Back to schools: Problems with schools projects

This coming year, the government will be pumping money into Building Schools for the Future projects and the Primary Schools Capital Programme, and will retender and expand the Partnerships for Schools national framework for academies and small-scale school projects, in an attempt to supply contractors with public sector work while the commercial market shrinks.

Those that win this work will have to cope with a set of sector-specific challenges when trying to prevent delays. For a start, unlike most other schemes, set term dates are the determining factor of any school construction programme. Projects have to be planned to ensure noisy work is undertaken outside term time or over weekends.

This rigid timeframe can also affect the date at which procurement must finish, as there will be pressure to start work during a school holiday. Early works agreements may be required so that work can start on time, even if the deal is not closed. Furthermore, it is likely that a school will not be able to move into a new building in the middle of term.

One essential success factor is the ability to co-ordinate with other contractors in the building. A local authority will not consider a project complete until the school is in a condition to be used, which means that time needs to be allowed after construction has completed to install furniture, equipment and, in particular, ICT facilities.

While the construction and ICT contractors’ obligations will be set out in separate contracts, the local authority should accept that their performance is interlinked. For example, extensions of time granted under the ICT contract will prompt claims for the same under the building contract. Both ICT and building contracts will also need to have an integrated process for variations so they can be dealt with simultaneously.

The local authority will look to its ICT and construction contractors to work together to provide a total solution, so the contractors’ risks will need to be dealt with in an interface agreement, to which the local authority will not be a party. This will ensure each contractor can claim back losses caused by the other’s delay. However, it may leave a building contractor in the unenviable position of claiming back losses for delay not from the local authority but from an ICT contractor that it has had no involvement in choosing.

If a school project is delayed, the new building may not be able to be used until the start of the following term, which may mean providing costly temporary accommodation for an additional term.

If there is a delay, the local authority will expect the contractor to pick up the costs

To mitigate this risk, the contractor could leave some lag in the programme and may also wish to quantify its risk of delay before pricing for a project. Standard form contracts for BSF and academies projects limit the contractor’s liability for delay to either a rate of liquidated and ascertained damages (which of course must be genuine estimates of loss) or the costs of temporary accommodation.

However, under these forms contractors are only responsible for delay up to practical completion, and this may leave the local authority picking up the tab for temporary accommodation from the date of completion until the end of the school term.

Often a local authority will not have extra funding for temporary school accommodation so, if there is a delay, it will expect the contractor to pick up the related costs and will want this set out in the contract.

Where losses associated with a delay are negligible, perhaps because the old school can continue to be used until the new school is completed, the local authority’s concern will be to incentivise timely completion either via a payment mechanism or, more likely given budgetary restraints, using key performance indicators linked to work on future projects.

These are just some of the issues that can arise on a schools project. For contractors, more than anything, avoiding problems is a case of being prepared and understanding who is liable for delay so it is possible to programme, price, mitigate or accelerate as necessary. Local authorities, in turn, should plan for delay by managing schools’ expectations of completion and ensuring any additional accommodation costs are covered.