Commercial Clients and Building Projects
For most commercial clients who engage in construction contracts to develop their business, the importance and value of having an adviser, who is not part of the project team, and who can remain objective, is very important and cannot be overstated. Often it is missed entirely.
It is common for firms of surveyors to offer business consultancy services which go way beyond their professional training. Where these firms offer a turnkey solution to a building project, the commercial client is easily reassured but in danger of not examining each aspect of the project objectively and so becomes carried away with the belief that their best interests are all being looked after, and all angles are covered.
Construction contract procurement does require independent advice. This ensures that the correct contractual structures are put in place, and all tender responses are scrutinised in a methodical and objective way. This is important to ensure the building works and a valuation of them is closely monitored.
Once the contract is signed and works begin, the commercial client still needs to scrutinise the contract administration work that is being carried out. As construction contracts are extensive and technical, having an objective adviser will help the client make the right decisions and address at an early stage, any contractual management shortcomings.
Some would say that this is an unnecessary expense as the role is already taken on by the contract administrator appointed by the client. We do not think that is correct. In our view, having an independent objective adviser will identify pitfalls, so any mistakes can be avoided. The cost spotting potential for mistakes will be a fraction of the cost of remedying defective works that are only identified as the project nears completion, leading to remedial work overspend and delayed completion.
When it comes to differences of opinion and matters that can give rise to a dispute it pays dividends to have an effective dispute resolution clause, and that the purpose and effect of the clause is understood. In too many cases, dispute resolution options are not properly considered, with the result that when good ones are needed, they are not available.
Case Study: Consumer clients and building projects:
The inability of consumer clients engaged in building works or buying a new build house off-plan to objectively assess risk is remarkable.
In these situations, the goal of a new look house with exciting alterations and extensions or the prospect of a new home bought off-plan, somehow completely removes any form of objective analysis of the risks being taken by clients.
Having a professional adviser to scrutinise contracts should be a given, but far too often clients try to “wing it” with disastrous effects.
Consumers are far too ready to pay sums on account of works to be carried out without realising the risks they are taking, and without understanding that if the works are not fit for purpose and the builder goes “bust”, then they will not get paid. Advice should be taken early on.