RIAI Practice e-bulletin (Issue No. 50) BUILDING CONTRACTS If your time to you Is worth savin' Then you better start swimmin' Or you'll sink like a stone For the times they are a-changin'. Bob Dylan 1. New Government Standard Conditions of Engagement for Construction Consultants For the last two years the Construction Industry Council (CIC), which comprises the RIAI, Engineers Ireland, ACEI and the CIF, have been in discussions with the Department of Finance on these proposals. There were some concessions made by the Department of Finance during the discussions mostly concerning Fee Bidding and Quality Price Ratio. The CIC did not agree to the Conditions of Engagement and it should be noted that they have been imposed by the Department of Finance and also that they will be implemented by all state agencies, including OPW, Departments of Health, Education, Defence and Local Authorities etc. The Government has introduced, from 1 January 2007 these new conditions of engagement for consultants (Architects, Landscape Architects, Engineers and Quantity Surveyors and others). This reform of public sector construction procurement in Ireland primarily involve risk transfer to contractors who are considered best able to manage and control identified risks, in a fixed price lump sum contract, and fixed price fee bidding for engagement of construction consultants. To view and download a copy of the Capital Works Management Framework Guidance Note on the Appointment of Consultants for Construction related Services previously called Guidance Notes 16 & 17. To view and download a copy of Government Standard Conditions of Engagement for Construction Consultants
Important Note: It is envisaged that the Conditions of Engagement will not be subject to any further textual change and will be used for appointment of consultants on or after 1 January 2007 in its present format described as Training Material. How will the Standard Conditions of Engagement for Construction Consultants apply? (For full text see Department of Finance Circular below) (a) To all new construction consultancy contracts awarded on or before 1 January 2007. (b) To all new construction consultancy contracts awarded before 1 January 2007 but after the issue of Department of Finance Circular 33/06, where contracting authorities want to use them following receipt of appropriate training. (c) To existing construction consultancy contracts awarded before the 1 January 2007 but only by agreement between the contracting authority and the construction consultant. (d) To the selection of the construction consultants made before the 1 January 2007 starting date in respect of construction consultancy awarded after 1 January 2007. Correspondence from the Minister of Finance to the CIC To view the correspondence between the Minister of Finance to the CIC, indicating what concessions were sought and where concessions have been made see the following: CIC Letter to B. Cowen 5 September 2006 B. Cowen Letter to CIC 12 October 2006 B. Cowen Letter to CIC 9 November 2006 Copyright It is the clear intention of the State to alter the accepted understanding of the intellectual ownership of copyright of the designer. The Minister of Finance has indicated that The issue of copyright is a matter for each Contracting Authority to decide on. The removal of the automatic right to transfer the copyright has been given as a concession. see Minister letter. The Contracting Authority will decide whether they implement their requirement take control of copyright of the design, by paying a fee. The RIAI advises copyright of the design should never be transferred to the client, unless a very substantial fee is agreed and paid. Government Policy and Types of Procurement Procedures for Consultants Government policy for construction related procurement is that fixed price lump-sum construction consultancy contracts are tendered on a competitive basis set out below:
Open Tendering: For this procedure a Request for Tenders is published at the same time as the advertisement / Contract Notice, is published. All tenders are evaluated and awarded first under qualification criteria and then under award criteria (including quality and price). Restricted Tendering: This is a two stage process: a Request for Expressions of Interest is published, and the resulting expressions of interest are subject to qualitative evaluation. A Request for Tenders is then issued to a number of qualifying suppliers; the tenders are evaluated and the contract awarded. Negotiated Tenders: Used as an exceptional procedure, in which the contracting authority negotiates the services required and the fees for those services with a number of competing service providers, called competitive negotiation procedure, or with one service provider, called non competitive negotiation procedure. Competitive Dialogue: This procedure is available for particularly complex contracts, where neither the open nor the restricted procedure will allow the award of the contract. It will rarely, if ever, be used for construction related services. Under most circumstances, the Restricted procurement procedure is to be used. 2. New Government Forms of Construction Contracts for Public Works These new contracts come into force on 19 February 2007 and they will replace the GDLA 82. While there are a number of building and engineering contracts proposed, the three building contracts affecting architects are: 1. Building Works Designed by the Employer 2. Building Works Designed by the Contractor 3. Minor Civil Engineering and Building Works Designed by Employer The final version of Contracts (1) to (3) will be available on 19 February 2007; until then a version described as training material is being assessed. Some minor changes may become evident and may need to be addressed. John O Reilly, FRIAI, Opinion and Observations on the Building Contracts John O Reilly, FRIAI, has prepared, for the RIAI, a paper on his opinion and observations on the contracts in a question and answer format.
How will the New Forms of Construction Contracts for Public Works apply? It is intended that the new Forms of Construction Contracts for Public Works will apply as follows: (a) To all new public works projects about to begin the planning Stage on or after Monday 19 February 2007. (b) To all new public works projects where planning has commenced but where detailed tender documents have not been developed by Monday 19 February 2007. (c) For those public works projects where detailed development of tender documents has commenced, contracting authorities can elect to use the new Forms of Construction Contracts on or after Monday 19 February 2007. (d) Where a contracting authority, following appropriate training, wants to use the new forms of Construction Contracts on public works projects on a date earlier than Monday 19 February 2007. View and dowload the Department of Finance Circular 33/06: Construction Procurement Reform revision of arrangements for the procurement of public works projects and for the engagement and payment of construction consultants The Fundamental Important Changes are: 1. This is a completely new contract. 2. They will be fixed price lump sum contracts; with many of the contractual risks, which are traditionally borne by the Employer will now pass over to the Contractor. 3. The Contractor s ability to make claims will be restricted by the introduction of stringent procedural requirements compliance with which will be a pre- requisite to any successful claim. 4. Greater responsibility for contract management and administration will move from the Employer s Representative to the Contractor, e.g. Here is a selection of some of the changes: Risk defined in Tender Documents to ensure competitive pricing. Consent & Authorisation Risk: Under most standard contracts the Employer is obliged to obtain any necessary planning permission and other authorization or consent required by law. In the new forms of contract the position is reversed. Awarding the Contract The Award Criteria: is the Most Economically Advantageous Tender (MEAT). Fixed Price Risk: The new contracts have a fixed price period of thirty-six months including a six month lead in time. Risk Attaching to Legal Requirements: Under the new forms of contract, the Contractor is obliged to comply with all Legal Requirements. Employer is protected from claims for Loss of Profits or Damages
Delay & Disruption Risk: The contracts provide that certain events causing delay may be compensational and others may not. Risks: include Archaeology, Geology & Human Remains, Unforeseeable Ground Conditions and Unforeseeable Utilities Administrative Burden: The new contracts introduce new rigorous procedures relating to the provision of programmes, the provision of progress reports, the making of claims, the requesting of information and otherwise. Programmes: The Contractor must submit an extensively detailed programme. Claims: If the Contractor considers that he is entitled to an extension of time or to any additional sum, he is obliged to make his claim as soon as practicable and in any event within twenty working days after he becomes aware of it, or should have become aware of it. There are 21 Delay & Compensation Events Insurance Requirement: include existing building Final Account: The Contractor is obliged within two months after substantial completion of the works are certified, to furnish a final statement setting out all money that the Contractor considers to be due from the Employer arising out of the contract. Novation: One of the new forms of contract makes provision for the novation of contracts to the Contractor. Termination: The contract provides for voluntary termination by the Employer at any time. Consequence of Termination after reference to Conciliation 12 Grounds for Termination by Employer including Health & Safety 4 Grounds for Termination by Contractor Employer s Representative: It is envisaged that the Role of the Employer s Representative will normally be fulfilled by an Architect or Engineer The Employer s Representative: is the Employer s Agent not an impartial administrator of the contract, the role normally fulfilled by the Architect. The Employer s Representative: has the power to vary the contract may be limited to: 1) Maximum Value or 2) Maximum No. of Instructions. Contractor s Obligations: Notwithstanding the limits of the Employer s representative the Contractor is obliged to carry out all instructions and any payment will not be affected by an Employers Representative exceeding its authority. Payment for Compensation Events: they are subject to conditions Payment for Delay: are for compensation events only. Copyright of Contractor s Document: is transferred to the Employer Conciliation: either party may refer a dispute to Conciliation on 10 Working Days Notice 10 Working Days to agree Conciliator If dispute is not resolved: in 42 days Conciliator must make recommendation within a further 3 days Either party: may refer a dispute to Conciliation on 10 Working Days Notice If dispute is not resolved: in 42 days Conciliator must make recommendation within a further 3 days
Minor Civil Engineering and Building Works Designed by Employer: Applicable: to projects of less than 5.0 million. Provides: for cap on transfer of unforeseeable risk Bill of Quantities: should normally form part of the contract. No Prime Cost: (PC), Provisional Sums or Provisional Quantities No: Nominated Subcontractors To view and download a copy of latest known (possibly subject to variations) Government Standard Conditions of Engagement for Construction Consultants Public Works Contract for Building Works Designed by the Contractor Public Works Contract for Building Works Designed by the Employer Public Works Contract for Minor Civil Engineering and Building Works Designed by the Employer Words of Caution Practices and members should be aware that the new building contracts and the conditions of engagements are intended to be complimentary. If, previously, conditions of engagement have been offered and accepted prior to 1 January 2007; these new conditions should not be substituted by the state and accepted by the RIAI Practice or member for the earlier conditions of engagement. Interpretation of the New Building Contracts As these are new contracts, Members therefore should be cautious in interpretation or offer any guidance on the contracts. All queries for guidance or interpretation, where uncertainty exists, should be referred to the client. Rumbling from the Contracting Side The Construction Industry Federation is a social partner and was involved in the social partnership talks and negotiations with government last autumn. The CIF were confident that their position as social partners would influence the outcome of the discussions with the Department of Finance on the new contracts. This did not prove to be the case; in fact they received few concessions. It is the contractor view that these contracts could achieve their objective of bringing cost certainty to building contracts. They are devised to discourage Contractors from claiming for delays (even those caused by the Employer). Contractors will be at a major loss if they do not adequately price for the transfer of risk, the loss of claims ability and the extra layer of administrative personnel required. There are now rumblings from the contracting side that there ambiguities and contradictions within the contract documents and they will be exposed. Ambiguity and contradictions means the architect must be very much aware of his or her position as a designer to the employer or contractor, and their role and duties as decision maker, if such role exists.
The National Public Procurement Policy Unit (NPPPU) of the Department of Finance has now published these documents on their website: www.finance.gov.ie Policy Areas & Publications - Construction Procurement Reform. The documents can be accessed here. General Conclusion This is the latest information available to the RIAI and as soon as further information becomes available, Members will be informed. The RIAI are preparing a programme to assist Members in their understanding and administration of the consultant s conditions of engagement, both dealing as the client s representative and their role in dealing with the contractor at tender and during construction. There is a view that the larger contractors will survive these contractual changes, but it is the smaller to medium size contractors, who will not have the resources to accept and cope with the additional administrative burden of the contracts. It is feared that they will fall by the wayside. As the present now Will later be past The order is Rapidly fadin. And the first one now Will later be last For the times they are a-changin. Bob Dylan BUILDING ENERGY RATING The regulations were introduced on 22 December 2006. Despite publicity, implementation has not been delayed by representations from industry, rather because training, as envisaged, is not in place. One of the key reasons for this is that the software programme required for assessment is not yet available. The following is an extract from a communication received by the RIAI from Sustainable Energy Ireland on 10 January 2007 - 'The European Communities (Energy Performance of Buildings) Regulations, 2006 (S.I. No. 666) were published by the Minister for the Environment, Heritage and Local Government on 22 December 2006. As you may be aware, under these regulations the transitional exemption period for the introduction of BER for new dwellings is shortened to 18 months compared with the 2 year period proposed in the Action Plan published last July. It now begins on 31 December 2006 rather than 30 June 2006 but runs as originally intended to 30 June 2008.Dwellings for which planning applications are submitted as and from 1 January 2007, require a BER when constructed or offered for sale.
The above arrangements will facilitate the final development and the putting in place of the administrative and quality assurance systems by SEI. Given the normal planning and construction timescales it is expected that demand for BERs will begin to grow from about mid 2007 and that the initial volume of work to be carried out by registered BER assessors will be minimal in the first half of 2007. A number of issues with the DEAP software were identified in the course of both beta testing and delivering first training courses. SEI is currently addressing the resulting requirements and it is now expected that a fully tested software package will be available by the end of March 2007, at which point training on the official DEAP software can commence. SEI will be registering BER assessors from Monday, 2 April 2007. Only assessors who have attended a validated BER training course using Version 2.1 of the DEAP software (due for release in March 2007) will be eligible for full registration as BER Assessors. SEI would strongly recommend that training providers conduct BER training on Version 2.1 of the DEAP software only, as BER assessors who train on earlier versions of DEAP will require refresher training on Version 2.1 once it is available.' For the last six months the RIAI and UCD ERG have been attempting to develop training for design and assessment with BER, but have not been able to make any progress because of changing deadlines and the non-availability of software. As above, SEI has confirmed that training cannot take place until the software is available. This is now projected for the end of March 2007. Only when the software is actually available can development of training begin. In light of this development the RIAI and UCD ERG cannot commence delivering training until April 2007, using DEAP Version 2.1, as recommended by Sustainable Energy Ireland. View and download the European Communities (Energy Performance of Buildings) Regulations 2006 Please note that the regulations do not apply to protected structures. There are two certificates: A design certificate A completion certificate Fee: 300 MISCELLANEOUS The Follies Trust seeks expressions of interest from professional consultants The Follies Trust is inviting submissions from interested professional consultants to provide a multi-disciplinary team to realise a scheme to conserve three major grave
monuments, situated in the Church of Ireland graveyard adjoining Knockbreda Parish Church in Belfast. The lead consultant must provide evidence of a working knowledge and experience of historic structures of architectural importance. The lead consultant must be a registered architect with RIBA or RIAI or an RICS chartered building surveyor. The team must include: A chartered structural engineer A chartered quantity surveyor A planning supervisor Members can be drawn from the resources of a single practice or be a consortium of independent professionals bound by a formal agreement for the duration of this commission. The appointment will be to develop the scheme from a sketch proposal through RIBA stages D to L inclusive. Terms of engagement will be RIBA CE/99 updated April 2004. Expressions of interest must arrive at: The Follies Trust 105 Somerset Studios Marcus Ward Street BELFAST BT7 1RP No later than 12 noon on Monday, 5 February 2007. In response, the Trust will provide a detailed written brief and a description of the selection procedures. Office Sharing in Dublin 2 Established practice in Dublin 2 can provide facilities and back-up for an architect who wants to set up practice, with a view to increasing the scope and sphere of work for both parties and a possible merger in the future. Contact in the first instance, Karina O'Neill - koneill@riai.ie 15 Jan 2007