Case study: Traditional procurement – Bath Spa

Initially estimated at £11 million, the Bath Spa project, a public leisure amenity, in the historic town of Bath in Somerset, England has become one of the most delayed and disrupted projects in recent times.

The project was funded via a £7.78 million grant from the Millennium Commission, who specified that the council must opt for a traditional JCT contract. The aim was to open for Christmas 1999; however, in the event, the contractor Mowlem did not start on site until 2000.

When the architect Grimshaw produced designs with more clarity, the costs rose to £15 million, then to £22 million.

In 2003 with construction complete, Grimshaw, as contract administrator, refused to certify practical completion because it had become apparent that the RIW Toughseal paint on the walls was peeling. In September it was reported that the steam room floors were also leaking.

Grimshaw claimed that the defects were construction related, whilst Mowlem claimed they were design related.

In February 2005 Mowlem offered to complete the project for £26.5 million under a design and build arrangement and drop all claims against the council. This proposal was never accepted.

In April 2005 following claims that Mowlem had refused to obey an Architect’s Instruction requiring replacement of the floors in the steam room, Mowlem were told to leave the site.

A new project manager, Capita Symonds, was appointed to take the scheme to completion under an arrangement in which the Council would have direct control of the contractors. Capita Symonds later said they found a series of significant structural problems from leaking floors, rusty and outdated fittings and £700,000 worth of windows which had begun to delaminate.

The project was completed in 2006 with a final account of £45 million and with a flurry of law suits following in its wake.

Sources: Building (11 Feb 2005, 18 Feb 2005, 8 April 2005, 13 May 2005); The Times (24 April 2006); The Telegraph (15 Dec 2008)

since competitive bidding requires a completed design, meaning that design services must be procured separately and before construction work is procured and that the selection process cannot be based on comparative evaluation of proposals (Raved, 2003).

Anecdotal evidence from an architect who has worked in New York identified the high level of corruption prevalent in the labour unions as a possible reason for the move away from a partnering strategy back to the traditional lump sum, fixed-price approach.

10.3 Design and build

Back in 1964 the Banwell Report remarked that ‘in no other industry is the responsibility for design so far removed from the responsibility of construction’.

Today the contractor-led design and build procurement route is now established as the most popular procurement route. Furthermore, it is increasingly perceived as the appropriate answer for large and complex projects, sometimes designed by signature architects.

The process

The design and build strategy requires the contractor to take overall responsibility for both design and construction in return for a fixed-price lump sum. However, in practice, the client may appoint an independent project manager or quantity surveyor to safeguard their interests.

The client enters into a single contractual relationship with the contractor to design and construct the project in accordance with a performance specification prepared by the client. The contractor then enters into a series of separate agreements with consultants, specialist subcontractors and suppliers to deliver the project in accordance with the agreed performance specification. Since the contractor becomes solely responsible for all aspects of the project delivery process, most of the risks associated with design and construction are therefore borne by the contractor, giving the client greater protection.

The client generally invites tenders based on an outline design, critical specification and workmanship standards, completion time and other key information. At the earliest stage of the 156 Organizational methods (1)

Figure 10.3 The design and build system EMPLOYER PRE-CONTRACT DESIGN conceptual designers/ architect/engineer/ specialist contractors CONTRACTS JCT2011(DB)

NEC3/ICC D&C Version FIDIC Yellow Book POST-CONTRACT DESIGN contractor/ architect/engineer/ specialist contractors CONSTRUCTION contractor/ subcontractors (domestic)

construction period, the contractor completes the outstanding design development, thus generating an overlap between the design development stage and construction stage which should in theory reduce the overall duration.

In practice, there may be two separate design teams, one employed by the client to develop the client’s brief and the other employed by the contractor to undertake the detailed design work. It should be noted that the former design team may not be contractually linked with the contractor, though in some cases this design team may be novated to the contractor. Equally, the design team employed by the contractor is usually contractually remote from the client, and the client can only influence the output of the design through their intervention in the design approval process. This often leads to variations and changes in the original requirements.

Contractor’s expertise

The design and build approach allows the contractor’s design and construction team to consider, at the earliest conceptual stage, site-specific construction issues which a consultant working in isolation is not normally equipped to deal with. For example, on a large marine project the team will be able to establish: if the site is suitable for the use of large cranes; whether heavy floating barges can be used in a tidal location; how materials will be transported to the construction locations; whether there are suitable areas close to the site for setting up a precasting or preassembling yard; what skills are characteristic of the local labour force; and how the local weather during the construction period will affect the construction methods.

The most economic type of structure and the most suitable method of construction will depend on the answers to the above questions, together with the contractor’s specific expertise and the availability of construction equipment. It is at this stage when the combined team has at its disposal all the relevant facts and techniques that increased productivity may be considered – thus reducing the overall cost to the client.

Flexibility

The design and build route is extremely flexible and many different versions have emerged over the past decades. The major difference between them is the amount of design input by the employer’s designers and the contractor’s designers; e.g. the client’s contribution to the design may vary from 5 to 75 per cent.

The amount of tender documentation provided by the client (known in the JCT Design and Build Contract 2011 as the Employer’s Requirements) can vary from little more than a written brief to a fully worked-out scheme. The greater the priority the client gives to design, the larger the amount of information which tends to be included in the tender documents. If a client’s priorities are economy and speed then less design information will be included, leaving more scope to the contractor.

Three main categories of design and build approach can be identified: Direct: designer/contractor appointed after some appraisal but not competition.

Competitive: conceptual design prepared by consultants; several contractors offer designs in competition.

Develop and construct: client’s designers complete design to partial stage before asking contractors to complete and guarantee the design in competitive tender either with their own or using the client’s designers (novation).

Responsibility for design

There are two standards of care which are relevant to the design and build strategy: 1 Reasonable skill and care

A duty imposed on a professional consultant who provides advice or a service. It is effectively a matter for professional judgment whether in providing that advice or service the consultant has exercised all the skill and care that can reasonably be expected. Only if professional negligence can be proven is the consultant liable for failure of the end product;

2 Fitness for purpose

A statutory requirement under the Sale of Goods Act and an implied term in any contract for the design and supply of a finished product. If the product is proved unfit for the intended purpose for which it was supplied, then, irrespective of whether the provider of the product has been negligent or not, there would be a liability for any failure of that product to perform. The risk of the design meeting the client’s requirement would be spread differently, depending on the contract strategy adopted.

Under the traditional and management approach:

• The consultant(s) who designed the project would not be liable for the performance of the completed project unless it could be proved that the consultant had failed to exercise the level of skill and care reasonably to be expected. Before recovering damages, the sponsor 158 Organizational methods (1)