A New Construction Contract For The 21st Century

PM World Journal Vol.
II, Issue VII July 2013

www.pmworldjournal.net
New Construction Contract for the 21st Century Contractor Design

Series Article by Keith Pickavance
A New Construction Contract for the 21st Century
Contractor Design
By Keith Pickavance
Introduction
The old adage that the more complete the design before commencement of a project the less likely it is to end up in delay and dispute is not always remembered by those concerned with complex construction and engineering projects. They may appreciate its inherent good sense, but they will also be aware that it is difficult to apply it on projects that can be conceived many years before design commences and designed and constructed over many succeeding years during which needs, technology and methods change.1 Contractors are almost always responsible for fabrication design and, because of the highly technical and specialized nature of 21st century construction operations, it is common to require the Contractor to take responsibility for much of the detailed design, if not also the conceptual design. It is thus surprising that, whilst so much delay and dispute concerns continuing design,2 the current standard forms of contract contain so little concerning the control of design development during construction. Most current forms do not even require the design process to be planned. Nothing is mentioned, for example in the JCT, FIDIC EPC (Silver Book) or NEC3 about continuing design obligations. The JCT design and build form doesnt even require the Contractor to produce a schedule for the construction of the works, let alone continuing design. The FIDIC Plant Design and Build form (Yellow Book) is unusual in this respect in requiring the schedule to include the anticipated timing of each stage of design. However, it fails to say what is meant by a stage of design, so even that is not much help. Even where a specification requires the design or fabrication processes to be distilled to a schedule the requirement is nearly always that such design or fabrication is to be
For example, the development of the fifth terminal at Heathrow airport was first conceived in 1982. Design commenced 6 years later and was submitted for planning permission in 1993. Permission was granted in 2001 Construction commenced in 2002. It was opened in March 2008, but construction continued well into 2010 before it was finished. In that 20 year period between design commencing and the project being opened for use, we had moved from ground based to internet communications, from manual to automated baggage handling and from paper plane tickets being sold by travel shops to automated web-based system from which you could even choose your seat from anywhere in the world. 2 For example, in Skanska Construction Ltd v Egger (Barony) Ltd [2002] EWHC 773 at [30] [44] and [191][204] in which more than double the tender price of a JCT-modified Guaranteed Maximum Price contract was claimed by the Contractor, the court held that it was part and parcel of the risk accepted by the Contractor that the Employers requirements for process plant would be perfected during construction.
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PM World Journal Vol. II, Issue VII July 2013


provided as a separate schedule not linked to the construction schedule, and without any, or any substantial redress for non-compliance. If a schedule is to react to change and delay then the constituent elements of design, off-site fabrication, procurement, delivery, on-site fabrication and on-site installation need to be integrated into the same schedule, whether it relates to the permanent or temporary works. Against this background the provisions of the CPC2013 offer significant advantages over other standard forms of contract by not only dealing with different methods of preparation of the design, but also the standard of the Employers reference design, if any, and other basic information to be provided by the Employer the standard of Contractor design building information modelling submittals and the power to reject or conditionally approve a submittal security, use and copyright defects in design the stages of design development and their content managing the timing of the design process, and redress for failure to comply with the contract requirements3
The standard of the Employers information

Because such issues are project-specific, what the contractor is to design and the stage to which it is to be performed are to be identified in the Special Conditions. The interface of other contributing designers is to be identified by reference to a matrix in Table 2 of Appendix 3. Where the Employer produces a Reference Design for the purposes of describing its requirements, it must be made clear whether it is prepared to a defined Design Stage, or to a particular status defined in the Special Conditions. Unless the status is made clear, the Reference Design will be deemed to be supplied for information purposes only and may not be relied upon by the Contractor for any purpose. Similarly, where the Employer provides any investigation report, data, maps, drawings, historical records or any other information in regard to existing structures, the physical ground conditions, subsurface conditions, geology and/or below ground services, its status is to be identified in the Special Conditions or, if not stated, it cannot be relied upon and the Contractor who must then make its own investigations.
This was dealt with in connection with a failure to publish risk management information in a previous article at http://pmworldjournal.net/wp-content/uploads/2013/03/pmwj8-mar2013-pickavance-time-management-ciobcontract-series-article.pdf.


The standard of Contractor design

By definition, under CPC2013, Contractor design includes the design or design contribution prepared by, or by any of the subcontractors under the direction of, the Contractor. Design comprises drawings and any specifications, calculations, analyses, or other information relating to the design. It also includes a design contribution, or a model prepared by, or under the direction of, the Contractor and any drawings specifications, calculations, analyses, or other information extracted from the model, or any other design or design contribution for which the Contractor is required to assume responsibility.
Whatever the degree to which the Contractor designs or participates in the design, the design must comply with Local Law comply with specified Standards be of good quality be prepared with the due diligence, skill and care that is reasonably to be expected of a professional practitioner experienced in the design of work of a similar scale and complexity
and facilitate the Works being 1. safe to construct and operate, and 2. fit for the purposes required by the Contract, and include all work reasonably to be inferred from the Specification as necessary for the proper carrying out of the Works not specifically referred to or described in the Specification but which is required to complete the Works, and otherwise necessary for the Works to be fit for the purposes required by the Contract.
Building Information Modelling

Building Information Modelling can be achieved in a number of prescribed levels of sophistication, ranging from uncoordinated 2D computer aided design Drawings, printed on paper, to a fully integrated and collaborative virtual web based Model, which includes construction sequencing, cost and scheduling data and operations and maintenance management information. The lowest level of maturity is referred to as Level 0 and the highest Level 3. The Contract provides for working at Level 2, as a coordinated three 2013 Keith Pickavance www.pmworldlibrary.net Page 3 of 8


dimensional Federated Model comprising separate Models with data attached, in accordance with the recommendations of the UK Governments BIM Task Force. The Conditions anticipate the preparation of a Building Information Modelling Protocol identifying the participation and responsibility of the various designers in the preparation of whatever individual Models are required and a Federated Model. Where the Works are designed by or under the direction of the Employer, the party responsible for the maintenance of the Model will be the Employers Design Coordination Manager (usually working under the direction of the lead design consultant) to ensure the proper coordination of that Contribution and to maintain, where appropriate, a database of submittals.
Submittals
As with all other information required during the contract, under CPC2013, the Contractor is required to publish its design electronically for acceptance4 and to publish it at completion of each required Design Stage and whenever the Contractor Design is updated or revised, and as and when required to do so by the Contract Administrator.
Unless the Special Conditions provide otherwise, each submittal must be made at least 10 Business Days before the logical date on which a response is required 5 and, unless rejected or conditionally approved within that period, it is deemed to be accepted. As with any other submittal, the grounds for rejection are that it does not comply with the Contract would impose an obligation on the Employer that the Contract does not require the Employer to bear would be contrary to Local Law would have an adverse effect on the Contractors ability to comply with the Contract, or it can be rejected for any other reason stated in the Special Conditions .
A submittal may be approved in part, by notice given within the due period, stating the defective part which is to be corrected the correction required, and the date by which the correction is to be submitted.
See previous article at http://pmworldjournal.net/article/a-new-construction-contract-for-the-21st-centuryinformation-flow/ 5 Clause 8.3.



If the Contractor fails to make the correction by the stipulated date, the submittal is deemed rejected and when rejected, deemed rejected, or conditionally accepted, it is to be replaced by a submittal complying with the Contract, with the time and cost effect being at the Contractors risk.
Security, use and copyright

Publication requires the design to be made available, transparently, in native file format to the Contract Administrator and Listed Persons and requires that subcontractors data should also have similar transparency. However, because these documents may contain data that may be commercially or security sensitive and the parties and the subcontractors are entitled to have access to such information limited to those who need it, the Contract provides for the appointment of a Data Security Manager, who is to be responsible for managing any Common Data Environment, File Transfer Protocol and the privileges of input, upload, download, access, and editing of any data provided electronically for use during the Contract and, in particular, any Building Information Modelling Protocol. The Contractor is to retain its copyright and all other intellectual property rights in its design, but grants the Employer a perpetual, transferable, irrevocable, non-exclusive, sub-licensable, royalty-free licence to copy, use and modify and reproduce the Contractors design in connection with constructing the Works resolving any issue or dispute arising out of, or in connection with, the Contract commissioning, maintaining and operating the finished project facilities management promotional activity, advertising, leasing or selling, and repairing or altering the project, whether or not such repairs or alterations are performed by the Contractor.
Design Defects
The Contractor is obliged to ensure that there is no potential or actual clash, conflict, discrepancy, omission, error, inconsistency and/or ambiguity in its design and, where it designs a part of the Works, between the Contractors Design and any other part of the design. The Contractor is to identify and notify the Contract Administrator at the earliest opportunity of when such defects do creep in and is to seek instructions for correction. Within 10 Business Days of receipt of a notice,6 the Contract Administrator is to issue an instruction for correction as a Variation unless the instruction requires
Clause 3.7.
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2013 Keith Pickavance


adoption of a description or data in a higher priority Contract Document over that in a lower priority Contract Document, or correction of any such defect in and/or between any design produced by or on behalf of the Contractor and any Contract Document or Local Law.
Notices must be given promptly. Because the work to be carried out at any one time is to be defined in high density7 and that is to be assessed and reassessed twice more over a 60 Business Day period before actually being carried out, CPC2013 says that where the current Working Schedule indicates that any Activity affected by such design defect is intended to be started within 20 Business Days, any delay to progress and/or loss and/or expense caused by an instruction properly issued for correction (but not the direct cost of any change required by the correction) is to be at the Contractors risk. This goes to ensure that proper regard is given to conflict correction and that the Contractor has nothing to gain by leaving any request for instructions until the last minute.
Control of the design process

Where the Employer designs the works but the Contractor is to make a design contribution, the Employer is to appoint its own Design Coordination Manager and produce a Design Execution Plan which, to the extent that it is to embody continuing design, must be provided to the Contractor for incorporation into its Working Schedule. The Contractor is to update its design with the effect of Variations and as-built information to ensure consistency between the Contractors Design and the built Works and, where the Specification requires the Contractor to design the whole of the Works, the Contractor is to appoint its own design coordination manager to prepare a design execution plan. The description of six generic Design Stages is set out in Table 1 of Appendix C. Unless the Specification provides otherwise, the Contractor is not to commence any Design Stage until the previous Design Stage has been approved and accepted as complete and in compliance with the Specification. Every Design Stage is to incorporate the requirements and benefits of its predecessor Design Stage and at the completion of each Design Stage, the approved design is to be signed by the Employer and Contractor and a copy of the signed approved design is to be provided to the Contract Administrator for archiving. The defined Design Stages are
7
Preparation Design Pre-construction Fabrication Construction, and Use.
See previous article at http://pmworldjournal.net/article/a-new-construction-contract-for-the-21st-century-2/

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Against each design stage description is its geometric limitation, its content and any limitations on the use of a design at any particular stage for Analysis Cost control Time control Licensing and approvals Construction, and any other specified uses.
Managing the timing of the design process

Unless stated otherwise in the Specification, the Working Schedule is required to contain all relevant data concerning any continuing design and, in particular, where the Contractor is required to design the Works, or any part of the Works, the Working Schedule must provide for Activities of adequate duration, linked to the construction Activities to which they relate for submittal for acceptance period for consideration period for corrections and amendments, and period for reconsideration and acceptance.
In relation to each of the relevant Design Stages, the Working Schedule is also to include Activities of adequate duration, linked to the appropriate Design Stages for every licence or approval, including those of Statutory Authorities necessary in connection with that design for preparation of submittals submittal consideration, and approval.
The Contract requires all time and cost data to be contained in the Working Schedule and Planning Method Statement, which can be integrated with a Model if required.8 The final two articles in this series will deal with dispute resolution and termination. A video of the introductory briefing seminar is now also available on http://bit.ly/ciobcpc
See previous articles at http://pmworldjournal.net/article/a-new-construction-contract-for-the-21st-century-2/ and at http://pmworldjournal.net/article/a-new-construction-contract-for-the-21st-century-cost-management-valuationand-payment/



About the Author
Keith Pickavance
Keith Pickavance first qualified as an architect in 1972 and then in 1978 obtained a law degree. After 20 years as an architect in private practice the last 10 years of which also involved construction management, dispute resolution and expert witness services, in 1993 he joined an American company specialising in forensic services and delay analysis. In 1996 he set up on his own again specialising in delay analysis and time management in London and Hong Kong. That practice was acquired by Hill International in 2006, an international construction management and claims consultancy with which he is now appointed an Executive Consultant. He is a Past President of the Chartered Institute of Building and has led the CIOBs time management initiative since its inception in 2007. He is the author of Delay and Disruption in Construction Contracts (4th ed., 2010, Sweet and Maxwell) and numerous other books and articles on delay related issues. Contact keithpickavance@hillintl.com
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PM World Journal Vol.

II, Issue VII July 2013

New Construction Contract for the 21st Century Contractor Design