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.