Feature


It is important for the parties to agree who is responsible for any design provided by the Employer. If the Employer wants the contractor to take responsibility for this, that needs to be addressed in the contract.


Sections


Can the works be carried out with a single start date and completion date? This won’t always be possible. If not, consider using sectional completion. We’re often asked if agreeing to take partial possession on a particular date, or including a requirement for certain works to be completed by a key date, will work. If you’re using a JCT contract this is unlikely to satisfy your needs without additional amendment. Generally you will want a standalone completion date(s) that is subject to the contractual extension of time regime.


Access


If your building contract gives exclusive ‘possession’ of the site to the Contractor, can you provide that? Will you need to occupy all or parts of the property while the Contractor carries out the works?


If the Contractor is to carry out works to various different areas in the property, in a rolling programme, these need to be carefully considered and documented. Careful drafting is needed if the start of works to one area is contingent upon completion of works to another, for example so that staff can be decanted around the building.


Payment


It isn’t uncommon for fit out contractors to seek an up front payment, before work is carried out. You will generally want to align the sums you pay with the value of works carried out and materials delivered to site. Be cautious about agreeing fixed payments against dates, not linked to programme and progress on site.


If you’re paying for materials off-site, consider how you take ownership of them upon payment.


Delay


Most contracts will include a completion date(s) with the contractor entitled to relief for delayed completion due to an agreed list of reasons that are either not its fault or which are the fault of neither party.


These are just some of the issues you will need to consider when planning your fit out works. Above all, make sure all parts of the team to communicate with each other and share relevant information in good time, including in these early stages.


Other Tenants


If you’re working alongside contractors engaged by other tenants carrying out fit out works or by the landlord, you may be required to agree method statements and comply with site-wide rules in a fit out guide. There may be restrictions around deliveries, whether through use of a booking system or an offsite consolidation centre, and restricted use of the goods lifts. Your contract should require your contractor to comply. If not, your contractor may seek time and money should these requirements impact the works.


Consider the consequences for failing to complete the works on time. Can you stay in existing premises, for example by extending the lease? When will you need to serve any notices required to achieve that? Is alternative accommodation available? Do you need to take part of the works, even through partial possession? You will need to consider the costs of this delay and agree a rate of liquidated damages for delay for which the contractor is responsible.


Liquidated damages are generally an exclusive remedy for delay, so if your losses exceed the specified amount these cannot be claimed from the contractor.


Insurance


Read the insurance obligations in your building contract and check whether you can comply. Many tenants using a JCT contract with Option C, for example, don’t appreciate it requires the Employer to maintain both All Risks Insurance of the works and materials, and insurance of the existing structure against the Specified Perils, in joint names and with a waiver of subrogation rights against the sub-contractors. Commonly tenants struggle to secure the latter.


Finding a solution to the insurance arrangements will generally involve discussions between the Employer, the contractor, the landlord and the insurers of each. While it’s complicated, get it on the table at the outset as it can take time to resolve and you won’t want to delay your works if everything else is agreed.


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