The Merry Month: Predictions are risky

Robert Merry, is an independent stone consultant and project manager who ran his own company for 17 years. He also acts as an expert witness. Here he presents his view of the stone industry this month.

Looking back over this column in previous issues I was reminded that in January I made a list of subjects I would be writing about this year. I rashly predicted that England would be playing and beating Germany at footie on the way to winning the World Cup. Ho hum.

Trying to predict the future is a risky business. And even worse than trying to predict the outcome of football matches is trying to predict the future of a Design & Build contract. It is a very risky business indeed and counter-intuitive to the contract.

Design & Build contracts are designed to be planned before the contract is let, reducing the element of risk in the outcome for the client. The builder is given licence to build within a set of clear specifications, developed by the client and the professional team – architect, M&E consultant, cost consultant and the rest – before the work is tendered. The idea being there is little or no need to predict the future because the client has worked all that out in advance.

A Design & Build contract is similar to most other contracts except the builder takes on the responsibility of designing the building to meet the clients spec and delivering the building to the standard required. This can allow the builder to substitute products as long as the substitution results in the building the client wants.

The level of detail written into the specification will reflect the level of control the client has over the quality of the finished building. You have to be careful to make sure the specification is unambiguous. ‘Top quality wall finishes’, for instance, might mean top of the B&Q range to the builder but handmade silk-finish wallpaper to the client. Best to be clear.

In simple terms and at one extreme (usually called ‘extreme Z’) the client hands over the spec and months later (but to an agreed programme) the builder hands over a building that meets the specification at the agreed price. No predictions needed. Time, cost, specification, quality… all agreed. Everyone is happy.

Simples, yeah?

In theory the client pays more for the builder to take the risk of design, but doesn’t have to employ the architect, designer, engineer… That’s the builder’s responsibility. This risk is mitigated for the builder by being in control of the delivery and information, the specification (to some extent) and, of course, the costs. Gone is the need for lengthy delays as professionals ponder an issue then feed the decision back through the usual channels to the builder. With Design & Build the contractor employs all the professionals, so the process is faster and less litigious.

At least, that is the idea.

Design & Build was first used for warehouses, where design was minimal and interpretation of the specification was simple.

At the other end of the Design & Build spectrum we have what is known as ‘extreme A’. This is where the client wants to retain some control over the design and ensure the quality of the specification as written. To achieve this the client novates the planning architect to the employment of the builder.

That architect, now employed by the builder, is responsible for the delivery of the project. But of course the client is still involved with ‘their’ architect – and if the client then makes changes that result in delays to a Design & Build contract it can be expensive.

Design & Build is not really suited to refurbishment because there are often many unknowns that require the design to be continually adapted.

The shoe-horning of what should be a traditional contract with appropriate mechanisms to deal with variations into a Design & Build contract, is often a short-sighted air raid by a developer to keep costs down, thinking (wrongly, in my opinion) that because all the professional fees are the responsibility of the builder, any variation in costs and professional fees can be dumped in the general direction of the builder without it costing the client a penny.

When such a client wants changes the novated architect is torn between the new paymaster and the old paymaster. Suddenly, what should have been a relatively simple process becomes a bit of an unmitigated mess – as I have lately found to my cost.

The result: More hair loss, sleepless nights and increased depth of lines on a frowning forehead… a bit like watching England play football really.

Robert Merry, MCIOB, ran his own stone company for 17 years and is now an independent Stone Consultant and Project Manager. He is also an expert witness in disputes regarding stone and stone contracts. Tel: 0207 502 6353 / 07771 99762.