The inexperienced employer does not always know what to look for when reviewing tender documents. Why can't the contractor help by providing objective advice at this stage, rather than complaining later?
The experienced employer, or his project manager, knows what to look for when reviewing tender documentation to be dispatched on traditional forms of contract. He knows:
  • to ask the question about release of further design information: how much remains to be done? Is there an issue schedule? Will it be met?
  • that provisional sums represent black holes in terms of design, and therefore cost and programme.
  • that PC sums spell nomination, and should therefore be avoided at all costs.
  • that "two-stage tendering" may be a good way of bringing contractors on board early, but may be a device recommended by the design team to disguise incomplete information.
  • that a provisional sum for contingencies is ludicrous.

    But for the one-off employer, these things are not obvious. It does not know the questions to ask, and it is unfortunately true that design teams do not always volunteer proper advice on these issues, but assume that the employer knows the game.

    I am not suggesting that the design teams are always at fault in creating the circumstances that give rise to these issues, but they are inevitably sometimes less than open about the consequences.

    The contracting industry has traditionally played the game. It has tendered on projects where design has barely reached work stage E and provisional and PC sums exceed 50% of the contract sum. The contract having been entered into and design information being issued late, with inevitable variations, the contractor then submits its claim. The design team try to evaluate it and make their recommendations.

    Contractors know that these will be less than the amount they have submitted, so they inflate the claim. Claims consultants are instructed and disputes, even in these enlightened days, ensue.

    But the root cause of the problem is the fact that the employer is not receiving objective advice when it needs it most – at tender stage. Is it naive to expect the contracting industry to play its part here, rather than carp from the sidelines about bad practice?

    Why can't tenderers note in covering letters addressed to the employer their concerns about the state of completeness of the design, the amount of provisional sums and so forth.

    If they want to avoid disputes, they should do this. If they want to partner with employers, they must.

    • Postscript

    Ann Minogue is a partner in solicitor CMS Cameron McKenna.