Construction Manager's Liability

Monday, 3 March 2008

Does a construction manager have any direct liability for COST and TIME?  the answer may be YES.

It is commonly thought that one of the advantages of construction management is that the construction manager passes responsibility for cost and time performance to the proprietor.  a recent decision in the UK casts some doubt on a construction manager's reliance on this belief.

The decision in Great Eastern Hotel v John Laing Construction Limited and Laing Construction Plc is important as it is one of the few occasions that a dispute involving a construction management agreement has reached the courts. In this case, the TCC considered the nature and extent of the defendant construction manager's obligations under a construction management agreement, which provided that the construction manager would carry out its services using the reasonable skill, care and diligence to be expected of a properly qualified construction manager. On the facts, HHJ Wilcox QC found the construction manager to be in breach of its obligations and liable to its client, the claimant, for the loss and damage it had sustained as a result of those breaches. It is clear from this decision that construction managers cannot simply consider construction management as a method of procurement whereby the principal risks of time and cost remain with the client. Indeed, in light of this decision, if a construction manager is in breach of its professional obligations it runs the risk of being ordered to pay damages similar to those which may be awarded against a traditional contractor operating under a lump sum contract.