Last year the CIOB ‘s Complex Projects Contract stressed the importance of time and cost management. Now it is to be joined by a consultancy agreement as it transitions to a suite of contracts
It’s a well-worked tale that the majority of large-scale construction projects are delivered late, often substantially so. But a solution may not be far away.
The Complex Projects Contract (CPC) was unveiled by the Chartered Institute of Building (CIOB) last year. Unlike others, this construction contract put time and cost management at its heart. It was innovative in other areas, too. For instance, it was the first standard form to focus on digital communication and BIM.
For a construction team to collaborate effectively and transparently its members need to share project parameters and information. This is best achieved by appointing them under contracts with a common philosophy. From next month, the CPC will be joined by a professional appointment, as it transitions to a contractual suite. The CPC’s ground-breaking features filter down into the new “Consultancy Appointment”. BIM remains intact, as do dispute resolution and the requirement for the parties to co-operate in mutual trust and fairness. The starring role, as ever, belongs to the time and cost risk provisions.
As with the CPC, the appointment anticipates that, since each project’s circumstances are different, the parties can make requisite modifications through special terms
The appointment understands the importance of design development scheduling. Each design consultant must submit and follow a design execution plan and co-ordinate with the works and overall programme. The contractor and consultants must work to an integrated programme. There are consequences for non-compliance. If an employer’s risk event occurs, the consultant must give early warning.
This is similar to the NEC3 Professional Services Contract (PSC3). Unlike in the PSC3, the time management duties under the appointment have teeth. If the consultant does not make a necessary contribution to the programme or fails to provide submissions or progress records in time, the employer may appoint others to reproduce the necessary documents at the consultant’s cost.
Similar to the PSC3’s Option X7, the appointment allows for liquidated damages to be levied for late completion of the services. Just as it is sensible for a client and contractor to agree levels of damages for delay, so it should be for consultants. They may need to check the terms of their professional indemnity insurance to assess the degree to which they are covered for pre-determined losses. That said, insurers may welcome the clarity this provides. In other places, the CPC includes provisions that employers would expect for a major project. In addition, the appointment addresses key concerns of consultants:
- It is possible to specify a cap on the consultant’s overall liability
- The consultant may rely on site information supplied by the employer
- If the employer fails to pay the consultant monies due and does not rectify this default, the consultant may suspend its services at the employer’s expense and, ultimately, terminate its employment. It may also terminate if the employer is insolvent
- The employer must keep the consultant’s prices confidential, save in respect of a contractor to whom the appointment is to be novated (novation makes use of the City of London Law Society Novation Agreement)
- The consultant may seek evidence from the employer that it can pay its fees
- Both parties are bound by an anti-poaching clause.
The CPC identified certain non-design roles as being critical to managing time effectively. Many users sought guidance on these. Not only is the appointment the ideal way to engage such professionals, but the CIOB will make services schedules for project time managers, valuers and contract administrators available from its website. Services for two BIM-centric positions - a data security manager and a design co-ordination manager - are also provided.
As with the CPC, the appointment anticipates that, since each project’s circumstances are different (and both agreements are for use globally as well as domestically), the parties can make requisite modifications through special terms.
I once wrote in this publication that the CPC was not for the faint-hearted. What I meant was that it takes strong planning and processes to ensure that a complex project is carried out on time and on budget. The appointment’s innovative nature may create the temptation to apply it even where CPC is not used. This is not recommended. Successful use of the CPC needs a commitment to understanding the principles of how to manage projects effectively. The same is true of the appointment.
Francis Ho is head of construction at Olswang. He co-authored the Complex Projects Contract and its forthcoming suite. The CIOB Consultancy Appointment will be published in June