8.4.1 This section focuses on how the Edinburgh PPP1 Contract deals with provisions aimed at seeking to ensure the quality of the project and in particular opportunities for the supervision and scrutiny of the construction works.
(i) Supervision of the Works
The Contract does not include an express obligation on ESP to supervise the works, although such an obligation might be implied by other obligations such as the requirement to comply with Good Industry Practice. The Inquiry notes that an express obligation to supervise the construction works is often imposed on other project companies by the terms of comparable contracts.
(ii) Quality Plan
The Contract refers expressly to the need for a Quality Plan and requires ESP to appoint a Project Quality Manager, who was to be 'independent from the Project Management Team' to ensure the effective operation of the quality systems and to review and audit them together with the Council Representative. This would seem a positive attempt to provide a focus on the quality of the project however, no evidence was provided to the Inquiry as to the degree to which this requirement was implemented and whether an independent Project Quality Manager was ever appointed.
(iii) Inspection of the works by the Council
Under the Contract, the Council has a right of access to the Works for the purposes of inspection and attending and tests and investigations.
However, the Contract does not contain a right for the Council to open up the Works where the Council reasonably believes that they may be defective nor does it have any increased monitoring rights in the event that its inspections reveal defects or other issues.
The inclusion of specific clauses of this nature would have strengthened the position of the Council in relation to their rights of inspections of the quality of construction, had there been concerns raised as to the quality of closed up areas such as the walls.
(iv) Collateral Warranties in favour of the Authority from Principal Building Sub-Contractors and Members of the Professional Teams
The Contract does not place an obligation on ESP to procure collateral warranties for principal subcontractors and members of the design team.
In the Inquiry's experience, this is an unusual omission as this was a relatively standard provision in most contracts of this type at the time and was also a standard approach in Design and Build contracts.
Further, there is nothing in the Contract terms that requires details of the appointments of the individual members of the design teams to be provided to the Council. Accordingly, there appears to have been no direct requirement on the part of the City of Edinburgh Council to be informed as to the level of service that was to be provided by the key members of the design teams involved.
In the Inquiry's experience, the architect, structural engineer, etc. can through their undertaking of regular site inspections, and reporting thereof, provide an additional highly valuable check on the quality of construction but only if their appointment with the D&B Contractor provides for this. The inclusion of the provision for collateral warranties would, indirectly at least (as the relevant appointments would also need to have been provided to the Council) have informed the Council as to the level of service that these key members of the design team were required to perform, including any requirement for regular site inspections.
(v) Overview of relevant Contract provisions
In 2001, when the Contract for the PPP1 schools was signed, PPP was still a relatively recent development. A standard form of contract had not yet been produced so, while there was clearly significant replication of clauses from earlier project agreements, there was still significant variation between the finally negotiated terms for each project. In particular, it must be recognised that in the negotiation of any major contract there will be trade-offs and compromises made between the parties.
It should also be noted that the provisions referred to in this section are only beneficial if they are properly implemented and the Council has due processes and resources in place to ensure that this is the case. Unfortunately, due to the passage of time and the departure of many of those involved, it has been difficult for the Inquiry to establish how effectively the provisions of the Contract were actually implemented and the level of quality assurance in relation to these provisions undertaken by the Council during the design and construction processes.