The publication of Circular 01/16 “Construction Procurement – revision of arrangements for the procurement of public works projects” on 18 January 2016 by the Department of Public Expenditure and Reform confirms the revisions to the Public Works Contracts. These changes will apply to the full suite of Public Works Contracts (PW-CF1-PW-CF5) and their associated tender documents from 4 April 2016.
The changes will effect clients, main contactors and sub-contractors alike. Set out below is a short brief on the changes contained in the Circular:
1. The Bill of Quantities
It is now a mandatory requirement for the Contracting Authority to produce a fully measured Bill of Quantities (in accordance with an approved method of measurement as set out in the Schedule) as the Pricing Document for PW-CF1, CF3 and CF5. Contracting Authorities will no longer be able to transfer the risk of inaccurate take-offs to the Contractor through Schedule 1K17.
This should be broadly welcomed by industry, as it will allow more accurate, and therefore more competitive, pricing at tender stage.
2. A return to ‘nomination’?
This change provides that Specialists will now tender directly to the Contracting Authority for projects carried out under the PW-CF1, CF3 and CF5. Similar, if not identical, to the old nomination mechanisms the Specialists sub-contract sum will be included in the tender package for the main works contract as a ‘Reserved Sum’ to which the main contractor will include a priced item for general attendances, special attendances and management. Profit must be added as a percentage and consequently this figure will change once the Reserved Sum is known. It is important to note that none of these additions made by the Contractor can be less than zero.
Specialists will be given the preferred Contractor’s programme at least 14 days before their separate tender response is due. Once the preferred Specialist is known the Contractor will confirm (or not) his acceptance to work with the successful specialist before a Letter of Acceptance is issued. If accepted, the Specialist sub-contract sum will be incorporated into the Contract Sum.
This change should see obvious benefits for Specialists such as:
• A more structured and transparent tender process
• Knowledge that their tender sum is not subject to adjustment at the behest of the Contractor; and
• Details of the Specialist’s payments will be included in the interim certification.
However, this may also create short term challenges for Specialists to upskill in understanding and completing the qualitative aspect of tender documents, if there are to be any, at initial selection and tender stage.
3. Dispute Resolution Procedures
Parties to PW-CF1 to CF4 now formally have the option of engaging in a without prejudice dispute resolution procedure prior to conciliation via a Project Board. As an example, the Project Board (as a minimum) could consist of a Director from the Contractor’s organisation and an executive from the Contracting Authority’s side. Both of whom have no direct involvement in the project.
In addition, for projects over a value of €10m, the parties must appoint a standing conciliator to conciliate any disputes that may arise during the life of the contract. For those contracts under a value of €10m, the parties must appoint a standing conciliator.
Although long overdue, these changes can only serve to assist, what we all hope, is a resurgence in publically funded construction projects. The obvious ‘elephant in the room’ is the absence of the Constructions Contracts Act and adjudication. For this, we will have to wait and see.