Engineers Ireland (Cork) New Conditions of Engagement ... Series 2007 1 Public W… · Clause 1...
Transcript of Engineers Ireland (Cork) New Conditions of Engagement ... Series 2007 1 Public W… · Clause 1...
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Engineers Ireland (Cork) New Conditions of Engagement
Kevin Kelly
Rochestown Park Hotel2 October 2007
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Key Features of Conditions of Engagement
• Part of new Capital Works Management Framework
• Same form used throughout public sector
• Fixed price lump sum– For well-defined services– Over a defined period
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Key Features of Conditions of Engagement (cont’d)
• Appointed on basis of quality and price – no fee negotiation
• Focus on fee certainty at all stages– Limited increase for delay– Competitively tendered rates for additional services– Limits on power to issue change orders under works
contract– Fee correction mechanism
• Copyright on design obtainable – for a price• Termination at will – even if project ongoing
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IEI vs Conditions of Engagement
• Lump sum, fixed price
• Restricted authority• Termination at will
• Fixed payment for suspension/termination at will• Copyright/licence to use on multiple projects
• No limit on liability• No net contribution clause
• No consequential loss exclusion
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Clause 1 - Appointment
• Schedules A and B– Core conditions will not change
– Schedules A and B allow for tailoring to particular job
– Schedule B key for pricing job – technical and management services
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Clause 2 - Performance
• Fixed fee covers services in Schedule B. If it is not in the services, it is not in the fee
• Includes all expenses – save for “special disbursements sanctioned in advance by Client” (Clause 9.4-5)
• Standard of care – reasonable skill and care (still room for fitness for purpose but not policy)
• Performance evaluation
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Clause 2 – Performance (cont’d)
• Restrictions on authority under works contract– Individual change orders– Cumulative change orders over 3 month period– ‘causing or contributing to reduction in safety, quality,
usefulness’– Right to management services– Advance consultation about financial assessments– Acceptance/rejection of value engineering proposal
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Clause 2 – Performance (cont’d)
• Liability– Explicit inclusion of “knock on” losses caused to
other parties working on project– Limit of insurance is no limit on liability (NB in
context of Clause 3.6)
– No net contribution clause
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Clause 3 - Transfers
• No assignment or subcontracting without consent
• Novation to private sector
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Clause 4 – Progress, Periods
• Stage Performance Period vs Total Performance Period
• Can only start each stage when Client gives permission
• No LAD for failure to complete within Stage Performance Period – but breach of contract
• Suspension – Whole / partial– Fixed payment (demob/remob/special actions)
• Only if suspended within stage
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Clause 5 – Prolongation
• If all float in programme used up such that delay inevitable – inflation on fee for services from date of overrun – CPI inflation only
– No inflation if delay due to consultant’s breach or “Special Circumstances” – NB delay to project construction contract
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The Three Cs
• Clause 6 - communication
• Clause 7 – co-ordination– What Client has to give you– Obligation as leader/member of design team– “Sign-off” from Client does not relieve responsibility
• Clause 8 – co-operation– Co-operation is a contract obligation– Co-operation does not imply responsibility– Carrot/stick approach
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Clause 9 - Payment
• Scheduled fixed fee plus ‘special disbursements sanctioned in advance’
• Conversion of percentage fee to lump sum –percentage x latest budget figure
• Withholding money – under this or any other contract
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Clause 10 – Client’s Changes
• Must comply with instruction to change services
• Additional services– Increased lump sum fee– Time charges at competitively tendered rates
– Client’s discretion
• Reduction in services - proportionate reduction in lump sum fee
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Clause 11 – Intellectual Property
• Copyright/licence to use• Licence can cover multiple projects
(Schedule A)• No lien on documents for payment
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Clause 12 – Termination• 3 grounds
– for substantial breach (for cause)– for insolvency– at will, even if project continuing
• If for cause – must explain why and what remedial action can be taken by other party
• Sub-consultancy appointments transfer automatically to Client– NB not when termination at will– Collateral warranty required– NB if you are sub-consultant on integrated design team
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Clause 12 – Termination (cont’d)
• Compensation
– Paid fee for work done up to termination
– For cause/insolvency – terminating party entitled to damages
– At will – if project continuing, paid scheduled percentage of fee for unworked services for the Stage in which termination occurs
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Clause 13 – Law
• Comply with all Irish laws
• NB change in law risk passed to Consultant
– arguably an additional service
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Clause 14 – Disputes
• Default is arbitration
• Client can insert alternative if desired (Schedule A)
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Fee Correction Mechanism
• Importance in the public interest of accurate estimating
• Consultant given pre-defined margin of error in producing estimate for construction contract
• If winning bid outside margin of error – over or under – difference between margin of error and actual error deducted from Stage (ii) fee
• E.g., margin of error 10% - winning bid 15% lower than pre-tender estimate – so 5% of Stage (ii) fee deducted
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Fee Correction Mechanism (cont’d)
• 3 “outs” for Consultant
– not due to my contribution
– only partially due to my contribution – only partial reduction in fee
– reasonable and justifiable cause – Client has discretion to waive part or all of reduction
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Engineers Ireland (Cork) New Conditions of Engagement
Kevin Kelly
Rochestown Park Hotel2 October 2007