Front Page Gadfly
- Jun 7, 2004
The construction world on big projects like the stadium is quite small. General disbelief that Tottenham did not negotiate a fixed price contract or similar but the talk down here in NZ was no-one was prepared to take on such a contract and with constantly changing design who would take on that risk. Unfortunately it would appear we are in for a lot of the pain from the stadium delay and will be lucky if it only ends up costing 1.2 billion. If you want the real reason we were absent from the TW look no further.
So instead, my area, which was affordable housing, abandoned traditional contract procurement and went for design-and-build contracts instead. You can transfer the financial risk to the contractor if you also transfer the design responsibility to the contractor - that's legal. But it comes with a cost in terms of quality: the developer loses control of the detailed design. You cannot seriously think that Daniel Levy and THFC would do that.
I got out of project-managing building contracts because I wasn't willing to put up with the dilution of quality and cheapskate shit that every contractor on a D&B job would try to get away with. You can spot these D&B housing estates all over London: the overall design of the buildings is quite imaginative, because it was devised by the developer's architect to get planning consent, but they are let down with cheap bricks, badly detailed windows, shoddy roofing details and half-cooked landscaping introduced by the contractor to save money and increase profit.
Instead, THFC went for a third option, which is construction management. The developer enters into the individual subcontracts (roofing, electrics, etc.) directly and they appoint a "construction manager", rather than a contractor, to coordinate everything: in this case, that is Mace. Mace have overall responsibility, but they are not cash-flowing the build and paying the subcontractors. The design control remains with the developer, but they have to do a hell of a lot of detailed work letting all these individual contracts and they are still exposed to the financial consequences of mistakes, unless they can charge liquidated damages against the construction manager.
I don't believe the rumour that Mace have no liability for damages for late completion. The usual thing with construction management is that you balance the damages clause with positive financial incentives for exceeding targets: if certain operations finish early, the manager gets paid more.
But the main point here is that the notion of a "fixed price contract" in the British construction industry is a fiction.