Illustration: Adam Nickel

Richard Hildrick’s Case notes

Case: Walter Lilly & Co v (1) Giles Patrick Cyril Mackay (2) DMW Developments

Technology and Construction Court, 11 July 2012

• Exit strategies: discharging contractual obligations, settling disputes, signing off, moving on. Whoever is procuring construction work,

whether clients, main contractors or large specialist trade contractors, would benefit from this standard. Given the huge complexity in putting major procurements together, this straightforward guide to navigating the complexities of construction procurement should be welcomed in all quarters. Ultimately, there is a “political” battle

respect of quality, timing and price.

• Promotion of other objectives such as use of SMEs, local job creation and local economic development, ensuring criteria is measurable, quantifiable and monitored.

BS 8534: Construction procurement policies, strategies and procedures The British Standard complements ISO 10845 and is aimed at a more strategic level, seeking to represent in one document all the various “best-practice” guidance that has been issued over the preceding couple of decades. The standard goes through the stages of procurement in sequence that will be familiar to those who develop procurement strategies: • Initiation: business need, roles, responsibilities, objectives, outcomes, scope, stakeholder identification;

• Procurement strategy: client brief, procurement routes, work packages, market engagement, control, approvals;

• Procurement tactics: contracts, liability, selection, pre-qualifications, award, performance, progress, evaluation;

between interest groups. Professional “procurement advisers” would clearly continue to promulgate their own approaches. Indeed, RICS is currently engaged in a consultation exercise to develop new guidance on construction procurement and RIBA has issued a report calling for reforms in EU procurement rules. These professional institutions seem to make no reference to the new procurement standards in their public pronouncements. However, once funders and investors realise that there is a document to which they can refer in their compliance demands, it will soon catch on! Also, the government may well be keen

on these standards, particularly BS 8534, because it ensures that what was the OGC best practice guidance will live on and evolve, without the need for government departments to be continuously updating it. For all of these reasons, I think that BS 8534 will become widely adopted.

Will Hughes is professor of construction management and economics, School of Construction Management and Engineering, University of Reading. He was involved in the drafting committee of BS 8534:2011

In 2004, DMW appointed Walter Lilly & Co (WLC) as main contractor to build three luxury houses in south-west London with a combined contract value of £15.4m. Separate traditional JCT contracts were ultimately placed for each of the three dwellings, the third of which was being carried out for Mr Mackay with a contract value of £5.3m. Justice Akenhead described

the project as “a disaster waiting to happen”, primarily because of the fact that little or no design work had been completed by contract stage. The design, led by Mr Mackay’s consultant design team, effectively took place during the construction phase, resulting in many severe delays to WLC’s progress. Contract completion, scheduled for January 2006, was not achieved until August 2008. In the intervening period, numerous issues of late design information, late specification decisions, defective works, payment, extensions of time, liquidated damages and loss and expense arose and several adjudications were instigated. In addition, relationships between all involved parties become extremely difficult, resulting in

Concurrent delay concerns the question of a contractor’s entitlement to an extension of time, in a situation where there are two (or more) causes of delay, one of which is an event for which the employer is contractually responsible (a “relevant event”), and the other is not. This has been the subject of many often conflicting decisions of the courts. However, in City Inn v Shepherd [2010] the Scottish Appeal Court suggested that an apportionment of the delay between the two causes might be appropriate. In this case, it was held that

Meanwhile, companies that have

invested in systems to respond to CRC are concerned that these may have to be changed at considerable expense. CRC’s forerunner, the voluntary

European Union Emissions Trading System (EU ETS, 2005), is proving more successful. The EU ETS is the largest multi-country, multi-sector greenhouse gas emissions trading system in the world, operating in 30 countries.

Trading terminated in January 2011

due to Cyber theft attacks estimated at more than £23.5m. But new improved systems have been back and operational since June 2012. By Kye Gbangbola, a director of Total Eco Management, a Chartered Building Consultancy. More on the CRC Energy Efficiency Scheme can be found on the CIOB’s dedicated sustainability website: www.carbonaction2050.com/

this “Scottish school” of thought was not applicable in England, the judge clarifying that a full extension of time must be awarded where one of the causes of delay was a relevant event. This conclusion flows naturally from the potential scenario in which an employer would otherwise be entitled to deduct delay damages despite having acted to prevent a timely completion. Global claims arise when a contractor seeks to recover

the replacement by Mr Mackay of his architects, his appointment of a full-time claims consultancy, and an ensuing war of both extensive correspondence and heated verbal exchanges. By the time of practical

completion, the parties were in serious dispute in relation to matters of defects, extensions of time, payment (including loss and expense) due to WLC, and delay damages deducted by DMW. A substantial claim was issued by WLC, which was met by a counterclaim from DMW. Significantly, Justice Akenhead

held in favour of almost all of WLC’s arguments on legal and valuation matters, as well as preferring the evidence of its experts and witnesses. WLC was awarded payment of a further £2.3m, a fraction of the sum expended by the parties in fighting their corners.

WLC was awarded payment of a further £2.3m, a fraction of the sum expended by the parties in fighting their corners.

Richard Hildrick’s analysis

its total additional cost. In a preceding decision concerning global claims John Doyle v Laing Management [2004], the judge said that “advancing a claim for loss and expense in global form is a risky enterprise”. The complexity of the events giving rise to loss and expense, and the inter-relationship between those, often numerous, events, however, often dictates that a global approach is necessary, or in reality is the only approach available given the difficulty of separating the effect of each individual cause of the loss and expense. The judge recognised this difficulty facing a contractor who has incurred considerable additional cost, largely through the actions/inactions of the employer. He therefore concluded that there is nothing in principle wrong with a global cost claim, and that it would be wrong to deny a contractor any recovery of loss and expense because it was unable to produce a detailed cause and effect analysis.

Richard Hildrick MRICS MCIOB FCIArb is a quantity surveyor, contracts consultant and adjudicator. Email: richard@rjhconsulting.co.uk

COnSTRUCTIOn MAnAGER | SEPTEMBER 2012 | 27