This month’s contract clinic question comes from a construction client worried the employer’s agent is siding with the late-running contractor. Hakan Ozsoy responds.
The question
We are the employer on a small residential development. We believe our employer’s agent (EA) is failing to deliver his duties and favouring the views of the contractor, which is in delay, rather than working to ensure the on-time delivery of the project. What are our rights? What would you recommend as a route for remedy?
The answer
The role of the EA, particularly under contracts like the JCT Design and Build (2016), holds a central role in ensuring the smooth execution of a project.
As an employer, you’ve entrusted your EA with critical responsibilities to oversee the contract. When a relationship breaks down due to underperformance or breach of duty, it can jeopardise your entire project.
Understanding your rights and available remedies is essential for swift and effective action.
Understanding the EA’s duties
According to RICS Practice Information, an EA acts on behalf of the employer in all matters while maintaining impartiality in certification and decision-making functions.
To start, you should review your appointment document or consultancy service agreement (assuming you have one). This will help you understand duties, performance expectations and reporting obligations. These typically include:
- Administering the contract and ensuring compliance.
- Overseeing the contractor’s performance and reporting progress.
- Managing variations, change control and claims, eg, extension of time, loss/expense and liquidated damages.
- Monitoring commissioning and inspections.
- Issuing instructions and payment certificates.
- Facilitating clear, concise and ongoing communication between stakeholders.
- Acting as main point of contact with the contractor.
- Arranging handovers, practical completion and agreeing the final account.
You have the right to expect the EA to fulfil these duties with fairness and diligence as outlined in your agreement.
Gather evidence of underperformance
The key to successful resolution lies in thorough documentation, clear communication of expectations and proportionate response to the severity of failures.
You should document specific instances of failure such as missed deadlines, poor communication and resulting costs or delays. Collect written correspondence and records demonstrating how the EA’s actions or inaction affect the project. This evidence is crucial for any escalation.
You have the right to expect full performance from your EA and should be able to pursue remedies
Construction projects operate under tight schedules. Delays in addressing EA failures can compound problems and increase eventual costs. Act promptly once performance issues become apparent.
Where possible, attempt resolution through discussion and clear communication before formal action. Resolution without litigation may benefit future working arrangements.
If such a resolution is not possible, formally notify the EA in writing, referencing the relevant clauses in your agreement. Clearly state the failures and request immediate rectification within a specified timeframe. Outline the consequences of continued non-performance. This approach may help resolve issues and strengthens your position should legal action follow.
Mitigate project risks
While addressing EA failures, ensure project continuity. Consider appointing interim professional support or temporarily assuming control of critical functions to prevent work stoppages or contractor claims.
Inform the contractor and other stakeholders of the changes, particularly to maintain validity of payment certificates and instructions.
If problems persist, follow the termination procedures in your agreement and appoint a new agent. Ensure you comply with notice requirements to avoid wrongful termination claims. Proceed with care: termination can be legally complex with financial consequences.
If the EA’s failures have resulted in cost overruns, delays or reputational damage, you have several options:
- Professional indemnity claims. Most EAs carry professional indemnity insurance. Claims can be made for losses resulting from negligent performance or breach of professional duty. Review your own project insurance arrangements as these may offer faster resolution than pursuing claims against the EA directly.
- Contract damages. Pursue compensation for additional costs, delays and other quantifiable losses directly attributable to EA’s failures.
- Recovery of fees. In cases of material breach, you may be entitled to recover professional fees paid for inadequate services.
Prevention for future projects
To mitigate risks and ensure your EA performs effectively, implement the following measures in your upcoming projects:
- Conduct due diligence on the EA’s competence and track record.
- Define clear performance and reporting requirements and communication protocols.
- Schedule regular review meetings.
- Implement milestone-based performance assessments.
- Include robust termination provisions with clear grounds and procedures.
- Specify sufficient professional indemnity cover.
- Establish dispute resolution mechanisms for performance issues.
- Consider step-in rights for early intervention.
You have the right to expect full performance from your EA and should be able to pursue remedies.
Your rights extend beyond simple contract termination to include recovery of damages and additional costs incurred due to their failures. When an EA fails to deliver, swift and decisive action protects your project interests and minimises potential losses.
Hakan Ozsoy is an associate at Decipher, A DeSimone Company.
