Client acting as contract administrator

3.9 DBC is unusual in that it offers the facility for the client to name themselves as contract administrator (optional cl. 19). Although it is sometimes frowned upon, there is no reason why the client can’t name themselves in this way, with the very important proviso that it must have been made completely clear to the contractor at tender stage that this was going to be the arrangement. The client must also ask themselves whether they have the skills and resources (particularly time) necessary to perform the role, and whether they are capable of being truly impartial. Any incorrect or biased decisions are liable to be challenged by the contractor and, if a reasonable solution is not agreed, may result in the contractor being successful in subsequent litigation (as the tribunal is likely to examine the decision very closely). It is unwise for a client to hope that it may secure a ‘better deal’ by taking on the role of contract administrator.

Completing the works

3.11 The main obligation of the contractor is to complete the works as set out in the contract documents. In both CBC and DBC, this obligation is set out in clause 2.1, which states:

The Contractor shall:

• 2.1.1 carry out and complete the Works in accordance with the Contract, in good and workmanlike manner, by the Date for Completion
• 2.1.2 be responsible for all regulatory and statutory consents, fees and charges as set out under item I of the Contract Details
• 2.1.3 comply with all of the relevant health and safety legislation
• 2.1.4 comply with all statutory obligations applicable to the Works.

3.12 It is essential that the standards for materials, goods and workmanship required for the works are set out clearly in the specification and other contract documents. The above clause does not refer expressly to ‘materials, goods and workmanship’, as would be usual in JCT contracts, nor does the contract set any further requirements for these. It is suggested that ‘in good and workmanlike manner’ refers to the method of carrying out the work, not what work is to be done. Clause 2.2 adds a further requirement as to working methods, stating that ‘the Contractor shall use methods that prevent nuisance, trespass and pollution’.

Contractor’s design obligation

3.13 Like most traditional contracts these days, the RIBA Building Contracts make provision for some design to be carried out by the contractor. It is an optional provision, but it is likely that on most projects it will be required to some extent. Any decision that affects the final form of the building (as opposed to the method of construction) is a design decision, even if it relates only to small levels of detail, such as the exact size of joist hangers or of central heating pipes. If in any doubt as to whether something is effectively ‘design’, the contract administrator should consider whether it is intending to make all the necessary decisions, and, if not, what would happen if the particular detail were to fail: would it be prepared to accept responsibility? If not, it should take steps to ensure that liability for design of that detail is expressly placed with the contractor.

3.14 The provisions are set out in optional clause 15, and the parts to be designed by the contractor are described in item P of the Contract Details (both contracts). A ‘Contractor’s design proposal’ is referred to in item D, therefore the contract anticipates that the contractor may have provided a design prior to the contract being executed, which may be for some or all of the parts, depending on what was requested at tender stage (see paras 2.15, 2.16 and 2.27). It appears that the contractor is responsible for designing only the parts that are listed. Although there is no clause stating that the contractor is not liable for design provided by the client or the client’s agents, as there was in the 2014 edition (A2.4), it is unlikely that a court would find a contractor liable for the contract administrator’s design. However, the contractor must notify the contract administrator of any discrepancy it finds between its designs and those of the contract administrator (cl. 15.3).

3.15 What happens if the contractor makes a design decision relating to a part that has not been stipulated in the Contract Details, but for which the contract administrator has provided no design information? It is possible that the contractor would not be held responsible for that design decision. A relevant case concerns the Museum of Liverpool (National Museums and Galleries on Merseyside v AEW Architects and Designers), where the judge said the contractor was not responsible for designing anything not identified as part of the contractor’s designed portion (CDP), in this case deciding the tolerance gaps between steps. Courts might a take less strict view in a smaller project, but to be safe it is best to use the ‘Contractor Design’ optional clause and to make sure the extent of the contractor’s design responsibility is clear.

3.16 It is therefore very important that the delineation between the parts to be designed by the contractor and the rest of the project is described accurately.¹ This can be quite difficult in practice, especially where several parts or elements are listed, or the list includes a system (e.g. services) that is integral to many parts of the building.

3.17 As the contractor is only required to design the specified parts, the contract administrator will remain responsible for any integration. This could extend to the physical junctions between the contractor-designed parts and other parts, but could also cover the combined performance of several systems or of systems and elements. If it is intended that the contractor is to be responsible for resolving any interface (physical or performance), the interface would have to be identified clearly within the parts to be designed by the contractor. The contractor retains the copyright in any design it provides, but grants the client a licence to use it for the Works and related purposes (cl. 15.4).

Contractor’s design liability

3.18 Under clause 15 the level of liability of the contractor for design is to use the skill and care of a competent designer (cl. 15.1.1). The contractor is also required ‘to ensure that its design is in accordance with the Client’s specification as stated in the Contract Document’ (cl. 15.1.2).

3.19 There are essentially two levels of liability used in construction. Professionals normally undertake to use reasonable skill and care, rather than promise to achieve a particular result. To understand this distinction, consider the case of a medical professional: a doctor would never promise to cure a patient, but simply to use their medical skills competently to achieve the best outcome possible. The fact that the patient does not get better is not of itself sufficient to show the doctor made a mistake. Similarly, with professional designers such as architects, the fact that there is a defect in the design is not sufficient to show they were negligent. Any client bringing a claim must also prove that the architect failed to use the reasonable skill and care of a competent architect. This is sometimes referred to as a ‘negligence-based liability’ and is the normal level of liability that would be set out in an architect’s appointment or would be implied by the courts if no level has been set.

3.20 The alternative, more onerous, level of liability is to promise to achieve a result. This is often referred to as a ‘strict liability’, as there is no need for the claimant to show that there was any negligence on the part of the designer; it would be enough to show that the result did not meet the stated requirements in some respect. A commonly used shorthand descriptor is that the designer has taken on a ‘fit for purpose’ liability. Contractors who undertake design work often take on an express ‘fit for purpose’ liability. Where no level of liability had been set out, the courts may imply that there is a strict liability, provided it can be shown the client was relying on the contractor’s skill and judgement.

3.21 Clause 15 appears to contain both levels of liability, i.e. a professional one under 15.1.1 and a strict one under 15.1.2 – the phrase ‘ensure that its design is in accordance with …’ would normally be interpreted as a strict duty. This could potentially create a conflict, however, the 15.1.2 obligation is stated to be ‘subject to clause 15.1.1’ and so it is likely that the former level would prevail. Nevertheless, this may depend on how the rest of the documents are expressed (see, for example, the recent case of MT Højgaard A/S v E.ON Climate & Renewables UK Robin Rigg East Ltd).

3.22 Clients would usually prefer a strict level of liability. After all, if they have taken the trouble, with their consultant, to set out detailed requirements for the design, including specific performance targets (e.g. in relation to energy use), they are likely to want to be able to bring a claim should the building not perform, without having to also prove a lack of care. However, as the ‘fit for purpose’ level of liability is more onerous on the contractor, some contractors may be unwilling to tender on this basis or might submit higher tender prices. The JCT contracts do not generally contain this option (except in the case of the Major Project Construction and Constructing Excellence contracts). However, it is the default position in NEC4 contracts, with the alternative of ‘reasonable skill and care’ under Option X15, and is standard in the FIDIC and IChemE contracts, therefore its use is increasing.

3.23 Under clause 15.5 the contractor is required to ‘ensure there is adequate professional indemnity insurance for its design responsibilities, as set out in item P of the Contract Details’ (if no requirement is set out the obligation would fall away). The contractor might not be able to obtain insurance to cover a ‘fit for purpose’ risk, but that would not, of course, affect its liability.

Contractor’s obligations in respect of subcontracted work

3.24 The contractor’s duties with respect to subcontracting the work are set out briefly in the following clause:

3.25 The contractor may subcontract to anyone it chooses; there is no requirement to inform the contract administrator beforehand, or to obtain permission from the contract administrator or the client, and neither has the power to bar a contractor from using a particular firm. As the contractor is, of course, entirely responsible for all its subcontractors, in theory there is no risk to the client, even if the contractor selects firms that are not capable of achieving the desired standard of work. However, in practice it can be frustrating to stand by without intervening, as work has inevitably to be redone and delays are caused.

3.26 If the client wishes to take a more proactive stance, there are two possible courses: one is to add a clause requiring the client’s or contract administrator’s permission for any subcontracting (or perhaps only for subcontracting certain work), with such permission not to be unreasonably withheld. The second is to use the ‘Required Specialists’ provisions for critical areas of work.

Compliance with statute/health and safety legislation

3.33 The contractor is required to comply with all statutory requirements applicable to the works (cl. 2.1.4). In addition, clause 2.1.3 requires it to ‘comply with all of the relevant health and safety legislation’. The contracts also require the contractor to notify the contract administrator if, in its opinion, an instruction may have adverse health and safety implications (cl. 5.14.2). This is a useful provision that reflects the normal implied duty to warn of any instruction that would have an adverse effect.

3.34 Clause 2.1.2 states the contractor shall: ‘be responsible for obtaining all regulatory and statutory consents, fees and charges as set out under item I of the Contract Details’. It is important to note that it is not just a matter of fees, notices and charges as would be the case in many JCT contracts; item I could list responsibility for obtaining and paying for all planning permissions, Building Regulations approvals and/or party wall consents.

3.35 Such matters would, of course, place far greater responsibility than the general compliance set out in clause 2.1.4. If the client wishes the contractor to obtain such consents, it would be important to make this clear in the tender documents, and to ensure that ‘Contractor’ is selected in item I, as otherwise this would not be covered by the lesser obligation in clause 2.1.4.

Table 3.5 Contractor’s duties

Table 3.6 Contractor’s rights

Pre-start meeting

3.38 The requirement to hold a pre-start meeting, at least 10 days before the work is due to start on site, is contained in clause 3.1. Both parties must attend, as well as the contract administrator. Clause 3.1 states that the parties and the contract administrator must:

• 3.1.1 set out expectations from each other
• 3.1.2 set out the administration and communication procedures, including any specific rules on written and electronic communications
• 3.1.3 identify potential and actual risks and set out procedures to deal with them, to include the preparation of a Risk Register, if appropriate.

3.39 The pre-start meeting is often the point at which the contract documents are signed. None of the discussions ought to result in any changes to the contract terms or the obligations of the parties. However, it would be wise to bear in mind that there is nevertheless a close link between the above and various contractual issues. For example, the ‘expectations’ cannot be more than those that are already set out. The client, for example, cannot demand a higher standard of work than the level specified in the contract documents or that the contractor finishes earlier than the contractual date. If it becomes apparent at the meeting that expectations are at odds with those in the contract, then the documents should be amended before signature.

3.40 The meeting will be used to flesh out and fine-tune some of the procedural matters. Key among these would be whether the client is to remain in occupation, and what the exact arrangements will be with regard to security, safety, access, use of facilities, storage and disposal of rubbish. If any additional or new arrangements are made, these should be recorded and annexed to the contract documents. The meeting may also be used to agree communication procedures (cl. 3.1.2). Generally, all communication is to be in writing and issued to the parties and the contract administrator (cl. 11.8), unless the contract states otherwise. Special procedures are set out in the case of termination (cl. 11.9, see para. 9.17).

Progress meetings

3.41 The 2014 version of CBC required that progress meetings be held monthly (or other period as agreed) and attended by the contractor, the contract administrator and any other person invited by the contract administrator (CBC 2014, cl. 3.6). Although the requirement has been omitted, it is common practice to hold such meetings. Including the provision in CBC 2014 meant that it was an obligation on the contractor to attend, and a breach if it did not. If the parties feel that attendance at meetings is important, they may wish to consider adding in such a provision, either in the contract or within the preliminaries to the specification. The meetings will normally cover matters such as progress, technical issues and information needed, and are an opportunity to discuss advance warning notices. In particular, requiring the contractor to provide an update to its programme five days before the meeting would be a useful way for the contract administrator to monitor and record how the job is progressing.

Risk register

3.42 Clause 3.1.3 refers to the preparation of a risk register ‘if appropriate’ (in the 2014 editions this was included as an optional provision that, if selected, required the contract administrator to establish and maintain a risks register). The term ‘Risk Register’ is defined as ‘a document identifying potential and actual risks which could affect the progress of the Works and setting out procedures to deal with them’. Initially, the register will list the risks and mitigation procedures identified and agreed at the pre-start meeting, but these are likely to be adjusted as the project progresses and new risks are identified. The register could be in the form of a simple list (or more likely a spreadsheet), and it is common practice to place a priority on the risks (e.g. highly likely, not likely), as well as to set out the measures or actions to be taken should a risk materialise and who will take them. Strictly speaking there is no contractual obligation to comply with any actions set out (unless, of course, the register includes obligations already covered in other contractual provisions). Nevertheless, it may be a useful point of reference in day-to-day communications and a good discussion item at progress and other meetings.