement: • Traditional • Management • Design and Build (20) Considerations: • Client: degree of involvement/ expertise • Design liability: separation of design from management/ clarity of client’s

contractual remedies • Variation: reserving the clients right to alter the specification • Complexity: organisational/ technical • Cost: value/certainty • Quality • Speed • Risk Traditional Contracting

Employer

Architect/ Civil

engineer

Quantity Surveyor

Structural Engineer

Services Engineer

General Contractor

Domestic

Sub-Contractor

Nominated

Sub-contractor

Under traditional contracting, the designers, on behalf of the employer, produce the documents and the contractor agrees to build what has been specified in the documents. Hence the contractor has no responsibility for design. The contractor's offer of price is based on the bill of quantities, a document that itemises and quantifies every aspect of the work. The work is not re-measured and the contractor is paid on the basis of his tender, not what he actually spends. • Management functions delegated to architect • Unites management with design by of the position of the architect as design

leader and contract administrator, but is least clear about contractual remedies because contractor is employed to build what the client’s design team has documented

• Variations permitted • All work fully designed before contractor bids for it, which assumes that the

complexity of the design is beyond the skill of the contractor • Cost certainty as agreed on a lump sum basis, although fluctuations can be

added • Work is fully designed, therefore quality is document controlled • Slowest method because of the need to design all work before inviting tenders • Contracts drafted to share risk between client and contractor

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Management Contracting

Employer

Architect/ Designers

Quantity Surveyor

Structural Engineer

Services Engineer

Management Contractor

Works

Contractor Works

Contractor

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The client engages the management contractor to participate in the project at an early stage, contribute construction expertise to the design and manage the construction. The management contractor is not employed for the undertaking of the works, but on a level that can be equated to a professional consultant. The management contractor's risk is reduced as such. Management contracting is therefore a procurement method of 100% sub-contracting, and the contractual risk associated with construction is distributed entirely between the client and the works contractors. • Management functions delegated to management contractor • Design is separated from management: architect co-ordinates design work,

while management contractor insures that design information is available at the right time and that works contractors’ design is properly integrated. Unclear contractual remedies as, although management contractor is committed to pursuing recovery from any defaulting works contractor, he has a right to be reimbursed by employer for all losses

• Each separate package can be finally specified quite late in relation to the project’s overall start date, until it is put out to tender

• Ideal for organisationally complex projects due to professional management role of the management contractor

• No certainty of final cost as packages let separately • High quality sub contractors can be selected for all packages • Separate release of packages overlapping and quick working • Management contractor's risk is reduced to the level of consultant, and there is

no cost certainty, therefore the majority of risk lies with client Design and Build

Employer

Design & Build

Contractor

Employer's Advisors

Architect/ Designers

(Quantity Surveyor)

Structural Engineer

Services Engineers

Sub-Contractors

Design and Build is where the contractor's design responsibility extends over the whole of the works. At one end of the scale D&B is the type of package deal where the client selects the contractor before any consultants have been approached. At the other end, significant parts of the design have already been done and the D&B contractor's design work is minimal. The original consultants can be novated over to the contractor, or the contractor can use his own in-house designers. • Employer involved as there is no contract administrator • No separation of design from management as both functions lie within the same

organisation and there is a single point of responsibility which carries the clearest contractual remedies

• Contracts let on lump sum basis therefore change to employer's requirements very difficult

• Not suitable for organisationally complex projects • Cost certainty as contract let on lump sum basis • Quality not guaranteed as contracts let on a lump sum, encouraging contractor

to focus on time and cost over other considerations

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• Speed possible are projects are generally straightforward and as the contractor will be undertaking the design, early assumptions are generally safe

• As a lump sum contract, and with the contractor holding all the responsibility for design and construction, the risk lies mainly with the contractor

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March 2000 3) Your practice has been commissioned by a packaging manufacturer to design a £6 million factory. Your client has stressed that time is the most important criteria The client has also requested that a small “showcase” exhibition building is constructed in tandem with the above on an adjacent site, although time is not critical to achieve this part of the work. Write a report to the managing director suggesting alternative contractual arrangements for the construction programme for both elements. The report should address time, cost, allocation of risk and cost certainty and design liability. (20) Factory • Time most important criteria - I would not recommend a traditional

procurement method used, is generally the longest • I assume that the factory will not involve a high level of complexity - seems

unnecessary to recommend any kind of management contracting • Unless the client envisages producing more factories, not appropriate to

consider partnering • I would recommend design and build for the factory • Contractor responsible for both design and construction - opportunity for quick

start on site • Lump sum basis - £6 million budget can be ensured, reducing the clients risk of

unforeseen costs • Quality not the most important factor - contractor should be sought as soon as

possible to take full advantage of his expertise to ensure buildability, speed and cost efficiency

• If quality of design is a concern - client can commission the consultants to carry out an initial amount of design work and be novated over to the contractor at a later stage - this however, will take some of the design liability away from the contractor, and the single point of responsibility will not be as clear

• I recommend that the JCT WCD 98 Exhibition Building • Design quality a priority - I do not recommend D&B as the contract is let on a

lump sum basis and the contractor will focus on time and cost over aesthetic issues

• Not complex enough to warrant a management contract, or any kind of partnering set up

• I recommend that it be procured on a traditional basis • The design will be fully worked up by the design team to ensure that it is to the

exact level of quality and client requirements • Longer to reach site than other forms of procurement, but this is not and issue

here • Traditional procurement route allows for the contract price to be agreed on a

lump sum basis - cost certainty • Fully designed by the time the contract is let - little chance of escalating costs • Drawback that if there are problems on site, it will first have to be established

whether it was a design or workmanship fault before the dispute can be resolved - clients recovery of damages can be a complicated process

• I recommend using a JCT IFC 98 - simpler form of contract than JCT 98 and ideal for smaller projects

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General • As the two buildings are on adjacent sites, it would make sense to employ the

same contractor • At tender stage for the factory it would be wise to discuss the exhibition building

with the contractors • They could become the preferred contractor for the second building, with a view

to seeking their advice on the design of the exhibition building to aid buildability • There would be no obligation to select them and it would depend on their skill

and expertise in both type of building • It may be possible to let a ground works contract for the exhibition building in

advance of the main contract, so that this can be carried out by the contractor for both buildings at the same time

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March 1999 5) Your practice is retained by a major UK food retailer. They have two brands of store: “superstores”, with a typical construction cost of £6 million, and smaller “neighbourhood stores”, with a typical construction cost of £2 million. They build three of each per annum and have, until now, procured these using the JCT 1980 Private with Quantities Form of Contract. Write a report for your client’s Construction Director suggesting alternative contractual arrangements for their construction programme. The report should have particular regard to the implications for quality, time, cost, cost certainty, allocation of risk and design liability. (20) Design and Build • Well suited to system building - superstores built with standard details • With standard details, level of quality is more predictable, but once the

contractor's proposals are accepted, the design is beyond the control of the client or the architect

• Size of the store is not crucial as the same standard details can be used • As design is the responsibility of the contractor, work can start early on site • Cost may be increased to cover the contractor's acceptance of the majority of

the risk • Lump sum therefore cost certainty • Most of risk is transferred to contractor • Contractor will be responsible for deign, even if preparatory work has been done

by architect • Situation could become complicated if architect is working for client on one

superstore, but has been novated over to the contractor for another - could be a conflict of interests, or a confusion over roles and responsibilities

Partnering • Strategic partnering involves client working with the same design team and

contractor for a series of projects • Based on principles of having mutual objectives and rewards, strategies for

producing procedures to improve the project and the way in which the partners work together, and continuous feedback

• Strategic partnering has been proved to achieve substantial cost and time savings

• Design can be constantly refined, improved and made more efficient as lessons are learnt from previous projects and fed into the next

• Cost certainty cannot be guaranteed for the first project, but after repeating similar projects, cost is far more predictable

• Competitiveness and value for money can be encouraged by having two preferred contractors

• This also enables more superstores to be built which might otherwise be beyond the resources of one contractor

• Risk is shared by all the partners and so are the profits - this is established in the partnering agreement

• Design liability would depend upon the conditions of the agreement, although partnering is designed to encourage teamworking, rather than allocated blame to one particular party

• For a series of superstores this could be a better option

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March 1998 Compare and contrast Construction Management and Management Contracting and describe the potential advantages to the employer of each. (10) Management Contracting

Employer

Architect/ Designers

Quantity Surveyor

Structural Engineer

Services Engineer

Management Contractor

Works

Contractor Works

Contractor • Client engages the management contractor to participate in the project at an

early stage, contribute construction expertise to the design and manage the construction

• The management contractor sub-contracts out 100% of the works • This seeks to establish the management contractor's participation on a level

that can be equated to a professional consultant, and the management contractor's risk is reduced as such

Construction Management

Employer

Architect/ Designers

Quantity Surveyor

Structural Engineer

Services Engineer

Trade Contracto

rs

Construction

Manager • This is a 'purer' version of management contracting • The employer places a direct contract with each trade contractors - higher

degree of involvement • Employer uses the expertise of a construction manager to co-ordinate these

contracts Similarities • The employer wishes the design to be carried out by an independent architect

and design team • There is scope for separating responsibility for design from responsibility for

management • The employer is familiar with construction • There is a need for early completion • Projects is fairly large and complex • Permit changing employer's requirements • Projects are procured on a cost reimbursement basis Differences Payment • Management contracting is more complicated as interim payments, (which

include a management fee), are made to the management contractor who then pays the works contractors

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• Under construction management the direct contract between employer and trade contractor ensures prompt payment, which should improve performance and minimise cost of finance to the trade contractor - this also means that there is confidence in the contract sum

Default by works contract (time/quality) • A management contractor is committed to pursuing the recovery from

defaulting works contractor, but if not possible, employer makes up the shortfall - the management contractor can suffer no loss

• Works contractor only liable for more than nominal damages because JCT 98 works contract states that works contractor shall not raise 'no loss' arguments against management contractor

• Under construction management the works contractors are directly liable to the client

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Describe the procedures that are to be followed in a two stage tender, possible reasons for adopting such an approach and the potential advantages and disadvantages to the employer. (10) Procedures First stage • Selection of preferred contractor and the establishment of a level of pricing for

subsequent negotiation • Competitive selection takes place based on minimum amount of information

needed to: • Provide a competitive basis for selection • Establish principles of layout and design • Provide unambiguous pricing documents related to preliminary design and

specification information in forms sufficiently flexible for a basis for pricing the second stage tender

• Define obligation, conditions of, and programme for second stage procedures • State the conditions of contract • When the first stage procedure has been completed and a contracted selected

for the second stage, no contract for the execution of the work will have been entered into

Second stage • Finalisation of the design, production drawings, preparation of bills of quantities

for the works on the basis of the first stage tender, preparation of the health and safety plan by the employer’s professional team in collaboration with the selected contractor

• The result is an acceptable sum for inclusion in a contract • Contract documentation is prepared in conjunction with the contractor • If the parties fail to proceed beyond the second stage, procedures, established

during the first stage, will need to include equitable arrangements for reimbursement of the contractor’s participation in the second stage

Reasons for adopting approach • Used for complex projects where it is advantageous to get early input from

contractor • To separate the process involved with selection from the process for

determining the pricing mechanisms Advantages • Employer gets early input from contractor • Can result in a more cost effective building which is quicker to build • Employer is not obliged to enter into a contract with the preferred contractor Disadvantages • Involves more work, as the tendering process happens twice • Unnecessarily complicated for simple projects • If the parties do not enter into a contract at the end of the second stage the

preferred contractor may be entitled to payment for the work carried out up to that point

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19 - RETHINKING CONSTRUCTION Construction Task Force, Sir John Egan, July 1998

Executive Summary • The UK construction industry at its best is excellent. Its capability to deliver the

most difficult and innovative projects matches that of any other construction industry in the world

• Nonetheless, there is a deep concern that the industry as a whole is under-achieving. It has low profitability and invests too little in capital, research and development and training. Too many of the industry's clients are dissatisfied with its overall performance

• The Task Force's ambition for construction is informed by our experience of radical change and improvement in other industries, and by our experience of delivering improvements in quality and efficiency within our own construction programmes. We are convinced that these improvements can be spread throughout the construction industry and made available to all clients

• We have identified five key drivers of change which need to set an agenda for the construction industry at large: committed leadership, a focus on the customer, integrated processes and teams, a quality driven agenda and commitment to people

• Our experience tells us that ambitious targets and effective measurement of performance are essential to deliver improvement. We have proposed a series of targets for annual improvements and we would like to see more extensive use of performance data by the industry to inform its clients

• Our targets are based on our own experience and evidence that we have obtained from projects in the UK and overseas. Our targets include annual reductions of 10% in construction cost, and construction time. We also propose that defects ion projects should be reduced by 20% per year

• To achieve these targets the industry will need to make radical changes to the processes through which it delivers its projects. These processes should be explicit and transparent to the industry and its clients. The industry should create an integrated project process around the four key elements of product development, project implementation, partnering the supply chain and production of components. Sustained improvement should then be delivered through the use of techniques for eliminating waste and increasing value for the customer

• If the industry is to achieve its full potential, substantial changes in its culture and structure are also required to support improvement. The industry must provide decent and safe working conditions and improve management and supervisory skills at all levels. The industry must design projects for ease of construction making maximum use of standard components and processes

• The industry must replace competitive tendering with long term relationships based on clear measurement of performance and sustained improvement in quality and efficiency

• The Task Force has looked specifically at house-building • The Task Force has concluded that the major clients for the construction

industry must give leadership by implementing projects which will demonstrate the approach that we have described. We want other clients, including those from the public sector, to join us in sponsoring demonstration projects. We also wish to see the construction industry join us in these projects and devise its own means of making improved performance available to all clients. Our ambition is to make a start with at least £500 million of demonstration projects

• In sum, we propose to initiate a movement for change in the construction industry, for radical improvements in the process of construction. This movements will be the means of sustaining improvement and sharing learning

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• We invite the Deputy Prime Minister to turn his Department's Best Practice Programme into a knowledge centre for construction which will give the whole industry and all of its clients access to information and learning from the demonstration projects. There is a real opportunity for the industry to develop independent and objective assessments of completed projects and of the performance of the companies

• The public sector has a vital role to play in leading development of a more sophisticated and demanding customer base for construction. The Task Force invites to Government to commit itself to leading public sector bodies towards the goal of becoming best practice clients seeking improvements in efficiency and quality through the methods that we have proposed

• The members of the Task Force and other major clients will continue their drive for improved performance, and will focus their effort on the demonstration projects. We ask the Government and the industry to join us in rethinking construction

Standardisation and Pre-Assembly • Advantages include speed of construction, lower cost, reduced need for skilled

labour and achievement of zero defect

Value Management • VM is a structured method of eliminating waste from the brief and from the

design before binding commitments are made • VM is now used by up to a quarter of the construction industry to deliver more

effective and better quality buildings, for example through taking unnecessary costs out of designs, ensuring clearer understanding of the brief by all project participants and improving teamworking

• VM can also reduce costs by up to 10%

Benchmarking • Benchmarking is a tool which can help construction firms to understand how

their performance measure up to their competitors' and drive improvement up to 'world class' standards

• Taywood Engineering Ltd are using benchmarking in a project to identify a strategy for achieving zero defects in construction, including the principles of a 'zero defects culture' and a range of possible tools, such as the concept of a 'stop button' in site production, to prevent defects 'going down the line'

Lean Thinking • Only a small fraction of the total time and effort in any organisation actually

adds value to the end customer • By clearly defining value for a specific product or service from the end

customer's perspective, all the non value activities, often as much as 95% of the total, can be targeted for removal step by step

• New relationships are required to eliminate inter-firm waste and to manage the value stream as a whole

• The key to success is improvement of the design and procurement process in order to facilitate construction on site, investing in the front end of the project to reduce costs and construction times

• Two major problems: inefficient supply of materials which prevent site operations from flowing smoothly, and poor design information from the prime contractor which frequently results in a large amount of redesign work

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More and Better Training • Among designers the high standards of professional competence achieved in

their training and development need to be matched by a more practical understanding of the needs of clients and of the industry more generally

• They need to develop greater understanding of how they can contribute value to the project process and the supply chain

Design for Construction and Use • Designers should work in close collaboration with the other participants in the

project process • They must understand more clearly how components are manufactures and

assembled, and how their creative and analytical skills can be used to best effect in the process as a whole

• There is no longer a place for a regime of design fees based on a percentage of the costs of a project, which offers little incentive to build efficiently

Long Term Relationships • Effective partnering does not rest on contracts • Contracts can add significantly to the cost of a project and often add no value

for the client • If the relationship between a constructor and employer is soundly based and the

parties recognise their mutual interdependence, then formal contract documents should gradually become obsolete

Reduced Reliance on Tendering • The most immediately accessibly savings from alliances and partnering come

from a reduce requirement for tendering • Clients may well ask how they can be satisfied that they are getting value for

money • The answer lies in the comparison between suppliers and rigorous measurement

of their performance • With quantitative performance targets and open book accounting, together with

demanding arrangements for selecting partners, the Task force believe that value for money can adequately be demonstrated and properly audited

• Cut-throat price competition and inadequate profitability benefit no one

Summary • The Task Force wishes to emphasise that ewe are not inviting UK construction

to look at what it already does and do it better: we are asking the industry and Government to join with major clients to do it entirely differently

• We wish to see, within five years, the construction industry deliver its products to its customers in the same way as the best consumer-led manufacturing and service industries

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20 - RISK

Nature of risk in construction • taking a risk involves a hazard combined with volition or will. • different types of building contract will allocate risk in different quarters. • even if a contract is silent on a particular risk, that risk will still lie with one

party or the other

Risk and price • wherever risk is shifted from the contractor to the owner, there should be a

counterbalancing advantage of price to balance the risk assumed by the owner. • any discussion about whether or not a particular risk should be included in the

price is a discussion of policy, not of ‘fairness’, ‘morality’ or ‘justice’.

Types of risk in construction projects Pure and particular risk • damage to persons and property (fire, storm, water, collapse, subsidence,

vibration, etc.) • often a contractual obligation to take out insurance cover against these risks Fundamental risk • war, nuclear pollution and supersonic bangs • government policy on taxes, labour, safety or other laws • malicious damage • industrial disputes • all the subject of statutory liability and no insurance cover is normally available

or needed Speculative risk • ground conditions • exceptionally adverse weather • unforeseeable shortages of labour or materials • other similar matters beyond the control of the contractor • apportioned in advance as decided by the parties to the contract Other types of risk • delays and disputes (possession of site, late supply of information, inefficient

execution of work, etc.) • poor direction, supervision or communication • delays in payment • delays in resolving disputes.

Dealing with risk • Identify the risk: linked to a clear statement of the client’s priorities for a

project • Analyse the risk: in terms of likely frequency of occurrence and severity of

impact • Respond to the risk: make risks explicit so that decisions can be taken as to

who should bear them

Transfer of risk • contractual clauses are intended to transfer risks • when laying-off risks, weigh up frequency of occurrence against level of

premium paid for the transfer

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• unwise to pass a risk that is difficult to assess to the contractor as he will either increase their prices to deal with it, or disregard it when preparing bid and then find himself in difficulty later

Acceptance of risk • client should carry highly unpredictable and poorly defined risks (war,

earthquakes, etc.): alternative will be unacceptably inflated tenders

Avoidance of risk • redefine a project • clarification of responsibilities, remuneration, and expenditure at the beginning

of the consultant’s appointment will help avoid problems

Insuring against risk • most standard form contracts insist on certain types of insurance, e.g.

insurance against, fire, loss of liquidated damages and professional indemnity insurance

Doing nothing about risk • either none of the project team considers the risk • or consultants considered the risk and decided that they already lie with those

who could best control them

Allocating risk through methods of payment • Fixed price: items paid for on basis of a contractor’s predetermined estimate • Cost reimbursement: items paid for on basis of what the contractor spends in

executing the work • not independent but contract will be described in terms of dominant method.

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March 2001 Contract Administration 1a) Describe the categories of risk that require assessing when deciding on a procurement method. The first category of risk is often referred to as 'pure and particular risk'. It includes damage to persons and property (such as fire, storm, water, collapse, subsidence, vibration, etc.) Contract conditions often make it a contractual obligation to take out insurance cover against these risks. The second category is 'fundamental risk'. This includes external factors such as: damage due to war, nuclear pollution and supersonic bangs; government policy on taxes, labour, safety or other laws; malicious damage; and industrial disputes. Such incidents are all the subject of statutory liability and no insurance cover is normally available or needed. The third category, often referred to as 'speculative risk', is something which can be apportioned in advance as decided by the parties to the contract. This may include losses in time and money, which result from unexpected ground conditions, exceptionally adverse weather, unforeseeable shortages of labour or materials, and other similar matters beyond the control of the contractor. There are also risks of losses of time and money due to: delays and disputes (possession of site, late supply of information, inefficient execution of work, etc.); poor direction, supervision or communication; delays in payment; and delay in resolving disputes. 1b) Describe the balance of risk for Design and Build, Traditional Lump Sum and Management forms of contract. Use diagrams where appropriate.

Design and Build

Employer

Consultants

Contractor

Agent

Sub-contractors and suppliers

As the diagram shows, there is a single point of responsibility with the contractor for both the design of the project and the operations on site. As such, most of the risk lies with the contractor, especially as the contract is let on a lump sum basis. However, risk is increasingly transferred back to the employer as more preparatory design work is carried out before the contract is let.

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Traditional Lump Sum

Employer

Consultants

Contractor

Nominated sub-contractors and

suppliers

Domestic sub-contractors and

suppliers

With traditional lump sum contracts, the intention is that there should be a fair balance of risk between the parties. As the diagram shows, the employer is responsible for the design and the contractor for the operations on site (although this is complicated when nominated sub-contractors and suppliers are included). The balance can be adjusted as required, but the greater the risk assigned to the contractor, the higher the tender figure is likely to be. The risk to the employer is lessened by the contract being let on a lump sum basis, although this will rise if fluctuations are included.

Management Contracting

Employer

Consultants

Management Contractor

Works

contractor

Nominated/ domestic sub-

contractors and suppliers

Under management contracting the balance of risk is most onerous with the employer. Due to separate works contracts being let, the employer may develop the design during construction. Hence there is no certainty about cost or time. However, most of the risk of delays and defects are associated with the responsibility for the works contract. In some cases the management contractor may absorb this risk and put up the price of the contract, although this may compromise his desired position of impartiality.

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Comparison of allocation of speculative risk Contract Type Risk

Employer Contractor

Design and Build

Complete package by supplier

Design and Build Design input by employer

Traditional Lump Sum Fixed Price

Traditional Lump Sum Fluctuations

Management Contracting

The above diagram illustrates that: with Design and Build, the risk lies mainly with the contractor; with Tradition Lump Sum contracts, the risk is evenly distributed; and with Management contracts, the risk lies mainly with the employer.

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21 - SPECIFICATION

Specification • The decision about the required performance • The way in which the performance will be achieved

Contractor's Design Portion Supplement • The Contractor is responsible for the design of the CDP • The Contractor provides to the Architect and Employer in regard to the CDP

similar information to that which the Architect provides to the Contractor for Works other than the CDP

• The Architect is responsible for its integration with the design for the Works as a whole

• It is essential that architectural aims are fully described and that interfaces with other elements are adequately specified in the tender documents

• The Architect will have regards for this integration when appraising the Contractor's Proposals

• The Architect is empowered to issue direction to achieve such integration during the course of the Works

• While the Architect can notify the Contractor of anything which appears to be defective in the design, such notice will not relieve the Contractor of his obligation in respect of his design Work

Performance Specified Work • The Architect will decide upon the required performance • The Contractor will decide upon the way in which the performance will be

achieved • To obtain technically efficient and economic solutions using the skills and

expertise of the Contractor and Sub-contractors • Will comprise materials/components/assemblies of a kind/standard that will

satisfy design requirements given in the tender documents • PSW should be carefully selected at the design stage in order to avoid the

detailed design for other work depending on the information to be supplied in the Contractor's Statements

• PSW should not be use for items which will materially affect the appearance of the building

• PSW should not be use for items which may result in changes in the design of other work

• PSW should not be use for items which will affect the use of the finished building

• If these proposals might have such effects, then the proposal's must be received from the Contractor before the contract

• When this is necessary, the Contractor's Design Portion Supplement can be used

• The Contractor is only required to exercise reasonably skill and care in the selection of materials and components to achieve the performance criteria

• PSW does not refer to design, but a design responsibility may be conferred by virtue of the Contractor's choice of solution

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March 1997 As part of an architectural team preparing tender information for a JCT 80 Contract, you are asked to prepare the specification for the profiled, curved metal roof cladding. The project is a silicone microchip factory and laboratory which is adjacent to a railway station in a northern coastal city. What and from where would you obtain appropriate information to help you identify the proprietary product you wish to specify? (12 marks) What information? From where? Cost: Budget cost QS Acoustics performance criteria: Required internal acoustic performance and insulation against noise from railway Client Thermal performance criteria: Required U-Values Building Regs Part L / M&E Engineer Structural performance criteria: Required loading/spanning capability Building Regs Part A /Structural Engineer Technical performance criteria: Resistance to corrosion from salt in air Manufacturers Appearance: Required colour Client Nature of proprietary systems - eaves etc Manufacturers Procurement: Required availability and max order time QS / Project Manager • Once the required performance criteria are established, the achievable criteria

can be sought from various manufacturers • This can be done by either consulting literature that may be in the office library,

or by contacting the manufacturer directly • Once both required and achievable criteria are gathered, a judgement must be

made as to the most appropriate product and the most appropriate manufacturer

How would your specification vary if: 1. The project were to be a design and build contract and you were assisting in the

preparation of the employer’s requirements? (4) • The design of the whole of the Works would be the Contractor's responsibility • The Contractor would be responsible for insuring integration of the roof with the

other elements of the building • The full specification would be limited to what was important to the client, eg,

appearance • This include specification of the colour along with details of particular important

junctions • Technical criteria could be covered by a performance specification, leaving the

Contractor free to choose the exact product and manufacturer 2. The project was a JCT 80 Contract but the tender identified that the roof is to be

a contractors design item? (4)

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• The Contractor is responsible for the design of the CDP • However, the Architect is responsible for its integration with the design for the

Works as a whole • It is essential that interfaces with other elements are adequately specified in the

Employer's Requirements and the specification for the rest of the Works • It is essential that architectural aims and aspect of particular importance to the

client are fully described in the Employer's Requirements • Technical criteria could be covered by a performance specification, leaving the

Contractor free to choose the exact product and manufacturer

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March 1998 Describe the procedures and contractual issues arising where it is proposed to carry out the mechanical and electrical services element of a project on the basis of a Performance Specification. (10) A nominated sub-contractor submits design drawings to you for approval later that the date set for this in the relevant NSC/C form. His results in a delay to the main contractor’s works for which the request an extension of time and associated loss and expense. Describe the contractual situation and your actions. (5) The Nominated Sub-contract form NSC/4 states that: “attendance shall be provided by the Contractor…to the sub-contractor…” Describe what is meant by attendance in this context and give examples. (5)

March 2000 Working as an architect in a large design team of a private practice you have been asked to prepare the specification for the external re-cladding of an existing 16-storey city centre building. The Project Manager has advised your practice that the cladding will be required in the very early stages of the construction work. Discuss how the programme and method of procurement would affect the form of specification. Describe the key stages that you would go through in carrying out appropriate research for the preparation of the specification. (20 marks)

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22 - TENDERING

Purpose of tender • A suitable contractor should be selected at a suitable time • The offer of a price is required from the contractor at an appropriate time • These two events are often simultaneous, but they do not necessarily need to

be • This offer (tender) will be the basis for the ensuing contract • There is no direct relationship between the type of tendering procedure and the

form of contractual arrangement • The tendering process marks the beginning of the contractual arrangement

Types of tender Standing offer • Rare • A contractor tenders for, say, such maintenance work as may be required by

the employer over a specified time • The acceptance does not create a binding contract: the employer is not bound

to order any work, nor is the contractor prevented from withdrawing before the period is over

• However, if any order are placed, they must be carried out Offer • Usual • An offer by the contractor to carry out the work specified in the invitation to

tender • Once the employer accepts this, it forms a legally binding contract

Legal analysis of tenders The parties’ obligations • The employer’s request for tenders is an invitation to treat and therefore the

employer is under no legal obligation to accept any tender • Consequence: the (substantial) cost of tendering is to be borne by the

contractor • Where the preliminary work goes beyond what is normally expected, an

employer may promise to pay • A person who invites another to tender with no intention whatsoever of

accepting that tender will be liable for any expenses that the latter incurs • An employer who expressly promises to accept the lowest tender will be bound

by that promise, if that tender complies with any conditions • An employer may be under an implied obligation to give proper consideration to

any tender submitted in accordance with published conditions • Local authorities are required by the Local Government Act 1972 to have and to

publicise formal contracting procedures, normally involving competitive tendering

• Local authorities are required to give reasons for their procurement decisions and are generally prohibited from taking into account non-commercial considerations in reaching those decisions

European Union control on procurement in the public sector • European Treaty (which applies to all public sector contracts): prohibits

discrimination within the European Union on grounds of nationality and restrictions on the free movement of goods or services

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• A complex array of European Union Directives lay down rules governing the procedure for the awarding of contracts with a value greater than £4m by any public body: 1. Intended contract must be published in the official journal of the European

Community 2. Specification must be based on European standards 3. Contracts must be let by either an open or a restricted tendering procedure,

which permits the selection of technically and financially competent contractors

4. Negotiation possible only in exceptional cases 5. Contract awarded to the lowest or most economically advantageous tenderer

Once bids have been opened, there must be no negotiation which distorts open competition

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Tendering procedures • Main distinguishing feature is the extent of competition • Increasing level of dissatisfaction with competition because all it guarantees is

the lowest tender price • Too low, and the employer may face higher costs due to contractor's insolvency • Tender procedures have been codified by the National Joint Consultative

Committee for Building (NJCC)

Open tendering • Traditional method • Advert placed and interest contractors can apply for documentation • Advert or documentation will state that the employer is not bound to accept the

lowest tender, or indeed any tender • It is an indiscriminate request for tenders, and there is no method of ensuring

high quality building • Preparation places unnecessary burden of time, effort and expense on industry • Its use has been declining in the UK, but because of the effect of certain

European Union legislation, its use in the public sector is increasing

Single stage selective tendering • A limited number of contractors (no more than six) are pre-selected to tender

for the work • An employer who builds regularly will have an approved list of contractors • If the pre-selection process has been done properly, any of the contractors is

satisfactory to the employer • Therefore tenders may be considered on price alone

6.

Selection of contractors • A short list of suitable tenderers should be drawn up either from the employer’s

approved list of contractors or from an adhoc list • The number of tenderers invited should be a maximum of six • One or two further names should be added to replace any firms that do not

accept the preliminary invitation • Points to be considered:

1. The firm’s financial standing and record 2. The firm’s recent experience of building at the required rate of completion 3. The firm’s general experience and reputation in this area 4. The firm’s competence and resources in respect of statutory health and

safety requirements 5. The firm’s approach to quality assurance procedures 6. Whether the management structure of the firm is adequate for this type of

contract 7. Whether the firm will have adequate capacity at the relevant time

• This can be achieved by means of the NJCC Standards Forms of Tendering Questionnaire

• Lists should be periodically reviewed to exclude firms whose performance has been unsatisfactory and to allow the introduction of suitable additional firms

Preliminary enquiry • In order that the contractors may be able to decide whether they will tender

and to anticipate the demands on their tendering staff, each firm should be sent an should reply to a preliminary enquiry for invitation to tender

• It should include the following information: • Project name

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1. Type and function of building 2. General description of the project 3. Employer’s name 4. Employer’s professional team 5. Location of site 6. Approximate cost range 7. Number of tenderers it is proposed to invite 8. Nominated sub-contractors for major items 9. Form of contract and any proposed amendments 10. Examination and correction of bill (Alternative 1 or Alternative 2) 11. Anticipated date of possession 12. Period for completion of works 13. Approximate date for despatch of tender documents 14. Tender period 15. Details of guarantee requirements 16. Particular conditions applying to the contract

Interview • After the responses to the preliminary enquiry letter have been received, each

contractor suitable should be interviewed in order to: • Determine that the forms of construction to be used will in general be suitable • Discuss and establish the organisation of the work and the time required for

tendering • Discuss and establish (if required) the nature and extent of the design

indemnity insurance to be taken out by the contractor • Provide ay further information required by the contractor • Make a final judgement on the competence of each firm’s competence Sending out documents • Tender documents will include:

1. Checklist of drawings and documents 2. Specification 3. Tender form and instructions for their completion 4. Complete sets of drawings 5. Or the bills of quantities with a selection of drawings 6. Pre-tender health and safety plan 7. Proposed programme dates 8. Specific contract terms and conditions 9. Details of and bond and/or guarantees required 10. Covering letter

• The covering letter should state: 1. Invitation to tender (if not already sent) 2. List on enclosures 3. Date and place for delivery of tenders 4. Whether the site is open for inspection and if so what arrangements should

be made to visit 5. Request for acknowledgement

• Also enclosed should be an envelop for the delivery of the tender already addressed and marked ‘tender for…’ on the face

Time for tendering • As long as possible • Determined in relation to the size and complexity of the job • Four weeks should be regarded as the minimum time for tender • Contractors tendering on a specification and drawings will need longer than

when bills are supplied

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The formulation of bids • Where no bills are supplied, the tenderers must prepare their own quantities

from a complete set of drawings with the guidance of the specification • Estimating, (the contractor formulating rates for the items in the bills), does

not: 1. take account of the way in which the costs are incurred (brickwork on

second floor is cheaper than brickwork on seventeenth floor) 2. necessarily mean that the actual rates are the same as those in the in the

bills • If the contractor does not want to tender (too busy or not appropriate work), he

will submit and inflated ‘cover bid’ • If the contractor is short of work he may be satisfied with a low profit or no

profit at all • If the contractor does want the job, but the contract is risky, he will add a

premium to the rates • The contractor’s cash flow has a significant effect:

1. If the project is at the end of a tax year, he may reduce the rates at the beginning of a project and increase then at the end – back loading

2. Or the contractor may wish to get cash quickly to meet liabilities and will therefore inflate the rates at the beginning – front loading

• Illustrates the danger of using bill rates to value variations Withdrawal of tender • As the contractor’s tender is merely an offer, it may be validly revoked at any

time before it has been accepted • This can cause problem for contractor’s relying on sub-contractor’s bids when

formulating their own tenders Opening of tenders 1. When returned the marked envelopes will be left unopened until the time stated

for delivery has passed and a check has been made that all have been delivered – if this procedure is not observed, the architect may be liable for the tenderer’s abortive expenditure

2. Bills should be returned in separate envelopes and only the bill accompanying the lowest tender will be opened – the others are returned

3. A list is prepared for the client in order of price, and the contract period may also be entered against the contractor’s name if this has been requested from the contractor

4. As soon as any tender is accepted, all tendering contractors must be notified 5. While confidentiality is important, contractors will want to know the result –

therefore the architect publishes the list of tender prices without the names attached

Examination of a priced bill • The QS will make a mathematical check and generally look through the rates for

any possible serious errors or omissions in the pricing • If there are none, the tender can be recommended for acceptance • If mistakes are found, the architect, employer and contractor must be notified • Under Alternative 1:

1. The contractor will either be invited to stand by the tender price or to withdraw

2. If he withdraws, the next lowest bid is considered 3. If he stands by the tender, an endorsement should be added to the priced

bills indicating that all rates and prices inserted therein by the tenderer are to be considered as reduced or increased in the same proportion as the correct total or priced items exceeds or falls short of such items

• Under Alternative 2:

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1. The contractor should be given the opportunity of confirming his offer or amending it to correct genuine errors

2. Should he elect to amend his offer and the revised offer is no longer the lower, the offer of the firm now lowest in the competition should be examined

3. If the tenderer elects not to amend his offer, an endorsement will be required as above

Negotiated reduction of tender • Should the tender under consideration exceed the employer’s budget, the

recommended procedure is for a reduced priced to be negotiated with the tenderer, based on agreed changes to the specification or the quantity of work

Preparing contract documents • Completing the articles or agreement is left to the architect or QS • All documents should be marked for identification and signed by both parties

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Two stage selective tendering (negotiated tendering) • To separate the process involved with selection from the process for

determining the pricing mechanisms • Not to involve the contractor with responsibility for design, but to get the

contractor involved in an advisory capacity before the scheme has been fully designed

First stage • The process for the selection of the contractor and for the establishment of a

level of pricing for subsequent negotiation • Competitive selection takes place based on minimum amount of information

needed to: 1. Provide a competitive basis for selection 2. Establish principles of layout and design 3. Provide unambiguous pricing documents related to preliminary design and

specification information in forms sufficiently flexible for a basis for pricing the second stage tender

4. Define obligation, conditions of, and programme for second stage procedures

5. State the conditions of contract • When the first stage procedure has been completed and a contracted selected

for the second stage, no contract for the execution of the work will have been entered into

• The costs incurred in preparing and submitting the first stage will be borne by the tenderers

• Tenderers should not be required to submit a response to the health and safety plan with their first stage tenders: the tenderer whose bid is most favourable should be required to submit its response as soon as possible

Second stage • The process of finalisation by the employer’s professional team in collaboration

with the selected contractor of the design and development of production drawings and the health and safety plan for the whole project and the preparation of bills of quantities for the works proceed on the basis of the first stage tender

• The result is an acceptable sum for inclusion in a contract, and completed contract documentation is prepared in conjunction with the contractor

• If the parties fail to proceed beyond the second stage, procedures, established during the first stage, will need to include equitable arrangements for reimbursement of the contractor’s participation in the second stage

• Used for complex projects

Selective tendering for design and build • The terms of any consultant switch should be communicated to the tenderers in

the preliminary enquiry • In order to limit unnecessary work by tenderers, the employer should include in

his requirements all information about the site and building that is in his possession

Selection of tenderers • Preliminary list should comprise six to eight contractors • Final list should (in additional to criteria outlined above) take into account:

1. Whether the firm has had recent experience of designing and constructing to type of building envisaged by the Employer’s Requirements

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2. Whether the firm’s customary design capability is in-house and if not, what method will be used

• Final list should limited to no more than three firms, due to the high costs involved in in preparing tenders for work with contractor’s design involvement

• If two stage tendering is used, the list may be increased to no more than five firms with either one or two going through to the second stage

Employer’s Requirements • The Employer’s Requirements should state the priority of the following items that will determine the

successful tender:

1. Appearance 2. Functional requirements 3. Capital cost 4. Expected lifespan of the building 5. Flexibility of use 6. Quality 7. Running and maintenance costs 8. Time of construction 9. Any other factors

Cost of tendering • Where substantial high quality design work is required or excessive competition

is introduced, it may be in the employer’s interests to offer payment fro the preparation of unsuccessful competitive tenders

Single stage or two stage? • Most employers would benefit from a two stage procedure that would enable

post-tender changes and development to the design and cost • In exceptional circumstances where the employer’s requirements are well

defined, then single stage tendering may be used Extent of information • A full set of drawings and specification should not be expected at tender stage • Therefore the employer must indicate the minimum require to enable him to

select a contractor • Tenderers should be instructed to indicate in their tender the period they

require to elapse between the acceptance of their tender and the commencement of work on site to enable them to complete production drawings and obtain necessary statutory approvals

Tender period • Depends on the nature of the Employer’s requirements and whether a single

stage or two stage procedure is being followed • For most projects, the period is three to four months Assessment • The evaluation should be carried out in accordance with the criteria specified in

the preliminary enquiry • The best tender, which may not be the lowest, should be accepted Two stage tendering • The process of finalisation of the contractor’s proposals resulting in an

acceptable basis for the contract • Where the employer fails to reach an agreement with the selected contractor, it

will be necessary either recommence with second stage procedures with another tenderer or invite further first stage competitive tenders

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Negotiation • Newer forms of procurement (eg construction management and management

contracting) demand a less adversarial approach • The inherent flexibility demanded means no standard method for negotiating a

contract • Serial contracting: contractors are asked to bid for a project on the basis that if

they build this one satisfactorily, others will follow and the same bill rates will be used - partnering

• Most effective way of selecting a contractor for non-traditional approaches • Familiarity between employer and contractor is important factor

Joint ventures • For projects that are so complex that the distribution of liability becomes a

problem • Involves all parties taking on joint and several liability for the design and/or

execution of the project • The agreements must be carefully examined and backed up by bonds or

guarantees

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March 1997 You have been asked by your client to draw up a tender list of main building contractors for a £10m retail development. Prepare: i) A tender enquiry questionnaire to be sent to ten contractors (6)

ii) The agenda and objectives for a structured interview to establish the shortlist of those who will be invited to tender. List the attendees for the interview (6)

i) Tender enquiry questionnaire • Name of firm • Size of firm • Turnover of firm • Evidence of financial stability • Location of firm • Recent experience of this type of project • References from previous clients/architects • Recent experience of this type of time scale • Health and safety records • Availability of resources for that time period • Information on key personnel to be working on project • Management structure of firm • Quality assurance procedures within the firm • Details of liability insurance ii) Agenda for interview • The information in the questionnaire • Location of project • Nature of site/ existing buildings • Restrictions over site • The firm’s general approach to the site conditions • Description of the required retail development including cost • Experience of the firm in large retail developments • Discussion as to the type of contract and method of procurement that will be

used • Experience of the firm with this type contract and procurement method • Whether there will be any contractor’s design • Health and safety records and initial plan for the project • Resource available for the project • Initial thoughts as to programme and phasing • Procedure to be adopted for the examination and correction of any errors in the

tender • Approximate date for despatch of tender documents and tender period • Any additional questions that the firm may have Objectives • To establish whether the firm has the requisite skill and experience for this type

of development • To judge their competence • To ascertain whether they have the adequate resources necessary to carry out

the project • To meet the firm face to face • To give the firm an opportunity to ask any questions about the project, client

and design team

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List of attendees • Client • Architect and/or contract administrator and/or quantity surveyor • Director of construction company • Key personnel who would be involved with project

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Bonds and/or parent company guarantees are commonly used to protect the financial interests of the employer. Describe what these are, in what ways they provide security and how the requirements for these are included in the tender documents. (8) What bonds? • Bonds are financial assurances that can be purchased from finance institutions

such as banks or insurance company by contractors to back up their tenders What are parent company guarantees? • Parent company guarantees are financial guarantees under which the

contractual performance of one company within a corporate group is underwritten by other members of the group to back up the contractor’s tender

In what ways do they provide security? • Bonds and/or guarantees can be provided to guarantee every aspect of the

contractor’s performance • They provide security for the employer in that in the event of insolvency of the

contractor • Bonds can be provided in return for early release of retention money, so that

the employer is protected against any defects that he may later discover • Advance payment bonds protect the client in the event that the contractor fails

to fulfil obligations that have already been paid for • Bonds can also be requested by contractors from subcontractors to protect their

ability to deliver the project for the tender sum in the event that their tender was based upon the subcontractor’s tender and the subcontractor has subsequently withdrawn

How are the requirements for these included in the tender documents? • The need for a bonds and/or parent company guarantee would be stated in the

preliminary enquiry for invitation to tender • Details of the bonds and/or parent company guarantees would be outlined in

the tender package

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23 - CONSTRUCTING THE TEAM Sir Michael Latham

Recommendation 1: Focal Points - Clients • DoE designated by Ministers as lead Department for implementing

recommendations of this Report • Government to commit itself to being best practice client providing staff with

necessary training necessary and establishing benchmarking arrangements to provide pressure for continuing improvements in performance

• A Construction Clients' Forum to be created to represent private sector clients

Recommendation 2: Guide for Clients on Briefing • Checklist to be prepared by CIC in conjunction with clients • Part of the contractual process that client should approve the design brief by

"signing it off"

Recommendation 3: Code of Practice • DoE to co-ordinate and publish a Construction Strategy Code of Practice (CSCP)

to inform and advise clients • In simple terms and easy to read • Circulated to all Governmental Departments and Agencies, public sector

institutions and private sector clients

Recommendation 4: Code of Practice • CSCP designed to assist clients to meet their objectives and to obtain value for

money • To harness clients' purchasing power to improve the long-term performance of

the industry • Wishes of the clients paramount for all construction participants, subject to

planning and development control and wider public interest • Clients should formulate a project strategy • Any external expertise retained to help with such preliminary feasibility study

should be for that purpose alone, and then discharged • Client should decide upon a contract strategy, influenced by the amount of risk

desired to be accepted • Advisers retained will be those who are most appropriate for that procurement

route • Advisers will be crucial in assisting the client with the brief • Clients should be strongly advised to consider cost-in-use and impact scheme

will have on the productivity of their business • Client should "sign off" approval of the brief

Recommendation 5: Consultation of the Process Plant Sector • Process plant industry clients and contractors have much to contribute to

further work following this Review

Recommendation 6: Check-List for Designers • Formulation of a full check-list should be an urgent task of the reconstituted JCT

as part of their new duties • As each stage of design is completed, the consultant should sign it off

accordingly.

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Recommendation 7: Co-ordinated Project Information • In conjunction with the preparation of a full matrix of documents, its use should

be made part of the Conditions of Engagement of the designers

Recommendation 8: Allocation of M&E Design Responsibilities • Allocation of design responsibilities between consulting engineer and specialist

engineering contractor should follow the check-list of guidance • There should be a separate design agreement for the specialist engineering

contractor, involving a fee and a common standard of liability to that of the design consultant

5.18: A Modern Contract • A specific duty for all parties to deal fairly with each other, and with their

subcontractors, specialists and suppliers, in an atmosphere of mutual co-operation

• Firm duties of teamwork, with shared financial motivation to pursue those objectives

• A wholly interrelated package of documents, which clearly defines the roles and duties of all involved, and which is suitable for all types of project and for any procurement route

• Easily comprehensible language and with Guidance Notes attached • Separation of the roles of contract administrator, project or lead manager and

adjudicator • A choice of allocation of risk, to be decided as appropriate to each project but

then allocated to the party best able to manage, estimate and carry the risk • Taking all reasonable steps to avoid changes to pre-planned works information • Express provision for assessing interim payments by methods other than

monthly valuation i.e. milestones, activity schedules or payment schedules • Clearly setting out the period within which interim payments must be made to

all participants in the process, failing which they will have an automatic right to compensation, involving payment of interest at a sufficiently heavy rate to deter slow payment

• Providing for secure trust fund routes of payment • Providing for speedy dispute if any conflict arises, by a pre-determined impartial

adjudicator/referee/expert • Providing for incentives for exceptional performance • Providing for advance mobilisation payment where appropriate

Recommendation 9: The Joint Contracts Tribunal • Structure to be changed so that it is subdivided into units which reflect the

actual parties to the specific agreements or contracts, who should then draw up their own contracts

• Including a total matrix of interlocking consultants' agreements and contracts, including subcontracts, available for all kinds of building work, and any additional relevant documentation such as bonds and warranties (if necessary) and latent defects insurance

• This can best be achieved by building on the NEC (as amended) • If clients wish to continue to use current JCT documents, that should be

redrafted to incorporate the principle in paragraph 5.18, be in comprehensive language, have guidance notes attached and incorporate other documents to complete the family

Recommendation 10: The CCSJC • As JCT

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Recommendation 11: Joint Liaison Committee • JCT and CCSJC should co-ordinate their work. • Joint Liaison Committee should be formed to consider amendments to the NEC

and to build up a complete family of documents around it • NEC is capable of being a common contract for the whole industry

Recommendation 12: Clients • Target should be set of one third of Government funded projects started over

the next four years to use the NEC • It will also be open to them to use JCT or ICE Forms (as amended ) • Use of the NEC (as amended) by private sector clients should be strongly

promoted by clients and industry bodies.

Recommendation 13.1-13.5: ConReg • A register based on ConReg should be compiled of consultant firms seeking

public sector work • Local authorities and other public bodies should be strongly encouraged to make

use of ConReg, rather than keeping their own registers. • Firms applying to go on the register should be required to demonstrate some

appropriate professional and managerial skills, the availability of resources and adequate professional indemnity

Recommendation 14.1-14.4: Project Managers • Clients should assess whether they need a separate Project Manager as well as

an internal project sponsor, or whether they should follow another procurement route

• If it is decided to retain an external Project Manager: • Terms of appointment and duties should be clearly defined • Clear evidence should be available that the applicants have the necessary

practical experience and skill to carry out their duties on behalf of the client • PM should be given necessary authority to ensure the work is carried out

satisfactorily through to completion • PM to be responsible for selecting and employing the other professional

consultants

Recommendations 16.1-16.3: Tendering • Detailed advice should be included in the CSCP to all public sector clients on the

specific requirements for selective tendering of European Union Directives • Clients should adhere to the recommended numbers of tenders for single stage

tendering in the NJCC Code of Procedure • Clients subject to EU legislation should not use open tendering procedures Clients who seek tenders on a design and build or design and construct basis should proceed by the following tender route: • Not more than three firms, with one name in “reserve” should be invited to

tender on a single stage basis • Best used for simpler contracts with straight forward design input, or where it is

intended that a significant proportion of the outline design will be undertaken by the client’s own consultants before tenders are sought

• Two stage tender procedure should be used for more complex and substantial projects, subject to guidance to public sector clients on EU requirements under the CSSP

• Maximum of five terms (with one “reserve”) should be approached to tender for the first stage, narrowing the choice down to two (or one if preferred) for the second stage

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• Where substantial ground investigation costs will be incurred by tenderers, they should b permitted to “pool” such costs by retaining a single firm of consultants to act on behalf of them all

• Where very large and expensive schemes are to be carried out, a reasonable proportion of the expenses should be paid to unsuccessful tendered, and this should be made known in advance

Recommendations 17.1-17.3: Interim Arrangements • DoE to set up a central qualification list based on CMIS of contractors and

subcontractors seeking public sector work, supported by a national scheme of guidance assessment of tenders

Pending its introduction: • DoE should remind all public authorities through the CSCP that those tenders

which offer the best value for money (“economically advantageous”) and show clear regard for cost-in-use should be accepted

• Public authorities should publish their own criteria for quality assessment in their tender documents, prior to the establishment of a national scheme.

• The CSCP should remind clients that it is desirable to adhere to proposals in the NJCC Codes of Procedure relating to timescales for submission of tenders, opening of bids, notification of tenderers and post-tender project planning

Recommendation 18.1-18.6: Selection of Subcontractors • CIEC and the Construction Liaison Group (CLG) should produce a joint Code of

Practice for the Selection of Subcontractors containing: • Commitments to short tender lists • Commitments to selection on quality and price • The contractor should confirm, when offering a subcontract document, that it

complies with the provisions of the Construction Contracts Bill • Dutch auctioning should be explicitly ruled out. Specific provision should be

made for tenders to be opened simultaneously at a predetermined time, date and place, and in the presence of the tenderers or their nominees, or of a mutually acceptable independent witness

• Main contractors should notify clients automatically in advance of the commencement of work of the names and addresses of all firms of domestic subcontractors to be employed on the site, so that they can exercise the right to object

Recommendation 19: Partnering • Specific advice should be given to public authorities so they can experiment with

partnering arrangements where appropriate long-term relationships can be built up

• Partner must initially be sought through a competitive tendering process, and for a specific period of time

• Any partnering arrangement should be mutually agreed and measurable targets for productivity improvements

Recommendation 20: Training • Substantial proposals on training by the CIEC have not been discussed

Recommendations 21.1-21.2: Image of the Industry and Equal Opportunities • If it is agreed to form a Construction Industry Development Agency, marketing

could become part of its duties

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• Equal opportunities must also be vigorously pursued by the industry, with encouragement from Government

Recommendation 22: Professional Education • A task force should be set up to supervise the delivery of the action points

which have already been proposed • Clients, contractors and specialists are also very interested in this, and should

be informed of progress through the Implementation Forum

Recommendations 23.1-23.4: Research and Development • Expenditure on research and development in the Industry is generally thought

to be inadequate and dissemination of it faces real difficulties • DOE should take steps to involve clients in its existing research strategy

programme • Since a number of initiatives have been launched, they should be monitored by

the DOE to ensure that they are co-ordinated and deliver effective results

Recommendation 24: Productivity Target • This target of 30% real cost reduction by the year 2000 should be accepted by

Ministers and the industry

Recommendation 25: Unfair Conditions • If the NEC (as amended) or Standard Forms of JCT and CCJSC (as amended)

are adopted as a normal procurement, many of the concerns expressed by clients, main contractors and subcontractors will be met

• All parties in the construction process should then encouraged to use those Standard Forms without amendment

• Their central provisions should be underpinned by legislation through a “Construction Contracts Bill”, which should state that the following actions should be unfair or invalid:

• any attempt to amend of delete the sections relating to times and conditions of payment, including the right of interest on late payment;

• to seek to deny or frustrate the right of immediate adjudication to any party to the contract or subcontract, where it has been requested by that party;

• to refuse to implement the decision of the adjudicator; • to seek to exercise any right of set-off or contra-charge without: giving

notification in advance; specifying the exact reason for deducting the set-off; and being prepared to submit immediately to adjudication and accepting the result;

• to seek to set-off in respect of any contract other than the one in progress

Recommendations 26.1-26.5: Adjudication • A system of adjudication should be introduced within all the Standard Forms of

Contract and should be underpinned by legislation • There should be no restrictions on the issues capable of being referred to the

adjudicator, conciliator or mediator, either in the main contract or subcontract documentation

• The award of the adjudicator should be implemented immediately • Any appeals to arbitration or the courts should be after practical completion,

and should not be permitted to delay the implementation of the award, unless an immediate and exceptional issue arises for the courts

• Resort to the courts should be immediately available if a party refuses to implement the award of an adjudicator

• Training procedures should be devised for adjudicators and a Code of Practice should be drawn up

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Recommendation 27: Trust funds • Mandatory trust funds for payment should be established for construction work

governed by formal conditions of contract • It is important that public sector clients have the same requirements, in order

to maintain confidence among subcontractors • If the main contractor fails, it would be the duty of the trustee to ensure direct

payment out of the trust fund to subcontractors • If the client fails, payment should be made out of the trust fund to the

contractor • Similar arrangements should be made to cover retention monies if the system

continues

Recommendation 28: Liability Legislation • The Construction Contracts Bill should include provisions to implement the

majority of the report of the working party on liability

Recommendations 29.1-29.7: Latent Defects Insurance • The Construction Contracts Bill should include provision for compulsory latent

defects insurance for 10 years from practical completion for all future new commercial, retail and industrial building work

• The policy should require the cost of the premium to be shared amongst the principal participants in the project, and exclude subrogation

Recommendation 30: Possible Delivery Mechanisms • A standing Strategic Group of the Construction Industry should meet twice a

year chaired by the Secretary of State of another DoE Minister • It can be the principal Forum for bringing clients and the industry together with

Ministers to discuss matters of interest and importance relating to construction

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24 - CONTRACT LAW

What is a contract? • Bilateral contract: contains a set of promises that each party has made to the

other (X promises to build Y a house and Y promises to pay X for doing it) • Unilateral contract: only one party will make a promise to do something if the

other party actually does something stipulated by the former (X promises to pay Y $100 if Y completes and returns a questionnaire)

Types of contracts • Under hand: evidenced in writing - liability limitation period six years • Under seal: deed - liability limitation period twelve years

Is there a contract? • Was there an intention of the partied to create legal relations? • Was there an agreement between the parties? • Was there a consideration?

Agreement Offer • A promise made by the offeror which matures into a contract when accepted by

the other party • An 'invitation to treat' does not turn into a contract - it is merely a stage in

negotiations, inviting the other party to make an offer Letters of Intent • The effect depends on the wording • Does not usually give rise to any contractual rights or obligations • It states that there will or may be a contract in the future, and hence is treated

as indicating that there is no such contract at present • Where a court is prepared to interpret a letter of intent as creating a contract, it

will then have to decide on its precise scope Acceptance • Must be certain and unambiguous: can be by word (written or oral) or by

conduct, which must be made known to the offeror • A counter-offer is not an acceptance as it varies the terms and destroys the

original offer, which it rejects • The counter-offer itself will have to be accepted by the initial offeror Retrospective acceptance • Where a formal contract is not signed until after work has commenced, does the

contract govern work which is done in the interim period? • If the contract does not apply, the work will be paid for on a quantum meruit

basis • Other rights and duties of the parties will be governed by whatever terms the

court implies into the circumstance • A court may imply a tem for retroactive effect of the contract

Terms of contract Express terms • With written contracts, read the documents evidencing the contract to ascertain

the express terms

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Implied terms • Terms implied by statute (Sale of goods and Services Act 1982: carry out the

service with reasonable skill and care, within a reasonable time, if not fixed by contract, and for a reasonable charge, if not fixed by contract)

• Terms implied by custom • Terms implied by court

Performance and Breach The right to sue on partial performance • A party must perform was he is contracted to do • Non-performance of some part will disentitle the partial performer to payment • Except when the party has 'substantially performed' his obligations whereby he

is entitled to the contract sum subject only to a counter-claim for those parts remaining un-performed

Remedies against the incomplete performer • Either incomplete performance gives the other party, who has so far performed

his obligations as they fall due, a right to damages to put him in the position he would have been in had the contract been performed

• Or he can hold himself absolved from any further performance of his obligations, when there is: 1. Breach of contractual condition 2. Repudiatory breach (if the breach goes to the route of the contract) 3. Renunciation (if one party does not intend to continue to perform)

Privity of contract • For there to be a contract, consideration must have been provided • Those who are privy to the consideration are said to be in privity of contract • A person who is not party to a contract cannot gain any benefit by suing on it,

nor can he suffer any detriment by being sued on it

The Contracts (Rights of Third Parties) Act 1999 • Has radically affected the doctrine of privity of contract • It grants a third party the right to enforce a term of a contract which has been

made for his benefit • Not only positive rights but also defensive rights • The third party must be expressly identified in the contract • It does not grant the right to enforce the whole contract • Enforcement by the third party is subject to all other terms of the contract,

therefore terms can be inserted to exclude any intention to create enforceable third party rights

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25 - HEALTH AND SAFETY Construction (Design and Management) Regulations 1994 Came into effect on 1st January 1996

Health and Safety at Work Act 1974 Provided a framework for a system of regulations applying generally to all workplaces, employers and employees and brought in series of regulations, for example: • Protection of Eyes Regulations 1974 • Control of Lead at Work Regulations 1980 • Control of Industrial Major Hazard Regulations 1984 • Control of asbestos at Work Regulations 1987 • Control of Substances Hazardous to Health Regulations 1988 • Noise at Work Regulations 1989

Objective of CDM Regulations • Proper co-ordination of health and safety matters throughout the design,

construction, occupation and demolition of a project. • Supplemented by an Approved Code of Practice published by the Health and

Safety Executive

Application • Apply to most construction work: site clearance, exploration, excavation,

ground works, assembly of pre-fabricated elements, building, (civil) engineering, alteration, renovation, repair, redecoration, fit-out, and maintenance.

• Apply to all dismantling and demolition work. • Obligations on designers only apply to projects under 30 days long or less than

500 person days • Projects involving less than 5 people at any one time • Minor works in premises normally inspected by the local authority

Obligations All parties must reasonably satisfy themselves through enquiries that those whom they appoint • Are competent to carry out their respective functions • Allocate adequate resources for health and safety Client • May be delegated to an agent • Appoint a Planning Supervisor • Appoint a Principle Contractor • Supply Planning Supervisor with information regarding land or premises (within

reason). • Ensure that construction work does not begin without a Health and Safety Plan • Retain Health and Safety File for future use Planning Supervisor • Notify HSE in writing following appointment as to: parties, programme, number

on site, etc • Advise client of obligations • Advise client on appointment of consultants • Ensure that the designers have met their responsibilities under the regulations • Resolve interface problems between them • Assess risks and apply reasonable risk reduction methods

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• Prepare a Health and Safety Plan for principle contractor • Assess differences in tender in relation to Health and Safety • Advise client to appoint a principle contractor • Prepare a Health and Safety File for client • Apply same procedures to any variations

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Designers • Advise client of duties before any design work is begun • Avoid foreseeable risks in construction and maintenance, (within reason) • Give priority to protection measures • Identify hazards • Co-operate with planning supervisor and other designers Principle Contractor • Ensure co-operation of all contractors • Provide contractors with information and training regarding Health and Safety

Plan • Ensure that everyone on site complies with Health and Safety Plan • Manage construction processes in accordance with other relevant regulations • Provide necessary information to planning supervisor for Health and safety File • Maintain and develop Health and Safety Plan • Keep unauthorised persons off site • Display Health and Safety notices clearly Other contractors • Co-operate with principle contractor • Provide employees with relevant information and training • Comply with Health and Safety Plan • Provide necessary information to principle contractor

Health and Safety Plan • Contains a general description of the project and programme • Identifies hazards • Pre-construction H&S Plan prepared by Planning Supervisor before construction

begins • Available at tender stage for bidding contractors • Construction Phase H&S Plan maintained and developed by Principle Contractor • Used for running the job • Available for inspection by the Health and Safety Executive • Details how the Principle Contractor can comply with welfare or statutory

provisions

Health and Safety File • Prepared for each structure in the project • Extension to maintenance manual • Made available to future owners • Identify materials, products and processes incorporated into project to • Inform users and occupiers how to clean, maintain, alter and demolish it.

Sanctions • Penalties may be personal or corporate • Liability is almost exclusively criminal • Breaches of the Act or Regulations can bring an unlimited fine and up to two

years imprisonment • All standard-form building contracts make reference to obligations of employer

and contractor under CDM regulations

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March 2000 You are a Partner in an architectural practice that provides planning supervising services for both projects on which you are engaged and projects being carried out by other design teams. You are currently engaged as Architects by a major pharmaceutical company on an SFA appointment for the refurbishment and alteration of an existing 4000 square metre research building. The works will be over four phases and, whilst each phase will be vacated by the client, remaining areas of the building will be in operation. At the time of your appointment you advised the client that a Planning Supervisor is required. The client has requested a brief report from you summarising what they must do to satisfy the requirements of the Regulations. (10) The client must:

• Appoint a planning supervisor • When tenders come in, consider their Health and Safety records • Appoint a principle contractor • Ensure when appointing the planning supervisor and principle contractor are

competent and have adequate resources to carry out their duties • Supply the planning supervisor with information regarding the existing

research building and the operationsand processes that are carried out there

• Ensure that work does not start on site without a health and safety plan • Retain the health and safety file

I must warn you that:

• It is a criminal offence not to comply with your duties, with a penalty of unlimited fines and up to a two-year imprisonment

• You may face civil action from injured workers or contractual claims for breach of the health and safety regulations

What do you consider would be the main issues for the pharmaceutical company to consider when choosing to appoint either you or their own excellent Health and Safety Officer as Planning Supervisor? (10) The pharmaceutical company must consider what the duties of the planning supervisor are. These are:

• To notify the HSE of the project • To advise the client of his obligations • To advise the client on the appointment of other consultants • To ensure that the designers have met their responsibilities under the CDM

regulations • To resolve interface problems between them • To assess the risks and apply risk reduction methods • To prepare a pre-tender health and safety plan for the contractor • To assess the differences in tender with a view to health and safety • To advise the client on the appointment of the principle contractor • To prepare the health and safety file • To apply the same procedures to any variations

There are no specific qualifications necessary to full the role of planning supervisor, however it is the client’s duty to ensure that the planning supervisor will be competent and will have adequate resources to fulfil the role.

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To do this, the client must make enquiries to determine whether ourselves or their own health and safety officer have the necessary competence and resources to be able to fulfil the role. Does the health and safety officer have enough time to be able to take on the responsibility while carrying out his normal job? Does the health and safety officer have sufficient knowledge of the CDM regulations to be able to advise the client of his duties? It is doubtful that the health and safety officer will have sufficient skills in the coordination of the various aspects of the design. As architects, that is what we are trained to do, and hence would be best placed to fulfil the role. However, the health and safety officer does have intimate knowledge of the existing building and the processes that go on within it. Therefore he is in a good position to act as an advisor to ourselves if we are appointed as planning supervisor, with regard to information about the existing building. In addition, he will have an important input to make in the compiling of the health and safety plan when it comes to the working methods of the contractor who will have to make provisions for keeping part of the building in operation. Also, he will be useful in the assessing of tenders in this respect. We recommend that we fulfil the role of planning supervisor as we have mush expertise in the area, and have sufficient resources with the office to be able to carry out the role. We also recommend that the health and safety officer be appointed as an advisor on matters concerning the existing building and the processes that go on in it.

March 1997 Prepare annotated notes on the following: What aspects would you consider and at what stages would you carry out risk assessment as a designer? (10) I would consider all aspects of construction, which include:

• Site access and planning • Site clearance and excavation • Construction • Fit-out • Repair and maintenance • Alteration and renovation • Demolition • Materials (in terms of hazardous substances and their weight and

manoeuvrability) I would carry out this risk assessment on a continuous basis, as something to be considered to the same degree as any other aspect of the design. However, I would formalise the process by introducing health and safety audits into the QA system to ensure that nothing gets overlooked. Good times for this would be during C stage while the design is still loose, at the end of D stage, when the design is usually frozen, and again at G stage in preparation for the pre-tender health and safety plan. I would continue to carry out risk assessments past the tender stage if the project was being procured on a D&B contract. Also, I would carry out risk assessments for any variations that occurred during construction.

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What do you consider to be the main advantages/disadvantages of the same person being appointed as a designer and planning supervisor? (10) Advantages

• Knowledge of the scheme • It is simpler for the client as there is one less point of responsibility • There is already an established relationship with the design team • It is a more efficient use of time and resources • If it were the architect, it would mean more fees • Furthermore the client may benefit from a reduced fee package

Disadvantages

• The view may be biased • The designer may be too close to the project to get an objective view • Bad time management could result in design issues being prioritised over

health and safety • Any problems between the planning supervisor and the design team or the

client would affect their perception of their capabilities as a designer • There is more liability, therefore PI insurance premiums may increase

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26 - HOUSING GRANTS, CONSTRUCTION AND REGENERATION ACT, 1996

General • Recommendations of the Latham Report were incorporated into Part II of the

Housing Grants, Construction and Regeneration Act • The Act received the Royal Assent in July 1996 • The Act specifies that construction contracts should contain certain provisions

relating to adjudication and payment • In default, the government’s “Scheme for Construction Contracts” applies • The Act could not come into force until the Scheme was approved • The Act, the Scheme and an Exclusion Order (defining particular construction

contracts to which the Act does not apply) came into force on 1 May 1998 • Part II of the Act comprises 13 sections, sections 104 to 117 inclusive JCT • Amendment 18 of JCT80 was to ensure compliance with Part II of the Act in

respect of adjudication and payment provisions • The 1998 edition of the Standard Form is a consolidated version of JCT 80 with

all the Amendments incorporated EEC • The Engineering and Construction Contract (ECC) is a Second Edition of the New

Engineering Contract (NEC) which was a ‘clean sheet’ approach to contract drafting from the Institute of Civil Engineers

• Latham bestowed high praise on the NEC, but advocated certain changes • The Second Edition was amended to meet many of the recommendations

contained in the report • An Addendum to the Second Edition of the ECC was issued in 1998 to take

account of the HGCRA 1996 (Part II)

Section 104: Defines “construction contracts” • The carrying out of construction operations • Arranging for construction operations to be carried out • Providing labour for construction operations • Architectural design or surveying work • Advice on building, engineering, interior or exterior decoration or the laying out

of landscape

Section 105: Defines “construction operations” • Construction of buildings • Engineering works • Mechanical and electrical works • Cleaning of buildings as part of a refurbishment project • Groundworks and scaffolding necessary for the preparation, execution or

completion of these works • Painting and decorating

Section 106 • Excludes contracts for the residential occupier

Section 107: The Act only applies when the contract is in writing • An agreement in writing whether or not it is signed

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• An agreement made by an exchange or communications in writing • An agreement evidenced in writing • Where the parties agree orally by reference to written terms • An agreement recorded by one or the parties or a third party with their

authority

Scope of the Exclusion Order • Agreements made under specified statutory provisions dealing with highway

works, planning obligations, sewage works, and externally financed NHS Trust Agreements

• Contracts entered into by specified public bodies under PFI as defined • Agreements which primarily relate to the financing of the works

Section 108: Adjudication procedures • See 'Adjudication' • Clause 40A provides the procedural rules governing a dispute referred to

adjudication

Section 109: Payment procedures • Sets out the right for a party to be paid by stage payments throughout the

duration of the contract • Where this is agreed between the parties • Or where the contract is estimated to be 45 days or more in duration

Section 110: Payment procedures • Sets out the right to be informed of the amount to be paid in any stage

payment and when that money is due for payment • Clause 30.1.1.3 requires the employer, within 5 days of issue of an interim

certificate, to give a payment notice to the contractor of the amount that he proposes to pay and the basis as such

• Clause 30.1.1.5 allows him to simply pay the total amount due under the certificate without giving the payment notice to avoid unnecessary administration

• If, however, the employer proposes to deduct or withhold any amount, he must provide a payment notice

Section 111: Payment procedures • Sets out the right to be given notice if it is intended that any payment be

withheld • Clause 30.1.1.2 allows the employer to make a deduction from interim

certificates including retention money included in such certificates, subject to a restriction in relation to retention payable to a nominated subcontractor

• Clause 30.1.1.4 provides that the employer may, within 5 days of final payment becoming due, give a written notice to the contractor of any payment that he proposes to withhold, and the basis as such

Section 112 • Sets out the right to suspend performance if payment is not made within the

specified time

Section 113 • Making “pay-when-paid” clauses ineffective except where a third party is

insolvent

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27 - LAND LAW

Land Law and Conveyancing • Land law is concerned with the rights of a landowner in or over his own land and

the rights (or 'interests') that others may have over that land • Law of conveyancing is concerned with the mechanics of the creation and

transfer of rights in and over land, usually, but not necessarily, pursuant to a contract between a seller and a purchaser

Unregistered Land • All land in England and Wales must be registered consequent on transfer of

ownership and in time unregistered conveyancing will disappear • Most equitable interests (other persons' right in the land) are registrable as land

charges under the Land Charges Act 1972

Registered Land • Over 90% of titles are registered • The actual title is registered. Eliminating the need for title deeds • Details of many (but not all) interests affecting the land will appear on the

Register against the land itself, not against the name of the landowner at the time the encumbrance was created

• Transfer of the land is effected by registering the purchaser as the new 'registered proprietor'

An intending purchaser of registered land should: • Inspect the Register • Inspect the land itself, because certain rights such as easements, squatters'

rights, local land charges etc may not appear on the Register • An architect should find out from the client what adverse rights affect the

client's property • Irrespective of whether the land is registered or unregistered, there are Local

Land Charges which are regulated by the Local Land Charges Act 1975 and registered separately in a register kept by all local authorities. These include:

• Preservation instructions as to ancient monuments • Lists of buildings of special architectural or historic interest • Planning restrictions • Drainage schemes • Charges under the Public Health and Highways Acts

The Extent and Meaning of 'Land' and Intrusions upon it 'Land in English law includes not only the soil but also: • Any buildings, parts of buildings, or similar structures • Anything permanently attached to the soil • Rights under the land • Rights above the land to such a height as is necessary for the ordinary use and

enjoyment of the land and the structures upon it • Easements Trespass • Any unjustifiable intrusion by one person upon the land in the possession of

another is trespass - a 'tort' • It is likewise a trespass to place anything on or in the land in the possession of

another • The trespass does not have to involve damage to the plaintiff's property to be

actionable as a tort

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• If construction work is likely to necessitate an incursion on to neighbouring land, the client must come to an arrangement with the landowner, usually in the form of a contractual licence

• If a permanent incursion is contemplated, it may be better to negotiate an easement

• In the absence of any easements, restrictive covenants or other binding agreements, a person is generally free to build anywhere on his land, subject to planning issues

• However, the development may give rise to a claim by a neighbour in 'nuisance' where there is an unjustifiable interference with the neighbouring landowner's use and enjoyment of his own land through excessive dust or noise

• If a landowner has an easement over adjacent land any interference with it by the owner of the burdened land will not constitute a trespass but will be a nuisance, but only if it prevents the practical and substantial enjoyment of the easement

Licences • A neighbour may give another person permission to use his land by means of a

'contractual licence' • A licence is permission to do something that would otherwise be unlawful • A bare licence is permission to enter the land given gratuitously without any

counter-benefit to the landowner giving permission • It is revocable at any time by the licensor, and on such revocation, the licensee

becomes a trespasser, although he is entitle a reasonable time to enable him to leave the land

• A contractual licence is granted for some counter-benefit, usually a fee • Whether it can be revoked depends upon the contract Boundaries • A boundary has been defined as the imaginary line that marks the confines or

line of division or two contiguous parcels of land • Boundaries are fixed by: proven acts or the respective owners, statutes or order

of authorities having jurisdiction, or by legal presumption

Easements • Easements are the rights that one owner of land may acquire owner the land of

another • There must be a dominant and a servient tenement • The easement must benefit the dominant tenement to which t will become

attached • The two tenements must not be owned and occupied by the same person • The easement must be 'capable of forming the subject matter of a grant', that

is, of being created by deed ie sufficiently well defined, certain and limited in scope so as to qualify as an easement

• There are well-established categorise of easement, but new rights can become recognized as being capable of being granted

• Against this, certain rights cannot exist as easements: a right to a view; o privacy; to a general flow of air; to have the property protected from the weather; and a general right to light (as opposed to a right through a defined aperture)

• Positive easement: enables the dominant owner to do some act upon the servient tenement

• Negative easement: allows the dominant owner to prevent the servient owner from doing something on his land

Easements may be acquired by:

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• Express grant or reservation: a landowner may by deed or written contract expressly grants an easement over his land in favour of a neighbouring landowner, or expressly reserves to himself an easement

• Implied reservation: when the parties to a transaction concerning land have not expressly mentioned easements reserved to burden the part sold. There are two situations where the easements will be treated as if they were deliberately reserved for the benefit of the land retained - easements of necessity (an easement without which the vendor's retained land cannot be used at all), or an easement in the common intention of the parties (an easement that both parties accept should exist)

• Implied grant: similar to above, but when no easements are expressly granted to the purchaser for the benefit of the land sold

• Prescription: long use without force, secrecy or permission can give rise to an easement. Use for 20 years is normally accepted

Extinguishment of Easements • Apart from an express release by deed, the most important method of

extinguishing an easement is when the dominant and servient tenement come into the same ownership and possession

Types of Easement • Rights of way: may be restricted in frequency and type of use • Rights of support: the right of support for land by other land has been

distinguished from an easement, but it is possible for one building to acquire an easement for support against another after a period of 20 years

• Rights of light: rendered of secondary importance by daylighting regulation under planning controls, and is only in respect of some definite opening and as necessary for 'ordinary purposes'. A Local Land Charge can be registered indicating the presence of a theoretical wall of stated dimension in such a position as to prevent an adjoining owner from claiming an absolute right of light after 20 years of uninterrupted use

Restrictive Covenants • A restrictive covenant is a binding obligation that restricts an owner of servient

land in his use and enjoyment of that land • Typical examples of restrictive covenants: not to build above a given height or

in a given place; restricting the user of the land to given purposes • It is in substance negative • It is made between the covenantor (the person who is making the promise and

whose land is burdened) and the coventantee (the person who can enforce the promise)

• That the parties intend the burden of the covenantto run with the covenantor's land so as to bind it not only to the covenantor but also his successors in title

• It is an equitable interest in land and therefore requires registration as a land charge in unregistered land or is protected by registering a notice on the Register of Title for registered land

• Architects should obtain from their clients confirmation from their clients that there are no restrictive covenants applying to the site that could affect the proposed design and use of the building or whether a building can be constructed at all

• Power is given to the Lands Tribunal under the Law of Property Act 1969 for the discharge or modification or any covenant if the Tribunal is satisfied that:

• changes in the neighbourhood make the covenant obsolete; • or that the restriction does now not secure practical advantages of substantial

value to the person entitles to its benefit; • or is contrary to public policy

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Landlord and Tenant - Repair Covenants • Architects are frequently asked to prepare a 'schedule of dilapidations' at the

start or end of a lease • This is used as the basis of assessing the extent of the repairing obligations of

the parties under the lease • The architect should find out the terms of the lease so that he is clear which

portions of the building come within the repair covenant • When a landlord and tenant cannot agree about the extent of the damage or the

extent of the responsibility for making them good, there dispute may have to be resolved in the courts, in which case the schedule of dilapidations becomes evidence

Surveys of Property to be Purchased • Architects are often asked to inspect property for clients who intent to purchase

it or take a lease • It is important to note that if defects are not observed and noted, the architect

may be held negligent • It is often wise to open up and inspect hidden portions of the building • If this is not dome, he limitations of the investigation should be clearly pointed

out to the client

Mortgages • The alteration to property will alter the value of the mortgagee's (lender's)

security • For this reason most mortgages contain covenants requiring the borrower to

obtain consent to any proposed works • The architect should ask the client if the property is mortagaged and request

him to obtain any consents

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28 - LAW OF TORT • Concerned with the conduct that causes harm to a party’s personal, proprietary

or financial interests • Law of wrong-doing: provides a system of loss distribution and regulates

behaviour within society • To be actionable it is not enough that an act or omission as a matter of fact

harms another person’s interests – the wrong must also interfere with some legal right of the complaining party

Negligence • Concerned with the careless infliction of harm or damage and has three

essential elements: 1. The existence of a legal duty of care 2. A breach of that a duty 3. Consequential damage

The legal duty of care • Three stage test:

1. Foreseeability of damage 2. The relationship of neighbourhood or proximity between parties 3. An assessment of whether the situation is one which in all the circumstance

the court considers fair and reasonable for the imposition of a legal duty • There should be little difficulty in considering whether a duty of care exists

where either damage to person or property has been occasioned Breach of Duty • A person acts in breach of a duty of care when behaving carelessly • The standard of care required is that of a reasonably prudent man • However, where the person holds himself out as a professional the standard of

care expected of him is higher than that of a layman Damage must be caused by the breach • In order to establish liability in negligence it is necessary to prove actual

damage Economic loss • Economic loss is a category of non-physical damage • The long-standing reluctance to recognise a duty of care to prevent economic

loss has been based on ‘floodgates’ argument –it would significantly widen the potential scale of liability in tort

• Murphy v Brentwood 1. A house which had been built on improper foundations allegedly due to the

council’s negligence in passing the building plans 2. It was held that the council did not owe a duty in tort to the owner or

purchaser of the property in respect of the costs of remedying such defects in the property

3. The repair costs were held to be pure economic loss and irrecoverable, whether or not the defects amounted to a threat to health and safety

• Although there is no general liability for economic loss, economic loss consequential to damage is treated separately and is recoverable

• An exception of there being no general duty to avoid causing pure economic loss is provided in the area of negligent misstatement

• Hedley Byrne &Co. Ltd v Heller and Partners 1. The defendants gave a favourable financial reference to the claimant’s

bankers in respect of one of the claimant’s clients

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2. The claimant relied on this incorrect reference and as a result suffered financial losses when the client became insolvent

• It was held that a defendant would become liable for such negligent misstatement if: 1. There was a special relationship based on an assumption of responsibility

between the parties 2. The defendant knew or ought to have known that the claimant was likely to

rely upon his statement 3. In all circumstances it was reasonable for the claimant to rely upon the

statement • Attempts to extend the liability for pure economic loss to negligent conduct has

largely failed

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Nuisance • Concerned with the unjustified interference with a party’s use of land • Whether the activity is actionable depends upon the circumstances of the case

and whether there was damage Public nuisance • Inflicts damage, annoyance or inconvenience on a class of persons generally • A criminal offence only actionable in tort if an individual has suffered some

particular kind of foreseen damage or when some private right has also been interfered with

Private nuisance • An unlawful act which interferes with a party’s use or enjoyment of land or of

some right connected with it • A party doing something that is not limited to his own land but affects another

party’s occupation of land by either: 1. Causing an encroachment onto the neighbouring land 2. Causing physical damage to the land or buildings 3. Causing an unreasonable interference with a neighbours enjoyment of his

land

Trespass • Involves an interference with a person’s right to the security of his body and

can be of three varieties: 1. A battery – unlawful physical contact 2. An assault – where the innocent party is caused to fear immediate infliction

of such contact 3. False imprisonment – which involves the complete deprivation of liberty

without proper cause for any period of time • It involves any unjustifiable entry upon land in possession of another • It is also a trespass to leave, place or throw anything onto another party’s

land • It is actionable without proof of damage although if consequential losses are

thereby caused, damages are recoverable

Breach of Statutory Duty • May lead to civil liability in court • The claimant must prove:

1. That he is part of the class of persons intended to be protected by the statute

2. That the loss or damage he has suffered is of a kind intended to be prevented under the statute

3. That there is no express provision in the statute that civil liability is not created by breach of its provisions

4. That on balance the probability of his injury, loss or damage was caused by the breach of statutory duty

5. That there has been a breach of the relevant statutory duty by the defendant

The Defective Premises Act 1972 • The duty created by the Act is owed to the person for whom the dwelling is

provided, although the main purpose of the Act was to confer rights of action on subsequent owners of the dwelling that they would not otherwise have

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• Liability under the Act is limited to a period of six years after the completion of the work concerned

The rule in Rylands v Fletcher • An example of strict liability in tort which does no require the proof of

negligence or intent on the part of the wrong-doer applies where a person collects and keeps anything on his land that is likely to do mischief if it escapes

• If it does escape his is responsible for all damage which is a natural consequence of its escape

• It applies to non-natural user of land – has been applied to water, fire, explosives, poison and anything dangerous

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Limitation periods • Tortuous actions – six years from the accrual of the cause of the action • Personal injury - three years • When damage is an essential ingredient in liability time begins to run from the

date when that damage occurs • If there is trespass, libel or other act which in itself amounts to an actionable

tort, time begins to run from the date of the act itself • Where a party deliberately conceals negligent design or construction work, the

liability period shall not begin until the claimant has discovered the fraud

Remedies Provision of damages • To compensate the claimant for the damage and losses sustained as a result of

the tort • Intended to put the claimant back in the position he would have been had the

tort not occurred Injunction • Aimed at preventing loss and damage rather than compensating for it • To prevent an anticipated tort, or restrain the continuance of one

Apportionment of liability • More than one person can be responsible for the same damage

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29 - PARTY WALLS

The Party Wall Act 1996 • Sets out procedure for serving Notices for the following works: • Building along the line of junction of the boundary which is not currently built on

other than to the extent of a boundary wall (not being the wall of the building) • Carrying out works to a party structure/party wall/party fence wall, such as

underpinning, demolishing and rebuilding, raising, removing chimney breasts, cutting in to install beams, injecting a damp-proof course, columns, etc.

• Excavating or excavating to construct new foundations within 3 metres of an adjoining building and to a greater depth than the foundations of that adjoining building or structure

• If one is excavating or excavating to construct foundations within 6 metres of an adjoining building or structure and to a depth that would intersect a 45° line drawn downwards from the next door's footings.

Definitions Party Wall • Section 20a: A wall which forms part of a building and stands on lands of

different owners to a greater extent that the projection of any artificially formed support on which the wall rests

• Section 20b: So much of a wall, not being a wall referred to in Section 20a above, as separates buildings belonging to different owners

Party Structure • Party wall, party floor, partition or other structure separating buildings or parts

of buildings approached solely by separate staircases or separate entrances Part Fence wall • A wall which does not form part of a building but stands astride the boundary

Notices Known as a Party Structure Notice, Line of junction notice, or a Foundation Notice Must state: • The name and address of the building owner • The nature and particulars or the proposed works • The date on which the proposed works will begin A Foundation Notice must be accompanied by plans and sections showing: • The site and depth of any excavation the building owner proposes to make • If he proposes to erect a building or structure on the site A Line of Junction Notice must describe the intended wall Time scale • A Party Structure Notice must be served at least two months before the works

are due to start • A Foundation Notice and Line of Junction Notice must be served at least one

month before • Works cannot start if an award is yet to be agreed • Notices must re-served after 12 months if an award has not been agreed within

this time • An adjoining owner has fourteen days to dissent or consent, otherwise he will

be deemed to have dissented by default

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• Thereafter a dispute arises and surveyors must be appointed to settle the matter by an award

Surveyors • The parties can agree the appointment of one surveyor: 'agreed surveyor' • The adjoining owner can appoint their own surveyor • The two surveyors must then appoint a third surveyor who will adjudicate • If an adjoining owner fails to respond to the notice, the building owner can

appoint a survey for the adjoining owner • No specific qualification is needed by the surveyor, but knowledge and expertise

necessary • The surveyor's duty to in his award to determine the right for the works to be

carried out, the time and manner of executing this work and any other matter arising out of or incidental to the dispute, including the costs of making the award

• Most important aspect of the award is the Schedule of Condition taken of the adjoining property or land

The Award • Once the award is agreed, it is published to the owners who have fourteen days

in which to appeal against the award in the County Court if they feel it has been made improperly

• The surveyors decide who pays the fees for agreeing the award and any other costs arising from it

• It is normally the building owner who bears the cost because the works will be for his benefit

• If there are works which are necessary on account of defect or want of repair, then the costs will be apportioned

The Building Owner's Rights • A building owner has the right to enter the land of the adjoining owner for the

purpose of executing any works under the Act • This could include the erection of scaffolding • If an adjoining owner fails to give access, then he would be guilty of an offence • If a building owner proposes to reduce the height of a party wall or party fence

to no less than 2 metres an adjoining owner can serve a counter-notice and insist that the wall is left at a greater height but the adjoining owner must bear the cost of this

• The Act permits the building owner to chase into an adjoining owner's wall to install a flashing or other weatherproofing of a wall erected against the adjoining owner's wall

• In the event of damage, the adjoining owner can either insist that the building owner make good that damage, or can request payment in lieu, with the amount determined by the surveyors

• The building owner is responsible for making good or paying for the damage, not the contractor

• The building owner must take all reasonable measures to minimise any inconvenience to the adjoining owner

• Where the adjoining owner may be vulnerable if the building owner does not honour his obligations, he can request security for expenses

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30 - PLANNING LAW

Principal Acts and Orders • Town and County Planning Act 1990 • Planning (Listed Buildings and Conservation Areas) act 1990 • Town and Country Planning (Use Classes) Order 1987 • Town and Country Planning (General Permitted Development) Order 1995 • Local Government, Planning and Land Act 1980

Planning Policy Guidance Notes • 1997/PPG1: General Policy and Principles • 1992/PPG4: Industrial and Commercial Development and Small Firms • 1992/PPG5: Simplified Planning Zones • 1996/PPG6: Town Centres and Retail Developments • 1994/PPG13: Transport • 1994/PPG15: Planning and the Historic Environment

Planning Control Process • The making of development plans • Control of development through the granting or refusal of planning permission

Preliminary Tasks of the Architect • Discover whether the site is cleared, or containing a building • Consider whether the project constitutes a 'development' • Consider whether the development can be dealt with normal planning control, or

if it will be subject to some additional control • Ascertain whether the development is 'permitted development' under the Order • Ascertain whether the development is in an 'Urban Development Area, an

Enterprise Zone or a Simplified Planning Zone'

Which Authority? • Planning permission applications must be made to the Local Planning Authority • In most cases the LPA is the District (Borough) Council or the Unitary Authority • If the application relates to a 'County Matter', it is made to the County Council • County Matters: mineral mining, working and development; national parks;

waste disposal • There are seven categories of development whereby consultation by the district

council with the county council must take place; this is when the development which would conflict with structure plans, development plans or local plans

• Usually negotiation will take place between the applicant and the LPA • Fees are payable in respect of planning applications

Meaning of Development • The carrying out of operations • The making of a material change in the use of land What is (not) an operation? • Purely internal works and • Works that do not materially affect the external appearance of a building are

not development What is a change of use? • Town and Country Planning (Use Classes) Order 1987 contains 11 classes of use

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• If the change of use will leave the use in the same use class, the proposed change will not constitute development

• When granting planning permission, a LPA may impose such a condition that would prevent any future change of use

Permitted development • The General Permitted Development Order 1995 carries 84 classes of

development by which planning permission is automatically given, and hence there is not need to make an application

• Example: erection of a porch

Other than Permitted Development • If the proposal does not fall within the 84 classes, then an application must be

made • If the application is refused, or the imposed conditions are unacceptable, the

applicant may appeal to the Secretary of State within six months of the LPA's decision

• Appeals can be dealt with by private hearing, public inquiry, or by the written representation process

• The Secretary of State has the power to 'call-in' an application if it is for a major development that has effects outside the area of the LPA

Outline Permission • A way of 'testing the water' to gain permission for the principle of the

development • Useful for applicant who does not own land, and wants to ascertain the value of

it • If approved, the applicant must later submit detailed plan and specifications for

the 'reserved matters' within three years • If the outline application is refused, there is a right to appeal, as above • If the outline application is granted, but the LPA refuses to approve the reserved

matters, there is also a right to appeal

Notices • Notice of making an application must be given to the landowner, and any tenant

of an agricultural holding • Notice of making an application must be placed in a newspaper for general

publicity • Notice of development must be exhibited on site

LPA Procedure • The LPA must consider the application and give a decision generally within 8

weeks • The LPA may need to consult the county council • The LPA may grant the application, may refuse it, or may grant it subject to

conditions

Conditions • The conditions must fairly and reasonably relate to the development • The LPA is not at liberty to use its powers for an ulterior motive

Section 106 Agreements • Section 106 of the Town and County Planning Act provides that the developer

may enter into either a unilateral undertaking or an agreement with the LPA so

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as to offer some planning benefit as part of the package involving the grant of planning permission

• The S106 binds both the current and the future owner of the land

Duration of Permission • Unless otherwise specified, the permission lasts for five years • With regard to outline permission, development must have begun within five

years of the grant, or within two years of the final approval of the reserved matters, whichever is longer

Starting Development • Development is begun on the earliest date on which a material operation in

connection with the development is started

Abandoning Development • Can planning permission be lost through non-use? • There is no legal principle that a planning permission could be abandoned by the

act of a party entitled to the benefit of permission

Completion Notices • The LPA may serve a developer with a 'completion notice' requiring the

completion within a certain time period • It will declare that the planning permission will cease to have effect on the date

specified, but not before twelve months of the notice • It will not take effect unless and until confirmed by the Secretary of State • The LPA may withdraw the notice

Revoking or Modifying Planning Permission • The LPA may revoke or modify the a planning permission by means of an order

confirmed by the Secretary of State • The Secretary of State must afford the owner and occupier of the land an

opportunity of being heard • There are certain revoking or modifying orders which do not require

confirmation by the Secretary of State • An order must be made before operations begin • Compensation may be payable on the revocation or modification of previously

granted planning permission

Conservation Areas • LPA has the power to declare certain areas as conservation areas • Designated under the Planning (Listed Buildings and Conservation Areas) Act

1990 • Conservation Area Consents are needed for demolition and the felling of trees • Planning application s must be advertised • Controls are not as extensive as for listed buildings, but more restrictive

tolerances may be applied

Listed Buildings • Planning (Listed Buildings and Conservation Areas) Act 1990 Listings • Compiled under section 1 of the 1990 Act by the Secretary of State or the

Historic Buildings and Monuments Commission for England

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• Once a building is listed the local authority cannot make a building preservation order for it

• The owner does not need to be consulted; merely told what has occurred • The statutory kept list is open by Secretary of State for free public inspection • Local authority keeps open for free public inspection any portion of the list that

relates to their area • To damage a listed building is a criminal offence • A local authority may carry out works urgently necessary for the preservation of

an unoccupied listed building after giving the owner seven days notice • A local authority may make a loan towards preserving buildings of special

historic interest • The entire setting is considered when deciding whether or not to list a building • Gives protection to any object or structure fixed to a building or forming part of

the land on which the building stands Listed Building Consent • No provision for an owner to appeal against the listing of his building • While it is necessary to get planning permission for any kind of development, if

the site of the development is occupied by a listed building, then the development cannot take place unless a 'listed building consent' is first obtained

• Listed building consent must be obtained in order to demolish, alter, or extend a listed building

• It may be granted with or without conditions • The application is made to the LPA • A grant for listed building consent will last for five years • If planning permission has been granted and there is a building on the site, the

developer may apply for a certificate that the Secretary of State will not list such building for at least five years

• Merely because planning permission has been granted for development, it does not follow that listed building consent will be given to remove some obstructive listed building to allow such development to go forward

• However, planning permission lasts for five years and during that time opinions about the listed building may change

• If listed building consent is refused, there is a right to appeal • It is an offence to fail to comply with any conditions attached to a consent • If the owner is faced with a refusal of a listed building consent and can

demonstrate that in its present state his listed building has become incapable of beneficial use, then he may serve a listed building purchase notice on the local authority

Listed Building Enforcement Notice • If unauthorized works to a listed building are carried out, the LPA may serve a

'listed building enforcement notice' upon the owner requiring a full reinstatement of the listed building

• There is a right to appeal • Penalties are provided in the case of non-compliance • A LPA is authorized to acquire compulsorily any listed building, which is not

properly preserved • This power may not be exercised until at least two months after the service on

the owner of a repair notice • If a listed building is compulsorily acquire, the compensation to be paid to the

owner will in general disregard the depressive effect of the fact that the building has been listed

• Unless the building has deliberately been allowed to fall into disrepair to justify the redevelopment of the site, in which case the owner is only entitled to minimum compensation

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Building Preservation Notices • Although an LPA can no longer make a building preservation order, it can serve

on the owner a building preservation order for temporary protection of six months, during which time the building is protected as if it were listed

• This gives time consideration as to whether the building should be listed • If is not listed then the preservation notice ceases and cannot be made again

for another 12 months • In addition, compensation may be payable to the owner Certain buildings of undoubted architectural and historic interest do not come within the protection of listings at all: • Ecclesiastical buildings in use for church purposes • A building included in the Schedule of Monuments compiled and maintained by

the Secretary of State under ancient monuments legislation Buildings in conservation areas • Section 74 of the 1990 Act gives protection to all buildings if they are within a

conservation area designated under section 69

Urban Development Areas and Corporations • Established by the Local Government, Planning and Land Act 1980 • The Secretary of State is empowered to create an Urban Development Area and

to establish an Urban Development Corporation to regenerate the area • It is not an elected body, but appointed by the Secretary of State with regard to

the persons having special knowledge of the area • Urban Development Corporations have the duty to regenerate their respective

areas by: • Bringing land and buildings into effective use • Encouraging development of industry and commerce • Generating attractive environments and • Ensuring that housing and social facilities are available • They will be empowered to deal with matters of land assembly and disposal,

planning, housing, and industrial promotion • They will be able to submit to the Secretary of State their own proposals for the

development of the area • The Urban Development Corporation may by order of the Secretary of State

become the LPA • The Urban Development Corporation must within twelve months prepare a code

of practice as to consultation with the relevant local government authorities relating to the manner in which the Corporation proposes to exercise its regeneration powers

• The Urban Development Corporation may transfer any part of its undertaking to the LPA

• When all property and undertakings have been transferred the Corporation may be dissolved

Enterprise Zones • Established by the Local Government, Planning and Land Act 1980 • Within Enterprise Zones special provisions relating to planning and local council

tax apply • Between 1981 and 1996 almost 50 Enterprise Zones were set up and they have

been successful in stimulating job creation

Simplified Planning Zones • In the White Paper 19985 'Lifting the Burden' it is proposed to introduce new

legislation to permit the setting up of Simplified Planning Zones which will

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extend to other areas the type of planning regime already established in an Enterprise Zone

• This will enable the LPA to specify types of development allowed in an area so that developers can then can then carry out development that conforms to the scheme without the need for a planning application and associated fee

• In addition to providing the LPA with powers to introduce SPZs, they will also be required to consider proposals for the establishment of SPZs initiated by private developers

• SPZs are now dealt with in the Town and Country Planning Act 1990 • They will be established by LPAs by means of Simplified Planning Zone Schemes • The LPA will need to consider very closely the details of their proposals because

the wider and more liberal the development automatically granted by the Scheme, the less will the LPA be able to exercise their own policies relating to development control on an ad hoc basis

• Land in a National Park, a Conservation Area, within Norfolk and Suffolk Broads, within an area of outstanding natural beauty, in a greenbelt identified in a development plan, or land notified under the Wildlife and Countryside Act may not be included in a SPZ

Enforcement of Planning Control Time Limits • If a development consisting of building operations is carried out without

planning permission and the LPA allow four years to elapse without doing anything, then the development becomes automatically validated and no enforcement action can take place

• For a change of use, the time limit is ten years Certification of Lawful Use • A developer may apply for a 'certificate of lawful use or development' from LPA • It makes clear that the use in question, although originally instituted without

planning permission is now lawful and immune from enforcement action Enforcement Notices • The notice must state exactly what the alleged breach of planning control is and

the steps required to remedy the breach • There is a right to appeal • A LPA is never obliged to serve an enforcement notice - they have to exercise

discretion Stop Notices • In the past developers have spun out the appeal procedure while getting on

with the development • A stop notice prevents this • Once an enforcement notice has been served a LPA can serve a stop notice

which brings all building operations or changes of use to a halt under a penalty for breach of the notice

• There is no right to appeal • If on appeal the enforcement notice fails, so does the stop notice • In this case compensation may be payable Injunctions • The LPA may seek injunctions in respect of actual or apprehended breaches of

planning control

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March 2001 What consultants do local authorities normally carry out in respect of a Planning Application, and what could an architect do to ensure a smooth passage to approval? (10) Consultations that local authorities normally carry out • Borough council: internal departments, such as housing, environmental health • County council (for projects that have an effect on LDPs or SP): transport,

archaeology • Parish council (if they claim the right) • Town council • Police and Fire Brigade • Statutory Undertakers: water, gas, electricity • Public and local interest groups • Highways Agency • Environment Agency To ensure a smooth passage to approval and architect could: • Apply for outline planning permission • Set up early and regular meetings with the case officer • Meet with the consultants - take heed of comments • Hold a public exhibition - take heed of comments • Be aware of the relevant PPGs, LDPs and SPs Additional planning approvals and consultations might be necessary for the following. What would these be, and what status would they have? i) Works which affect the character of a listed building • Planning Permission • Listed Building Consent • English Heritage - statutory body • Society for the Protection of Ancient Buildings - advisory • Victorian Society - advisory • Local action groups - advisory ii) Demolition of an unlisted building in a conservation area • Planning Permission • Conservation Area Consent • English Heritage - statutory body • Society for the Protection of Ancient Buildings - advisory • Victorian Society - advisory • Local action groups - advisory iii) A new building of more than local significance on a particularly sensitive or prominent site? (10) • Planning Permission • Commission for the Built Environment - executive non-departmental public body

- advisory • Secretary of State (DTLR) - has the power to 'call in the application if it is of

major importance • English Nature - statutory body

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• National Trust - advisory • Environment Agency - statutory body • Highways Agency (for prominent sites) - statutory body

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March 2000 The Property Company Ltd owns a former supermarket building and site in the main retail street of an historic market town. The town centre is a Conservation Area and the buildings adjacent to the former supermarket are both listed. The former supermarket is 3500 square metres at ground level, with a further 2000 square metres at first floor level facing directly onto the main shopping street. Behind the supermarket is a parking area for 120 cars and a goods delivery area. The Property Company Ltd have been advised by retail agents that there is a demand for a range of retail units of about 150 to 1500 square metres but no demand for the former supermarket. You are retained as Architect by The Property Company Ltd to prepare a feasibility study for the redevelopment of the site. Prepare notes to demonstrate the scope of the feasibility study, the principle considerations and the enquiries/research it will be necessary for you to carry out. (20) Planning • Consultations with development control • 1996/PPG6: Town Centres and Retail Developments • 1994/PPG13: Transport - recommended number of parking spaces • 1994/PPG15: Planning and the Historic Environment • Local Development Plan, Structure Plan • Is the area a conservation area? If so need conservation area consent need for

demolition • Are there any previous planning consents? • Outline planning permission? • Consultations with English Heritage, SPAB Site • Ground conditions - consult engineer • Building survey - consult surveyor • Topographical survey - consult surveyor • Hazardous substances survey and contamination - consult surveyor • Archaeological survey - consult county Council dept of archaeology • Easements/Restrictive covenants - consult land register and solicitor • Services - consultations with statutory undertakers re relocation and upgrading

of services Design • Access • Demolition or conversion? • Specification • Massing and arrangement on site Cost • Outline budget - consult QS • Are any grants available? - consult local authority Time-scale Procurement options

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March 1997 Respond to the following letter: Retail Shed Company Development Road The City A N Architect The Studio Workplace Dear Sirs We were pleased to meet last Thursday and, having agreed your terms of engagement, we wish to move ahead with the feasibility proposals for the retail shed centre. We envisage that we will need in excess of 30,000 square metres of building, comprising mainly of free standing units of between 1500 and 4500 square metres, 1700 car parking spaces, a petrol station a drive through fast food unit. From the site visit you will be aware that the site is a former railway and dock area and is only accessible from the local council housing estate. It is vital that we gain a direct road link through the existing local highway depot onto the motorway link road. We are anxious to move forward with sketch proposals and we will arrange a meeting with the Director of Planning and Economic Development at the City Hall and we will wish to table your proposals at that first meeting. Please forward a summary of the principle planning issues that you believe we will need to address at that meeting and, for our information, outline the enquiries, documents, etc, that you will be consulting prior to preparing your sketch proposals. We look forward to working with you on this exciting and fast moving project. Yours faithfully Mr B I G Client (20) Principle planning issues • As a former industrial site, is it an enterprise zone or simplified planning zone? • Does a Local Development Plan or Structure Plan exist to cover the areas? • Area the uses permitted in this area, especially petrol station and fast food

outlet? • 1992/PPG4: Industrial and Commercial Development and Small Firms • 1994/PPG13: Transport - recommended number of parking spaces for this

development • Are there any previous planning consents? • Outline planning permission? Consultations prior to sketch proposals • Highways Agency regarding creating a link road and access around site • Environment Agency regarding redeveloping former industrial land • Ground conditions - consult engineer • Topographical survey - consult surveyor • Hazardous substances survey and contamination - consult surveyor

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• Easements/Restrictive covenants - consult land register and solicitor • Services - consultations with statutory undertakers re relocation and upgrading

of services Information required from client • Specification • Outline budget • Are any grants available? - consult local authority • Time-scale • Procurement options - to be discussed dependent on the above

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March 2001 Feasibility Studies What is a feasibility study, and under what circumstances would you recommend to a client that one should be carried out? (5) • To find out whether what the client wants is feasible to build • A wide range of issues should be investigated relating to the proposed

development • The information discovered should be presented in a structured way so that

client can decide whether or not to proceed • Various consultants and statutory authorities may be considered when carrying

out the study • I would recommend to the client that one should be carried out when project is

large and/or complex, or where there is some doubt or controversy regarding the type of development

• Formal feasibility studies may not be necessary for small or straightforward projects

What subjects might it cover on a large industrial project on a tight reclaimed site close to but not linked to main roads, and why? (10) • Site location and access - ascertain whether it is possible to link the site to

the road system, it is near any areas of outstanding natural beauty or interfere with any watercourses?

• Uses of adjoining land - is the use compatible with surrounding uses? • Easements and restrictive covenants - can restrict development • Planning issues - is there a LDP or SP that dictates the nature of the

development? Are the uses permitted? Is it in an Enterprise Zone or Simplified Planning Zone?

• Geological issues - as reclaimed land, is it stable? Will the development require excessive foundations? Is there contamination?

• Services - can the existing services be extended, relocated or upgraded? • Grants - are any available? • Design possibilities - is a satisfactory arrangement on site possible for such a

tight site? • Cost - What is the outline budget? • Specification - What level is required? • Programme - What is the time scale? • Procurement routes - Which are appropriate for this type of development? How would you deal with any significant issues that could not be resolved in time for delivery of your report? (5) • Clearly outline in the report what information is missing • Set up meetings with the various consultants so that the missing information

can be discovered as soon as possible • Ascertain if and when such information will be available • If the information is not available, warn the client that he will be proceeding at

risk • Choose a procurement option that would allow that risk to be minimised • Suggest that the client rethink his proposals so as to eliminate the risk

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31 - STATUTORY AUTHORITIES: Local Government

Local Authorities • Legal persons capable of suing and being sued • Entrusted by government with a range of functions over a precisely limited

geographical area • Within the powers defined by Parliament, each local authority is its own master

Officers • The elected members of the council make decisions about what is to be done • All local authorities employ officers and other staff to implement their decisions

Committees • Committees consisting of named councillors are entrusted with specified

functions of the council • Examples: planning, finance, parks, housing, etc

Officer's Power • Local authorities can clearly delegate any of its discretionary decisions to any of

its officers • Local authorities do not stand outside the common law in respect of negligence

by their officers • Local authorities are not generally liable in negligence to building

owner/occupiers for failings in the authority's enforcement of the building regulations concerning the defective construction of those buildings

• Local authorities are not liable for negligence in the grant of planning permission

Responsibility of Local Authority Officers Planning Planning officer/surveyor DC Building regulations Building inspector/surveyor DC Development in a private street Surveyor CC Surface water sewerage Engineer SU Sewer connections Engineer SU Blocked sewers Engineer SU Housing grants/housing Environmental health officer DC Height of chimneys/clean air matters Environmental health officer DC Petroleum licensing Petroleum inspector CC/DC Other licensing Environmental health officer CC/DC Music and dancing licensing Local magistrate's clerk Liquor licensing Local magistrate's clerk

Local government: distribution of planning functions • Within National Parks: National Parks Authority • Tree preservation and replacement: National Parks Authority and district

planning authority • Within Norfolk and Suffolk Broads: Broads Authority • Secretary of State for the Department of Transport, Environment and the

Regions has wide-ranging supervisory powers

Local government: other functions • Outside London: CC responsible for fire services, main and district highways and

refuse collection • Outside of Metropolitan areas: CC responsible for education and welfare services

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• Inside of Metropolitan areas: DC responsible for education and welfare services • All DC responsible for housing, refuse collection, drainage, clean air and public

health generally, development control, parks and open spaces, and building control

• Water Act 1989: water industry was privatised and as a consequence the sewerage and water supply functions of the former water authorities have passed to successor companies, who are appointed by the Secretary of State to act as water and/or sewerage undertakers

• Water and sewerage undertakers are forbidden from causing river pollution

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STATUTORY AUTHORITIES: Others

English Heritage • The Historic Buildings and Monuments Commission for England established

under the National Heritage Act 1983 • To secure the preservation of ancient monuments and historic buildings in

England • To promote the preservation and enhancement of the character and appearance

of conservation areas in England • To promote the public's enjoyment and advance their knowledge of ancient

monuments and historic buildings in England • Making grants in relation to historic buildings and conservation areas • Acquiring historic buildings • Acquiring or becoming the guardian or ancient monuments • The undertaking of archaeological investigation and publishing the results • Compiling lists of buildings of special architectural or historic interest for the

Secretary of State's approval, who must consult EH before he compiles, adds to, or modifies any such list

Must be consulted by the planning authority regarding: • Demolition in whole or in part or the material alteration of a listed building • Development likely to affect the site of a scheduled monument • Development likely to affect any Grade I or II registered garden or park of

special historic interest

English Nature and the Countryside Council for Wales • The establishment, maintenance and management of nature reserves • The notification and protection of Sites of Special Scientific Interest • The provision advice for the Secretary of State on the development and

implementation of policies for or affecting nature conservation • The commissioning or support of research • The provision of advice for the Secretary of State of any endangered animal or

plant which should be added to or removed from the list of protected species Must be consulted by the planning authority regarding: • Development of land in a SSI • Development of land in any consultation area around a SSI (up to 2 km from

boundary) • Development which is likely to affect a SSI

The Environment Agency • Established under the Environment Act 1995 • Inherited functions previously carried out by: National Rivers Authority, Waste

Regulations authority, HM Inspectorate of Pollution • Duty: to protect or enhance the environment, taken as a whole, as to make the

contribution towards the objective f achieving sustainable development Must be consulted by the planning authority regarding: • Developments involving mining operations • The carrying out or works or operations in the bed of or on the banks or a river

bed or stream • The refining or storage or mineral oils or derivatives • The deposit of refuse or waste • The use of land as a cemetery • Fish farming

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• The retention, treatment or disposal or sewage, trade waste, slurry or sludge

Statutory Undertakers • An architect is obliged to consider the availability or mains services and the

rights of his client as a landowner regarding the various statutory undertakers: sewer and highways authorities, water, gas and electricity.

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Grants • The following are circumstances in which a building owner is able to obtain a

grant from the local authority for some alteration or extension of his dwelling • It may be possible in development areas and enterprise zones to obtain grants

for industrial development Grants under Housing Grants, Construction and Regeneration Act 1996 • Renovation grant for the improvement or repair of a dwelling when unfit for

human habitation • Common parts grant for the improvement or repair of the common parts of a

building • Disabled facilities grant • HMO grant for the improvement or repair of a house in multiple occupation • Applications should be made and approved before work commences • Applications are means tested Other grants • Agriculture: with a view to the rehabilitation of livestock rearing land • Clean air: for the adapting of a fireplace to allow then to burn only authorised

fuels • Historic buildings: available from local authority or English Heritage and are

discretionary • Airport noise: cost of insulation • Water supply • Home repair assistance; applicants on benefit

Housing Associations and Societies • Formed on a charitable basis for the provision of houses for those in need on a

specified area • The association may be able to obtain assistance from the local housing

authority in whose area they propose to build, or from the Secretary of State

Special Premises • Additional controls are exercised over special premises: • Factories: fire certificate, regulation regarding emissions • Public houses and restaurants: liquor license, reports from fire brigade,

environmental health and police • Music and dancing: license • Hotels: fire certificate • Petroleum: license • Theatres and cinemas: license • Shops and offices: fire certificate, regulations regarding cleanliness, lighting,

ventilation etc • Food premises: food safety regulations

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32 - BONDS AND GUARANTEES

General • a bond or a guarantee is an arrangement under which the performance of a

contractual duty owed by one person (principal debtor) to another (beneficiary) is backed up by a third party (bondsman, surety or guarantor)

• to give financial protection where the principal debtor becomes insolvent

Where from? • parent company guarantees • financial institution

Nature of bonds Payment • employers duty to pay contractor • contractor's duty to pay sub-contractor • contractor providing bond for employer in return for early release of retention

money Specific obligations • a promise by a sub-contractor not to withdraw a tender Performance of contract in general • every aspect of contractor's performance guaranteed

Types of bond • conditional: surety agrees to pay if and when specified conditions are satisfied,

usually a default (breach of contract) by the contractor • unconditional (demand bond): whether or not there has been a default unless

fraudulent (uncommon)

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33 - CONTRACT INSURANCES

Relevant Provisions in Main Contract • Clause 20 - Injury to persons and property and indemnity to employer • Clause 21 - Insurance against injury to persons and property • Clause 22 - Insurance of the works • Clause 22A - Erection of new buildings - all risks insurance of the works by the

contractor • Clause 22B - Erection of new buildings - all risks insurance of the works by the

employer • Clause 22C - Insurance of existing structures - works in or extensions to

existing structures • Clause 22D - Insurance for employer's loss of liquidated damages • Clause 22FC - Joint Fire Code compliance

Clause 20 - Injury to persons and property and indemnity to employer • contractor to indemnify the employer for • any expense, liability, loss, claims or proceedings • arising by virtue of statute or common law • in respect of death or personal injury caused by the carrying out of the works • except as a result of negligence of the employer • or of any person for whom the employer is responsible • duty to indemnify the employer also covers damage to property (property

owned by third parties, parts of contract works for which certificate of practical completion has been issued, and exiting property owned by the employer)

• but only when damage was due to negligence, breach of statutory duty, omission or default by the contractor, or those for whom he is responsible

• not caused by specific perils (fire, lightening, explosion, storm, tempest, flood, burst pipes, earthquake, aircraft and riot)

• contractor can recover from any third party at fault

Clause 21 - Insurance against injury to persons and property • insurance to be taken out and maintained by the contractor for indemnities

given under Clause 20 to the employer • contractor does not take responsibility for a sub-contractor maintaining its

insurance, but will need to ensure that the sub-contractor carries such a policy under the relevant sub-contract

• contract administrator can instruct the contractor to take out and maintain an additional joint names policy to indemnify the employer both against strict liability to third parties and against any damage caused to the employer's own property resulting from collapse, subsidence, heave, vibration, withdrawal of support, lowering or ground water etc.

Clause 22 - Insurance of the works • insurance to remain in force until the issue of certificate of practical completion

or determination of the contractor's employment

Clause 22A - Erection of new buildings - all risks insurance of the works by the contractor Requirement • contractor to take out and maintain a joint names policy for all risks insurance • providing cover against physical loss or damage to work executed and site

materials

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Exclusions • damage to property arising from wear and tear, obsolescence, deterioration • work carried out as a result of design defects • professional negligence risk - insured separately • fitness for purpose risk Failure of contractor to take out policy • employer can take out his own policy and set off the costs against monies due

to the contractor Payment of insurance proceeds • contractor authorises the insurers to pay all insurance proceeds to employer • employer has to pay monies (less professional fees) to the contractor by

instalments • issued under architects' certificates at interim certificate periods Partial completion • employer takes responsibility of the works taken back Site materials • all unfixed and goods delivered to, placed on, or adjacent to the works and

intended for incorporation in them

Clause 22B - Erection of new buildings - all risks insurance of the works by the employer Requirement • employer to take out and maintain a joint names policy for all risks insurance • providing cover against physical loss or damage to work executed and site

materials Exclusions • as above Failure of employer to take out policy • contractor can take out his own policy and increase the contract sum by the

amount of premiums he has to pay. Payment of insurance proceeds • no requirement • restoration of any loss or damage is treated as a variation

Clause 22C - Insurance of existing structures - insurance of works in or extensions to existing structures • for contract works, employer to take out a joint names policy and protect all

sub-contractors • for existing structures, employer to only insure against specific perils • insure existing structures and their contents if owned by him, or for which he is

responsible

Clause 22D - Insurance for employer's loss of liquidated damages • employer to inform the contractor whether he should obtain a quote to insure

the employer's potential loss of liquidated damages

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• only in respect of damage by an specific peril - contractor will be entitled to extension of time, but employer will not be able to claim liquidated damages

Clause 22FC - Joint Fire Code compliance • employer and contractor to comply with the Joint Code of Practice on the

Protection from fire of Construction Sites and Buildings Undergoing Renovation if stated in the appendix

• contractors obliged to rectify breaches of the code if drawn to their attention by the contract works insurer

• contractors liable to the employer if a breach causes damage to the works

Sub-Contractors • required to observe, perform and comply with the provisions or the main

contract • indemnify the contractor against breaches by them of specific provisions in the

main contract • required to carry and maintain insurance to cover its liabilities in respect of

personal injury or death ensuing from work carried out by it

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CONTRACT INSURANCE UNDER JCT 98 WITH CONTRACTOR'S DESIGN

General • contractor to carry out not only duties and obligations of a building contractor,

but also obligations as a designer

Contract Works Insurance • similar to JCT 98

Professional Indemnity Insurance: Design and Construct • under clause 2.5.1 , the liability of the contractor as a designer is limited to the

liability of an architect (reasonable skill and care, not fit for purpose) • this liability can be covered by a Contractor's Design and Construct PI policy • ensure that the design and build contractor carries PI cover as Clause 22

imposes no requirement

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CONTRACT WORKS INSURANCE POLICY

Damage to Works • the indemnity may be the repair, reinstatement or replacement of any property

lost or damaged, or a monetary payment of the same amount • the insured will be the employer and the main contractor, and possible sub-

contractors • loss or damage are covered, subject to a number of exceptions • the property insured is described in the policy schedule • the loss or damage must occur during the currency of the policy • the cover only applies to the contract site

Cover • usually arranged on an annual basis by a contractor, thus covering all contracts • possible for cover to be arrange on a single contract basis but more expensive

Extensions to the policy Transit • anywhere within the territorial limits • excludes sea and air transit (heavier risk) • excludes motor vehicles (insures under motor vehicle policy) • excludes employees tools (too many small claims) Principals • means the employer to comply with the contract condition that the policy should

be in joint names Architects', Surveyors' and Consulting Engineers' fees • incurred in the reinstatement of the property insured consequent on its loss or

damage Removal of debris • removing debris • transportation to dumping ground • dismantling or demolishing • shoring up or propping of the portions or property lost or damaged Off-site storage • materials and goods whilst not on the site but intended for inclusion in any

contract works covered by the policy

Exceptions to the policy Excess • means of encouraging the contractor to take care and of • eliminating small claims Post-completion risks • contract works policy to cover risks of loss or damage during construction: once

contract completed, risk of damage passes over to employer • cover ceases at practical completion, except to the extent that it is necessary to

cover the contractor's liability under the defect liability clause Existing Structure

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• contract works policy to cover risks of loss or damage to contract works, but not to employer's existing property

• if the employer's existing property is damaged then the employer will only have legal redress against the contractor if he can prove negligence

• the employer may have already insured the risk under existing insurance arrangements

• or may effect special cover under clause21.2.1 against the specific risks of collapse, subsidence, vibration, weakening or removal of support, or lowering of ground water

Other exceptions • motor vehicles, vessels and crafts • breakdown and explosion of construction plant • trade risks: defective materials or workmanship, normal wear and tear • professional negligence risks: design defects • confiscation by government • losses due to unexplained disappearances • contract penalties for delay, non-completion or consequential loss or damage • cessation of work: failure to take precautions to protect the property • testing and commissioning

General Conditions • reasonable precautions • disclosure of material facts • adjustment of the premium • contribution - if there is another policy, the policy will not pay until the first

policy has been exhausted • cancellation - insurer's, but not the insured, have the right to cancel

Claims Conditions • notify insurer within three months of any events that may give rise to a claim • refrain from repairs until the insurer has had time to inspect • notify and assist the police in case of theft, loss or wilful damage to property

CLAIMS • dealt with by loss adjusters

OTHER LIABILITIES

Employers and Public • Contractors' Liability Insurance covers Employer's Liability, Public Liability,

Product Liability or Completed Works cover in respect of injury to third parties or damage to their property, as required by JCT 98

• Excludes Professional Liabilities (covered elsewhere)

Clause 21.2.1 • insurance to be arranged in the name of the employer • to protect him in respect of his legal liability for damage to adjacent or

surrounding property • which is caused other than by the negligence of the contractor or his sub-

contractors (employer already protected against negligence under clause 20.2)

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LATENT DEFECTS (DECENNIAL) INSURANCE

General • ten-year non-cancellable policy • to indemnify the insured against the cost of repairing defects in the design,

material or construction of the building which were not discovered until after the building had been completed

• once a building passes to the owner, he insures it under a fire and perils policy • the cost of rectifying latent defects is not covered by a fire and perils policy • underwriters will only accept risk if satisfied by design - technical control

undertaken by specialists, who issue a certificate of (qualified) acceptance

The Insured • any person who acquires the freehold or leasehold interest in the premises

during the period of insurance therefore subsequent owners/tenants can be insured

What the policy covers Inherent defects • if there is no physical damage but an inherent defect in the structure is

threatening its stability the policy will cover the cost • damage to premises caused by subsidence, heave or slip of land is not covered

unless it arises from an inherent defect in the foundations • discovery of an inherent defect does not in itself constitute a claim since there

must be damage or threat of collapse Policy exceptions • damage arising from fire and the perils normally insurable under a fire policy • damage arising from alterations, modifications or additions during the period of

insurance • damage caused by or contributed to by inadequate maintenance • damage exceeded from any process for which the building was not designed • faulty or inadequate weatherproofing unless requested at the outset

Period of Insurance • ten-year policy starts from the date of practical completion • but issued at the start of construction to enable compliance with Technical

Control • policy contains no cancellation cause Maintenance Period • contract works policy is extended to give cover during the maintenance (defects

liability) period • risk of duplication of cover during that period • if during that period damage occurs that is covered by both policies, decennial

policy will only pay in excess of the amount payable under contract works policy

Sum Insured • a full value sum is total estimated cost of re-building the premises, including

provision for professional fees and removal of debris • a first loss sum is lower that the full value when the risk of a total loss may be

low

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Premium affected by: • type of building and intended usage • design and type of construction • foundations and site (soil) conditions • project location • amount of excess and indexation • basis of cover (full value or first loss)

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March 2000 Insurance The Contractor notifies you that a domestic sub-contractor has caused damage to the works by inadvertently leaving a tap running over the weekend. Explain the contractual implications. (6) • Clause 22.3.2 the joint names policy shall provide recognition for the domestic-

subcontractor or will include a waiver of any right of subrogation by the insurers against the domestic sub-contractor for loss and damage by the specified Perils.

• If the domestic sub-contractor is named in the policy then he will be protected. However, if there is just a waiver of a right of subrogation against loss or damage due to specified perils, then the insurer's may be able to make a counter-claim against the domestic sub-contractor as leaving a tap running is not a specified peril.

If the all risks insurance is by the contractor: • Clause 22A.4.1: shall give notice in writing to both the employer and the

architect of the extent, nature and location of the damage • The contractor will also notify the insurers • Clause 22A.4.2: the occurrence of such loss shall be disregarded in computing

any amounts payable to the contractor • Clause 22A.4.3: after any inspection required by the insurers the contractor will

restore the damaged work, restore and repair any site materials damaged, remove and dispose of any debris, and proceed with the carrying out and completion of the works

• Clause 22A.4.4: the contractor shall authorise the insurers to pay all monies in respect of the loss or damage to the employer, who will pay the amount (less any professional fees) to the contractor in instalments under Interim Certificates issues by the architect

• The contractor shall not be entitled to any payment in respect of the loss or damage other than the monies received under the insurance

If the all risks insurance is by the employer: • Clause 22B.3.5: the restoration of the loss or damage shall be treated as if it

were a variation required by an and architect's instruction under Clause 13.2 • Therefore the contractor will be entitled to the full payment in respect of the

loss or damage, regardless of the amount paid by the insurers • Clause 25.4.5.1 and 26.2.7: the contractor may be entitled to an extension of

time and loss and/or expense due to the variation.

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On a separate project the Contractor notifies you that a recently constructed floor and wall have collapsed. Explain your course of action and the contractual situations in the following situations: 1. The Contractor notifies you that the collapse is due to a “runaway” truck owned

by the neighbouring haulage firm crashing into the wall. (7) 2. Where no fault has been identified. (7)

Course of action of the architect and contractual situation in both situations: • Stop the work • Ensure that the contractor has notified the employer • Ensure that the contractor does not repair any work until the insurers have

carried out their investigation • Notify the Planning Supervisor • Instruct the Structural Engineer to carry out a structural report • Assess measures to be taken to restore the site to a safe condition • Ask the QS to go to site to value the work damages • Ensure that the contractor has disclosed all of the facts to the insurer In situation 1: • The insurance money will be dealt with as described above • The insurers will be able to use their right of subrogation against the

neighbouring haulage firm In situation 2: • Carry out a full investigation to determine who's fault it was:

1. Design fault 2. Contractor's fault 3. Specified peril

• Contact PI insurer's in case to notify them of a circumstance that may lead to a claim

• Advise other consultants to do the same • If the damage was caused by a specified peril, it will be covered by works

insurance • If a design fault, will be covered by PI insurance

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March 1998 Insurance and Antiquities A fire breaks out and damage occurs during refurbishment works to a building insured by the employer in accordance with Clause 22C. Describe the contractual situation and the actions you would take. (Note that the fire is defined in the Insurance Policy as a Specified Peril). (10) All risks insurance by employer: • Clause 22C.4: contractor shall give notice in writing to both the employer and

the architect of the extent, nature and location of the damage - architect to ensure that the client has been informed

• The contractor will also notify the insurers - architect to ensure that this has been done

• The architect is to ensure that work stops on site until after inspection by the insurers

• Clause 22C.4.1: the occurrence of such loss shall be disregarded in computing any amounts payable to the contractor

• Clause 22C.4.2: the contractor shall authorise the insurers to pay all monies in respect of the loss or damage to the employer

• Clause 22C.4.3.1: the employment of the contractor may be determined within 28 days of the occurrence of the loss or damage by notice from either party to the other. Within 7 days of receiving the notice, the party may invoke dispute resolution procedures or accept the determination

• Clause 22C.4.4: if no notice of determination is served then, • Clause 22C4.4.1: after any inspection required by the insurers the contractor

will restore the damaged work, restore and repair any site materials damaged, remove and dispose of any debris, and proceed with the carrying out and completion of the works

• Clause 22C.4.4.2: the restoration of the loss or damage shall be treated as if it were a variation required by an and architect's instruction under Clause 13.2 - architect to issue an instruction covering the variation to carry out this work

• Therefore the contractor will be entitled to the full payment in respect of the loss or damage, regardless of the amount paid by the insurers

• Clause 25.4.5.1 and 26.2.7: the contractor may be entitled to an extension of time and loss and/or expense due to the variation - architect to ascertain entitlement to extension of time and loss and/or expense

During the early stages of a project you receive a fax from the contractor stating “we have uncovered during excavations, what we suspect to be the remains of a medieval graveyard”. Describe the contractual situation and the actions you would take. (10) • Clause 34.1: all antiquities found on site are the property of the employer • Clause 34.1.1: the contractor shall not disturb the remains, and shall cease

work that would endanger the remains • The architect should ensure that work ceases • Clause 34.1.2: the contractor shall preserve the remains in the position found • Clause 34.1.3: the contractor shall inform the architect • The architect should contact the archaeology department of the borough or

county council to inform them of the discovery and ask advice • Clause 34.2: the architect shall issue instruction as to what is to be done, which

may require that the contractor permit the examination, excavation and removal of the item by a third party

• Clause 34.3.1 the architect shall ascertain any entitlement the contractor has to loss and/or expense

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• Clause 34.3.2 as a relevant event, the architect shall ascertain any entitlement the contractor has to an extension of time

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34 - LAW, INSURANCE AND LIABILITY

Law Criminal Law • determines limitations on people's behaviour • legal action - punishment of individual by state Civil Law • determines rights and liabilities between parties in particular circumstances • civil action - "claimant" claims remedy for act or omission by "defendant" • remedy: damages, declaration of rights, order to do or refrain from doing

something • claims in Contract: dependent on terms and conditions of contract (from client) • claims in Tort: negligence, nuisance, trespass, defamation or breach of

statutory duty (from client or third party)

Types of Insurance Liability Insurance • the insurer will indemnify the insured against damages and legal costs payable

to a third party • compare to third party car insurance Loss Insurance • the insurer will indemnify the insured against loss or damage which that person

has suffered, whether caused accidentally or by someone else's negligence • compare to fully comprehensive car insurance

Liability Insurance • public liability policies (for those who provide a physical service, contractors) • professional Indemnity policies (for those who give advice, prepare designs etc.,

consultants) • the insurer's legal duty is owed to client not victim Third Parties (Rights Against Insurers) Act 1930 • where a person or company becomes insolvent, any claim the insured person

could have made is automatically transferred to the victim • however, the Act only transfers to a claimant those rights which the insured

already had against the insurers, and these only arise when the person has been held liable to the claimant

• therefore, unless a successful claim is made against the company while it still exists, the victim cannot take action

• and, where a person who has become bankrupt has failed to comply with a condition of his liability insurance policy, the insurers will be entitled to refuse payment to the victim, just as they could have refused to pay the client

Loss Insurance Subrogation • where the loss insurer pays the client in respect of a loss that was someone

else's fault, the insurer is entitled to take over legal rights the insured person could have exercised against the third party

• the insurer will seek, by suing in the client's name, to recover from the third party the amount that was paid to the client

• no rights of subrogation against any person who is insured under the same loss policy

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35 - PROFESSIONAL INDEMNITY INSURANCE

What is it? An indemnity to the architect (the Assured) by an insurer (the Underwriters) for: • any claims made against the Assured during the period of the policy in respect

of civil liability incurred by the Assured or others acting on behalf of the Assured in the course of the Assured's Professional Business

• any loss sustained by the Assured during the period of the policy as a result of dishonest or fraudulent acts or omissions of any present or former partner, director, employee or others acting on behalf of the Assured in the course of the Assured's Professional Business

• defence costs for claims up to limit of liability, with Underwriter's consent • proportion of defence costs for settlements in excess of limit of liability equal to

proportion of limit to settlement

Why buy it? • Compulsory since 1998 under ARB rules • Claims brought through increasing tendency to blame • Claims brought to stall a fee demand • May be required by client • Joint and several liability of partners

Claims made • PI insurance covers claims made during the period of insurance • When proposing for insurance, architect must notify insurers of any past

circumstance • Failure to do so could void the contract • During period of insurance, the architect must notify insurers of any new

circumstance • Any subsequent claim is deemed to have been made during the period of

insurance • Run-off insurance is needed after end of business

The insured • Practice • Present partners and directors • Future partners and directors for breach of duty in previous practice • Former partners or directors for breach of duty while still in practice (6yrs) • Estate, heirs and executors of the above • Employees

Limits of Indemnity • Aggregate limit for all claims made in one year • Limit for each and every claim with unlimited aggregate • Higher the limit, higher the premium • Must comply with professional body's minimum requirement • Must satisfy client requirement • Must provide for foreseeable contingencies - what type of work, past and

present? • Must be affordable - how much is the practice worth? • Generally, three times gross fee income

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Excess • First £X of each claim, or of a series of claims arising from the same occurrence • Advisable to limit excess in aggregate in any one year • Can include of exclude costs and expenses • Generally 1-2% of Gross Fee income, say £100,000 • Better to buy max affordable level of excess to allow high limit • Must notify of circumstance even if seems to be within excess in case

settlement eventually becomes more expensive than excess.

Exclusions Claims are coverable by other insurances: • Employers' Liability (Compulsory Insurance) - work accidents/unfair

dismissal/sexual or racial discrimination • Aviation, marine, and motor insurance • General Public Liability Insurance - for risks involving ownership or use of own

property or land • Product Liability Insurance - products manufactured, supplied etc. Where insurers make a practice of not covering risk concerned: • War risks • Nuclear risks Special Arrangements • No indemnity is provided against claims brought about by dishonest, fraudulent,

criminal or malicious acts or omissions, however • Indemnity is provided for innocent parties against claims brought about by

dishonest, fraudulent, criminal or malicious acts or omissions of a partner or employee of the insured

Controlling Interest • Any entity in which the insured exercises a controlling interest • Any entity exercising a controlling interest over the insured unless such claim is made against the insured for any indemnity in respect of a claim made by another party Where claims are made against contractual liability (including Collateral Warranties and Duty of Care Agreements), and the following are accepted in the terms of engagement: • Acceptance of or guarantee for fitness for purpose • Any express guarantee • Any express contractual penalty • Any acceptance of liquidated damages Pollution • Either excluded entirely, or • Provided in a restricted form, where because of an error (rather than intentional

act) by the insured Directors and Offices Liability • Claims arising out of an architects activities as director of a company

Extensions • Inadvertent non-disclosure before inception when innocent and free from

fraudulent conduct or intent to deceive • Liability for and physical loss or damage to documents • Defending and pursuing actions for breach of copyright

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• Joint Venture and Consortia, where such venture together with turnover has been declared to underwriters

• Self employed sub-contractors and contract hire staff • Lecturing, arbitration, expert witness • Libel and Slander

CDM Implications • PI can be extended to define Planning Supervision as part of the insured's

professional business, subject to the architect satisfying the insurers on the standard of training provided

• Exclusion relating to liability arising out of criminal acts has to be modified to ensure that breach of a statutory instrument does not preclude insurers dealing with any civil claims which follows

• Insurers will bear some of the costs of criminal prosecution defence civil action is likely to follow

Housing Grants, Construction and Regeneration Act 1996 • PI extended to cover adjudication awards and costs of defending claims brought

under the ACT • Timescale is a problem (adjudication 28 days, PI claim 1 year), therefore

immediate notification is a policy condition

Proposal Forms • Completed each year and accompanied by: • Awards for major projects • Practice brochure • Certification under IS09000 and similar • Internal organisation chart • Details of joint ventures

Market • Insurers: companies, Lloyd's syndicates, underwriting agents, mutuals • Brokers: general retail broker, specialist PI broker, specialist architects' PI

broker • Claims handled by: specialist solicitors appointed by insurers, specialist loss

adjusters appointed by insurers • Premiums influenced by: gross fees, type of work, claims history, limit of

indemnity, excess, market competition

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March 1997 Explain why architectural practices are recommended to have professional indemnity insurance. (5) Professional Indemnity insurance covers the architect against his civil liability and the civil liability of those acting on his behalf in the course of professional business. Hence the architect is covered against claims in contract and in tort. It also covers the cost of defending any such claim. In addition, PI insurance covers the architect for any loss incurred as a result of fraudulent acts or omissions of and partners or employees of the architect. Therefore it is vital that the architect has such insurance to protect him against these eventualities, especially as: • there is an increasing tendency for people to lay blame • and for clients to bring claims as an attempt to stall a fee demand Moreover: • it has been compulsory since 1998 under ARB rules to maintain PI insurance • it may be required by the client • and the architect is jointly and severally liable for his partners What factors do you consider would influence the level of premium in assessing a professional indemnity application from an architectural practice? (15) The level of premium is affected by the nature of the practice being insured, the terms of the insurance policy and the condition of the insurance market Practice: information necessary for the insurers to establish premiums is requested on the proposal forms, which should be completed and returned annually, includes • The types of projects in the practice - size and complexity will be influencing

factors • The fees for the project • What other duties are taken on - planning supervisor, expert witness,

adjudicator, arbitrator, etc • The structure of the practice - whether it is a partnership, a limited company,

etc • Internal organisation of the practice - number of partners, senior architects,

junior architects etc • Details of any joint ventures • Whether they are certified under ISO 9000 or (9001) - Quality Assurance • Their claims history Terms of Policy • What limit is required by the practice, ARB, or client • The higher the limit, the higher the premium • What excess is acceptable • The higher the excess, the lower the premium Market: the insurer can be: • A company • A Lloyd's syndicate • An underwriting agent • A mutual Competition between these bodies will affect the premium

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In addition, • different types of broker will be able to offer different policies • and the state of the economy will also effect the level of premium

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36 - CERTIFICATES

March 1998 Outline the duties, roles and contractual responsibilities during construction stage of:

• The Quantity Surveyor • The Clerk of Works • The Person-in-Charge (12)

Quantity Surveyor Role • To ensure that the correct amount is paid to the contractor at the correct time Duties • Valuations of Variations, Interim Valuations, final adjustment of Contract Sum Contractual responsibilities: • Valuation of Variations Either: 1. Clause 13.4.1.2A2: within 21 days of receipt of a Price Statement the Quantity

Surveyor, after consultation with the Architect, shall notify the Contractor in writing either the Price Statement is accepted or not

2. Clause 13.4.2.1A4: where the Price Statement has not been accepted the Quantity Surveyor shall include in his notification to the Contractor the reasons for not having accepted the Price Statement and supply an amended Price Statement which is acceptable to the Quantity Surveyor after consultation with the architect

Or 1. Clause 13.4.1.2B: the Valuation shall be made by the Quantity Surveyor • Interim Certificate 1. Clause 30.1.2.1: interim valuation shall be made by the Quantity Surveyor

whenever the Architect considers them to be necessary for the purpose of ascertaining the amount to be stated as due in an interim certificate

2. Clause 30.4A.1: the Architect shall at the date of each interim certificate prepare, or instruct the Quantity Surveyor to prepare, a statement specifying what deduction in respect of the Contractor's Retention and of the Nominated Sub-Contract retention for each Nominated Sub-contractor would have been made in arriving at the amount stated as due in such Interim Certificate

• Final Adjustment of Contract sum 1. Clause 30.6.1.2: Not later than 3 months after receipt by the Architect or by the

Quantity Surveyor of the documents necessary for the purposes of the adjustment of the Contract Sum, the Quantity Surveyor shall prepare a statement of all adjustments to be made to the Contract Sum

Clerk of Works Duty • To act solely as inspector on behalf of the Employer under the directions of the

Architect Responsibilities • Instructions given to the Contractor by the Clerk of Works are only empowered

if confirmed by the Architect within 2 days - Clause 12 Person in charge Role • Site foreman Duties • Ensuring that Health and Safety procedures are adhered to • Security on site

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• Keeping record of adverse weather • Keeping day working sheets Contractual responsibility • Clause 10: The contractor shall constantly keep on site a competent person-in-

charge and any instruction given to him by the Architect shall be deemed to have been issued to the contractor

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Describe the architect’s duties and responsibilities to inspect and certify works during the contract, up to and including the issue of the Final Certificate. Describe the procedures you would follow in discharging these duties. (8) Inspection • Duty to inspect but not supervise • Inspections should take place at critical points during construction:

1. before the work is covered up 2. before issuing any certificate to ensure that the work has been properly

executed Certify Interim Certificates • Clause 30.1.1.1: issue interim certificates stating the amount due to the

contractor from the employer specifying to what the amount relates and the basis on which the payment was calculated

• Clause 30.2.1.1: included within the interim certificate should be the total value of the work properly executed by the contractor

Certificate of Practical Completion • Clause 17.1 when in the opinion of the Architect practical completion of the

works is achieved, the contractor has sufficiently complied with H&S requirements, and the Contractor has supplied as-built drawings for performance specified works, he shall issue a certificate to that effect

• The Defects Liability Period then begins • The Architect prepares a schedule of defects (any defects, shrinkages, or other

faults due to materials or workmanship not in accordance with the contract) which appear within this period, which he delivers to the contractor not later than 14 days after the expiration of the Defects Liability Period

Failure to Complete • Clause 24.1 if the Contractor fails to complete the works by the Completion

Date, then the Architect shall issue a certificate to that effect Certificate of Making Good Defects • Clause 17.4 when in the opinion of the architect any defects, shrinkages or

other faults which he may have required to be made good shall have been made good, he shall issue a certificate to that effect

Final Certificate • Clause30.8.1 the Architect shall issue the Final Certificate not later than 2

months after whichever of the following occurs last: 1. The end of the Defects Liability Period 2. The date of issue of the Certificate of Making Good Defects 3. The date on which the Architect sent the Contractor a statement of all

adjustments made to the Contract Sum • The Final Certificate shall state the sum of the amounts already stated as due in

the interim certificates, the adjusted Contract Sum, and to what the amount relates

• The difference, if any, shall be expressed as a balance due to the Contractor from the Employer or vice versa

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March 2000 What is the effect of issuing the Practical Completion certificate? (5) • The Defects Liability Period begins • The Contractor is required to, and has the right to, make good any defects that

appear within this period, according to a schedule of defects prepared by the architect

• The onus shifts to the architect to instruct any outstanding work • 2.5% of the retention is released • The contractor's responsibility for any further frost damage ends • The contractor's liability for l&a damages ends • The site is now in the possession of the employer • The contractor's duty to insure the works ends (Clause 22A.1) although the

contractor is still obliged to maintain insurance against injury to persons and property in the course of or caused by the carrying out of the works (Clause 20.1)

What is the effect of issuing the Making Good of Defects Certificate? (5) • The issue of the Making Good Defects Certificate is one of the pre-conditions for

issuing the Final Certificate • It signifies that the architect is satisfied that all defects have been made good • It signifies the end of the Defects Liability Period • The architect no longer has the power to instruct that these defects are made

good The Contractor, on completing the Making Good of Defects, notifies the Contract Administrator (CA) who subsequently issues a Making Good of Defects Certificate. The day after issue of the Certificate a major defect comes to light. Explain the contractual position and the CA’s advice to the client. (10) • The contract does not state what should happen in respect of defects, which

appear after the issue of the Making Good Defects Certificate, but before the issue of the Final Certificate

• The employer has two options: • Either

1. Make an agreement with the contractor to rectify defects before the final certificate is issued

2. If the contractor refused to do this, an amount could be deducted from the contract sum to cover the cost of making good the work

• Or 1. Have the defective work rectified by another contractor and deduct the

amount paid from the contract sum • It would be best to try to try to reach an agreement with the original contractor

because if he agrees, it will be a far quicker method of rectifying the defects • In addition, the original contractor is probably best placed to rectify the defect

because of his familiarity of the work • If another contractor is used it would probably be disputed by the contractor

which could be a drawn out and costly process • If the dispute goes to court or arbitration, the employer may not be able to fully

recover the cost of putting right the defects as it may be held that he did not do everything possible to mitigate the extent of the damages

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March 1999 You receive a letter from you client containing the following passage: “I am aware that we are now approaching the Date for Completion as noted in Appendix 1-5 of the Contract. I would be grateful if you would explain to me the contractual situation, the actions you will be taking and anything I am required to do. Incidentally, I am assuming that the contractor will complete in time. Please explain the situation should they fail to do so.” Prepare notes for a response. (10) Contractual situation • Before the Certificate of Practical Completion is issued:

1. The Architect must be satisfied that practical completion of the works is achieved

2. The Contractor must have sufficiently complied with H&S requirements 3. The Contractor must have supplied as-built drawings for performance

specified works • After issue of the Certificate of Practical Completion the Defects Liability Period

begins • The contractor is obliged, and has the right to, make good any defects as

instructed by the architect, at no cost to the employer • The insurance of the works is no longer the duty of the contractor Actions of Architect • The conditions being satisfied, the architect will issue the Certificate of Practical

Completion • The Architect prepares a schedule of defects due to materials or workmanship

not in accordance with the contract which appear within the Defects Liability Period

• The Architect delivers the schedule to the contractor not later than 14 days after the expiration of the Defects Liability Period

Obligations of client • The client can take possession after the issue of the Certificate of Practical

Completion • The client is obliged to allow the contractor access to the works to make good

any defects • The clients needs to take out his own insurance policy for the buildings Failure of contractor to complete on time • The architect must issues a certificate to that effect • Liquidated and ascertained damages will become due • Before the issue of the Final Certificate, the employer must notify the contractor

that he may require payments of, or may withhold or deduct, L&A damages from the final account

What actions would you take and what would the contractual position be, should your client ask to take possession of a part of the building three months prior to the Completion Date? (10) Actions of Architect • Clause 18.1: The Architect shall issue to the Contractor a written statement

identifying the part or parts taken into possession by the employer - relevant part

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• Clause 18.1.2: When in the opinion of the Architect any defects in the relevant part have been made good, he shall issue a certificate to that effect

Contractual situation • Clause 18.1.1: Practical Completion of the relevant part is deemed to have

occurred and Defects Liability Period in respect of the relevant part shall be deemed to have begun

• Clause 18.1.3: The insurance to the works of the relevant part will cease and other arrangements must be made by the employer

• The contractor's responsibility to pay L&A damages in respect of the relevant part ends

• Clause 18.2.4: L&A damages due because of non-completion of the rest of the works are reduced by the ratio of the value of that part of the works to the value of the relevant part

• The contractor's responsibility for any further frost damage in the relevant part ends

• The onus shifts to the architect to instruct any outstanding work in the relevant part

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March 2001 The Contractor has not completed by the Date for Completion and, although no sections of the works are sufficiently complete to allow the Employer to take partial possession of those parts under Clause 18, the Employer is anxious to occupy part of the works Describe your advice to the Employer. (8) • I would advise the employer not to take possession of any part of the works

even though it is within his right to do so with the consent of the contractor • Taking possession of a part would be deemed as that part being practically

complete (Clause 18) and has the following effects: 1. The Defects Liability Period begins for the relevant part taken into

possession of the employer 2. The Contractor is required to, and has the right to, make good any defects

that appear within this period, according to a schedule of defects prepared by the architect

3. The onus shifts to the architect to instruct any outstanding work 4. The contractor's responsibility for any further frost damage ends 5. 2.5% of the retention is released 6. The contractor's liability for l&a damages ends 7. The contractor's duty to insure the works ends (Clause 22A.1) although the

contractor is still obliged to maintain insurance against injury to persons and property in the course of or caused by the carrying out of the works (Clause 20.1)

• The employer will be entitled to L&A damages for non-completion where he hasn't taken possession of the works (Clause 24)

• It would be better for the Employer to use these damages to make other arrangements rather than take partial possession

List the criteria for the issue of the Practical Completion Certificate. (4) • Clause 17.1: Before the Certificate of Practical Completion is issued:

1. The Architect must be satisfied that practical completion of the works is achieved

2. The Contractor must have sufficiently complied with CDM regulations as outlined in Clause 6.A4, ie sufficient information for the planning supervisor to be able to compile the Health and Safety file

3. The Contractor must have supplied as-built drawings for performance specified works and information concerning the maintenance and operation of such work as outlined in Clause 5.9

Describe the contractual problems with early confirmation of Practical Completion with the certificate qualified by a long list of defects/uncompleted work. (8) • If there is a long list of uncompleted work, and this work is completed within the

Defects Liability Period, there is not an additional Defect Liabilities Period that begins to give time for defects to appear in this late completed work

• With a very long list, there is considerable onus on the architect to instruct every defect to be made good

• 2.5% of the retention is released, only leaving 2.5% left to cover any defects that the contractor does not put right in work that may not have even been started yet

• If this late work is frost damaged, the contractor has no responsibility for it (Clause 17.2)

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• The contractor is no longer liable for L&A damages, therefore there is far less motive to complete the works quickly

• If the employer is now in possession of the site, there are health and safety implications of a substantial amount of work being carried out while the contractor is not in full control of the building

• The contractor is no longer obliged to insure the works (Clause 22A.1), and this responsibility must be taken over by the employer

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37 - POSSESSION AND COMPLETION

Possession • Failure to give contractor possession is a serious breach by the employer • Where clear possession is not intended, the tender documents should set out

the restriction and the contract amended accordingly • Failure to give the contractor ingress and egress of the site (so far as this

relates to land in control of the employer) is grounds for: an extension of time (Clause 25.4.12), direct loss and/or expense (Clause 26.2.6), determination (Clause 28.2.2.4)

Progress • The contractor must proceed 'regularly and diligently' (Clause 23.1.1) • West Faulkner Associates v Newham LBC • 'To proceed continuously, industriously and efficiently with appropriate physical

resources so as to progress the works steadily towards completion substantially in accordance with the contractual requirements as to time, sequence, and quality of work'

• The contractor is free to organise his own working methods and sequence of operations so long as it complies with statutory requirements and health and safety plan

• An architect should never approve a programme

Completion • If a contractor fails to complete by the completion date, liquidated damages

become payable • JCT 98 provides for the granting of extensions of time • JCT98 does not provide for reducing the contract period to a date earlier than

the date for completion (Clause 25.3.6)

Extensions of time • 'Time at large', if:

1. No provisions to grant extensions of time 2. Delay occurs that was caused (in part) by the employer - it would be a

breach by the employer 3. The contractor would no longer be bound to complete by the completion

date 4. The employer would lose his right to liquidated damages

• The contractor must use his 'best endeavours' to prevent delay (Clause 25.3.4) • Suggests more than 'reasonable' or 'practicable' but is unlikely to extend to

excessive expenditure • The contractor must give written notice to the architect

1. When progress is being, or is likely to be delayed 2. Whether or not completion is likely to be delayed 3. Whether or not delay is caused by a Relevant Event 4. Setting out cause of delay (Clause 25.2.1) 5. Copying to any nominated sub-contractors referred to in the notice 6. Including (or be followed by) particulars in respect of any Relevant Events,

including delay caused and estimated effect on completion • Architect must respond within 12 weeks (or by the Completion Date if earlier)

and fix a new completion date or state that no extension of time is due (Clause 25.3.1)

• Balfour Beatty v Chestermont

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• The architect may award further extensions of time in respect of Relevant Events which occur after the Completion Date (ie when the Contractor is in cupable delay and liable to pay L&A damages)

• The extension is added on to the date that has passed - net method of extension

Failure to complete by Completion Date • The architect must certify this fact (Clause 24.1) • Once issued, the contractor is in culpable delay • Employer may deduct damages from an amount payable on a certificate • Employer must first notify the contractor to that effect (Clause 24.2.1.2)

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March 2001 What is meant by “time at large”? (4) • Time at large is what would occur if there was no provision in the contract to

grant an extension of time • If the employer was (in part) responsible for casing a delay, the employer would

be in breach of the contract • The contractor would then be under no obligation to meet the completion date

and would not be liable to pay L&A damages Are minutes of site meetings regarded as an adequate delay notice? Explain your answer. (4) • No • Under Clause 25.2.1.1 the contractor must given written notice to the architect

when it becomes reasonably apparent that the works are being delayed or likely to be delayed

• Minutes of site meetings are meant to be a record of what was discussed and agreed, not to serve as a form of notice

• It may be construed that a contractor's report attached to the minutes that outlined details of the delay could act as notice

• To clarify the situation, it should be stated in the prelims that this would not be sufficient

What is meant by a contractor or sub-contractor having to use “best endeavours to prevent delay”? (4) • Suggests an effort that is more than 'reasonable' or 'practicable' • Suggests an effort to adjust his programme and swallow slack to prevent delay • Unlikely to extend to excessive expenditure If the Employer fails to serve written notice will this negate his entitlement to levy liquidated damages? Explain your answer. (4) • Yes • Under Clause 24.2.1 states that the employer must inform the contractor in

writing whether he will require the contractor to pay L&A damages, or whether he will deduct the amount from the amount due to the contractor

• He must do this no later than 5 days before the final date for payment of the debt due to the contractor

• This is due to the requirements of the Housing Grants, Construction and Regeneration Act 1996 which states that the employer must give notice to the contractor before deducting payments

How is the term “regularly and diligently” as used in the contract defined? (4) • Defined in case law - West Faulkner v Newham as the duty to: • proceed continuously, industriously and efficiently with appropriate physical

resources so as to progress the works steadily towards completion substantially in accordance with the contractual requirements as to time, sequence, and quality of work

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March 2000 After site set up and commencement of the works the Contractor writes to inform the Contract Administrator that the works are likely to be delayed due to the following: Electricity cable diversion works completed under a separate works contract. The contract preliminaries describe the works as being completed prior to the start on site. The works prevent access to the top of the site for the first 4 weeks of the contract. Explain the contractual implications and actions you would take. (10) Northumbrian Water diversion works, described in the contract as works by Statutory Authorities, which have delayed the contractor due to Northumbrian Water Authority being unable to locate the hydrant. This requires Northumbrian Water Authority to freeze the pipe, provide a valve and therefore delay the works to the bottom of the site for the first 8 weeks of the contract. Explain the contractual implications and the actions you would take. (10)

March 1998 You receive a letter from your client containing the following passage: “When we last spoke about my retirement home in Cornwall, you mentioned to me that the contractor has claimed an extension of time due to the snow experience in January and April. Whilst I appreciate his problem in this regard, as you know I am committed to moving out of my present house and I do not want these delays to affect the day I take possession of the new house. At some time you and I will need to sit down and agree how much compensation the contractor is due arising from these delays. In the meantime can you please instruct the contractor to accelerate his works, using extra men if necessary, in order to complete on time.” Draft a response to this letter. (12)

Describe the procedure you would follow as a contract administrator in determining an extension of time arising from the weather conditions described. (8)

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March 1998 (Phased Works) Your client wishes to refurbish in phases, a terrace of shops, which he owns by entering into a single JCT 80 Contract. Write brief notes for a meeting with you client describing the practical and contractual issues to be considered. (12) Practical issues • Dates of phases - when clients wants to be in possession of which parts • Dates of leases that may have been signed with tenants • Critical path analysis - to allow this to happen • Areas including within which phases • Access to the completed parts in terms of:

1. Fitting out 2. Service access when open 3. Customer access when open

• Health and Safety: 1. Refurbishment/demolition - hazardous substances survey (asbestos?) 2. Maintaining fire exits from completed phased while work continuing in other

parts 3. Dust/fumes/noise pollution from continuing phases affecting completed

phases • Insurance - will have to be taken out by employer as existing building • Services

1. Where are they at present and what modifications need to be made? 2. May affect ability to give sectional completion if services are not independent

Contractual Issues • If sectional completion is to be used, separate completion supplement will need

to be added to the contract • Separate completion dates are set for each section • Separate L&A damages are set for each section • It should be ensured that if an Extension of Time is granted for one section, or if

the contractor is liable for damages for non-completion for that section, that the contractor will not be liable to pay L&A damages for a delay in completion of the next section, caused by the initial delay

• Certificates of Practical Completion are issued of each section, signifying the start of the Defects Liability Period for each section

• Only one final certificate is issued at the end of the Defects Liability Period (or when the Certificate of Making Good Defects has been issued) for the last section

• If the project is to be phased by granting partial possession to the employer, separate completion dates will not be set for the separate parts

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Your client has undertaken to remove existing shop fittings within one of the shop units using his own workforce. The main contractor works are progressing and your client has failed to do so and as a result is now delaying the main contractor’s works. Write a letter to your client setting out the contractual implications of this. (8) Will the contractor be entitled to an Extension of Time? • Clause 25.3.1: If in the opinion of the Architect the cause of the delay is a

Relevant Event and if the completion of the works is likely to be delayed beyond the completion date as a consequence, the Architect shall grant an extension of time

• Relevant Events include: • Clause 25.4.8.1: The execution of work not forming part of the contract by the

Employer himself or by persons employed or otherwise engaged by the employer or the failure to execute such work

• As the Contractor has given notice that this delay will cause the delay of the completion of the works beyond the Completion Date (Clause 25.2.2), and because the delay was caused by a Relevant Event, the Contractor will be entitled to a reasonable Extension of Time

Will the contractor be entitled to loss and expense? • Clause 26.1: If the Contractor makes a written application to the Architect

stating that he has incurred or is likely to incur, direct loss and/or expense in the execution of the contract because the regular progress of the works has been materially affected by a matter, the Architect (or QS if instructed by Architect) shall ascertain how much loss and/or expense has been incurred

• Matters include: • Clause 26.2.4.1: The execution of work not forming part of the contract by the

Employer himself or by persons employed or otherwise engaged by the employer or the failure to execute such work

• Therefore the Contractor will be entitled to loss and/or expense, the amount of which shall be ascertained by the Architect or Architect (or QS if instructed by Architect)

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March 2001 (Phased Works) Your firm has completed the design of a £6 million Bus and Rail Interchange. The project includes the demolition of the existing facilities and construction on an integral Terminal. The client has stated that the bus and rail operations must continue to operate throughout, and all railway track works must be completed by their own staff. Describe the items that, as a result of the above scenario, may be included in the preliminaries for the project and the implications for phased or sectional completion. (10) Items included in preliminaries • Demolition

1. Hazardous substances survey 2. Demolition schedule 3. Items to be kept and re-used

• Construction 1. Pre-tender Health and Safety Plan for construction phase 2. Contractor's working space drawing 3. Temporary hoardings

• Phasing 1. Method statement 2. What areas demolished/constructed 3. At what time

• Continuing operations 1. Protection of public from danger/noise/dust from demolition/construction 2. Separation of construction traffic/servicing traffic/public

transport/pedestrians 3. Maintenance of fire exits 4. Maintenance of services

• Track works by own staff 1. Co-ordination of work by own staff with work by main contractor 2. Management of associated risks to safety

Implications for phased or sectional completion • Management form of contract would be wise considering the complex nature • Is it possible to construction of new facility and decant into it before demolishing

old facility? • Does demolition of old facility need to happen to allow space to construct new

facility? • Will temporary accommodation have to be set up? • Critical path analysis should be done • Sectional completion supplement added to contract, with separate completion

dates • Conditions should be included to ensure that if a delay occurs in one phase, that

the contractor will not be liable to pay L&A damages for a delay in completion of the next phase, caused by the initial delay

• Conditions should be included to ensure that if a delay occurs in the track works, that the contractor will not be liable to pay L&A damages for a delay in completion of the next phase, caused by railway's own staff

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Prepare an agenda, including attendees, for the initial project meeting prior to works commencing on site, following the appointment of the contractor. (10) Attendees • Client (operational director/track works staff) • Contractor (director/person in charge) • Architect (job architect/contract administrator) • Planning Supervisor • Quantity Surveyor • Structural Engineer • M&E Engineer • Clerk of Works Agenda Introductions • Client and client's track works staff • Contractor's personnel • Roles of consultants • Role of clerk of works Information/Preliminaries • Production information (prepared/to be prepared) • Contractor's copy of contract documents • Insurances/bonds • Signboard Phasing • Critical path • Sequence of construction/demolition Communication strategy • Queries and information requests • Exchange of information • Further meeting and participants • Monitoring progress • Up-dating programme/resourcing Procedural strategy • Selection and co-ordination of sub-contractors • Co-ordination of railway staff's work • Instructions (from architect/from clerk of works/oral) • Samples • Covering up work • Setting out • Services • Procedural matters not otherwise covered Health and Safety Any other business Date, time and place of next meeting

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38 - ADJUDICATION

What is adjudication? • A binding summary interim decision making process by an independent third

party • “The construction industry operates on a rhythm of monthly interim payments

intended to be about right, followed by a final more precise adjustment after projects are over. It is at least plausible that prompt adjudication, followed by later arbitration or litigation, stands a better chance of serving the dispute resolution needs of the industry, since it mirrors the contract administration process itself." McGaw

• Traditionally the architect or engineer had performed this function of adjudicator, or “first tier dispute settler” or “third-party neutral”

• Latham envisaged that the adjudicator would be named in the contract, appointed at the outset of the project and called in when necessary with some familiarity with the project. This requirement has not been incorporated into the Act.

How is adjudication incorporated into a contract? • Contract itself defines the adjudication provisions in compliance with the

Housing Grant, construction and Regeneration Act, 1996 • Contract incorporates adjudication rules such as those be the Technology and

construction Courts Solicitors Association (TecSA), and the Construction Industry Council Model Adjudication Procedure (CICMAP)

• If neither of the above, the Scheme for Construction Contracts applies

Section 108 of the Act Section 108 - key adjudication provisions • The requirements for adjudication that all construction contracts should provide

for • If the contract does not comply with these requirements, then the statutory

scheme will apply • A party to a construction contract will thereby be able to refer any dispute

arising under the contract for adjudication under either the contractual scheme or the statutory scheme

Section 108 (2) - stipulates that the contractual scheme for adjudication should • Enable a party to give notice at any time of his intention to refer a dispute to

adjudication • Provide a timetable with the object of securing the appointment of an

adjudicator and referral of the dispute to him within 7 days of such notice • Require the adjudicator to reach a decision within 28 days of referral or such

longer period as agreed by the parties, or by up to 14 days with the consent of the party by whom the dispute was referred

• Impose a duty on the adjudicator to act impartially and • Enable the adjudicator to take initiative in ascertaining the facts and law • (The adjudicator is not required to act judicially when applying the law, nor is

there any obligation upon him to reach the right answer) • Provide that the decision of the adjudicator is binding unless and until the

dispute is finally determined by legal proceedings, by arbitration or by agreement

• Provide that the adjudicator is not liable for anything done or omitted in the discharge of his functions unless in bad faith

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The government Scheme Notice • The party seeking adjudication serves written notice on every other party to the

contract • This briefly sets out the nature of the dispute and the relief sought • A copy is sent to the adjudicator of nominating body Appointment • Selection of an adjudicator by a body must be communicated to the parties

within five days of referral • The selected adjudicator has two days to decide whether he is willing to act • This person must not be an employee of a party to the dispute • Once appointed, the referring party must serve notice on the adjudicator,

accompanied by copies of all documents on which that party intends to rely • Copies of this notice and documents are sent to all other parties in the dispute Related Disputes - provision of a 'joinder' • The adjudicator may decide more than one dispute arising out of one contract,

and/or • May decide related issues arising under different contracts Objection to adjudicator • The objection of a party to the appointment of a particular person as adjudicator

will not invalidate the appointment or decision of the adjudicator Powers of adjudicator • To open up, revise and review certificates unless the contract provides that they

are final and conclusive • To decide and order payment of sums due under the contract • To decide whether interest should be paid

Enforcing an adjudicator's decision • The success or failure of adjudication is thought to depend upon the

enforcement issue • The decision of an adjudicator is said to be binding but no provision is made for

its enforcement • When the legislation was implemented, there were real unresolved issues as to

how an adjudicator's decision could be enforced • The Scheme proposes that Adjudication should be brought within the scope of

section 41 and section 42 of the Arbitration Act, which provide for the giving and enforcement of peremptory orders, or

• A party may enforce a decision by an application for a summary judgement

Shortcomings of Adjudication No Contract • It is not clear how it is envisaged that 'no contract' arguments will be resolved

because, unlike arbitration, the adjudicator has no power to rule on his own jurisdiction

No dispute - two means of objection • That the claim is being considered and has not been rejected and that therefore

there is no dispute • That the contract provides for the architect's or engineer's decision to be final

and therefore not open to challenge

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No limit to the timing and number of references • One party may spend months preparing his case before referring it to

adjudication, leaving the receiving party to respond within 28 days Costs • There is no provision for the award of costs against the losing party or in the

case of unmeritorious claims Future challenges to adjudication • The will probably concern the validity of the adjudicators decision • Confusion relating to appointment • 28-day time limit - the courts will support a decision even if it is wrong • An unfair decision • A late decision • If an adjudicator were to agree to decide matters, which were not strictly

referred to him

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March 2001 Adjudication Describe the process of appointment of an adjudicator under JCT provision. Use diagrams if appropriate. (5) Pursuant on article 5: • Clause 41A.1: either party may refer any dispute to adjudication • Clause 41A.2: The adjudicator shall either be an individual agreed by both

parties, or an individual to be nominated by the person named in the Appendix, provided that:

• Clause 41A.2.1: no adjudicator shall be agreed or nominated who will not execute the JCT standard agreement for appointment on an adjudicator, and

• Clause 41A.2.2: where either party has given notice of his intention to refer a dispute to adjudication then:

• any agreement by the parties must be reached with the object of securing the appointment of the adjudicator within 7 days of the notice

• any application to the nominator must be made with the object of securing the appointment of the adjudicator within 7 days of the notice

• once agreed or nominated, the parties shall execute with the adjudicator the JCT adjudication agreement

Describe the particulars to be provided with the referral documents. (5) The referral documents should include: • Particulars of the dispute • A summary of the contentions on which the referring party relies • A statement of the relief or remedy that is sought • Any material the referring party wishes the adjudicator to consider • Referral documents should be copied to the other party How will an adjudicator’s decision be enforced if either party refuses to comply? (2) The parties are bound by the decision until it is finally determined by arbitration, by legal proceedings or by agreement. Therefore if either party refuses to comply, they can refer the dispute to arbitration or seek to enforce it through the courts. The courts generally support the decision of an adjudicator and are likely to grant a summary judgement to require the parties to comply. How are the costs dealt with under the terms of adjudication? (8) • Clause 41A.5: The parties shall meet their own costs of the adjudication except

that the adjudicator may direct as to who should pay the cost of any test or opening up if required

• Clause 41A.5.8.3: Where an expert has been appointed by the adjudicator, the parties shall be jointly and severally responsible for the fees and expenses. In his decision, the adjudicator shall direct as to who should pay the fees and expenses or the proportion in which the fees and expenses are to be shared

• Clause 41A.6.1: The adjudicator in his decision shall state how payment of his fee and reasonable expenses is to be apportioned between the parties. In default of such statement, the parties shall share the cost equally

• Clause 41A.6.2: The parties shall be jointly and severally liable to the adjudicator for his fee and reasonable expenses

March 2001 Disputes Briefly describe the various methods of resolving disputes available to the construction industry, noting their main differences. (12)

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Alternative Dispute Resolution • Cheap, non-binding, and investigatorial rather than accusatorial • Since reconciliation is voluntary, either party can pull out at any time and refer

the matter to the courts • The parties are not bound to accept the decisions • ADR techniques tend to place the disputant sat the centre of the process and

seek to help them find their own way out of an impasse Types of ADR include • Conciliation: conciliator is independent, does not take sides, take decisions or

make judgements, but seeks to discover the facts and find common ground • Quasi-conciliation: an investigator is appointed by one of the parties and makes

recommendation to that party as to how to proceed • Mediation: as conciliation, but the mediator will make recommendations for a

settlement • Private enquiry: this involves the appointment of an independent professional to

investigate some aspect of the project and is commonly used for highly technical disputes

• Mini-trial: this procedure requires the disputing parties to present their cases to a board consisting of themselves

Adjudication • A binding summary interim decision making process by an independent third

party, the adjudicator • The adjudicator must come to a decision within 28 days unless an extension is

agreed by the parties Arbitration • A process whereby parties agree to refer an existing or future dispute to the

determination or one or more independent persons in a judicial manner • The decision of the arbitrator is expressed in an award, which will be binding to

all parties and enforceable by law • This can be a long and expensive process Litigation • This is where a dispute is taken to court and is heard by a judge • Building cases of any size are tried in the Technology and Construction Court • This can be a long and expensive process • The decision is binding • Parties may apply for summary judgement to reduce cost and expense • and/or interim payment Under what circumstances might each be appropriate? (8) • ADR should be used as the first method of dispute resolution as it is quick and

inexpensive. It is also non-adversarial, therefore promoting the notion of teamwork.

• If the parties cannot reach an agreement, the dispute can be referred to adjudication or arbitration.

• Adjudication has the advantage that is quick and relatively cheap. It allows

construction to continue and for the dispute to be finally resolved after completion.

• However, the decision can be unfair, and therefore a party may chose to have a more in depth dispute resolution and opt for arbitration or litigation

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• The advantages of arbitration over litigation are that is can be arranged to suit the parties, it has a greater degree of privacy, and is less adversarial for situations where the contractual relationship between the parties may be continuing.

• However, litigation has the advantages of: allowing more than the parties to the contract to be involved; the courts are generally more ruthless in their dealings with reluctant defendants and in their rulings; and if the dispute concerns a matter of law, it may be better for a judge, rather than an arbitrator to hear the case.

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39 - ARBITRATION

What is arbitration? • A process whereby parties agree to refer an existing or future dispute to the

determination or one or more independent persons in a judicial manner • Unless the parties have agreed to refer their dispute to arbitration, there can be

no arbitration • The decision of the arbitrator is expressed in an award, which will be binding to

all parties and enforceable by law

The relevance of arbitration law to architects • Standard forms of agreement provide that disputes will be determined by

arbitration and not by the courts • An architect may be required to give factual evidence during an arbitration

arising out of a project in which he has been involved • Architects as expert witnesses • Architects as arbitrators

The Arbitration Act 1996 Section 1 • The object of arbitration is to obtain the fair resolution of disputes by an

impartial tribunal without unnecessary delay or expense • The parties should be free to agree how their disputes are resolved, subject only

to such safeguards as are necessary in the public interest • The court should not intervene in arbitrations save as expressly provided by the

Act Section 33 - Duty of the tribunal • Act fairly and impartially as between the parties, giving each party a reasonable

opportunity of putting his case and dealing with that of his opponent • Adopt procedures suitable to the circumstance of the particular case, avoiding

unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined

Section 40 • Imposes a general duty on the parties to do all things necessary for the proper

and expeditious conduct of the proceedings • Including complying without delay with any decision of the arbitrator

The importance of deciding whether a process is or is not 'arbitration' • As the process is governed by the Act, the parties will be afforded a number of

legal rights and remedies, and may use the courts to enforce those rights or to obtain the remedies

• If the agreement describes the process as 'arbitration', then a third party must act as arbitrator and his decision will be enforceable by law

The arbitration agreement • The Act only applies when the agreement is in writing • The agreement defines the categories of dispute which can be referred to

arbitration • The agreement establishes the composition of the arbitration tribunal • The agreement may prescribe the procedures which the tribunal should follow

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The arbitration tribunal Jurisdiction • The arbitration agreement is separate from the substantive agreement in which

it may be incorporated, and therefore does not become invalid because the other agreement is invalid

• Does the dispute fall within the scope covered by the arbitration agreement? Not much doubt with JCT 98 "any dispute or difference as to any matter or thing of whatsoever nature arising under this contract or in connection therewith except for"…certain specified exceptions

• The arbitral tribunal may rule on its own jurisdiction • Any such rulings may be challenged in court Composition • Defined in arbitration agreement, or defaults to Act • One arbitrator: parties to jointly appoint the arbitrator - most common • Two arbitrators: each party to appoint one • Three arbitrators: each party to appoint one and the parties to jointly appoint a

third as Chairman • Not necessary for an arbitrator to have an particular qualification, but desirable

to have some experience of arbitration and a member of the Chartered Institute

The arbitration procedures • "It shall be for the tribunal to decide all procedural and evidential matters,

subject to the right of the parties to agree any matter" • JCT forms provide that disputes shall be dealt with in accordance with

Construction Industry Model Arbitration Rules (CIMAR) How to commence arbitration proceedings • If not specified in the agreement then the act applies • Proceedings are commenced when one party serves on the other party a notice

in writing requiring him to submit that matter to the person named as arbitrator Limitation Periods • The Limitation Act 1980, which requires every legal action to be commenced

within a certain time period, applied to litigation as well as arbitration • The question is whether the claimant issued a notice (or claim form- formerly a

writ - in litigation cases) within the statutory time period • Construction contracts frequently contain their own provisions as to both the

earliest and the latest time in which disputes can be taken to arbitration • Such time limits will not operate in cases of deliberate concealment or a breach

of contract Objectives • To define the issues so that each side can prepare the evidence and argument • To make provision for the exchange of information and evidence relating to the

matters in dispute • To make provision for the way in which the hearing itself will be conducted Exchange of information and evidence • In most cases the parties will be required to on each other a 'statement of case' • Disclosure of documents has never been mandatory in arbitration proceedings • Modern approach: not to require parties to produce more than the documents

on which it relies plus specific categories of documents which may be requested by the other party

Evidence of fact and expert evidence

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• The tribunal can decide whether: to apply strict rules of admissibility; • it should take the initiative in ascertaining facts by making its own enquiries; • there should be oral or written evidence and to what extent • The tribunal has the power to appoint experts

The arbitration hearing • A party may be represented by a lawyer or any other person chosen by him • Tribunals increasingly require the parties to put in written submissions or law

and take steps to reduce the length of the oral hearing • After the arbitrator has heard the evidence, the representatives of the parties

will make their closing statements, usually written

The award • The parties are free to agree the form of the award, but if there is no

agreements, the Act applies • An arbitrator can make a provisional award • The award should be in writing and signed by the arbitrators • It should contain the arbitrators reasons, to allow the court to consider the

appeal • The tribunal may make more than one award at different times on different

aspects of the matters to be determined

Costs • The arbitrator's fees and expenses • The fees and expenses of the arbitral institution involved • Legal and other cost of the parties • The tribunal will deal with the allocation of costs in its award

The power of the tribunal in the case of a party's default • Parties have an explicit duty to comply without delay with the orders of the

tribunal • The tribunal has the power to dismiss a claim if there has been inordinate and

inexcusable delay on the part of the claimant • The tribunal has the power to continue with proceedings in the absence of a

party in default and may make an award on the basis of the evidence before it

The role of the courts Enforcement of the arbitration agreement • There is a procedure whereby one party may seek to prevent the other from

outflanking that clause by starting proceedings in court • Under Section 9 of the Arbitration Act 1996, a defendant in such circumstances

may apply to have a legal action barred ('stayed') so that arbitration can take place

Support of the arbitration process • May extend time limits for commencing arbitration proceedings • Can secure the attendance of a witness • Can take and preserve evidence Enforcement arbitration awards • Arbitration awards may be enforced in the same manner as a judgement of the

High Court Supervision of the arbitration process • Power to remove an arbitrator

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• Power to set aside an award if there is a procedural irregularity

Appeals on points of law • The right to appeal to the courts can be excluded by agreement and is restricted

to appeals on points of law

The architect as arbitrator • Should have a good working knowledge of the law and practice of arbitrations in

addition to the law and practice of the construction industry • Time-consuming • Experienced arbitrators do not accept their appointment until the parties have

accepted the arbitrator's terms of engagement, usually that both parties are jointly and severely liable for the arbitrator's fees

• An arbitrator is generally not liable for his actions as arbitrator, unless he acted in bad faith

• The architect should ensure that he is covered by appropriate PI insurance

The architect as expert witness • The opinion should be stated clearly in a written report served prior to the

hearing, then orally at the hearing the expert will usually meet his opposite number before the hearing to identify common ground and issues on which they disagree

• An architect needs no special training to be an expert witness • If any of the subject matter falls outside of his area of expertise, the witness

should inform the arbitrator Civil Procedure Rules state: • It is the duty of an expert to help the court on the matters within his expertise • This duty overrides any obligation to the person from whom he has received

instruction or by whom he is paid

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40 - LITIGATION • Any dispute arising between parties to a contract may be settled by an action in

court • Building cases of any size are tried in the Technology and Construction Court

Remedies • An important difference between arbitration and litigation is that parties whose

dispute is heard in court may be able to invoke two very powerful remedies, which are not readily available at arbitration:

• Summary Judgement may be obtained in very clear cut cases, where the whole claim, or a particular issue, can be decided once and for all on the basis of affidavit evidence (written statements made by oath), which avoids the expense and delay of a full-scale trail

• Obtained under Part 14 of the Civil Procedure Rules • Interim Payment may be applied for when the claimant can satisfy the court

that he is likely to be awarded a substantial sum of money (if the later proceedings do not confirm the award, the money must be repaid)

• Obtained under Part 15 of the Civil Procedure Rules

Arbitration or Litigation? Advantages of Arbitration • Cost: often said, but rarely true as parties must pay for the arbitrator and

venue • Speed: true for simple cases, but judges are more ruthless than arbitrators in

enforcing the prescribed time limits for various procedural stages • Technical complexity: may be better to have case heard by an arbitrator with

technical expertise, but this also exists in the Technology and Construction Court

• Convenience: Arbitration can be arranged to suit the parties, including the control over the choice of arbitrator, fixing venue, setting timetable

• Privacy: Although it is not easy to maintain complete confidentiality in large arbitrations, it can be said that litigation is officially in the public domain

• Commercial expediency: less confrontational in nature which is important where the parties' contractual relationship is continuing

• Appeals: there is the ability to exclude appeals Advantages of Litigation • Third parties: the right to take a dispute to arbitration is conferred by the

terms of the contract and so only the parties to the contract are bound • Reluctant defendants: the courts are more effective when dealing with

reluctant defendants • Legal aid: a private individual in a dispute may qualify for legal aid • Legal complexity: where a dispute is essentially over a point of law it is better

to have it decided by a judge than an arbitrator without legal qualifications • Decisiveness: there is a belief that arbitrators are reluctant to rule wholly in

the favour of one party or the other, consequently, a party who genuinely believes that a claim is 100% justified may prefer litigation

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41 - ALTERNATIVE DISPUTE RESOLUTION

Methods of Dispute Resolution • Whether or not there is an arbitration agreement I the contract, it must always

by remembered that he contracting parties can alter the terms of their contract at any time by mutual consent

• In the event of a dispute, the parties are not compelled to resort to the courts • They can choose to attempt to settle their differences amicably • If this should happen, it is extremely important to record exactly what has been

agreed and to have it signed by both parties in case of any future disagreement about what was agreed

ADR • The development of Alternative Dispute Resolution techniques arises from

dissatisfaction with and alienation from the legal system • Their chief features are that they are cheap, non-binding, and investigatorial

rather than accusatorial • Reconciliation is a collective term for the different methods and indicative

private, non-adversarial methods of resolving disputes • Since reconciliation is voluntary, either party can pull out at any time and refer

the matter to the courts • The parties are not bound to accept the decisions • ADR techniques tend to place the disputant sat the centre of the process and

seek to help them find their own way out of an impasse

Conciliation • The conciliator must be independent of the parties to a contract • The conciliator does not take sides, take decisions or make judgements • The conciliator talks to each party in private and must be sure not to reveal

anything to the other party- confidentiality is essential in order for discussions o be frank and meaningful

• The conciliator may bring the parties together for an open discussion, which he chairs

• The conciliator will seek to discover common ground, ascertaining the facts that are in dispute

• The conciliator needs considerable knowledge of construction disputes • It is ultimately up to the parties to reach an agreement

Quasi-conciliation • Quasi-conciliation comes about when one of the parties unilaterally appoints an

expert professional to advise on a dispute • The investigator may be appointed to discover the facts and to make a

recommendation to the party about how to proceed • The quasi-conciliator will often need to talk to the other party to find out what is

at issue • If the other party also appoints a professional, then the two of them may get

together and compare their findings and conclusions • This type of process is likely to happen in the public sector • Once the quasi-conciliator has reached a decision, a report is made to the client,

which can be used as a negotiating instrument, or used as evidence is the dispute goes to court

Mediation • This procedure is an extended version of conciliation

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• If no negotiated settlement results from the process, the mediator will make recommendations to settle

• This process retains the flexibility of conciliation, while encouraging a slightly more interventionist role

• It is expected that neither party will pull out and that both will accept the decision of the mediator

• It is also expected that this process will give the parties a useful indication of the outcome of arbitration

Private enquiry • This involves the appointment of an independent professional to investigate

some aspect of the project • Commonly used for highly technical disputes • On the basis of the report, the parties are in a better position to negotiate • One of the greatest benefits it its speed

Mini-trial • This procedure requires the disputing parties to present their cases to a board

consisting of themselves • Representatives of the employer's and contractor's organisations will conduct

something like a trial; in front of a panel of senior executives from those organisations

• Having heard the evidence, the panel can negotiate their respective positions until they reach an agreement