What do you do if you find that life on site cruelly punctures the naive hopes in your tender? Well, you try to get the client to pay more, don’t you? Yes, but how?
When I tell you about the John Doyle and John Laing Management, you will say, “been there, done that, got the T-Shirt”, and you will add that regardless of whether you are a contractor or architect or subcontractor or putterer-upperer.
The real fun on a job begins when the tender bumf describes the job, the work packages. Your estimator works out the time for each task, tots up the prices and puts in the bid. The work content is in truth the estimated man-hours for each wee task. It’s all theory. It’s all with an eye to fathoming the most efficient way of doing the putting uppering and winning the job.
And you did … you won the job. And in due course the blokes turn up to “spend” those estimated man-hours. And in due course they find they can’t do the putter-uppering in the slick way the estimator planned and priced for. Why? Oh you name it … The job isn’t quite ready, the package has been started too early, (to gee-up the people in front), information is outstanding, the drawings are ambiguous, the widgets are missing from the wiggle pins, the client wants umpteen variations, its snowing, the lads are fed up, Tom’s mum’ fruit cake has got Tom in the tum. The plain fact is that the 5500 hours in the package takes 10,500 to do. “Disruption!” hollers the contractor. And the bill comes in, “Disruption: 5000 lost hours”. Reasons: “All sorts.” Got the T-shirt? Thought you might.
John Laing Management Sealand got that sort of claim from John Doyle Contracting for the production losses after it did the superstructure works package on an HQ for Scottish Widows in Edinburgh. Laing said it wouldn’t wear such a “global claim”. Put shortly, that’s the name for hours spent minus hours estimated caused by the reasons listed. Even the most reasonable person must see how unattractive that is to the payer. It means that all of the works contractor’s own problems, own inefficiencies, own bad luck, gets swept up in its bill. And that same reasonable person can see that somewhere in this jumble of nuisances there is a whopping loss. So, Laing said to the court, please tell Doyle to sling its claim.
The first judge said he would not. He added, however, that such a claim is a risky enterprise. Laing went to the Scottish Court of Appeal and that three-man bench came to the same conclusion. The trial of the global claim is to go ahead. But, let me urge you to read the whole judgment. It is a training course in global claims and it is truly what contractors have to contend with in real life. And it is truly a damned awkward type of claim to win. Some do and some don’t.
The judgment is a training course in global claims. And it is truly a damned awkward type of claim to win. Some do and some don't
The reality is that the putter-upperer’s blokes on site get disrupted. Frequently they shrug, whinge, let it go. But things mount up. The bonus goes. The lads leave. The new blokes get fed up. Rooms and areas and work places aren’t ready. Someone has nicked the widgets. Nobody knows what colour the blandanbladderstibles are to be. The 5500 estimated hours have long since been used up. Nobody wants to write nasty contractual letters, but then the boss sees the site account and goes ape. By now he can’t show what precisely happened, so he brings a shopping basket of reasons. The other side will want chapter and verse: every reason and consequence of every reason. No, that’s not a tease; they just want to ensure they are not paying out for the effect of Tom’s mum’s fruitcake.
All that the claiming team can do is prove the original estimate was right, prove that the payer did disrupt and did so in breach of contract and prove the overrun costs. Now, here comes the real hurdle: to prove that the breaches were the material cause of all the contractor’s overrun. And the heart of the dispute will almost always be here. Will the works contractor be able to show the whole lump of 5000 lost hours, is down to the payer? The odd interruption thanks to Tom’s mum’s fruitcake is not important in the overall scheme of things. But do you see why the court said it would allow a trial on the facts?
And if disruption is so ordinary and if it is part of putter-uppering and if you still want to be competitive you can’t just double your estimated hours and expect to win the job. The answer is to get the evidence at the time. Ideas on how to do that via a postcard please.
Tony Bingham is a barrister and arbitrator