The industry is undergoing its worst outbreak of hostilities since the Latham peace process began in 1994.
Only this time the fighting is not between cut-throat clients and litigious contractors, but rather clients and their consultants. The tension has been building for some time, but the flash point was supplied by the publication of the British Property Federation’s universal consultants’ agreement (see news section and page 47).
Almost everyone agrees in principle that a standard form would be beneficial. A document that sets out the same terms and conditions for each profession would be transparent and fair, and would define each consultant’s role in a way that would clear those minefields that mark the end of one firm’s responsibilities and the beginning of another’s – for example, between the role of the architect and the M&E consultant. The problem is that almost nobody agrees with anyone else about what such an agreement ought to contain. Many, many meetings have been held within the JCT to find a satisfactory wording for a standard agreement, none of which could reach a consensus on how much liability the consultants should accept. The BPF then left the table and wrote its own agreement, which the consultants say loads too much risk on them, and which the BPF says is more enlightened and less onerous than many contracts drawn up by individual developers. Meanwhile, the Construction Industry Council, the forum for professional bodies, is soldiering on with a version that, it says, better reflects the reality of modern working practices and that balances the interests of clients and consultants.
Clearly the views of the two sides could not be more polarised and it’s hard to see how they can be reconciled. Consultants are particularly incensed by the fact that the BPF’s form offers neither a cap on liabilities nor a net contribution clause. This could mean that if, say, an engineer made a mistake and then went bust, each member of the professional team could cop the whole cost of putting it right. Consultants can’t be expected to take more risk than their professional indemnity insurance covers, and the rising costs of PI premiums is understandably driving a trend towards capping liability. It’s perfectly reasonable for a consultant to question the wisdom of working for a fee that could amount to a few thousand pounds if it makes it liable for a few hundred million.
The BPF’s document is a sign that many of the federation’s members are becoming alarmed by the increasingly aggressive stance being taken by consultants over the division of risk. The consultants respond that their contract is irrelevant and nobody will use it. Clearly the market will arbitrate in this dispute: who needs who most is going to determine whether the BPF’s or the CIC’s contract prevails. But a war, phony or not, is not an ideal way to proceed for an industry that’s meant to have replaced confrontation with collaboration, is it? That members of the BPF are comparing the liability deals on offer from consultants should not be any great surprise and if it gets the issue out in the open and provides the basis for more sensible discussion then it should be encouraged. Who knows, it may provide the evidence to show just what is a reasonable demand, and help restore what Latham pointed to as the essential ingredient of a partnership: trust.
Denise Chevin, editor