Determinations, Rocks and Hard Places

Most form of contract oblige the consultant responsible for determining the contractor’s claims (the Architect, Engineer or Contract Administrator), to make a fair and reasonable award or decision in accordance with the contract. One of the questions that is frequently asked on our training courses by those acting in such positions is “What should we do when the client puts us under pressure to issue an unfair or unreasonable determinations?”

When determining claims, the consultant is between a rock and a hard place. If too little is awarded, the situation is likely to be elevated to a dispute by the Contractor, which could cost both parties considerable time and money and if too much is awarded, then the client will not be happy. If we bear in mind that the client pays the consultant’s fees, it is very probable that the consultant will feel under pressure to favour the client in such situations.

My answer to such questions is always the same. It should firstly go without saying that the determination should actually be fair and reasonable under the terms of the contract. In order to settle the matter however, it is necessary to convince both parties that this is the case. So how may this be achieved?

The consultant’s determination should contain exactly the same elements as a good claim. It should examine cause, effect and entitlement, it should be substantiated and it should be presented in a user-friendly way so that it may be understood by someone unfamiliar with the project or the matter in question. In short, a determination needs to have a great deal of effort put into it if it is to ensure that the decision is fully explained to both parties. If it is prepared in such a way, both parties will have difficulty in disagreeing with it and if the client tries to pressure the consultant to issue a lesser award, the consultant will be able to confidently say that the award is just and a lesser award may well result in a costly and time-consuming dispute.

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Comments

Leave a comment 2 Reader Comments
  1. Written by
    John Pearson on

    I question the title of this paper as the consultant has certain unbiased contractual obligations under the construction contract and, presumably, certain functional obligations under its professional services contract with the owner. Though your article gently alludes to these obligations your premise suggests the opposite and assumes your consultant is faced with a decision making dilemma.
    Owners, contractors, consultants and etc., must receive the same consistent message from us ‘construction claims practitioners’, that Contracts not only matter but that all participants in the construction cycle must return to – yes, return to – the position when we are all prepared to live or die by the contractual obligations to which we sign our names.
    This small admonishment and pedantic position on your article was prompted by your use of the conditional word ‘should’ in the second sentence of your penultimate paragraph. When referring to contractual obligations our industry would do well to delete this word from common usage in favour must or other unconditional language.

  2. Written by
    Andy Hewitt
    on

    Hi John
    Thank you for your comment with which I agree totally. Yes, consultants are obliged to carry out their obligations impartially in accordance with the contract and their service agreements, but in many parts of the world this does not happen. The employer pressures them to defend his position and the consultant often considers it their duty to protect the party who is paying their fees. This results in a biased rather than an impartial response to claims, which as you have correctly pointed should not be the case.
    The main gist of the blog however, is that a response to a claim should be detailed enough to prove that the findings are in accordance with the contract and take into account all the circumstances and if this is done correctly, it will make both parties realise that raising a dispute will be pointless.

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