Matthew Schofield, Executive Director, and Sean Vernon, Senior Contractual/Commercial Consultant at Quantum Global Solutions continue their series of articles on the construction industry. This month, Sean moves into the kitchen and discusses the implications of giving the right order …
The use of design and build, Engineering, Procurement and Construction (EPC) and Engineering Procurement Installation Commissioning (EPIC) contracts seems to be on the rise and you can see the advantages to the client. Cut out a tier of administration and complexity. Leave the problems of both construction and design to the contractor. Give your order and wait to pick up the keys to your new building.
However, it also seems that in many cases the client often does not understand the right way to administer such contracts.
Imagine that you are dining out in a nice restaurant. You want to eat a certain dish so you scan the menu and select what you fancy. Maybe steak. An Argentine kobe, 250 grams, medium done, with a beef jus sauce. Side order of fries and haricot verts. A nice Malbec to accompany it.
In other words you have given your requirements and you now wait for these to be fulfilled and the meal delivered to your table.
The chef served his apprenticeship at the Ritz in Paris as a commis chef before working for a further two years as sous chef at Maxims. The kitchen has been inspected by the authorities and complies with all relevant legislation and food hygiene guidelines. The staff are also highly trained and aware of the requirements of running a top class restaurant.
The detail of how to present your order, the fine detail of the ingredients and how to cook it you leave to the chef. He is the expert and will ensure a top quality product is served up in a reasonable time.
But think about it. Even before you set foot in the restaurant you had already carried out a vetting process. What were your previous experiences with this restaurant? What did friends say? Had the establishment been closed down by the authorities? What did reviewers write about the place?
The same is true of the selection process for a design and build contractor. References must be taken up, any previous experience taken account of and due diligence carried out so that the best contractor can be selected for the project.
Then, post contract the selected contractor, depending upon the terms of the contract, just like the chef, should be allowed to do his job unhindered.
Indeed the introductory notes to the FIDIC Silver Book “Conditions of Contract for EPC/Turnkey Contracts” states that, “the Contractor should be given freedom to carry out the work in his chosen manner, provided the end result meets the performance criteria specified by the Employer. Consequently, the Employer should only exercise limited control over and should in general not interfere with the Contractor’s work.” Set your parameters and wait for the call to pick up your keys.
But think again about eating out. Many people suffer from allergies, some more severe in consequence than others. Me, I do not like my food too spicy. Therefore, if I am eating out somewhere where the food has a high chilli content I will ask for it to made with less chilli. The consequences may be uncomfortable but seldom fatal… If I do not specify that I want the food chilli free then I will bear the consequences. The chef is not a mind reader!
In the same vein, the employer must make clear its needs for design and build contracts, by way of the employer’s Requirements. If the employer wanted a specific brand of pump to match its other plants and to ease maintenance and spare parts sourcing, then he should make this abundantly clear in his employer’s requirements. Otherwise, just like my chilli, he may have a situation he did not want.
Clearly the contractor can only price to the specification and requirements he has been given at tender. Any post contract changes will be variations that may attract time and cost.
Likewise, other parameters are set at an effective date. The standards and norms in existence at this date, usually the date of return of tenders, are those applicable. This is much as if you order your steak but then see that there has been a delivery of lobster. You would not expect to change your order of steak to lobster without incurring an additional cost or potential abortive costs depending on how far the chef was on with the original order. At the very least there would be a time penalty.
The message then, is that much like eating out in a restaurant, the employer needs to carry out its research to make sure it is selecting the right contractor for the project, set its requirements explicitly, know what it expects to receive, and query this if unsure, and then let the contractor get on with the job. If this is not done then just like a poor meal in a poor restaurant, the results could be painful.
Sean Vernon, Senior Contractual/Commercial Consultant
Sean Vernon joined Quantum Global Solutions in 2013 as a Senior Contractual/Commercial Consultant. Sean is an experienced Quantity Surveyor and Contract and Claims Manager from a building and civil engineering background. He has worked on projects ranging from small local authority refurbishment projects to major engineering, procurement and construction projects including a nuclear power station. His experience in a wide range of areas of construction shows a flexibility and adaptability to the needs of a large variety of projects.