Project managment

Developments in the later 1980s

During the 1980s, as competition between civil engineering contractors for jobs in the UK intensified, contractors tended to reduce their margins for profit and risks in order to gain work. Consequently a contractor getting a job with low margins had to protect his position by making sure he billed the promoter for every matter he was entitled to charge for under the contract. However, some contractors developed the practice of submitting claims for extra payment wherever they thought a weakness in the wording of the contract might justify it. They employed quantity surveyors for this purpose, and it was not uncommon for more than a hundred claims of this type to be submitted on a major project.2
The resulting ‘climate of dispute’ that seemed to arise – more particularly on complex building projects than in civil engineering – led to other methods being sought for controlling constructional work. Some promoters thought that the independent Engineer, who had to decide on claims under the ICE or FIDIC conditions of contract, was not being tough enough in rejecting contractors’ claims. But claims would inevitably arise and some have to be paid, especially in cases where a promoter did not allow enough time and money to be spent on site investigations, or who let construction start before being certain of his requirements. The practice of promoters to accept the lowest tendered price on most projects also increased the chance of employing a contractor whose price was so low he needed to use claims to safeguard his precarious financial position on that contract.3

In 1985, in an effort to reduce claims, the UK Department of Transport
(DTp) proposed to deprive the independent Engineer of his role in settling claims under contracts for motorways and trunk roads, and let one of their own staff decide what should be paid. The DTp faced especial difficulties because road building involves much below-ground work and building in earth. Even minor changes in below-ground material from that expected can give rise to large extra costs for the contractor.4 However, due to wide opposition, the DTp did not pursue its original intentions. Instead both the DTp and other public bodies sought to have more say in decisions on claims, such as giving the promoter a right to have his own staff take part in discussions with the contractor on claims, or requiring the Engineer to consult with the promoter on any claim exceeding a given amount.

2Before about 1975 most civil engineering contractors did not employ quantity surveyors. It was only the building industry which used them.
3While a commercial company can place a contract with any contractor it favours a public authority must ‘safeguard the public purse’, and cannot therefore reject the lowest tender without good reason.
But, although an experienced engineer can see when a tender price is perhaps too low, he cannot prove this is bound to cause trouble. Nor can he guarantee that the next lowest tender, if adopted, will be free of trouble over claims.

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