In the second installment of 'cementing the basics' I am going to be looking at the other two factors that need to be considered for the successful procurement of a project: understanding the parties; and attention to detail.
Understanding the parties
You have got your head round the deal - what you’re building and the most suitable type of contract - building or one of the engineering forms - and now you need to choose the appropriate version of that type. That choice depends on who the parties are, what they do, and how they operate.
Who the parties are and what they do
If the client is a seasoned developer then their procurement requirements will be very different to a farmer with a diversification project; local authorities and charities have regulatory constraints that differ to those that a bank has. Some contractors specialise in big sheds; others undertake only heritage projects. Each client will require consideration of to what extent they want to be involved in the project, and each contractor will have a position on everything from design responsibility to the use of sub-contractors.
When looking at the various options in your chosen suite of model or standard forms, the first decide is who is undertaking the design. Will it be design and build – one-stop shop design liability on the contractor, suitable for an inexperienced (or even disinterested) client who simply needs a building for their own use, or traditional procurement, where the contractor simply builds to the drawings and spec they are given with no design input, which is more suitable for a client for whom sticking exactly to the spec is the most important factor. There are in-between options of every level of design input, of course, but it depends on the client and what they do.
How the parties operate
This is pertinent to both the type of procurement route and the payment regime. A hands-on, present on site everyday client with established relationships with local contractors would be better suited to management contracting or construction management than turnkey, which is drafted on the basis of “call me when it’s finished”; a charity with a very finite amount of money would be suited to a fixed price deal rather than a cost-plus or even a lump sum one. All these things make up the big picture of the procurement route, but then the contract terms also need to take account of the client’s day-to-day operating procedures. If the accounts team do their payment runs only every three weeks then it’s not helpful to require the contractor to be paid fortnightly; it won’t happened, and then the HGCRA provisions will kick in. If the contractor’s contract manager does everything by email then it’s not helpful to have communications required to be sent only by post. Small, seemingly insignificant terms can make a massive difference if the event of a dispute, and can also just reduce everybody’s stress levels during the project. Construction is difficult enough without putting unnecessary obstacles in the way.
The last basic is attention to detail, and it’s in the top three basics because it can make or break a project. It’s mostly to do with the technical and commercial part of the contract documents, and it goes to the heart of “the three Cs” – the golden rules of a contract: clarity, consistency, and certainty. Without the technical and commercial and legal parts of the certain being clear, consistent and certain there will be a dispute. It won’t be because either side is particularly awkward or argumentative, it’ll be because there is an uncertainty about who is doing what, or two specifications for the same item in different documents, or whether or not an item is a provisional sum or not, or something. Both sides need to know exactly what is expected of them, when, how and for what payment. My pet hates are contracts that don’t have an order of priority between the various documents, and the inclusion of tender documents in the contract.
Attention to detail doesn’t mean just the big important things, though. We are regularly required to produce deeds of collateral warranty for projects, and the very first thing we do is check the information we have been given on, for example, a sub-contractor with the information on Companies House. Is the name correct? Is the registered address correct? Do they still actually exist? The main contractor’s surveyor has said that the package is being done by “Smiths in Leeds” (for example). Which Smiths? Is Leeds the registered address or a local office? This detail is fundamental to the warranty having any worth at all.
So if you get the basics right, you’ve set the project up right. Whatever happens on site, if the parties follow the contract procedures they will be able to sort the problem without troubling a judge, and they will deliver a successful project that they can all be proud of.
And that, surely, is the aim.