New build or renovation projects by small charities or community groups (including some work by consultants & contractors)
Cara Community Services draws upon considerable experience in community regeneration and new build or renovation projects. When affordable housing and associated services for marginalised groups are scarce we can provide the expertise to ensure your project is successful. We can assist both individuals and groups providing advice, information, guidance and practical support to ensure delivery to design, timeframe and budgets. The government make plain their wish to support the further development of this sector to promote home ownership. A range of grants are available.
As the crisis in affordability rises many small charities or local groups are considering the possibility of establishing a self-build project or affordable rental housing project which incorporates and benefits local people to either own or rent their homes . Cara Community services are willing to assist in whatever capacity is desired. We can play a major or minor role depending upon the group`s preference from inception of a scheme to practical handover or future management provision.
1) Development Strategy Whatever the aspiration any new group or charity seeking to undertake a self build project or affordable housing rental scheme it will have to be legally constituted or acting within its powers. It may wish to be simply constituted as company or charity for the sole purpose of the new development or continue as a management entity post construction. It will need to establish or amend a comprehensive business plan as a basis for borrowing substantial capital from banks as a primary capital funding source. We can seek additional capital funds via any available source including internally generated subsidy, open markets, grants and fundraising, local authorities or NHS Trusts etc.
We would strongly advise that a skills audit of the group is undertaken at an early stage and written commitments are made with regard benefits desired with regard to either reduced rents or low cost purchase. We would further advise that adequate provision is made for involvement of consultants and contractors as required to bring the cost and time effectiveness to the project. All schemes will be reliant on grants or loans and therefore both time management and completion of critical tasks is critical to success.
2) Appraising a site or property. New development opportunities arise from both open market purchase of sites or asset transfers from local authorities or government agencies which meet statutory needs. In the longer term we will have to follow the same development routes acquiring sites. Some current or future sites may only be feasible from generating cross-subsidy from open market sales, disposals or mixed development. Any site from whatever source will require some evaluation and financial appraisals to maximise benefits.
Every site or property will have both good and bad points but must have sufficient good to be rentable or sellable with a long term perspective. The basic principle of property acquisition in England is caveat emptor or let the buyer beware. Should we wish to acquire a site for development a final pre-acquisition checklist is available via Cara.
Cara Community Services Officers will need to conduct a feasibility assessment to ascertain whether a scheme is do-able on that site or property. A significant part is the financial assessment – but in-sufficient funds are only one reason why a scheme is not deliverable. The assessment should follow stages which screen out opportunities which do not meet predetermined criteria. Officers analysing a site or property combine desk top research and `walking the area`. Scheme feasibility is an intuitive process of constant refinement of design and cost predictions until such time as reports provided and commitment made.
3) Financial Appraisals. The monetary costs of property development include the broad headlines of:- – acquisition: (land or property) – fees: (designers/architects/surveyors/valuers/solicitors/CDM co-ordinators/structural, mechanical, electrical engineers,/ employer agents/clerk of works/planning consultants/environmental sustainability assessors etc – works: the cost of construction including site clearance, re-shaping ground, foundations and drainage, roads, parking and pathways, assembling the building ,installing utilities and finishes etc.
Predicting the above costs on buildings that are specific to individual sites and not reached final stages of design (let alone planning) especially in a chaotic market-place is high risk activity. Our general advice is that:-
“ The works cost prediction can differ from the actual costs by as much as 30% where it is made before the land or buildings have been thoroughly investigated (P16 NHF “Developing Affordable Accommodation” -2ND Edition July 2009)
4) Lenders. Unless you are a rich charity the lenders are key stakeholders in any new development proposals. Most borrowing is based on the business plan of the organisation or project as a whole, but lending terms may limit the investment to or within certain schemes. Loan covenants will require us to keep within prescribed limits on gearing and interest cover to be determined by negotiations. Gearing is the ratio of debts to total reserves although the way it is calculated varies with some calculating debts to value based on historical cost. Interest cover is a measure of the interest to be paid in relation to rental and other income as it appears on the income and expenditure account.The above considerations will limit any project`s borrowing capacity and therefore limit the development ambitions. The business plan will assess borrowing requirements.
5) Viability. Cara Community Services Officers will consider a project viable if it can be relied upon to be self-financing, i.e. if the sales cost or rental income will be sufficient to meet all its operating costs and repay the loan over the period of the financial appraisal. It also needs to fund provisions for major repairs to keep the properties in rent in tenantable condition throughout the 30 year period.
Officers will need to provide a capital and revenue budget to demonstrate the viability both for above costs and long term revenue requirements for approval of the new group. Equally the assessment on whether we can afford to finance the loan required is dependent upon assumptions about running costs and future income. Any new project may be able to charge sub-market rents (with above inflation increases if required reduced to take account of any `sweat equity`) which encourage our tenants to `move on` into other forms of tenure or to purchase at a later date. The project must maintain a 30 year business plan which should be sufficiently robust and `sensitivity tested` to ensure that should the cost and income predictions prove wrong there is a sufficient contingency to cover the impact of such risks being taken.
6) Appraisal methods. Cara Community Services Officers will need to produce appraisals demonstrating viability for Trustee or project group approval prior to any development work commencing. There are a number of ways of evaluating schemes to assess viability broadly categorised as follows:-
- Cash-flow (e.g. first year deficit, break -even year, peak debt year)
- Long term viability (eg.net present value, internal rate of return or payback)
- Value for money (e.g. cost as % of market value, works cost per m2 etc)
It is best practice to incorporate one of each above into viability assessment to measure: – a) the impact upon project cash-flow b) long term profitability c) how efficient is the development
Initial appraisals without incurring consultants costs may receive Trustee approval but subsequent predicted or actual rises which impinge upon the overall scheme viability must go back to Trustees.
7) Obtaining capital & revenue funding
There are 6 main ways for us to fund our new build activities:-
-Debt (loans from banks);
-Gifts & donations in cash or kind (including asset transfer from local authority or NHS land /cash)
-Internal funding (by generating annual surplus) – Grants (from other charities or central govt i.e. from HCA as unregistered body)
-Fundraising (capital contributions /small donations from supporters)
-Cross-subsidy from selling part of re-developed site at market price to subsidise rented units.
Each new re-development scheme will have to `stack up` financially demonstrating both capital and revenue viability into the long term supporting the business plan agreed with lenders.
8) Selection, appointment and briefing of consultants and contractors
Poor advice is expensive and therefore the above is critical to successful delivery. Equally important is the procurement route (detailed later) which determines which consultants will be required. The respective roles are available.
Cara can ensure when selecting consultants there is a need to take account of procurement directives issued by the EU pertaining to public bodies (legal advice to be sought if registered charity). Each contract must have a technically qualified and professionally insured consultant with selection depending upon competence, availability and cost.
Officers must ensure before employing any consultant references are taken up and interviews conducted to examine their experience of similar work so they are able to offer:-
-good rapport and effective accessible communications (20%)
-appropriate skills (30%)
-a proven track record of successful delivery (25%)
-membership of an appropriate professional body (5%)
-adequate capacity for level of work required (20%)
-adequate professional indemnity insurance (essential requirement)
-suitable diversity and equal opportunities policies (essential requirement)
When we formally commissions a consultant the duties of architects, surveyors, engineers etc. the appointment letter must be taken from the standard appointment documentation issued by their respective professional bodies providing it fulfils the duties and responsibilities expected.
Consultant’s appointment letter
Cara can ensure this is reviewed by the solicitor and must contain in general:- -a clear statement of the standards to which the consultant must conform (Design brief etc)
-Definition of how the fees are to be calculated – fixed lump sum or % (if later clarity on contract sum used to prevent incentive to raise costs)
-breakdown of amount and timing of fee payment and any disbursements and expenses
-a requirement that any conflict of interest is declared in respect of any partner, director or employee who may have a connection with any supplier, contractor or Together
– A requirement to maintain the level of professional indemnity insurance required for 12 years
-a clause limiting assignment or sub-letting without our consent
-a clause setting out a termination of appointment procedure
-a clause outlining a disputes resolution procedure
– A clause giving us the right to use any drawings, calculations and other documents on an irrefutable royalty free licence, for own purposes
-in `traditional` architects contracts the level of costs to which they can bind us without prior approval
9) Briefing Consultants
Cara can ensure that your requirements are set out in writing namely, but not exclusively, via our design brief and project briefings including:-
-a clear explanation of the objectives of the scheme
-any information that could affect the consultant`s area of work (e.g. access)
-particular priorities we have for the scheme (service user participation etc)
-an outline programme or timetable of events etc. 11) Managing the design process
This section is a précis. It is important that we get this right –as poor design will produce a poor building which will result in poor level or service user satisfaction with our services. At basic level the process involves a few key activities:-
-Setting a clear and thought –through brief
-selecting an appropriate design team and briefing them
-the designer devising alternatives designs for us to consider with `thinking time` & consultation
-taking design decisions in an appropriate sequence and `freezing` decisions The architect should be first asked to evaluate the site capacity without proposing any designs using information about acceptable densities, parking, dwelling area footprint etc. then visit site to augment any areas that are difficult to develop. This avoids the design not maximising the site.
Cara officers can ensure throughout the design process that they update any financial predictions used in scheme viability assessments and consult with service users and operational staff. Design reviews should be undertaken when agreeing the initial brief; agreeing the design principles; selecting the preferred sketch option and finally when agreeing the planning application designs.
Further details on design process stages are available.
10) Obtaining planning permission
Local Authorities Housing Strategies
Cara and the lead consultants will have to be engaged with the local authority as a major partner in the attainment of our aims. They can also be the source of capital funding and below cost land disposals or commissioning. We can play a role by informing housing needs and commenting upon the local Housing Strategy ensuring the needs of our client group are met. Our own development strategy beyond our existing stock replacement programme will need to address identified local needs based on robust research evidence.
Negotiations with planners and local authorities
Cara will need to carry out preparatory work with consultants to address any areas of concern before any formal planning application is made. This will involve meeting local groups, councillors, housing dept staff and commissioners to negotiate a successful outcome of the planning application process rather than incur abortive or modification costs.
Once the new designs have been agreed by all stakeholders all our new developments will require a planning permission for a defined set of design stages including use; layout; amount; scale; appearance; landscaping and access. Obtaining full permission is preferable but an outline planning application establishes if development is acceptable. Demolition of existing property requires permission whereas refurbishment of existing buildings which does not involve external changes does not.
Cara may consider that our planning applications require planning specialist consultants due to the nature of our schemes. A planning permission relates to the land rather than the applicant and to the use not the occupant. The alleged reduction in property values is not valid planning consideration whereas noise and disturbance are material considerations. If we have to go to planning it appears these are potentially expensive albeit a major advantage of our owned sites is the long term occupation we have gained. Officers need to be aware that in determining a planning application the planning authority must take account of the adopted Local Development Framework which will guide how the application is determined.
Any applications consisting of 10 or more units and may require a long list of information depending on local validation requirements. Officers will need to check before proceeding with any planning application as a huge amount of information will be required of the consultants and therefore the scale of the work required will have to be determined to save a considerable time and expense. We have a checklist but it is unlikely to be definitive.
A key component of above is the design and access statement which Cara and consultants should use to `sell` the scheme to the planners. We should also allow local communities and other stakeholders to make statements of support for the scheme.
Cara may need to consider recommending that the project group seeks above. Should this occur a planning consultant’s advice should be sought. The planning authority must give written reasons for refusal not just they did not like the scheme. We have the right to go to seek an Appeal considered by a planning inspector appointed by the Secretary of State. Most are handled by written representation or an informal hearing before an inspector or decided after a public enquiry. The deadline for requests is 6 months from date of decision or date decision should have been made. There is no fee for submitting an appeal but own expenses will be substantial. The planning inspector decides which party pays all or some of the costs.
A planning permission can be granted with conditions attached which local authorities have to ensure are relevant, fair and enforceable.
One major condition is often section 106 agreements arising out of the Town & Country Planning Act 1990 (amended) which is simply a contract obliging the applicant to provide defined community benefits such as making some housing affordable etc. Each local authority has separate policies and priorities and officers will need to negotiate prior to application bearing in mind our charitable status and client group. Also local authorities operate a Community Infrastructure Levy under the Planning Act 2008 to contribute to local infra-structure and services. Charitable bodies are exempt and non-charitable ones pay reduced rate so as a Charity providing a housing service we will argue for exemption if applied locally.
Officers should have identified many of the above as part of feasibility and assessment process including capacity of existing infrastructure including foul and surface water drainage, gas, water and electricity with associated costs for upgrades. Officers will need to be aware of ecology delays such as `homing ` rare species (e.g. slow worms) or archaeological digs and impact upon costs as part of permission granted. Other constraints may include advertising hoarding which may require termination or likely flood risk; tree preservation orders; previous uses which may give rise to contamination or poor ground conditions.
11) Building Regulations 2012 Approval
Cara will need to ensure above is obtained as compliance is mandatory and your responsibility as the owners of the building or sites. However we will seek to pass a contractual obligation on to the builder but we will be served with any enforcement notice if the work breached the regulations.
Participants will need to be aware that Building Regulations 2012 aim to ensure the health and safety in and around all types of buildings and covers energy conservation, access, fire and sound insulation, ventilation and use of buildings. Compliance is checked by building control body either local authority or approved inspector such as NHBC for which we pay a fee. The regulations contain a number of parts dealing with definitions, procedures, and the technical performance of building work. They also contain a series of approved documents which are to be read alongside each of the 14 parts of the Building Regulations.
Cara must obtain compliance that plans meet regulations by submitting the plans and other information as required showing all construction work via our consultants. If they comply, a notice is issued stating they have been approved or request for further details which should be held on file. An inspector from the control body will visit the site at key times to check all construction work is in accordance with the approved plan. Providing the works complies with the Building Regulations the contractor will be issued with a completion certificate when the project is completed which should also be held on file.
12) Procurement Strategy, EU directives and VAT
Presuming we have achieved the necessary planning approvals and scheme is still financially viable with finance in place, our next stage will be to ensure cost effective procurement is undertaken. Each opportunity will need to be appraised and approved at project and Trustee level.
Other opportunities for part self build or renovation projects.
A major self-build project may be considered too ambitions a step for either an established organisation or new project group. There are alternatives to become established:
Cara can seek to use all acceptable and ethical methods of procurement from relying on agents or others to bring us opportunities, developing and maintaining a network of contacts, or direct sourcing by `walking the streets`.
A contractor may approach with a site or building that it already owns (or intends to buy via an option agreement) preparing designs for us to approve and then a price for completing the building work. If acceptable terms are agreed (subject to our own appraisals) then a contract to purchase the site is entered into and exchanged simultaneously with a building contract.
Cara can seek to be entrepreneurial with a range of further opportunities including with section 106 agreements in which the local authority or developer will ask us to purchase at a discounted price fully built buildings. An off-the shelf purchase involves the purchase of newly completed dwelling from a house builder which depending on market conditions can be either more or less costly than a site acquisition and development. Finally there is purchase and repair were second-hand properties may offer good value in certain housing market conditions providing they can reach our let-able standard and standards of sustainability are achieved.
13) Construction procurement routes
Cara will have options depending on the nature and type of construction and the weight given to factors such as quality and cost etc.
a)Traditional contract This is where the client would be supported by the architect as our lead consultant providing detailed drawings, a specification of works or bill of quantities, providing the builder with complete instructions. Three Joint Contract Tribunal (JCT) forms of contract provide for this type of procurement:-
-Minor Works Building Contract 2005 for simple works where the employer is to provide drawings and/or a specification and architect or contract administrator administer the contract conditions
-Intermediate Form of Contract 2005 for building without complex building services installations or specialist works , where fairly detailed contract provisions are necessary and architect or quantity surveyor administer the contract
-Standard Building Contract 2005 for larger works where detailed contract provisions are required and employer provides the contractor with drawings and architect or quantity surveyor administer the contract
The last 2 contracts are available in various editions with quantities, without quantities or approximate quantities. Under the above contracts supporting consultants –quantity surveyors, mechanical and electrical engineers, structural engineers, etc .will vary according to the type and size of the contract
The above form of contracts leave the risk of cost increases or benefit with Together and may be tendered or negotiated (subject to EU procurement rules?)
b ) Design & Build contracts This is where part of the design responsibility rests with the contractor but an architect will provide initial designs (from project group requirements in development brief) to detailed planning stage (Stage D of RIBA) with our Employers Agent preparing the `Employers Requirement`. This is the brief describing the detail designs to deliver, quality of materials and workmanship required. The contractor`s responding proposals will need to be checked and confirmed that they meet employers’ requirements. With the responsibility for most of the design decisions and the building work resting with the builder with benefits in terms of time saving and less risk of cost overruns.
To ensure clear liability for the design remains with the consultant or contractor any comments give by officers should be given as observations or requests and not given or interpreted as approval of the drawings or design.
- c) Partnering and construction management There are a range of specialist contracts mainly for volume production which are not feasible for small scale developments.
14) EU Procurement Directives
The above is beyond the scope of this paper and you are referred to `Guide to EU procurement rules` 2nd Edition National Housing Federation. At time of writing this area will be examined as part of a separate document to cover the Legal Framework of New Development.
15) Value Added Tax
At time of writing new construction used solely for residential purposes and not sold under any part-ownership arrangement is not subject to VAT but consultants fees are. These matters will be further examined as part of separate document to cover the Legal Framework of New Development.
16) Selecting a builder
Cara will wish to ensure that we are dealing with competent, financially sound contractors and therefore use Construction Line, the national register of pre-qualified construction contractors and consultants. Together must be satisfied with the builder’s capacity, experience and ability to deliver the type of project we require and will investigate:-
-the quality of previous work undertaken (from site visits and references)
-financial standing (bank references, audited accounts, and a report on financial status from a reputable agency)
-references preferable from similar undertakings
-ability to obtain performance bond
-availability of NHBC or similar warranty
The contractors performance should be reviewed at both practical completion and final account with details kept on file for future reference.
Cara may consider introducing an OJEC framework agreement or most likely tender projects as stand-alone contract so a competitive tender process will be undertaken. If a framework agreement is used this could involve the award of a `call–off` contract or a mini–competition. Whichever route is used officers must ensure that nothing is done which could be regarded as discriminatory, improper, or which distorts competition so that you obtains the best price for works.
Where tenders are invited under a single stage priced tender (not a negotiated one) the Quantity Surveyor or Employers` Agent will arrange for the necessary documentation to be sent inviting tenders. Where an assessment on best value is undertaken this should be prior to examination of priced documentation. The JCT Practice Note N06: Main Contract Tendering provides helpful guidance.
Upon receiving tenders the envelopes will need to be stamped with date and time by 2 individuals and kept in secure place until opened. Any tenders received after the deadline should be recorded in the Tender Register (kept in Head Office Safe) and returned to sender unopened.
In addition to the appropriate consultant for Tenders over £30,000 our development procedures will require 3 Central Management Team Officers to be present preferably including the CEO, Director of Finance, Director of Housing and others as required. A minimum of 2 Trustees will be required and all will witness the opening of the tenders and simply witness that the record made in the Tender Register book is accurate.
The tender record will also include a note of the recommended action to be taken including the calling in of the lowest tenders for an arithmetic check, an analysis of the tender sum (incorporating a priced bill or the contractor’s proposals as appropriate) together with any qualifications to the tender and a preliminary review of the health and safety plan.
A report on tenders must be prepared by the quantity survey or employer agent .This will include recommendations to accept or reject the tender, invite further tenders or alternatives. Opinions will need to be backed up by evidence including benchmarking data particularly if the consultant is commenting on a negotiated contract sum to demonstrate probity. Unsuccessful tenders will be notified after the report on tenders has been issued. The Tender Register will be held in a secure place.
19) Pre-contract procedures
It is vital that Officers and the consultants carry out final checks before the contract is signed. This must include:-
-The contract sum -start and completion dates -phased handover dates (if applicable) -liquidated damages -performance bond -insurance arrangements -the health & safety plan
All construction contracts must be signed as a deed to ensure we have 12 years remedy against any contractor`s defects.
Pre-contract meeting this is one of the most important meetings and much future difficulty can be avoided by establishing at the outset an open constructive relationship between all parties to the contract. Further questions to be addressed at this vital meeting are available.
20) Managing the project during construction
Cara staff as project manager (unless one is appointed) must control the project to ensure:-
-the consultants carry out their duties effectively
-monitor progress against time, cost and quality
-control change (both requested and unavoidable)
-keep internal and external stakeholders informed or progress
-ensure the contractor has information and decisions in a timely manner
-make sure finance is in place and payments made to meet contractual commitments
21) Controlling costs
Cara or project officers must ensure that predictability of costs is dependent upon clear unchanged objectives and clarity when contract documentation is prepared as alterations prove costly. Whatever form of contract used costs can vary during the construction process.
Under Design & Build the builder generally carries the costs of the unexpected (e.g. poor ground conditions) with the Employer’s requirements carefully drafted to pass on such risks – but at a cost of higher prices – so we have to balance certainty of cost against cheapness of cost. But cost overruns are not completely eliminated on D & B contracts.
Changes generate costs with from either clients or external events such as weather or delays from utilities etc. Officers evaluate implications quickly taking advice from consultants with consideration given to saving which can be made elsewhere in the contract or using as last resort our project contingency.
22) Controlling quality and safety on site
The contract documents should be clear on quality and workmanship expected but the lead consultant should check and report alongside regular reports from the Clerk of Works appointed by use. These reports should be reviewed and held on file for further reference.
We will have appointed a CDM co-ordinator from whom we require confirmation on design work and compliance with procedures with regard to health & safety ensuring adequate records are kept and retained on our files.
23) Monitoring time
At the start of the contract the builder must provide a copy of the proposed programme of works breaking down the overall project into individual elements of the construction process usually by trade or task activity such as : establish site setup; demolition/site clearance; levelling; roads, footpaths and drains; foundations to DPM; brickwork to wall plate; roof/weather-tight; first–fix; plaster; second fix; decoration; handover normally in the form of a Bar Chart with progress reports at regular site meetings.
The above involves testing and commissioning the building prior to it being ready for occupation and involves:-
-from the building contractor to us in accordance with the building contract requirements
-from the Officer responsible for the development project to operational users
The building contract JCT forms stipulate `practicable completion` to donate when a building can be handed back to the client which case law clarifies to mean :- -be free from patent defects( everything must be in working order and constructed in accordance with the contractual requirement)
-be complete, apart from very minor items which can promptly be completed without affecting the usability of the building.
Officers must note the difference between patent (identifiable) and latent defect (hidden) as the builder is only liable under the contract to remedy defects that are apparent before practical completion (patent defects). Courts have therefore decided logically that if any defects are apparent the scheme has not reached practical completion. Officers will need to prepare for a successful handover using the checklist available.
Therefore Officers must produce an architect’s certificate certifying practical completion with all Health & Safety information finalised and available to us.
25) Delays in practical completion
The building contract sets out the rights and responsibilities of the builder and project group if works carry on beyond the completion date set out in the contract. If the delay is due to contractor’s failure, liquidated damages (LDs) and the applicable rate ( normally daily rate) is inserted into the contract before tendering or negotiating so contractor can price this risk. If delay due to ourselves or exceptional adverse weather then an extension of time may be requested. If our delay causes the contractor additional expense then they can claim for loss and expense. Officers should therefore seek to avoid such potential claims by ensuring no unnecessary changes are made during construction period.
26) Defects liability period (rectification period)
This is the period of time we can legally hold onto half the contractor’s retention monies to pay another contractor any defects that the main contractor will not rectify for between 6 to 12 months depending on the contract. What counts as a defect is defined in JCT Contracts as `materials and workmanship not in accordance with the contract` to be remedied within ` reasonable period`.
Within 2 weeks of the end of the DLP the main consultant and ourselves should inspect the building (talking to residents) and compile a list of outstanding defects to be remedied by the contractor which when satisfactorily complete a Certificate of Making Good Defects (CMDG) and upon receipt we can release outstanding monies. The lead consultant will then issue a Final Completion Certificate and we release any remaining monies we hold.
27) Builders Liability
We ensure that the building contract is signed as a deed so that the builder`s liability is extended to 12 years. However we may decide that it is not commercially worth suing a builder as it is difficult to establish with enough certainty that a problem was down to defective design or work from the builder.
There are recognised high profits to be made from good development but it is also notoriously unpredictable and much can go wrong even with the best preparation and project control. We begin with a fundamental review of the risk management framework.
Should you face particular problems either detailed here or unforeseen, our first remedy must be to seek professional legal advice. This paper does not cover partnering contracts or implication arising from European law and therefore remedies below would only cover the standard JCT contracts.
Any project team must put in place adequate legal safeguards to protect our interests in the event of a consultant or contractor failing including provisions in contracts with appropriate measures under the Insolvency Act 1986 as follows:-
30) Contractor insolvency
Under the JCT standard forms of contract we as the `employer` have the right to end the contract where the contractor goes into liquidation, or receivership, or if an administrative receiver is appointed. Choosing to continue with the contract allows a new builder to `step into the contract`.
If we chose to end the contractor`s employment we should also immediately:-
-request of the main consultants advice on what provisions in contract allowing sub-contractors to continue to work
-Consideration undertaken in consultation with Administrators or Receivers who might complete the work
-secure the site from theft or vandalism;
-insure the site and contents;
-hold further payments to the contractor until all the works have been completed
-Prevent removal of site materials by the contractor or sub-contractors and protect from the weather
-If `novation agreement` produced the small print will often affect the terms of the contract with a different set of obligations. The competency and suitability of the new contractor should be checked
-detailed record of costs as a result of contractors insolvency is required to offset against any monies to which the contractor is due
-where we have a bond or defect liability insurance notification and claims procedures will have to be followed.
31) Architect or consultant insolvency
If above occurs outcomes will depend upon wording in the conditions of employment and important that we are given the right to use designs even after the appointment is determined.
Everyday disputes between clients ,contractors and consultants are a common feature impacting upon cost, quality of work, and the development programme and are preferably resolved via normal negotiations of the disputes resolution spectrum as follows:-
-mediation voluntary and non binding via skilled mediator
-conciliation with both parties agreeing the conciliator decides the dispute
-expert determination which is the cheapest and quickest with parties identifies and agrees the matters in dispute using technical expertise with legally binding determination
-adjudication under the Construction Act 1996 confers a statutory right for an aggrieved party to call for an adjudicator to resolve matter, binding on the parties only if the contract says so
-arbitration used as an alternative to litigation as quicker and cheaper but has legal enforcement through the courts and is usually final and binding on the parties
-litigation follows a rigid public procedure costly and time consuming which we would only pursue after taking appropriate legal advice.
If amounts due to negligence on part of the designer we would seek to recover additional costs.
Where the contractor is responsible for completing the design and construction, the liability will be passed on but should the contractor be insolvent, the claim resorts to the designer presuming a collateral warranty is in place.
b)Workmanship and materials
If the contractor falls short of above requirements in accordance with the drawings, specifications, performance standards /bill of quantities, it will have to be corrected at own expense. Please refer back to the defect liability period.
Where latent defect arise damage must be minimised and insurance company informed; where liability is denied by both contractor and designer independent advice or disputes process above entered into.
Standard forms of contract require the contractor to take out and maintain in the joint names of the client and contractor an all risk insurance policy covering damage due to fire but not goods or equipment belong to us on the site. We have to ensure:-
-check contractors insurance, including full re-instatement costs and all premiums are paid
-that contractors serve notice on us in event of fire and notify the insurance company
-The contractor will be entitled to money paid out by the insurance company – it is not for us to pay a top up where the re-instatement costs exceed the sums insured.
35) Accidents on site
All construction work lasting for more than 30 days or 500 person working days must comply with CDM regulations requiring:-
-appointing a competent CDM contractor, designer and principal contractor with adequate resources for Health & Safety
-ensure construction does not commence until the principal contractor has prepared, developed and implemented a satisfactory health and safety file which is also passed on once project completed.
The contractor is required under contract to indemnify us against any claim made as a result of death or injury caused by the construction works except where it arises from our own negligence. Therefore staff or Trustees should not visit the site unless in possession of a card issued by the Construction Skills Certification Schemes.
36) Damage to third parties
If damage not due to contractor’s negligence (e.g. vibration or lowering/rising ground water) the contractor may have no liability with us been left to settle . So if damage occurs we will have to ensure via the lead consultant that:-
-written records /photo provided to illustrate damage incurred
-if possible agreement on extend of damage
-contractors insurers notified
-temporary repairs to prevent further damage
Quotes for remedial works required
The approval of the insurance company will be required so loss adjusters can inspect prior to remedial works commencing.
All new development is difficult and small charities or self help groups will require considerable support and assistance to succeed. Cara Community Services is here to help and looks forward to hearing from you.
For further information please contact John Brennan 01803852270 or email firstname.lastname@example.org Our conversations are in the strictest confidence and covered by both our confidentiality agreement & Terms of Business as displayed on this website.
Please note we accept no responsibility for anyone relying upon the above (which is subject to changing circumstances & markets).To do so is entirely at your own risk .The above is simply given as a guide to the process and some of the detail involved. We recommend that readers obtain further professional advice & assistence.