Designing Buildings - User contributions [en]

Certificate of non completion

2019-01-06T11:51:27Z

Rhea1910:

The date for completion of construction works (or dates for completion of sections of the works) is generally set out in the contract particulars. However, it is not uncommon for delays to cause the completion date to be missed, that is, the works are not complete, and so a certificate of practical completion cannot be issued by the date for completion.

Where the client is responsible for the delay, an extension of time may be granted, the completion date adjusted, and the contractor may be entitled to claim loss and expense.

Where the contractor is responsible for the delay, the client may be entitled to claim liquidated and ascertained damages (at a rate set out in the contract particulars).

Some contracts (such as the JCT Standard Form of Building Contract), require that the contract administrator issues the contractor with a certificate of non-completion (sometimes referred to as a ‘non-completion certificate’ or ‘non-completion notice') as a prerequisite to claiming liquidated and ascertained damages.

The certificate of non-completion gives formal written notice to the contractor that they have failed to complete the works described in the contract by the completion date that was last agreed (the original completion date may have been adjusted during the course of the works).

The contract administrator must give due consideration to any applications for extension of time before issuing a certificate of non-completion, and if there are subsequent extensions of time that result in the completion date being adjusted, and the contractor then fails to meet this adjusted date, a new certificate of non-completion must be issued.

Where the contract provides for sectional completion of the works, separate certificates of non-completion must be issued for each section that is not completed by the required date.

The client may then deduct liquidated and ascertained damages from payments otherwise due to the contractor, providing that an appropriate notice has been issued (a pay less notice) setting out the basis of the calculation. Contractors may challenge claims for liquidated and ascertained damages if the procedures and the notice periods set out in the contract have not been followed.

Some contracts (such as the JCT Minor Works Building Contract) do not require that a certificate of non-completion is issued, although it may be considered best practice to issue one anyway.

It is very important when deducting liquidated damages to ensure that the correct contractual procedures are adhered to. In the case of [[Octoesse_LLP_v_Trak_Special_Projects_Ltd|Octoesse LLP v Trak Special Projects Ltd.]] [2016], Justice Jefford held that Octoesse was not entitled to deduct liquidated damages as they had agreed to an extension of time after a certificate of non completion had been issued. The JCT Intermediate Building Contract is constructed such that:

'If the Contractor fails to complete the Works or a Section by the relevant Completion Date, the Architect/Contract administrator shall issue a certificate to that effect. If an extension of time is made after the issue of such certificate, the extension shall cancel that certificate and the Architect/Contract Administrator shall where necessary issue a further certificate.'

As Octoesse had not issued a further certificate of non completion, they were not entitled to deduct liquidated damages.

To find out more, see Octoesse LLP v Trak Special Projects Ltd.

-----
(Clause 2.31) If the contractor fails to complete the works by the completion date, then the architect shall issue a certificate of non-completion.

The [https://www.designingbuildings.co.uk/wiki/Certificate_of_non-completion certificate of non-completion] gives formal written [https://www.designingbuildings.co.uk/wiki/Notice notice] to the [https://www.designingbuildings.co.uk/wiki/Contractors contractor] that they have failed to complete the [https://www.designingbuildings.co.uk/wiki/Works works] described in the [https://www.designingbuildings.co.uk/wiki/Contract contract] by the [https://www.designingbuildings.co.uk/wiki/Completion_date completion date] that was last agreed.

If the architect does not do this, they are denying the client their ability to claim for LAD’s.

The [https://www.designingbuildings.co.uk/wiki/Contract_administrator contract administrator] must give due consideration to any applications for [https://www.designingbuildings.co.uk/wiki/Extension_of_time extension of time] before issuing a [https://www.designingbuildings.co.uk/wiki/Certificate_of_non-completion certificate of non-completion].

Once this is issued, the employer may claim LAD’s.

(2.31) However, if a new completion date is fixed after the issue of such a certificate, such a fixing shall cancel that certificate and the CA shall issue a further certificate.

It is very important when deducting [https://www.designingbuildings.co.uk/wiki/Liquidated_damages liquidated damages] to ensure that the correct contractual procedures are adhered to. Under all JCT forms, the employer must give the contractor written notice.

JCT SBC 16 clause 2.32 ‘Payment or allowance of liquidated damages’ states that:

# The CA must issue a non-completion certificate (2.32.1.1)
# A notice that the Employer may require payment of or withhold or deduct LADs (2.32.1.2)
# A notice demanding payment of LADs or withholding or deducting them (2.32.2)

The Employer is required to, no later than 5 days before the final date for payment of the final amount due under the contract, serve a notice stating that, for the period between the Completion Date and the date of practical completion of the Works, (i) he requires the Contractor to pay liquidated damages (clause 2.32.2.1) and/or (ii) he will withhold or deduct liquidated damages (clause 2.32.2.2).

[https://www.designingbuildings.co.uk/wiki/Contractors Contractors] may challenge [https://www.designingbuildings.co.uk/wiki/Claims claims] for [https://www.designingbuildings.co.uk/wiki/Liquidated_and_ascertained_damages liquidated and ascertained damages] if the procedures and the [https://www.designingbuildings.co.uk/wiki/Notice notice] periods set out in the [https://www.designingbuildings.co.uk/wiki/Contract contract] have not been followed.

= Related articles on Designing Buildings Wiki =

* Certificate of practical completion.
* Completion.
* Construction contract.
* Contract administrator.
* Extension of time.
* Liquidated and ascertained damages.
* Loss and expense.
* Pay less notice.
* Practical completion.
* Octoesse LLP v Trak Special Projects Ltd
* Topping out.

=== External references ===

* Standard forms for certificates of non completion are available – e.g. [http://www.ribabookshops.com/item/certificate-of-non-completion/2878/ RICS Certificate of Non-Completion].

[[Category:Articles_needing_more_work]] [[Category:Contracts_/_payment]]

Planning permission

2019-01-05T15:39:16Z

Rhea1910:

= Introduction =

Planning permission is the legal process of determining whether proposed developments should be permitted. Responsibility for planning lies with local planning authorities (usually the planning department of the district or borough council). The legislation, policy and guidance that underpins planning in England can be found on the government's [http://planningguidance.planningportal.gov.uk/ National Planning Practice Guidance] website.

Other than [[Permitted_development|permitted developments]], (which are considered to have insignificant impact), all developments require planning permission. The [[The_Town_and_Country_Planning_(General_Permitted_Development)_Order|Town and Country Planning (General Permitted Development) Order 1995]] sets out details for developments that might be permitted without requiring a planning application.

The Ministry of Housing, Communities and Local Government (MHCLG) decides national planning policy for England and this is set out in the National Planning Policy Framework.

= Detailed and outline planning applications =

Planning applications can be detailed or outline:

* Outline planning applications can be used to find out whether a proposed development is likely to be approved by the planning authority before substantial costs are incurred developing a detailed design. Outline planning applications allow the submission of outline proposals, the details of which may be agreed as 'reserved matters' applications at a later stage. NB: Applying for outline planning consent may not fall within the scope of services for members of the consultant team unless it has been separately identified under 'other activities'
* Detailed planning applications submit all the details of the proposed development at the same time.

= Planning risk =

Planning permission can be the greatest risk on a construction project.

Deciding whether to make an outline or detailed application, and when to make an application is of great importance. Typically, clients wish to secure planning permission as soon as possible so as to minimise abortive design costs. However, being granted planning permission may become more likely as the design develops and more details can be provided to the planning authority.

See Planning risk for more information.

= General procedures =

Before making a planning application it is important to check with the local planning authority; when planning meetings are held and the what procedures are followed (procedures of planning meetings, number and types of drawings required, notices required, public consultation requirements, etc.). It is also wise to enter into early consultations with the the local planning authority to gauge their likely reaction to the proposed development.

NB: See BPF/LGA 10 commitments for effective pre-application engagement January 2014.

Records should be kept of all communications with the local planning authority. This process will generally be led by the lead designer who may invite the client to attend particularly important meetings.

On large or sensitive projects it may be desirable to carry out an external consultation process. Ideally this process should being early in the life of the project in order that it can influence the preparation of the brief.

See Consultation process for more information.

Planning applications require payment of a fee (see the [http://www.planningportal.gov.uk/planning/usefultools/ Planning Portal] for more details) which should be checked with the local planning authority. They also require specific forms to be completed, a cover letter describing the nature of the application, a list of drawings, and ownership certificates (see the articles on Outline planning application and Detailed planning application for more information).

The start date for the period for determination is defined by the date stamp on the application. See How long does it take to get planning permission.

The lead designer should obtain a copy of the planning officers report to the planning committee prior to the committee meeting and may, if permitted, wish to make a oral representation to the planning committee

Permissions may be the subject of planning conditions, where, rather than refusing a planning application, a local planning authority might grant permission but might, for example, restrict the use of the site or require additional approvals for specific aspects of the development.

Permissions may also be subject to planning obligations (also known as Section 106 Agreements) which are used to mitigate or compensate for negative impacts of development that might otherwise make them unacceptable. The development may also be subject to a community infrastructure levy.

The introduction of the community infrastructure levy should result in a scaling back in the imposition of planning obligations.

If planning permission is refused, the applicant may lodge a planning appeal which will then usually be decided by an inspector acting for the Secretary of State. See Planning appeal for more information.

NB: Many planning applications are now made online via the Planning Portal, which also allows supporting documents to be uploaded, fees paid, and offers a great deal of guidance information. See Planning Portal for more information.

-----
Statutory Planning process

Advise may be required on whether LBC or Full Planning permission is needed.

Propose pre-application meeting to give client comfort or to be alerted to any problems or local opposition. Invite

Propose early consultation with local community

Advise on Planning process (D&A statement, environmental information) and timescale (8 weeks for a minor development; 13 weeks for a major development; appeal of conditions or refusals can be made for 6 months - decided by an inspector)

Once the planning application has been received, accompanied by all the necessary information, it should be validated as soon as reasonably practicable. The LPA should then start the determination process. Notification should be given to the applicant in writing. Normally, validation will take 3-5 working days from the date of receipt.

LBC - similar process and timescale.

If the LPA turns down an application, the applicant can make an appeal and have the matter resolved by a Planning Inspector. An appeal is also permitted on the grounds of 'non-determination' however this should be a last resort.

Explain section 106 and CIL

Land Law

- Party wall act 1996

* Explain rights of adjoining property owners
* Advise client to make informal contact
* Might appoint party wall surveyor
* Mention rights to light, overlooking issues etc.

Health and Safety Legislation and Responsibilities.

* CDM 2015
* The need for a CDM co-ordinator
* General duties of the act

Access Requirements

* Disability Discrimination Act 1995 and Building Regs Part M. An access consultant can advise.

Building Regulations 2010

* Provides guidance that complies with the regulations.
* Compliance overseen by Building Control

Other relevant legislation:

<ul>
<li>Fire Risk Assessment</li>
<li>Highways Act</li>
<li>Clean Air Act</li>
<li>Control of Pollution Act</li>
<li>Flood Risk Assessment - Flood and Water Management Act 2010
-----</li></ul>

= Detailed procedures =

== Varying permissions ==

Section 96A of the Town and Country Planning Act allows 'non-material' amendments to be made to planning permissions without the need to submit fresh application. What qualifies as 'non-material' is considered to be context specific and so is left to the Local Planning Authority to decide. (Ref. MHCLG: [https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/5997/1729942.pdf Greater flexibility for planning permissions: Guidance].)

Section 73 of the Town and Country Planning Act allows changes to the conditions applying to existing permissions and if the conditions allow, this can be used to allow minor material changes. Minor material changes are described as changes 'whose scale and nature results in a development which is not substantially different from the one which has been approved.' (Ref. MHCLG: [https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/5997/1729942.pdf Greater flexibility for planning permissions: Guidance].)

== Additional permissions ==

Additional permission may be required for sites within conservation areas, for listed buildings, for sites including tree preservation orders, or for designated areas.

Demolition requires prior notification to be submitted to the local authority for determination on whether approval is required of the method of demolition where buildings are over 50 cubic metres and for walls or gates.

Where demolition works may have an environmental impact, a screening opinion is required from the local authority on whether a full Environmental Impact Assessment (EIA) is required. Conservation area consent is required for demolition of a building over 115 cubic metres, and listed building consent is required for any part of a listed building.

== Special measures ==

Local planning authorities can be placed under special measures if they fail to determine 70% or more of the major applications they handle within 13 weeks (applications for 10 homes or more, or the equivalent commercial floorspace), or if more than 20% of major applications decisions are overturned on appeal.

Local planning authorities under special measures will have applications determined by the planning inspectorate and will lose a proportion of the application fee. Special measures designation will be reviewed annually to allow improving authorities to regain their determination powers.

== Called-in planning applications ==

Under certain circumstances, the Secretary of State may 'call in' planning applications to decide them themselves rather than leaving them to the local planning authority. For more information see [[Called-in_planning_application|Called-in planning applications.]]

= Reform =

The government sees the planning system as a barrier to growth and as a consequence has brought in a large number of significant changes aimed at speeding up the process and reducing red tape. This is seen by some as a welcome relaxation enabling businesses and home owners to adapt more easily to changing circumstances, whilst others see it as a bonfire of policy that creates a developer's charter.

== Penfold review (2010) ==

Following the recommendations of the Killian Pretty Review in 2008, the Penfold Review made a number of recommendations for streamlining non-planning consents, some of which are now being implemented by the government. For more information see Penfold Review. See Penfold Review for more information.

== Localism Act (2011) ==

The Localism Act sets out a series of measures intended to transfer power from central government to local authorities and local communities. It is intended ‘…to help people and their locally elected representatives to achieve their own ambitions.’ In relation to planning, this includes; abolishing regional planning strategies, creates neighbourhood planning and reforms the community infrastructure levy. See Localism Act for more information.

== National Planning Policy Framework (2012) ==

The National Planning Policy Framework proposes that there should be a presumption in favour of sustainable development, that determination should be plan-led and that planning authorities should grant permission wherever the local plan is absent, silent, or out of date. The framework also proposes that local communities will be able to produce their own neighbourhood plans.

For more information see the article on the National Planning Policy Framework, and Planning policy replaced by the NPPF.

== Taylor review (2012) ==

In addition to the radical reform brought about by the framework, Lord Taylor's review of planning guidance [https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/39821/taylor_review.pdf External review of government planning practice guidance: report submitted by Lord Taylor of Goss Moor] has found that it is unfit for purpose. He suggests that 80% could be scrapped and has called for the process to begin early in 2013. See Taylor Review for more information.

In October 2013, Planning Minister Nick Boles announced [https://www.gov.uk/government/news/simplified-regulations-will-make-planning-easier aphased programme to reduce the number of technical planning regulations] to 78 - a reduction of 57%.

== Growth and Infrastructure Act (2013) ==

The Growth and Infrastructure Act sets out a series of reforms intended to reduce the red tape that the government considers hampers business investment, new infrastructure and job creation. It is hoped that this will help the UK recover from recession and allow it to compete more effectively on the global stage.

See Growth and Infrastructure Act for more information.

== Permitted development (2013) ==

In May 2013, the Town and Country Planning (General Permitted Development) (Amendment) (England) Order 2013 came into force, making changes to permitted development rights. See Town and Country Planning (General Permitted Development) (Amendment) (England) Order for more information. Further changes are proposed (see Taylor review above).

== Design and access statements (2013) ==

In June 2013, the Town and Country Planning (Development Management Procedure) (England) (Amendment) Order 2013 came into force, limiting the requirements for applicants to produce design and access statements. See Design and access statements for more information.

NB: Despite all of these changes, in April 2014, Prime Miniser David Cameron re-stated that 'Simplifying the planning system, making it faster, is absolutely essential if we’re going to build that infrastructure that the country needs.' (Ref. [https://www.gov.uk/government/speeches/speech-by-david-cameron-and-george-osborne-at-skanska David Cameron and George Osborne speech & Q&A at Skanska], 22 April 2014.)

= Devolution of planning =

See:

* Scottish planning policy.
* Welsh planning policy.
* Northern Ireland planning policy.

= Related articles on Designing Buildings Wiki =

* Avoiding planning permission pitfalls.
* Building codes.
* Building regulations.
* Community Infrastructure Levy.
* Conservation areas.
* Delegated powers.
* Design and access statements.
* Detailed planning application.
* Environmental impact assessment.
* How long does it take to get planning permission.
* How long does planning permission last.
* Listed buildings.
* National Planning Policy Framework.
* National Planning Practice Guidance.
* Neighbourhood planning.
* Outline planning application.
* Permission.
* Permission for mining or working of minerals.
* Permitted development.
* Planning (Listed Buildings and Conservation Areas) Act.
* Planning appeal.
* Planning authority.
* Planning conditions.
* Planning enforcement.
* Planning fees.
* Planning legislation.
* Planning objection.
* Planning obligations.
* Planning performance agreement.
* Pre-application advice.
* Sui generis and planning permission.
* The difference between planning permission building regulations approval.
* Town and Country Planning Act.
* Use class.
* What approvals are needed before construction begins.

[[Category:Planning_permission]] [[Category:Property_law]] [[Category:Design]] [[Category:Property_development]] [[Category:Roles_/_services]]

Flood risk

2019-01-05T15:26:35Z

Rhea1910:

= Introduction =

The National Planning Policy Framework considers flood risk to be the combination of the probability and the potential consequences of flooding from all sources, including:

* Rivers and the sea.
* Rainfall.
* Rising groundwater.
* Overwhelmed sewers and drainage systems.
* Reservoirs, canals and lakes.
* Other artificial sources.

= Flood zone and flood risk tables =

The Environment Agency has produced a [http://maps.environment-agency.gov.uk/wiyby/wiybyController?x=357683.0&y=355134.0&scale=1&layerGroups=default&ep=map&textonly=off&lang=_e&topic=floodmap Flood Map for Planning] which has three zones of flooding and refers to the probability of the river and sea flooding but does not consider the presence of any defences.

The zones and definitions are as follows:

* Zone 1 Low probability: Land having a less than 1 in 1,000 annual probability of river or sea flooding.
* Zone 2 Medium probability: Land having between a 1 in 100 and 1 in 1,000 annual probability of river flooding; or land having between a 1 in 200 and 1 in 1,000 annual probability of sea flooding.
* Zone 3a High probability: Land having a 1 in 100 or greater annual probability of river flooding; or land having a 1 in 200 or greater annual probability of sea flooding.
* Zone 3b The Functional Floodplain: This zone comprises land where water has to flow or be stored in times of flood.

= Planning and flood risk =

The National Planning Policy Framework (NPPF) sets out policies to avoid inappropriate development in areas at risk of flooding. This includes requiring new development to be flood resilient and resistant where appropriate. The NPPF defines tests that local planning authorities are expected to abide by in order to protect people and property. If the tests cannot be met, new development should not be permitted. The steps are outlined below.

=== Assessment of flood risk ===

A Strategic Flood Risk Assessment is undertaken by the local planning authority and informs local flood risk. In any areas that are at a high risk of flooding or for development on sites of over 1 hectare, site-specific flood risk assessments are required to accompany planning applications.

=== Avoid flood risk ===

Local planning authorities will aim to avoid site-selection in areas of high flood risk. Development is targeted where the risk of flooding is lowest.

=== Manage and mitigate flood risk ===

If development is needed on land at risk of flooding and no alternative options exist, it is necessary for the development to be flood resilient and resistant for the development’s lifetime.

= Building Regulations =

Approved document C, Site preparation and resistance to contaminants and moisture, suggests that when building in flood prone areas, buildings can be constructed to mitigate some of the effects of flooding:

* Elevated groundwater levels or flow of subsoil water across the site can be alleviated by the provision of adequate sub-soil drainage.
* Sewer flooding due to backflow or surcharging of sewers or drains can be addressed through the use of non-return valves and anti-flooding devices.
* Intrusion of groundwater through floors can be addressed through the use of water resistant construction.
* Where there is a risk of the entry of water into floor voids, provision to inspect and clear out sub-floor voids can be considered.

It references: Improving the flood performance of new buildings – Flood resilient construction, Communities and Local Government, Defra and the Environment Agency, May 2007, as a source of further information.

Flood and Water Management Act 2010

* The landowners have the primary responsibility for safeguarding their land and other property against flooding
* Must provide a Flood Risk Assessment (FRA) demonstrating whether any proposed development is likely to be affected by flooding
* Documents: Planning Policy Statement 25 - Development and Flood Risk Practice Guide

= Find out more =

=== Related articles on Designing Buildings Wiki. ===

* Applying flood resilience technologies GG 84.
* Building flood resilience.
* Catchment flood management plans.
* Coastal defences.
* Engineers and hurricanes.
* Flood and Water Management Act.
* Flood defences.
* Flood insurance.
* Flood risk management plans.
* Future flood prevention.
* Hurricane design considerations.
* Managing and responding to disaster.
* Managing risks in existing buildings: An overview of UK risk-based legislation for commercial and industrial premises (FB 86).
* Pitt Review.
* Planning for floods (this article needs more work).
* Planning permission.
* Rainwater harvesting.
* River engineering.
* Sustainable urban drainage systems.
* Thames barrier.
* Water engineering.

=== External references ===

* [http://maps.environment-agency.gov.uk/wiyby/wiybyController?x=357683.0&y=355134.0&scale=1&layerGroups=default&ep=map&textonly=off&lang=_e&topic=floodmap Flood Map for Planning].

[[Category:Planning_permission]] [[Category:Policy]]

Planning permission

2019-01-05T15:21:15Z

Rhea1910:

= Introduction =

Planning permission is the legal process of determining whether proposed developments should be permitted. Responsibility for planning lies with local planning authorities (usually the planning department of the district or borough council). The legislation, policy and guidance that underpins planning in England can be found on the government's [http://planningguidance.planningportal.gov.uk/ National Planning Practice Guidance] website.

Other than [[Permitted_development|permitted developments]], (which are considered to have insignificant impact), all developments require planning permission. The [[The_Town_and_Country_Planning_(General_Permitted_Development)_Order|Town and Country Planning (General Permitted Development) Order 1995]] sets out details for developments that might be permitted without requiring a planning application.

The Ministry of Housing, Communities and Local Government (MHCLG) decides national planning policy for England and this is set out in the National Planning Policy Framework.

= Detailed and outline planning applications =

Planning applications can be detailed or outline:

* Outline planning applications can be used to find out whether a proposed development is likely to be approved by the planning authority before substantial costs are incurred developing a detailed design. Outline planning applications allow the submission of outline proposals, the details of which may be agreed as 'reserved matters' applications at a later stage. NB: Applying for outline planning consent may not fall within the scope of services for members of the consultant team unless it has been separately identified under 'other activities'
* Detailed planning applications submit all the details of the proposed development at the same time.

= Planning risk =

Planning permission can be the greatest risk on a construction project.

Deciding whether to make an outline or detailed application, and when to make an application is of great importance. Typically, clients wish to secure planning permission as soon as possible so as to minimise abortive design costs. However, being granted planning permission may become more likely as the design develops and more details can be provided to the planning authority.

See Planning risk for more information.

= General procedures =

Before making a planning application it is important to check with the local planning authority; when planning meetings are held and the what procedures are followed (procedures of planning meetings, number and types of drawings required, notices required, public consultation requirements, etc.). It is also wise to enter into early consultations with the the local planning authority to gauge their likely reaction to the proposed development.

NB: See BPF/LGA 10 commitments for effective pre-application engagement January 2014.

Records should be kept of all communications with the local planning authority. This process will generally be led by the lead designer who may invite the client to attend particularly important meetings.

On large or sensitive projects it may be desirable to carry out an external consultation process. Ideally this process should being early in the life of the project in order that it can influence the preparation of the brief.

See Consultation process for more information.

Planning applications require payment of a fee (see the [http://www.planningportal.gov.uk/planning/usefultools/ Planning Portal] for more details) which should be checked with the local planning authority. They also require specific forms to be completed, a cover letter describing the nature of the application, a list of drawings, and ownership certificates (see the articles on Outline planning application and Detailed planning application for more information).

The start date for the period for determination is defined by the date stamp on the application. See How long does it take to get planning permission.

The lead designer should obtain a copy of the planning officers report to the planning committee prior to the committee meeting and may, if permitted, wish to make a oral representation to the planning committee

Permissions may be the subject of planning conditions, where, rather than refusing a planning application, a local planning authority might grant permission but might, for example, restrict the use of the site or require additional approvals for specific aspects of the development.

Permissions may also be subject to planning obligations (also known as Section 106 Agreements) which are used to mitigate or compensate for negative impacts of development that might otherwise make them unacceptable. The development may also be subject to a community infrastructure levy.

The introduction of the community infrastructure levy should result in a scaling back in the imposition of planning obligations.

If planning permission is refused, the applicant may lodge a planning appeal which will then usually be decided by an inspector acting for the Secretary of State. See Planning appeal for more information.

NB: Many planning applications are now made online via the Planning Portal, which also allows supporting documents to be uploaded, fees paid, and offers a great deal of guidance information. See Planning Portal for more information.

-----
Statutory Planning process

Advise may be required on whether LBC or Full Planning permission is needed.

Propose pre-application meeting to give client comfort or to be alerted to any problems or local opposition. Invite

Propose early consultation with local community

Advise on Planning process (D&A statement, environmental information) and timescale (8 weeks for a minor development; 13 weeks for a major development; appeal of conditions or refusals can be made for 6 months - decided by an inspector)

LBC - similar process and timescale.

Explain section 106 and CIL

Land Law

- Party wall act 1996

* Explain rights of adjoining property owners
* Advise client to make informal contact
* Might appoint party wall surveyor
* Mention rights to light, overlooking issues etc.

Health and Safety Legislation and Responsibilities.

* CDM 2015
* The need for a CDM co-ordinator
* General duties of the act

Access Requirements

* Disability Discrimination Act 1995 and Building Regs Part M. An access consultant can advise.

Building Regulations 2010

* Provides guidance that complies with the regulations.
* Compliance overseen by Building Control

Other relevant legislation:

<ul>
<li>Fire Risk Assessment</li>
<li>Highways Act</li>
<li>Clean Air Act</li>
<li>Control of Pollution Act</li>
<li>Flood Risk Assessment - Flood and Water Management Act 2010
-----</li></ul>

= Detailed procedures =

== Varying permissions ==

Section 96A of the Town and Country Planning Act allows 'non-material' amendments to be made to planning permissions without the need to submit fresh application. What qualifies as 'non-material' is considered to be context specific and so is left to the Local Planning Authority to decide. (Ref. MHCLG: [https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/5997/1729942.pdf Greater flexibility for planning permissions: Guidance].)

Section 73 of the Town and Country Planning Act allows changes to the conditions applying to existing permissions and if the conditions allow, this can be used to allow minor material changes. Minor material changes are described as changes 'whose scale and nature results in a development which is not substantially different from the one which has been approved.' (Ref. MHCLG: [https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/5997/1729942.pdf Greater flexibility for planning permissions: Guidance].)

== Additional permissions ==

Additional permission may be required for sites within conservation areas, for listed buildings, for sites including tree preservation orders, or for designated areas.

Demolition requires prior notification to be submitted to the local authority for determination on whether approval is required of the method of demolition where buildings are over 50 cubic metres and for walls or gates.

Where demolition works may have an environmental impact, a screening opinion is required from the local authority on whether a full Environmental Impact Assessment (EIA) is required. Conservation area consent is required for demolition of a building over 115 cubic metres, and listed building consent is required for any part of a listed building.

== Special measures ==

Local planning authorities can be placed under special measures if they fail to determine 70% or more of the major applications they handle within 13 weeks (applications for 10 homes or more, or the equivalent commercial floorspace), or if more than 20% of major applications decisions are overturned on appeal.

Local planning authorities under special measures will have applications determined by the planning inspectorate and will lose a proportion of the application fee. Special measures designation will be reviewed annually to allow improving authorities to regain their determination powers.

== Called-in planning applications ==

Under certain circumstances, the Secretary of State may 'call in' planning applications to decide them themselves rather than leaving them to the local planning authority. For more information see [[Called-in_planning_application|Called-in planning applications.]]

= Reform =

The government sees the planning system as a barrier to growth and as a consequence has brought in a large number of significant changes aimed at speeding up the process and reducing red tape. This is seen by some as a welcome relaxation enabling businesses and home owners to adapt more easily to changing circumstances, whilst others see it as a bonfire of policy that creates a developer's charter.

== Penfold review (2010) ==

Following the recommendations of the Killian Pretty Review in 2008, the Penfold Review made a number of recommendations for streamlining non-planning consents, some of which are now being implemented by the government. For more information see Penfold Review. See Penfold Review for more information.

== Localism Act (2011) ==

The Localism Act sets out a series of measures intended to transfer power from central government to local authorities and local communities. It is intended ‘…to help people and their locally elected representatives to achieve their own ambitions.’ In relation to planning, this includes; abolishing regional planning strategies, creates neighbourhood planning and reforms the community infrastructure levy. See Localism Act for more information.

== National Planning Policy Framework (2012) ==

The National Planning Policy Framework proposes that there should be a presumption in favour of sustainable development, that determination should be plan-led and that planning authorities should grant permission wherever the local plan is absent, silent, or out of date. The framework also proposes that local communities will be able to produce their own neighbourhood plans.

For more information see the article on the National Planning Policy Framework, and Planning policy replaced by the NPPF.

== Taylor review (2012) ==

In addition to the radical reform brought about by the framework, Lord Taylor's review of planning guidance [https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/39821/taylor_review.pdf External review of government planning practice guidance: report submitted by Lord Taylor of Goss Moor] has found that it is unfit for purpose. He suggests that 80% could be scrapped and has called for the process to begin early in 2013. See Taylor Review for more information.

In October 2013, Planning Minister Nick Boles announced [https://www.gov.uk/government/news/simplified-regulations-will-make-planning-easier aphased programme to reduce the number of technical planning regulations] to 78 - a reduction of 57%.

== Growth and Infrastructure Act (2013) ==

The Growth and Infrastructure Act sets out a series of reforms intended to reduce the red tape that the government considers hampers business investment, new infrastructure and job creation. It is hoped that this will help the UK recover from recession and allow it to compete more effectively on the global stage.

See Growth and Infrastructure Act for more information.

== Permitted development (2013) ==

In May 2013, the Town and Country Planning (General Permitted Development) (Amendment) (England) Order 2013 came into force, making changes to permitted development rights. See Town and Country Planning (General Permitted Development) (Amendment) (England) Order for more information. Further changes are proposed (see Taylor review above).

== Design and access statements (2013) ==

In June 2013, the Town and Country Planning (Development Management Procedure) (England) (Amendment) Order 2013 came into force, limiting the requirements for applicants to produce design and access statements. See Design and access statements for more information.

NB: Despite all of these changes, in April 2014, Prime Miniser David Cameron re-stated that 'Simplifying the planning system, making it faster, is absolutely essential if we’re going to build that infrastructure that the country needs.' (Ref. [https://www.gov.uk/government/speeches/speech-by-david-cameron-and-george-osborne-at-skanska David Cameron and George Osborne speech & Q&A at Skanska], 22 April 2014.)

= Devolution of planning =

See:

* Scottish planning policy.
* Welsh planning policy.
* Northern Ireland planning policy.

= Related articles on Designing Buildings Wiki =

* Avoiding planning permission pitfalls.
* Building codes.
* Building regulations.
* Community Infrastructure Levy.
* Conservation areas.
* Delegated powers.
* Design and access statements.
* Detailed planning application.
* Environmental impact assessment.
* How long does it take to get planning permission.
* How long does planning permission last.
* Listed buildings.
* National Planning Policy Framework.
* National Planning Practice Guidance.
* Neighbourhood planning.
* Outline planning application.
* Permission.
* Permission for mining or working of minerals.
* Permitted development.
* Planning (Listed Buildings and Conservation Areas) Act.
* Planning appeal.
* Planning authority.
* Planning conditions.
* Planning enforcement.
* Planning fees.
* Planning legislation.
* Planning objection.
* Planning obligations.
* Planning performance agreement.
* Pre-application advice.
* Sui generis and planning permission.
* The difference between planning permission building regulations approval.
* Town and Country Planning Act.
* Use class.
* What approvals are needed before construction begins.

[[Category:Planning_permission]] [[Category:Property_law]] [[Category:Design]] [[Category:Property_development]] [[Category:Roles_/_services]]

Duty of care in building design and construction

2019-01-05T10:32:13Z

Rhea1910:

= Introduction =

A duty of care to ensure that another party does not suffer unreasonable harm or loss can arise in the construction industry as a result of:

* Contractual obligations.
* Tort of negligence.

The architect has a [https://www.designingbuildings.co.uk/wiki/Duty duty] to perform the [https://www.designingbuildings.co.uk/wiki/Services services] they are carrying out with [https://www.designingbuildings.co.uk/wiki/Reasonable_skill_and_care reasonable skill and care], that is, to the standard of a reasonably competent [https://www.designingbuildings.co.uk/wiki/Professional professional].

= Contractual obligations =

Contractual obligations can be express terms of the contract or implied terms. Terms may be implied as a matter of law (legislation of general application to all contracts) or as a matter of fact (the presumed intention of the parties).

Generally, the contractual obligation is a duty to perform services with reasonable skill and care, that is, to the standard of a reasonably competent professional. However, if an appointment is made on the basis of specialist capabilities, then the duty will be to perform services with the standard of care that would be expected from a reasonably competent specialist, rather than the standard of a general practitioner operating in that field.

On design and build projects (subject to the express terms of the contract) there is an implied term that the building will be fit for purpose. This duty exists provided there is reliance by the client on design decisions taken by the contractor, for example, there is no reliance if the client insists on a particular construction method which subsequently fails.

The 'fitness for purpose' obligation is not generally extended to designers unless the contract specifically provides for this (for example, if they have accepted obligations under a design and build contract).

The Defective Premises Act 1972 provides that a contractor building a residential dwelling or converting or enlarging an existing dwelling, has a duty to ensure that the building work '...is done in a workmanlike or, as the case may be, professional manner with proper materials and so that as regards the work the dwelling will be fit for habitation when completed'

A duty of care can be restricted (subject to the Unfair Contract Terms Act 1997) or extended by agreement, and contractual rights (but not obligations) can be assigned to other parties unless the contract specifically prohibits this.

NB: Other statutory duties may exist, for example in relation to waste handling, CDM, environmental protection and so on. Duties here may apply not only to contractors and consultants, but also to the client and workers. In addition, there is an implied duty to warn, if proposed works are likely to pose a danger.

= Tort of negligence =

A concurrent duty of care exists in tort of negligence unless the contract has specifically restricted this duty.

Contractors and consultants will generally owe a duty of care in tort to their clients and third parties to take reasonable care to avoid causing personal injury or damage to property (other than to the works themselves).

Consultants will normally also owe their clients a duty of care in tort for the quality of their work, but this duty is not generally be owed by contractors.

In the absence of a contract, contractor design liability may arise in tort by reason of a duty to warn. This arises when a reasonably competent contractor should have realised that a design or elements of the design were likely to be defective.

Purely economic loss is generally not recoverable in tort other than where the loss is consequential upon damage for which a duty is owed, or where there is an assumption of responsibility, special relationship or reliance.

= Collateral warranties =

The case of Murphy v Brentwood District Council made clear that there is no duty of care to subsequent purchasers in respect of latent defects as they are a purely economic loss. As a result, collateral warranties have emerged creating a contractual duty of care to a third party who is not party to the original contract. A typical example would be where an architect accepts a duty of care to the occupier of a development in relation to defects which may arise.

= The Contracts (Rights of Third Parties) Act =

The Contracts (Rights of Third Parties) Act 1999 enables third party rights to be created by a contract. This is seen by some to offer an alternative to collateral warranties.

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Assignment.
* Collateral warranties.
* Design and build.
* Design liability.
* Duty to warn.
* Good faith.
* Measure of damages.
* Murphy v Brentwood District Council.
* Negligence.
* Professional indemnity insurance.
* Reasonable skill and care.
* Rights of third parties.

[[Category:Other_legislation]] [[Category:Property_law]]

Sectional completion in construction contracts

2019-01-04T13:06:15Z

Rhea1910:

Sectional completion refers to a provision within construction contracts allowing different completion dates for different sections of the works. This is common on large projects that are completed in sections, allowing the client to take possession of the completed parts whilst construction continues on others.

Sectional completion differs from partial possession in that it is pre-planned and defined in the contract documents.

If sectional completion is required, it must be an express term of the contract, and reflected by the fact that there are multiple completion dates rather than just one. The extent of each section must be clearly defined and liquidated damages, and the amount of retention that will be released must be specified for each section. There may also need to be clarification of how extension of time provisions will be applied if, for example, delays to one section of the works have a knock-on effect on other sections (the cascade effect).

In procedural terms, sectional completion is similar to normal completion and follows the usual handover procedures (see handover to client). However, some work within the section may remain outstanding, such as the completion of commissioning, operation and maintenance manuals and as built drawings, which will cross all sections.

It may exclude mechanical and electrical service systems which are reliant on total completion before they can be properly tested and commissioned. This means that their needs to be an agreed protocol for re-entry into completed sections for the contractors to complete outstanding work.

Sectional completion requires particular care to be taken regarding:

* Difficulties with logistics on site when different sections are in the possession of different parties.
* The protection of completed sections from ongoing work.
* The provision of appropriate insurance at all times for all sections.
* The adoption of appropriate health and safety measures to deal with risks resulting from occupation of areas adjacent to, or only accessible through ongoing construction works.
* The provision of appropriate security measures.
*

Consequences of practical / sectional completion?

# Half of the retention is released
# The Rectification Period begins
# The contractor’s responsibility for insuring the works (if applicable) ends
# The contractor’s liability for liquidated damages ends
# The employer is now responsible for any damages to the works

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Completion.
* Defects liability period.
* Defects.
* Difference between practical completion and partial possession.
* Early use.
* Extension of time.
* Handover to client.
* Liquidated damages.
* Loss and expense.
* Migration strategy.
* [[Occupation_of_completed_construction_site|Occupation.]]
* Partial possession.
* Performance in use.
* Phased construction works.
* Possession.
* Post occupancy evaluation.
* Practical completion.
* Retention.
* Soft landings.
* Topping out.
* Work-to-complete list.

[[Category:Construction_management]] [[Category:Procurement]]

New Engineering Contract

2019-01-04T12:11:43Z

Rhea1910:

NEC was first published in 1993 as the New Engineering Contract. It is a suite of construction contracts intended to promote partnering and collaboration between the contractor and client. It was developed as a reaction to other more traditional forms of construction contract which have been portrayed by some as adversarial.

The intentions of NEC contracts include:

* Stimulate good management
* Be clear and simple, written in plain English, in the present tense and without legal terminology
* Be useable in wide variety of situations from minor works to major projects

The suite of documents now include:

* ECC Engineering and Construction Contracts
* ECSC Engineering and Construction Short Contracts
* ECS Engineering and Construction Subcontract
* ECSS Engineering and Construction Short Subcontract
* FC Framework Contract
* TSC Term Services Contract
* TSSC Term Services Short Contract
* PSC Professional Services Contract
* SC Supply Contract
* SSC Supply Short Contract
* AC Adjudicators Contract

-----
Key differences between NEC and JCT?

* - 9 main options and secondary options (mix and match approach to distribute risks) JCT uses separate contracts e.g. JCT SBC D&B, SBW W/Q, X/Q etc...
* - NEC written in laymen terms easy to understand
* - No QS mentioned in NEC only Project Manager
* - Tries a more collaborative approach to working “Mutual trust and understanding”
* - Programme is a contract document (NEC) 25% of monies due can be withheld if the contractor does not submit an accepted programme
* - Variation (JCT)= Compensation Event (CE) (NEC)
* - Contractor can notify of a CE called (NCE) must do so within 8 weeks of becoming aware of the situation
* - Valuation rules, Bill rates are not binding on CEs.
* - CEs built up from first principles called Schedule of Cost Components (SCC) People, Plant, Equipment, Design and Manufacture include a % for O/H
* - NEC does not have claims NO direct loss and/or expense
* - Loss and/or expense is dealt with in CE
* - EOT... again prolongation is dealt with in CE.
* - Project Manager by accepting a CE is potentially extending the completion date
* - Defects: Defects correction period (normally 2-3 weeks) contractor must “make good” in these time periods (better at dealing with defects than JCT)
* - Periods of reply (incentivises the parties to respond to each other) however reality is very administration heavy.

-----
There are a number of articles relating to NEC on Designing Buildings Wiki:

* Accepted programme.
* Activity schedule
* Compensation event.
* Cost reimbursable contract.
* Defined cost.
* Delay damages.
* Disallowed cost.
* Early contractor involvement.
* Early warning notice.
* Key dates.
* Latham Report.
* NEC contract change management systems.
* NEC contracts - road development and management schemes.
* NEC contracts and collaborative working.
* NEC early contractor involvement.
* NEC early warning notices - a tool of mutual benefit.
* NEC3.
* NEC4.
* NEC Option A: Priced contract with activity schedule.
* NEC Option B: Priced contract with bill of quantities.
* NEC Option C: Target contract with activity schedule.
* NEC Option D: Target contract with bill of quantities.
* NEC Option E: Cost reimbursable contract.
* Period for reply.
* Term Contract.
* The NEC and the Z clause.
* Time Risk Allowance.
* Z clauses.

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Adversarial behaviour in the UK construction industry.
* Contractor.
* Construction contract.
* Design and build.
* Construction management.
* Managing the procurement process.
* Procurement route.
* Selection criteria.
* Sub-contractors.
* Sustainable procurement.

[[Category:Contracts_/_payment]] [[Category:Procurement]]

New Engineering Contract

2019-01-04T12:10:55Z

Rhea1910:

NEC was first published in 1993 as the New Engineering Contract. It is a suite of construction contracts intended to promote partnering and collaboration between the contractor and client. It was developed as a reaction to other more traditional forms of construction contract which have been portrayed by some as adversarial.

The intentions of NEC contracts include:

* Stimulate good management
* Be clear and simple, written in plain English, in the present tense and without legal terminology
* Be useable in wide variety of situations from minor works to major projects

The suite of documents now include:

* ECC Engineering and Construction Contracts
* ECSC Engineering and Construction Short Contracts
* ECS Engineering and Construction Subcontract
* ECSS Engineering and Construction Short Subcontract
* FC Framework Contract
* TSC Term Services Contract
* TSSC Term Services Short Contract
* PSC Professional Services Contract
* SC Supply Contract
* SSC Supply Short Contract
* AC Adjudicators Contract

-----
Key differences between NEC and JCT?

<ul>
<li>- 9 main options and secondary options (mix and match approach to distribute risks) JCT uses separate contracts e.g. JCT SBC D&B, SBW W/Q, X/Q etc...</li>
<li>- NEC written in laymen terms easy to understand</li>
<li>- No QS mentioned in NEC only Project Manager</li>
<li>- Tries a more collaborative approach to working “Mutual trust and understanding”</li>
<li>- Programme is a contract document (NEC) 25% of monies due can be withheld if the
contractor does not submit an accepted programme</li>
<li>- Variation (JCT)= Compensation Event (CE) (NEC)[[File:page146image9968128]]</li>
<li>- Contractor can notify of a CE called (NCE) must do so within 8 weeks of becoming aware of the situation</li>
<li>- Valuation rules, Bill rates are not binding on CEs.</li>
<li>- CEs built up from first principles called Schedule of Cost Components (SCC) People, Plant,
Equipment, Design and Manufacture include a % for O/H</li>
<li>- NEC does not have claims NO direct loss and/or expense</li>
<li>- Loss and/or expense is dealt with in CE</li>
<li>- EOT... again prolongation is dealt with in CE.</li>
<li>- Project Manager by accepting a CE is potentially extending the completion date</li>
<li>- Defects: Defects correction period (normally 2-3 weeks) contractor must “make good” in
these time periods (better at dealing with defects than JCT)</li>
<li>- Periods of reply (incentivises the parties to respond to each other) however reality is very
administration heavy.</li></ul>

-----
There are a number of articles relating to NEC on Designing Buildings Wiki:

* Accepted programme.
* Activity schedule
* Compensation event.
* Cost reimbursable contract.
* Defined cost.
* Delay damages.
* Disallowed cost.
* Early contractor involvement.
* Early warning notice.
* Key dates.
* Latham Report.
* NEC contract change management systems.
* NEC contracts - road development and management schemes.
* NEC contracts and collaborative working.
* NEC early contractor involvement.
* NEC early warning notices - a tool of mutual benefit.
* NEC3.
* NEC4.
* NEC Option A: Priced contract with activity schedule.
* NEC Option B: Priced contract with bill of quantities.
* NEC Option C: Target contract with activity schedule.
* NEC Option D: Target contract with bill of quantities.
* NEC Option E: Cost reimbursable contract.
* Period for reply.
* Term Contract.
* The NEC and the Z clause.
* Time Risk Allowance.
* Z clauses.

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Adversarial behaviour in the UK construction industry.
* Contractor.
* Construction contract.
* Design and build.
* Construction management.
* Managing the procurement process.
* Procurement route.
* Selection criteria.
* Sub-contractors.
* Sustainable procurement.

[[Category:Contracts_/_payment]] [[Category:Procurement]]

Novation

2019-01-02T14:06:06Z

Rhea1910:

[[File:Projectwork.png|link=File:Projectwork.png]]

Novation is a process by which contractual rights and obligations are transferred from one party to another. Whilst the benefits of a contract can be transferred by assignment, if the parties wish to transfer both the benefits and the burdens then this must be done by a novation agreement.

A novation occurs when there is a rescission of one contract and the substitution of a fresh contract in which the original contractual obligations are carried out by different parties. In building design and construction, novation normally refers to the process by which design consultants are initially contracted to the client, but are then 'novated' to the contractor.

This is common on design and build projects where the design team are appointed by a client to carry out initial studies or prepare a concept or detailed design, but then when a contractor is appointed to carry out or complete the design and construct the works, the design team (or part of it) is novated to work for them.

This can be beneficial to clients as it maintains continuity between pre-tender and post-tender design whilst leaving sole responsibility for designing and building the project with the contractor. Novation effectively over-writes the contractual history to give the impression that the consultant has worked for the contractor throughout the project

(NB. The process of novation in itself does not make a contractor responsible for any design carried out for the client prior to novating their contract. To achieve this the building contract needs to specifically state that the contractor has examined the design and adopted it).

-----
Alternatively, there may be a 'consultant switch', which simply transfers the consultants from working for the client to working for the contractor, without altering the contractual history.

When there is a consultant switch, the original [https://www.designingbuildings.co.uk/wiki/Agreement agreement] between the [https://www.designingbuildings.co.uk/wiki/Consultants consultant] and the [https://www.designingbuildings.co.uk/wiki/Clients client] terminates on appointment of the [https://www.designingbuildings.co.uk/wiki/Contractor contractor], and there is then a new [https://www.designingbuildings.co.uk/wiki/Agreement agreement] between the [https://www.designingbuildings.co.uk/wiki/Contractor contractor] and the [https://www.designingbuildings.co.uk/wiki/Consultants consultant].

This can be seen to provide better clarity of the contractual relationships. However, because the [https://www.designingbuildings.co.uk/wiki/Consultants consultant]’s [https://www.designingbuildings.co.uk/wiki/Liability liability] to the [https://www.designingbuildings.co.uk/wiki/Clients client] for pre-switch [https://www.designingbuildings.co.uk/wiki/Services services] remains, some argue that there is a greater [https://www.designingbuildings.co.uk/wiki/Risk risk] of [https://www.designingbuildings.co.uk/wiki/Conflict_of_interest conflict of interest].

-----
A novation agreement is not possible without consent. If novation and the form of novation agreement were not agreed when the consultant’s was initially appointed, they are under no obligation to agree to be novated. It is essential therefore that the principal contracts between client and consultants and between client and contractors contain express terms obliging the contractor and the consultant to enter into the novation agreement.

To avoid the risk of merely having an agreement to agree which is unenforceable, a specimen form of the proposed novation agreement should be appended to the original contractual documentation.

It is important that any novation documentation is properly drawn up and that it makes clear which services consultants performed for the client and which they will now perform for the contractor, otherwise initial appointment agreements may be rendered meaningless, for example a requirement for the consultant to inspect the contractor's work and report to the client (when they are in fact now appointed by the contractor).

The process of novation can leave designers feeling they have mixed loyalties and there can be difficulty determining where liability lies for design work carried out before novation. If the contractor does not take on the design team effectively as if they had been the employer from the beginning therefore, it may be wise for them to obtain warranties for pre-novation services from the designers. The client may also require collateral warranties from novated designers (see [[Blyth_%26_Blyth_Ltd_v_Carillion_Construction_Ltd|Blyth & Blyth Ltd v Carillion Construction Ltd]]).

Advantages:

a) Overall project duration is shorter due to overlapping design and construction 
b) There is contractor contribution to the design and planning process 
c) Changes can be accommodated in packages not yet let if they have no further impact d) The works are let competitively at current market prices on a firm price basis

Disadvantages?

a) The price for the works is not received until the last package has been let 
b) Changes to the design of later packages may affect packages already let - expensive 
c) There is little incentive for the MC to reduce costs 
d) May become a ‘post box’ system 
e) In practice, the MC has little legal responsibility for the defaults of the works contractors

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Architect.
* Appointing consultants.
* Assignment.
* [[Blyth_%26_Blyth_Ltd_v_Carillion_Construction_Ltd|Blyth & Blyth Ltd v Carillion Construction Ltd.]]
* Collateral warranties.
* Concept design.
* Consultants.
* Consultant switch.
* Designers.
* Design and build.
* Design and build - pros and cons.
* Detailed design.
* Difference between assignment and novation.
* Joinder.
* Privity of contract.
* Procurement route.
* The Contracts (Rights of Third Parties) Act.

=== External references ===

* PACE [http://webarchive.nationalarchives.gov.uk/20100503135839/http://www.ogc.gov.uk/documents/PACE_-_GACC.pdf Guidance on the Appointment of Consultants and Contractors] P126 guidance on novation.
* [http://www.building.co.uk/news/finance/novation-without-tears/9246.article Building article: Novation without tears.]
* [http://www.kpkqs.com/download/2007%20Aug-KPK%20Research%20Digest%20-%20Novation%20Consultant%20Switch.pdf KPK Research, Design and build, novation or consultant switch?]

[[Category:Appointments]] [[Category:Procurement]]

Novation

2019-01-02T13:56:51Z

Rhea1910:

[[File:Projectwork.png|link=File:Projectwork.png]]

Novation is a process by which contractual rights and obligations are transferred from one party to another. Whilst the benefits of a contract can be transferred by assignment, if the parties wish to transfer both the benefits and the burdens then this must be done by a novation agreement.

A novation occurs when there is a rescission of one contract and the substitution of a fresh contract in which the original contractual obligations are carried out by different parties. In building design and construction, novation normally refers to the process by which design consultants are initially contracted to the client, but are then 'novated' to the contractor.

This is common on design and build projects where the design team are appointed by a client to carry out initial studies or prepare a concept or detailed design, but then when a contractor is appointed to carry out or complete the design and construct the works, the design team (or part of it) is novated to work for them.

This can be beneficial to clients as it maintains continuity between pre-tender and post-tender design whilst leaving sole responsibility for designing and building the project with the contractor. Novation effectively over-writes the contractual history to give the impression that the consultant has worked for the contractor throughout the project

(NB. The process of novation in itself does not make a contractor responsible for any design carried out for the client prior to novating their contract. To achieve this the building contract needs to specifically state that the contractor has examined the design and adopted it).

Alternatively, there may be a 'consultant switch', which simply transfers the consultants from working for the client to working for the contractor, without altering the contractual history.

A novation agreement is not possible without consent. If novation and the form of novation agreement were not agreed when the consultant’s was initially appointed, they are under no obligation to agree to be novated. It is essential therefore that the principal contracts between client and consultants and between client and contractors contain express terms obliging the contractor and the consultant to enter into the novation agreement.

To avoid the risk of merely having an agreement to agree which is unenforceable, a specimen form of the proposed novation agreement should be appended to the original contractual documentation.

It is important that any novation documentation is properly drawn up and that it makes clear which services consultants performed for the client and which they will now perform for the contractor, otherwise initial appointment agreements may be rendered meaningless, for example a requirement for the consultant to inspect the contractor's work and report to the client (when they are in fact now appointed by the contractor).

The process of novation can leave designers feeling they have mixed loyalties and there can be difficulty determining where liability lies for design work carried out before novation. If the contractor does not take on the design team effectively as if they had been the employer from the beginning therefore, it may be wise for them to obtain warranties for pre-novation services from the designers. The client may also require collateral warranties from novated designers (see [[Blyth_%26_Blyth_Ltd_v_Carillion_Construction_Ltd|Blyth & Blyth Ltd v Carillion Construction Ltd]]).

Advantages:

a) Overall project duration is shorter due to overlapping design and construction 
b) There is contractor contribution to the design and planning process 
c) Changes can be accommodated in packages not yet let if they have no further impact d) The works are let competitively at current market prices on a firm price basis

Disadvantages?

a) The price for the works is not received until the last package has been let 
b) Changes to the design of later packages may affect packages already let - expensive 
c) There is little incentive for the MC to reduce costs 
d) May become a ‘post box’ system 
e) In practice, the MC has little legal responsibility for the defaults of the works contractors

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Architect.
* Appointing consultants.
* Assignment.
* [[Blyth_%26_Blyth_Ltd_v_Carillion_Construction_Ltd|Blyth & Blyth Ltd v Carillion Construction Ltd.]]
* Collateral warranties.
* Concept design.
* Consultants.
* Consultant switch.
* Designers.
* Design and build.
* Design and build - pros and cons.
* Detailed design.
* Difference between assignment and novation.
* Joinder.
* Privity of contract.
* Procurement route.
* The Contracts (Rights of Third Parties) Act.

=== External references ===

* PACE [http://webarchive.nationalarchives.gov.uk/20100503135839/http://www.ogc.gov.uk/documents/PACE_-_GACC.pdf Guidance on the Appointment of Consultants and Contractors] P126 guidance on novation.
* [http://www.building.co.uk/news/finance/novation-without-tears/9246.article Building article: Novation without tears.]
* [http://www.kpkqs.com/download/2007%20Aug-KPK%20Research%20Digest%20-%20Novation%20Consultant%20Switch.pdf KPK Research, Design and build, novation or consultant switch?]

[[Category:Appointments]] [[Category:Procurement]]

Purpose of Tendering and Procedures

2019-01-02T11:47:13Z

Rhea1910:

This article needs more work. To help develop this article, click 'Edit this article' above.

= Legal obligations =

=== 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.
* The cost of tendering is generally borne by the contractor.
* Where the preliminary work goes beyond what is normally expected, an employer may agree to make payment.
* A person who invites another to tender with no intention whatsoever of accepting that tender can 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 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.
* A complex array of European Union Directives lay down rules governing the procedures for the awarding of contracts by any public body where the contract value is greater than specified values. See OJEU for more information.

-----
Tendering is a method of obtaining the resources necessary to carry out the required work

What are the main methods of choosing a contractor?

a) Open tendering 
b) Selective tendering – single or two stage

c) Nomination / negotiation 
d) Serial 
e) Joint ventures

= Open tendering =

* Traditional method
* Advert placed and interested suppliers can apply for documentation
* Advert or documentation may 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 the industry as a whole
* 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 (generally no more than six) are pre-selected to tender for the work
* An employer who builds regularly may 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

=== 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:

# The firm’s financial standing and record
# The firm’s recent experience of building at the required rate of completion
# The firm’s general experience and reputation in this area
# The firm’s competence and resources in respect of statutory health and safety requirements
# The firm’s approach to quality assurance procedures
# Whether the management structure of the firm is adequate for this type of contract
# 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

What are the advantages of single stage tendering?

* Ensures only capable and approved firms submit tenders
* Tends to reduce the aggregate (whole) cost of tendering
* Client gets a lump sum for the whole works

=== 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 and should reply to a preliminary enquiry for invitation to tender
* It should include the following information:

# Project name
# Type and function of building
# General description of the project
# Employer’s name
# Employer’s professional team
# Location of site
# Approximate cost range
# Number of tenderers it is proposed to invite
# Nominated sub-contractors for major items
# Form of contract and any proposed amendments
# Examination and correction of bill (Alternative 1 or Alternative 2)
# Anticipated date of possession
# Period for completion of works
# Approximate date for dispatch of tender documents
# Tender period
# Details of guarantee requirements
# 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 any 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:

* Checklist of drawings and documents
* Specification
* Tender form and instructions for their completion
* Complete sets of drawings
* Or the bills of quantities with a selection of drawings
* Pre-tender health and safety plan
* Proposed programme dates
* Specific contract terms and conditions
* Details of and bond and/or guarantees required
* Covering letter

The covering letter should include:

* Invitation to tender (if not already sent)
* List on enclosures
* Date and place for delivery of tenders
* Whether the site is open for inspection and if so what arrangements should be made to visit
* 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

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:

# take account of the way in which the costs are incurred (brickwork on second floor is cheaper than brickwork on seventeenth floor)
# 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), they may submit an inflated ‘cover bid’
* If the contractor is short of work they may be satisfied with a low profit or no profit at all
* If the contractor does want the job, but the contract is risky, they may add a premium to the rates
* The contractor’s cash flow has a significant effect:

# If the project is at the end of a tax year, they may reduce the rates at the beginning of a project and increase them at the end – back loading
# 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 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 ===

* 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.
* Bills may be returned in separate envelopes and only the bill accompanying the lowest tender will be opened.
* 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
* As soon as any tender is accepted, all tendering contractors must be notified

=== 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 contract administrator, employer and contractor must be notified
* Under Alternative 1:

# The contractor will either be invited to stand by the tender price or to withdraw
# If they withdraw, the next lowest bid may be considered
# If they stand 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:

# The contractor should be given the opportunity of confirming their offer or amending it to correct genuine errors
# Should they elect to amend the offer and the revised offer is no longer the lower, the offer of the firm now lowest in the competition may be examined
# If the tenderer elects not to amend the 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 contract administrator or QS
* All documents should be marked for identification and signed by both parties

= 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 a 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
* 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

What are the advantages of 2 stage tendering

* Early involvement of the contractor
* Encourages collaborative working
* Potential for earlier start on site
* Greater client involvement in selecting the supply chain
* Contractor can help identify and manage risk

What are the disadvantages of 2 stage tendering?

* Cost certainty may not be achieved before construction starts
* Additional pre-construction fees for the contractor
* Contractor could take advantage of second stage negotiation - increase costs
* Potential for parties to not agree contract sum - risk - cost of retendering

= 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 the requirements all information about the site and building in their possession

=== Selection of tenderers ===

* Preliminary list should comprise six to eight contractors
* Final list should (in additional to criteria outlined above) take into account:

# Whether the firm has had recent experience of designing and constructing to type of building envisaged by the Employer’s Requirements
# Whether the firm’s customary design capability is in-house and if not, what method will be used

* Final list should be 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:

* Appearance
* Functional requirements
* Capital cost
* Expected lifespan of the building
* Flexibility of use
* Quality
* Running and maintenance costs
* Time of construction
* 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 to either recommence the second stage procedures with another tenderer or invite further first stage competitive tenders

= 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

= Points to consider when preparing a Tender enquiry questionnaire to be sent to various contractors =

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

= Points to consider when preparing an agenda and objectives for a structured interview to establish a shortlist of contractors who will be invited to tender. =

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

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

Bonds and/or parent company guarantees are commonly used to protect the financial interests of the employer.

What are 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

How would you deal with errors in tender returns?

Depends on which alternative chosen on instructions to tenders:

* • Alternative 1 – the QS should amend computing errors arriving at a new tender sum. They should inform the contractor who can choose to either confirm or withdraw
* Alternative 2 - QS should amend computing errors arriving at a new tender sum. They should inform the contractor who can choose to confirm, amend or withdraw.

[[Category:Articles_needing_more_work]]

Reasonable skill and care

2019-01-02T10:54:00Z

Rhea1910:

[[File:10-construction-trends.jpg|link=File:10-construction-trends.jpg]]

= Introduction =

A contractual obligation to carry out works or services with reasonable skill and care creates a performance obligation which is analogous to the standard of care in negligence. Fit for purpose is when goods must be fit for purpose ie. good enough to do the job they were designed to do. Reasonable skill and care is when an architect is under an implied duty to carry out their work to exercise reasonable skill and care expected of an ordinarily skilled architect. The important distinction between reasonable skill and care and [https://www.designingbuildings.co.uk/wiki/Fitness_for_purpose fitness for purpose] is that [https://www.designingbuildings.co.uk/wiki/Fitness_for_purpose fitness for purpose] is an absolute obligation and provided the obligation is clearly established or defined by the [https://www.designingbuildings.co.uk/wiki/Contract_document contract document], the party in [https://www.designingbuildings.co.uk/wiki/Breach breach] will not be able to plead as a defence that they have discharged their [https://www.designingbuildings.co.uk/wiki/Services services] with reasonable skill and care.

= Blyth v Birmingham Waterworks Company =

The court considered the standard of care in negligence in Blyth v Birmingham Waterworks Company and stated:

'... negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do’.

Blyth established the appropriate tests for the behaviour of the general public and not for the behaviour of members of a more limited group who have or hold themselves out as having specialist skills such as architects or engineers.

In Bolam v Friern Hospital Management Committee (approved in Whitehouse v Jordan), the court refined the test established in Blyth in order to accommodate specialist skills. The court applied the following test:

'... where you get a situation which involves the use of some specialist skill or competence, then the test of whether there has been negligence or not is not the test of the man on the top of a Clapham omnibus because he has not got this special skill. A man may not possess the highest expert skill at the risk of being found negligent. It is well established law that it is sufficient to be exercising the ordinary skill of an ordinary competent man exercising that particular art.'

= J D Williams & Co Ltd v Michael Hyde and Associates Ltd =

In J D Williams & Co Ltd v Michael Hyde and Associates Ltd, the Court of Appeal set out three qualifications to the test in Bolam:

* In a rare case, it may be demonstrated that the opinion alleged to be held by a respectable body of the profession cannot in fact withstand logical analysis (see also Bolithio v City % Hackney Health Authority where the court held that the practice relied upon had to be respectable, responsible and reasonable, with a logical basis and where it involved weighing comparative risks, it had to be shown that those advocating the practice had directed their minds to the relevant matters and had reached a defensible conclusion).

* In some cases the evidence given may not establish that the view contended for is in fact held by a responsible body of professional opinion, but may simply be the personal view of the expert as to what he might have done if faced with similar circumstances. This is not expert evidence at all, and the judge must discount it and form his own view.

* Where the advice at issue required no special skill, then the Bolam test was simply irrelevant and should not apply.

= Plant Construction plc v Clive Adams Associates and JHM Construction Services Ltd =

Plant Construction plc v Clive Adams Associates and JHM Construction Services Ltd concerned a contract between Ford and Plant to design and build two pits for engine mount rigs and a suspension rig at Ford's research and engineering centre at Danton. The contract between Ford and Plant provided that:

* Plant was to be responsible for damage to the works caused by its own negligence and Ford's negligence.
* Plant was responsible for all acts and omissions of its sub-contractors.
* Any assistance provided by Ford would not release Plant from responsibility for the works.

Clive Adams were structural engineers engaged by Plant and JHM were sub-contractors for the sub-structure work involving shoring excavations and roof support. The roof collapsed because of insufficient support. Ford sued Plant who settled the claim. Plant then brought claims for breach of contract against Clive Adams and JHM. Clive Adams settled. JHM defended alleging that they had been following the instructions given to them by an engineer employed by Ford in the design and execution of the works.

The Court of Appeal had to consider the principles of the duty to warn and the implied term of skill and care in the context of damages known to the contractor. The court held:

* JHM was contractually obliged to carry out the temporary works of supporting the roof in the way in which and to the design by which they were so instructed by Ford.

* The factual extent of the performance required by the implied term that a contractor will perform his contract with the skill and care of an ordinarily competent contractor, will depend on all the circumstances.

* Given crucially that the temporary roof support works were obviously dangerous and were known to JHM to be dangerous, JHM's implied obligation to perform with skill and care carried with it an obligation to warn of the dangers which they perceived.

* The facts that the design and details of the temporary works were imposed by Ford, that Plant had Clive Adams as their consulting engineer, that others were at fault, or that JHM were contractually obliged to do what Ford instructed did not negative or reduce the extent of performance of the implied terms.

* JHM's duty extended to giving property warnings about risk.

The facts of Bolam were concerned with a medical negligence case; however, in Williams, which approved Bolam subject to the three qualifications, the problem was a defective gas fired heating system. Clearly, therefore, the test set out in Bolam is equally applicable to other professional people and those exercising specialist skills: see also Greaves & Co (Contractors) Ltd v Baynham Meikle and Partners below.

An error of judgment or the selection of the wrong method where there is a genuine difference of specialists’ opinion will not necessarily amount to negligence. In Robinson v The Post Office, R, a doctor in general practice, injected a patient with an anti-tetanus serum without first administering a test dose. At the relevant time, medical opinion was moving against the use of anti-tetanus serums generally.

The Court of Appeal held that since R's failure to give a test dose was contrary to accepted procedure, he had been negligent, but that no damage had been caused as the result of the test would have been negative, and that, since at the time there was still a responsible body of medical opinion who favoured anti-tetanus serum, he had not been negligent in using it.

Similarly, in the case of Perry v Tendring District Council and Others which dealt with, inter alia, the failure of a consultant engineer to design foundations that would be unaffected by long term soil heave, the court considered that the standard of care depended on 'what was to be expected of the competent engineer at the material date' (i.e. the time he designed the foundations).

This is the 'state of the art' defence. There was conflicting expert witness evidence. One expert engineer personally knew of heave but was only able to refer to one textbook intended for engineers that dealt with it. Another expert had not read that textbook and thought that engineers generally would not have known of heave although that particular expert had expressed a contrary view some 12 years after the material date. Two other engineers stated categorically that they had never heard of heave. Judge Newey stated:

"On the totality of the expert evidence I must, however reluctantly, conclude that at the material time a competent engineer would not have known of long term heave".

A more draconian attitude was adopted by the House of Lords in Independent Broadcasting Authority v EMI Electronics Limited and BICC Construction Ltd . The defendant’s submissions that the design and building of the cylindrical mast was work which was 'both at and beyond the frontiers of professional knowledge at that time' was not disputed by their Lordships, nevertheless they held that the designer was negligent. As regards the state of the art submission, Viscount Dilhorne stated:

"No doubt all this was true, and bearing in mind the consequences that might ensue if such a mast collapsed - fortunately no-one was killed or injured at Emley Moor, though part of the mast fell across a road and it might have fallen on a farmhouse - it was in my opinion incumbent on [the designer] to exercise a very high degree of care".

There are conflicting judicial decisions on the issue of whether a professional man who specialises within his profession has a higher duty than the non-specialist. In Wimpey Construction UK v Poole a consultant held himself out as having especially high skills and was retained on that basis. The court rejected the argument that the test in such circumstances should be that of a man exercising or professing to have especially high professional skills. However, in Ashcroft v Mersey Regional Health Authority, the court found that the more skilled a person, the more the care which is to be expected of him, but the test should be applied without gloss either way.

Competency will invariably be a matter of expert evidence and opinion. However, in the last resort, the courts consider that they have discretion to reject expert evidence as to what is an acceptable practice within a profession.

In Sidaway v Governors of Bethlem Royal Hospital, Lord Templeman stated:

"Where the practice of the medical profession is divided or does not include express mention, it will be for the court to determine whether the harm suffered is an example of a general danger inherent in the nature of the operation, and if so whether the explanation afforded to the patient was sufficient to alert the patient to the general dangers of which the harm suffered is an example."

Sidaway was concerned with a surgeon's duty to warn a patient of a potential risk, and on that basis can be distinguished from a designer of a building project. However, it is suggested that the court would have a similar discretion in construction cases. Indeed, the House of Lords adopted a similar position in Independent Broadcasting Authority v EMI Electronics Limited and BICC Construction Ltd.

= Greaves & Co (Contractors) Ltd v Baynham Meikle and Partners =

The express conditions of the principal contract or the collateral warranty may determine the standard of performance. What, however, is the position if the contract is silent on this particular point? In the Greaves case, there was a suggestion that a designer's obligation might extend beyond reasonable skill and care to fitness for purpose.

The facts of the Greaves case concerned G, a building contractor who undertook to design and construct on a package deal basis, a new factory, warehouse and offices for Alexander Duckham Limited. The warehouse was to be used for the storage of barrels of oil. G contracted with B, structural engineers, to design the structure of the warehouse. G informed B that the floors of the warehouse had to take the weight of forklift trucks carrying barrels of oil. After completion and occupation, cracks began to appear in the floors of the warehouse. It was established that the failure of the floors was due to vibrations caused by the use of the forklift trucks.

The issues before the court turned upon whether B were in breach of their obligation to carry out their design works with reasonable skill and care, or whether B were in breach of an implied term of the contract between G and B that B's design should be fit for its purpose, namely the movement of loaded forklift trucks. It will be appreciated that a term which is implied as a matter of fact does not have the consequences of a term that is implied as a matter of law in so far as the former only relates to the particular bargain struck between the parties to the contract whereas the latter applies to all bargains unless excluded by the express terms of the contract.

In the Greaves case, the judgment at first instance appeared to suggest that a fitness for purpose obligation was to be implied as a matter of law. On first reading, this is also the impression given by the judgment of Lord Denning MR in the Court of Appeal.

However, on its facts, the Greaves case does not create a universal principle of fitness for purpose on the part of designers, in that the court found that whilst there was a contractual term that the designers should design a warehouse that was fit for its purpose, this term was implied as a matter of fact and not law. The court also found that B's design was negligent, that is to say in breach of the obligation to carry out their services with reasonable skill and care.

= George Hawkins v Chrysler (UK) Limited and Burn Associates =

Any doubts that lingered from the Greaves case were disposed of by the Court of Appeal in George Hawkins v Chrysler (UK) Limited and Burn Associates. B were engineers who contracted with C to prepare the design and specification for a shower room at C’s factory, which included a new floor and wall coverings.

G, the plaintiff, was an employee of C and he slipped on a puddle of water in the shower room after having used the shower. G sued C and C in turn brought proceedings against B. C settled G's claim but continued the third party proceedings against B. The main issues in the case were:

* was there an implied term of the contract that B would use reasonable skill and care in selecting the material to be used for the floor of the shower room?
* was there an implied warranty or term that the material used for the floor would be fit for use in a wet shower room?

The judge at first instance found against C in respect of the first issue. However, on the second issue the judge found that B was in breach of an implied warranty that they would provide, 'as safe a floor as was practicable in the expertise of the profession to provide a safe floor for these men in these conditions'.

On appeal, the Court of Appeal held, inter alia, that although a party contracting for both the design and supply of a product will usually be under an implied contractual duty to ensure that it is reasonably fit for the purpose for which it is intended, where the contracting party is a professional man providing advice or designs alone (i.e. without supplying any product), no warranty will normally be implied beyond a term that reasonable skill and care will be taken in giving the advice or preparing the design. There was nothing in the present case to require the implication of any term other than a duty to take reasonable care and skill in preparing the design.

If the party being called upon to enter into a collateral warranty is an architect or engineer with a design function, and their principal contract expressly provides for a performance obligation of reasonable skill and care or is silent on this matter, for that party to enter into a collateral warranty with a fitness for purpose obligation will be increasing their liabilities.

The important distinction between reasonable skill and care and fitness for purpose is that fitness for purpose is an absolute obligation and provided the obligation is clearly established or defined by the contract document, the party in breach will not be able to plead as a defence that they have discharged their services with reasonable skill and care.

The facts in Samuels v Davis provide a useful illustration of the dichotomy between reasonable skill and care and fitness for purpose. In Samuels, the Court of Appeal held that where a dentist undertakes for reward to make a denture for a patient, it is an implied term of the contract that the denture will be reasonably fit for its intended purpose. Du Parcq LJ stated:

"... if someone goes to a professional man ... and says: "Will you make me something which will fit a particular part of my body? ..." and the professional gentleman says "Yes", without qualification, he is then warranting that when he has made the article, it will fit the part of the body in question ... If a dentist takes out a tooth or a surgeon removes an appendix, he is bound to take reasonable care and to show such skill as may be expected from a qualified practitioner. The case is entirely different where a chattel is ultimately to be delivered".

It is important to note that if an architect or engineer extends his potential liability by entering into a collateral warranty providing for a fitness for purpose obligation, there may well be serious repercussions in respect of their professional indemnity policy.

See also, The Supply of Goods and Services Act.

= Related articles on Designing Buildings Wiki =

* 199 Knightsbridge Development Ltd v WSP UK Ltd.
* Best endeavours v reasonable endeavours.
* Collateral warranty.
* Construction contract.
* Contract v tort.
* Contractor.
* Defective Premises Act.
* Defects.
* Duty.
* Fitness for purpose.
* Good faith.
* MT Høgjaard A/S and E.ON Climate and Renewables UK Robin Rigg East Limited and others.
* Negligence.
* Sub-contractor.
* Supply of Goods and Services Act.
* Workmanlike manner.

[[Category:Case_law]] [[Category:Contracts_/_payment]]

Reasonable skill and care

2019-01-02T10:53:05Z

Rhea1910:

[[File:10-construction-trends.jpg|link=File:10-construction-trends.jpg]]

= Introduction =

A contractual obligation to carry out works or services with reasonable skill and care creates a performance obligation which is analogous to the standard of care in negligence.

Fit for purpose is when goods must be fit for purpose ie. good enough to do the job they were designed to do. Reasonable skill and care is when an architect is under an implied duty to carry out their work to exercise reasonable skill and care expected of an ordinarily skilled architect.

The important distinction between reasonable skill and care and [https://www.designingbuildings.co.uk/wiki/Fitness_for_purpose fitness for purpose] is that [https://www.designingbuildings.co.uk/wiki/Fitness_for_purpose fitness for purpose] is an absolute obligation and provided the obligation is clearly established or defined by the [https://www.designingbuildings.co.uk/wiki/Contract_document contract document], the party in [https://www.designingbuildings.co.uk/wiki/Breach breach] will not be able to plead as a defence that they have discharged their [https://www.designingbuildings.co.uk/wiki/Services services] with reasonable skill and care.

= Blyth v Birmingham Waterworks Company =

The court considered the standard of care in negligence in Blyth v Birmingham Waterworks Company and stated:

'... negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do’.

Blyth established the appropriate tests for the behaviour of the general public and not for the behaviour of members of a more limited group who have or hold themselves out as having specialist skills such as architects or engineers.

In Bolam v Friern Hospital Management Committee (approved in Whitehouse v Jordan), the court refined the test established in Blyth in order to accommodate specialist skills. The court applied the following test:

'... where you get a situation which involves the use of some specialist skill or competence, then the test of whether there has been negligence or not is not the test of the man on the top of a Clapham omnibus because he has not got this special skill. A man may not possess the highest expert skill at the risk of being found negligent. It is well established law that it is sufficient to be exercising the ordinary skill of an ordinary competent man exercising that particular art.'

= J D Williams & Co Ltd v Michael Hyde and Associates Ltd =

In J D Williams & Co Ltd v Michael Hyde and Associates Ltd, the Court of Appeal set out three qualifications to the test in Bolam:

* In a rare case, it may be demonstrated that the opinion alleged to be held by a respectable body of the profession cannot in fact withstand logical analysis (see also Bolithio v City % Hackney Health Authority where the court held that the practice relied upon had to be respectable, responsible and reasonable, with a logical basis and where it involved weighing comparative risks, it had to be shown that those advocating the practice had directed their minds to the relevant matters and had reached a defensible conclusion).

* In some cases the evidence given may not establish that the view contended for is in fact held by a responsible body of professional opinion, but may simply be the personal view of the expert as to what he might have done if faced with similar circumstances. This is not expert evidence at all, and the judge must discount it and form his own view.

* Where the advice at issue required no special skill, then the Bolam test was simply irrelevant and should not apply.

= Plant Construction plc v Clive Adams Associates and JHM Construction Services Ltd =

Plant Construction plc v Clive Adams Associates and JHM Construction Services Ltd concerned a contract between Ford and Plant to design and build two pits for engine mount rigs and a suspension rig at Ford's research and engineering centre at Danton. The contract between Ford and Plant provided that:

* Plant was to be responsible for damage to the works caused by its own negligence and Ford's negligence.
* Plant was responsible for all acts and omissions of its sub-contractors.
* Any assistance provided by Ford would not release Plant from responsibility for the works.

Clive Adams were structural engineers engaged by Plant and JHM were sub-contractors for the sub-structure work involving shoring excavations and roof support. The roof collapsed because of insufficient support. Ford sued Plant who settled the claim. Plant then brought claims for breach of contract against Clive Adams and JHM. Clive Adams settled. JHM defended alleging that they had been following the instructions given to them by an engineer employed by Ford in the design and execution of the works.

The Court of Appeal had to consider the principles of the duty to warn and the implied term of skill and care in the context of damages known to the contractor. The court held:

* JHM was contractually obliged to carry out the temporary works of supporting the roof in the way in which and to the design by which they were so instructed by Ford.

* The factual extent of the performance required by the implied term that a contractor will perform his contract with the skill and care of an ordinarily competent contractor, will depend on all the circumstances.

* Given crucially that the temporary roof support works were obviously dangerous and were known to JHM to be dangerous, JHM's implied obligation to perform with skill and care carried with it an obligation to warn of the dangers which they perceived.

* The facts that the design and details of the temporary works were imposed by Ford, that Plant had Clive Adams as their consulting engineer, that others were at fault, or that JHM were contractually obliged to do what Ford instructed did not negative or reduce the extent of performance of the implied terms.

* JHM's duty extended to giving property warnings about risk.

The facts of Bolam were concerned with a medical negligence case; however, in Williams, which approved Bolam subject to the three qualifications, the problem was a defective gas fired heating system. Clearly, therefore, the test set out in Bolam is equally applicable to other professional people and those exercising specialist skills: see also Greaves & Co (Contractors) Ltd v Baynham Meikle and Partners below.

An error of judgment or the selection of the wrong method where there is a genuine difference of specialists’ opinion will not necessarily amount to negligence. In Robinson v The Post Office, R, a doctor in general practice, injected a patient with an anti-tetanus serum without first administering a test dose. At the relevant time, medical opinion was moving against the use of anti-tetanus serums generally.

The Court of Appeal held that since R's failure to give a test dose was contrary to accepted procedure, he had been negligent, but that no damage had been caused as the result of the test would have been negative, and that, since at the time there was still a responsible body of medical opinion who favoured anti-tetanus serum, he had not been negligent in using it.

Similarly, in the case of Perry v Tendring District Council and Others which dealt with, inter alia, the failure of a consultant engineer to design foundations that would be unaffected by long term soil heave, the court considered that the standard of care depended on 'what was to be expected of the competent engineer at the material date' (i.e. the time he designed the foundations).

This is the 'state of the art' defence. There was conflicting expert witness evidence. One expert engineer personally knew of heave but was only able to refer to one textbook intended for engineers that dealt with it. Another expert had not read that textbook and thought that engineers generally would not have known of heave although that particular expert had expressed a contrary view some 12 years after the material date. Two other engineers stated categorically that they had never heard of heave. Judge Newey stated:

"On the totality of the expert evidence I must, however reluctantly, conclude that at the material time a competent engineer would not have known of long term heave".

A more draconian attitude was adopted by the House of Lords in Independent Broadcasting Authority v EMI Electronics Limited and BICC Construction Ltd . The defendant’s submissions that the design and building of the cylindrical mast was work which was 'both at and beyond the frontiers of professional knowledge at that time' was not disputed by their Lordships, nevertheless they held that the designer was negligent. As regards the state of the art submission, Viscount Dilhorne stated:

"No doubt all this was true, and bearing in mind the consequences that might ensue if such a mast collapsed - fortunately no-one was killed or injured at Emley Moor, though part of the mast fell across a road and it might have fallen on a farmhouse - it was in my opinion incumbent on [the designer] to exercise a very high degree of care".

There are conflicting judicial decisions on the issue of whether a professional man who specialises within his profession has a higher duty than the non-specialist. In Wimpey Construction UK v Poole a consultant held himself out as having especially high skills and was retained on that basis. The court rejected the argument that the test in such circumstances should be that of a man exercising or professing to have especially high professional skills. However, in Ashcroft v Mersey Regional Health Authority, the court found that the more skilled a person, the more the care which is to be expected of him, but the test should be applied without gloss either way.

Competency will invariably be a matter of expert evidence and opinion. However, in the last resort, the courts consider that they have discretion to reject expert evidence as to what is an acceptable practice within a profession.

In Sidaway v Governors of Bethlem Royal Hospital, Lord Templeman stated:

"Where the practice of the medical profession is divided or does not include express mention, it will be for the court to determine whether the harm suffered is an example of a general danger inherent in the nature of the operation, and if so whether the explanation afforded to the patient was sufficient to alert the patient to the general dangers of which the harm suffered is an example."

Sidaway was concerned with a surgeon's duty to warn a patient of a potential risk, and on that basis can be distinguished from a designer of a building project. However, it is suggested that the court would have a similar discretion in construction cases. Indeed, the House of Lords adopted a similar position in Independent Broadcasting Authority v EMI Electronics Limited and BICC Construction Ltd.

= Greaves & Co (Contractors) Ltd v Baynham Meikle and Partners =

The express conditions of the principal contract or the collateral warranty may determine the standard of performance. What, however, is the position if the contract is silent on this particular point? In the Greaves case, there was a suggestion that a designer's obligation might extend beyond reasonable skill and care to fitness for purpose.

The facts of the Greaves case concerned G, a building contractor who undertook to design and construct on a package deal basis, a new factory, warehouse and offices for Alexander Duckham Limited. The warehouse was to be used for the storage of barrels of oil. G contracted with B, structural engineers, to design the structure of the warehouse. G informed B that the floors of the warehouse had to take the weight of forklift trucks carrying barrels of oil. After completion and occupation, cracks began to appear in the floors of the warehouse. It was established that the failure of the floors was due to vibrations caused by the use of the forklift trucks.

The issues before the court turned upon whether B were in breach of their obligation to carry out their design works with reasonable skill and care, or whether B were in breach of an implied term of the contract between G and B that B's design should be fit for its purpose, namely the movement of loaded forklift trucks. It will be appreciated that a term which is implied as a matter of fact does not have the consequences of a term that is implied as a matter of law in so far as the former only relates to the particular bargain struck between the parties to the contract whereas the latter applies to all bargains unless excluded by the express terms of the contract.

In the Greaves case, the judgment at first instance appeared to suggest that a fitness for purpose obligation was to be implied as a matter of law. On first reading, this is also the impression given by the judgment of Lord Denning MR in the Court of Appeal.

However, on its facts, the Greaves case does not create a universal principle of fitness for purpose on the part of designers, in that the court found that whilst there was a contractual term that the designers should design a warehouse that was fit for its purpose, this term was implied as a matter of fact and not law. The court also found that B's design was negligent, that is to say in breach of the obligation to carry out their services with reasonable skill and care.

= George Hawkins v Chrysler (UK) Limited and Burn Associates =

Any doubts that lingered from the Greaves case were disposed of by the Court of Appeal in George Hawkins v Chrysler (UK) Limited and Burn Associates. B were engineers who contracted with C to prepare the design and specification for a shower room at C’s factory, which included a new floor and wall coverings.

G, the plaintiff, was an employee of C and he slipped on a puddle of water in the shower room after having used the shower. G sued C and C in turn brought proceedings against B. C settled G's claim but continued the third party proceedings against B. The main issues in the case were:

* was there an implied term of the contract that B would use reasonable skill and care in selecting the material to be used for the floor of the shower room?
* was there an implied warranty or term that the material used for the floor would be fit for use in a wet shower room?

The judge at first instance found against C in respect of the first issue. However, on the second issue the judge found that B was in breach of an implied warranty that they would provide, 'as safe a floor as was practicable in the expertise of the profession to provide a safe floor for these men in these conditions'.

On appeal, the Court of Appeal held, inter alia, that although a party contracting for both the design and supply of a product will usually be under an implied contractual duty to ensure that it is reasonably fit for the purpose for which it is intended, where the contracting party is a professional man providing advice or designs alone (i.e. without supplying any product), no warranty will normally be implied beyond a term that reasonable skill and care will be taken in giving the advice or preparing the design. There was nothing in the present case to require the implication of any term other than a duty to take reasonable care and skill in preparing the design.

If the party being called upon to enter into a collateral warranty is an architect or engineer with a design function, and their principal contract expressly provides for a performance obligation of reasonable skill and care or is silent on this matter, for that party to enter into a collateral warranty with a fitness for purpose obligation will be increasing their liabilities.

The important distinction between reasonable skill and care and fitness for purpose is that fitness for purpose is an absolute obligation and provided the obligation is clearly established or defined by the contract document, the party in breach will not be able to plead as a defence that they have discharged their services with reasonable skill and care.

The facts in Samuels v Davis provide a useful illustration of the dichotomy between reasonable skill and care and fitness for purpose. In Samuels, the Court of Appeal held that where a dentist undertakes for reward to make a denture for a patient, it is an implied term of the contract that the denture will be reasonably fit for its intended purpose. Du Parcq LJ stated:

"... if someone goes to a professional man ... and says: "Will you make me something which will fit a particular part of my body? ..." and the professional gentleman says "Yes", without qualification, he is then warranting that when he has made the article, it will fit the part of the body in question ... If a dentist takes out a tooth or a surgeon removes an appendix, he is bound to take reasonable care and to show such skill as may be expected from a qualified practitioner. The case is entirely different where a chattel is ultimately to be delivered".

It is important to note that if an architect or engineer extends his potential liability by entering into a collateral warranty providing for a fitness for purpose obligation, there may well be serious repercussions in respect of their professional indemnity policy.

See also, The Supply of Goods and Services Act.

= Related articles on Designing Buildings Wiki =

* 199 Knightsbridge Development Ltd v WSP UK Ltd.
* Best endeavours v reasonable endeavours.
* Collateral warranty.
* Construction contract.
* Contract v tort.
* Contractor.
* Defective Premises Act.
* Defects.
* Duty.
* Fitness for purpose.
* Good faith.
* MT Høgjaard A/S and E.ON Climate and Renewables UK Robin Rigg East Limited and others.
* Negligence.
* Sub-contractor.
* Supply of Goods and Services Act.
* Workmanlike manner.

[[Category:Case_law]] [[Category:Contracts_/_payment]]

Insolvency in the construction industry

2018-12-30T20:49:48Z

Rhea1910:

= Introduction =

'Insolvency' describes the inability of a debtor to pay its debts. In the United Kingdom insolvent individuals are made 'bankrupt', while companies are put into 'liquidation' or 'administration'.

In both cases, insolvency proceedings do not constitute formal legal claims. Instead they are effectively administrative processes instigated by either the insolvent entity or one of their creditors. Their specific aim is to recover all available assets so that they may be disposed of and the proceeds distributed to creditors to satisfy all debts to the greatest extent possible.

This article aims to provide a general overview of a highly complex area of law, and does not constitute legal advice. Any reader wishing for further information should consult a practitioner textbook or seek legal advice.

= Bankruptcy/individual insolvency =

A person is made bankrupt when a bankruptcy order is made by a court following the presentation of a bankruptcy petition. An individual may petition for their own bankruptcy where they are unable to pay their debts, or alternatively a petition may be presented by an individual’s creditor, or more than one creditor acting jointly.

Any creditor owed a debt exceeding the bankruptcy limit of £750 may petition for an individual’s bankruptcy. The debt must be liquidated and unsecured.

A petition may be founded on one of three grounds:

# A court judgment has been entered against the individual, and the Judgment Creditor has taken steps to enforce the judgment (e.g. by the seizure of goods) which have been unsuccessful.
# A statutory demand has been presented to the debtor and not complied with.
# A debtor has failed to comply with their obligations under a binding Individual Voluntary Agreement (IVA).

== Statutory demands ==

Any creditor may present a debtor with a statutory demand, in prescribed form, for payment of a debt. Upon receipt of a statutory demand, the recipient may either satisfy the debt within 21 days of service, challenge it by applying to set it aside or not respond to it.

Where no response is made, or an application to set aside the demand is dismissed and the demand stands, a presumption that a debt exists and cannot be paid is created. A petition can then be presented on this basis.

== Individual voluntary agreements ==

IVAs are specifically provided for in the Insolvency Act 1986. An individual will present a detailed proposal to all their creditors, with the help of a licensed insolvency practitioner. A detailed analysis of all income streams and assets will be conducted, possible courses of action suggested (e.g. sale of property), and an overall proposal presented to all creditors. Generally, the individual will aim to persuade their creditors to allow them to discharge their debts over a period of time rather than to petition for bankruptcy, usually achieved by demonstrating a higher return in the pound than via bankruptcy.

A meeting of creditors will be held, at which they will vote to either accept or reject the IVA proposal. If 75% of creditors by value of debt vote in favour the IVA will be adopted and become binding on all parties.

The obligations imposed on an individual by an IVA can be extensive and varied (for example to sell a property by a certain date) and any failure to comply with the obligations can lead to a bankruptcy petition being presented.

== Hearing of petitions ==

Once a petition has been presented to the court, a date for the hearing of the petition will be set. Detailed rules as to procedure and the form and service of any petition must be followed.

At the hearing the court will determine whether or not a bankruptcy order should be made. A petition may be opposed, in which case the court may adjourn the petition and give directions for the filing of evidence. A trial of the disputed issues may then be held. An unreasonable refusal of an offer to settle the debt may lead to a court dismissing the petition. What constitutes a reasonable offer is a matter of fact for the court, but for example an offer to settle a modest debt over two months would perhaps be considered one no reasonable creditor could refuse.

Ultimately, if a court is satisfied a valid debt exists that cannot be paid, and all necessary procedure has been followed correctly, a bankruptcy order will be made.

== Bankruptcy ==

Following the making of a bankruptcy order, a Trustee-in-Bankruptcy will be appointed, in whom the bankrupt’s estate vests. Generally, the bankrupt’s estate comprises all assets and property owned at the time the bankruptcy order was made, with certain exceptions (for example tools of trade).

The Trustee’s duty is to get in the bankrupt’s assets to be disposed of, and to utilise the proceeds to satisfy all debts. They have wide powers to enable them to do this, including the power to sell property. The bankrupt has duties to cooperate with the Trustee, for example by providing information as to their assets and income. Once all assets have been realised, the Trustee is entitled to cover their own costs - which can be substantial - from the proceeds. Following this, creditors’ debts are satisfied in order of priority and any surplus returned to the bankrupt.

A bankrupt will be discharged from bankruptcy after one year, although this period may be extended on the application of the Trustee if they have failed to comply with their obligations. While a bankrupt may be discharged after one year, the process of realising their estate may take longer than this.

= Company insolvency =

There are four types of procedures set out under the Insolvency Act 1986 governing the affairs of insolvent companies:

# Company Voluntary Arrangements.
# Administration.
# Receivership.
# Winding up.

== Company voluntary arrangements (CVAs) ==

These reflect the same procedures and aims as for IVAs. The directors of a company may put forward a proposal to creditors, or alternatively, if the company or partnership is already in administration or being wound up by the receiver or liquidator. As with IVAs, a meeting of creditors is held and if 75% of creditors by value vote in favour, the CVA is adopted.

-----
== Administration ==

An administrator may be appointed by a company's directors, by order of the court or by the holder of a qualifying floating charge. The purpose of administration is to:

# Rescue the company as a going concern.
# Achieve a better result for the company's creditors as a whole than if the company were wound up.
# Realise property to distribute to creditors.

A qualifying party, such as a director of the company or a creditor, may apply to court for an administration order. The court may make such an order where satisfied the company is unable to pay its debts and that administration is likely to achieve its purpose as set out above.

Following appointment, an administrator must assess the company's position and put forward proposals for achieving the purposes of administration. Under certain circumstances creditors' meetings may or must be held in order for proposals to be accepted or revised. Progress reports must generally be provided by the administrator every 6 months. The administrator has wide powers, for example the ability to dispose of property or to bring or defend legal proceedings on the company's behalf.

Administration ends 1 year after the initial order is made, although this period may be extended in certain circumstances or indeed may end earlier where the purposes of administration have been already met.

Contractor has gone into administration receivership, what do you do?

You must act quickly, following measure which need to be discussed with the design team.

* Advise the client of contractor insolvency, contractural position and recommended action
* Go to site, secure site and materials and change the locks
* Get in touch with administrative receiver
* Instruct the QS to prepare a detailed valuation of the completed work and an inventory of materials and equipment
* Termination of the contractor’s employment under the contract at any time by notice. Written notice is required, delivered by hand, special or recorded delivery. Termination effective with immediate effect upon the contractor receiving the notice. Contractor’s obligations to carry out and complete the works are suspended
* Withhold any payments to the contractor. Employer is not obliged to make any further payments or release monies if Termination is in effect. If the interim certificate has recently been issued, it is advised to issue a withholding notice
* Contact key sub-contractors, suppliers and commence discussions about continuation contracts.
* Begin the process of engaging a new contractor to proceed with the works
* Check the contract for Bonds or Parent Company Guarantees (PCG).
* Get in tough with administrative receiver or liquidator and client about their views with regard to project completion
* Keep record of all time spent - it is normal for additional fees to be charged in this respect
* Ensure that the project is insured and that the insurance obligations have been fulfilled/ complied with

How do you complete the works?

* Continuation with original contractor - only practical if works are nearing completion
* Assignment or Novation of the contract
* Appointing a new contractor to complete the project - completely new contract

== Administrative receivership ==

Historically, administrative receivership was a widely used insolvency process, granting the holders of floating charges the power to appoint a receiver. An administrative receiver's principal duty is to realise the indebtedness owed to the creditor by whom they were appointed by disposing of assets. In practice, this remedy is now much less common following the enactment of the Enterprise Act 2000.

-----
== Winding up ==

A registered company may be wound up either by court order or voluntarily. A court may wind up a company upon presentation of a petition on one of a variety of grounds, including, inter alia, that it is unable to pay its debts.

A company is deemed unable to pay its debts if (inter alia):

# A statutory demand for a debt exceeding £750 has been served on the company and the company has failed within three weeks of service to satisfy the debt; or
# It has a court judgment against it, and steps to enforce said judgment have been taken unsuccessfully; or
# It is proved that the company is unable to pay its debts as they fall due; or
# The company's assets are less than its liabilities.

As with bankruptcy detailed rules as to procedure and the form and service of demands and petitions must be followed. Persons served with the petition may appear at the hearing if they have given notice and may support or oppose the petition.

== Liquidation ==

Where a winding up order is made, it has the effect of discharging all employees, ending any agency relationships, and dismissing the company’s directors, who cease to possess powers of management. They continue to hold certain responsibilities as officers of the company, for example to respond to requests for information.

A liquidator will be appointed. Their responsibility is to get in and dispose of the company’s assets in order to discharge its liabilities to creditors, with any surplus passed to whomever is entitled to it. They hold wide powers to enable them to do so, constituting the governing body of the company and the receiver of its assets. They are entitled to their own costs before the proceeds are distributed to creditors. Once this process is complete the company is dissolved, which means that the company has now ceased to exist entirely.

== Phoenixing ==

Construction is an industry that can suffer the most from of what is known as 'phoenixing'. This is where directors dissolve companies to avoid having to pay staff wages, pensions or creditors before re-emerging 'phoenix-like' in a similar guise.

For more information, see [[Insolvency_Act_1986_-_Use_of_Prohibited_Names|Insolvency Act- Use of Prohibited Names.]]

In August 2018, the government's Insolvency Service announced plans to tackle phoenixing to help safeguard workers, pensions and small businesses. Directors may face investigation and be liable to fines or be disqualified from running a business if they try to avoid paying a dissolved company's debts. Under the new powers, directors will be required to explain to shareholders how dividends can be paid alongside other financial commitments.

Business Minister Kelly Tolhurst said: “While the vast majority of UK companies are run responsibly, some recent large-scale business failures have shown that a minority of directors are recklessly profiting from dissolved companies. This can’t continue. That is why we are upgrading our corporate governance to give new powers to authorities to investigate and hold responsible directors who attempt to shy away from their responsibilities, help protect workers and small suppliers and ensure the UK remains a great place to work, invest and do business.”

Further measures are due to be set out in Autumn 2018.

(Ref. [https://www.gov.uk/government/news/new-crackdown-on-reckless-directors https://www.gov.uk/government/news/new-crackdown-on-reckless-directors)]

-----
This article was created by --[[User:Alistair_Cantor|Alistair Cantor]].

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Carillion.
* Cash flow statement.
* Contract claims.
* Fair payment practices.
* Insolvency Act 1986 - Use of Prohibited Names.
* Liens.
* New regulations on late payment.
* Profitability.
* Remedies for late payment.
* Scheme for construction contracts.
* Solvency.
* The Late Payment of Commercial Debts Regulations 2013.

[[Category:Other_legislation]]

Insolvency in the construction industry

2018-12-30T20:44:44Z

Rhea1910:

= Introduction =

'Insolvency' describes the inability of a debtor to pay its debts. In the United Kingdom insolvent individuals are made 'bankrupt', while companies are put into 'liquidation' or 'administration'.

In both cases, insolvency proceedings do not constitute formal legal claims. Instead they are effectively administrative processes instigated by either the insolvent entity or one of their creditors. Their specific aim is to recover all available assets so that they may be disposed of and the proceeds distributed to creditors to satisfy all debts to the greatest extent possible.

This article aims to provide a general overview of a highly complex area of law, and does not constitute legal advice. Any reader wishing for further information should consult a practitioner textbook or seek legal advice.

= Bankruptcy/individual insolvency =

A person is made bankrupt when a bankruptcy order is made by a court following the presentation of a bankruptcy petition. An individual may petition for their own bankruptcy where they are unable to pay their debts, or alternatively a petition may be presented by an individual’s creditor, or more than one creditor acting jointly.

Any creditor owed a debt exceeding the bankruptcy limit of £750 may petition for an individual’s bankruptcy. The debt must be liquidated and unsecured.

A petition may be founded on one of three grounds:

# A court judgment has been entered against the individual, and the Judgment Creditor has taken steps to enforce the judgment (e.g. by the seizure of goods) which have been unsuccessful.
# A statutory demand has been presented to the debtor and not complied with.
# A debtor has failed to comply with their obligations under a binding Individual Voluntary Agreement (IVA).

== Statutory demands ==

Any creditor may present a debtor with a statutory demand, in prescribed form, for payment of a debt. Upon receipt of a statutory demand, the recipient may either satisfy the debt within 21 days of service, challenge it by applying to set it aside or not respond to it.

Where no response is made, or an application to set aside the demand is dismissed and the demand stands, a presumption that a debt exists and cannot be paid is created. A petition can then be presented on this basis.

== Individual voluntary agreements ==

IVAs are specifically provided for in the Insolvency Act 1986. An individual will present a detailed proposal to all their creditors, with the help of a licensed insolvency practitioner. A detailed analysis of all income streams and assets will be conducted, possible courses of action suggested (e.g. sale of property), and an overall proposal presented to all creditors. Generally, the individual will aim to persuade their creditors to allow them to discharge their debts over a period of time rather than to petition for bankruptcy, usually achieved by demonstrating a higher return in the pound than via bankruptcy.

A meeting of creditors will be held, at which they will vote to either accept or reject the IVA proposal. If 75% of creditors by value of debt vote in favour the IVA will be adopted and become binding on all parties.

The obligations imposed on an individual by an IVA can be extensive and varied (for example to sell a property by a certain date) and any failure to comply with the obligations can lead to a bankruptcy petition being presented.

== Hearing of petitions ==

Once a petition has been presented to the court, a date for the hearing of the petition will be set. Detailed rules as to procedure and the form and service of any petition must be followed.

At the hearing the court will determine whether or not a bankruptcy order should be made. A petition may be opposed, in which case the court may adjourn the petition and give directions for the filing of evidence. A trial of the disputed issues may then be held. An unreasonable refusal of an offer to settle the debt may lead to a court dismissing the petition. What constitutes a reasonable offer is a matter of fact for the court, but for example an offer to settle a modest debt over two months would perhaps be considered one no reasonable creditor could refuse.

Ultimately, if a court is satisfied a valid debt exists that cannot be paid, and all necessary procedure has been followed correctly, a bankruptcy order will be made.

== Bankruptcy ==

Following the making of a bankruptcy order, a Trustee-in-Bankruptcy will be appointed, in whom the bankrupt’s estate vests. Generally, the bankrupt’s estate comprises all assets and property owned at the time the bankruptcy order was made, with certain exceptions (for example tools of trade).

The Trustee’s duty is to get in the bankrupt’s assets to be disposed of, and to utilise the proceeds to satisfy all debts. They have wide powers to enable them to do this, including the power to sell property. The bankrupt has duties to cooperate with the Trustee, for example by providing information as to their assets and income. Once all assets have been realised, the Trustee is entitled to cover their own costs - which can be substantial - from the proceeds. Following this, creditors’ debts are satisfied in order of priority and any surplus returned to the bankrupt.

A bankrupt will be discharged from bankruptcy after one year, although this period may be extended on the application of the Trustee if they have failed to comply with their obligations. While a bankrupt may be discharged after one year, the process of realising their estate may take longer than this.

= Company insolvency =

There are four types of procedures set out under the Insolvency Act 1986 governing the affairs of insolvent companies:

# Company Voluntary Arrangements.
# Administration.
# Receivership.
# Winding up.

== Company voluntary arrangements (CVAs) ==

These reflect the same procedures and aims as for IVAs. The directors of a company may put forward a proposal to creditors, or alternatively, if the company or partnership is already in administration or being wound up by the receiver or liquidator. As with IVAs, a meeting of creditors is held and if 75% of creditors by value vote in favour, the CVA is adopted.

== Administration ==

An administrator may be appointed by a company's directors, by order of the court or by the holder of a qualifying floating charge. The purpose of administration is to:

# Rescue the company as a going concern.
# Achieve a better result for the company's creditors as a whole than if the company were wound up.
# Realise property to distribute to creditors.

A qualifying party, such as a director of the company or a creditor, may apply to court for an administration order. The court may make such an order where satisfied the company is unable to pay its debts and that administration is likely to achieve its purpose as set out above.

Following appointment, an administrator must assess the company's position and put forward proposals for achieving the purposes of administration. Under certain circumstances creditors' meetings may or must be held in order for proposals to be accepted or revised. Progress reports must generally be provided by the administrator every 6 months. The administrator has wide powers, for example the ability to dispose of property or to bring or defend legal proceedings on the company's behalf.

Administration ends 1 year after the initial order is made, although this period may be extended in certain circumstances or indeed may end earlier where the purposes of administration have been already met.

== Administrative receivership ==

Historically, administrative receivership was a widely used insolvency process, granting the holders of floating charges the power to appoint a receiver. An administrative receiver's principal duty is to realise the indebtedness owed to the creditor by whom they were appointed by disposing of assets. In practice, this remedy is now much less common following the enactment of the Enterprise Act 2000.

== Winding up ==

A registered company may be wound up either by court order or voluntarily. A court may wind up a company upon presentation of a petition on one of a variety of grounds, including, inter alia, that it is unable to pay its debts.

A company is deemed unable to pay its debts if (inter alia):

# A statutory demand for a debt exceeding £750 has been served on the company and the company has failed within three weeks of service to satisfy the debt; or
# It has a court judgment against it, and steps to enforce said judgment have been taken unsuccessfully; or
# It is proved that the company is unable to pay its debts as they fall due; or
# The company's assets are less than its liabilities.

As with bankruptcy detailed rules as to procedure and the form and service of demands and petitions must be followed. Persons served with the petition may appear at the hearing if they have given notice and may support or oppose the petition.

== Liquidation ==

Where a winding up order is made, it has the effect of discharging all employees, ending any agency relationships, and dismissing the company’s directors, who cease to possess powers of management. They continue to hold certain responsibilities as officers of the company, for example to respond to requests for information.

A liquidator will be appointed. Their responsibility is to get in and dispose of the company’s assets in order to discharge its liabilities to creditors, with any surplus passed to whomever is entitled to it. They hold wide powers to enable them to do so, constituting the governing body of the company and the receiver of its assets. They are entitled to their own costs before the proceeds are distributed to creditors. Once this process is complete the company is dissolved, which means that the company has now ceased to exist entirely.

== Phoenixing ==

Construction is an industry that can suffer the most from of what is known as 'phoenixing'. This is where directors dissolve companies to avoid having to pay staff wages, pensions or creditors before re-emerging 'phoenix-like' in a similar guise.

For more information, see [[Insolvency_Act_1986_-_Use_of_Prohibited_Names|Insolvency Act- Use of Prohibited Names.]]

In August 2018, the government's Insolvency Service announced plans to tackle phoenixing to help safeguard workers, pensions and small businesses. Directors may face investigation and be liable to fines or be disqualified from running a business if they try to avoid paying a dissolved company's debts. Under the new powers, directors will be required to explain to shareholders how dividends can be paid alongside other financial commitments.

Business Minister Kelly Tolhurst said: “While the vast majority of UK companies are run responsibly, some recent large-scale business failures have shown that a minority of directors are recklessly profiting from dissolved companies. This can’t continue. That is why we are upgrading our corporate governance to give new powers to authorities to investigate and hold responsible directors who attempt to shy away from their responsibilities, help protect workers and small suppliers and ensure the UK remains a great place to work, invest and do business.”

Contractor has gone into administration receivership, what do you do?

You must act quickly, following measure which need to be discussed with the design team.

* Advise the client of contractor insolvency, contractural position and recommended action
* Go to site, secure site and materials and change the locks
* Get in touch with administrative receiver
* Instruct the QS to prepare a detailed valuation of the completed work and an inventory of materials and equipment
* Termination of the contractor’s employment under the contract at any time by notice. Written notice is required, delivered by hand, special or recorded delivery. Termination effective with immediate effect upon the contractor receiving the notice. Contractor’s obligations to carry out and complete the works are suspended
* Withhold any payments to the contractor. Employer is not obliged to make any further payments or release monies if Termination is in effect. If the interim certificate has recently been issued, it is advised to issue a withholding notice
* Contact key sub-contractors, suppliers and commence discussions about continuation contracts.
* Begin the process of engaging a new contractor to proceed with the works
* Check the contract for Bonds or Parent Company Guarantees (PCG).
* Get in tough with administrative receiver or liquidator and client about their views with regard to project completion
* Keep record of all time spent - it is normal for additional fees to be charged in this respect
* Ensure that the project is insured and that the insurance obligations have been fulfilled/ complied with

How do you complete the works?

* Continuation with original contractor - only practical if works are nearing completion
* Assignment or Novation of the contract
* Appointing a new contractor to complete the project - completely new contract

Further measures are due to be set out in Autumn 2018.

(Ref. [https://www.gov.uk/government/news/new-crackdown-on-reckless-directors https://www.gov.uk/government/news/new-crackdown-on-reckless-directors)]

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This article was created by --[[User:Alistair_Cantor|Alistair Cantor]].

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Carillion.
* Cash flow statement.
* Contract claims.
* Fair payment practices.
* Insolvency Act 1986 - Use of Prohibited Names.
* Liens.
* New regulations on late payment.
* Profitability.
* Remedies for late payment.
* Scheme for construction contracts.
* Solvency.
* The Late Payment of Commercial Debts Regulations 2013.

[[Category:Other_legislation]]

Construction manager

2018-12-30T17:25:02Z

Rhea1910:

Construction management is a procurement route in which the works are constructed by a number of different trade contractors. These trade contractors are contracted to the client but managed by a construction manager.

The employer places a direct contract with each of the trade contractors and utilises the expertise of a construction managers who acts as a consultant to coordinate the contracts. The trade contactors carry out the work and the construction managers supervises the construction process and coordinates the design team. The CM has no contractual links with the trade contractors or members of the design team. Their role includes preparation of the programme, determining requirements for site facilities, breaking down the project into suitable works packages, obtaining and evaluating tenders, co-ordinating and supervising the works.

Construction management differs from management contracting, in that management contractors place contracts with works contractors (equivalent to trade contractors in construction management) direct, whereas construction managers only manage the trade contracts, the contracts are placed by the client.

Construction managers are effectively acting as a consultant to the client, the client takes the risk for the trade contractors' performance. In legal terms the management contractor is acting as a principal whereas the construction manager is acting as an agent.

As the client is required to place and administer the trade contracts (of which there may be a large number) and perhaps to accept price uncertainty, construction management is only appropriate for experienced clients.

The construction manager is generally appointed early in the design process so that their experience can be used to improve the cost and buildability of proposals as they develop, as well as to advise on packaging, the risks of interfaces between packages, and the selection of trade contractors. Construction manager's are often appointed at the end of the concept design stage.

Appointing a construction manager enables some trade packages to be tendered earlier than others, and sometimes, even before the design is completed. For example, piling might commence whilst the detailed design of above ground works continues. This can shorten the time taken to complete the project, however, it means that there will be price uncertainty until the design is complete and all contracts have been let.

The services provided by a construction manager might include:

* Advising on the development of the brief (if appointed at this stage).
* Advising on the procurement route.
* Advising on appointments (such as site inspectors).
* Advising on the feasibility, interfaces, buildability, cost and programming of the design.
* Advising on statutory approvals.
* Defining key performance indicators for trade contractors.
* Advising on the need for mock ups, samples, tests and inspections.
* Acting as the principal contractor.
* Cost planning and cost control.
* Preparing a construction programme and defining methods of working on site.
* Identifying potential trade contracts.
* Tendering trade contracts.
* Consenting to sub-contracting of work by trade contractors.
* Arranging for site accommodation, welfare facilities, fences, hoardings, roads and walkways, drainage, power and water supply.
* Co-ordinating setting out.
* Arranging labour for certain site activities (such as cleaning).
* Managing site inspectors.
* Co-ordinating the release of information.
* Managing and co-ordinating trade contracts, including acting as contract administrator, carrying out or co-ordinating inspections, issuing instructions and certificates, etc.
* Co-ordinating the work of statutory undertakers.
* Witnessing tests and co-ordinating commissioning.
* Collating as-built information, building owner's manual, building user's handbook, project handbook, health and safety file, pre-construction information and construction phase plan.
* Monitoring key performance indicators.
* Managing the site.
* Chairing site progress meetings and preparing progress reports for the client.

Construction managers are likely to be paid based on reimbursable costs (such as site facilities, staff costs, statutory fees, offices, and so on), and a management fee, comprising pre-construction and construction fees, which may be fixed, or calculated based on an agreed formula. It is important to establish what is included in the construction manager's price (for example, insurance requirements or payment of statutory fees) and to agree the limit of the construction manager's delegated authority in issuing instructions which affect the cost of the project.

As a construction manager performs a consultancy and management role (unlike a traditional contractor), their appointment may be on similar terms to the consultant team. They may be required to hold professional indemnity insurance and to provide collateral warranties for tenants, purchasers or funders, and collaborative working with the consultant team will be vital to the success of the project.

As construction managers tend to be appointed early in the project, their appointment is unlikely to include a completion date.

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When is it Appropriate?

- On large, complex projects were the advantages of CM can be put to use e.g. upfront buildability knowledge, programme advise, specialist input from trade contractors

- Where early start on site is key 
- Flexibility in design, procurement, construction strategy 
- Where price certainty before commencement is not key 
- Where the client is experienced in construction

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What are the advantages?

a) Overall project duration reduced by overlapping design and construction 
b) Construction manager can contribute to the design and project planning processes

c) Roles, risks and relationships for all parties are clear 
d) Changes in design can be accommodated without paying a premium 
e) Prices may be lower due to direct contracts with trade contractors 
f) Client has means of redress to trade contractors through direct contractual links

What are the disadvantages? 
a) Price certainty not achieved until last trade package is let 
b) Changes to later packages may adversely affect packages already let - expensive 
c) Need an informed, pro active client 
d) Client has a lot of consultants and contractors to deal with – not just one – more fees

NB: The Chartered Institute of Building (CIOB) created a new profession of 'Chartered Construction Manager' in 2013. CIOB's use of the term 'construction manager' is a much broader one than the contractual definition described above. They describe construction management as, 'Management of the development, conservation and improvement of the built environment'. This might involve any role managing construction activities, rather than the specific role of managing trade contractors who are contracted to the client.

= Find out more =

=== Related articles on Designing Buildings Wiki ===

For detailed descriptions of the tasks performed on a construction management project see the construction management: outline work plan.

* Collaborative practices.
* Collateral warranties.
* Commercial manager.
* Construction manager at-risk.
* Construction management contract.
* Construction management: outline work plan.
* Contractor.
* Early contractor involvement.
* How to become a construction manager.
* Management contractor.
* Managing the procurement process.
* Pre-Construction Services Agreement.
* Principal contractor.
* Procurement route.
* Professional indemnity insurance.
* Resource management.
* Sub-agent.
* Subcontractor.
* Time management of construction projects.
* Trade contractor.
* Traditional contractor.
* Types of contractor.

[[Category:Appointments]] [[Category:Construction_management]] [[Category:Construction_techniques]] [[Category:Procurement]] [[Category:Roles_/_services]]

Management contracting - pros and cons

2018-12-30T17:23:35Z

Rhea1910:

[[File:Construction_management.jpg|link=File:Construction_management.jpg]]

Management contracting is a procurement route in which the works are constructed by a number of different works contractors who are contracted to a management contractor. The management contractor is generally appointed by the client early in the design process so that their experience can be used to improve the cost and buildability of proposals as they develop, as well as to advise on packaging and the risks of interfaces.

The agreement between client and management contractor is likely to cover both pre-construction and construction activities, with a notice to proceed between the two, before which works contracts cannot be let.

Management contracting can be beneficial on complex and/or specialist projects made up of a number of packages individually appointed to the best-suited subcontractor. This means that there is the potential for the highest-quality of delivery.

It can also be beneficial for the client in that they are able to retain control of the design while drawing on the experience and expertise of a construction specialist as part of the professional team, since the management contractor contributes to the design process. At the same time, the client is able to move risks or procurement and delivery onto the management contractor who is responsible both for project management and carrying out the works.

It is also beneficial in that the competitive tendering process, rather than the contractor tendering a fixed price, they can provide cost savings for the client. In addition, time savings can be made by tendering some of the work packages early (such as groundworks) and overlapping the design and construction activities. This allows for a quick start on site.

There can be also be considerable flexibility in the design, with changes being made throughout the construction process (albeit with potential cost implications).

However, it can be unsuitable as a procurement route for inexperienced clients since, although they can have more control over the design, works usually begin before the nature of the completed building is known. The lack of available specialists may also cause unproductive gaps in the work to be undertaken.

There is a body of opinion that believes that if a management contractor operating on a cost plus fee arrangement pursues a works contractor in court for non-performance, the management contractor is unable to prove loss and damages. This is because the loss is simply passed on to the client, and so it is the client that has incurred the damage. This has increased the tendency for clients to require direct warranties from each works contractor.

A decision needs to be made as to whether the client wishes to retain the services of both an independent cost consultant or to transfer cost planning, reporting and cost control as a service to be provided by the management contractor. A judgement has to be made on the competence and experience of the management contractor's proposed quantity surveying and cost estimating team and whether the client has a competent individual to police the financial aspects of the management contractor’s consultancy agreement.

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Management contracting is when a management contractor is employed to contribute their expertise to the design and to manage construction and is paid a fee for doing so. The management contractor has direct contractual links with all of the works contractors. They have the responsibility for the construction works without actually carrying them out. Not all of the design need be completed before the first works contractors start work. The MC selects the works contractors through competitive open book tenders. The client reimburses the cost of these packages to the MC plus their fee. The MC’s role is low risk – get prime cost plus a fee.

 
Appropriate for -

 
- Where the client does not want cost certainty before commencement 
- Where an early start on site in a priority

What are the advantages?

a) Overall project duration is shorter due to overlapping design and construction 
b) There is contractor contribution to the design and planning process 
c) Changes can be accommodated in packages not yet let if they have no further impact d) The works are let competitively at current market prices on a firm price basis

What are the disadvantages?

a) The price for the works is not received until the last package has been let 
b) Changes to the design of later packages may affect packages already let - expensive 
c) There is little incentive for the MC to reduce costs 
d) May become a ‘post box’ system 
e) In practice, the MC has little legal responsibility for the defaults of the works contractors

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Find out more

=== Related articles on Designing Buildings Wiki ===

* Construction contract.
* Construction management contract.
* Design and build - pros and cons.
* Design build operate (DBO).
* Design liability.
* Employer’s requirements.
* Management Building Contract.
* Management contract: outline work plan.
* Management contractor.
* Traditional contract - pros and cons.
* Works contractor.

[[Category:Construction_management]] [[Category:Contracts_/_payment]] [[Category:Procurement]]