Reduce Your Risk in the Contractual Jungle - Equal and Approved
- Published: Sunday, 29 August 2010 16:11
Contractors can unwittingly take on more risk than they expect by being helpful in this way. Most specifications which accompany the drawings include the phrase ‘equal and approved’. In this article we look at some ways you can reduce your risk in the contractual jungle.
The article is brought to you as collaboration between UK Estimating Support Ltd and Knowles Ltd.
Two scenarios estimators commonly face are:
1. Suggesting alternatives within their tender submission to offer savings, and/or
2. Suggesting changes to produce tender savings.
Contractors can unwittingly take on more risk than they expect by being helpful in this way. Most specifications which accompany the drawings include the phrase ‘equal and approved’. What exactly does this phrase mean? It can simply mean that any proposed alternatives must be equivalent to those specified, but who decides what is equivalent? Look to the specification definition. Some specifications also carry an obligation to pay for any redesign costs incurred by the designers for any changes you instigate to the design. Sometimes a unilateral change can have an unintended consequence on unaltered design, and who carries the cost for this, undoubtedly the contractor will be expected to pay for the cost and ignorance will not be an acceptable defence. For example change of luminaire manufacturer or FCU. The new ones were carefully selected to fit into a shallow ceiling void, or to integrate with the depth of the duct, but the proposed alternative is 35mm greater i n depth and is ok accept where ductwork crosses above the luminaire. Another example is a contractor proposes an alternative hand drier, the client takes the saving, 2 years after handing the project over the hand driers are vandalised, the client (building user) argues that the alternative were not fit for purpose. We would suggest always that your initial tender offer ensures that design liability is and remains with the designers and that they bear the cost of re-design, after all you’re putting forwards changes to lower the tender because the client is facing a project which is over budget!
Geraldine Fleming of Knowles Limited – the dispute resolution experts says.
This is certainly a common problem that occurs on many building projects.
First of all, it is about ensuring that your tender is clear – if you have priced on a cheaper alternative product, ensure that the tender clearly states the products that you have priced on. If you then receive an order for the works, you have to check that the order properly reflects your tender, including the alternative product.
If you wish to make an alteration post formation of contract, then it is important to review the two words separately ie the word “equal” separately from “approved”. In the Court of Appeal case of Leedsford Ltd v Bradford Corporation (1956) it was held that the phrase “or other approved firm” gave the contractor the opportunity to submit other names to supply rock, that the architects obligation was to act in good faith, but this did not extend to the Architect being obliged to approve an alternative or even having to give reasons for non-approval.
It is therefore important to remember the “approved” part of the equation, and contractors who do not get the necessary approval would be in breach of contract if they installed an alternative product without gaining the necessary approval.
Note that the phrase “or equal and approved” means that the architect may approve the alternative, but is not obliged to approve it.
Finally also bear in mind the programme. If an alternative product is proposed during the course of the project, sufficient time must be given to the architect to consider this alternative, without jeopardising the programme. A minimum of one month before materials need to be ordered, after appropriate documents have been submitted it is suggested. Appropriate documents could include:
• technical literature
• performance specification
• test results
• method statements
• COSHH sheets
• life cycle costing
• environmental impact statements.
UK Estimating Support Ltd
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