Bath sparring

Contracting has long been characterised as prone to conflict and fragmentation. This is a unique example of just how wrong it can go.

Back in 1996, Bath and North East Somerset Council (BANES) conceived a nifty but modest £13m leisure amenity to be ready for Christmas 1999. It was not to be. The pool paint peeled. The floors leaked. BANES blamed Mowlem. Mowlem blamed architect Grimshaw. Construction minister at the time Nigel Griffiths blamed BANES, calling it the “client from hell”. Badly off course, with total relationship meltdown, the Bath Spa project has been like a ship on full throttle while the captain and commander lunge at each other in the wheelhouse.

Well, the captain appears to have got the upper hand – for the time being. In April BANES ordered Mowlem off site and installed Capita Symonds to fix the floors and do the few things left to finish the spa. A new opening date is set for April 2006, with a projected final cost of around £37m. Whether it was the right thing to do legally looks set to be the subject of a court battle that could be construction’s equivalent to the Michael Jackson case. But what it certainly did was end a partnership so poisoned that it, and not any technical issue, seemed the main thing preventing the spa getting built.

The man behind the move is John Betty, MCIOB, parachuted into Bath in January to head up BANES’ new major projects directorate. Formerly an associate director at Mace, and before that major projects director at Westminster City Council, this veteran seems cool at the helm.

“Now that we’ve got the right people here and the culture’s easier and the angst has gone out of it, we have a project that is going to be dealt with in what could be described as a normal way,” he says.

Last month we went to hear his take on the final twists and turns of the saga, including Mowlem’s famous offer to take charge of the project for a guaranteed price, and BANES’ alleged Holiday Ambush.

The Offer

Mowlem caused a sensation in February by announcing to the press that it had offered to fix the floors and finish the project on a design and build basis, for a fixed price of £26m, and have it finished in July.

Considering the cost estimate rose to £26m back in 2003 when the paint peeled, this was a breakthrough, right? Wrong. BANES denounced the offer as a hollow publicity stunt, accused Mowlem of withholding full details, and claimed it contained a condition that the council must drop any claims over the paint.

Mowlem tells a different story. (Surprise, surprise.) It claims that it went to the press only because BANES was stalling. Mowlem outlined its proposals in a letter to BANES on 15 December 2004. True, that letter omitted the price. But Mowlem says BANES was sufficiently interested to request a more detailed plan, which Mowlem worked up over Christmas. Mowlem also invited BANES repeatedly to meetings, including ones to meet specialists and suppliers lined up to do the work, but BANES declined. Mowlem said BANES asked for more detail in January, and in February indicated it would take three months to decide, maybe more with an election coming. That’s when Mowlem went public.

So what was going on? Why didn’t Betty jump at the offer?

“I was unconvinced [it] represented a fair reflection of the time necessary to complete the work and neither did it represent value for money, and that there were implications in accepting it that I felt were not in the council’s best interests. There was an implication that the £26m may not have been the whole story.

“But more fundamentally, I don’t think that offer would have changed the dynamics of the project or the culture.”

Had Mowlem attached a condition that BANES would guarantee no claims?

“I’m not able to actually tell you what the content of the offer was, but I can say it’s a good question,” he says.

Now that we’ve got the right people the angst has gone. we have a project that is going to be dealt with in a normal way

John betty, major projects director, BANES

Last month Mowlem claimed that the work now being done on the floor under the management of Capita Symonds, was basically the solution it proposed in the offer, and not what BANES instructed in the now famous Architects Instruction 133 (AI 133), which leads us to The Holiday Ambush.

The “Holiday Ambush”

The council says the final straw was Mowlem’s refusal to confirm whether it would comply with an architect’s instruction to replace the floor in the steam room, which had been taken up to find out why it was leaking.

But Mowlem maintains that AI 133 was a devious scheme to trap it into not complying. Mowlem claims the AI arrived from Grimshaw, the architect and contract administrator, late on Thursday 24 March, the day before Easter long weekend. They claim that it was 200 pages long, contained a design new to Mowlem, and, if that wasn’t enough, demanded that manufacturers be consulted and a method statement and programme be produced, all within five working days – or else Mowlem would be fired.

Mowlem said it was normal to shut down for the week after Easter, indeed, that it was agreed in the original programme. That made AI 133 nothing less than a “holiday ambush”, it said, which BANES had been cooking up for months.

Nevertheless, Mowlem claims it raced to comply. Key people broke off their holidays and worked through the week after Easter digesting the AI and formulating an answer, which they delivered on the following Monday, 4 April. Mowlem released part of that letter to the press. It’s disdainful, and signals Mowlem’s intention to consult it’s lawyers, but the letter does nevertheless record the contractor’s intention to comply. On 7 April Mowlem wrote again with a draft programme, but complained that Grimshaw hadn’t yet provided enough information for a definitive one, or approved Mowlem’s proposed subcontractors.

The next day BANES announced it was terminating the contract.

Betty denies the holiday ambush and calls it an “accident of the calendar”.

“The timing was what it was,” he says. “The fact that we were in a holiday period was coincidence.

“We’re talking about a bank holiday, actually, and the week after it, we know that Mowlem were actually working, had people in attendance, so I think it’s something of a disingenuous argument to use after a period of two and a half years to pick on a few days and try and use that as an issue. The whole situation is much bigger than that.”

But Mowlem said it would comply, didn’t it? Betty maintains there is compliance, and then there is compliance.

“Our judgement was that it was not being responded to positively, there was a likelihood that we were going to end up in the same long, protracted discussions that we had over the pool paint, and I was not prepared to get into that circumstance.”

Did Betty come to the job having already decided to get rid of Mowlem? Mowlem claims BANES was advertising for a contract administrator and a project manager as early as 27 January. But Betty denies it:

“The starting point was me arriving in January and reporting back that whatever happens, the situation would stay the way it was and that we needed to get control of the project. To do that we needed to split the role of architect and contract administrator.

The client has to be in a position to complete its building in the way it decides to do it

John Betty

“In the meantime the floors issue developed. The architect came up with a solution and it was quite clear that Mowlem, although acquiescing to dealing with the AI, was not, in our view, progressing that [demonstrably].”

Storm clouds gather

Ordering Mowlem off the site provided the starkest spur to legal action and Mowlem seems intent on going to war. “Unless BANES wish to accept our restated offer... our focus must change to the protection of our position and the recovery of our just entitlements,” Mowlem stated on 13 May. But Betty is confident he did the right thing.

“We used proper legal processes to do that,” he says. “We’d taken a significant amount of advice, as you can imagine.

“They will have whatever rights are duly available to them. But it is absolutely a fundamental of contracting that although both parties need to be treated fairly, at the end of the day the client has to be in a position to be able to complete its building in a timely fashion, in a way it decides it wants to do it.”

He appears open to an amicable settlement.

“When they come forward with clear claims we’ve got our people lined up to receive them in a proper way. Hopefully we can have a sensible discussion and understanding of what our relative positions are and we’ll see how it plays.

“We’ll try hard to make it as easy for everybody as we can. There is no point doing it the hard way if you can do it the easy way.”

Now that, in this plaited saga, would be a truly surprising twist!

But how did it get to this point? Who was responsible for stoking the culture of mistrust? Betty honourably avoids overtly blaming Mowlem. He says an industry thing.

“Various parties have been accused of being more aggressive than others, but I think it’s an example of being in a position where nobody could see a way out of the situation, and therefore people act very defensively because either their reputations or their P&Ls [profit and losses] are looking a bit sick.”

Has BANES learned any lessons? Yes. After all, it hired him, didn’t it?

“That will move us forward in the way in which the industry is going. We’re already procuring another big project on a partnering contract, and we’re processing some of our schools through a framework agreement. And we will be moving forward our new projects in a more consensual way.” cm