Project risk and control

Tender risk Programme and method – Tightness of completion LAD’s Extent of change – Construction method Temporary works Change of sequence Reuse – Ground conditions Measurement and “contractors” risk Who measures, how paid for consequential method-related costs? © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 2

Tender risk cont Subcontractors – Extent of quotation – Qualifications – Relationship with main contractor – Specificity Suppliers and materials – Fixed ? Price – Which rate to use? – Wastage allowance – Small load charges – Muscle? – Time for resend out © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 3

Commercial opportunity An opportunity to make the tender more competitive – Sometimes called “scoping” allowance – Calculated figure which results in a net reduction of the tender total – Usual to have a project commercial strategy Design team ability Client approach Quality of documentation Type of procurement Competitiveness of subcontract market Valuation and variation provisions © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 4

Reduction in tender price © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 5

Contract risk Delay and disruption – Responsibility Delay-impact on overall handover Delay-impact on sequencing – Disruption Direct measurable consequences Can take place without any measurable delay Who is at fault – Contractor – Client – Both – No-one Who determines – Architect – Engineer – Approach of contract © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 6

Delay- some terms Compensable delay – An employer risk event where the contractor is entitled to an extension of time and time- related costs Concurrent or parallel delay – Where there are two or more delays and at least one is an employer risk event and another a contractor risk event Critical delay – Delay to a critical activity which causes delay to overall completion of the project Excusable delay – Where the contractor is relieved from delay damages and where there may be time and money entitlement under the contract Non-excusable delay – Delay caused by the contractor for which there is no relief from delay damages and no time or money entitlement Global delay – Where actual completion exceeds planned completion but individual employer risk events are not identified Local delay – Delay to noncritical activities which do not impact the contract completion date. © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 7

Claims Extension of time awarded – Relevant event/compensation event – No culpable delay – Culpable delay Loss and expense – Records, records, records Evaluation of prolongation expenses – Who and how © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 8

Insolvency Risk rating Definitions Bankruptcy Voluntary agreement Administrative receivership Administration Winding up Voluntary liquidation Compulsory liquidation © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 9

Termination and insolvency The effect of termination – Notices – Impact Subcontractor insolvency – Practical difficulties Programme Evaluation of the work Notional account and final account Employer insolvency – Practical difficulties Recovery Contractual position Subcontract position Contractor insolvency – Options available © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 10

Subcontractor price weighting criteria © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 11

Post auction stage © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 12

Bidding activities © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 13

Popularity? Price only? Reduced buyer/supplier trust Need for completeness of tender information No opportunity to offer comparable materials Little opportunity for integrated procurement Future in a price-oriented market? © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 14