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Legal Stuff in Facility and Building Management

A Contract Management Fail

An outline of this privileged observation:

In a nut shell, a HVAC contractor is a given a task to replace a Fan Coil Unit (FCU). The contractor submitted his price, received the order and began the job. He didn’t consult with any other trades, tenancies or technicians involved in the building. I can understand his point of view (not that I agree with it), his job was to replace the FCU, everything else, is not his problem, or is it?

“in the beginning”

A scope of works document for a straight forward Fan Coil Unit (FCU) replacement had been written by the building manager, but where did he get the scope from. The Scope, had originally been written by the incumbent HVAC sub contractor, whom was well aware of the building and how it operated. The incumbent HVAC contractor’s written word didn’t include isolation strategies, re connections, BMS interface, electrical connections and isolation because it was a “given”, as far as he was concerned. The incumbent had the words to the effect of “disconnect/reconnect services”, which included these things. The incumbent contractor would have allowed some time and effort to do these tasks. but his price was deemed too high.
The Building Manager (good guy, by others) simply copied the scope which was written by the incumbent HVAC contractor, onto the BM’s company letter head and asked others to quote. The new HVAC contractor was at a lower cost and was given the order. The BM thought he was on track and saving money, keeping the incumbent HVAC contractor honest and letting him know he has a rivalry on site. Usually, this is a reasonable strategy, but the incumbent wrote the scope of works for the replacement FCU with several assumptions and with pre-existing site knowledge.

Re-use another contractors scope:

To reuse another contractor’s scope in a call for quotes is a logical process and I’m sure is a common practice, in this case, it doubled the cost of the job.

How the Disaster unfolded

The new HVAC Contractor did the expected things, he turned the water off. He didn’t tell any one, he didn’t know he had to. Consequently, a server room shut down. I’m sure you can guess the colour of the air.
Once that was sorted, the new FCU was installed. Now it was time to commission the new FCU; the new FCU caused the circuit breaker to keep tripping, (cause = conflict between BMS fan speed and an on board control fan speed) so that was sorted, the BMS didn’t work as it should, that was sorted, the replacement of the ceiling tiles was sorted, the replacement of fire retardant in the penetrations was sorted.

Added costs

The new HVAC contractor didn’t allow for the extra commission time, and a few other minor issues, so he charged for these costs. This more than double his overall price and was above the incumbents original price.

What happened next

The new HVAC contractor was a little ruthless and not a great communicator. The owner paid the Bill, the BM learnt about reading and writing, and the incumbent HVAC contractor had a stronger hold on the site than before. But this isn’t the point, the point is the scope of works document, in the beginning of the whole process, was flawed, not re-read and not questioned.
To take it further, the contract should have Safety concerns addressed, waste and sustainability concerns, and so much more. The BM, whom was actually employed by the owner, had exposed the owner to some unnecessary risk.

Conclusion:

We can discuss for hours about the inclusions and exclusions of the contact, we can discuss the behaviour of the new HVAC Contractor, and we can discuss the legal opportunities for recovery of some of the costs, but, the point is, the initial document was flawed, it should have never been used for pricing.
What are your thoughts?
Nigel Wraight
Principle
Wraight Property

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