Construction NEC Contracts with Main Contractor & Professionals

International aggregates business project overspend and loss of profit

 

This international aggregates business with an impeccable safety and environmental compliance record was faced with a project overspend in excess of £2million and a loss of profit claim in excess of £1.5 million.

The project was to turn a clay quarry used for producing bricks into a landfill site fit to receive non hazardous waste. Our client had relied throughout on the professional expertise of longstanding geotechnical advisers and project managers from the outset, obtaining an integrated pollution prevention permit, selecting the form of contract and procuring a main contractor.
 

Our investigations established the client's project managers, renowned for geotechnical expertise, had failed to design a site that could store and settle ground and surface water of sufficient purity that it could be discharged into the controlled waterways without causing a pollution incident.
 

The revelations occurred six months into the construction program when the Environment Agency started a prosecution against the client site owner due to a pollution event. This caused all further works to cease while a redesign and further Environment Agency permissions where obtained to avoid all further risk of pollution.
 

Investigations also established that the NEC Option D Target contract, based on bills of quantities, had not been operated by the project manager in accordance with the checks and balances that controlled time, cost and compensation events. The result being that the Main Contractor had been allowed to run the contract on a prime costs basis.
 

Our strategy:

We took action before the final account was agreed, to recover overpayments made to the Main Contractor. Proceedings against the Main Contractor were drafted and used as the basis for a negotiation with the Main Contractor and by negotiation, a settlement was achieved based on a refund and further works to be carried out at a discounted rate.
 

Similarly with the Project Managers, a claim for the excess spends incurred with the Main Contractor as a consequence of the incorrect design, and the loss of profits caused by the need to stop the contract, resulted in the professional indemnity insurers for the Project Managers making a substantial payment at a mediation attended by over fifteen people.

 

The outcome:

The net result was that over a period of five years, the client was able to turn the disastrous project around and achieved a fully compliant and functioning landfill site. Compensation for damages and loss of profit were in excess of £3.5 million plus legal costs.

If you need advice and help with a dispute, contact us today.

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