Professional Documents
Culture Documents
Paper 0143V3-0
A project managers guide to development
strategy
Contents
INTRODUCTION
1. Foreword
2. Introduction
APPOINTMENTS
3. The project management appointment
4. Consultant appointments
5. Architect
6. Quantity surveyor
7. Structural engineer
8. Mechanical and electrical services consultants
AGREEMENTS
9. Development partnerships contracts
10. Development/building agreements
11. Joint venture agreements
12. Finance agreements
PROCEDURES
13. Design and specification
14. Construction (Design and Management) Regulations 1994 (CDM)
15. Statutory approvals
16. Statutory powers and agreements
17. Rights over land easements
18. Insurance
19. Specialist subcontractors
(Continued)
A project managers guide to development strategy Paper 0143Page 2
20. The building contract
21. Tenants leasing and occupation
22. Commissioning and management transfer
23. Monitoring and administration
READING LIST
APPENDICES
A. Drafts of consultant appointments
B. Developer/tenant outline specification; Tenants handbook contents;
Letting memorandum; Shopfitting pro forma
C. Project record; Quarterly financial appraisal; Cash flow; Nominated
specialist status report
D. Health and Safety: Construction (Design and Management) Regulations
1994 Project record addendum; Competency and resource enquiries
A project managers guide to development strategy Paper 0143Page 3
Introduction
Contents
1. Foreword
2. Introduction
A project managers guide to development strategy Paper 0143Page 5
1Foreword
On reaching the first floor landing of the grand staircase in the RICS headquarters in
Great George Street, there have been times although I admit not many when,
instead of my steps tracing a path in the direction of the bar, I have turned sharp
right towards the double doors which announce entry to the library. Inside, two short
turns to the left have brought me to a short length of shelving which bears the legend
Project Management . I cannot remember how long ago it was that my eyes first ran
over the titles, but both then and subsequently I have been struck by the
overwhelming bias towards description of organisation systems and network
analyses mostly related to construction activities. Helpful as these works may be,
the project manager of a commercial development has far wider horizons to
encompass.
Since 1970 my career has been solely concerned with project management, and in
recent years, as director of a major development company, I have fortunately been
provided with the opportunity to translate experience into policy. This spawned the
idea of a Guide which would act as a reference work for our in-house project
management team. However, the reality lay dormant until the announcement by the
RICS in 1982 of a Project Management Diploma Course. The Guide was first
researched and created in response to the course requirement for a second year
project, and in 1985 I was pleased to be prompted by CASLE (Commonwealth
Association for Surveying and Land Economy) to revise and extend this work. The
information is necessarily based on features and practice within the UK development
industry, but I believe much of this to be of broad application. I trust the reader will
therefore find benefit even in those chapters which are closely tied to legal doctrine.
For the purpose of narrative style I have assumed that the project manager is
representing the developer, whether as an in-house employee or as an agent, and the
attitudes and observations flow accordingly. I also refer to the employing party,
whether it be corporate or an individual, as the client or developer; the reader should
treat these identities as synonymous.
The term Guide is deliberately chosen. There is no single definitive approach to
project management and consequently my intention has been to provide a
commentary on the major facets affecting commercial development. Nor should it be
regarded as exhaustive. The scope of project management is ever changing, whether
through market fashion or the influence of statute, and there is no shortage of
personal impressions that have been aired as to its content and style. The Guide
inevitably reflects my interpretation, but fundamentally it is a statement of factual
and practical matters encountered in everyday project management.
A project managers guide to development strategy Paper 0143Page 6
2Introduction
In September 1989 the Royal Institution of Chartered Surveyors published the first
professionally authorised Project Management Agreement and Conditions of
Engagement. This was an ambition realised for the RICSs Project Management
(Diploma) Association, which from its inception in 1985 had seen the creation of a
standard form, comparable to those published by the RIBA and ACE for architects
and engineers, as an essential requirement of the property development industry.
Henceforth it would provide a basis of common understanding between clients and
project managers of the role and services to be performed.
However, such a document a contract has necessarily to be objective. It cannot
easily address the more subtle influences which affect the relationship of client and
project management. For example, by what yardstick is the project manager to be
judged? Does the project manager who directs the design and construction of low
quality speculative offices, which let immediately on completion, perform better
than one who gives care and attention to long term maintenance and service charge
costs for a building that does not attract a tenant for two years? Which is more
desirable: a shopping centre where a drive on programme saves two months and
considerable interest charges but has only a few tenants ready for trading, or one
which completes on time with virtually all tenants shop-fitted and ready to receive
the public? The difference in marketing impact is considerable.
These examples may be simplistic but they nonetheless serve to highlight the need to
determine the project managers role. I suggest this can be looked at as one of three
possibilities:
l administration and co-ordination;
l achievement of targets, eg construction cost, completion date, or quality of
specialist accommodation such as computer suite;
l overall success from site acquisition to final letting and occupancy;
and allied to these considerations is the extent of the project managers brief. It may
embrace the entire development process or be limited to only part, such as design
and construction.
The understanding between client and project manager is therefore of vital
significance. This will be influenced in part by the client s own expertise, but it must
be anticipated that in some instances the project manager may have to prepare and
condition his client. He must understand the clients corporate and executive
hierarchy, his decision processes and reporting requirements. There has also to be an
appreciation of the clients role: how did he gain his position, what are his
expectations, and particularly what is his relationship to other principals and how did
this arise? The last point is fundamental to any contact the project manager may
have with third parties when representing the client.
Following from this, the project manager must distinguish the rights, responsibilities
and obligations created by contracts. Development projects attract a plethora of
parties, ground landlords, funding institutions, consultants, contractors and
subcontractors, and statutory authorities to name just the obvious. The project
manager is a pivotal character in fulfilling his client s obligations, covenant by
covenant. He must recognise where action under one contract may have
consequences for another (eg extension of time under the building agreement), and
also distinguish between similar obligations under differing contracts (eg certificate
of practical completion under a building contract, and certificate of practical
completion pursuant to a funding agreement).
A project managers guide to development strategy Paper 0143Page 7
Whilst careful selection of a development team is important to the successful
undertaking of a project, much more can be gained by creation of a positive and
responsible working atmosphere. I appreciate that personalities influence
relationships, but I am firmly of the opinion that the project manager should show
respect for expertise, and recognise too that time, money and supporting information
are resources required in varying measure by the team if they are to perform and
respond effectively. Whilst the role of paymaster and client carries with it a degree
of privilege, it is all too easy amidst the daily pressures and demands for service to
lose sight of the assistance and consideration that can be shown to the team which
will in turn create goodwill and encouragement. I am not suggesting largesse, but
responsibility is a two-way process.
Even small gestures can go a long way. For example survey information
dimensions, levels, ground conditions, etc which usually cost comparatively little,
can be obtained at the preliminary design stage. Not only does this facilitate the
design consultants to be accurate in their schematic drawings, but it also introduces
greater reliability into the engineers foundation assumptions and the quantity
surveyors budget estimates.
Risk is an abstract characteristic, difficult to define but ever present in
development projects. In directing and administering a team whose activities may
run from site acquisition to occupancy, the project manager has a crucial task in
controlling pace and direction. This is perhaps at its most obvious in the early
speculative stages when appraisals and potential commitments demand a supply of
information which can only sensibly be provided by the consultants. The project
manager performs a key service in directing the teams effort to assist the removal of
uncertainty and aid negotiations, whilst preventing unnecessary or premature work
and limiting potentially abortive expenditure. Having passed beyond the speculative
stage, the areas of risk exposure may well increase due to contractual commitments
that have been taken.
It is as important for the project manager to disseminate information as it is for
consultants to produce drawings and Bills of Quantity. A typical example, which I
quote in the Guide, is that the project manager should convey to the consultants
those clauses in every draft contract between the client and a third party, eg Fund,
which affect design and construction of the project. Their comments should be
sought, and those of the contractor if he is on board, and the final covenants
confirmed again to the team once contracts are exchanged.
Design information is fundamental to effective preparation and planning for
construction, yet frequently there is a crusade to achieve the earliest possible start
date with insufficient regard to the quantity or quality of information that will be
available for contractors to tender against, or at the time works start on site. Still,
competitive tenders will be sought and due horror expressed when the contractor
claims for late information or details showing unimagined expression of the outline
concept. Whilst many clients and consultants are alert to this industry trait the
project manager can still provide significant service to his client by analysing project
timescale and ensuring that this is sensibly reflected in the consultant s requirements
for design production, the form of building contract adopted and financial budget
allowances.
The project manager should continually pay regard to the expertise professed by his
development team and for which he has agreed to pay. He is entitled to expect and if
necessary demand service. To do so, however, he must remain aware of the
functions ascribed under relevant contracts or conditions of engagement which can
be quite detailed. He must also understand the interaction required between the
respective design consultants, and in turn with the cost estimating and control
process. The project manager should be explicit as to the service he requires;
appointments worded in generalised terms invariably lead to disputes and requests
for additional fees. The format outlined in the chapter on consultants appointments
has been successfully practised by my company for a number of years.
A project managers guide to development strategy Paper 0143Page 8
The role of the project manager will inevitably involve him in discussion, review
and instruction of matters impinging on the respective consultants specialist
expertise. This is particularly apparent in the chapter on Design and Specification in
which I mention various aspects requiring the project managers attention, but which
clearly overlap the consultants functions. This cannot be avoided; the project
manager should simply take care not to relieve or transgress the consultants
responsibilities.
The project managers usual relationship to a building contract is that of an
estranged party. The employer (client/developer) and contractor will be signatories
and the consultants names will at the very least be recorded. All will commit to
obligations. However, not so the project manager. His role has yet to be formally
recognised and he is therefore in a nebulous position. In practice the project
managers role is understood, but it is important to appreciate the underlying
reservation placed on any instructions he may issue; or the manner in which he deals
with contract advice from the consultants for the benefit of the client, particularly in
respect to claims!
Lastly in this series of role-playing features, I would mention the project managers
duty generally to safeguard his clients interest. This can take many forms, but by
way of instance, he should monitor local press coverage and make regular
inspections beyond site boundaries to ensure no unreasonable overspill effect on
adjoining owners and the public at large. Well maintained hoardings, safety lighting
and courtesy notices present an image which reflects on the client and the entire
development team.
A development project runs through many phases, a number of which will overlap
according to circumstance, but for which there is nonetheless a reasonably
determined sequence. The chapters of this Guide are therefore arranged in the
approximate order of events. It may be that, for any given project, the project
manager will be appointed to control only certain activities, in which event some
interpolation will be needed. However, even in these instances I suspect a review of
other topics will enable the project manager to assist his client beyond his immediate
brief. The Guide does not contain a specific chapter dealing with the clients brief, as
the criteria to be established are substantially reflected under the various headings.
Finally, but I am sure not least in the mind of the consultant project manager, is the
matter of his remuneration. The Project Management Agreement and Conditions of
Engagement deliberately leave open the assessment of fees. Consequently the
project manager must conduct his own assessment and negotiation with the client. In
doing so I suggest full account is taken of my earlier remarks about the alternative
degrees of project management responsibility; if this entails achievement of targets
or some measure of project success, then the role contains a degree of
entrepreneurial risk it is not simply consultancy. In such situations the project
manager must consider whether this merits additional reward. Presumably the
contrary position must be that if the project manager does not achieve his target, he
is potentially liable!
I hope that the reader does not have the misfortune ever to become so distrained
from a client, and that in some measure this Guide will signpost the way to fruitful
and satisfactory service.
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Appointments
Contents
3. The project management appointment
3.1 Structure
3.2 The project
3.3 The services
3.4 Obligations and standards
3.5 Reporting to and obtaining instructions from the client
4. Consultant appointments
4.1 Appointment terms general criteria
5. Architect
5.1 Appointment terms (Appendix A1)
5.2 Memorandum of Agreement
6. Quantity surveyor
6.1 Appointment terms (Appendix A2)
7. Structural engineer
7.1 Appointment terms (Appendix A3)
8. Mechanical and electrical services consultants
8.1 Appointment terms (Appendix A4)
8.2 Memorandum of Agreement
8.3 M & E subcontractor appointment
A project managers guide to development strategy Paper 0143Page 11
3The project management appointment
In the Introduction to this Guide I referred to the client s and project managers
expectations of a project management appointment. It is now time to consider the
contractual expression of these and other matters. For a backdrop, I shall refer to the
RICS Project Management Agreement and Conditions of Engagement (the RICS
Agreement), being a style deliberately drafted for universal application. The RICS
Agreement is accompanied by a Guidance Note which provides advice on the
individual clauses. (The Guidance Note, Memorandum of Agreement between Client
and Project Manager, and Conditions of Engagement for a Professional Project
Manager, can be found in the Code of Practice for Project Management for
Construction and Development .) My purpose in this section is to offer thoughts on
the underlying consideration to this or any other appointment contract.
NB: For non-native English speakers the words appointment and engagement
may be considered interchangeable in this section.
3.1Structure
There are three primary components to an appointment contract:
1. The project specifics, eg the parties, scope of development, duration of
appointment, fee etc.
2. The services to be performed.
3. The obligations and standards by which the contract is to be implemented and
judged.
Whilst there is some inevitable intermingling of these in all contract drafting, I
recommend the project manager always to keep these distinctly in mind when
reviewing or drafting terms. It is a helpful discipline when assessing the balance,
relevance and risk of the contract. The RICS Agreement comprises two parts: the
Memorandum contains the project specifics, and the project management services by
reference to an appendix; the Conditions of Engagement describe the obligations and
standards (although some also appear in the Memorandum).
3.2The project
The parties
It should first be appreciated (as defined under General Conditions in the
Conditions of Engagement), that the Project Manager is the person or company
named in the Memorandum of Agreement. In other words the Project Manager is
often a company with a principal person specifically identified to undertake the
project managers duties and obligations (ref: item 11 in the Memorandum of
Agreement between client and project manager).
Title Institution Agreement
Project
Manager
Royal Institution of
Chartered Surveyors
Memorandum of Agreement between Client and
Project Manager and Conditions of Engagement for a
Professional Project Manager.
A project managers guide to development strategy Paper 0143Page 12
Make clear to your client the form in which you are contracting as an individual,
partnership, primary or subsidiary company? Is a guarantee for your performance on
offer (or perhaps only if requested)?
Equally, be certain of the client entity with whom you are contracting. A corporate
search never goes amiss, and does not have to be disclosed.
Scope of development
The project manager is often first engaged at a time before the scope is sufficiently
certain for accurate contract description. By the same token, it is too soon to confirm
absolutely your contract commitment and services. Temporarily, a provisional
agreement is better.
For the client as well as project manager, it would benefit the ultimate relationship if
the scope is wholly or substantially defined and confirmed in the agreement. A later
disagreement about what was intended, even though the misunderstanding may be
genuine, will prejudice trust.
Duration
Whilst the start of an appointment usually presents no difficulty, careful thought and
anticipation needs to be given to its completion. Project management services
frequently go beyond events associated with the building contract, eg final
certificate. Client and project manager should agree how the end is to be decided.
Is it to be a fixed date come what may, a particular event, or completion of the last
service (not necessarily an obvious point in time)?
Whatever the decision, the duration is important. First for contract certainty, second
for agreeing the fee payment schedule, and third for setting the starting point for
statutory post -contract liability. One consideration in relation to this last is a possible
distortion of dates between that applying under the project manager s appointment
and those derived from the consultants and contractors agreements.
Keep in mind too that the project duration may vary from the original expectation. A
mechanism for adjustment is usually prudent.
Fee
In the United Kingdom there is no Institutional guidance provided for the assessment
of a project management fee. Whilst a market opinion based on percentages has
developed for commercial work, this is unsophisticated. I have not heard of anyone
who could demonstrate facts and figures from a number of sources. Consequently
even if expressed as a percentage of cost, the root calculation of a fee is in the
estimate of the resources, time and effort which the project manager will devote. To
this must be allied the responsibility, authority (and liability?) which the project
manager is to take. I commented on this in the Introduction. Particularly in fee
bidding, it is so easy to be optimistic and assume all will go smoothly. Be prudent.
Productive relationships and jobs well done are usually only achieved through
considerable effort those that turn sour are even harder.
Fees in the UK are usually expressed as a percentage of the building cost. By
implication, this conveys the impression that project management is solely
concerned with design and construction. This is often far from the truth, as I hope
this Guide and the course in general will confirm. Perhaps the worth of your project
management service will be better understood if the fee is calculated and expressed
according to the services to be performed, eg as a measure of development cost.
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3.3The services
The Guidance Note issued with the RICS Agreement offers a comprehensive
summary of services and reflects the broad spectrum that is project management. It
is not, however; nor is it designed to be a mandatory schedule applicable to every
development. The project management organisation owes it to itself and to the client
to scrutinise the schedule, and to add or omit as appropriate for the work anticipated.
For a UK development which qualifies under the CDM Regulations (which will be
most), it may be appropriate to add reference to the project managers
responsibilities in relation to health and safety, possibly even including a role as the
clients agent and/or planning supervisor, if either should be the case.
When considering the services, think also of the external agencies with which you
will relate, eg funding partner, tax adviser, insurance broker etc. Ensure their
identities are known, and, perhaps more importantly, that they each understand and
recognise your role as project manager.
3.4Obligations and standards
Authority
Fundamental! In the context of UK law (but a principle I am sure of equal
importance elsewhere), in what legal capacity is the project manager acting
servant, independent contractor, or agent?
l Servant. An employee subject to client control, eg in-house project manager.
l Independent contractor. Engaged through a contract to complete a specified
task, and enjoys considerable autonomy except as qualified in the contract.
l
Agent. Contains elements of both servant and independent contractor.
Assumes professional competence and an ability to judge when to
instructwith the clients implied agreement, or when first to refer to the client
for decision. The approach to certain situations may be prescribed in the
appointment.
In the UK, the most common relationship is that of agent, as indeed for the RICS
Agreement. It is also comparable to that of the consultants.
It is desirable that the project manager s authority and relationship to the consultants
be clarified in the appointment. The RICS Agreement deals with this in two respects.
First it states that the client will directly appoint the consultants but that the project
manager will be responsible for management of them and that they shall provide the
project manager with information required for the performance of his duties, without
charge to the project manager. Second, the RICS Agreement states that the client
will formally notify the consultants of the authority given to the project manager to
act on his behalf, and also identify any specific items upon which the client s written
consent is to be obtained.
Decisions
Development requires daily decisions, usually modest but sometimes significant.
Few clients expect every item to be reported to them first, but as it is impossible to
anticipate all circumstances, some guidelines are an important safeguard for both
client and project manager. Hence in the RICS Agreement a requirement not to issue
any instruction which would materially vary the project, or increase cost or time to
complete, without the prior consent of the client.
A project managers guide to development strategy Paper 0143Page 14
Too many controls will inhibit the development process; two few and there is a
breeding ground for misunderstandings and mistrust. The happy medium is fostered
as much by demonstrable responsibility by the project manager, eg frequent and
informal contact with the client to discuss current issues, as by specific controls or
periodic formal reports.
Directing the team
To be effective the project managers function should include:
1. Organisation of the team.
2. Instructing the clients brief to the team.
3. Determining strategy.
4. Deciding priorities.
5. Taking decisions and instructing the team.
6. Negotiating and administering consultant appointments, and approving fee
payments.
The client will participate to some degree in most of these. So far as it is practicable
to do so, describe in the appointment the extent of the project managers function.
3.5Reporting to and obtaining instructions from the client
Formal reporting is a healthy discipline, and the style and frequency might
reasonably be expected to be confirmed in the appointment. It is, however, desirable
to retain the flexibility to adjust and develop the reporting format as the development
progresses so that issues of the time can be given due focus and weight, rather than
be shoehorned into a predetermined structure.
A distinction is required between reports for routine decisions (which might be
consigned to a pro-forma arrangement for example) and those for major topics such
as a planning negotiation or construction tender. There might also be periodic
overview reports. The arrangement will vary for each appointment, but the project
manager should approach the matter positively; for instance consider the issues to
which the client is known to attach particular importance. Similarly the nature of the
clients organisation and its internal reporting and decision structure.
The corollary to this is the clients mechanism for instructing the project manager
(and the project team). It will be beneficial if a pre-determined style or format can be
adopted. This removes the potential for misunderstanding. A project team frequently
comprises numerous organisations and individuals, including within the clients
organisation; it is vital to prevent confusion of requirement or approval. The project
manager is the guardian of the clients brief. The decisions which flow from it and
this responsibility should be impressed firmly, positively and continuously.
Furthermore, it should be clearly set out in the project manager s Conditions of
Engagement.
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4Consultant appointments
The role of the traditional design and cost control consultants is supported by four
separate Conditions of Engagement, produced by three different professional
institutions.
Each of the Conditions is written in a style dissimilar to any other, even as between
Agreements 3 and 4A, and the only harmonisation, to quote Agreement 3, is an
attempt by the ACE in their recent editions to link the Services description of the
Engineering disciplines to the work stages described in RIBAs SFA. (The Table
provides a reconciliation of the Consultants services, using the Work Stages of SFA
as a base reference.)
Individually and collectively the Conditions have important shortcomings.
1. Because each of the Conditions is presented in different style, each requires a
fresh attitude when read, to understand and interpret the client/consultant
relationship and responsibilities.
2. The Conditions contain only limited reference to each other, and to the co-
ordination of activities and working interface that must occur within the
consultant team.
3. There are features of typical development consultancy not mentioned.
4. A number of responsibilities are qualified or excluded.
5. The Conditions contain services both within and without the normal
appointment, for which additional fees may be charged.
Nevertheless, each of the Conditions is the recognised conventional basis for
appointing the respective consultants in the UK development industry. Consequently
both clients and project managers should appreciate the confidence factor accorded
by development partners, particularly funding institutions and statutory authorities,
to appointments made using the standard forms.
Architects
Royal Institute of
British Architects
(RIBA)
Standard form of Agreement for
the Appointment of an Architect
(SFA)
Structural Engineers
Association of
Consulting Engineers
(ACE)
Conditions of Engagement
Agreement 3
Mechanical and
Electrical Services
Consultants
Conditions of Engagement
Agreement 4A
Quantity Surveyors
Royal Institution of
Chartered Surveyors
Professional Charges Scales 36
and 37
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To study and negotiate in detail on the Institutions Conditions before each
appointment is, I believe, impractical. At best it is likely to lead to long and tortuous
discussion about interpretation of meanings and extent of responsibilities. Whilst the
importance of these is not to be under -rated, the project manager should, in my view,
accept the services for what they are the recognised Institutional standard and
use his time to better effect in devising conditions which provide a comprehensive
set of appointments.
In the following sections of this chapter I describe how this may be achieved, using a
common proforma basis, and then incorporating the requirements and features of the
project and the particular consultant s role. Appendix A, Consultant Appointments,
contains the resultant standard drafts. The ultimate aim: a total service, for a single
fee.
Example of professional charges (but not always used)
QUANTITY
SURVEYOR
ARCHITECT
STRUCTURAL
ENGINEER
MECHANICAL AND ELECTRICAL
ENGINEER
RICS Scale of
Charges
RIBA SFA 99 ACE Agreement 3 ACE Agreement 4 A
Fees Fees Fees Fees Fees Fees
Scale 36 Work Stage
Full Duties
Pre-design
Abridged
Duties
Performance
Duties
Preliminary Services
A/
B
Inception
and
Feasibility Time
Stage: 1 Time 1 Time 1 Time
Pre-contract Stage: 2 Time 2 Time 2 Time
Basic Services Design
Budget
estimating
C
Outline
proposals
10%
Outline
proposals
15% 3 7% 3 10% 3 15%
(extensive)
Preparation of
tender
documents
D
Scheme
design
25% Scheme design 35% 4 17% 4 25% 4 60%
E Detail design 45%
Detail design and
tender
documentation
60%
5 40% 5 40% 5 66%
(restricted
service)
(very limited
service)
Examination of
tenders
received
F
Production
information
Production
information
85% 6 80% 6 70% 6 70%
G
and Bills of
Quantities 65%
(restricted
service)
(very limited
service)
Construction
50% H
Tender
Action
7 7 7
(very limited
service)
(very limited
service)
Post -contract J
Project
Planning
Measurement Construction stage 8 8 8
Costing variations K
Operations on
site
(restricted
service)
Preparing interim
valuation and final
account
L Completion 98% Works complete 100% 100% 100% 100%
100% Final Account 100%
A project managers guide to development strategy Paper 0143Page 17
I should stress here that the Conditions set out in the drafts are my own choice; the
reader may consider some should be omitted and others added. There is no single
option. For what it is worth, however, I can add that the style shown in Appendix A
has been used by me without exception since 1980. Whilst there have been
amendments to the standard draft since that time, and on every occasion it has been
purposely refined to suit the particular development, the essence has remained the
same. It has been remarkably successful in bringing certainty to the client/consultant
relationship.
Addressing appointment terms early in the life of a development does, in my
experience, promote a better and realistic understanding between the client/project
manager and consultants. Thus I strongly recommend the project manager to issue a
draft of the appointment as soon as possible, even though it may not be appropriate
to define or sign against final terms until some time later, when the character of the
development has unfolded sufficiently for all parties to settle with reasonable
confidence. Prior to signature the draft appointment provides a substantial indicator
of the client/project manager and consultant relationship.
Other than the lead design and cost consultants, the project manager must consider
that further consultants or advisors should be recruited to the team. Some may have a
design bias, such as landscape architects, acoustic consultants or traffic engineers, in
which event the project manager must determine between the direct appointment by
the client or a sub-appointment by main consultants; also whether the main
consultant embraces full design responsibility or only direction and administration of
any sub-appointment, and whether the main consultants fee is deemed to include
payment to the sub-appointee or is separately defined.
Invariably, a development team will include an array of professional advisors whose
roles are essential to the development process and who may have a strong influence
on the direction and performance of the design and cost consultants. Surveyors, real
estate agents and lawyers are the obvious examples, but the list may easily extend to
include others such as accountants and market research analysts. Whether imposed
by the client or recruited by the project manager, the latter must be certain as to his
responsibility for instructing, directing or ensuring overall co-ordination. If he is to
settle terms of appointment, the project manager can often obtain guidance from
relevant institutional recommendations. The service required of these professionals
is usually more easily defined or described and thus a letter of appointment will
often suffice without need for recourse to a specially drafted agreement.
4.1Appointment terms general criteria
The following comments are of general application to the draft Appointments which
appear under Appendix A of this Guide and clause numbers relate accordingly.
1. Project
Although the development title appears at the head of each appointment, this
paragraph should give a brief resume of the work to which the appointment
relates. Example: The alteration and refurbishment of 63/67 Kensington High
Street, to provide retail shops, stores, offices and car park.
2. Client
State the name and address of the client. Be certain: developments are often
carried out by a subsidiary or specially constituted company. The client
named will be the party responsible for payment of fees.
A project managers guide to development strategy Paper 0143Page 18
3. Consultant
Some professional practices operate under more than one style. Check the
practice name (and address) acting as consultant and its corporate credentials!
4. Service
(1)
A further refinement, which the project manager might consider appropriate
to the service description, is to specify the number and/or names of each
consultants personnel assigned to the development, and their role. My own
view is that this can be a double-edged sword as it may demand premature
judgement of personalities and can inhibit flexibility. Nonetheless, I do accept
that it is a means of determining adequate resourcing by consultants.
In commercial development it is essential the consultants function as part of a
team capable of servicing the sale and/or letting activities. Although generally
understood as a principle by consultants, the need for specifically produced
drawings and specifications suited to marketing campaigns and tenancy
agreements can be regarded by them as exceptional. There is no reference at
all in the Institutions standard forms! Hence it is appropriate to include the
commitment in the appointment, even though the precise requirements are
unlikely to be known at the time of signing the appointment agreements. It is
also therefore included within the fee.
Only the RICS Professional Charges refers to claims, and then only in the
context of additional charges by quantity surveyors for investigating the
validity of contractors claims. Bearing in mind that the consultants are
inextricably linked to claims discussion (argument!) and assessment indeed,
lack of design information is probably the most frequent contractors
complaint there seems good reason to make plain that the consultants
service includes advice to the client and project manager, and representation
of the client s interest.
(2)
Before drafting the specific services requirement for a given development, the
project manager should assess the role of each consultant and their inter-
relationship. The architect has traditionally been regarded as the leader of the
consultant team and part four of the RIBAs Standard Form of Agreement
confirms this principle by stating The Architect will have the authority to co-
ordinate and integrate into the overall design the services provided by any
consultant, however employed. A decision on the extent of services to be
performed by the Mechanical and Electrical Services Consultant is
particularly important because of the three alternatives offered in ACE
Agreement 4A. (See Mechanical and Electrical Services Consultant, later in
this paper.) The design of the M & E systems is often substantially
undertaken by specialist subcontractors, and this can influence overall design
co-ordination and supervision responsibilities. The approach for each
development should be clarified when settling service terms.
Development associates (funding institution, local authority, tenants)
frequently engage professional consultants to give independent advice on the
quality of design and administration of the building contract, including
sanction of architects certificates submitted to a fund for reimbursement.
Whilst it is important that there should be no interference in the
responsibilities of the client s consultants in relation to the building contract,
it is also necessary that the consultants recognise and agree the liaison
required with those representing Development Associates.
A project managers guide to development strategy Paper 0143Page 19
Collateral warranties are an established feature of commercial development,
although the subject still gives rise to a considerable amount of vehement
discussion, mainly on account of stories that certain clients and/or their
lawyers are reported to insist on unreasonable conditions. No doubt there is
some foundation for this, but for the project manager endeavouring to strike a
fair balance, help is at hand. The British Property Federation, in association
with the RIBA, RICS and ACE, has produced two standard forms. The first is
as between a financier and consultant(s), and the second is for a purchaser or
tenant and consultant(s). (The RICS considers them equally appropriate for
project managers, adopting the adaptation for quantity surveyors noted in both
standard forms.)
(5)
Consultants are not expected to carry responsibility for tenants fitting-out
contracts but it is reasonable to ask that they observe the works are properly
undertaken to comply with approved drawings and to safeguard the clients
structure and services. The consultants should witness that connections to
landlords services are effective (eg sprinklers, fire and security alarms, no
blockage of drains by careless dumping of screed mix, etc).
(6)
The project manager is well advised to monitor the consultants throughout the
development programme, to be sure the records are compiled, guarantees
documented etc.
5. Copyright
The wording in the draft appointment follows the style included in the BPF
Collateral Warranty. Copyright is retained by the consultant but licence is
given to the client for all reasonable needs.
Tenant works/fittings out. Compiling a Tenants Handbook can be a
substantial and time-consuming exercise; this clause establishes the principle
of consultant co-operation and contribution, and/or the provision of other
information to tenants and their advisors/contractors to assist the preparation
of fitting-out proposals. Occasionally it is necessary to arrange the inclusion
of tenant works in the clients building contract; where necessary the
consultants must provide separate valuations and certificates to enable the
client to obtain reimbursement from the tenant.
As-built record: drawings, operating and maintenance manuals, guarantees,
maintenance contracts. These are essential requirements to the management
of a building, and any future repair, alteration or extension. However, it is
often difficult to collect all the information because it is derived from a
number of sources, and in the case of specialist products such as lifts,
manufacturers can be jealous of releasing information. The aim is therefore to
put the consultants on notice that the information is required and that they are
responsible for preparing or securing it according to their discipline, and
within a time limit.
A project managers guide to development strategy Paper 0143Page 20
6. Fee
The fees set down in the respective Conditions of Engagement are not
mandatory. Indeed the RIBA now only provides information on fee ranges
based on market research of actual fees from amongst its members. The
earlier table shows the cumulative fee due to each consultant according to the
Work Stage completed, as recommended by the respective Conditions of
Engagement.
It is common to all four consulting disciplines to calculate fees as a
percentage of the final account value. For the structural and services
engineers, however, Agreements 3 and 4A set down specific means of
calculating their fee against the value of the works with which they are
particularly associated. The calculations are complex, particularly those for
structural engineers, and seem to offer no definite advantage over the gross
final account method. The latter is certainly easier for administration and
possibly removes any inclination on the part of the engineers to design
expensively, as they have limited influence on the total budget. The overall
fee approach is accepted by most consulting engineers.
Fixed or lump sum fees have a definite attraction for the client and project
manager, because of the certainty they provide. I have also found consultants
willing to agree once they are reassured how this is to be achieved. For them
too it can be a safeguard; it is not unknown for final contract sums to be lower
than the pre-contract forecast or accepted tender. An approach I have found to
work well is to agree a percentage which, once a contract sum is defined, is
applied to that and converted into a fixed fee sum. This has the benefit that
the fee reflects the value of the work described in the building contract, which
is reassuring to the consultant, but removes any suspicion that there is
financial advantage to the consultant in designing or instructing changes
through the contract. When requested, I have agreed a proviso that the
consultant shall receive an additional fee if the client instructs a major change.
This is also discouragement to the client. As client changes can rarely be
anticipated and may be omission or adaptation as much as addition I do
not agree to any more specific wording then this statement of intent. In turn,
however, I regard it as the duty of the project manager to promote to the client
the case for additional fees if instruction falls within the spirit of major
change.
The fee should be recorded as being in payment of all services described in 4
above. If any exceptions are made, as for example in approving tenants
shopfitting proposals, special presentations, or production of a maintenance
manual, these should be specifically noted and the basis of assessment or
agreed fee for these be recorded.
Expenses are usually treated on one of the following bases:
a. as within the aggregate fee, or
b. as a separate and additional percentage of the contract value, or
c. as based on actual costs incurred, evidenced by vouchers, etc.
For reasons of certainty and simplicity of administration, the project
managers preference might be in the same order.
A project managers guide to development strategy Paper 0143Page 21
7. Site personnel
The need for site personnel will vary according to the complexity of design
and construction, and also often according to the preference of the individual
consultant. Costs normally form an extra to fees and are customarily based on
wage and national insurance expenses plus an addition for administration
overheads. It is advisable therefore to establish early with each consultant the
likely need for site personnel, because cost allowances must be made in
development appraisals.
When budgeting for expenditure the project manager should take account of
possible wage or salary increases during the time that site personnel are
employed on a project.
8. Terms of payment
The project manager must distinguish between:
a. the pre-commitment period, ie prior to an unequivocal client
instruction to proceed and complete the project, and
b. the post-commitment period, when the full fee terms (Clauses 6 and 7)
will apply.
During the pre-commitment stage the consultants reward may be based on
either a lump sum for work up to any given stage of design or development
progress or, alternatively, at an agreed monthly rate, subject to an aggregate
limit. In either event, pre-commitment should be defined as including all
expenses and site personnel. All payments made will be on account of the full
fee in the event of the development proceeding. Beware of payments based on
time charges without a ceiling limit; they can result in unpleasant surprises!
Provision should always be made for a proportion of the consultant s fee, say
5%, to be held until issue of the architects final certificate, ie completion of
defects.
9. Suspension or abandonment of project
This clause will usually distinguish between the pre- and post-commitment
periods.
For the pre-commitment period it is preferable to relate the consultants
entitlement to the terms of payment for this same period, but occasionally it is
appropriate to agree different figures.
Once the post -commitment stage is reached, it is conventional to provide that
payment to the consultant will have regard to the relevant Institutional
provisions, unless some other basis is agreed.
A project managers guide to development strategy Paper 0143Page 22
10. Professional indemnity insurance
This clause follows the similar provision contained in the BPF warranty. The
judgement for the project manager is the amount of indemnity. Better that he
proposes, than the alternative of asking the consultant whats available?, but
keep a sense of proportion.
The period will be commensurate with whether the appointment is signed
under hand (6 years) or under seal (12 years).
11. Consultant team, project manager
If the project manager is appointed on the Agreement and Conditions of
Engagement published by the RICS, then it is probably sufficient only to
record the identity of the project manager, and that the consultants will supply
information to him without charge. The Conditions require that the client
shall formally notify the consultants of the authority given to the project
manager.
If, however, the project manager is appointed on some other basis, it is
desirable to have on record his role and responsibilities vis--vis the client and
consultants, in so far as they impinge on the consultants activities.
12. Signature
The draft appointments in Appendix A are presented in the format appropriate
for them to be signed as a Deed (in England and Wales), ie with twelve years
continuing liability following completion of duties. The project manager
should consider whether this is appropriate to the type of development and
duties to be performed. The alternative is to sign under hand, which conveys
six years liability.
The following sections deal with matters related specifically to the respective
appointments of the four primary consultants. The clause numbers again
relate to those contained in the draft appointments set out in Appendix A.
5Architect
5.1Appointment terms (Appendix A1)
4Service
Schedule Two of the SFA lists the services to be provided by the Architect. It begins
with four headings Design Skills, Consulting Services, Building/Sites, and All
Commissions under which are listed services generally applicable to any
appointment. It is intended, however, that the client (project manager) and architect
should indicate those included or deleted, and write in any additions.
Then in similar style, the following 11 Work Stages. In summary these are:
l
Work stage A: Inception and feasibility
Principally concerned with initial analysis of the client s brief but including
appraisal identification of clients requirements and possible constraints of
development. Preparation of studies to enable the client to decide whether to
proceed and to select probable procurement method.
A project managers guide to development strategy Paper 0143Page 23
l Work stage B: Strategic briefing
Preparation of Strategic Brief by, or on behalf of, the client, confirming key
requirements and constraints. Identification of procedures, the organisational
structure and range of consultants and others to be engaged on the project.
l Work stage C: Outline proposals
Prepare outline proposals and approximate construction cost for client
approval. Review of procurement route.
l
Work stage D: Detailed proposals
Develop the design to agree spatial design arrangements, materials and
appearance, coupled with a cost estimate. Also give an indication of possible
building contract start and completion dates. Prepare application for full
planning development control approval.
l Work stage E: Final proposals
Develop detailed design; co-ordinate design work by other consultants,
specialist contractors, etc; obtain quotations; carry out cost checks; prepare
application for building regulations approval.
l
Work stage F: Production information
l Work stage G: Tender documentation
Preparation and collation of tender documentation in sufficient detail to
enable a tender or tenders to be obtained for the construction of the project.
(Solely concerned with the documentation required for tenders. Particularly
useful with D & B or management contracts.)
l
Work stage H: Tender action
Identification and evaluation of potential contractors and/or specialists for the
construction of the project. Obtaining and appraising tenders and submission
of recommendations to the client.
l
Work stage J: Mobilisation
Letting the building contract; appointing the contractor; issuing production
information to the contractor; arranging site handover to the contractor.
l Work stage K: Construction to practical completion
Administration of the building contract to and including practical completion.
Provision to the contractor of further information as and when reasonably
required.
l Work stage L: After practical completion
Administration of the building contract after practical completion. Making
final inspections and settling the final account. (Clearly separated from the
construction phase.)
6Fee
The SFA guide contains information supplied by its members. This is reproduced on
the following pages. As will be seen there are two tables, one for New Works and
the other for Works to Existing Buildings, and each contains five classifications of
building type, details of which are given in Table 3.
Clause 6 should contain a statement of the percentage, lump sum or other fee
payable and that this is in respect of the entire service. Any specific exceptions
should be noted together with the fee basis.
F1: Preparation of production information in sufficient detail to enable a
tender or tenders to be obtained. Application for statutory approvals.
F2: Preparation of further production information required under the building
contract.
A project managers guide to development strategy Paper 0143Page 24
In the case of multi -tenanted buildings involving considerable fitting out, it is
recognised practice that the architect receives a fee for reviewing tenant proposals;
this is usually paid by the tenant. A cost yardstick should be agreed (eg a flat rate per
unit) and stated.
5.2Memorandum of Agreement
SFA contains a draft Memorandum of Agreement for signature by architect and
client. This should be superfluous if the form set out in Appendix A1 is adopted.
TABLE 1 New works Percentage fee bands for classes of buildings
(see Table 3)
Construction cost
bands*
Class 1
%
Class 2
%
Class 3
%
Class 4
%
Class 5
%
50 000 to 75 000 7.207.45 7.758.60
75 000 to 100 000 6.857.20 7.157.75 7.458.10
100 000 to 250 000 6.256.85 6.007.15 6.707.45 7.107.60 7.758.00
250 000 to 500 000 5.906.25 5.606.00 6.256.70 6.757.10 7.507.75
500 000 to 750 000 5.755.90 5.455.60 6.006.25 6.506.75 7.357.50
750 000 to 1 million 5.655.75 5.355.45 5.906.00 6.356.50 7.207.35
1 m to 2.5 million 5.505.65 5.055.35 5.705.90 5.956.35 6.857.20
2.5 m to 5 million 5.505.70 5.705.95 6.306.85
5 m to 7.5 million 5.355.50 5.655.70 6.206.30
7.5 m to 10 million 5.255.35 5.605.65 5.906.20
10 m to 50 million 5.005.25 5.255.60 5.305.90
*Where no figures are given, insufficient data was available
TABLE 2 Works to existing buildings Percentage fee bands for classes
of buildings (see Table 3)
Construction cost
bands*
Class 1
%
Class 2
%
Class 3
%
Class 4
%
Class 5
%
50 000 to 75 000 12.3014.00 11.4012.40
75 000 to 100 000 11.7512.30 10.8011.40 10.6511.15
100 000 to 250 000 10.2011.75 9.6010.80 9.6010.65 10.6011.40 11.4011.90
250 000 to 500 000 9.7010.20 9.359.60 8.959.60 9.8010.60 11.1011.40
500 000 to 750 000 9.509.70 9.309.35 8.608.95 9.409.80 10.7011.10
750 000 to 1 million 9.309.50 9.209.30 8.408.60 9.109.40 10.3010.70
1 m to 2.5 million 7.708.40 8.709.10 9.9010.30
2.5 m to 5 million 7.257.70 8.408.70 9.609.90
5 m to 7.5 million 7.107.25 8.208.40 9.309.60
7.5 m to 10 million 6.907.10 8.108.20 8.909.30
10 m to 50 million 6.206.90 7.408.10 7.408.90
*Where no figures are given, insufficient data was available
A project managers guide to development strategy Paper 0143Page 25
Survey of Fees
TABLE 3Classification of Building Types
Type Class 1 Class 2 Class 3 Class 4 Class 5
Industrial
l
Storage
sheds
l
Speculative
factories and
warehouses
l
Assembly
and machine
workshops
l
Transport
garages
l Purpose-built
factories and
warehouses
Agricultural
l
Barns and
sheds
l
Stables
l
Animal
breeding units
Commercial
l
Speculative
shops
l Surface car
parks
l
Multi-storey
and
underground
car parks
l
Supermarkets
l
Banks
l Purpose-built
shops
l
Office
developments
l Retail
warehouses
l
Garages/
showrooms
l
Department stores
l
Shopping centres
l Food processing units
l
Breweries
l
Telecommunications
and computer
buildings
l
Restaurants
l
Public houses
l
High risk
research and
production
buildings
l
Research and
development
labs
l
Radio, TV
and recording
studios
Community
l
Community
halls
l
Community
centres
l Branch
libraries
l
Ambulance
and fire
stations
l
Bus stations
l
Railway
stations
l
Airports
l
Police stations
l
Prisons
l Postal
buildings
l
Broadcasting
l
Civic centres
l
Churches and
crematoria
l
Specialist libraries
l
Museums and art
galleries
l Magistrates/ County
Courts
l
Theatres
l
Opera houses
l Concert halls
l
Cinemas
l
Crown Courts
Residential
l Dormitory
hostels
l Estate housing
and flats
l
Barracks
l
Sheltered
housing
l
Housing for
single people
l Student
housing
l Parsonages/ manses
l
Apartment blocks
l
Hotels
l
Housing for the
handicapped
l
Housing for the frail
elderly
l Houses and
flats for
individual
clients
Education
l
Primary/
nursery/first
schools
l
Other schools
including middle and
secondary
l
University complexes
l
University
laboratories
Recreation
l
Sports halls
l Squash courts
l
Swimming pools
l Leisure complexes
l
Leisure pools
l Specialised
complexes
Medical/
Social
services
l
Clinics
l
Health Centres
l
General hospitals
l Nursing homes
l
Surgeries
l
Teaching
hospitals
l Hospital
laboratories
l
Dental
surgeries
A project managers guide to development strategy Paper 0143Page 26
6Quantity surveyor
6.1Appointment terms (Appendix A2)
4 Service
6 Fee
Scales 36 and 37 provide for fees to be calculated according to three categories of
work arranged in approximate order of complexity. Speculative standard offices and
other relatively simple forms of construction fall into category C; whilst shopping
centres and offices incorporating detailed tenants requirements are more likely to
fall within category B. Category A relates to specialised buildings such as libraries
and universities.
(1)The RICS publishes two fee scales, Nos 36 and 37. Scale 36 is an inclusive
scale; scale 37 gives an itemised scale of professional charges, breaking the
quantity surveyor service into a number of components, and is only likely to have
relevance in the event of a contract proceeding on the basis of an approximate
Bill of Quantities or Schedules of Rates.
When defining the service it is important to consider whether a Bill of Quantities
is required for the air-conditioning, heating, ventilating and electrical services as,
if undertaken by the quantity surveyor, this generates an additional fee according
to both scales. The ACE Conditions provide that the services consultant can
produce a Bill of Quantities (for an additional fee based on the quantity
surveyors scale) but it is preferable that if a Bill is required this be undertaken
by the quantity surveyor, so as to maintain uniformity of cost control. It also
provides an independent check (by the quantity surveyor) on the adequacy of
information shown by the services engineer. For many commercial projects an
M & E Bill is not necessary and frequently the quantity surveyor provides a
reasonable measure of cost control within the fee.
(8)Capital allowance. In the UK it has been a traditional part of the Governments
fiscal policy to provide tax allowances in the form of an annual writing off of a
proportion of the original construction costs. This does not apply to all forms of
building or every part of construction; but where it does apply can provide a
valuable tax benefit. Plant and machinery is the most frequently cited instance,
but the project manager should also review with the clients tax adviser to secure
the best current advice, and then direct the quantity surveyor.
Tax allowances can usually only be claimed by the party providing the
development finance. Whilst the client will therefore not always gain direct
benefit, it is necessary to retain the service in case this is required by the fund.
(9) Consulting engineers fees. As one means of determining engineering
consultants fees, the ACE Conditions of Engagement require the percentage
scale to be calculated against the respective value of the structural, and
mechanical and electrical services, content of contract. It is usual for the client
and engineer(s) to accept the quantity surveyors assessment.
A project managers guide to development strategy Paper 0143Page 27
Category B
Category C
The additional scale fees, when bills are required for air conditioning, etc are:
The inclusive scale of professional charges provides that the printing of a reasonable
number of Bills of Quantity and other documents, together with normal travelling
and other expenses, are included within the percentage fee.
However, the principle of using standard fee scales is no longer considered
necessary. Non-standard rates or agreed lump sums are now often used in the
UK.
Value of work
Fee
300 000 600 000 16 110 + 3.9% on balance over 300 000
600 000 1 500 000 27 810 + 2.8% on balance over 600 000
1 500 000 3 000 000 53 010 + 2.6% on balance over 1 500 000
3 000 000 6 000 000 92 010 + 2.4% on balance over 3 000 000
over 6 000 000 164 010 + 2.0% on balance over 6 000 000
Value of work
Fee
300 000 600 000 13 800 + 3.3% on balance over 300 000
600 000 1 500 000 23 700 + 2.5% on balance over 600 000
1 500 000 3 000 000 46 200 + 2.2% on balance over 1 500 000
3 000 000 6 000 000 79 200 + 2.0% on balance over 3 000 000
Over 6 000 000 139 200 + 1.6% on balance over 6 000 000
Value of service
Additional fee
Up to 120 000 5.0%
120 000 240 000 6 000 + 4.7% on balance over 120 000
240 000 480 000 11 640 + 4.0% on balance over 240 000
480 000 750 000 21 240 + 3.6% on balance over 480 000
750 000 1 000 000 30 960 + 3.0% on balance over 750 000
1 000 000 4 000 000 38 460 + 2.7% on balance over 1 000 000
Over 4 000 000 119 460 + 2.4% on balance over 4 000 000
A project managers guide to development strategy Paper 0143Page 28
7Structural engineer
7.1Appointment terms (Appendix A3)
The Association of Consulting Engineers is the presiding body which publishes
Terms and Conditions of Engagement for Structural Engineering Services . Those
for the structural engineer are contained in a booklet titled ACE Conditions of
Engagement, Agreement 3 for Structural Engineering work where an Architect is
appointed by the Client Harmonised with Architects Appointment.
4 Service
6 Fee
Agreement 3 (Clause 10) recognises four alternative methods of payment.
a. Calculated upon the cost of the project
b. Calculated upon the cost of the works
c. As a lump sum
d. On a time basis.
According to Agreement 3, Project may be taken to mean the total contract sum,
whilst Works are said to mean that part of the project for which the client has
engaged the engineer to provide professional services!
(1)Following the lead of the RIBA, Agreement 3 describes the normal service
under a sequence of work stages approximating to those set out in Architects
Appointment. (NB: Although Architects Appointment was superseded by
SFA in June 1992, the Work Stages remain the same in principle.)
Whilst the nature of the service under each heading is described, there is only
minimal reference to the features of the development which the structural
engineer is to design or supervise. Consequently the project manager should
define any particular matters for which the engineer is responsible, as indicated
in the draft (Appendix A3).
Clause 7 of Agreement 3 describes a number of additional services (not included
in the normal service) for which payment is on a time basis. Seldom will any of
the additional services be required, but for a large complex development this
section should be reviewed. If any additional service is needed, it is preferable
that payment be absorbed in the principal fee calculation rather than left for
assessment on a time basis as provided in Agreement 3.
Adjacent properties. In establishing the structural engineers brief, it is
particularly important to consider the need for involvement with properties that
are to be retained either within or outside the development site. If the stability or
structural condition of such properties may be affected, the structural engineer
can be instructed to monitor their condition and represent and/or negotiate with
any third parties concerned.
Ground investigation. A ground investigation is invariably required for
development work, and will normally be undertaken by a specialist company to
the direction of the structural engineer.
(6) Record drawings. As-built drawings are listed by Agreement 3 under Clause 7.
Additional Services (time charge!). Engineers drawings are vital to the long
term ownership of a building, and possible future alterations or refurbishment.
A project managers guide to development strategy Paper 0143Page 29
Agreement 3 goes on to describe a complex formula and graph for determining fees
based on the cost of the Works ; too complex to attempt a precis here. I earnestly
commend every project manager to alternatives (a) or (c), for the reasons mentioned
earlier under General Criteria, which seem equally to be appreciated by structural
engineers.
The ACE Conditions provide for expenses to be reimbursed at cost. A fixed lump
sum limit or adjustment in the fee percentage provides greater budgetary certainty.
7 Resident Engineer
Agreement 3 stipulates that the client shall reimburse all salary and wage payments
paid by the consultants to site staff, plus a percentage to be agreed for head office
overheads and administration. Reasonable in principle, but beware the salary
increase(s) part way through the job which blows the budget allowance! Better to
agree a fixed gross monthly sum, with an aggregate upper limit.
Memorandum of Agreement. Agreement 3 contains a Memorandum of Agreement
to be signed by the client and consultant recording the engagement and terms of
payment. This should be superfluous if the form set out in Appendix A3 is adopted.
8Mechanical and electrical services
consultant
8.1Appointment terms (Appendix A4)
4 Service
(1)Mechanical and Electrical Services Consultants are commonly appointed under
the Association of Consultant Engineers Conditions of Engagement Agreement
4A. This provides three alternative bases of appointment, known as Full duties,
Abridged duties and Performance duties. (See also M & E Subcontractor
Appointment, below). This is a vital early decision. It affects the extent to which
the design of the services is on a comparable level with architecture and
structure; it also significantly influences the time when the services subcontractor
must be appointed. See Sequence below.
Agreement 4A specifies in detail the work programme for each form of duty. The
respective programmes are divided into eight stages, which are intended to match
the RIBA work stages.
Unless stated otherwise, the Full and Abridged duties provide for the consultant
to produce a Bill of Quantities (for which an additional fee based on the quantity
surveyor scale is payable). A Bill of Quantities for the M & E services is
infrequently required, but, when it is, it is usually preferable for it to be prepared
by the quantity surveyor. This acts as a check on the quality of information
produced by the consultant and assures uniformity of cost control. By virtue of
other provisions in Agreement 4A, the services consultant still retains
responsibilities for providing budgetary advice and account checking.
A project managers guide to development strategy Paper 0143Page 30
6 Fee
Agreement 4A contains three graphs for calculating the fee according to each type of
duty, but interpretation requires (in the UK) knowledge of the output price index
produced quarterly by the Department of the Environment. The cost of works,
against which the scale fee is then applied, is the value of the specialist subcontract
together with some additions for attendant builders work, and to this aggregate
figure there is a further 15% to cover profit and preliminaries. When assessing fees
on the scale basis, be sure not to overlook the value of these additions.
The fee arrangements are further complicated by a series of notes at the side of the
work programme for each type of duty, indicating that many of the items in the work
stages are subject to other forms of payment time charge, supplementary scale, and
quantity surveyor scale. In particular, stages 1 and 2 (pre-design work) are entirely
on a time charge unless otherwise stated. It is therefore preferable clearly to record
that the consultant s fee will be based solely on the scale or otherwise agreed fee,
and will be in respect of all the responsibilities listed in the work plan (except
perhaps Bill of Quantities) unless specific exceptions are made and stated.
Fortunately, services consultants, like other disciplines, are happy to work on either
a lump sum fee or a percentage fee of the total building contract. As a general
indication, a fee for Full duties assessed on the total contract value is likely to rest
between 2% and 2.7% depending upon the size, complexity and value of the M & E
services and building contract.
Expenses. According to Agreement 4A, the consultant will be entitled to
reimbursement of expenses in addition to the scale fee. A percentage fee inclusive of
expenses, or a lump sum, are more positive alternatives.
Even when a consultant is appointed to Full duties, the subcontractor will have to
produce installation drawings, which Agreement 4A describes as drawings
based on the tender drawings and/or co-ordination drawings (by the consultant)
showing details of the subcontractors proposals for the execution of the works.
The drawings will be in such detail as to enable the works to be installed.
Separate to the detailed list of duties given for the three principal services,
Agreement 4A schedules a number of optional Additional duties. It therefore
requires a laborious cross check to establish what is automatically included in the
appointment, and which of these further duties may be required for a particular
project. Most consultants recognise this problem and are willing to take a broad
view, hence the wording in the draft Appointment. Although Agreement 4A
requires the M & E consultant to carry out commissioning and testing
procedures, to inspect the works on completion and record any defects, there is
no mention of certification to support the architects Certificate of Practical
Completion. Given the significance of the consultants role, it is desirable that
there should be a clear contractual record of acceptance, and hence the provision
in paragraph 4.1.3.
Agreement 4A contains an Appendix describing the engineering services and
equipment included in the consultant s appointment; a copy is reproduced in the
following pages.
(6)Record drawings. Both Full and Abridged duties provide in the scale fee for the
consultant to receive and examine, on completion of the work, copies of record
drawings, operating instructions and maintenance schedules prepared by the sub-
contractor and deliver same to the client . However, if responsibility for
producing this information is placed on the consultant then, unless otherwise
stated, an additional time charge fee is payable.
A project managers guide to development strategy Paper 0143Page 31
7 Resident Services Engineer
Similar observations apply as for the Resident Structural Engineer (above).
8.2Memorandum of Agreement
Agreement 4A includes a Memorandum of Agreement to be completed and signed
by the consultant and client. This should be superfluous if the form set out in
Appendix A4 is adopted.
8.3M & E subcontractor appointment
In reviewing the appropriate appointment basis for the consultant (ie Full, Abridged
or Performance Duties), the project manager must take into account the service
which will in consequence be required from the M & E subcontractor.
Simplistically, the distinction may be described as the extent to which the consultant
and subcontractor are respectively responsible for producing the M & E designs
and it should be acknowledged here that many reputable M & E subcontractors have
competent design teams capable of operating from the concept design stage
onwards.
The primary considerations for the project manager are:
l The degree of comparability required in the respective consultant s design
responsibilities.
l The complexity/simplicity of the M & E installation.
l The degree of co-ordination/integration necessary between the M & E designs
and the architectural/structural disciplines during the pre-contract design
stage; therefore the timing and selection method by which the subcontractor is
to be appointed.
l The extent of tender competition required and the certainty of design and
price that is to be embodied.
l The degree of consultant verification of the M & E subcontractors design,
on-site workmanship, variations, commissioning, snagging and maintenance
manuals.
A project managers guide to development strategy Paper 0143Page 32
SEQUENCE OF WORK STAGES
(RIBA PLAN OF WORK AND ACE AGREEMENT 4A)
RIBA
PLAN OF WORK
ACE
AGREEMENT 4A
Work
stage
Title
APPENDIX
1
APPENDIX
2
APPENDIX
3
Work stage
A
Inception &
Feasibility
1
PRE-DESIGN
B
Strategic Briefing
2
C Outline Proposals 3
DESIGN
D
Detailed Proposals
4
E
Final Proposals
5
F
Production
Information
6
G
Tender
Documentation
See listed duties
7
CONSTRUCTION
H
Tender Action
J
Mobilisation
See listed duties 8 K
Construction to
Practical Completion
L
After Practical
Completion
INTENDED HARMONISATION
A project managers guide to development strategy Paper 0143Page 33
Agreements
Contents
9. Development partnerships contracts
10. Development/building agreements
10.1 Approved plans, elevations and specifications
10.2 Definitions
10.3 Demolition/site clearance/services diversions
10.4 New main services
10.5 Consultants
10.6 Programme
10.7 Delays during building contract
10.8 Multi -phase development
10.9 Insurance
10.10 Building contract
10.11 Ground landlords right to enter on site during building construction
10.12 Progress report to ground landlord
10.14 Archaeological finds
10.15 Site hoardings
10.16 Developers boards
10.17 Works for third parties
10.18 Leasing to tenants
10.19 Tenants shopfitting
10.20 Displaced traders
10.21 Local authority obligations
10.22 Site access
10.23 Completion certificate
10.24 Development outlay
10.25 Arbitration clause
10.26 Example of development agreement Process analysis
11. Joint venture agreements
11.1 Definitions
11.2 The company
12. Finance agreements
12.1 Approved drawings and specifications
12.2 Working drawings, services installation drawings, etc
12.3 Consultants appointments
12.4 Building contract
12.5 Deleterious building materials
12.6 Contract administration
12.7 Development outlay/developers calldown
12.8 Completion certificate
12.9 Tenants
12.10 Record drawings and manuals
12.11 Finance provisions
12.12 Reflection
10.13
Developer:
Banks:
Banks Representatives:
Employers Agent:
Developer: will keep the Owner informed of the progress and any material
problems or delays affecting the Development Works, the Fitting out Works
and/or the Hotel Moveable Items 5.1
Developer: will keep the Owner furnished throughout with a complete set of
Design Documents as amended and revised MDev 3.5
Owner: any extension to building contract caused by act default or
omission of owner will extend time for completion 1.2
Developer remains responsible notwithstanding approvals etc given by Owner or
Owners PM re Design Documents, Development or Fitting Out Works MDev 11.2
Standard for Club Rooms and Junior Suites: ...........................................
Standards for all other internal areas inc bedrooms: ...........................................
A project managers guide to development strategy Paper 0143Page 49
CVariations
DRestaurant & Bar
Owner serves Owners Request for:
(a)Owners Development Works Variation
(b)Owners Fitting Out Variation
(c)Owners Moveable Items Variation 3.1
10 days 10 days
Owner: accepts in writing Owner: fails to accept
Developer: implements
Developer: makes written
demand
for costs of preparing
estimate/quote
21 days
Owner: aggregate of
estimate/quotes not paid for
exceeds 200K, owner
deposits total with Bank
3.1.9
Owner: pays costs 3.1.4
Before 9 months before access date
Owner: serves notice to exclude No notice served
Restaurant & Bar excluded Developer: responsible for fitting out Restaurant
& Bar 3.1.10.3 and bears whole cost of provision
3.1.10.5
Contract price reduced by .........
A project managers guide to development strategy Paper 0143Page 50
ENotification of Practical Completion
FDefects
Developer: gives notice to Owner & notice to
Banks Representatives of pending issue of
statement of sectional or Practical Completion
Owner:
Owners Project Manager:
Banks Representatives:
may make representations to Employers Agent as to whether Statement should be
issued or what qualification should be made 7.2 Employers Agent not to be fettered
from issuing such Statement at such time as it thinks fit 7.3
Date of Practical
Completion
12 months
Employers Agent: includes such defects in schedule of defects 8.1.3
Under building contract Main Contractor rectifies defects
8 working weeks
Hotel Operating/Occupancy
Certificate as ......
2 working days
Note: the Statement of Practical Completion and
Certificate of Operability should be coincident
to avoid liquidated damages liability of
Developer to Owner
10 working days
Dispute: referred to Fellow of RICS acting as an
expert 14.2
9 months
50 m
2
Accommodation specified in ......
3 months
4 weeks
Two bedrooms
2 weeks
Back of House
Offices
2 weeks
Kitchens
2 weeks
Statement of Practical Completion
Potential period for which Developer at risk for liquidated damages
Certificate of Operability
1.Introduction
The Construction (Design and Management)
Regulations 1994 (CDM) were placed before
Parliament on 10th January 1995 and, subject to
transitional provisions, are effective from 31st March
1995.
CDM gives a new prominence to health and safety in
construction projects. The Regulations apply to most
construction projects and everyone associated with
them. Those involved in projects must now rethink
their approach to ensure that health and safety issues
are properly taken into account from the outset and
then co-ordinated and effectively managed throughout
the construction process.
Defined roles of planning supervisor and principal
contractor have been created and the client is under a
specific duty to ensure that these are duly appointed
for each project. He is under a further duty to ensure
that they, and any designer also appointed, are
sufficiently competent and resourced to enable the
project to be carried out with regard to health and
safety. The main duties placed upon the client, the
planning supervisor, the principal contractor and the
designer are set out in summary form in Table A.
The task of policing CDM is given to the Health &
Safety Executive (HSE). There are various
sanctions for breaches of CDM, including in certain
circumstances unlimited fines. It is important that
those involved in the construction industry understand
what they need to do under CDM in order to discharge
their duties.
To act as a guide, HSE is due shortly to publish an
Approved Code of Practice (ACOP). The ACOP
will give detailed guidance on, for example, what
needs to be included in the health and safety plan and
ultimately in the health and safety file.
This Briefing Note is a short guide to CDM and
comments briefly on its impact and effect, looking at
the duties and obligations imposed by it and how it is
likely to affect standard construction documentation.
2.How CDM operates
(a) When does CDM apply?
l CDM will generally apply to construction work
which is notifiable, ie lasts for more than 30 days
or will involve more than 500 person days of
work.
l CDM also applies to non-notifiable work which
involves five people or more on site at any one
time.
l Where demolition or dismantling works are
taking place, CDM applies regardless of the
length of time or the number of workers.
l CDM will apply to any design work no matter
how long the work lasts and how many workers
are involved on site.
l Where work is being carried out by domestic
householders, CDM will not apply, so long as the
residence is not being used in connection with a
trade or business. However, the requirements on
designers and for the project to be notified will
apply.
l If there is any doubt as to whether CDM applies,
you should contact your nearest HSE area office.
(b) Construction Work
This term has been widely defined by CDM. It means
any building and engineering work and includes:
l site clearance, investigation and excavation and
foundation work,
l new build and commissioning,
l conversion, alterations or fitting out,
l renovation and repair,
l dismantling and demolition,
l upkeep and maintenance,
l assembly of prefabricated elements to form a
structure or disassembly of the same,
l cleaning work where this involves high pressure
systems or corrosive or toxic substances, or
involves cleaning windows or translucent walls or
roofs where there is a danger of falling more than
two metres,
l installation, maintenance and removal of
mechanical and electrical, telecommunications or
computer equipment which is normally fixed to a
structure; the installation of compressed air or
other gases, and
l the installation, commissioning or demolition of
manufacturing plant where there is a possibility of
falling more than two metres.
(c) The Client
Client for the purposes of CDM means any person for
whom a project which includes construction work is
carried out, whether by a third party or in-house.
There can be more than one client for any particular
project. Where there are a number of clients, they are
at liberty to elect one of their number, or his agent, to
take the legal responsibilities imposed by CDM on
behalf of them all.
Where a project is being constructed by a developer
for the benefit of a private client who will occupy the
building as his residence, the developer is treated as a
client and not the future occupier.
This Briefing Note has been prepared by Kevin J Greene, a construction law partner in the firm
of Messrs Nicholson Graham & Jones incorporating Brecher & Co
A project managers guide to development strategy Paper 0143Page 85
Briefing Note
Plan fee
Inspection fee