Are Contract Administrators decisions being driven by concerns that a claim will be made against them?

Question

Are Employer's putting pressure on CA's and a cause of PII cover becoming more costly? Has the balanced view intended by the Contract disappeared?

Andrew Crawford · Accepted Answer

I think that there are two principle separate issues here;

The first in respect of an increase in PI insurance premiums is, that I do not believe that it is primarily due to an increase in professional negligence claims against the CA for its decisions in administering the Contract. We have seen the large increase in PI premiums, from what I have seen, mainly arising out of fire safety and in particular the sad and unnecessary tragic event of the Grenfell Tower where so many lives were lost due to, inter alia, lack of fire safety design and installation and neglect on life cycle maintenance of the property by the landlords etc.

Secondly and where I think this question is centred on, but please correct me if I am wrong and I will reply, is where, for example, the CA resists granting an extension of time due to an Employer Event and/or deciding a derisory amount for a Relevant Matter. This is where there may well be some concern by the CA for the decision its reaches and how that decision impacts the Employer.

Take the issue of late design information submitted by the CA. In effect, it is required, if it is proven, to extend the Completion Date due to its failure to release the design information in a reasonable time that enables the Contractor to continue, unhindered with the progress of the Works. If the late release of that design is not due to the Employer making Changes to the already signed-off design, then the Employer may well reach the conclusion that the Completion Date will be late due to the CA negligence. The Employer may well decide that the cost it has incurred by the extended Completion Date due to the CA negligence it submits a claim for recovery of that lost from the CA and then this results in lengthy proceedings, cost of the dispute and a subsequent increase in PI premium for many years.

In that scenario, there maybe, but it is not clear that it is the case, for the CA to take an unnecessary very strong line on the evidence needed to demonstrate that the Completion Date requires extending due to the Relevant Event cited by the Contractor. I have seen the CA require so much unnecessary evidence to prove the delay, to the extent that the Contractor then has to incur further cost in engaging delay experts resulting in some cases, embarking upon adjudication to obtain an independent decision. It must be remembered that the CA has knowledge and information on the issues and is bound, to use that knowledge and information in reaching a fair decision.

I do accept though, that some Contractors and/or sub-contractors do not present their case well and therefore there may well be a need for them to engage others to represent them in the way that is needed to present its case to the CA.

Once this has been done though, talking through and understanding the issues collectively with the CA and if need be, the Employer is a sensible way in reaching an agreement. If no agreement then fine, reach a conclusion on the dispute by other means such as adjudication, mediation, litigation, arbitration etc.

Are Contract Administrators decisions being driven by concerns that a claim will be made against them?

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Tom Spilsted

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