News & Media
October 21, 2020

UK court decision shows importance of ensuring scopes are consistent

UK court decision shows importance of ensuring scopes are consistent By David Hunter, Daniel Contract Management Services

In June 2020 the UK Technology and Construction Court handed down its judgment in the case of Blackpool Borough Council v. Volkerfitzpatrick Ltd & Ors [2020] EWHC 1523 (TCC). The decision serves as a reminder for NEC users preparing ECC contract documents of the importance of writing clear, consistent and concise scopes (or works information in NEC3).

The council had appointed the contractor using an amended NEC3 Engineering and Construction Contract (ECC) to design and build a landmark tram depot as part of a major upgrade to Blackpool’s historic tramway system. The depot was completed in May 2011 and in spring 2012 the new tram service started operating. A defects certificate was issued in June 2012.

Unfortunately in January 2015 a storm caused the depot roof to become detached. Following subsequent inspection and repairs, the council discovered that the galvanised cold-formed steel purlins and cladding rails that connected the main structural steel frame to the roof and wall panels were corroded.

Design-life dispute
The council went on to sue the contractor on the grounds that significant parts of the depot did not comply with the 50 year design life as required by the contract, and that the depot as designed and constructed was not suitable for an exposed coastal marine environment.

The council relied on its ECC works information, identified in contract data part one (data provided by the client), which specified a design life of 20 years unless otherwise stated in the appended functional procurement specification. This specification stated the ‘building structure’ should achieve a 50 year design life, though the contract did not provide a definition of ‘design life’ or ‘building structure’.

The contract also included works information provided by the contractor, referenced in contract data part two (data provided by the contractor). Attached to this was a technical design log stating a minimum design life of 50 years for the ‘structural frame’ and 25 years for the ‘external shell’. The contractor contended in its defence that the design life for the wall cladding panels was 25 years but for the purlins and cladding rails it was the client’s generally specified figure of 20 years.

The contract included an amendment stating that, in the event of an inconsistency, the council’s works information took priority over the works information provided by the contractor. The council argued there was an inconsistency between the documents so the contractor’s obligation was to ensure the purlins and cladding rails complied with the 50 year design life stated in its functional procurement specification.

The court did not agree. The problem was that the contract did not clearly identify that the purlins and cladding rails were part of the ‘building structure’, and there was no legal precedent or decisive British standard for the court to rely on. Judge Stephen Davies concluded there was no inconsistency, so the contractor’s works information prevailed and the design life of the purlins and cladding rails should be 20 years.

Discussion and lessons learnt
Scope (and works information) is defined in clause 11.2(16) of ECC (11.2(19) in NEC3) as
‘information which either 
  • specifies and describes the works or
  • states constraints on how the Contractor Provides the Works.’

The scope identified in contract data part one is the client’s scope. A main responsibility of the contractor is to provide the works in accordance with the client’s scope (clause 20.1).

For a design and construct contract, the client’s scope should state what design the contractor is to do, otherwise the default position is the client provides the design (clause 21.1). With contractor design, the client sets out its requirements, which may be in the form of a performance specification providing standards and a description of what the final product must be capable of doing.

The client may also invite the contractor to submit its design proposals at tender stage by identifying, ‘The Scope provided by the Contractor for its design’ in contract data part two. This become the contractor’s part of the scope.

The ECC does not expressly state a hierarchy of contract documents. After the contract is signed, if the project manager or contractor becomes aware of an inconsistency between the client’s and contractor’s parts of the scope, they must notify the matter. The project manager is then required to give an instruction to resolve the inconsistency (clause 17.1).

If the project manager decides the contractor’s part of the scope is wrong, an instruction may be given to change it to comply with the client’s scope. This instruction is not a compensation event and therefore gives effect to the client’s scope taking precedence over the contractor’s scope (clause 60.1(1)).

With design and construct contracts, there is a risk that the contractor’s design, where provided, may not comply with the client’s scope. Time should be spent reviewing tender submissions and correcting any differences before entering into a contract.

Some clients also amend their contracts to include an order-of-priority clause as a fallback position in the event of inconsistencies. The difficulty of this, as demonstrated in the Blackpool and other cases (e.g. Waterhouse, 2019) is that the clause cannot be relied upon where there is no inconsistency.

In the Blackpool case, the employer’s works information was not sufficiently clear as to its requirements, leaving a gap which was filled by the contractor’s works information, affirming the position taken by the courts that the contract should be read as a whole.

Conclusion
The scope (or works information) in an NEC contract can be a substantial document comprising separate parts prepared by different people. Clients should take great care and time when preparing and checking these documents to ensure that requirements are unambiguous and consistent.

NEC publishes excellent guidance on how to prepare scopes (NEC, 2019) and works information (NEC, 2013). Without proper co-ordination and alignment of the client’s and contractor’s versions of these documents at tender stage, there a real risk of inconsistency.

Amending the contract to include an order-ofpriority clause may give the client a false sense of security and should not be seen as an alternative to spending time getting the scopes in order before entering into a contract. 

References
NEC (2013) NEC3: how to write the ECC Works Information, https://www.neccontract.com/NEC3-Products/NEC3-Contracts/NEC3-Engineering-Construction-Contract/How-Tos/NEC3-how-to-write-the-ECC-Works-Information

NEC (2017) NEC4: Preparing an Engineering and Construction Contract Volume 2, https://www.neccontract.com/NEC4-Products/NEC4-Contracts/NEC4-Guidance-Notes-FlowCharts/NEC4-Preparing-an-Engineering-andConstruction-Co

Waterhouse P (2019) NEC short contracts and ambiguities, NEC Users’ Group Newsletter, 98, May, p 10.
POSTED BY NEC Contracts
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