Newsletter Issue 60 - July 2010

• Builders Profile
• Retention of Documents
• The Importance of Keeping Good Written Records
• CSCS Cards Explained
• Environmental Permitting (England and Wales) Regulations 2010

Builders Profile

Is Builders Profile the answer to Pre-Qualification Questionnaires?

When Members of the National Specialist Contractors Council (NSCC) complained about the number and length of pre-qualification questionnaires, the NSCC Director, Susannah Nichol, set off on a quest to find a solution.

CDM requires the employment of competent contractors.  Good management and robust risk management requires the employment of competent professionals and contractors. Clearly, therefore, abandoning prequalification is not an option and the only viable way forward is to find a way of making the system work.

The solution that Suzannah came up with was ‘Builders Profile’.  The name is unfortunate - but civil engineering professionals and contractors should try to overcome their antipathy and consider whether this is a system that could work.

What is Builders Profile?

An online system of providing pre-qualification information.  Builders Profile have compiled a questionnaire that covers all common PQQ information.  This is stored in a secure online database.  Fill it in once, and the data is there for release to potential clients.  Furthermore, there are checks in place to ensure that the data remains up to date and automatic prompts are sent out when critical information such as insurance details are due for renewal.

How does it work and what does it cost?

Once the information is stored, the Member can send their pre-qualification information simply by creating a Profile for each client and ‘submitting’ it.  This can be done without cost.

For an annual payment of £275 a specialist can become a Premium Member of Builders Profile.  This enables them to create and store a single Profile so that it can be sent to several enquirers at once, via an email link, with no setup requirements or additional costs.  If the main contractor or client in question is already a user of Builders Profile, the details are already available to him without needing to take any action at all.

Why should a client/main contractor accept information from Builders Profile?

Prequalification is also a problem for clients/main contractors.  Once a client creates a Builders Profile Main Contractor Account they can immediately see the ‘headline details’ of every subcontractor using the service, and can use the online search to refine what they want to see.  Once confirmed as a bona fide ‘main contractor’, they can access the full service functionality and request new profiles, or updated profiles. At the click of a mouse they can see the full Profiles of all Premium Members who have authorised them to see their details, along with all Basic Members who have specifically submitted their Profile to the contractor, plus the headline information about every other company who is using the Builder’s Profile service.  Membership is free.

What should a specialist contractor do when a paper PQQ is received?

If a paper PQQ arrives on a specialist contractor’s desk from a company that is not using the Builder’s Profile, the specialist should resist filling it out.  Instead, log onto the Builder’s profile and send an automated email to the contractor containing a link to your Profile.

Will it work?

The NSCC has over 30,000 Members who are all being encouraged to sign up.  Additionally, NSCC and Builder’s Profile are actively pursing main contractors, in particular, to convince them of the advantages. 

It won’t solve all the problems today.  Some contracts are just too valuable  - if you are asking ‘how high?’ when the enquirer says ‘jump!’ this is probably not the right time to mention Builder’s Profile.  But for the rest - give it a go!   The £275 annual fee won’t break the bank. It will save several hours of form filling today and it could save you a full-time salary tomorrow.

It’s chicken and egg - clients won’t use it until there are sufficient specialist contractors signed up.  Specialist contractors won’t sign up unless they think there will be potential employers wanting to use it.  But once the band wagon starts to roll - the momentum could drive away the waste of time, effort and money that current PQQ represents and usher in a greener, cheaper, more timely, online equivalent to replace it.

www.buildersprofile.co.uk 

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Retention of documents – how long is long enough?

Introduction

How long is a piece of string?  Tricky.  Twice the length from one end to the middle, you say?  Well, yes, but still not very helpful in determining how long the string actually is, is it?  We can do slightly better with the question as to how long a business should retain its professional appointment documents; but a definitive answer is almost as elusive.

Firstly, it should be emphasised that this note deals with general considerations relating to professional appointment documents only.  For the myriad of other documentation and regulatory intervention that today’s firms need to be aware of, for example, in the fields of financial and accounting information, personal information and when dealing with public bodies, specialist advice should be sought. 

With the increasing sophistication of computer storage systems, it is now possible to store many hundreds of thousands of documents relatively cheaply.  With the drop in price of file servers and the associated backup hardware, digitising newly produced documentation is a real possibility for many.  Many practices may never need consider purging documents; they simply digitise newly produced documentation as it is created.  Nevertheless, for those of us with many years of old paper files to consider, the cost and time implications of digitising these can be a drain on resources.

As arrangers of Professional Indemnity (PI) insurance to various professions, the document retention question is one which we are often asked.  If it is one you have already grappled with, then hopefully, this paper will do nothing more than reinforce the advice already given.  Alternatively, if it’s something you have never considered, now might be the time to do so.  With many practices struggling with burgeoning documentation, deciding when it is finally safe to destroy files is of increasing importance. 

Document retention

Be it schematics for the construction of a building, advice issued to clients on a negligence claim, or papers supporting the valuation of a house, documents are produced which are vital to the service that is provided.  Indeed, the documents produced might be the very service itself.  Storage space is finite for all businesses – everything cannot be stored indefinitely.  The danger with destroying document early, however, is readily apparent.

Although general guidance can never address the specifics of individual situations, and we always recommend that you take specific advice, the following areas should definitely frame the debate:

1. PI policy requirements
2. Contractual requirements and liability periods
3. Other factors

Professional Indemnity policy requirements

We suggest the first port of call in trying to answer this question is to look at the terms of your PI policy.  Different insurers have different requirements ranging from remaining silent on the issue, to imposing quite onerous terms as to both how long you must store your documents and in what state they must be retained.  The reasons for insurers taking an interest in how you keep your documents are obvious; in the event of an allegation of negligence, the notes you have taken, the minutes of meetings held and the written advice given, will all be crucial to mounting a defence.

Griffiths & Armour’s PI insurance schemes for construction professionals have no particular requirements relating to the retention or storage of documents and you are at liberty to make whatever arrangements you consider commercially prudent.  It would be extremely foolish, however, to ignore the issue.  As previously mentioned, project documents can be crucial in mounting a defence and as our latest risk management book ’Reinforcing the Simple Messages’ shows, a claim can fail or succeed on the accuracy and/or sufficiency of project records.

Other PI policies, however, can contain fairly demanding requirements, such as:

It is important that you check with your broker exactly what conditions apply to your particular policy, so as to ensure that you can comply.  Often, retaining the documents for the period and in the manner specified in the policy will be a ’condition precedent of cover’ (i.e. if you don’t comply, the policy will not respond to the claim).  Even conditions at the less onerous end of the spectrum can allow insurers to reject claims, should they consider your actions ‘prejudice their position’.

Contractual requirements and liability periods

Quite aside from the conditions within your PI policy, your client may well require that you retain documents on a particular project for a specified number of years.  Although it is unusual for clients to specify the manner in which the documents are kept, the requirement to store project documentation for ‘x years’ will often be combined with a right for the client to inspect the documents too. 

The document retention period imposed by clients in contract often matches the relevant limitation period applicable to the project in question (i.e. the period after which claims become ‘time barred’).  Knowing when your liability expires is essential when considering how long to retain your documents, even if the contract is silent on the matter.  Usually, the liability period will expire a number of years following completion of the services you are providing or completion of the project to which they relate.  The limitation period is usually six or twelve years depending on the form of contract and what you have agreed with your client.

In certain circumstances, where so-called latent defects are present, the law can impose liability up to 15 years following completion of your services and this, for most categories of claim you are likely to face, should be considered the ‘long-stop’ of liability.  It follows that, generally, speaking this can also be used as the ’long-stop’ for retaining documents

Other factors

Many more issues may well impact upon your decision as to whether or not to retain documents and, if so, for how long. 

Some clients view historical records as a potential revenue stream. They view them as a useful tool in securing work in the future from, for example, clients refurbishing a building an engineer had previously worked on.

Special consideration should be given to certain categories of documents, for example, the certain financial documents (for example, balance sheets etc) as there may well be specific legislation (e.g. the Companies Act) which deals with how long these should be kept and specialist advice should be sought in this regard.

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The Importance of Keeping Good Written Records

Here at Griffiths and Armour, we are acutely aware that being able to produce clear evidence of the advice given to a client is clearly essential to a good defence when facing allegations of negligence. However, it is also important to have a record of the actions and decisions of other members of the project team, including the client, where they have an impact on your services.

For instance, detailed discussions often take place between designer, contractor and employer during design and site meetings regarding aspects of the design or construction of a project.  Often verbal advice is given at such meetings and decisions are made regarding the development of the design or construction of the project, but the points discussed are not always evidenced in writing and, if they are, are often no more than short-hand bullet points in the meeting minutes.  Without clear written evidence of such discussions, it may prove impossible to rely in Court on an assertion that a particular piece of advice was given, when another party argues strongly that it was not.

It is also worth noting that Courts and arbitrators attach great importance to factual records of meetings, site inspections and telephone conversations, and the accuracy and detail of such records will often be viewed by a Court as reflecting the overall professionalism, experience and integrity of the author.

In this note, we consider very different cases where, on the one hand, the lack of good written records proved detrimental to the defence of a claim and, on the other, an example highlighting how the existence of good written evidence can be of huge benefit to the successful defence of a claim.

Case 1

Ambiguity over the scope of an appointment agreement (and whether it was extended midterm) is created by the absence of written records.

The project in question related to the conversion of a bungalow to make it suitable for habitation by a wheelchair user, left disabled following an accident.  Various problems arose following completion of the conversion. A firm of surveyors were engaged to investigate the defects with a view to assisting the owner, acting via her trustees, to recover from the contractors and/or designers responsible.  Whilst investigating the defects to the property, a further problem was identified with the drains in the bathroom, apparently unconnected to the conversion works. The surveyors offered to arrange for a contractor to visit site and suggest remedial works.  The contractor made his visit and commenced work estimating a cost of £8,000.

The problem arose when he increased his price to £48,000 after encountering unexpected complexities.  Following completion of the drainage work, the trustees alleged that they had no contractual relationship with the contractor and refused to pay for the works. In the event that a Court were to find against them on that argument, they would argue that the surveyors acted either as their agent or as principal in their own right, and therefore should be liable to pay the £40,000 differential.

At the time of writing the contractor is pursuing his fees from the trustees who are threatening to drag the surveyors into any subsequent proceedings.  The surveyors maintain that they did not appoint the contractor, but merely introduced him to the client.  Unfortunately, correspondence between the various parties (when viewed objectively) creates ambiguity
over the actual role of the surveyors. The contractor purports to be under the impression that he was appointed by the surveyors, but this may simply be a tactic adopted by his solicitors in an attempt to drag the firm into the dispute. Legal advice obtained on behalf of the surveyors and their insurers suggests that they were probably acting as agent to the trustees, but may be open to criticism for exceeding their authority.

Case 2

Defence harmed due to an absence of written evidence to substantiate that suitable advice had been given to a claimant.

A firm of architects and contract administrators were appointed in relation to the extension of a cottage.  The owners of the cottage alleged that they had not been provided with a copy of the building contract, nor advised on how to complete the draft form of contract with the result that the contract was never executed. Specifically, they alleged that the architect
had failed to advise them on how to go about completing the contract sections dealing with
liquidated ascertained damages and insurance of the building works.

A fire occurred at the property part way through construction and it was discovered that no insurance had been taken out in respect of the building works destroyed in the fire. The contractor had not insured the works because the draft building contract released to him clearly indicated that insurances were the responsibility of the employer. The architects were
reasonably confident of their position having provided appropriate advice in various areas, but very little of that advice was recorded in writing. The defence therefore relied on the architect’s recollection of oral advice given to the employer at meetings that took place a number of years previously. However, the employers were able to show that they were in fact
out of the country on some of the dates the meetings were alleged to have taken place, causing considerable damage to the credibility of the architect’s defence.  The general lack of documentary evidence meant that this was not a matter which could easily be defended in Court, and this had a consequent effect on subsequent settlement negotiations.

The previous examples make grim reading and highlight how the absence of written evidence to prove or disprove assertions or allegations can seriously damage a consultant’s defence to a professional negligence claim. 

Case 3

The final example we wish to highlight in relation to this subject is far more positive and demonstrates how detailed and comprehensive records of a project can be invaluable in fending off a spurious claim.

This particular case relates to the refurbishment and extension of a large hotel. Completion of the project was delayed by about 50 weeks and the cost increased from under £40m to just over £60m.

Following completion, the hotel owner commenced Court proceedings against the construction management company, who it alleged was primarily responsible for the delay and cost overruns.  Our concern lies with the role of the structural engineer appointed for the project.  Although the structural engineer was not directly implicated in the Court case, the construction manager consistently sought to avoid responsibility for the delay by placing blame at the structural engineer’s door.  Various allegations were made, including that delays had arisen as a result of late production of design information and late changes to design drawings.  The structural engineer was given an opportunity to provide the Court with evidence and witness statements explaining the true position.  There was a significant risk that subsequent action would be taken directly against the engineer by either of the parties to the case, should the Court fail to rule out culpability on the engineer’s part.

The project was dogged by problems from the very beginning, most of which stemmed from the failings by the construction manager in the procurement and management strategy for a key phase of the works - the erection of a complex temporary roof structure to protect the exposed building whilst allowing access for the construction of a new, higher, mansard roof.
This element was eventually completed seven months later than planned and had a direct effect on the rest of the project. Later phases of the project were further delayed, again largely as a result of the construction manager’s failure to manage the construction
process properly.

The employees appointed by the construction manager for the project came from a traditional contracting background and were described as having a ‘builder’s mentality’ when it came to managing the project.  This no doubt contributed to problems, and throughout the project the construction manager adopted a highly adversarial stance when dealing with the design team. Progress reports issued by the construction manager consistently claimed that the causes of delay lay with other parties, usually members of the design team. The structural engineer, in particular, was often accused by the construction manager of poor performance and placed under significant pressure to produce design information in accordance to revised deadlines that were totally unachievable.  This tactic was part of a wider strategy to disguise the real source of the delays and the construction manager went to great lengths in order to do so,
providing misleading information to the hotel owner regarding the actual delay occurring and in one case even claimed that certain demolition activities had been completed months before they actually were. It also became clear that ‘logic links’ in the electronic programming software used on the project were tampered with, which had the effect of disguising where the programme’s critical path lay.

Faced with a concerted effort on the part of the construction manager to confuse the programme and the causes of delay, the structural engineer needed to provide a strong case in order to convince the Court of the true position. Key to this was a raft of documentation from the firm’s project files, which provided a detailed and accurate description of the project’s progress and the problems it succumbed to.

Evidence which proved invaluable to the structural engineer’s arguments included the following:

• detailed site progress reports with dated photographs depicting the actual progress of demolition and construction. This documentation helped the Court to determine when work took place on site and where the construction programme’s critical path really lay.

• detailed meeting minutes and records of conversations with the construction manager and other parties to the project. The structural engineer had a policy that requires all such records to be copied to every employee and senior manager within the firm who was connected with the project, so in this way the entire team was kept fully aware of developments.

• dated records of drawings made available to the construction manager including records of times when drawings were reviewed by the construction manager at the structural engineer’s offices.

• letters and other written records providing evidence that the structural engineer continually sought to highlight areas of concern to the construction manager in relation to the sequencing and programming of the works and procurement of specialist trade packages, yet his comments were often ignored.

• evidence in the form of file-notes and letters to the employer and other members of the project team highlighting concerns regarding the construction manager’s poor performance and lack of understanding regarding the critical path. The employer was also warned that the programme revisions issued by the construction manager did not mirror what was taking place on site.

The quality and detail of the structural engineer’s records had great influence on the Judge, who placed significant reliance on them throughout the case. He found the construction manager liable for the damages claimed by the hotel owner and made it clear in his judgement that the structural engineer played no part in causing or contributing to the delays to the project.

There is no doubt that the structural engineer’s records were heavily relied on by the Court and the claimant’s programming expert to determine where the cause of the project’s  problems lay. No other party to the project was able to provide the Court with records as detailed as those of the structural engineer, and there is little doubt that the Court would have struggled to accurately determine the true progress of the project or seen through the construction manager’s attempts to disguise the true picture had those records been incomplete. The resulting ambiguity would certainly have been exploited by the construction manager in order to persuade the Court to place some of the blame with the structural engineer and other parties.

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CSCS Cards - Explained!

There are four types of red cards which are new or recent entrants to the construction industry  for  experienced workers whose occupation has been closed for industry Accreditation and are working towards a NVQ (National Vocational Qualification) or SVQ (Scottish Vocational Qualification).

RED CARD- TRAINEE (craft and operative)
You will qualify for this card if you are a trainee, and registered for an NVQ or SVQ (or Construction Award) but have not yet achieved level 2 or 3 and have met current CSCS Health and Safety requirements.

Trainees must have passed the health and safety test and the card is valid for three years. The card can be renewed for a further three years on application.

RED CARD-GRADUATE (Technical, Supervisory and Management)
You will qualify for this card if your have completed a nationally recognised construction related qualification with a further/higher education college or university. You will be required to complete the Managerial and Professional (known as MAP) Health and Safety Test.

The Graduate card is valid for three years and can be renewed for three years on application.

RED CARD- EXPERIENCED TECHNICAN, SUPERVISOR OR MANAGER (Technical, Supervisory and Management)
This card is available to Supervisors and Managers with on the job experience (normally at least one year within the last three), but missed the industry accreditation opportunity and do not hold and NVQ or SVQ level 3,4 or 5 or a Member of an approved Professional Body. To qualify for this card you need to-

• Check to see if your role is covered by CSCS
• Pass the health and safety test
• Register for an NVQ or SVQ
• Complete and NVQ or SVQ profiling session

The card is valid for three years and is non renewable. The card is only issued on a temporary basis, while an NVQ/SVQ is being achieved. It is expected to be replaced by a skilled five year card on achievement of NQV/SVQ level 3 or higher.

RED CARD-EXPERIENCED WORKER
This card is available to everyone with on the job experience (normally at least one year within the last three), but missed the industry accreditation opportunity.
To qualify for this card you need to-

• Check to see if your trade is covered by CSCS
• Pass the health and safety test

This card is valid for one year and is non renewable.
This card is issued on a temporary basis, while an NVQ/SVQ is being achieved. It is expected to be replaced by a skilled five year card on achievement of NVQ/SVQ level 2 or higher.

An Experienced Worker Card can not be replaced by a Construction Site Operative (CRO) or a basic skills green card.

WHITE/YELLOW- PROFESSIONALLY QUALIFIED PERSON (PQP) CARD
The white/yellow PQP card is for competent assessed members of CSCS approved professional bodies such as (ICE, CIOB, RICS). The scope of the PQP card has recently been redefined after a lengthy consultation with the professional bodies and no longer has a time spent on site restriction placed on it. To apply for the PQP card you must-

• Be a competent assessed Member of an approved institution
• Pass the Managerial and Professional (MAP) Construction Skills health and safety test

These cards are valid for five years and can be renewed on re-verification of the PQP criteria.

WHITE/GREY- CONSTRUCTION RELATED OCCUPATION (CRO) CARD
This card covers construction related occupations not covered by the other categories of card and shows the holder’s occupation.

A CRO card is valid for five years and to renew it applicants must retake and pass the Construction Skills health and safety test.

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Environmental Permitting (England and Wales) Regulations 2010

DEFRA announced that the Environmental Permitting (England and Wales) Regulations 2010 came into force on April 6th 2010. Water discharge consenting, groundwater authorisation and radioactive substances regulation are now part of the single environmental permitting system which helps to deliver cuts in unnecessary red tape whilst continuing to protect the environment and human health.

The Environment Agency’s Environmental Permitting web pages (www.environment-agency.gov.uk)  and Netregs website (www.netregs.gov.uk) provides detailed advice on the new procedures and offers links to new application forms, regulatory guidance and standard permit rules.

Government guidance is also available from the DEFRA website. The guidance includes additional Environmental Permitting guidance on Statutory Nuisance and several other updated documents.

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