Abstract
Umbrella organisations are in a prime position to be able to assess the issues that face construction professionals, since they see all sides of the problem at one time or another. Hence this paper attempts to trace the development of the construction process from the pre 1939/45 period through the present day and to look to possible future developments, particularly so far as both contractual issues and the settlement of disputes is concerned. Whilst looking at the position within the industry created for Alternate Dispute Resolution, it seeks to suggest how such procedure could be encompassed within a future framework.
Keywords: Deterioration, Professionalism, Education, Conflict, Settlement.
1 Introduction
FASS, being an umbrella organisation representing a significant number of specialists in the construction industry, is in a prime position to comment upon the current, and future, role of the specialist contractor in the present day construction process. Our industry has moved from a position where the architect controlled the whole process, through various developments to the present day when perhaps the architect is the person least suited to have ultimate control of the contractual scene.
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Pre-world war two to the present day
The industry has moved over the years from a position where considerable mutual respect between professionals, contractors and sub-contractors resulted in well designed buildings being constructed to a relatively high standard and without conflict, to a position where the complexities of design, not only of the
structure but of the services within it, has led to many designers being involved, to specialist contractors taking on all manner of additional responsibilities so far as design is concerned, whilst planning and programming techniques have developed considerably to establish control and progress of the works which had hitherto not been considered necessary. All this has let to a proliferation of working parties, working groups, committees and sub-committees, all with the same aim, that of preserving the interests of particular sector groups, be it professionals, employers, contractors or sub-contractors.
The method of execution of the works has also altered considerably from the position of the contractor who employed directly almost all of the tradesmen necessary to complete the works to the present day position where, as is now generally accepted, something over 90% of the construction process is carried out by specialists or sub-contractors. Indeed, the contractors site staff are often confined to merely operatives involved in unloading and generally servicing the specialist trades.
Recent years have seen changes such as were not even contemplated by our predecessors, hence the proliferation of contract systems that we have encountered over recent years. Prime Cost, Design & Build, Management Contracting and now Construction Management. Each brought their own contract forms, some structured for contracts with quantities, some without. Of course, following in the wake of all these sub-contracts were all the sub-contract documents and yet more complications added in the shape of nomination, naming, pre-naming, to identify but a few.
But even the foregoing was not enough, for in addition others, who for their own reason, be it dissatisfaction with the present forms or merely that they thought they could do better, sought to confuse the issue by the introduction of their own “pet” forms and so we saw the publication of yet further documentation in the form of contracts designed and published by the British Property Federation, The Association of Consultant Architects, The Faculty of Architects and Surveyors and so the list of available options grew.
The matter was made yet more complex by the actions of contractors in recent years, for despite the fact that Joint Contracts Tribunal had produced, after much deliberation and negotiation, forms of sub-contract to cater for particular instances and that the specialist umbrella organisations, in conjunction with contractors, had produced standard sub-contract forms, the contractors by and large decided that these forms were not to their liking and spurred on by the strength they had gained in the path of the ensuing recession in construction, they in the main decided to ignore standard forms and publish their own individual forms, or alternatively produce numerous pages of amendments to those standard forms which rendered them unrecognisable.
And so the scene was set by the early 80’s for the arrival in strength of the legal profession. Since the mid 80’s it seems that the industry has been in the grip of both lawyers and accountants and in many companies the “professional”
contractor has been forced to take a back seat.
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How does conflict arise?
It seems therefore that in the early 80’s the industry was ready to welcome the lawyers. Everything about the contractual scene seemed to be ready for them, there was a proliferation of contract and sub-contract documents of all shapes and sizes and only the Joint Contract Tribunal documents had, in the main, been
“tried and tested”. Case law already abounded, but there was little or nothing
‘tried’ so far as the non-tribunal forms were concerned. In addition the latter part of the 80’s saw a take off in the requirement for Bonds of various types and more latterly the collateral warranty hit the contractual scene.
Gone, finally, were the days when the Quantity Surveyor and the Architect could complete the task of mediation between the feuding parties to the contract, the quasi judicial role of the architect seemed in the main to have slipped quietly away.
To repeat therefore, how then does conflict arise in the modern building contract? The reasons seem to be many, but the following are probably the principal causes of problems.
Firstly, in the traditional type of contractual set up there is now little time for proper consideration to be given in the design stage to provide sufficient detail to permit the contractors to properly assess the implications of design etc upon their programme and thereby upon the ultimate financial outcome.
The effect of the current economic situation has been to cause two significant problems.
1 To cause designers, of whatever persuasion, to restrict the extent of their work at pre-tender stage, thus fairly positively ensuring the failure of SMM7 which, in the main, has just not worked.
2 To cause contractors, be they main or sub-contractors, to be encouraged to submit prices which cannot but cause either financial problems when the final outcome is known, or to bring additional financial muscle to bear on specialist and sub-contractors to reduce margins to a dangerously low level.
Secondly, the training in both the professional and commercial sectors has severe shortcomings. In the professional sector training is concentrated in areas which largely ignore the contractual and management spheres and an architect who has effectively little formal training in the managerial scene, is suddenly expected to control perhaps a multi-million pound contract.
In the commercial scene of construction there are four principal training areas namely:
Architectural Engineering
60 CONSTRUCTION CONFLICT—THE SPECIALIST CONTRACTORS VIEW
Quantity Surveying Accountancy
and with various sub-divisions in each category. There is however too much specialisation in practice. This means that within construction the real leaders tend to emerge from either the engineering or quantity surveying areas.
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Future development
Having witnessed failure from the various systems experienced over previous years it seems likely that the current atmosphere lends itself to the latest and most interesting of contractual systems, that of Construction Management. This area will not however develop without considerable thought and input from the various sides of industry.
In this regard we have to firstly decide from where this new animal, the Construction Manager, is likely to emerge. Certainly the training of such a person will have to be developed to provide the right knowledge and ability to properly administer contracts. It is unlikely that such an administrator would come from the architectural scene and even less likely that he will will be an accountant.
Training needs will have to be thought out very carefully and further thought should be given to the background knowledge that will be necessary for such a task. It may be that the additional skills would be obtained form a second degree.
The knowledge required will encompass, construction, contractual procedures and law relating to building contracts, ability to appreciate the financial implications upon client and contractor, ability to programme and effectively control not only the construction process, but also the total project from initial conception to settlement of the final account. Finally, leadership qualities of a very high degree will be essential in such a person.
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The Contractual position
It would be our view that the contractual position would be one that should exist as between the client and specialist contractors executing the various works packages.
It is essential that the contract between these parties should be fair and even handed, unlike some of the contracts currently imposed upon specialist contractors. Careful attention should be given to the management of disputes throughout the duration of the contract. There is nothing new about such a concept for quantity surveyors in general, and indeed architects and contractors,
have been in many instances practicing Alternate Dispute Resolution without the assistance of the legal profession for many years.
The contract should therefore include means of managing and settling disputes as they arise and it is clear that adjudication should play a significant part in such a contract. It should not be restricted to set-off problems as is presently the situation in various sub-contracts, but it should be enlarged to encompass all the problems that can be envisaged as arising, within a contract, in which adjudication could be of assistance.
Finally, it is essential that the activities relating to adjudication should be designed in such a way as to keep the activities of lawyers to an absolute minimum. For what we are proposing is very akin to an Alternate Dispute Resolution, but if one looks at the present ADR scene it is disturbing to see a predominance of lawyers yet again and what is more likely to ensure the failure of a scheme than that.
62 CONSTRUCTION CONFLICT—THE SPECIALIST CONTRACTORS VIEW