Case Study

Question 1

What is the role of the Employers Agent?

Answer 1

Acts on behalf of the employer on all matters, unless the employer expressly states (in writing to the contractor) that he or she wishes to act themself, or to appoint others to act for him or her on certain aspects of the contract.

The employer’s agent’s duties are summarised within the contract, i.e. to receive and issue:
• applications
• consents
• instructions
• notices
• requests or
• statements
and otherwise to act for the employer under any of the conditions.

Question 2

What responsibilities does the employer retain?

Answer 2

• Providing possession of the site – as the site belongs to the employer
• Making payment to the contractor in compliance with payment notices – as the employer and the contractor are the contracting parties – no-one else can pay the contractor and
• Issuing a notice to the contractor following the issue of a non-completion notice stating that the employer may require payment of, or may withhold or deduct liquidated damages. The role of the employer’s agent is to issue payment notices without deduction for liquidated damages, though the employer’s agent must advise the employer of his or her rights and responsibilities in this respect.

Question 3

Whar are the features of Employers Agent Appointment Documents/Service Agreement?

Answer 3

• Project Brief - in broad terms
• The Service - Split into pre-con, construction and post-con
• Responsibilities - Inspection and Testing of Compliance
• Fiduciary - What authorities are passed to the EA;
  
  • Agreement of consultant fees, costs, claims, instructions/variations resulting in cost/programme/specification/design change
  • Authority to act on behalf of employer to avoid employer contractual brief

Should be provided to all parties to avoid ambiguity

Question 4

When may an EA be appointed?

Answer 4

• ​Can be appointed at any stage prior to execution of contract.
  
  • Concept/Design Stage
  • Tender Stage
  • Contract Stage

Question 5

What are the differences between Contract Administrator, Project Manager and Employer’s Agent?

Answer 5

Contract administrator - Identified within the contract. Solely responsible for administering the contract for the employer. It is an impartial role and only exists at the point the contract is entered into, i.e. when a contract exists.

Project manager - Identified within the contract and manages a team to develop and deliver a project for an employer, often from the project inception stage, making decisions on behalf of the employer and giving instructions to the contractor. The project manager provides information, controls and manages communications from the team to the employer so that the employer can act as required. The project manager is impartial in respect of the contract.

Employer’s agent - Identified within the contract and who acts on behalf of the employer in all matters, effectively as if the employer’s agent was the employer. In carrying out its certification and decision-making functions under the contract, employer’s agent should act impartially.

Question 6

What is the EA’s role with respect to Design?

Answer 6

It is not the responsibility of the employer’s agent to tell the contractor what to design or how to design it, but he or she has to check that the contractor complies with his or her contractual obligations.

Question 7

What is the EA’s role with respect to Construction?

Answer 7

Once the Design and Build Contract is in place, any employer authority over the contractor may only come through the employer’s agent.

Other parties, for example, quantity surveyors to be able to have contractual powers. In these instances they will normally be appointed to act either directly on behalf of the employer, in which case the contract would have to be amended to provide for that, or through the employer’s agent under the contract. Note that there can only be one employer’s agent under the contract.

Under the contract, the contractor is responsible for management and control of the design team. The employer’s agent could possibly be an architect by profession, but it is critical to state that he or she is not acting in that capacity under the contract.

Question 8

What is the EA’s role with respect to Insurance?

Answer 8

Check that the relevant insurances to be provided by the contractor are in place in terms of coverage, indemnity limits and timescales in accordance with the contract.

As insurance is a specialist element of construction contracts, the role of the employer’s agent is to check, when assessing the tenders and recommending the appointment of the contractor, that the contractor is able to provide the required policies, certificates and premium receipts for inspection by the employer and his or her insurance advisors.

Question 9

What are other responsibilities of the EA through the project?

Answer 9

• Project Control Documents - Draft with input of PM/Employer
• Meetings - Chair Progress/Employer Meetings
• Project Status Reports - Provide confidentially to employer
• Issuing Instructions - Properly issued in writing
• Quality Inspections - Carry out regularly
• Patent & Latent Defects - Issue relevant instructions (removal from site of works, change instructions, opening up/testing instructions)
• Change - Vary work as set out in the contract
• Payment - Issue Certificates
• Claims - receive notices from Contractor for EoT/L+E, issue notices on Non-Completion (LADs)

Question 10

What are the implications of the Law of Agency fo EA’s?

Answer 10

• Confidentiality: EA must hold any information received from the employer as confidential, and may only divulge this information with their express permission.
• Duty of care: unlike a normal commission where the duty of care falls to the company first and the employer second, the role of employer’s agent in effect is the same as a director of the employer. The employer’s agent, therefore, has an obligation that may exceed or conflict with their employment duties. In summary, the employer’s agent has a duty not to allow the employer to fail in their contractual obligations, not to cause damage or loss to the employer, and to act in the employer’s best interests.

Employer can pursue the employer’s agent directly. While this route would provide no limitation on a legal judgement, the courts have been reluctant to exceed any agreed limitations stipulated for professional indemnity.

Question 11

What other practical considerations are their for appointing an EA?

Answer 11

• Competence, technical ability and experience. EA should be able to demonstrate that they have the experience and technical ability to carry out the employer’s brief.
• Conflicts of Interest. EA cannot act in any role where it could be seen that confidential information or communication between the employer’s agent and the employer could be provided to the contractor.

Question 12

What is the Contractor’s responsibility to the EA?

Answer 12

• Check information and works carried out are compliant with the contractor’s obligations and employer’s requirements, and that any requested changes identify all changes required to the employer’s requirements and the contractor’s proposals.
• Early Warning. Inform EA as soon as they becomes aware of any work that has been carried out in contradiction to the employer’s requirements or contractor’s proposals.
• Change Requests. identify any and all elements of the employer’s requirements and contractor’s proposals which require change, any change submitted must remain compliant with the remaining unchanged employer’s requirements and contractor’s proposals.
• Comply with Contract and Prompt responses. Not act in a manner that would create a breach in the contract by either the employer or the employer’s agent. All requests for change, information issue, inspections of work, requests for information etc. should be provided in sufficient time to act within the contract or programme timescale.

Question 13

What is the EA’s responsibility to the Contractor?

Answer 13

• Hindrance. Not to hinder or obstruct the contractor in the execution of his or her contractual obligations.
• Not Interfere. Action must not be construed as managing the contractor’s team, or interfering in the contractor’s attempts to act diligently in carrying out the works.
• Warn. Warn the contractor of any non-compliance observed as soon as it is noticed.
• Acknowledge. That the contractor has complied with his or her obligations when issuing the practical completion statement.
• Impartiality. Remain impartial with regard to the valuation of the works, processing of claims, and duties relating to certification.
• No breach. EA should not act in a manner that would create a breach of the contract by the contractor.

Question 14

What are the EA’s responsibilities to the Employer?

Answer 14

Act as if they were one and the same as the employer. As a result, the employer’s agent has the following obligations to the employer:

• Confidentiality. Not to divulge any information of a confidential or private nature given by the employer where the employer has specifically requested.
• Warning. the employer of any potential breaches in the contract, and endeavour to enable the employer to fulfil their contractual obligations in a timely fashion.
• Advise. Based on his or her knowledge and experience to assist the employer in making informed decisions (unless expressly stated, the employer has appointed a qualified construction professional).

Question 15

What are the Employer’s responsibilities to the EA?

Answer 15

• Timely Decisions and Payments. In compliance with the contract, and therefore should check that he or she has the means to do this.
• Give EA suitable authority. As required to fulfil the role and responsibilities identified in the employer’s agent’s appointment.
• Not impede or interfere. With the work of the EA once that authority is given.
• Information. Provide EA with all information relevant to the project so as to allow the employer’s agent the ability to offer good advice.

Question 16

What may be included in the Employer’s Requirements?

Answer 16

In general, matters likely to affect the preparation of the contractor’s proposals.

• Site Details
• Project description including any drawings/specifications already prepared
• Building Purpose for use
• Functional requirements
• Specific requirements for finishes/elements
• Bills of quantities (if supplemental provisions apply)
• Drawing Submission & As-Builts requirements
• Team Functions (EA and others in Employers Team)
• Payments confirmation. Alternative A (stage) or B (periodic)
• Details of any provisional sums
• Planning restraints, e.g. restrictive covenants, and any permissions already granted
• Access restrictions
• Utilities availability
• Contract form and any amendments, and any legal documents
• CP’s presentation method
• Contract Info e.g. project control requirements and templates

Question 17

How may acceleration be achived?

Answer 17

In order to improve the rate of progress the
contractor may be able to change:

• Site working hours
• Level of resources deployed
• Programme
• Temporary works (weather protection etc)
• Methods of working.

The employer may be able to make changes to:

• Specification
• Design
• Work scope.

Question 18

What factors should be considered when suggesting/agreeing acceleration measures?

Answer 18

• Focus on Critical Path/s
• Efficiency losses from resource changes
• Extended Working Hours - Cost, Productivity increase not linear, potential restrictions, quality, H&S
• Increased Resources - Keep correct balance between resources, labour/plant etc. Sufficient area/space limitations/welfare capacity
• Alterations to the programme - Least effective, already optimistic, re-sequencing risks to quality/damage/H&S.
• Introduction of Temporary Works - Weather protection etc.
• Working Methods - Quality risk
• Changes to specification/Design - Employer may end up with something they didn’t want. Potential additional design fees.
• Work Scope Changes - Omitting rarely possible or practical. Delaying to post PC isn’t acceleration and incurrs QA/H&S risk/disturbance etc. If work omitted, contractor may claim for Loss of Profit.

Question 19

What parts should be outlined in an Acceleration quotation?

Answer 19

• What can be achieved?
• How it will be achieved?
• What it will cost?
  
  • Basic Costs
  • Allowance for Risk
  • Lump sum or Itemised
  • Assessments based on actual cost

Question 20

What do decisions regarding acceleration come down to, and what are the risks?

Answer 20

• Cost-Benefit Analysis
• Measures conducted and costs incurred, but works not completed early
• Other action specific risks
• Difficult to make a decision under time pressure.

Question 21

What Relevant Events allow for EoTs under JCT?

Answer 21

• variations
• instructions
• deferment of possession of the site
• suspension
• works by statutory undertakers
• exceptionally adverse weather
• civil commotion
• terrorism and strikes
• ‘any impediment, prevention or default … by the Employer’.

Question 22

When must a contractor give notice of a delay and what should the Notice include?

Answer 22

• When it becomes reasonably apparent that the progress of the works is being or is likely to be delayed.
• Material circumstances including the cause/s of the delay
• Relevant Event. Specifically identified.
• Expected Effect. Upon the completion date, either in notice or in writing ASAP.

Question 23

What is delay avoidance?

Answer 23

• Contractor required to use best endeavours to prevent delay OR further delay.
• Doesn’t impose positive duty on Contractor to accelerate progress.

Question 24

Methods of delay analysis?

Answer 24

• Overview of the Facts
• Comparing actual and planned progress
• Critical Path Analysis
  
  • Review of Planned Programme
  • Review of ‘as-built’ Programme
• Focused methods of analysis

Question 25

What are the strengths and weaknesses of delay analysis methods?

Answer 25

* Overview of the facts * Simple, quick, easy * Least analytical * Comparing actual/pre-planned progress * Simple to understand * Doesn't show causation * Focussed methods of analysis * Reviews what actually happened * Specialist programmers required

Question 26

CASE LAW: Concurrent Liability for Delays

Answer 26

***Walter Lilly & Company Ltd v Mackay & Anor [2012]*** cited *Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd [1999]* if one of concurrent delays is a RE the Contractor is entitled to a full extension of time … there is no apportionment for delays which are not caused by REs.

Question 27

CASE LAW: Omission of Work

Answer 27

*Abbey Developments Ltd v PP Brickwork Ltd* Abbey engaged PPB as a labour-only subcontractor for brickwork and blockwork. Clause 2 of the subcontract conditions empowered Abbey to increase or reduce the quantity of work. The question was whether this enabled the employer to determine the entire subcontract. The Court considered that a contract for the execution of work confers on the contractor not only the duty to carry out the work, but the corresponding right to be able to complete the work which it contracted to carry out. The work has to be defined for there to be a right to execute it. To take away or to vary the work is to be considered an intrusion into and an infringement of that right and a breach of contract. Hence, contracts contain provisions to enable the employer to vary the work in order to achieve lawfully what could be achieved without breaking the contract or by a separate further agreement with the contractor. By entering into a contract with a variations clause, such further agreement is obviated, as the contractor's consent to changes in the work is in the primary contract. However, the Court considered that provisions entitling an owner to vary the work have to be construed carefully so as not to deprive the contractor of its contractual right to the opportunity to complete the works and realise such profit as may then be made. Reasonably clear words are needed in order to remove work from the contractor simply to have it done by somebody else, whether because the prospect of having it completed by the contractor will be more expensive for the employer than having it done by somebody else, although there can well be other reasons such as timing and confidence in the original contractor.

Question 28

What is a pre-construction services agreement?

Answer 28

Documents services and T&C's that contractor is to perform before entering into the building contract.

Question 29

When is a PCSA usually used?

Answer 29

Two stage tendering, signed after first stage and cover up to end of second stage. Often on D&B.

Question 30

Why are they used?

Answer 30

Develops a lump sum price, enables it to be determined and the main contract entered into.

Question 31

What happens in Stage One?

Answer 31

Employer issues outline information (including scope of services in preliminaries) to potential contractors.

Question 32

What do the contractors include in their tender returns?

Answer 32

**Profit, overheads, preliminaries, proposals** on how they intend to execute the project, fee for second stage services

Question 33

What tasks might the Contractor be asked to perform in the second stage?

Answer 33

Finalise the **design** Advise on **methods of construction** Obtain **subby prices for packages** (open book basis) **Evaluate tender** returns and agree selection with the employer

Question 34

What are the advantages of this two stage approach?

Answer 34

**Contractor advice** to the employer **Early input** should reduce the disputes and problems arising during construction Design and tendering of packages **overlaps** – quicker The contractor also benefits from getting paid earlier and becoming part of the DT

Question 35

What are the disadvantages?

Answer 35

Contractor **no longer in competition** – costs rise Longer involvement without the main contract signed, weaker contractor’s bargaining position Contractor integration means employer becomes **reluctant to dismiss** them if fails to perform or negotiate on price/programme **Subbies tend to be bigger** and more prominent = more expensive (diff. under single stage) Generally only **80-85% fixed pricing** at contract execution, prov. sums = less price certainty than under single stage

Question 36

What should be taken into account in the wording of a PCSA?

Answer 36

**Does NOT commit** to the building contract Ensure obliged to **pay for documented services only** and nothing else State **employers discretion** to appoint the contractor at the end of the second stage or not State that if they do not appoint the contractor, the **employer has no liability** for any loss of project, contract or other opportunity

Question 37

What might the pitfalls be?

Answer 37

It is not uncommon for the pre-construction services to **include enabling works** and surveyors etc More work carried out before the building contract T&Cs are executed the **weaker the employer’s negotiating position** becomes If the contractor is not selected to go further, any new contractor will be reluctant to adopt responsibility for the previous contractor’s work – **split liabilities**

Question 38

Where would you recommend the use of a pre-construction services agreement?

Answer 38

Long pre-construction period If the contractor integration into the design team, and providing advice is needed

Question 39

What do you need to be careful about with PCSAs?

Answer 39

**Explicit agreement on what services** to be provided and how paid How to **disengage** if not satisfied (procedures) Careful not to encourage a lot of work to commence before the building contract is signed (dis-incentivises) (**over-commits**)

Question 40

What other forms of procurement could be used that may safeguard the employer better?

Answer 40

Early start before final design - consider **construction management** rather than trying to shoehorn a traditional or D&B contract into a programme where it does not fit

Question 41

Is there a standard form PCSA that you might recommend the use of?

Answer 41

Traditionally, no contractor involvement ahead of contract execution and start on site Traditionally bespoke documents – drafted by lawyers for the Employer. Now JCT Pre-Construction Services Agreement: General Contractor 2016: (PCSA)

Question 42

What are 'Day 2' Items?

Answer 42

An essential component of the long-term projects which contain many of change requests is “DAY 2 items”. The “DAY 2 items” may be evaluated as a post live project which consists of the items that have no direct effect to the deadline but must be completed as soon as possible. In other words it is all requirements or functions that can be postponed in order not to change the project deadline.

Question 43

How do “DAY 2 items” arise?

Answer 43

In general DAY 2 items are not considered and planned at the beginning of the project and arise close by the project deadline. In order not to affect the deadline, the “must have” DAY 1 items are released and the second priority functionalities (it should not be “nice to have”) are planned as post launch activities and called as “DAY 2 items”. The difference between “DAY 2 items” and “Phase 2” is that the phases are usually known and planned at the start of the project but the DAY 2 items arise during the project and can not be completed by the end of the project. The most important reason for DAY 2 items to occur is the change requests. These changes may be requested during the analysis approval or even worse during the user acceptance tests (UAT). Especially the change requests arise during the UAT is a big challenge for the project management. Another factor of DAY 2 items is underestimating the effort. While the project is ongoing, the risk regarding catching the deadline is posed and the team realizes that the project will be completed later than expected. The change requests and underestimated efforts affect directly the deadline and in this case one of these project components should be changed: scope / deadline / resource. If you have a project that you are not be able to change the deadline or assign an additional resource, then you have to change the scope. In this case it should be determined which functions are “must have” and show stopper for the project launch. The rest of the functionalities are the DAY 2 items.

Question 44

What are the advantages/disadvantages/risks of “DAY 2 items”?

Answer 44

The DAY 2 items are the follow-up of the released functions and they do not contain any different and brand-new functionalities. Since these items have to be completed as soon as possible, the project management approach would be to assign the same resources for the DAY 2 items. But this case increases the resource dependency. Working with the same resources increases the speed. But the team including the customer/business units has a slackness due to the project launch and it may cause that the team works inattentively and slowly although the items have to be completed as soon as possible. Since the DAY 2 items are not considered as project phases, the perception is that the project is not completed yet. It also has effect on the success factors of the project. Therefore the scope and status of the DAY 2 items should be shared with the stakeholders regularly and in detail. Despite all disadvantages listed above “DAY 2 items” allows the scope change luxury and provides that the “DAY 1 items” can be released as planned. Thus since the deadline is not changed or postponed the customer will be satisfied and able to start to use the requested functions as planned.

Question 45

Planning and tracking of “DAY 2 items”

Answer 45

Even though the project actions are broken into small manageable pieces in big projects, only the main processes/tasks are reported rather than these small and detailed pieces. Therefore the steering committee has information about the general situation but they don't worry about details. The “DAY 2 items” should be planned item-based and presented to the steering committee in detail. Due to the perception that the project is not completed yet and since these items should be completed as soon as possible, the steering committee will demand detailed information. Therefore the deadline of each item should be determined and managed accordingly. Before making a decision about the DAY 2 items, a written approval is required. Only the customer can decide which functions may be evaluated as DAY 2 item and this decision is based on the deadlines. Therefore the project manager takes the following steps; * Determining non-essential items * Planning these items * Getting approval from the customer In case that no phases is considered at the start of the project, the resources may be reserved for another project. Therefore if there are “DAY 2 items” in a project and it is decided that the resources will be assigned for the DAY 2 items, it will directly affect the resource planning. DAY 2 items should be tracked very strictly by the project management due to the slackness problem explained. Since both project team and stakeholders lose their focus as the project is released, the project manager has to call for stakeholder’s attention on the project through pointing out the risks and issues. Even though sometimes the “DAY 2 items” is an inevitable part of a project, using phases is a better approach in terms of the perception and the project management. Foreseeing the risks earlier and handling the issues which are a threat for the deadline in a different phase is a more manageable approach.

Question 46

What are the benefits of VM and VE to clients and delivery teams?

Answer 46

* **Reduce project cost** by focusing specifically on the functional requirements of the project and then considering what alternative approaches can be adopted. This targets unnecessary costs that may have been built into the project specification as a result of unchallenged assumptions. * Earlier consideration of design, buildability and maintainability can encourage the different project team members to discuss ideas in a structured way and **seek more efficient or effective ways of achieving the required project outcomes**, improving the subsequent asset management.

Question 47

What are the similarities between VM and VE studies?

Answer 47

Five Steps: 1. Information gathering 2. Creative thinking 3. Analysis, evaluation and shortlisting 4. development 5. presentation Both generate a report with recommendations. VM - outlining approaches to between project objectives, and business needs. VE - outlines approaches to achieveing the required functionality for a particular material, component/system, with comparatives costs and recommendation for best value.

Question 48

What are the differences between VM and VE studies?

Answer 48

VM * Multi-disciplinary approach * Strategic/highly complex problems * Workshop likely required VE * Engineering solutions to problems already relatively developed * Detailed, specific problem solving * Can be completed by individual/single discipline Reports reflect this.

Question 49

What is the relationship of VM/VE to other PM activities?

Answer 49

**Risk Management.** Associated with a lack of info. Normally introduced via VM/VE report. **Life cycle costing.** Can be incorporated in VM/VE, helps understand economic value of options. **Configuration Management.** Compartmentalising a design so that there is maximum opportunity to select alternative suppliers of particular equipment. Supports ethos of VM/VE as allows flexibility of supplier against Performance Spec. **Lean Construction.** Identifying and removing unnecessary stesp from a construction activity, so similar. **BIM.** Managed approach to use of shared/structured data and info into full project life-cycle. Prevent waste by reducing overprovision. Supports VM/VE in rapid option review.

Question 50

How should you carry out VM and VE?

Answer 50

* Understand the problem * Identify different solutions * Evaluate the different solutions * Develop the shortlisted solutions in more detail * Identify the best solution and make recommendations

Question 51

What resources are needed to carry out VM and VE?

Answer 51

* Time * Background details * Skills and knowledge * Facilitites

Question 52

How do you report the outcomes of a VM/VE study?

Answer 52

* Introduction and context * Required outcomes and value criteria * Alternatives considered * Value assessments of alternatives * Conclusions and recommendations * Appendices

Question 53

What are the potential problems when carrying out VM and VE studies?

Answer 53

* Not enough time * Lack of precision * Not starting the process early enough * Not including the appropriate stakeholders * Revisiting previous decisions

Question 54

What are appropriate facilitation skills and VM workshop techniques?

Answer 54

Facilitation * Generating ideas * Clarifying and grouping ideas * Screening and prioritising ideas * Progressive hurdles (the Battelle method) * Paired comparison