SM031 APPENDIX G4. Procedures for introducing a consultant s deed of professional care (DoPC) into a D&C contract following Contract Award
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1 SM031 APPENDIX G4 SUBJECT: Procedures for introducing a consultant s deed of professional care (DoPC) into a D&C contract following Contract Award Purpose Detail the procedure to amend the contract documents of a Design and Construct (D&C) contract to allow the Contractor to provide a deed of professional care, where the contractor does not hold annual or project specific professional indemnity insurance. The NZ Transport Agency (NZTA) approval s required prior to Implementing DoPC provisions 1. Consultant to obtain Regional Project Manager (RPM) approval in principle to include a Deed of Professional Care (DoPC). 2. RPM to obtain National Highway Manager approval to use a DoPC. Note it is intended that the DoPC only be an option where the contractor does not hold annual PI insurance, nor project specific PI insurance. Background This appendix describes the process required to be followed where there is intention to allow a contractor to provide a deed of professional care signed by the design consultant, following contract award. These notes are intended as guidance for the Consultant and NZTA s Project Manager for developing a DoPC to meet their contract specific requirements. A DoPC is used where the contractor, rather than the Principal is engaging a consultant on a project. Under this DoPC a contractual agreement between the Principal and the Consultant is established The use of the DoPC is the only way that the principal can have some assurance as to the responsibility/liability of the consultant where the contractor does not hold project specific, or annual professional indemnity (PI) insurance. This Appendix and proforma assumes the DoPC is to be introduced after contract award The DoPC will be introduced through an NTC. By putting it in the NTC, we are advocating that the deed is the process for ensuring insurances are in place, whereas previously the signed 7th schedule was the mechanism for ensuring insurances are in place. and it doesn't alter the actual PI requirements in clause 8.6 of the general conditions. The DoPC is based on the ACENZ proforma deed, but has been tailored to NZTA s needs. G4 Issue 2-Deed of prof care Page 1 of 5 SM031 App G4 Issue 2: August 2008
2 Steps to introduce the DoPC: 1. Confirm the following with the Contractor A. Detailed Design Consultant to agree in principle, in writing, to provide a DoPC B. Contractor to confirm in writing that they have no annual Professional Indemnity (PI) insurance C. Design Consultant to confirm in writing they are undertaking 100% of the detailed design of the permanent works D. Contractor to confirm in writing they are carrying out no detailed design, and the design consultant named in the deed is completing 100% of the design for the permanent works. E. The contractor s tendered price was based on providing project specific insurance, and this change to a DoPC will offer the Principal a saving, the $ saving offered to NZTA to be tabled by the contractor in writing. F. Contractor to confirm in writing that each party shall bear their own costs to develop and implement the DoPC. G. NZTA Project Manager to obtain written legal approval of any amendments to the attached deed 2. Obtain NHM written approval to use the DoPC A. NZTA Project Manager to forward confirmation of steps 1 A-G above when seeking his approval to use the DoPC 3. Insert the following paragraphs as an NTC Further to Conditions of Contract clause 8.6 (Professional Indemnity Insurance). The Principal has agreed to the Contractor's proposal to submit a "consultant's deed of professional care" signed by <<<Consultant s name>>>, as evidence that the contractor has effected professional indemnity insurance for the contractor's design for this project. The deed shall be provided in lieu of the Contractor's Professional Indemnity Insurance Certificate included in the contract documents. The value of this variation is agreed as a cost deduction of $XXXX (excluding GST), as the full and final cost of this variation, and includes all related time or other cost consequences of this variation. The deduction of this lump sum shall be made from the first appropriate monthly progress payment following the execution of this variation. Attached to this NTC is the Consultant s Deed of Professional Care (including schedule to the deed design services agreement) for signature by your consultant. Please return 2 signed copies for the Principal s signature, one of which will be returned to you for your records. 4. Fill in the project specific blanks for the attached deed 5. Issue Draft NTC (including completed deed) to contractor for review prior to finalisation and formal issue to the Contractor. G4 Issue 2-Deed of prof care Page 2 of 5 SM031 App G4 Issue 2: August 2008
3 CONSULTANT S DEED OF PROFESSIONAL CARE THIS DEED dated this day of 20 BETWEEN The NZ Transport Agency, a Crown entity, established on 1 August 2008 by Section 93 of the Land Transport Management Act 2003 of <<<Street Address>>> ( the Principal ) AND [Insert Consultant], a duly incorporated company having its registered office at [Insert Address] together with its successors and assigns ( the Consultant ) BACKGROUND: 1. The Principal entered into an agreement ( Construction Contract ) with [Name Company] ( Contractor ) for the development and construction of [Outline Project] situated at [Insert Address] and known as ( the Development ). 2. The Contractor has engaged the Consultant to provide the professional services for the Development described in the attached schedule ( the Services ). 3. The Principal has requested the Contractor to procure covenants from the Consultant and the Consultant has agreed at the request of the Contractor to enter into this deed. NOW THIS DEED witnesses, as follows: The Consultant covenants with the Principal as follows 1. Duty of Care The Consultant will or has exercised reasonable skill and care in providing its Services. 2. Acknowledgement The Consultant owes the Principal a duty of care to exercise reasonable skill and care in providing the Services. 3. Payment of Fees The Consultant s professional fees will continue to be paid by the Contractor. The Consultant is not entitled to any additional fees because it has signed this deed. 4. Directions Notwithstanding anything in this deed, only the Contractor is entitled to issue instructions to the Consultant. The Consultant is not obliged to advise the Principal of any direction the Contractor gives to the Consultant. The Consultant is also not obliged to advise the Principal of any information the Consultant has or receives in relation to the Development. 5. Liability Notwithstanding any other provision of this deed, the maximum aggregate liability of the Consultant to the Principal, whether under this deed and/or the Design Services Agreement between the Consultant and the Contractor dated [date] (and whether in contract, tort or otherwise), shall be limited to $[Insert Amount]. Neither, the Principal nor the Consultant shall be considered liable for any loss or damage resulting from any occurrence unless a claim is formally made on it within [Insert Number] years from The issue of the Defects Liability Certificate for the Development. The Consultant shall not under any circumstances be liable to the Principal for any indirect, special or consequential loss or damage including any loss of profits. The Consultant shall not be liable to the Principal under this deed in respect of any part of the Services, to the extent that the Consultant has fulfilled its duty of care to the Contractor in respect of that part of the Services. G4 Issue 2-Deed of prof care Page 3 of 5 SM031 App G4 Issue 2: August 2008
4 6. Governing Law This deed shall be governed by and construed in accordance with the laws of New Zealand and each of the parties submits to the non-exclusive jurisdiction of its courts. 7. Counterparts This deed may be executed in any number of counterparts. If that is done, all of such counterparts, taken together, shall be deemed to constitute the one instrument. 8. Insurance Without limiting its obligation under (5) the Consultant shall effect professional indemnity insurance for the Consultant s design for an amount not less than $[Insert Amount] for any one claim or series of claims arising out of the same occurrence and in the aggregate. The Consultant shall agree to maintain the minimum level of cover, and shall undertake to give the Principal Immediate notice should the aggregate annual limited of the Insurance fall below it. The Consultant shall maintain the insurance to indemnify against liability for damage, loss or injury caused by the Consultant not meeting its obligations of Duty of Professional care. The Consultant shall maintain the professional indemnity insurance up to the issue of the defects liability certificate and thereafter for a further period of six (6) years. The policy shall be extended to include at least one automatic reinstatement of the sum insured. The insurance policy may be renewed or replaced during the required period of insurance provided that The Consultant shall obtain the Principal's written agreement of any material changes to their Professional Indemnity Insurance policy that may affect this deed. SIGNED as for and on behalf of The NZ Transport Agency by: SIGNED as a deed for and on behalf of [Insert Consultant] by: Regional manager (Authorised Signatory) Director In the Presence of Director G4 Issue 2-Deed of prof care Page 4 of 5 SM031 App G4 Issue 2: August 2008
5 SCHEDULE TO CONSULTANT S DEED OF PROFESSIONAL CARE Attach here a copy of the scope of the Design Services Agreement between the Contractor s Designer and the Contractor, as the description of the scope of professional services for the Development referred to in clause 5 above G4 Issue 2-Deed of prof care Page 5 of 5 SM031 App G4 Issue 2: August 2008
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