Design & build – employers agent

This separation of design from construction in the building industry has, for a long time, been the source of many problems, and remains so, despite the efforts of Latham and Egan and their predecessors to combine the two disciplines.

In response to this, many employers who undertook construction work regularly began to look to contracts that reduced their risk, and more specifically in this case transferred design responsibility to the contractor. This was done by either providing employer’s requirements, which specified what was required so that the contractor carried out the design from the start, or as is more regularly used now, the employer’s existing design team who had taken the design to a certain stage was novated to the contractor, who was then responsible for completing the design and construction of the project using that design team.

The design and build process increases the opportunities for harnessing the benefit of the contractor’s experience during the design stages of the project. Many of the developments in procurement processes, and much of the work in the fields of study known as ‘value engineering’ and ‘buildability’, have had this purpose in mind. The benefits of the integration of designers and builders are buildings that are more economic to construct, as well as providing a more economic and effective production process.

Other positive aspects of the design and build process include the employer having less interfaces to deal with, not only in terms of consultants on the project, but also external third parties. Price certainty is gained as the employer only has one party to deal with (and pay for) once the contractor is appointed, for the design and construction stages of the project.

The emergence of a standard form of contract for design and build took a long time, but eventually arrived as the JCT Standard Form of Contract with Contractor’s Design 1981, which was subsequently replaced by the 1998 edition, then the restructured Design and Build Contract 2005, followed by the 2011 edition, and the current version which launched in 2016, and on which this guidance note is based, where it refers to the contract.

The JCT Design and Build Contract is appropriate where:

• detailed contract provisions are necessary and employer’s requirements have been prepared and provided to the contractor
• the contractor is not only to carry out and complete the works, but also to complete the design and
• the employer appoints an employer’s agent (who may be an external consultant or employee) to administer the conditions.

The JCT Design and Build Contract only has six references to the employer’s agent in the whole contract.
Firstly, the employer’s agent is named in the contract ‘or such other person as the Employer shall nominate in his place’.

Also, ‘Save to the extent that the Employer may otherwise specify by notice to the Contractor, the Employer’s Agent shall have full authority to receive and issue applications, consents, instructions, notices, requests or statements and otherwise to act for the Employer under any of the Conditions.’

The role of the employer’s agent is relatively simple. He or she acts on behalf of the employer on all matters, unless the employer expressly states (in writing to the contractor) that he or she wishes to act him or herself, or to appoint others to act for him or her on certain aspects of the contract. It is important that the employer allows the employer’s agent to carry out the duties on the employer’s behalf, and does not ‘interfere’ with those duties.

The employer’s agent’s duties are summarised within the contract, i.e. to receive and issue:

• applications
• consents
• instructions
• notices
• requests or
• statements
• and otherwise to act for the employer under any of the conditions.

However, the employer will always retain the following responsibilities:

• providing possession of the site – as the site belongs to the employer
• making payment to the contractor in compliance with payment notices – as the employer and the contractor are the contracting parties – no-one else can pay the contractor and
• issuing a notice to the contractor following the issue of a non-completion notice stating that the employer may require payment of, or may withhold or deduct liquidated damages. The role of the employer’s agent is to issue payment notices without deduction for liquidated damages, though the employer’s agent must advise the employer of his or her rights and responsibilities in this respect.

There are five further clauses in the contract that refer specifically to the employer’s agent:

• any notice or other communication between the employer (or employer’s agent) and the contractor that is expressly referred to in the agreement or the conditions shall be in writing
• the contractor is required to keep on-site and available to the employer’s agent at all reasonable times a copy of the employer’s requirements, the contract sum analysis, the contractor’s proposals and various other referenced drawings and other documents
• the employer’s agent and any person authorised by him or her or the employer shall at all reasonable times have access to the works and to the workshops or other premises of the contractor where work is being prepared for the contract
• a payment notice or a pay less notice to be given by the employer may be given in his or her behalf by the employer’s agent or by any other person who the employer notifies the contractor as being authorised to do so
• the (site) manager shall keep complete and accurate records in accordance with any provisions relating thereto in the employer’s requirements and shall make the same available for inspection by the employer and/or the employer’s agent at all reasonable times.

Although the JCT Design and Build Contract does not refer to the appointment of a quantity surveyor (or even mention the role), it is common for such an appointment to be made separately to the employer’s agent, or prior to his or her appointment, to assist with preparation of the employer’s requirements, cost planning, tenders, and other valuation-related issues. This may also, by agreement, form part of the employer’s agent’s responsibilities.

Note that where the contractor is restricted to design discrete parts of the works and not made responsible for completing the design for the whole of the works, the JCT Design and Build Contract should not be used. Other members of the JCT suite of contracts provide for such limited design input (contractor’s designed portion) by the contractor, and the employment of a contract administrator, rather than an employer’s agent.

The JCT suite of contracts also include standard forms of subcontract conditions, which dovetail the main contracts.

• Definition of Employer’s Agent – The definition of the employer’s agent is fundamental to being able to manage and complete his or her obligations under the contract, and for the contractor to establish correct authorities and instruction.
• The employer’s agent should be an individual named in the contract, together with his or her employer.
• The employer’s agent for the purpose of any contract must be one individual within whom the employer has entrusted his or her authority to manage the project.
• The contract provides for the employer to change this named party should that become necessary.
• Other parties may also be appointed by the employer but only one party acts as the employer’s agent under the Design and Build Contract, and therefore these other parties will have no authority to issue instructions, statements, notices etc.
• The same would apply with regards to a business being appointed, the individual carrying this authority should be specifically identified to avoid any potential misunderstandings.