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Posts Tagged ‘Risk’

Smiling Assassin or Shrewd Business Practice?

02/10/2023 5 comments

After several months and now experience of several sub-contractors (and then sub-sub, sub-sub-sub ad infinitum…) I thought to reflect on a few observations I’ve found from the world of civilian business practice. As graduates of the esteemed RMA Sandhurst , we live by the Values and Standards, drilled into us from day one to the point that personality is surgically removed and replaced with a code of conduct – I find it strange that it seems such a code of honour can be more negotiable in industry.

Now to be clear, I have not witnessed anything outright illegal or amoral but perhaps a few instances of “collaboration” which appears in conflict of the NEC approach where one party may mislead another through varying versions of the same truths, revealed at carefully stage managed points in time. This has come at increased surprise to me as any contractor on site must be, as a minimum BPSS vetted if not SC, and so come withs a modicum of implied trustworthiness.

An example –

During Client inspection of concreting works where tolerances were tight (-0/+5mm on plan). It was known by a subbie (and sub-subbie) that they were just over, by 1mm. The decision was made, through some implied comms and impressive framing of the problem that we were all better off if the client was led to believe that the slab was on tolerance and the offending non-conformity was shaved off by the night shift to achieve tolerance – as if it had never happened. My question was this;

“Why not declare the non-conformity in good faith but also how you plan to remediate and keep the client happy that we’re a diligent contractor?” (Or words to that effect…)

The answer, whilst simple, seemed almost a lie of omission;

“Paperwork”

I can see the pragmatism of such an approach where hours have been saved by removing the need to submit TQs or NCRs and the bureaucratic process therein.  Does integrity have a price? My gut tells me no – one must always do right by the plan and contract, less you end up tangled in a web of lies. Apart from patting myself on the back for the DS answer, it did raise another thought –  at the root of this, is it not a slippery slope where there may be other dangers lying beneath? Errors compounding errors (think of the Swiss cheese risk model). Thoughts that were shrugged off by the majority of project staff.

Perhaps I have been lost in the woods too long and suffer from institutionalised naivety but I wonder if others have experienced similar?

(Image From: Ren, Xin & Terwel, Karel & Nikolic, Igor & Gelder, P.H.A.J.M.. (2019). An Agent-based Model to Evaluate Influences on Structural Reliability by Human and Organizational Factors.

Conference: Proceedings of the 29th European Safety and Reliability Conference

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Any risk of a contract?

16/06/2020 7 comments

Background:

  • Heathrow Airport use an overarching Framework Agreement (bespoke contract: target price, similar to NEC Option C) with a principle contractor (Mitie) for the supply of services.
  • I am working within the Energy Demand Management Team that looks for one-off opportunities to employ novel technologies (energy efficient lighting, intelligent air-con control etc.) to make financial savings.
  • These one-off works make use of a Works Package clause within the framework contract, where the contractor can be set to work under a simple Purchase Order (PO) agreement.
  • These agreements follow the form of a fixed-price (NEC OptA) as they as it has been the simplest at the outset to manage. Although still subject to many of the payment and H&S clauses of the framework contract, there is no contractual obligation for submission of a works programme (by the contractor) or detailed project deliverables (by the client) beyond the scope that is given in the PO.

The potential problem:

  • Although the projects are relatively small (6-10 weeks and typically less than £100,000) I think there still exists significant risk for both parties should there be time or financial issues.
  • There already exists a good working relationship between the Client and Contractor but in this uncertain environment where the bean counters have most of the say, there may be cause for friction.

Where I come in:

I gather that it is probably rare to be given so much scope in an organisation! I am keen to play with different options and tailor the contract based on the scope definition of the individual work package and my own (and boss’) personal willingness for risk and admin. I am told I have the option to change the commercial model as per my requirement in any specific work package. I could specify any of Fixed Price (OptA), Target Price (OptC), Cost Reimbursement (OptE) or a combination of them.

Questions:

  • My initial thoughts are to formalise the existing client/contractor relationship and to head down an NEC OptA route using NEC Minor Works contract.
  • Has anybody else any experience of working with principle contractors on jobs of similar sizes/costs? Has there been any particularly good or bad experiences and what are the significant pitfalls to avoid?
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