Construction Incident Report of Hospital

Introduction

This report looks at incidents that have occurred on a project to extend and refurbish a cancer centre at a North-West Hospital.

Assumptions

With sectional completion dates, it is taken section cannot commence until the previous section has been completed (Chappell, 2011), with all the incidents relating to section 1.

The contractor has issued their master programme as clause 2.9.1.2 of the contract, this programme is not contractually binding but for reference purposes only (Out-law, 2013).

Incidents

Overhead Cable

The overhead cable diversion works do not form part of the contract (Chappell, 2014), clause 2.7.2 of the contract allows the client to undertake works not part of the contract with permission of the contractor and that permission is not to be unreasonable refused (Chappell 2014).

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Clause 2.27.1 requires the contractor to give notice as soon as they are aware an issue may cause delay (JCT, 2011), this allows the contract administrator to monitor the situation and insure the cable is diverted before any delay occurs (Chappell 2011). Failure to provide notice or late notice may be considered not to comply with clause 2.28.6.1 requiring the use of best endeavours to avoid delay (Chappell 2011).

The client relocated the cable prior to the steel erection date thus no delay to the contract works occurred. The contract administrator’s response notice under clause 2.28.1 it will state that no extension of time is to be granted as no delay materialised.

Access

The tender information did not include the restrictions detailed in the quality manual, visiting site would not have highlighted these issues to the contractor. This omission of information is a relevant event under clause 2.29.7 as it imposes a new impediment on the contractor not included in the contract, this impediment being under the control of the client (Chappell 2014).

However, clause 2.28.6.1 requires the contractor to use best endeavours to prevent delays, and clause 2.28.6.2 requires the contractor to proceed reasonably when a delay occurs (Dunn, 2011).  Knowing after the first meeting of restricted access it is reasonable that the contractor plan work so access is not required on these Thursdays, access for everyone else is still available so works can proceed (Dunn, 2011)

Reduced Hours

The no machine digging between 2pm and 4pm is different as this occurs every day making re-planning difficult for the contractor, the delay only relates to digging operations and no other site activities.

In Amalgamated Building Contractors Ltd v. Waltham Holy Cross Urban District Council [1952] the cause of delays occurred every day, it was held that it was reasonable for the contract administratorto decide on extension of time on completion (ICE 2007).

Delays associated with the other incidents are likely to mean that the adjusted completion date is not affected by this issue.

Drainage Works

Under clause 2.13.2 of the contract the contractor is not responsible for the employer’s design (Dunn, 2011), clauses 2.14.2 and 2.14.3 allow the correction of any errors in the design with corrections treated as a variation (Cartlidge, 2013). Thus, an instruction is to be issued under clause 3.10 to undertake investigation works and the alteration works being instructed under 3.10.2 requesting a quotation based on the revised design (Dunn, 2011).

The investigation works should be valued as clause 5.7.1 daywork rates as the extent of the works would not have been known (Cartlidge, 2013) with the alteration works being valued as clause 5.2.2 and the accepted quotation.

A variation is a relevant event under clause 2.29.1, with the drainage alterations solely in the confines of the site preventing any other works from progressing, clause 2.28.1 of the contract requires the contract administrator to issue a fair and reasonable extension of time. The completion date of section 1 should be adjusted by 5 weeks, this can be done even without notice under clause 2.27.1, London Borough of Merton v Stanley Hugh Leach Ltd. 1985 to prevent time going large (Dunn, 2011).

Cladding

The cladding is an undefined provisional sum, this will mean that the contractor has not allowed for these works in the price or programme (Suttie 2013).  Provisional sums require an instruction from the contract administrator to progress under clause 3.16 and an undefined provisional sum becomes a variation and relevant event under clause 2.29.1 (Brooks et al., 2011).

In Walter Lilly & Co Ltd v Clin [2016] the court stated that when not defined in the contract the client is responsible for providing sufficient information in time to obtain the required planning consents (Tulloch 2016), delay in issuing any instruction due to planning authorities is the responsibility of the client.

When instructed, it should be based on a quotation from the contractor, the works are then valued as clause 5.2.2.

The contract administrator needs to consider whether any delay to the cladding works will mean that the works go beyond the previously adjusted completion date of section 1.

Loss and expense

Clauses 4.23 to 4.26 of the contract cover loss and expense relating to the delays (Chappell 2011).

The current delay is 5 weeks for the drainage and 9 weeks for the cladding, any entitlement to loss or expense must be directly related to the actual timing of the delay (Chappell, 2011). The contractor cannot make an over exaggerated claim for loss as found in C & P Haulage v Middleton (1983) the claim for any loss must be justified (RICS, 2015).

The average weekly costs for the contractor during the delay were £4,609, not all costs were non-productive as the investigation works, diversion works and cladding are valued in the contract, members of the site staff would have been carrying out both other on-site works and preparation works for future activities (Chappell, 2011).

The contractor must minimise loss due to the delay this includes relocating staff and plant where possible (Chappell, 2011), evidence that relocation had not been possible is required to claim for these items as Shore v Horwitz Construction v Canada Ltd (1964) (RICS, 2015)

Actual on-site loss to the contractor following the removal of productive items or those that could be reallocate are as follows: –

The contractor may also claim for office overheads that they cannot divert to new projects during the extra time on-site (Lomas-Clarke, 2014). These losses can be calculated using a formula such as the Emden formula (Lomas-Clarke, 2014) as J F Finnegan v Sheffield County Council (1988) (RICS, 2015)

(Overhead and Profit Percentage) 7% x (Contract Sum) £4,000,000

(Contract Period) 52 Weeks

Equals £5,384 per week x 14-week delay = £75,376 (Lomas-Clarke, 2014)

The total loss and expense claim is £94,444, for all loss and expense claims the contractor must provide evidence (RICS, 2015)

Liquidated Damages

The extension of time granted to section 1 adjusted the completion date for this section, if this adjusted date is not met by the contractor then the liquidated damages stated in the contract for section 1 can be claimed by the client (Murdoch & Hughes, 1993). On completion of each section the liquidated damages no longer apply to that section going forward (Murdoch & Hughes, 1993). Following completion of section 1 section 2 can commence with its original duration that is stated in the contract (Dunn, 2011) if the contractor then fails to meet the adjusted completion date for this section then liquidated damages as stated in the contract can be claimed by the client (Murdoch & Hughes, 1993).

Conclusion

The project has suffered delays which have required adjustment of the contract completion date and allowed a loss an expense claim by the contractor.

The contractor is required to proceed at a reasonable pace and if they do not complete by the adjusted completion date the client will be able to claim liquidated damages as set out in the contract.