Do the construction professionals play out their clients? Construction management companies, designers, engineers/architects, and contract and claims professionals are trusted and relied upon for investments. But, once they are set uncontrolled, they have plenty of means to leave the client high and dry, addicted to further services. Look at the real-life examples, and take the advice.
[Weakness of intertwined Designer and Engineer roles] Are you looking forward to outsourcing Construction Management, Engineer/Architect roles, and Design in one shot? It might be good. Actually, it is quite a common practice.
But there is the thing: most price and time adjustments are related to design updates/adjustments. These would be the subject of the Contractor’s claims and, subsequently, the Engineer/Architect's assessment. Some of these might occur late, might result from the late response, or be avoidable – simply put, these might be the Designer’s fault. So, if the Designer and Engineer are from the same company, no one could expect a fair and unbiased claims assessment. It’s a conflict of interests.
In such conditions, the Designer’s faults may never be admitted by the Engineer and would be hidden as long as possible. Consequently, it raises the threat of the Contractor's reactions, e.g., if the case comes down to payment issues, then the usual response is to slow down work. It creates further extremely expensive delays. The other cost is a dispute adjudication.
How to avoid it? It’s not new that becoming too dependent on a single company makes you vulnerable. The roles of a Designer and a Contract Engineer/Architect supplied by a single company play out well if you watch the Engineer's claims management. I advise hiring an independent, appropriately qualified person to oversee design-related claims.
[Playing fool with interpretation of legal rules] In Joe Rogan's Experience podcast, Elon Musk said that NGOs could blame him for discrimination if he avoids foreigners in SpaceX and for breaking security restrictions if he hires so. It might work if someone plays that for public opinion. Still, it hardly results in legal actions – because there are recognized legal rules for interpreting such contradictory claims.
But how does it relate to Construction investments? Well, construction contracts might have sets of conditions that, at first glance, look contradictory – or worse, require what’s impossible or impractical. For example, a duty to find all design flaws within the 3 days of the Contract conclusions - it's hardly possible or enforceable. Another example is the extreme and unreasonable interpretation of the time-barring clause.
To resolve contradictory or ambiguous conditions, the sophisticated advisor would look at the explicit wording, intentions, the contract as a whole, precedences, general law, etc.
But naive or ill advisors might be unconscious of construction practice and, what's worse, with a strong belief in their judgment. They sometimes stick to the explicit wording of the particular clause and drag their client into an unnecessary dispute. All could make a mistake, but that try, not the advisor, but ultimately the investor would cover the cost.
[Coordination of multiple-prime contractors] Time on site is expensive and the key risk for which the single prime/general contractor is paid. Isn't it inviting to hire the scheduler and save on engagement to a “multiple-prime contractor” construction model? One could even save more time arranging a fast-track schedule.
Well, one must remember that construction contracts (like FIDIC) hardly account for the time lost on unexpected events. I.e., all unexpected issues are subject to an extension of the contractor’s time. This may have a snowball effect on subsequent contractors.
So here comes the troubles. With a tight schedule of multiple prime contractors, the unexpected delays require schedule adjustments (costly), the prompt introduction of mitigation plans, granting an extension of time, and associated prolongation costs. This, even if costly, should be considered the best possible outcome.
The worst, but more common – without prompt schedule management, the prime contractors’ time for completion would become “at large,” and control over schedule would be lost.
This is an example of severe consequences. But take a look at the consulting company situation. The construction management company has hardly any interest in inappropriate time management – only their professional ambitions can keep them interested because (i) they are usually paid for hours of best-as-they-can services, independent of the outcome, (ii) the whole blame is focused on exceptional events and shifted away from schedule managers, (iii) in case of troubles the Investor/the Employer becomes even more reliant upon advisor, (iv) the Investor/the Employer would ultimately cover all costs.
The example above is the hard-to-resolve case. First, if you are looking for a production facility to benefit from the expanded capacities, I do not advise taking the risk of coordination of the multiple-prime contractors. Not everyone needs to learn the craft of construction coordination.
Second, to properly manage such interlinked schedules, the scheduler must be aware of (i) legal rules to keep the contractors accountable for their delays (ii) forensic delay analysis rules to distinguish the impact of particular delays (i.e., to distinguish delays resulting from the contractor’s default from the delays forced by Force Majeure) and asses their impact, and (iii) it must be quick, simple and understandable with the schedule. These are the competencies that schedulers focused on prospective planning hardly possess.
[Conclusions] As the examples show, construction management companies can play out their clients. From my experience, the over-trusted advisors left uncontrolled could play out their client, stop construction investment, and move it from the site to the courtroom. Re-consider the advice you receive from your consulting companies, and check whether the dispute isn't because of a Designer's and Engineer's conflict of interests.
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