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Water Services National Training Group. 12th Annual Conference 11 th September, 2008. Water Services National Training Group. Delivery. New Conditions of Engagement and Forms of Contract from a Consultant's Perspective. Michael Hand Managing Director WYG Engineering Ireland Ltd.
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Water Services National Training Group 12th Annual Conference 11th September, 2008
New Conditions of Engagement and Forms of Contract from a Consultant's Perspective Michael Hand Managing Director WYG Engineering Ireland Ltd
Content • Introduction • New Conditions of Engagement • New Conditions of Contract • Conclusions
Time Cost Project Performance Project Execution - Aims • Time • Cost • Quality/Performance
Organisational Method Type of Contract Tender Procedure Strategic Choices Management All-in Conventional Lump Sum Admeasurement Cost Reimbursable Target Competitive Two – Stage Negotiated Continuity
Historical Development of New Conditions 2004/05 Development of New Conditions of Contract & Conditions of Engagement 2005/06 Consultation with the Industry 2007 Public & Private Sector Training 2008 Effective Launch of New Conditions 2010 Review and Modifications ?
Consultancy in Context • Typically 7-10 year project relationship • Design critical to project cost efficiency • Consultants’ fees represent 4-6% of Project Capital Cost • Consultants’ fees represent 1-2% of Project Whole Life Costs • Service or Commodity ?
Guide Quality/Price Ratios • Feasibility Report and Investigations • Innovative and Imaginative Design Projects Major Conservation & Restoration Projects • Most Construction Projects • Repeat & Straightforward Projects • Straightforward Repairs & Maintenance
Risks of Price-Biased Selection • Drop in Quality of Service • Less Time for Innovation • Less Time for Value Engineering • More Errors and Consequential Costs • More Claims for Extras and Disputes • Conflict/Adversarial Relationships • Loss of Quality Personnel from the Industry THE COMMON LAW OF BUSINESS PROHIBITS PAYING A LITTLE AND GETTING A LOT – John Ruskin (1860)
Value Engineering • Project 1 – RC Basement Initial Design 130t Rebar Revised Design 80t Rebar Works Cost Saving €60k Audit Fee €5k • Project 2 – 3 storey RC Building Initial Design 150t Rebar Revised Design 110t Rebar Works Cost Saving €150k Job Fee €250k
Fee Correction • Where approved construction contract tender price >10% higher or lower than pre-tender estimate • Design Stage Fee reduced by % variation in excess of + 10% • Sliding Scale 10% for projects up to €50m 1% for projects above €600m • Applies only to Consultant at fault • Client discretion to waive fee correction
Procurement - Lianakis • Prequalification – Qualitative Selection Criteria • Tender – Award Criteria • Can Assess Quality of Team Once Only • Award Sub-criteria to be Brought to Tenderers’ Attention • Transparency and Equal Treatment
Some Suggestions on Consultants • Brief at EOI Stage • “Eurovision” Scoring on Quality • Reality Check on Prices and Eliminate Outliers • Health & Safety is a Key Ingredient • Select on Value for Money – Not Price • Timely Appointments and Approvals
Historical Contracts – Employer Issues • Overspends & VFM • Health & Safety • Public Relations • Services Disruption • Landowner Issues • Prompt Reinstatement
Historical Contracts - Contractual Claims • Unforeseeable Conditions • Legislative Enactments • Delay & Disruption • Method of Measurement • Method Statement • Extensions of Time
DoF Public Works Contract Objectives • Short listing of tenderers • Tender price = Final cost • Transparent risk allocation • Non adversarial / partnering • Value engineering incentivised • Speedy appointments • New Inflation Index
New Conditions of Contract Experience • Early Days • Launch Coincided with Market Decline • Burden of Notices • Value Engineering • Partnering • SI Inadequacies / Errors • Award Delays
Ground Condition Risks • All Risk may be transferred to Contractor • Comprehensive Site Investigation • Factual Report Only • Tender Period SI Facilitated • Archaeology Fully Investigated • Utility Services Identified
Measurements Issues • BOQ Accuracy – Contractors Risk • Compensation Events • Delay Events • Claims - Notice within 20 days - Valuation within 20 additional days - Monthly updates for continuing effect • Delay costs - Cost per day Quote • Provisional Sums Out • Prime Cost Sums Out • Price Variation (New Index) after 36Mts
Conclusions • Engineers Adaptable & Flexible • Industry Cooperation Essential for Efficiency • Vital to Attract and Retain the Best • Competition on Price Wrong for Design – Not VFM • Still Time to Stave off Lawyer-ridden Industry • Enlightened Review Essential
Water Services National Training Group 12th Annual Conference 11th September, 2008