Posts Tagged 'Retention monies'

So where is the future for us?

Let’s start with Professor Brain Cox and his wonderful programme on Sunday evenings Wonders of  the Solar System, all burnt up in the sun is the most likely outcome but that’s billions and billions and billions (or whatever he says)…….of years away.

By the way is it just me or does he send you to sleep too, and you have to watch the programme again to understand it?

Well enough of that, we did our annual State of The Economy Survey again this year and one of the questions we posed was where do you think the work is going to come from this year?

And without giving names of anyone away, I thought you all might like to see the most popular answers we received and whether you agree with them or not, so here goes…..

1. High End Residential –and/or high income private clients with money to invest
2. Refurbishment – all sectors
3. Retail
4. Schools, including Free schools
5. Student accommodation
6. Hotels
7. New office developments
8. Health
9. Regeneration of brownfiled sites
10. Infrastructure – power, rail, utilities

Now if any of these rock your boat or are in an area you were or were not thinking about you’ve got some like minded people out there. The wittiest comment of them all however I liked was ‘Finding oil!’

All I can say is the very best of luck for what is going to be another challenging time ahead for everyone associated with the construction sector

If you missed the link above full details are on our website

Pitfalls of Design and Build

I was reading the article by Rudi Klein in building magazine at the weekend (yes I still subscribe and get a paper version, old fashioned I know!) and his article HOW TO STAY OUT OF HELL about design risk.

Have to say he has a point doesn’t he? Why as an industry do we separate the design process from construction? As he says any manufacturer worth his salt wouldn’t separate design from manufacture.

But don’t you find that the design and build contract process is being abused?

Here’s a recent example to mull over….

Contractor calls our office: ‘I’ve got a potential contractual problem on a job, can you help me please?’

GFP: Well I’d like to think we can, tell me more….

Contractor: I’m trying to handover a job, and I’m having difficulties because the building was originally built in the wrong place!

GFP: Oh, now that is a problem, tell me more….

Contractor: You see we set the building out as the drawings and documents, all checked out ok on site, and then we looked at the proximity of some overhead power lines to where the imaginary building (as of then) would have been built. And well quite frankly we thought it wasn’t right.

GFP: What did you do? Tell me more……

Contractor: Well we sort advice from the design team who checked everything over and we were told we had built it in the right place. All as per the contract drawings. Except that nobody had considered the implications of the overhead power lines and the proximity to the building.

GFP: What happened next then? Tell me more….

Contractor: The design team worked out that we had to move the building. So we were instructed by way of a priced and agreed variation under the contract to carry out some remedial works so the building could be built in a different position (now not as the approved planning drawings). This we did and finished the building, albeit a bit later than scheduled. But as it turns out it was only relatively minor works to what we thought could have been a major problem. So we all felt quite pleased we’d come up with a good solution.

GFP So what’s the problem then? Tell me more….

Contractor: The client says it’s all our fault and won’t accept the building.

GFP: Why is that I don’t understand? Tell me more….

Contractor: I forgot to tell you it’s a design and build contract, the design team have been novated to us and as far as the client is concerned we are responsible for all of the design and the risk that goes with it.

GFP: Now I understand, I’m afraid we’ll have to look at what you’ve signed up to. Send us over some documents……

So who is right, and is it the Contractors fault?

To be continued……

Quiz answers

And the answers to our quiz were:

  1. Grant Shapps
  2. Aecom
  3. Joseph Cyril Bamford
  4. Spackle
  5. The Design Council
  6. Keep on Roking!
  7. Conservation of fuel and power
  8. Paul Morrell
  9. Banner
  10.  The Shard

Christmas Quiz

As it’s nearly the end of the year I thought we could have a bit of fun.

So here are some questions for you.

Email me your answers and I’ll consider giving out a prize to the fastest, and the funniest answers I receive.

I’ll publish the answers before the New Year…have fun and enjoy the holiday period

  1. What’s the name of the Minister of state for Housing?
  2. What was the name of the company that took over Davis Langdon?
  3. What do the letters JCB stand for?
  4. This term came to be both a noun and a verb, but it is actually a trademark for a powder or paste designed to fill cracks and holes in interior walls, ceilings and partitions, what is it?
  5. Cabe the government design quango has been saved this year by which organisation?
  6. What did Garvis Snook say in his parting email to his redundant staff?
  7. Part L1A of the building regulations came into force in October 2010, but what does part L stand for?
  8. What’s the name of the governments Construction Advisor?
  9. Apart from Connaught and ROK another household named contractor went in June of this year, can you name them?
  10. What is the tallest building in London?

I blame the Government…

Well Sir John Egan does, so read on….

But first

Here’s an unsurprising statistic.….one in eight UK Construction firms are pricing jobs with no profit in.

Come on, who on earth paid KPMG to come up with this piece of earth shattering news! Oh I know its just KPMG wanting to drum up more business for themselves.

For those of us old enough and been around the game long enough will know what really goes on, and its nothing new to find this out given that we are in one of the toughest periods construction has ever known…..or has it?

On this theme a thank you to Keith Kelly @pagroupuk via twitter who drew my attention to a bbc article online about deconstructing the economy. Makes for some fascinating reading. Statistics I ask you. Duh.

Anyway who out there doesn’t know what contractors get up to when things get tough and they are scrambling around for work and every last penny they can find. And who suffers in the long run as a result? Well everyone really. Don’t they?

How can we change this circus we are in? I’m afraid I haven’t got the easy answer, I wish I had. Everyone has a role to play from the employer, professional advisers, contractors, subcontractors and suppliers alike.

Dear old Sir Michael Latham and Sir John Egan and their review Rethinking Construction of our industry from 1998 recommended many things but heres two of them repeated again:

  • ’The industry must replace competitive tendering with long term relationships based on clear measurement of performance and sustained improvements in quality and efficiency.’
  • ‘The public sector has a vital role to play in leading development of a more sophisticated and demanding customer base for construction. The task force invites the government to commit itself to leading public sector bodies towards the goal of becoming best practice clients seeking seeking improvements in efficiency and quality through the methods that we have proposed.’

Sir John Egan was asked 10 years on by building magazine were we on track? Part of his interesting reply (although in the context of the OFT investigation at the time) ‘In 1998 we said the government was a relatively poor client. This is still the case.’

So perhaps that’s the answer we’ve got to wait for the government to slap us into shape??? Think again……..

If you want to re-read the full original report heres the link

Notices in Writing

As its getting nearer to Christmas I thought I’d trot out one or two of our favourite old chestnuts…

It’s a very old one……

Get your notices in writing!

If I had a pound for every time we’ve had to tell a contractor or subcontractor did you send them a notice under the contract that you were in delay, that it was a variation, that you haven’t got this vital piece of information…..well, I’d be a rich man and not sitting here on a cold, dark and foggy December night writing this!

It doesn’t have to be anything elaborate, confrontational or quoting the contract clauses verbatim. What it simply has to do is quote the facts of the situation. Record the current position, nothing more, nothing less.


Keep it up-to-date too, tell the other party if things have improved or got worse, have a dialogue you’ll be surprised what it may bring out. If it brings out the worst, well then you know where you stand a lot earlier that if you let matters drift. You could end up with a serious financial penalty that could perhaps have been avoided.

Then why don’t we do it?

Not enough time, afraid of offending the other side, not sure what or how to say it, think you are in the wrong too, or something else? Then pick up the phone and talk to your counterpart, tell them the situation and that you are going to drop them a line as a result recording it. At least they will know its coming.

If you cannot do that then ask me to do it for you, I’d be only too pleased to help!

A relevant case if you are interested in reading more is Steria Limited v Sigma Wireless Communications limited, or have a read of our briefing paper (number 1 on the list, now there’s some irony!)

Letters of Intent and all that….

Now here’s a thing who works on a letter of intent….no one in their right mind would? Surely?

Ah but oh yes we do, and there are lots of you out there doing it.

We did a state of the economy survey at the beginning of this year (we’ll do another one next year) and a massive 75% of respondents said they worked on them…….so what of the pitfalls?

Why do we do it? We haven’t got time……then make time I say, it’s so vitally important to establish the correct contract at the outset.

If you find you really really must, then use them ever so sparingly……make sure that if you do enter into such an agreement that the formal contract is executed as quickly as possible thereafter, and at least before the expiration of any financial cap or time limit you have imposed/agreed to and that you include provisions for ‘what if’ it all goes wrong too.

Otherwise if you fall out…….. you could be asking yourself……
what are the terms
have they been varied
did you do what was agreed
have there been subsequent variations to it
were the variations recorded and agreed
was the original letter of intent revised/amended
if so by whom
did they have the authority to do that
was it sent correctly
did you receive it
have you been paid by the terms
do we pay/charge VAT
did we sign a copy
have we got a copy of the letter
is there a dispute
what mechanism is there to resolve disputes ………..

And then you’ll be asking yourself why on earth did we start on a letter of intent and not get the contract sorted in the first place?

If you wanted some further examples of cases to read when things went wrong then have a read of this! (number 4 on the list)

Happy reading……of your contract that is!

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About Me

I’m now the Managing Director of Mynott Associates Limited my own specialist measurement business. I’ve been in the industry all of my life since I left school. My first job was with Bovis Construction as a management trainee where I trained to become a quantity surveyor. I’ve worked for contractors all through my career, I am FRICS, FCIOB and MCIHT qualified and act as an RICS assessor. I’m also a keen Arsenal supporter having followed them from a young boy

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