1. CMG CONSTRUCTION CONTRACTS CONFERENCE DEIRDRE HENNESSY, SENIOR ASSOCIATE BYRNE WALLACE

2. PUBLIC WORKS CONTRACTS
April 19, 2019

3. April 19, 2019
INTRODUCTION:
DEPT OF PUBLIC EXPENDITURE AND REFORM – RESPONSIBLE FOR NATIONAL POLICY ON PUBLIC PROCUREMENT
CAPITAL WORKS MANAGEMENT FRAMEWORK –
.IE
PUBLIC WORKS CONTRACTS – 2006
2014 – GOVERNMENT REVIEW CHANGES (2016)
STATUS OF BILL OF QUANTITIES /PRICING DOCUMENT
REVISED DISPUTE PROCESS
NOTICES OF DISSATISFACTION
REVISED SPECIALIST TENDERING
NEW TENDER AWARD CRITERIA
April 19, 2019

4. PWC - RECENT CHANGES - Introduction
Construction Contracts Act 2013
PWC - RECENT CHANGES - Introduction
TWO RECENT CIRCULARS
-Circular 10/2018 –
Amendment to threshold amounts for use of Short Form Contracts
- Circular 08/2018-
Amendments to reflect SEO’s and
Amendments to the Comparative Cost of Tender Process
April 19, 2019

5. Recent Changes – Continued…
CIRCULAR 10/2018 –
Amended the threshold for use of the Short Form PWC from an estimated value of €500, to €1,000,000.00
Updated the legislative references to new legal provisions introduced in relation to SEO’s
Clause 5 amended to include Sectoral Employment Orders
Any contracts awarded pre May 2018 – cannot recover additional costs incurred as a result of SEO’s unless can make a case for it under Clause
Changes the manner in which the Comparative Cost of Tender process is undertaken – Forms of Tender and Schedule amended
April 19, 2019

6. Recent Changes - Continued
6th June 2018 –
Amended forms of FTS1-FTS5, FTS13 and ITT-W1, ITT-W1a, ITT-W2and ITT-W8 published to include revised Comparative Cost of Tender
If tender submission date is prior to 7 July 2018 no action required
27th June
Amended forms of PW-CF1 –PW-CF5 and MF 1.13 were published.
Apply to all tenders submitted on or after 7 July 2018
April 19, 2019

7. STATUS OF BILL OF QUANTITIES
Effective from April 2016
PW- CF1, PW-CF3 AND PW-CF5 – Bill now a compensation event
Previous position - financial risk of difference between the BOQ and the works requirements - contractor risk
New position - financial risk now set out in Schedule Part 1K,17:
A difference between the Contract value of the Works according to the quantities and descriptions in the Pricing Document and the Contract value of the Works described in the Works Requirements, because the Pricing Document, when compared with the Works Requirements
includes an incorrect quantity or
includes an item that that is not included in the Works Requirements or
April 19, 2019

8. BILL OF QUANTITIES
excludes an item that is included in the Works Requirements or gives an incorrect item description and the difference for an item in, or that should have been in, the Pricing Document is more than €500. Then….no delay event but IS a compensation event– EMPLOYER RISK
April 19, 2019

9. For example – Ground Conditions (Part I K, 19)
BILL OF QUANTITIES
Risks not compensated under Schedule Part 1 K override Schedule Part 1 K, 17
For example – Ground Conditions (Part I K, 19)
April 19, 2019

10. IMPLICATIONS FOR CONTRACTING AUTHORITIES:
BILL OF QUANTITIES
IMPLICATIONS FOR CONTRACTING AUTHORITIES:
BOQ will prevail in relation to contract sum
Must employ fully qualified cost consultant to prepare fully marked BOQ from the design
Complete design must be prepared
Design team appointment crucial
BOQ will be base document for any additions and valuing interim payments
April 19, 2019

11. POINTS FOR CONTRACTORS:
BILL OF QUANTITIES
POINTS FOR CONTRACTORS:
The contractor must pay particular attention to the BOQ submitted with the tender documents and must price its tender based on those quantities and work descriptions as opposed to the WR.
The overriding criteria for the contract will continue to be the lowest price/most economically advantageous tender but the BOQ will be used as the document to evaluate those tender submissions.
Check that the BOQ has been prepared by a cost consultant. Is it prepared correctly and in accordance with the specified rules of measurement? If not this matter should be raised with the employer and a properly measured bill should be obtained before any tender is submitted.
Has the BOQ been prepared with complete design information? The contractor should analyse the WR versus the description for the items in the BOQ to ensure that full information has been provided. If there are any anomalies or discrepancies at this point they should be raised and responded to before the contractor submits a price.
April 19, 2019

12. BILL OF QUANTITIES
The guidance note for Contracting Authorities is very specific about the Employer’s obligations in relation to the preparation of the information required in order to input into the pricing document and, therefore, if this task is not properly carried out by the design team it may lead to an avenue for the contractor to claim for full discrepancies against the employer at a later date.
If a contractor calls for a check on the quantities during the contract and it transpires there is no error/discrepancy then they will have to cover the Employer’s costs of carrying out the check.
Contractors should engage a qualified quantity surveyor to assess the tender documents and assist with the tender price to be submitted.
April 19, 2019

13. REVISED DISPUTE PROCESS
WITHOUT PREJUDICE DISCUSSIONS
DISPUTE MANAGEMENT PROCEDURE
CONCILIATION
ARBITRATION
ADJUDICATION
IRISH COURTS
April 19, 2019

14. Recent Changes – REVISED DISPUTE PROCESS
PWCF1- PWCF 4 –
DISPUTES UNDER CLAUSE OR
can be referred to without prejudice process prior to conciliation
dispute management procedure consists of meetings of the Project Board
CLAUSE – sets up the Project Board
PROJECT BOARD - individuals identified in Schedule Part 3a – persons nominated to represent the Parties
SCHEDULE PART 1A – Employer selects no. of people to make up the Project Board – minimum 1 and max 3
Details of persons must be contained in the letter of acceptance
April 19, 2019

15. REVISED DISPUTE PROCESS
At least one member must hold a construction related role in each Party’s organisation;
Employer’s Representative or Contractor’s representative or design team members cannot be members of the Project Board;
Members should have authority to negotiate agreements which are binding on the party;
External people can be appointed – should have knowledge of construction industry, commercial and technical dispute resolution, alternative dispute resolution methods, commercial decision making, commercial negotiation
April 19, 2019

16. REVISED DISPUTE PROCESS
FUNCTION OF THE PROJECT BOARD:
Solely to review disputed Employer representative Determinations issue under Sub-clause and which have been referred under clause 13.1 of the Contract
The Board must hold a preliminary meeting within 28 days of the Letter of Acceptance
Must agree a Protocol for all future meetings and a schedule of dates for standing meetings
Operation procedures are at discretion of the Board
All Board communications are WITHOUT PREJUDICE
Project Board must meet at least every 60 DAYS to review and discuss the disputes referred to it
Where no agreement is reached at the first meeting following the referral the Board must inform the Parties and either Party can refer the dispute under Clause 13.2
April 19, 2019

17. REVISED DISPUTE PROCESS
If the dispute is not referred then the original Employer’s Representative Determination is binding
Shall not review any other dispute under the contract – only those re and
ADJUDICATION –
If a matter is referred to Adjudication where the dispute process has commenced – process is suspended pending outcome of Adjudication
If Adjudicator makes Decision – dispute process terminates
If no Decision – dispute process re-commences
April 19, 2019

18. Recent Changes – REVISED DISPUTE PROCESS
CONCILIATION:
Clause 13.2 sets out the process
Notice of Referral must state it is given under Clause 13.2
PWCF1-PWCF4 – Where a Standing Conciliator is appointed, they shall act as the Conciliator
If Adjudication is issued while a matter is in Conciliation – Conciliation must adjourn pending outcome of Adjudication
If Adjudicator reaches Decision – Conciliation terminates
If no Decision – Conciliation recommences
April 19, 2019

19. Recent Changes – REVISED DISPUTE PROCESS
THE STANDING CONCILIATOR
For all contracts under PW-CF1 to PW-CF4 where contract sum expected to be less than €10m –optional but mandatory for contracts with a sum in excess of €10m
Employer has option of appointing a Standing Conciliator -
Where appointed, the Standing Conciliator fulfils the role of Conciliator for all disputes referred to Conciliation –
Intended to encourage proper engagement by the Parties to assist them in avoiding disputes and to avoid costly and lengthy dispute procedures –
Standing Conciliator shall be issued with full set of contract documents
Shall attend site meetings on a regular basis
Included in correspondence re clause 4.9, (prog.)4.10 (progress reports) and 4.15 (meetings)from each party
April 19, 2019

20. Recent Changes – REVISED DISPUTE PROCESS
Where dispute is referred to Conciliation under Clause 13.2 Standing Conciliator must act as Conciliator
Relationship between the Standing Conciliator and the Project Board must be carefully managed
Standing Conciliator can get involved in Project Board with agreement of the Parties
April 19, 2019

21. Notices of Dissatisfaction
NOTICES OF DISSATISFACTION – CLAUSE 13 Clause 13.1 Where either Party is dissatisfied with the Conciliator’s Recommendation, it may, within 42 days after receiving the Conciliator’s Recommendation, so notify the other Party. If a Notice of Dissatisfaction has been given either Party may refer the matter to Arbitration under Clause 13.3.
April 19, 2019

22. Notices of Dissatisfaction
Clause 13.1 – If Payment Recommended
Where the Conciliator has recommended a payment of money and a notice of dissatisfaction is served then:
Party concerned shall make the payment provided the other Party first
(a) gave notice complying with the arbitration rules referred to in Clause , referring the dispute to arbitration and
(b) gave the paying party a bond for the amount of the payment.
April 19, 2019

23. Notices of Dissatisfaction
The BAM case:
BAM Building Ltd v UCD Property Development Co Ltd [2016] IEHC 582 (20 October 2016):
The issue before the court was whether the dispute as to whether or not the defendant was liable to pay the sum recommended by the conciliator pending the arbitration, should be determined by the High Court or by the arbitrator.
The court held that the starting point for interpretation of any arbitration clause should be on the basis of an assumption that unless the language makes clear that certain questions are excluded from the arbitrator’s jurisdiction, all disputes should be referred to arbitration. Quite apart from the presumption that Clause 13 should be interpreted on the basis that the parties intended that all disputes arising out of the conciliation should be capable of referral to arbitration, the text of Clause 13 also pointed in that direction.
April 19, 2019

24. Notices of Dissatisfaction
Accordingly, the issue was a matter for the arbitrator to decide and the court stayed the proceedings pursuant to Article 8(1) of the Model Law. Implications of BAM Case: - Will this discourage parties from Conciliation if they cannot get paid - Encourage them to adjudicate instead?
April 19, 2019

25. Notices of Dissatisfaction
Kelly’s of Fantane (Concrete) Limited (In Receivership) v Bowen Construction Limited [2017 No.272 S]
This case concerned an application for Summary Judgment to enforce a Conciliator’s Recommendation
Contract was for paving works by Sub-contractor for Main Contractor on N7
Clause – the party concerned shall make the payment recommended by the Conciliator provided that the other party first
Gave a notice under 13.2 referring the same dispute to arbitration and
Gave the paying party a bond in the amount of the payment
The Defendants argued that they should not have to pay the sum as the Plaintiff did not comply with (b) – did not refer the same dispute and that pursuant to Clause 12 the sub-contract had been terminated
“If a party fails to comply with a conciliator’s recommendation which is binding, the other party may take such court proceedings as are appropriate to force compliance with the conciliator’s recommendation without availing further of the conciliation or arbitration process” (Clause 13(b)(5) of the sub-contract).
April 19, 2019

26. Notices of Dissatisfaction
April 19, 2019
Notices of Dissatisfaction
Matter before the Court was whether the Defendants have met the threshold required for the issue of payment of the Conciliator’s Recommendation to be remitted to plenary hearing Court found in favour of the Plaintiff– The terms of the contract clearly envisage a situation where the amount recommended might be varied by the arbitral award. If the Plaintiff obtains summary judgment, it does no more than give effect to Clause 13… The obligation to pay the recommended sum once a bond has been provided and the matter has been referred to arbitration is a binding obligation because that is what the parties have agreed…
April 19, 2019

27. Notices of Dissatisfaction
This was a strong endorsement of the binding nature of Conciliator’s Recommendation
Must be distinguished from BAM case due to sub-contract Clause 13(5)(b).
April 19, 2019

28. Revised Specialist Tendering Process
Procedure for Contracting Authorities to directly obtain tenders from Specialists who are to be appointed by Contractors – Reserved Specialists
Only refers to PW-CF1, CF3and CF5
The revised 2016 Reserved Specialist procedure replaces the procedure where Specialists proposed by tendering Contractors could be determined by the contracting authority as being suitable for appointment on Employer design contracts. Whilst the Reserved Specialist procedure is not available on Contractor design contracts, pre-qualification of Specialists continues to be available
April 19, 2019

29. New Tender Award Criteria
Guidance Note 1.0 v1.1 dated 21 January 2019.
April 19, 2019

30. SECTORAL EMPLOYMENT ORDERS
COST RECOVERY
April 19, 2019

31. The former REA system (1946-2013)
Permitted trade unions and employers to make “employment agreements”.
These could be registered by the Labour Court and thereby become “REAs”.
Could apply in individual undertakings or across whole sectors.
Set terms and conditions of employment in construction; electrical contracting; Dublin retail drapery.
McGowan case – McGowan v Labour Court Ireland & Ors
IESC 21 (9 May 2013)
the entire mechanism for creating REAs was struck down as unconstitutional.
April 19, 2019

32. SEO Systems
Sectoral wage-setting now called “sectoral employment orders” (“SEOs”).
SEOs not structured as agreements – Labour Court to make recommendations to the Minister.
Application can be made for an SEO by a trade union or employer organisation or jointly by both.
April 19, 2019

33. Process for making SEOs
Application by union or employer(s) or both.
Court determines whether application can be examined.
If so, Court invites submissions from interested parties.
Court considers matters by reference to statutory criteria.
Court can make recommendation about certain conditions of employment to the Minister.
Minister can make the SEO, subject to possible annulment by Oireachtas.
April 19, 2019

34. Labour Court: jurisdictional requirements
Trade union requester must be “substantially representative of workers of the particular class, type or group in the economic sector” concerned.
Employer organisation requester must be substantially representative of the employers of a [sufficient] number of workers in that sector.
The request must apply to all of the workers in the class/type/group concerned.
It is a “normal or desirable practice” or it is “expedient” to have separate terms for that particular class/type/group.
Any recommendation is likely to “promote harmonious relations” between relevant workers and employers.
April 19, 2019

35. Labour Court: substantive examination
Court shall have regard to the following:
Potential impact on the levels of employment and unemployment in the sector.
Any relevant national wage agreement.
Potential impact on competitiveness in the sector.
General level of remuneration in other economic sectors in which workers of the same class, type or group are employed.
That the SEO shall be binding on all workers and employers concerned.
April 19, 2019

36. Provisions that can be included in an SEO
A minimum hourly rate of pay.
Not more than 2 higher rates based on skills or length of service.
Lower rates for young or unskilled workers, apprentices.
Premiums for shift work, piece work, overtime, unsocial hours, Sunday work, travel time.
Pension scheme.
Sick pay.
April 19, 2019

37. Other provisions Provides for civil, not criminal enforcement.
Compensation from adjudication officers: up to 104 weeks’ pay.
Exemptions for employers who are unable to pay.
No new applications can be made within 12 months of making of SEO except in exceptional circumstances.
Prohibitions on penalisation.
April 19, 2019

38. Construction sector SEO 2017
Has effect from 19 October 2017
Applies to all “building firms” and “civil engineering firms” as defined in the Order.
Compulsory rates of pay; pension; sick pay for the categories of workers as defined in the order.
Contains a dispute resolution procedure to be utilised in the event of a dispute arising over a term in the Order.
April 19, 2019

39. The hot topics
Application for a new SEO in the construction sector to replace SI 455/2017, the Sectoral Employment Order (Construction Sector) 2017:
Construction Unions seeking a phased 12% increase in pay.
Labour Court hearing held 22nd March 2019 – Court has 6 weeks from the hearing date to make recommendations to the Minister
Thereafter Minister will have six weeks to approve the Court’s Recommendations
Even if accepted unlikely to come into effect for some months.
Application for a new SEO in the electrical contracting sector:
Labour Court hearing held 14th March
April 19, 2019

40. Thank you – Any questions?
April 19, 2019

41. Dhennessy@byrnewallace
88 Harcourt Street, Dublin 2, D02 DK18, Ireland
April 19, 2019