Practical Law

Increasingly, the construction industry model that we know so well – based on layers of contractors and sub-contractors – is being called into question. In the last six months various failures (including Grenfell, Scottish PFI-built schools and Carillion’s collapse) have prompted questions about construction industry outsourcing and transfer of risk.

Queries have been raised about the potential for “passing the buck” and lack of accountability when things go wrong. On major construction projects, typically the large majority of the workforce are sub-contractors, sub-sub-contractors or workers employed on a daily or hourly basis, rather than being directly employed by the contractor. Does this model enhance the risk of non-payment, safety issues and reduced acceptance of responsibility for such issues? Continue reading →

The NEC contract is built on the spirit of mutual trust and co-operation. One area in which this plays out is in the context of applications for an extension of time or a change in the prices by a contractor. The project manager is required to assess these applications on a prospective or forecasted basis, at the time the relevant compensation event occurs.

However, one issue that the courts have not yet fully grappled with is how that assessment works when the contractual mechanism relating to quotations is not followed and the time and money effects of the compensation event fall to be considered after the impact of the event has played out. This post considers that scenario in the context of two recent cases: Northern Ireland Housing Executive v Healthy Buildings (Ireland) Ltd and Fluor v Shanghai Zhenhua Heavy Industry Ltd. Continue reading →