Planning your construction project.
It is never too early in the process to begin considering how you are going to procure and structure the development and the risk profile you are prepared to accept. Some of the things you will need to consider at an early stage include: PLANNING PERMISSION IT goes without saying that you will need to consider whether an application for planning permission is required, and decide where this application needs to fit into your project timetable. Consideration should also be given to how much cost you are willing to incur before you have received a decision on your planning application.
PROCUREMENT STRATEGY EVERY project is different and there is no one-size-fits all strategy for procuring construction works, the route most suitable for your project will depend upon balancing competing interests such as time, cost and quality.
Common procurement routes include design and build (where the contractor is responsible for both design and construction), traditional (the contractor builds to the design provided to him by the developer's consultants), management contracting (a management contractor manages the works and places separate works contracts with individual trade contractors) and construction management (the construction manager arranges for the developer to appoint specialist trade contractors).
There is a commonly held belief the design and build route carries the least risk for the developer, followed by traditional, management contracting and finally construction management, although this is not a hard and fast rule and will depend on several factors, not least the adequacy of the contract governing the parties' relationship. It is important to also bear in mind that often the greater the risk placed on the contractor the higher the price will be to account for that risk.
In terms of the building contract, you will need to decide whether you are using a standard form of contract (the most commonly used are the JCT and NEC forms of contract) and if so which one.
You should also consider whether you require bespoke amendments to those standard forms of contract in order that the contract better suits your needs.
For example the JCT Design and Build Contract is commonly amended so as to create a more robust single point of responsibility for design.
PROFESSIONAL AND DESIGN TEAM THE nature and size of your professional team may be dictated by the procurement route you choose for your project. For example under a design and build route you may decide to produce only outline designs and allow the contractor to produce the detailed design within its contractor's proposals.
Alternatively, under a traditional procurement route you will need to ensure that the design is carried out in full prior to inviting tenders from contractors, thus front loading your design costs before you have been able to test the market for construction costs.
Either way you should consider at the earliest opportunity which consultants you will need to engage and how they are to be structured. It is often best to have the consultant who will be retained to issue certificates and notices under the building contract as the 'lead consultant' to co-ordinate the design team.
It is crucial to ensure that you formalise the appointment of your professional team on terms that protect your position, detail the relevant scope and cost matters and set out appropriate procedures for how the project is to be dealt with.
For example, you may need to cater for novation of certain consultants to the contractor under a design and build route and you may also need to consider whether the provision of collateral warranties to third parties such as funders and tenants will be required, as discussed further below in more detail. Bear in mind that standard form documents and professional body produced appointments will not always be appropriate and may not protect your position fully.
THIRD PARTIES AS alluded to above, there are often many parties with an interest in a construction project that do not fit within the obvious contractual matrix and you may need to consider catering for those parties at an early stage.
For example a funder of a development may require sight of all of the contracts you are seeking to enter into and wish to carry out its own due diligence on the project as a whole, including the cost schedules.
Further, it is likely that a funder will want to create a contractual relationship with key parties to the construction such as the contractor, design team and designing sub-contractors by way of collateral warranties.
Similarly a future tenant or purchaser of the development may require a suite of collateral warranties from the parties outlined above in the event that significant defects are identified at a later date.
Collateral warranties to third parties are easily incorporated into your documents such as professional appointments and the building contract, failure to do so at the outset of your development could cause you great difficulties and increasing costs at a later stage should you require these to be 'retrofitted'.
The phrase "failing to plan is planning to fail" is never more apt than when applied to construction projects and taking advice at the outset of your development may help you avoid costly and time consuming difficulties further down the line.
EVENT | SINTONS, in conjunction with Constructing Excellence in the North East, is holding a construction mock trial. The event will be on Tuesday, October 4, from 5.30pm to 8.30pm, at the Crowne Plaza Newcastle. Prices are PS20 for CENE members, PS40 for non members. To book, contact Leanne McAngus on Leanne@cene.org.uk
Alex Rayner, associate in the construction team, Sintons