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The Aqua Group Guide toProcurement, Tendering andContract Administration

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The Aqua Group Guideto Procurement,

Tendering and ContractAdministration

Second Edition

Edited by

Mark Hackett and Gary Statham

with contributions from

Michael Bowsher, John Connaughton,Michael Dallas, Paul Morrell, Alan Muse,

Erland Rendall, Simon Rawlinson, Nick Schumann,Andrew Shaw and Peter Ullathorne

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This edition first published 2016© 2016 by John Wiley & Sons Ltd© 2007 The Aqua Group and Blackwell Publishing

Wiley-Blackwell is an imprint of John Wiley & Sons, formed by the merger of Wiley’s globalScientific, Technical and Medical business with Blackwell Publishing.

First edition published 2007Second edition published 2016

Registered officeJohn Wiley & Sons, Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, UnitedKingdom.

Editorial offices:9600 Garsington Road, Oxford, OX4 2DQ, United Kingdom.The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom.

For details of our global editorial offices, for customer services and for information about how toapply for permission to reuse the copyright material in this book please see our website atwww.wiley.com/wiley-blackwell.

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, ortransmitted, in any form or by any means, electronic, mechanical, photocopying, recording orotherwise, except as permitted by the UK Copyright, Designs and Patents Act 1988, without theprior permission of the publisher.

Designations used by companies to distinguish their products are often claimed as trademarks. Allbrand names and product names used in this book are trade names, service marks, trademarks orregistered trademarks of their respective owners. The publisher is not associated with any product orvendor mentioned in this book.

Limit of Liability/Disclaimer of Warranty: While the publisher and author(s) have used their bestefforts in preparing this book, they make no representations or warranties with respect to theaccuracy or completeness of the contents of this book and specifically disclaim any impliedwarranties of merchantability or fitness for a particular purpose. It is sold on the understanding thatthe publisher is not engaged in rendering professional services and neither the publisher nor theauthor shall be liable for damages arising herefrom. If professional advice or other expert assistanceis required, the services of a competent professional should be sought.

Library of Congress Cataloging-in-Publication Data

The Aqua Group guide to procurement, tendering and contract administration. – Second edition /edited by Mark Hackett, Gary Statham ; with contributions from Michael Bowsher [and 5 others].

pages cmIncludes bibliographical references and index.ISBN 978-1-118-34654-9 (paperback)

1. Buildings – Specifications. 2. Construction contracts – Great Britain. 3. Letting of contracts –Great Britain. 4. Construction industry – Management. I. Hackett, Mark, 1962- editor. II. Statham,Gary, editor.

TH425.A678 2015692 – dc23

2015008101

A catalogue record for this book is available from the British Library.

Wiley also publishes its books in a variety of electronic formats. Some content that appears in printmay not be available in electronic books.

Cover design by Workhaus

Set in 10/12pt, SabonLTStd by SPi Global, Chennai, India.

1 2016

www.wiley.com/wiley-blackwell

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Contents

PART I BRIEFING THE PROJECT TEAM 1

1 The Project Team 3

Introduction 3Parties to a building contract and their supporting teams 3Rights, duties and responsibilities 4

The employer 5The architect/contract administrator 5The quantity surveyor 5The principal designer 5The clerk of works 6The status of named consultants 6Unnamed consultants with delegated powers 7The project manager 7The principal contractor 7Sub-contractors 9

Statutory requirements 9The CDM regulations 10

Avoiding disputes 12Communications 12

2 Assessing the Needs 14

The structure 14The strategic definition 14Contribution to the initial project brief 16The initial programme 17The appointment 17

Appointment documents 19Collateral warranties 20

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3 Buildings as Assets 21

Buildings as assets as well as buildings 21Single building or programme? 22Buildings as solutions to business challenges? 23Everyday solutions-based thinking 24Summary 25

PART II AVAILABLE PROCUREMENT METHODS 27

4 Principles of Procurement 29

Simple theory – complex practice 29The eternal triangle 29Other considerations 32

The Construction (Design and Management) Regulations 2015 32Risk 33Accountability 33

Entering into the contract 33Type of contract 34Selection of the contractor – the tendering procedure 35Establishing price and time 35

The dynamics of tendering 36

5 Basic Concepts 37

Economic use of resources 38Labour 38Materials 39Plant 39Capital 39

Contractor’s contribution to design and contract programme 40Production cost savings 40Continuity 41Risk and accountability 41

Accountability 43Summary 43

6 Accountability 45

Background 45The modern concept of public accountability 46Contract documentation 46Proper price 47Dispensing with competition 47Inflation 47Value for money 48Summary 49

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7 Value and Risk Management 50

Value management 50Value articulation and project definition 52Optimisation of benefits and costs 52Learning lessons and performance optimisation 53

Risk management 54Risk must be managed 54Nothing ventured, nothing gained 55Understanding the project 56

Risk management strategies 57Allocating management actions 58Value and risk are complementary 59

Similarities in the processes 63The integrated process 63

8 Fixed Price and Cost Reimbursement 64

Fixed price 64Cost reimbursement 65Application to contract elements 65Fluctuations 66Target cost contracts 66Use 67

The employer’s position 67The contractor’s position 67

Programme 68Summary 69

9 Fixed Price Contracts 70

JCT fixed price contracts 70The standard building contract 71Design and build contract 71Major project construction contract 73Intermediate building contract 74Minor works building contract 75Other fixed price contracts available 75

Advantages and disadvantages of fixed price contracts 76Advantages 76Disadvantages 76

10 Cost Reimbursement Contracts 77

The fee 77The prime cost building contract 78

Characteristics of the form 78Advantages and disadvantages of cost reimbursement contracts 79

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Advantages 79Disadvantages 80

Budget and cost control 80Administering the contract 80Procedure for keeping prime costs 81

Contractor’s site staff and direct workforce 81Materials 82Plant 82Credits 82

Sub-letting 83Defective work 83Cost control 83Final account 84

11 Target Cost Contracts 85

Guaranteed maximum price contracts 87Competition 88Contract 88Advantages and disadvantages 89Use 89

12 Management and Construction Management Contracts 90

Payment and cost control 90Selection and appointment of the contractor 92Contract conditions 93Contract administration 94Professional advisers 94Advantages and disadvantages 95


Construction management 96Use 97Programme 97

13 Design and Build Contracts 99

The contract 100Where to use DB (and when not to do so) 101Managing the design process 102Novation 103Evaluation of submissions 104Post-contract administration 104Financial administration 104Programme 105Advantages and disadvantages 106


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14 Continuity Contracts 107

Serial contracting 108Purpose and use 109Operation 109

Continuation contracts 110Purpose and use 110Operation 111

Term contracts 112Purpose and use 112JCT Measured Term Contract 113Operation 113

15 Partnering 115

A definition 115When to adopt a partnering approach 117The agreement 117JCT Partnering Charter 118JCT Framework Agreement 118JCT constructing excellence 119The partnering workshop 119The benefits 119The risks 120Future of partnering 121

16 EU Procurement 122

Introduction 122The scope of procurement law 123The general principles 123Procedures 124Key principles 124Evaluating tenderers 124Evaluating tenders 125Framework agreements 126Contract change 127Cancellation of the process 127Information obligations debrief and disclosure 127Commencing proceedings 128Remedies 128Complaints to the EU commission and other challenge procedures 129Tendering contracts 130Notes 130

PART III PREPARING FOR AND INVITING TENDERS 131

17 Procedure from Brief to Tender 133

Initial brief 133

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Developing the brief 133Feasibility stage 134Sketch scheme 134Costs 135

Procurement 135Detailed design 136Programming 137Design team meetings 138Drawings 138Specifications 139Bills of quantities 140Specialist sub-contractors and suppliers 140Quality assurance 140Obtaining tenders 141

18 Pre-Contract Cost Control 142

Introduction 142The purpose of pre-contract cost control 142Framework for pre-contract estimating 143Order of cost estimate 145Information used to prepare an order of cost estimate 146Treatment of on-costs and other costs in order of cost estimates 147Presenting an order of cost estimate 148Cost plans 149Treatment of on-costs and other costs in cost plans 151Presenting a cost plan 153Challenges associated with the production of cost plans 155Cash flow 155Whole life costs 156Summary 158Notes 158

19 Drawings and Schedules 159

The language of drawing 159The changing role of drawings and documents 159Quality 162

Standards 162Quality manuals 162Quality procedure codes 163Quality review 164

Types, sizes and layout of drawings 164Size 165Layout and revision 165Scale 166

Nature and sequence of drawing production 167RIBA Plan of Work 2013 167

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Drawings for SBC contracts 167Drawings for design and build or management contracts 168Design intent information 169

Computer aided design 170Drawing file formats and translation 171

Project extranets 171Contents of drawings 174

Survey plan 174Site plan, layout and drainage 175General arrangement 175Elevations of all parts of the building 177Descriptive sections 177Ceiling plans at all floor levels 177Construction details (scale 1 : 20 and 1 : 10) 177Large-scale details (scale 1 : 10 and 1 : 15) 178

Schedules 178Drawings and schedules for records 179Notes 184

20 Specifications 185

The use of specifications 185Specifying by prescription 187Specifying by performance 187Specifying by description 187

Specification writing 188Decide on format 188Collect information 194Input information 194Check and test 195Deliver 195BIM 196

21 Building Information Modelling 197

The BIM revolution – what is BIM, and who/what is it for? 197The role of government and its BIM strategy 199The levels of BIM adoption 202The BIM journey 203

Plan of work, deliverables and work stages 203Loading the model: language and libraries 205Bringing different software programmes together – the search

for interoperability 206Operation and maintenance 207Terms of appointment and changes to other business practices 208

Level 3 and the future 209Epilogue 209Notes 210

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22 Bills of Quantities 211

Tender and contract document 211The wider role 211Basic information 212Preliminaries 212Preambles 213Measured works 213Formats 214

23 Sub-contractors 220

Introduction 220Specialist sub-contractors 221Design by the sub-contractor 221The SBC and sub-contract agreements 222

SBC provisions under the main contract 223

24 Obtaining Tenders 224

Introduction 224Tender list 225Preliminary enquiry 226Tender documents and invitation 226Tender period 227Tender compliance 227Late tenders 228Opening tenders 228Examination and adjustment of the priced document 228Negotiated reduction of a tender 229Notification of results 229Tender analysis 230E-Tendering 230

PART IV CONTRACT ADMINISTRATION 231

25 Placing the Contract 233

Preparing and signing the contract documents 233Sectional completion 234Contractor’s designed portion 234Executing the contract 235

Performance bonds and parent company guarantees 236Collateral warranties 236Third party rights 240Issue of documents 241Insurances 242

26 Meetings 245

Initial meeting 245

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Introductions 246Factors affecting the carrying out of the works 246Programme 247Sub-contractors and suppliers 248Lines of communication 248Financial matters 248

Procedure to be followed at subsequent meetings 250Contractor’s meetings 251Employer’s meetings 251

27 Site Duties 256

The architect on site 256The architect’s duty of inspection and supervision 258

Supervision and Inspection duties 258Routine site visits 259Consultants’ site visits 260Inspections by statutory officials 260Records and reports 261Samples and testing 262

Considerate constructors scheme 263Site safety 264

Health and Safety Policy 264Fire precautions on site 267

Regulatory control 268The Joint Fire Code 268Means of escape 269Fire-fighting equipment 270Emergency plans 270Providing information 270

28 Instructions 277

Architect/contract administrator’s instructions 277Clerk of works’ directions 279Format and distribution of instructions 279

29 Variations and Post-Contract Cost Control 281

Variations 281Valuing variations 282

Dayworks 286Cost control 287

30 Interim Payments 290

Introduction 290Payments of pre-determined amounts at regular intervals 292Pre-determined payments at pre-determined stages 293Regular payments by detailed valuation 293

Certificates and payments under the SBC 293

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The architect/contract administrator 293The quantity surveyor 294The employer 294The contractor 295

Interim certificates under the SBC 296Unfixed materials and goods on site 298Unfixed materials and goods off site 298

Retention under the SBC 299Payments to sub-contractors under the SBC 299Value added tax 299Valuation and certificate forms 300

31 Completion, Defects and the Final Account 304

Practical completion 304Partial possession 307Possession of the building 307Defects and making good 308Final account 309

Adjustment of the contract sum 309Practical considerations 311

Final certificate 312

32 Delays and Disputes 316

Introduction 316Delays caused by the contractor 317Delays caused by the employer or his representatives 317Delays caused by events outside the control of either party 318

Force majeure 319Exceptionally adverse weather conditions 319

SBC procedure in the event of delay 320Best endeavours 320Notification of delay 321New completion dates 321Final adjustment 322Duties and decisions 322

Reimbursement of loss and/or expense under the SBC 323Liquidated damages 324Disputes and dispute resolution 325

Mediation 326Adjudication 326Arbitration 330Litigation 332

33 An Introduction to Sustainability in Construction 335

Sustainable development 335Key concepts 335

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The importance of the environment and the importance ofenergy 336

Sustainability in the built environment 336The regulatory framework for construction 337

European Union developments 337UK regulatory and policy developments 338

Assessing the sustainability of construction and buildings 340UK building environmental assessment schemes and standards 341International building environmental assessment schemes and

standards 342Author’s comment 343

Sustainable procurement 344Key concepts 344Guidance and standards 345

Other important issues 346References 346

34 Future Trends 349

Global -v- local 349Industry and corporate trends 351Opportunities and challenges 352

BIM 352Lean process and procedures 353Knowledge management 353Behaviours 354

Index 357

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Part I

Briefing theProject Team

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Chapter 1The Project Team

Introduction

Since the first editions of the Aqua Group’s books, the process of constructingand running a built asset has become increasingly complicated. From inceptionto completion, through site acquisition, design, tender, contract and construction,each stage of the process is time-consuming and can be considerably expensive.The need to optimise the process is of paramount importance and the best basefrom which to achieve this is proper and efficient team work. It is therefore vitalthat all members of the project team are fully conversant, not only with their ownrole but also with the roles of others and with the inter-relationships at each stageof the project. All members of the project team can then play their part fully andeffectively, contributing their particular expertise whenever required.

The make-up of any particular project team will depend upon the scopeand complexity of the project, the procurement route and the contractualarrangements selected. There are already many different methods of managing aproject and, no doubt, others will be developed in the future. This chapter is setin the context of traditional procurement and, although not exhaustive, providesan indication of the principles involved and the criteria by which other situationscan be evaluated.

Parties to a building contract andtheir supporting teams

The parties to a building contract are the employer and the contractor. Thoseappointed by these two will complete the project team which can include:

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4 The Aqua Group Guide to Procurement, Tendering and Contract Administration

The design team

▪ *employer▪ *architect▪ *quantity surveyor▪ *principal designer▪ project manager▪ structural engineer▪ building services engineers▪ sub-contractors

In addition, the employer may appoint:

▪ *clerk of works

The construction team

▪ *contractor and/or principal contractor▪ *site agent (or foreman, described in the contract as the person-in-charge)▪ sub-contractors

It should be noted, however, that only those marked with an asterisk are men-tioned in the Joint Contract Tribunal (JCT) Standard Building Contract WithQuantities 2011 Edition (hereinafter referred to as the ‘SBC’). This list is notexhaustive and to it could be added planners, landscape consultants, process engi-neers, programmers and the like. Furthermore, some roles may be combined androles such as the project manager or principal designer may be fulfilled by indi-viduals, firms or companies from varying technical backgrounds.

Rights, duties and responsibilities

The SBC is comprehensive on the subject of the rights, duties and responsibilitiesof the employer, the contractor and the other members of the project team men-tioned in it. Not all the members of the project team are mentioned in the SBCand those not mentioned will usually be given responsibility by way of delegationfrom those who are mentioned. The delegation of any duties and/or responsibil-ities must be spelt out elsewhere in the contract documents and this will usuallycomprise part of the bills of quantities.

Whatever the size of the project team, all members should be familiar with thecontract as a whole and, in particular, with those clauses directly concerning theirown work, so that the project can be run smoothly and efficiently. It should benoted that the duties comprise (i) discretionary duties; (ii) mandatory duties; and(iii) statutory duties.


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The employer

The employer is referred to throughout the contract and is expressly requiredto perform specific duties. The vast majority of these duties are codified and arecarried out by the architect/contract administrator on behalf of the employer.However, the employer, as one would expect, retains the important duty ofpayment to the contractor for works which are completed in accordance withthe contract. Such is the importance of the payment provisions in the SBC, andindeed in all construction contracts, that failure to adhere to the provisions maylead to statutory repercussions against the employer.

The architect/contract administrator

The architect/contract administrator is named in the contract and, as the desig-nation contract administrator suggests, is not only responsible for carrying outthe design of the works but also for the vast majority of the administrative dutiesunder the contract on behalf of the employer. The architect/contract administra-tor is also the only channel of communication for any un-named consultants withdelegated powers. Historically, the architect was recognised as being the personresponsible for administering the contract. However, since the designation ‘archi-tect’ is a protected title under section 20 of the Architects Act 1997, it can be usedin business or practice by only those with the requisite education, training andexperience. In this regard, if a person happened to carry out the duties of admin-istering the contract and that person was not entitled to practice as an ‘architect’,then he could be held to be in breach of the Act. The title ‘contract administrator’was added in order that other professionals could administer the contract withoutfear of breaching the Act.

The quantity surveyor

Quantity surveyors are named in the contract and their principal duties are inrelation to the payment provisions, value of the works including the value of vari-ations and, if so instructed, ascertainment of any loss and/or expense suffered bythe contractor as the consequence of a specified matter.

The principal designer

The Construction (Design and Management) Regulations 2015 (hereinafterreferred to as ‘CDM 2005’), which came into effect on 6 April 2015, intro-duced the ‘Principal Designer’ to the project team (having been previouslyreferred to as the planning CDM co-ordinator in the Construction (Design and


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Management) Regulations 2007). When a project is notifiable, the principaldesigner is appointed by the employer, pursuant to regulation 5(1)a of theCDM Regulations. Standard contracts such as the SBC make provision for theappointment of a Principal designer. For instance, Article 5 of the SBC identifiesthat the Principal designer is the architect/contract administrator unless suchother person is appointed.

The Principal designer is required to:

▪ plan, mange, monitor and co-ordinate matters relating to health and safetyduring the pre-construction phase to ensure the project is carried out withoutrisks to health and safety;

▪ liaise with the principal contractor regarding the contents of the health andsafety file, the information which the principal contractor needs for preparationof the construction phase plan, and any design development which may affectplanning and management of the construction work;

▪ assist the client in the provision of the pre-construction information requiredby regulation 4(4) and to provide such of that information as is relevant todesigners and contractors as is necessary;

▪ ensure that designers comply with their duties under Regulation 9 and ensurethat all persons working in relation to the pre-construction phase cooperatewith the client, the principal designer and each other; and

▪ prepare and update as necessary the project ‘health and safety file’ and, at theend of the construction phase, pass that file to the client; and

The clerk of works

The clerk of works may be appointed by the employer to act as an inspectorof the works, solely under the direction of the architect/contract administrator.Traditionally, the role would have been taken by an experienced tradesmansuch as a carpenter, joiner or bricklayer. However, with today’s highly complexand high-tech buildings, the architect/contract administrator, who will normallyrecommend the appointment, may need someone technically experienced orqualified and here the Institute of Clerks of Works will be able to assist in findingthe right person. The clerk of works should be ready to take up the duties beforethe date of possession (how early will depend on the size and complexity of theproject) and that person will either be resident on site or will visit the site on aregular basis during the period of the works.

The status of named consultants

While the architect/contract administrator and the quantity surveyor are expresslyreferred to in the contract and are expressly required to perform specific duties(many clauses include the phrase ‘the architect/contract administrator shall’), theyare not parties to the contract. Should the contractor have a grievance regarding


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the named consultants failing to carry out their duties prescribed in the contract,the only contractual recourse is to seek redress from the employer.

Unnamed consultants with delegated powers

The project manager, the structural or any other consulting engineers are notreferred to in the contract and nor do they have any express powers under thecontract. They do, however, have a duty, as the employer’s persons, not to impedethe progress of the contractor. Their position within the project team depends onthe agreement they have with the employer or the architect. Where they have beengiven responsibility by way of delegation, perhaps for design or site inspection,they should be named in the contract documents and the extent of their delegatedresponsibility should be defined so that they have contractual recognition. Sincethey have no powers under the contract, if they need to issue instructions then thismust be done through the architect/contract administrator.

As with the named consultants, if the contractor has any grievance against anunnamed consultant, the only contractual recourse is to seek redress from theemployer.

The project manager

A project manager, who may be considered as an employer’s representative,is likely to be appointed at the outset by the employer to whom he is directlyaccountable. The project manager is likely to be responsible for the programming,monitoring and management of the project in its broadest sense, from inceptionto completion, to seek a satisfactory outcome. This will involve giving adviceto the employer on all matters relating to the project, and may include theappointment of the architect, quantity surveyor and other consultants. However,since the project manager is not mentioned in the contract, the project manager’sposition in respect of the contract works, which will be only a part of his overallduties and responsibilities, must be clearly determined and described in thecontract documents. The duties and responsibilities delegated must not exceedthose set out in the contract in respect of the employer.

The principal contractor

Whilst a main contractor may feature as a person in the design team for cer-tain elements of the works, the contractor is usually appointed to construct theworks. That same contractor is usually appointed as the principal contractorwhilst carrying out the works. Under Article 6 of the SBC, the principal contractoris stated to be the contractor or such replacement as the employer shall appoint asthe principal contractor pursuant to regulation 5(1)b of CDM 2015. The defini-tion of a principal contractor in CDM 2015 allows for some flexibility but for the


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majority of construction contracts carried out under the SBC, the main contractorwill be appointed as the principal contractor.

Since a principal contractor must always be appointed while work is in progresson-site, problems could arise where enabling works contracts, such as demolitionor piling works, are required before the commencement of the main contract,or where a fitting-out contract follows completion of the main contract. In thesecircumstances, the employer will probably appoint a succession of principal con-tractors but care will need to be taken to ensure responsibility passes properly fromone principal contractor to the next. In the event that the employer (client) failsto contractor, Regulation 5(4) provides that the employer must fulfil the duties ofthe principal contractor.

The principal contractor’s duties are extensive and they are contained withinthree Regulations

12 – Construction phase plan; and health and safety file.13 – Duties of a principal contractor in relation to health and safety at the con-

struction phase.14 – Principal contractors duties to consult and engage with workers.

These duties can be summarised as follows:

(Construction phase plan and health and safety file)

1. Draw up a construction phase plan which sets out the health and safetyarrangements and site rules; ensure that the plan is appropriately reviewed,updated and revised from time to time.

2. Provide the principal designer with any information in its possession relevantto the health and safety file and, where the health and safety file is passedto the principal contractor (on conclusion of the principal designer’s duties)the principal contractor must ensure that the file is appropriately reviewed,updated and revised to take account of the work and any changes that haveoccurred.

(Duties of a principal contractor in relation to health and safety at the constructionphase)

3. Plan, manage and monitor the construction phase and coordinate mattersrelating to health and safety during the construction phase to ensure that,so far as is reasonably practicable, construction work is carried out withoutrisks to health or safety.

4. Organise cooperation between contractors.5. Coordinate implementation by the contractors of applicable legal require-

ments for healthand safety.6. Ensure that employers and, if necessary for the protection of workers,

self-employed persons apply the general principles of prevention in aconsistent manner and follow the construction phase plan.

7. Ensure that a suitable site induction Is provided.8. Ensure that the necessary steps are taken to prevent access by unauthorised

persons to the construction site.9. Ensure that welfare facilities that comply with the requirements of Schedule

2 of the Regulations are provided throughout the construction phase.


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10. Liaise with the principal designer and share information relevant to theplanning, management and monitoring of the pre-construction phase andthe coordination of health and safety matters during the pre-constructionphase.

(Principal contractor’s duties to consult and engage with workers)11. Make and maintain arrangements which will enable the principal contractor

and workers engaged in construction work to cooperate effectively in devel-oping, promoting and checking the effectiveness of measures to ensure thehealth, safety and welfare of the workers.

12. Consult workers or their representatives in good time on matters connectedwith the project which may affect their health, safety or welfare, in so faras they or their representatives have not been similarly consulted by theiremployer.

13. Ensure that workers or their representatives can (with certain limited excep-tions) inspect and take copies of any information which relate to the health,safety or welfare of workers at the site.

Sub-contractors

Sub-contractors may feature as members of the design team as well as members ofthe construction team. This is because, in addition to carrying out work on site,they are often involved in the design and planning of specialist works in advanceof the appointment of the main contractor. All sub-contractors employed by thecontractor under the SBC have ‘domestic’ status and are fully accountable tothe contractor. The contractor is fully liable to the employer for the sub-contractwork completed and there is only a single exception in this regard. The exceptionis when the employer chooses a ‘Named Specialist’ to carry out certain of theworks. If the employer opts for a Named Specialist then the employer will retainliability to the main contractor for any extension of time and loss and/or expensearising through the insolvency of a Named Specialist.

Statutory requirements

Under the SBC, the parties and the various consultants are charged with manyduties, some of which are discretionary (‘the architect/contract administratormay… ’) and some of which are mandatory (‘the contractor shall… ’). In addi-tion, express provision is made for compliance with duties and responsibilitiesimposed by legislation as follows:

▪ Article 5 Appointment of principal designer and any necessary subsequent prin-cipal designer pursuant to regulation 5(1)a of the Regulations.

▪ Article 7 Refer a dispute to adjudication under Housing Grants, Constructionand Regeneration Act 1996 (hereinafter referred to as ‘HGCRA 1996’).

▪ Clause 2.1 Comply with Construction Phase Plan – CDM Regulations andother Statutory Requirements.


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▪ Clause 2.2 Contractor’s Designed Portion – comply with Regulations 8 to 10of the CDM Regulations.

▪ Clause 2.9 Construction information and Contractor’s master programme –CDM Regulations.

▪ Clause 2.17 Divergences from Statutory Requirements.▪ Clause 2.18 Emergency compliance with Statutory Requirements.▪ Clause 2.19 Design liabilities and limitation – Defective Premises Act 1972.▪ Clause 2.21 Fees or charges legally demandable under any of the Statutory

Requirements.▪ Clause 3.23 CDM Regulations▪ Clause 4.6 Value Added Tax (VAT).▪ Clause 4.7 Construction Industry Scheme (CIS).▪ Clause 4.9 Interim payments – due dates and amounts due – HGCRA 1996 and

Local Democracy, Economic Development and Construction Act 2009 (here-inafter referred to as ‘LDEDC Act 2009’).

▪ Clause 4.10 Interim Certificates and valuations – HGCRAct 1996 and LDEDCAct 2009.

▪ Clause 4.11 Contractor’s Interim Applications and Payment Notices – HGCRAct 1996 and LDEDC Act 2009.

▪ Clauses 4.12–4.15 in respect of Interim payments – final date and amount,Pay Less Notices and general provisions and Final Certificate and final pay-ment – HGCR Act 1996 and LDEDC Act 2009.

▪ Clause 6.1 Liability of Contractor – personal injury or death, employer’s lia-bility insurance – Employers’ Liability (Compulsory Insurance) Act 1969.

▪ Clause 8.1 Meaning of insolvency – Insolvency Act 1986 or Bankruptcy (Scot-land) Act 1985.

▪ Clause 8.6 Corruption – Bribery Act 2010 or Local Government Act 1972.▪ Clause 8.7 Consequences of termination under clauses 8.4–8.6 HGCR Act

1996 and LDEDC Act 2009.▪ Clause 9.2 Adjudication – HGCR Act 1996 and LDEDC Act 2009.▪ Schedule 8 Health and Safety – Management of Health and Safety at Work

Regulations 1999 and Health and Safety (Consultation with Employees)Regulations 1996.

These may change from time to time and may be augmented by the addition ofRegulations issued by government under delegated legislation. Constant vigilanceis therefore required to keep up to date.

The CDM regulations

The Construction (Design and Management) Regulations 2015 place dutieson clients, principal desingers, designers and principal contractors to plan,co-ordinate and manage health and safety throughout all stages of a constructionproject. CDM 2015 came into force on 6 April 2015 evoking and replacingCDM 2007 which itself had consolidated a number of amendments to the


Par

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The Project Team 11

Construction (Design and Management) Regulations 1994 (hereinafter referredto as ‘CDM94’) made by the Management of Health and Safety at Work Reg-ulations 1999, the Construction (Health, Safety and Welfare) Regulations 1996and The Construction (Design and Management) (Amendment) Regulations2000 (the latter amendments merely made minor amendment to the definition ofdesigner).

It is worthy of note that contravention of the Regulations can be a criminaloffence and serious offenders are likely to face prosecution. The Regulations applyto all construction work (as defined by the Regulations) but with only certain partsapplying to some projects. The Regulations are in five parts and with supportingSchedules 1 to 5:

1. Introduction2. Client duties3. Health and safety duties and roles4. General requirements for all construction sites5. General

Clients are accountable for the impact of their approach on the health andsafety in respect of those working on or affected by a project. Many clients,however, will know little about construction health and safety and as a conse-quence they are not expected to plan or manage projects themselves. Insteadthey may engage and rely (to an extent) on an expert such that they ensure thatvarious obligations are completed, but they are not usually expected to do themthemselves. If, however, the client fails to appoint a principal designer and/ora principal contractor, the client, under regulations 5(3) and 5(4), becomesresponsible for fulfilling those duties. The client is also required to give notice inwriting to the HSE if a project is “notifiable” under the terms of CDM2015. Aproject is notifiable if construction work is expected to longer than 30days andhave more than 20 workers simultaneously at any point in the project or to exceed500 persondays. In practical terms it is the principal designer (along with otherdesigners) who has the most impact in the early stages of a project and, whilesuch duties will continue throughout the design and construction periods, it is inthe pre-contract stages that the majority of the designer’s responsibilities remainto be discharged. The designer should seek design to reduce, if not avoid, risksto health and safety. Any design must consider the construction and subsequentoccupational stages and the design documentation must include adequate infor-mation on health and safety. Such information should be included on drawingsor contained in specifications and should be included in the health and safety file.The key duty of principal contractors is to properly plan, manage and co-ordinatework during the construction phase in order to ensure that the risks are properlycontrolled.

The HSE provides a free-to-download internet version of its guidance notes forthe CDM2015 Regulations and a quick guide for clients, which provides practicaladvice on the application of the Regulations for all parties to whom they mightapply.


Part

I


Avoiding disputes

It is imperative that the project team implements formal procedures and properdocumentation to succeed in the efficient and smooth running of building con-tracts – clarity and certainty are perhaps the key words. This is particularly rel-evant when seeking to reduce risk and avoid disputes. As projects become morecomplex, costs increase, margins tighten and employers demand greater financialand quality control, the margin between success and failure narrows and there isless flexibility to absorb the ‘swings and roundabouts’ which feature in the con-struction industry. The likelihood of disputes arising therefore intensifies.

The project team must be vigilant and ensure that the procedures employedand any working relationships built up produce an environment of co-operationrather than discord. Just as the project team strives for perfection in its workingrelationships, so the JCT strives to refine its contracts to take account of legisla-tion, current practice and the latest decisions in the courts. Hence the frequentrevisions to the JCT’s standard building contracts which aim to achieve clarityand certainty in formalising the relationships between the parties.

In the event that a dispute does arise, the importance of proper documentationand compliance with formal procedures cannot be over-stated. If formal disputeproceedings become inevitable, it should be some comfort to know that properdocumentation will be an asset rather than a liability.

On the assumption that the contract documents are complete, tenders are rea-sonable and reflect current prices, and that information is available when requiredand not subject to late changes on the part of the employer or the architect, theorigin of a contractual dispute is seldom found to be in the dishonesty or incompe-tence of any party but rather in the failure of one member of the team to conveyinformation clearly to another. Unfortunately, what is clear in the mind of thearchitect, for example, may be ‘misty’ to the quantity surveyor and ‘foggy’ tothe contractor. This can lead to all sorts of problems! Conveying intentions andinstructions clearly is vital for the successful management of a contract and, alltoo often, it is the breakdown or failure of communications that is the root causeof a dispute.

Communications

Myriad books, conferences and papers have been devoted to the subject of‘communications’ and it is a matter that cannot be dealt with exhaustively here.However, set out below are certain golden rules to be observed by all membersof the team in their dealings with each other:

▪ Do not unnecessarily tamper with the standard clauses of the SBC, but if theemployer nevertheless requires it then employ a specialist.

▪ Ensure that the contract is executed prior to any start on site.▪ Ensure that all team members have certified copies of the contract documents.▪ Be realistic when completing the contract particulars and identify such infor-

mation in the bills of quantities at tender stage.▪ Issue all instructions to the contractor through the architect.

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