A painful case

We know how much it cost, but how on earth did it all come to pass? Birse Construction has got it in the neck for a job that went wrong at Molesworth Street, Lewisham, London SE13.

It is known as the Riverdale Data Centre. The customer was CIB Properties, a subsidiary of Citibank.

The cost to Birse adds up like this: a £1.22m settlement with CIB three weeks ago, partway through a High Court trial; £2m for CIB’s legal costs; £2.3m paid to CIB in the adjudication decided in February 2004; £1.6m in Birse’s legal costs at that date; plus Birse legal costs in resisting enforcement of the adjudication, plus the recent costs of Birse in the High Court trial. Shall we say £7.5m or thereabouts? And Birse’s key man at the top says: “My board colleagues and I are delighted to have reached this settlement with CIB.” Delighted? Well, I guess so, because CIB wanted upwards of £15m in the adjudication.

So, once again, what on earth happened to cause such grief?

Put shortly, CIB became so fed up with the contractor that it dismissed it from the job. And from what I can learn, it was not because Birse behaved badly or outrageously. In fact, it just got into one of those positions that I have seen so often … I think it got fed up, too. The job slid into a sort of miasma. The contractor ought to have cleared off but, hell’s bells, there is a price to pay if you do.

So what’s to be learned? The site itself comprised six storeys of computer gizmos. Birse agrees it was a technically straightforward building job. True, the programme was tight: 53 weeks for about £21m of work. The deadline for finishing, after a 10-week extension of time award, was 8 October 2001. But by then, its latest target programme was forecasting another eight months to go. So, on 30 November, CIB sent its termination of contract salvo.

Birse rejected the complaints. So at 8am on 22 December, CIB’s team marched in and took possession. Birse left.

Birse said it expected the job to go ahead from the outset with a developed and finalised set of details. But that didn’t happen. Worse still, CIB made numerous and significant revisions to the design, ranging from foundations and steelwork to cladding and roofing packages. The information release schedule went to pot and was abandoned. The M&E package was £17m, or miles over the original budget.

The whole pattern of Birse’s behaviour from about September 2001 showed it had lost any sense of urgency and was beset by the problems

Can you feel that miasma creeping over the site? CIB whinged at Birse and complained that the work was increasingly late and defective, particularly in getting the building watertight. Birse complained back, prodding the professional team to stump up design information, outline subcontract packages. Have you been here, got the T-shirt?

The end came on that winter morning. Not nice. Bovis took over. Birse decided to call CIB to adjudication. A senior barrister was appointed to decide the all-important question: “Was CIB entitled to terminate the Birse contract?” In his 48-page analysis, he answered yes. And this is where I reckon Birse shows its fedupness. This I have seen before when contractors lose heart.

I call it contractor’s torpor.

It was said: “The whole pattern of Birse’s conduct from about September 2001 shows that it had lost any sense of urgency and it seems, was so beset by problems with the subcontractors over the cladding and the roof that it was simply treading water. The result was that progress on the site had slowed almost to a standstill and Birse did not seem to know what to do about it. Further, the activities or lack of activities carried out by Birse during the 10-day notice period reinforces this point.

Finally, the fact that the latest draft target programme issued by Birse showed completion on 10 June 2002, that is, eight months late, shows the seriousness of the delay. Accordingly, I find Birse was in breach of contract. Its only excuses for delay were factors for which I have found it was responsible. I remain surprised that Birse was unable to put up, so I find, a credible or convincing case for any further extension of time.”

So the eventual bill for being fed up was £7.5m.