q&a
Michael Hiscock is a construction lawyer and partner at Midlands-based Wright Hassall, with much experience of school building projects
EDB: What’s the first question any head or estates manager should be asking themselves when embarking on a building project? Understand your objectives before you start. It is human nature to select what appears to be the least expensive option. Unfortunately, prospective cost savings often turn out to be illusory as the inherent risks that underlie all construction projects bubble to the surface. The starting point for every headteacher, bursar or school business manager must be to think very carefully about the end result: once the construction contract is signed and work begins, changes can start getting very expensive.
EDB: How do you decide whether to project manage, or not to project manage? There is a tendency to assume that having direct control of the design process will result in more flexibility in the event of changes being made as the project progresses. While this is true to a certain extent, there are a number of risks associated with this approach and contractors can take advantage of an inexperienced project manager. The government has actively endorsed NEC contracts for schools because they tend to be more collaborative in nature and allow time and cost management. However, because of this flexibility, there is more emphasis on real-time decision making creating deadlines that you miss at your peril resulting in deemed actions/ decisions that may or may not help you, so these contracts really need experienced project management otherwise you run the risk of spiralling costs.
EDB: What’s the best type of contract? As a result of the compulsory statutory framework that sits behind construction contracts, that cannot be avoided even by agreement between the parties, they are difficult for non-specialists to negotiate. For example failure to follow the right procedures within the prescribed time frame, such as issuing instructions, or approving designs, or deducting LADs without the correct notices, or serving a payment notice or paying less notice at the correct time or in the right format, means that you are much more susceptible to challenge
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(often by adjudication, which is a short but intense formal dispute process that applies to all construction contracts). Maintenance contracts can pose similar problems for schools. The number of provisions contained in a standard contract means that the likelihood of something going awry is high – and is compounded by parties applying complicated payment structures with deductions based on performance KPIs judging quality and responsiveness, which are difficult to operate in practice. Bear in mind that the law requires you to serve a zero notice, even if everyone knows that it is obvious that no payment is due. It may not be appropriate to consider full- scale partnering where all parties share the risk but a two-stage tender process with early contractor involvement, or a pre-construction services agreement, might be one way to find the most effective balance of time, cost, and risk.
With clear objectives and early legal advice to avoid contractual pitfalls, school management teams will be able to address risks before they occur and avoid hidden surprises.
EDB: Given money’s so tight, how can I justify not choosing the lowest price? In terms of whole life costs, school management teams will be looking for buildings that are easy and cheap both to run and maintain. This means that some initial decisions may seem counterintuitive if budgets are tight, for instance using a more expensive flooring material in the initial build may save money in the long run if it has a longer shelf-life than a cheaper alternative. If the decision is to refurbish rather than rebuild, a similar decision-making trajectory is required.
www.wrighthassal.co.uk
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