Last edited 04 Dec 2015

Sub-consultants for design and construction

Consultants are professionals, typically, appointed to by the client to perform expert tasks on a project. This might include:

Providing advice on setting up and defining the project.
Developing and co-ordinating the design.
Preparing production information and tender documentation.
Administration of construction contracts.
Inspecting the work of contractors.

The members of the consultant team likely to be required on most projects include; an architect, a cost consultant, a services engineer and a structural engineer. However there are a wide range of other consultants that might be required on some projects (See consultant team for more information).

Given the increasing complexity of many construction projects it is becoming more common that a consultant appointed on a project, will in turn themselves appoint consultants to undertake some or all of the work for which they have been engaged. The client’s consultants may be referred to as ‘prime consultants’ whilst the consultants that they appoint are generally referred to as ‘sub-consultants’. This is similar to the relationship between clients, contractors and sub-contractors.

Typically a prime consultant will appoint a sub-consultant because some of the work for which they have been engaged is outside of their expertise, or because they lack the resource to undertake the work themselves.

For the client, this hierarchical contractual structure means they can maintain a single point of responsibility despite needing the services of a wide range of specialist consultants. For the prime consultant, it may enable them accept work which they could not carry out entirely by themselves.

However, if the sub-consultant's engagement was not agreed at the time of appointing the prime consultant, the client may be required to give permission or may have the right to refuse. As the client has no direct contractual relationship with the sub-consultant, they may also require a collateral warranty in their favour allowing them to make a direct claim against the sub-consultant if necessary and to have step-in rights into the sub-consultancy agreement in the event that the prime consultant becomes insolvent.

The prime consultant may wish to ensure they have back to back clauses in their own consultancy agreement and in the sub-consultancy agreement to avoid being exposed. Negotiating this is not always straight-forward, and is best achieved if the consultancy and sub-consultancy agreements are drafted and agreed at the same time. The sub-consultancy agreement should cover issues such as the transfer of copyright to the prime consultant, and the timing of payments so that the prime consultant’s cash flow from their own payments is adequate, and so they can comply with the requirements of the Housing Grants, Construction and Regeneration Act which would allow a sub-consultant to suspend performance for non-payment.

The prime consultant retains responsibility for the services for which they have been contracted, irrespective of whether they appoint sub-consultants, and the sub-consultant must only accept instructions from the prime consultant. This means that the prime consultant will have a management and co-ordination role for the sub-consultant’s work and will be liable for any claims that may be made by the client as a result of the sub-consultant’s work. They will then have to attempt to recover losses from the sub-consultants. This can be problematic, if for example the sub-consultant has become insolvent.

There may be professional indemnity insurance implications in this additional responsibility, particularly where the sub-consultancy services are different from the prime consultant’s usual services, for example if an architect appoints a structural engineer as a sub-consultant. The prime consultants insurer would be likely to require subrogation rights to recover losses from the sub-consultant. Subrogation is the substitution of one person in place of another in relation to a claim; that is, one person (the subrogee) ‘steps into the shoes’ of the other (the subrogor) and is assigned with all their rights and remedies. The prime consultant should not therefore agree with the client to waive their insurer's subrogation rights unless this has been agreed with the insurer.

The prime consultant should consider these issues when appointing a sub-consultant (for example checking the professional indemnity insurance cover of the sub-consultant) and when negotiating their own consultancy fee.

There are a number of standard sub-consultancy agreements, aligned with consultancy agreements, such as the RIBA Sub-consultant Agreement and the ACE Sub-consultant Agreement.