The RIBA Plan of Work 2013 identifies the roles of the Project Lead, responsible for managing the project, and the Lead Designer, responsible for managing and coordinating the design, in building projects.
A trend in recent years has been for ever more projects to operate on the basis of the appointment of a lead consultant and/or lead designer so that the client has a single or fewer points of contact.
There are differing reasons for this; it may be the lack of experience of the client in the construction process, causing them to want a high level of assistance from the lead consultant and/or lead designer, or it may be that the client is having the work undertaken at a distance and so needs to rely on a trusted advisor.
There is also the benefit to the client that if something goes wrong; there is only the one point of action, as claims would be made against the lead consultant or lead designer and their insurance policy. It would then be down to the lead consultant or lead designer to seek a contribution from the sub-consultant. This is the process called subrogation.
The danger is always that this process is not successful, for instance, if the sub-consultant does not have insurance, which may lead to a claim being paid under the lead consultant’s policy, even though the work was undertaken by, and the error the responsibility of, the subconsultant. This could have an effect on the future availability of insurance for the lead consultant or the terms that are available particularly if a substantial figure is involved.
TO MINIMISE THE RISKS INVOLVED IN APPOINTING SUB-CONSULTANTS, THE FOLLOWING POINTS SHOULD BE CONSIDERED:
- Always try to work with sub-consultants that you know the reputation of and ideally have a good existing working relationship with.
- Sign a back to back professional services appointment with the sub-consultant such as by means of the sub-consultants form in the RIBA Agreements.
- Pass on the same obligations that you have to your client to the sub-consultant especially in respect of the limit of insurance and the period for which it is to be maintained.
- Ensure that all contract documents are executed in the same format. If you are signing a deed with your client, then the sub-contracts should also be signed on this basis.
- Make sure that the sub-consultant is also obliged to provide collateral warranties to any parties that you are providing with collateral arranties. It may also help if the sub-consultant signs a collateral warranty with your client, creating a direct contractual path. This could enable your client to take direct action if there was a clear responsibility.
- Obtain a copy of the sub-consultant’s professional indemnity insurance certificate. Check the limit of indemnity they buy and bear in mind that if it is an aggregate rather than an each and every claim policy it represents the total insurance available to them for the whole policy period for all claims that may occur. The extent of insurance available varies according to the profession of the parties involved.
- Continue to check the sub-consultant’s insurance is renewed in the future; it is the professional indemnity policy in force when the claim is made that will respond to any future claim, not the policy in force at the time the services were undertaken.
- Check your insurance policy wording; some insurers include requirements for the use of sub-consultants - typically a minimum limit of indemnity that they are obliged to carry and that there must be a written contract between you.
- Declare clearly any employment of subconsultants on your renewal proposal forms and include within the fee income of the practice those fees paid to sub-consultants, and ideally identify the different professions involved.
There is always an element of risk in situations where you are taking the direct responsibility for another party but it seems likely that the trend for clients to request fewer individual professional services contracts will continue to grow. The additional risk of employing sub-consultants can be minimised through ensuring you take these few essential precautions.