Constructing what the client wants

Nick Carnell, lead partner at Kennedys, discusses how successful ‘design and build’ is down to understanding what the clients wants.

Paul Taylor’s article published on 8 March on design and build contracts reminded me of some of my own experiences of projects procured in this way. Paul quite rightly pointed out that for design and build to work there needs to be changes in both the mindset and philosophy from projects procured in the traditional manner.

Design & build has become more popular.The traditional approach is to have the design separate to construction: the client engages a consulting engineer and/or architect to design the project and later employs a contractor to build it. The disadvantages of this are that: there is no overlap between design and construction phases; it lacks the benefit of having the contractor’s input in design; it does not promote team working between the professions; and its risk allocation is not appropriate for all projects. It is no surprise that as clients seek to reduce project timescales and obtain better value for their investment there has been a move away from the traditional approach. As Paul noted, the design and build route has become increasingly popular with clients in the Middle East.

Design and build has a number of advantages, one of which is that it allows construction to commence before the design is complete. Consequently, it is sometimes perceived as a solution where speed to market is key to a project’s success. However, design and build projects do not always proceed smoothly. A frequent cause of conflict is the difference between the obligations placed on the contractor and the employer’s expectations. Why does this occur? Well, in my experience, it is caused by a lack of care when preparing the Employer’s Requirements, misunderstanding of the contractor’s freedom to design and confusion as to who is responsible for the Employer’s Requirements. Firstly, there is sometimes a perception that since the contractor is responsible for the design there is no need for the employer to state in the contract exactly what it wants.

This is often coupled with the notion that the purpose of a design review is to enable the employer to choose at a later stage precisely what the contractor is to provide at no additional cost. This is a dangerous mix as the result is that little care is given when preparing the Employer’s Requirements. Where this occurs, the Employer’s Requirements are vague and do not represent what the employer truly wants to be delivered.

Now, many of the contractors I know are not mind-readers: when they examine the Employer’s Requirements they are not aware that the document presented to them does not reflect what the employer wants. What they do understand is that where something is required but is not precisely defined in the contract then it is their responsibility to specify, design and build that item of work. Let’s take bathroom fittings as an example. Poorly prepared Employer’s Requirements might simply state that ‘quality bathroom fittings’ are to be provided. Any contractor looking to maximize its profit would seek to provide the cheapest ‘quality’ fittings that will do the job.

It is likely, however, that the cheapest ‘quality’ fittings are not what the employer had in mind. So, what happens next? Well, many contracts contain provisions that require the contractor to submit its design for review before commencing construction. Such provisions give the employer the chance to check that what the contractor plans to build is in line with the contract as well as a last opportunity to instruct any changes prior to construction.

However, because of a misconception of design reviews, some employers think that the contractor has to provide it with a choice so it can choose what it wants. So, as per my example, when presented with the cheapest ‘quality bathroom fittings’ that the contractor can find, the employer is disappointed and wants something better. The story continues like this: during the design review the employer rejects the contractor’s design and tells the contractor to provide better fittings; the contractor says okay but states that it is a variation for which employer will have to pay more; the employer argues that it is not a variation but merely design development and instructs the contractor to provide the better fitting at no additional cost. Now, we have a dispute. If the contractor has to provide something but the Employer’s Requirements are silent on the exact thing to be provided then the contractor is free to choose what it provides subject to other provisions of the contract.

If the Employer’s Requirements permits two or more alternatives then it is the contractor’s right to choose which of the alternatives is provided. In such instances, if the employer later insists on being provided with a specific thing then it is a new requirement and would thus be a variation. The moral of the story is that the Employer’s Requirements must state clearly and precisely what the employer wants.

If at tender stage the employer does not know exactly what it wants in respect of a particular item then the item should be treated as a provisional sum. In my experience, taking more care when preparing the Employer’s Requirements goes a long way to helping design and build contracts run smoothly.

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