2013-09-15T13:45:34Z

Talk:The Board of Trustees of National Museums and Galleries on Merseyside v AEW Architects and Designers Limited and PIHL UK Limited and Galliford Try Construction Limited (in joint venture)

2013-09-15T13:45:04Z

Valuation of interim payments

2013-09-15T13:43:07Z

Najma Dunnett: Created page with " Interim valuation is an exercise that is a necessary pre-cursor to the issue of an interim certificate. Essentially it is a detailed breakdown by a contractor that constitutes a..."

Interim valuation is an exercise that is a necessary pre-cursor to the issue of an interim certificate. Essentially it is a detailed breakdown by a contractor that constitutes an application for part payment of work undertaken since its last application. It is checked and signed off by the contract administrator who often delegates the task to a cost consultant. It is generally used on larger projects to ease the contractor’s cash flow and on the premise that project finance is cheaper for the client than it is for individual contractors in the construction business..

The basis of the contractor’s application will vary depending on the type of contract being used for the work being undertaken. Calculations can be based on:
*Activity schedules assessed on percentage achieved or completion of the activity.
*Milestones reached on a pre-agreed programme.
*Measurement against a bill of quantities.
*Stage payments against calendar dates

Or a combination of the above.

The detailed build up of the valuation will show all work and entitlement up to the date of the interim valuation and comprise:
*'''Works packages.'''
*'''Variations. '''These elements should only be paid after the work has been undertaken based on additional costs actually incurred avoiding duplicate payment of concurrent costs or resources.
*'''Extension of time (EOT) and / or loss and expense.''' Payment entitlement is only due upon delay that is solely caused by the client or items of risk that fall to the client. Concurrent delay where the contractor has part liability may lead to an extension of time and relief of liquidated and ascertained damages but not entitle the contractor to additional payment.
*'''Preliminaries. '''Set up and dismantling costs (only incurred once) and running costs such as insurance and electrical consumption (that will occur regularly in an interim application), as well as staff and management costs together with overhead and profit (which can amount to 50% of the prelims cost).
*'''Special payments for off-site goods and materials. '''Such payments might apply on large items of manufacture prior to site installation but only when such payment has been pre-agreed. Such items might include transformers, chillers, lifts, prefabricated units or expensive cladding systems. The application must be accompanied by evidential proof (sometimes photographic), or a factory visit by the client’s representative, a certificate of client ownership and appropriate identification labelling on the items of completed manufacture, stored separately in the factory from other materials.
*'''Acceleration costs.''' Sometimes acceleration agreements can be negotiated as an addendum to the contract in lieu of extensions of time caused by elements constituting client’s risk. Such agreements will stipulate the payment provisions.
*'''Provisional Sums.''' These are the substitution of agreed costs for any items in the contract documents that were provisional and therefore subject to negotiation and resolution after further and better particulars were available upon which to fix a price.

Certain deductions might be made by the contract administrator when certifying the contractor’s application such as:
*'''Retention'''. As set out in the contract.
*'''Liquidated and ascertained damages.''' These can only be levied after the completion date has expired.
*'''Set off costs.''' The client’s right to deduct costs it has incurred through the contractor’s negligence such as a successful claim by an adjacent property owner for subsidence due to failure of temporary bracing of a party wall.
*'''Substandard or rejected work.''' Occasionally a client might agree a reduction in payment to reflect diminution of value rather than insisting on replacement.

(See pay less notice for more information)

The certified interim payment will then be calculated by subtracting the value of the previous valuation from the current valuation less the deductions. The resulting total and retention figure are then included in the interim certificate issued to the client for payment by the contract administrator. Under management contracts the works package contracts will be administered and valued by the management contractor or the construction manager to which the management staff costs and fee will be added prior to onward transmission to the client after sign off by the client’s certifying authority.

= Find out more =

=== Related articles on Designing Buildings Wiki ===
*Contract administrator.
*Construction contract certificates, notices and instructions.
*Interim certificate.
*Off site materials.
*Pay less notice.
*Payment notice.
*Set off.

[[Category:Contracts_/_payment]]
[[Category:Design]]
[[Category:Client_procedures]]

Off-site goods and materials

2013-09-15T13:36:35Z

Najma Dunnett: Redirected page to Off-site materials

#redirect:[[Off-site_materials|Off-site_materials]]

The Board of Trustees of National Museums and Galleries on Merseyside v AEW Architects and Designers Limited and PIHL UK Limited and Galliford Try Construction Limited (in joint venture)

2013-09-15T13:28:14Z

Najma Dunnett:

The Board of Trustees of National Museums and Galleries on Merseyside v AEW Architects and Designers Limited and PIHL UK Limited and Galliford Try Construction Limited (in joint venture) [2013] EWHC 2403 (TCC)

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This is a sorry tale of professional negligence. So much of this appears to be caused by the architect’s misunderstanding and failure to truly appreciate its contractual obligations and recognise the scope and nature of its design responsibility and services. This case bears the hallmarks of a practice in too deep but looking to make its mark on an iconic building.

In about 2005 the Museum of Liverpool (the Claimant) engaged Danish architects to design the new museum, who in turn subcontracted much of the architectural work to a local firm of architects, AEW (“AEW”). It subsequently entered into a direct appointment with the Claimant when the Danish architects fell out of the picture. AEW’s duties included design, contract administration as well as design team leader duties of co-ordinating the professional team and an inspection role. The Claimant also appointed a contractor, a joint venture between PIHL and Galliford Try (“the Contractor”), with a contractor design portion element to the building contract. The usual suspects were also appointed including quantity surveyor, engineer and M&E consultant.

AEW’s appointment with the Claimant included the following clause: “AEW further warrants and undertakes to the Employer that in respect of the complete architectural services in relation to the Project as set out in this Deed he has exercised and will continue to exercise reasonable skill and care and diligence to be expected of a professional person acting in the capacity of a consultant experienced in carrying out such services for a development comparable in size, scope, complexity and purpose to the Project and within the scope of this Deed.” AEW also undertook a significant design co-ordination role, which it failed to properly discharge. The scope of services included various references to “ensuring”, an onerous obligation, for instance: “As Design Team Leader the Consultant will liaise with the M&E, Structural, or consultants as well as other specialist subcontractors and consultants to ensure all elements of the Project are fully co-ordinated...”

The main design failings comprised the steps and seats to the amphitheatres as well as faulty suspended ceilings. The design detailing of the steps and seats proved too challenging for AEW causing a redesign with consequent delay and additional costs. It also failed to produce a specification for the reinforced concrete cover to the steels for the steps and seats. The judge, Mr Justice Akenhead, remarked that this was a “huge lapse by AEW” even if it thought this detail was for others to specify. Add to this the collapse of poorly designed and inadequately installed ceilings causing injury and damage to exhibits.

The judge found AEW in breach of contract and negligent in failing to properly design the architectural steps and seats as well as finding it in breach of its co-ordination and inspection obligations. On the evidence, the architect was found to be extremely poor at the co-ordination function and the judge noted that it was “possible that the individual architects involved misunderstood what roles AEW had contractually undertaken.” It was liable for approx £1.1m in damages to the Claimant.

AEW joined the Contractor into the proceedings as a third party claiming a contribution (pursuant to the Civil Liability (Contribution) Act 1978) from them for failures in aspects of their design and workmanship which overlapped with AEW’s duties. In terms of apportioning liability between the Contractor and architect, the judge found the Contractor 25% liable for design and workmanship breaches and ordered it to contribute about £200,000 towards AEW’s damages.

In a later judgment, AEW was also found liable for the defective suspended ceilings. The architect was held to have failed to inspect the ceilings pursuant to its periodic inspection obligations although afforded adequate opportunity to inspect the works. A further £1.2m was awarded in the Claimant’s favour.

This case serves to underline the significance of clarifying at the outset of a project the roles and responsibilities of the parties and identifying who has (design) responsibility for what aspects. It is essential that this is reflected clearly in the contract documents. AEW did not clearly understand and appreciate the nature and extent of its contractual design obligations or its extensive co-ordination role. Surprisingly, AEW did not believe it had any design responsibility for the steps and seats and hence the serious problems that arose; it believed the Contractor was responsible for those aspects. The judge noted the unwarranted reliance and buck passing to others, when, as design leader, it should have taken important decisions itself.

The case also demonstrates the joint liability issues that arose amongst the consultants and the Contractor but it was the architect in the firing line.

Amongst the issues raised in this case are the importance of timely legal advice, the necessity to consider early settlement, which the court tried to facilitate, as well as the careful selection of experts. Whilst having your day in court is right for some, consider the ramifications of having the details of your firm’s alleged professional negligence played out in open court for all to see. The consequences of this cannot be underestimated.

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[[File:Ndunnett profile.jpg|RTENOTITLE]]

This article was created by construction lawyer [[User%3ANajma%20Dunnett|Najma Dunnett]] as part of an ongoing series of legal articles. Follow Najma on Twitter to keep up to date with the latest changes in construction law [https://twitter.com/NDunnett_Cons @NDunnett_Cons]. 

= Find out more =

=== Related articles on Designing Buildings Wiki ===
*Breach of contract.
*Contract.
*Damages.
*Deed.
*Defects.
*Negligence.

=== External references ===
*[http://www.bailii.org/ew/cases/EWHC/TCC/2013/2403.html BAILII decision].

[[Category:Case_law]]

User:Najma Dunnett

2013-09-15T13:25:46Z

Najma Dunnett:

User:Najma Dunnett

2013-09-09T08:19:08Z

Najma Dunnett:

User:Najma Dunnett

2013-09-09T08:18:16Z

Najma Dunnett:

== Najma Dunnett ==

N Dunnett Consulting Limited

phone: 07971 320381

follow: [https://twitter.com/NDunnett_Cons @NDunnett_Cons]

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N Dunnett Consulting provides legal advice to contractors, architects, engineers, quantity surveyors, project managers and other consultants on their terms of appointment, including reviewing, drafting and negotiating appointment terms, collateral warranties, novation agreements and other associated documents.

The company also offers advice on building contract terms and risk management, training and compliance services.

Najma is a construction lawyer with more than ten years’ post qualification experience. She has practised both contentious and non-contentious construction and commercial law in private practice as well as in-house for an international firm of architects and for an architects’ insurance mutual company.

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Articles contributed by Najma:

*[[Atkins%20v%20Secretary%20of%20State%20for%20Transport|Atkins v Secretary of State for Transport 2013]].

*[[Bonds%20and%20guarantees|Bonds and guarantees]].

*[[Derek%20Hodd%20Limited%20v%20Climate%20Change%20Capital%20Limited|Derek Hodd Limited v Climate Change Capital Limited]].

*[[FG%20Skerritt%20Ltd%20v%20Caledonian%20Building%20Systems%20Ltd|FG Skerritt Ltd v Caledonian Building Systems Ltd 2013]].

*[[Hunt%20and%20others%20v%20Optima%20%28Cambridge%29%20Limited%20and%20Strutt%20%26%20Parker|Hunt and others v Optima (Cambridge) Limited and Strutt & Parker]]. ‎ ‎

*[[Oakapple%20Homes%20%28Glossop%29%20Ltd%20v%20DTR%20%282009%29%20Ltd%20and%20others|Oakapple Homes (Glossop) Ltd v DTR (2009) Ltd and others 2013]].

*[[TSG%20Building%20Services%20Plc%20v%20South%20Anglia%20Housing%20Limited|TSG Building Services Plc v South Anglia Housing Limited]].

*[[The%20Late%20Payment%20of%20Commercial%20Debts%20Regulations%202013|The Late Payment of Commercial Debts Regulations 2013]].

*[[West%20%26%20Anor%20v%20Ian%20Finlay%20%26%20Associates|West & Anor v Ian Finlay & Associates]].

*[[Westshield%20Civil%20Engineering%20Ltd%20and%20Westshield%20Ltd%20v%20Buckingham%20Group%20Contracting%20Ltd|Westshield Civil Engineering Ltd and Westshield Ltd v Buckingham Group Contracting Ltd]].

*[[Zennstrom%20%26%20Anor%20v%20Fagot%20%26%20Ors|Zennstrom & Anor v Fagot & Ors]].

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N Dunnett Consulting Limited is a limited company registered in England and Wales (No. 8410048). Registered office: 20 Eton Avenue, London N12 0BB.

2013-05-16T10:25:27Z

Najma Dunnett: