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Introduction /overview of issue The Authority may agree to carry out works that are relevant to a project for a number of reasons. For example, such works may fall within the Authority’s responsibility in terms of any agreed “Authority Planning Conditions” and/or the Authority may simply be seeking to reduce the overall cost of the Project.

Where the Authority agrees to do so, the relevant works will be excluded from the scope of works that would otherwise fall to be carried out by the Contractor. This means that if there is any failure by the Authority to carry out the relevant works at all, or to carry them out in the correct way or if the Authority works are not carried out in accordance with the programme agreed with project co, it is likely that the Contractor will be subject to a delay in terms of completing the project works.

Interface with project agreement

The “counsel of perfection” on this issue would be to amend the project agreement so as to include specific provisions setting out the Authority’s obligations to carry out the relevant Authority Works. As will be understood by parties who are

active in hub and NPD projects, it can prove difficult to secure derogations approvals for amendments to the standard form contracts, and changes to document these obligations will be no exception. Consequently, our suggested approach is that the relevant obligations are recorded in the Authority’s Construction Requirements and that project co seeks to rely on Clauses 29.3.2 and 29.10.1 of the project agreement, should there be any serious failure on the part of the Authority in relation to the carrying out of the Authority Works.

Clause 29.3.2 establishes “breach by the Authority … of any of the Authority’s express obligations under this Agreement …” as one of the Delay Events under the project agreement. The ACRs are included within the Schedule Parts to the project agreement and the Schedule is expressly stated to be part of that agreement. As a result, if obligations relating to Authority Works are inserted in the ACRs, any failure on the part of the Authority to comply with those obligations will be a breach of an express obligations under the project agreement.

Clause 29.10.1 states that any Delay Event under Clause 29.3.2 is included within the list of Compensation Events under the project agreement. Our recommended approach should

accordingly allow project co to claim both an extension of time to the Completion Date/relevant Phase Completion Date and compensation for losses caused as a result of the Authority’s breach, without the need for amendments to the project agreement “front end”.

Exclusion of responsibility on project co’s part is not enough

It will not be sufficient, in order to secure protections under Clauses 29.3.2 and 29.10.1, for project co’s proposals document relevant to the Project to contain statements that project co is not responsible for elements of the works that the parties have agreed will instead be carried out by the Authority. The contractual provisions are based on Authority breach of contract. If the project agreement simply records that project co is not accepting responsibility for part of the project works, this is unlikely to be sufficient to establish an obligation on the part of the Authority to carry out therelevant works.

Key points for drafting “Authority Works obligations”

Where HM guidance is followed, the obligations will be included in

This note summarises our recommended “best practice” for documenting any works to be carried by the Authority that are relevant to the Project, based on practical experience gained in previous projects.

INFRASTRUCTURE & PROJECTS

Guide on documenting “Authority Works” in Hub and NPD Projects

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a technical document and, as such, they should be kept in context and not appear overly “legal” in nature. Our experience is that guidance for drafting can be summarised in three key words:

• “What” – what works has the Authority agreed to carry out?

• “How” – what standards or other requirements are to be complied with by the Authority when carrying out the works?

• “When” – what is the programme for carrying out the Authority’s works?

What?The drafting should capture all works that the parties have agreed are relevant to the Project and are to be carried out by the Authority. The description of the Authority’s works should be as clear and detailed as possible, including copies/details of relevant drawings, plans and specifications etc. It will also be important to show the location of the Authority’s works (in relation to the Site) on the site plan(s). The clearer the description of the Authority works, the easier it is likely to be to establish that the Authority has failed to carry out those works, should that become necessary.

How?It is unlikely, in practice, that (having agreed to accept responsibility for the same), the Authority will fail to carry out the Authority works in absolute terms. It is more likely that there could be a failure to carry out works to a requisite standard and/or in a manner that will result in the Authority works “interfacing” with the project works in the

manner intended by project co/the Contractor. Consequently, it is essential that the drafting clearly sets out the technical standards to be complied with by the Authority when carrying out the Authority works, including how those works are to be “tied in” with the project works, where appropriate.

When?Any delay in carrying out the Authority works may have a knock on implication for the project programme/the carrying out of the project works. As a consequence, the Authority should be asked to confirm the programme for the Authority works, this should be reviewed in conjunction with the project programme and the Authority should then commit to whatever programme is agreed for the Authority works. The approach should follow the provisions applied to project co under the project agreement – i.e. completion dates for the Authority works should be extracted from the programme and set out in the drafting. It will also be necessary to consider any events which, if they should occur, should relieve the Authority from the obligation to complete the Authority works by such date(s).

If there are multiple Authority works, and they are different in nature, in may be easiest to split these into different sections in the ACRs and to answer the What, How and When questions in relation to each section.

Terminology

Terminology used in the drafting of the Authority works obligations (and in the ACRs more generally) must be consistent with defined terms

in Section 1 of Schedule Part 1 to the project agreement. Without attempting to provide an exhaustive list, some of the more important defined terms are:

• the Authority (where references are being made to obligations or rights of the party procuring the Project) – and no references to “the Council” or “the Health Board” or the equivalent;• DBFM Co (for hub deals) or Project Co (for NPD deals) (where references are being made to obligations or rights of the project company);• the Contractor (where references are being made to the party appointed by the project company to carry out the Works); • the Service Provider (where references are being made to the party appointed by the project company to perform the Services); • the Works (or “Phases” if appropriate) (where references is being made to works being carried out as part of the Project); • the Services (where reference is made to the services to be performed by the project company at the Facilities following completion of the Works); • Project Operations (where reference is made to the entirety of the project company’s obligations in relation to the Project); and• the Facilities (where reference is being made to the completed works).

Contact Us

Euan PiriePartner0131 247 2505euan.pirie@harpermacleod.co.uk

This Guide provides only a brief summary on selected areas and is not intended to amount to advice on which reliance should be placed. Readers should not apply any of the information in it without first taking legal advice on the issue concerned. If you have any questions arising from this guide or would like legal advice on any other matter, we would be happy to hear from you.