A top team of construction folk was assembled to build London’s iconic building, but a Dispute Adjudication Board might have prevented a 12-day High Court bust-up
‘The Shard at London Bridge Quarter will redefine the London skyline and become a symbol for the capital, recognisable throughout the world.”
So said Irvine Sellar, chairman of Sellar Property Group. And for steelwork folk Cleveland Bridge UK and Severfield-Rowen Structures it will stick out like a sore thumb. Those two have well and truly fallen out - had a 12-day trial where the only thing each got was a very good view of the High Court.
This Shard job has something missing from its team. It ought to have had a standing, visiting, well briefed Dispute Adjudication Board (DAB). The developer chose a top class team of construction folk - Mace, Turner & Townsend, Davis Langdon, WSP and Arup - but not a top class way of avoiding litigation and its damaging publicity, the DAB. It would have had the inside knowledge to tidy away this expensive dispute. Let me tell you the story.
Mace is the main contractor for the 1000ft (62 floor) crystalline edifice. The subcontract for the 12,700 tonnes of steelwork erection up to floor 40 went to the largest steelwork contractor in the country, Severfield-Rowen. Nearly 4,000 tonnes of the whole is in floors 1-9. In summer of 2009, Severfield-Rowen placed a contract with well-known Cleveland Bridge for fabrication and supply of all that.
The developer chose a top class team of construction folk – Mace, Turner & Townsend, Davis Langdon, WSP and Arup - but not a top class way of avoiding litigation - the dab
By end of November 2009, Cleveland Bridge and Severfield-Rowen began to get at odds. It later turned out that it coincided with Cleveland Bridge winning too much work elsewhere. They tried every which way to deal with the overload but fell behind. Mace was not best pleased. Severfield-Rowen as the subcontractor was responsible for the non-performance of its suppliers, fabricators and installers. A sign popped out from the barrel of a cannon, which reminded Severfield-Rowen that liquidated damages for causing late completion of the Shard is - wait for it - £500,000 per week. Then Severfield-Rowen pulled the plug on payment. Cleveland Bridge “reacted strongly” says the court judgment. And the litigation began.
The dispute is the sort of thing we deal with in adjudication all the time. It is mostly to fathom how much loss and expense has been caused by Cleveland Bridge to Severfield-Rowen. But the dispute could not come to adjudication - fabrication & supply is not a construction contract because installation is not included.
Severfield-Rowen presented its bill. It came to a counterclaim sum of over £3.5m. Cleveland Bridge was accused of delaying the installation, disrupting installation, causing out of sequence working, acceleration costs, and an extra £812,000 for extra use of Mace tower cranes.
The heart of the claim is causation - what loss has in fact been caused? That involved the familiar search for a critical programme path on the building work. There is a bouquet by the judge for expert David Barry of Blackrock Programme Management, for his lucid and logical evidence. He pinpointed which parts of the project were impacted by the delays. It was just one key part for which fabricated steel needed to be delivered on time. So when Severfield-Rowen pointed to this or that hold-up, it had to be traced back and caused by this particular incident of delay.
The dispute could not come to adjudication - fabrication & supply is not a construction contract because installation is not included
And this “cause” event cuts both ways. Cleveland Bridge argued that a major variation caused delay to its works and argued that delayed and late information caused critical delay to the programme. I suspect it did and probably disrupted productivity but none of it went to cause the whole programme of Cleveland Bridge to be pushed out. It was not critical; nuisance yes, critical no.
In the end Severfield-Rowen’s claim and no doubt true expenditure costs for prolongation, disruption and acceleration was seriously whittled down from the £3.5m to £824,000 to be laid at Cleveland Bridge’s door. Even the tower crane claim of £800k came down to £95k. And since Cleveland Bridge had its money stopped, the court said it was otherwise due £928,000 less the counterclaim of £824,000.
But don’t tell me that CBUK was the net winner in this 12-day High Court battle. Nor that Cleveland Bridge, or Severfield-Rowen, or Mace wanted the dispute to take a public and expensive airing. It needed a DAB, that’s all.
Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple