Irish government may back down over fixed price contract plans

The Irish government is set to water down its proposals for fixed price contracts for contractors and consultants.

Sources close to negotiations between trade bodies in the country and the Irish Department of Finance claim the government has relented on parts of the new contracts, which have angered the industry.

Negotiations between the Construction Industry Federation (CIF) and the Society of Chartered Surveyors could see the introduction of the contracts delayed until later next year.

The govern-ment has listened to us but it’s easy to listen

Tony Smith, chief executive, Society of Chartered Surveyors

A source at one trade body said: “There has been a lot of to-ing and fro-ing in the last few weeks. I think the government is looking to tone down some of the clauses in the contracts.”

The source said one clause that would be watered down was a so-called ‘risk register’ in the contracts. The clause forces contractors to make predictions about future prices for materials and particular elements of projects such as how much archaeological surveying is needed. “It’s crystal ball gazing essentially and would hike up insurance policies for contractors,” the source said.

I think the government is looking to tone down some of the clauses in the contracts

Industry source

Tony Smith, chief executive of the Society of Chartered Surveyors, said there were “ongoing negotiations” between the two parties. “As far as I understand the government still wants to introduce them next year,” he said. “They (the government) have listened to us but it’s easy to listen.”

QS News first revealed plans for the new fixed-price deals in September. The government wants to pass more risk to contractors to reduce cost overruns on public projects. The new contracts will force contractors to submit to fixed-price lump-sum contracts for future projects – until now the government shouldered increases in material and labour costs. Consultants will also face competitive fee bidding for public work. Previously fees were negotiated.

The CIF labelled the changes as totally unnecessary as the contracts themselves were not causing cost overruns and claimed the new contracts would be “rich pickings for lawyers”.