Project risk and control
Tender risk
• Programme and method
– Tightness of completion
• LAD’s
• Extent of change
– Construction method
• Temporary works
• Change of sequence
• Reuse
– Ground conditions
• Measurement and “contractors” risk
• Who measures, how paid for consequential method-related
costs?
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Tender risk cont
•Subcontractors
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Extent of quotation
Qualifications
Relationship with main contractor
Specificity
•Suppliers and materials
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Fixed ? Price
Which rate to use?
Wastage allowance
Small load charges
Muscle?
Time for resend out
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Commercial opportunity
•An opportunity to make the tender more
competitive
– Sometimes called “scoping” allowance
– Calculated figure which results in a net reduction of
the tender total
– Usual to have a project commercial strategy
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Design team ability
Client approach
Quality of documentation
Type of procurement
Competitiveness of subcontract market
Valuation and variation provisions
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Reduction in tender price
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Contract risk
•Delay and disruption
– Responsibility
• Delay-impact on overall handover
• Delay-impact on sequencing
– Disruption
• Direct measurable consequences
• Can take place without any measurable delay
•Who is at fault
– Contractor
– Client
– Both
– No-one
•Who determines
– Architect
– Engineer
– Approach of contract
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Delay- some terms
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Compensable delay
– An employer risk event where the contractor is entitled to an extension of time and timerelated costs
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Concurrent or parallel delay
– Where there are two or more delays and at least one is an employer risk event and another a
contractor risk event
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Critical delay
– Delay to a critical activity which causes delay to overall completion of the project
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Excusable delay
– Where the contractor is relieved from delay damages and where there may be time and
money entitlement under the contract
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Non-excusable delay
– Delay caused by the contractor for which there is no relief from delay damages and no time or
money entitlement
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Global delay
– Where actual completion exceeds planned completion but individual employer risk events are
not identified
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Local delay
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Delay to noncritical activities which do not impact the contract completion date.
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Claims
• Extension of time awarded
– Relevant event/compensation event
– No culpable delay
– Culpable delay
• Loss and expense
– Records, records, records
• Evaluation of prolongation expenses
– Who and how
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Insolvency
•Risk rating
•Definitions
•Bankruptcy
•Voluntary agreement
•Administrative receivership
•Administration
•Winding up
•Voluntary liquidation
•Compulsory liquidation
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Termination and insolvency
• The effect of termination
–Notices
–Impact
• Subcontractor insolvency
–Practical
difficulties
•Programme
•Evaluation of the work
•Notional account and final account
• Employer insolvency
–Practical
difficulties
•Recovery
•Contractual position
•Subcontract position
• Contractor insolvency
–Options available
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Subcontractor price weighting
criteria
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Post auction stage
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Bidding activities
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Popularity?
•Price only?
•Reduced buyer/supplier trust
•Need for completeness of tender information
•No opportunity to offer comparable materials
•Little opportunity for integrated procurement
•Future in a price-oriented market?
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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