PRE-CONTRACT WORKSHOP 26th January 2011
PRE-CONTRACT WORKSHOP EVENT REPORT 26th January 2011
PROFESSIONAL PRACTICE: OFFICE AND PROJECT
MATTHEW LAMBERT
PRE-CONTRACT WORKSHOP 26th January 2011
EVENT REPORT Event: Late instruction from client to change building material from concrete frame to steel frame within a design and build contract. Summary: The purpose of this report is to discuss and analyse Scenario 1 from Professional Practice: Office and Project module pre-contract workshop held on 26th January 2011. In the report I will firstly discuss the impacts of the client instruction upon design and delivery of the project. I will then discuss important issues involving the implications of the client instruction on the pre-contract arrangements, and implications upon forms of appointment between the contractor, client and architect. I will conclude with a summary of strategies to help deal with this and ideas on how the incident could be avoided. It has been necessary to make certain assumptions from the Scenario text in order to analyse the scenario in detail: - Alec French Architects (AFA) and Westmark Developments (WD) initially used the RIBA Standard Form of Appointment (SFA/99) which was then replaced by the JCT Design and Build Contract (DB05) which was let of the basis of a two-stage tendering process. (see fig 1.) - Sir Robert McAlpine (SRM) sub-letted work to Alec French Architects (AFA) to perform the Architectural function. - The major instruction from WD early in September 2008 was a simple change of mind from the Employer, to change the building material from reinforced concrete to steel frame to achieve column free space and with the expectation of a shorter construction period. - All original Employers Requirements were acknowledged and taken through into the Contractors Proposals, i.e. provision for column free space was not in the original Employers Requirements (ER’s). - AFA upon receiving the instruction were obliged to revise the original ER’s from which they and Sir Robert McAlpine would produce a new set of Contractors Proposals (CP’s). fig 1. Diagram of design build 2 stage tender
PROFESSIONAL PRACTICE: OFFICE AND PROJECT
MATTHEW LAMBERT
AFA appointed by Westmark Developments
April 2005
April 2008
Robert McAlpine Appointed main contractor by Westmark Developments
Dec 2005
AFA submit planning app.
Work is sublet to AFA to Produce Contractors proposals.
AFA Produce Employer Requirements (ERs) *at risk
PROFESSIONAL PRACTICE: OFFICE AND PROJECT Contract Value Established at £23 million
SRM sublet work to AFA to produce Contractors Proposals.
ER’s are value engineered by SRM
June 2008
May 2008
Tripartite agreement in which AFA were novated to SRM.
Westmark issue instruction to change construction material from concrete to Steel AFA working on second set of ER’s and CP’s
AFA complete Stage E
Dec 2008
SRM Take possession of site.
Sept 2008
PRE-CONTRACT WORKSHOP
26th January 2011
fig 2. Timeline of events.
MATTHEW LAMBERT
PRE-CONTRACT WORKSHOP 26th January 2011
Effect upon Design and Delivery Upon receiving the instruction, it is the responsibility of both Architect and Contractor to investigate the implications on construction method, programme, M&E servies, appearance etc. The Contract documents i.e. Employers requirements, Contractors Proposals, would need to be revised and the Contractsum would also need to be re-evaluated. Firstly structural calculations including revised foundation details would be required and seeked to be obtained from the structural engineer by Alec French Architects (AFA) which then should be incorporated into the revised drawings. This would incur further costs for additional work by the structural engineer and resources of AFA. Subsequently the Employers Requirements and Contractors proposals would have to be updated in line with change of structural material. Secondly steel has a shorter construction time than that of reinforced concrete, but also has a longer lead in time. Sir Robert McAlpine (SRM)would be obliged to adjust the programme to a certain extent to allow for this change, incorporating a phasing strategy to mitigate expense, however any potential time saved may be outweighed by additional time spent on modifying the design. As the instruction only effect’s Office B it’s a fair assumption that labour could be resourced from other areas of the site if needed. Another possible implication of the instruction would be that the appearance externally would change, meaning that the plans would have to be re-submitted to the planning department, incurring further costs for re-submission. As roof, wall and floor build up will have changed significantly, new drawings by AFA will have to be re-submitted for Building Regulations and BREEAM will need to be re-assessed with cold bridging details also revised. SRM would be responsible for any impact the instruction would have upon CDM as the CDM coordinator . The instruction may also give rise to a claim for an extension of time by SRM Under DB05 SRM must give notice about delay to the works to the employer’s agent, in this case AFA. Westmark are at risk in this case for any cost incurred in delaying the job. SRM will need to provide in writing the particulars of the expected effects of the change of material, and an estimate of the extent of the expected delay. It is then up to AFA to decide whether the particulars and estimate from the contractor is fair and reasonable in order to grant an extension of time. Contractual Implications In order to ascertain the implications upon conditions of appointment its important to look at risk allocation and obligation. At the time of instruction AFA are in fact contractually obliged to the client having not yet been formally novated to SRM. This creates a conflict of interest as they owe a duty of care to WD but also are working on behalf of SRM producing the CP’s. AFA were in fact working at risk producing the CP’s as they were not legally obliged to carry out the work. This may have meant that any abortive work done by AFA cannot be recouped and resources were wasted producing drawings which became defunct. The problems arose from the Architect working in both the interest of the Employer and contractor at the same time. The terms of engagement are crucial in design and build contract and they should be drawn up with great care. AFA should have ensured that the terms were acceptably for PI insurers, made sure that liability to the Westmark is not greater than liability to the contractor. Also ensured that liability to employer is not greater than that owed to the contractor.
PROFESSIONAL PRACTICE: OFFICE AND PROJECT
MATTHEW LAMBERT
PRE-CONTRACT WORKSHOP 26th January 2011
Issues of conflict of interest and working at risk could have been avoided if AFA were novated before producing the CP’s. Ideally AFA should have been novated at tender stage, and the duty owed by the consultant to the employer would be transferred to the contractor. In a two stage tendering process the novation point would occur after the successful contractors first stage submission (in this case agrees by negotiation in April 2008) and commence with services required for the final submission (CP’S) in May 2008. The contract between the Employer and the Architect, i.e. between WD and AFA, would be replaced by another contract between the architect and contractor, i.e. between AFA and SRM. The usual purpose of a Novation agreement is to shift responsibility from the architect to the contractor. WD may have opted for Novation because they wish to retain some influence over design and quality standards.. After novation AFA become liable to SRM and SRM would be entitled to any remedy under the novated agreement for defective performance. AFA’s existing SFA/99 agreement with Westmark would be replaced by the DB2/99 addendum which would update the architects scope of work, Fees, responsibility of parties etc. Without this agreement AFA would be open to litigation from Westmark and challenge AFA’s partiality. This aggreement avoids the architect working for both the contractor and the employer at the same time. It is best practice that the Contract is signed by both parties before work starts on site. This ideal is not always achieved but the work on site might start on the basis of a letter of intent. It is good practice to have at the very least a letter of intent before work starts on site. A letter of intent inform the architect of the position of the contractor in that they cannot enter into a contract for the work but it can be carried out and fees can be recouped for work carried out if the employer has to stop the work. It should however be noted that this form of contract would not be adequate to assign rights and risks and therefore should only be used a temporary ‘holding’ contract. Any amendment to the agreement between AFA and SRM may be appropriate because the instruction requires Alec French to provide additional resources, i.e. Amendment DB1/99 to Employers requirements to include Change of material. Any amendments to the terms themselves, or additional Conditions, would be incorporated by means of an additional document. Pre-contract arrangements relating to provisional sums would be relevant as the Change could be incorporated into the contract as in DBO5 clause 3.9.5. Conclusion The above scenario highlights the uncertainty and contingencies inherent in the building industry. It highlights the difficulties in a fragmented industry in which there is a notable separation of design and production. Whereas the problems of making a building are highly interdependent, and require the inputs of several members of the design team, the people solving these problems work to large extent independently. Communication between parties is therefore crucial in resolving any disputes like in the above scenario. As the Design and build contract is becoming more prevalent in the building industry it has been useful to familiarize myself with DB05 and the slippery subject of Novation so that I may be better prepared in the future when encountering it.
PROFESSIONAL PRACTICE: OFFICE AND PROJECT
MATTHEW LAMBERT
PRE-CONTRACT WORKSHOP 26th January 2011
Bibliography Chappell, David, The Architect In Practice (Blackwell Publishing Ltd, 2005) Lupton, Sarah, Guide to DB 05 (RIBA Publishing, 2009) Architects Registration Board, ARB Code Of Conduct 2010 (from http://www.arb.org.uk/ accessed on 18/04/11) RIBA, Guide to RIBA Forms of Appointment (RIBA Publishing, 2004) RIBA, Guide to RIBA Agreements 2010 (RIBA Publishing, 2010) Birkby, Gillian, Albert Ponte and Frances Alderson, Good Practice Guide: Extensions of Time (RIBA Publishing, 2008)
PROFESSIONAL PRACTICE: OFFICE AND PROJECT
MATTHEW LAMBERT