Specialist Contractors and Design

4.14 The term "specialist contractor" can mean different things to different sections of the industry. Mr Martin Davis, in the Construction Management Forum Report and in his recent lecture to the SPIM Conference (see footnote 20 below), lists specialists as follows:-

4.15 These subdivide into two general categories:-

1. Those, such as curtain walling and lifts, which are basically product orientated, where the design input is responding to a performance specification, and where the skills of the specialist are in the quality, compliance, value for money and delivery of the product.

2. Those which are systems orientated, such as mechanical and electrical engineering services, who either carry out a design from inception, in response to a performance brief, or who work up the details of a conceptual design prepared by a consultant.

4.16 Many of the specialist engineering services may be provided by one specialist contractor employing other specialists in a subcontract capacity. This is particularly the case with mechanical and electrical (M&E) services. This section of the Report largely relates to their specialist role within the construction process.

4.17 The M&E contractors and consultants have played an active and valuable part in this Review. Their contributions to the construction industry are immense. The more complex the building, the higher is the likely value of the M&E input and the greater the design responsibility which will be passed by the architect/engineer to the building services consultant and the specialist contractor. In some projects, the value of the M&E content may exceed the builders' work.

4.18 The interface between consulting engineer and specialist engineering contractor can be problematic. The draft BSRIA report (see footnote 14) describes the "fuzzy edge disease" of the industry, and seeks to clarify the design responsibility between the two sets of specialists18. In general, the consulting engineer does the conceptual design and drawings and the specialist contractor is responsible for much of the detail, including necessary value engineering. The specialist contractors themselves often sub-let much of the installation work, such as ductwork, insulation, controls and sprinklers. Liability can involve complex legal questions, with the design consultant having to take "reasonable skill and care", whereas the installing specialist contractor may have a warranty which involves responsibility for "fitness for purpose".

4.19 The involvement of the consulting building services engineer/designer in the initial design process is essential. Few architects would claim to be specialists in the engineering services field. It is to be hoped that they will involve their other design colleagues in the planning and co-ordination of the project at the earliest stage. Greater difficulty can arise over the early involvement of specialist contractors, especially if they are expected to undertake significant detailed design responsibilities of their own. If they are taken on as domestic subcontractors by a main contractor post-tender, this may affect their ability to work directly in conjunction with the designers. The BSRIA report makes this point and adds that "having used the specialist's knowledge during the design process it is then logical that the same specialist would be appointed to carry out the works on site. This would enable the overall design to be completed with the necessary degree of certainty and would ensure that the site process could be properly planned and managed". The BSRIA report also comments that alternatively clients may prefer the specialist to be appointed post contract as a domestic subcontractor, and it makes some recommendations about how to integrate the specialist's design in those circumstances. Whatever the procurement route chosen by clients, the need to integrate and clarify design responsibilities remains.

4.20 There are several approaches available if the client does not wish the specialist to be engaged as a domestic subcontractor. They include:-

1. Nomination

Many specialists (not only in the engineering services sector) would like the return of this system. But, as the SECG report points out, "only 11% of specialist engineering contractors are now nominated under JCT 80". (The percentage is higher in Northern Ireland.) Many clients do not wish to use this route. The CIPS final report describes the nomination system as "a contradiction in terms" and recommends that "the nomination system should be dropped"¹⁹. Since clients seem increasingly reluctant to use a long established procurement route which is available, I cannot recommend that it be followed as a normal procedure. But neither do I recommend its abolition.

2. Joint Ventures (JV)

Where high technology buildings have been commissioned, some general contractors and specialist engineering contractors have set up a joint company to undertake the work. This route is most effective where there is a large engineering services input, and the joint company can work satisfactorily on a basis of commercial equality. In such circumstances the general contractor tends to concentrate on managing the project and the M&E joint venture partner on providing the specialist engineering services. The joint company comes together as one single contractor. It is therefore suitable for design and build schemes, as well as contracts let upon the traditional basis. The SECG is concerned that the law on joint and several liability militates against JV arrangements. That problem is dealt with elsewhere in this report. The JV route can be a very effective one for the client, in that the specialist design input can be achieved at the earliest stage. It also provides continuing single joint responsibility for the client, who transfers to the general contractor and the specialist contractor jointly the responsibility to work together as a single corporate entity during the project. Some clients may be concerned about long term liabilities and how they will be discharged if a JV company is dissolved after completion of a contract, unless there are also continuing "parent guarantees".

3. Separate Contracts

If the client wishes to deal separately with the specialist contractor, but does not wish to use either nomination or a joint venture route, it can let separate contracts.

4. Construction Management

This is the most effective route for the client wishing to deal direct with specialist contractors (and trade contractors) of all kinds, and to create a clear contractual relationship with them. It also allows for full participation by the specialists in design and other commercial decisions from an early date. It is a tough system to manage, requiring considerable involvement by the client in conjunction with the construction manager. Not all clients will wish to accept the financial risks to which it can expose them. But some very successful projects have been brought to fruition under this procurement route. It is extensively used by some substantial clients. It is possible under the New Engineering Contract but not, as yet, under any JCT Form, though one is in preparation. This method also allows for a two stage pricing system if the design is incomplete at the time the specialist is appointed and a firm price cannot be established.20

5. Appointing the Specialist as Main Contractor

Where the specialist work represents much of the value of the project, the client can employ the specialist contractor as main contractor, and pass to that firm the responsibilities of employing another firm to do the builder's work.

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18 Plant and equipment selection can also be a controversial area between consultant and specialist contractor.

19 CIPS also points out that "The New Engineering Contract does not contain clauses allowing for nomination", and "neither German nor French contracts contain any provision".

20 For details of the role of two stage pricing of specialist engineering work within construction management, see "Construction Management Forum, Report and Guidance" published by the Centre for Strategic Studies in Construction, Reading University, 1991, pages 62-67, the lecture given by Mr Martin Davis to the SPIM Conference on 25th March 1994 and the SECG final report,