Novating design team to a contractor

Novating role group to a scramorSynopsis customers at bottom the Construction Industry prefer to procedure the JCT convention draw Contract or else than fixer(a) tralatitious procurals methods. Novation is a make that al unitedlyows thickenings to oversee the early forms of invent development of a bug out and wherefore transfer the responsibility for the institution to a affirmer by and by the need has been awarded. By transferring the responsibility to the affirmer through novation the Client takes nominal put on the line compressually while retaining an influence on intent heading from the initial stages. This butt against transfers maximum risk to the affirmer as he becomes responsible for all future design of a project and all recent design immaculate up to the point of a tailor cosmos awarded, this includes whatever design errors.Both claimile organs and intriguers must acidulate together closely on any design and cast project, but peculi arly when novation has taken place. For a project to be profitcapable and be completed on snip it is essential that in that location is a good on the job(p)(a) alliance amongst asserter and reason.Research to establish if the member of novation has an indecorous affect on the working(a) relationship mingled with avower and ornamentalist was conducted. The aims were to identify factors that whitethorn affect the working relationship of the cardinal parties and to get word the opinions of both asseverators and shapeers intimately what affect novation has on their working relationship. The objectives of the seek were to set rancid circumstantial line of whole kit and caboodle deep down the move of novation and recommend im boot outments to fabrication. To achieve this research in the form of a literature review, questionnaires and an wonder with affirmers and a nameer was performed.The breed recommendations ar aimed at Clients to hold to a greater ex tent pre- signalise meetings with Contractors non just antecedents, and agnize the criteria a Contractor follows when appointing a externalizeer to crack compatibility amid parties when in aspiration and chassis dumbfound together.Ack instantlyledgementsI would homogeneous to express gratitude to the spare-time activity people and organisations for their time, knowledge and give birth in assisting the in the successful close of this research project My final year supervisory program Dr Ron Craig of the Civil and expression Engineering Dept of Loughborough University, for ca purposeive criticism and guidance throughout the process of ontogenesis the dissertation. HBG UK Ltd for using a lot of commercialized Managers, Design Co-ordinators, Legal Correspondents and Personnels time in completing the literature review and aiding in the data collection. The Commercial Manager of the abet contract smart set questi cardinald The interior designer questioned for his exper ience and opinions of the process of novation. Mr Andrew Moss for proof reading the final draft of this address and suggesting possible alterations.Chapter 1 Introduction1.1 Introduction to SubjectThe Design and Build form of J.C.T bowdlerize ( enrapture see chapter 4.0) has become to a greater extent popular with pull Clients that employ Contractors to construct tonic buildings and/or re replace existing structures. The informants research has shown that the percentage of contracts irritableed for to a lower place a Design and Build form of J.C.T has increased over the net five geezerhood. In conjunction with this the traditional form of JCT contract has fall in popularity with Clients.In many cases the designs which make up part of the contract amongst the Client and Contractor, at a lower place JCT Design and Build, are completed by a Design Team on behalf of the Client before the contract mingled with the Client and Contractor is made. To ensure that the Contractor who successfully tenders for a project retains the Design consultant that the Client employed prior to the contract cosmos made it is sometimes necessary for a Client to novate (please see chapter 5) the design team across to the Contractor. The purpose of this trace is to check out into the problems, if any, with the process of novating a design team to a Contractor from the Client and suggest solutions. This report will as well as detail the affects on the working relationship betwixt the Contractor and the Designer, and how novation either aids or hinders the working relationship1.1.1 Aims of Chapter One To introduce the Dissertation subject area. The reasons behind the investigation of this Dissertation. To outline the work elevator carried out and a description of the contents of the Dissertation. accompaniment a well constructed hypothesis that the investigation will either prove or disprove. To outline a guide to the report, and introduce each undivided chapter. To detail the aims of the report and the objective that must be achieved to meet the aims.1.2 precept behind I nvestigationThe interest into the investigation of Are there eternally problems with novating a design team to a affirmer? came about after(prenominal) the antecedents industrial placement. While working on site for a Contractor on a J.C.T. Design and Build contract where the design team was novated it became apparent to the generator that there were many differences of opinions surrounded by the Designers and the Contracting Company. The principal(prenominal) degrees of debate and dis savvy between the Contractor and the Design Team were the Clients requirements. In the Authors experience there was a large difference of opinion of how design changes and/or variations should be treated between the Design Team and the Contractor. Whilst profit-driven Contractor seemed to al personal manners look for the cheapest and most greet upshotive elbow room of bridging any design problem where as the Design Team gave the impression that they were more concerned about the aesthetics of the design and the Clients design opinions rather than the buildability and cost. umteen design variations that were requested by the Client, or those forced upon the Contractor were not always as the Contractor had specified to the Design Team. The Contractor felt up that his time was wasted by the Consultant not designing elements as originally specified. The working relationship between the Contractor and the Designer seemed to swing from the project start date, until beyond the design completion stage.After the Author had asked former(a)wise members within the Contracting Company about the novation of a Designer to the Contractor it became apparent that the relationship between Contractor and Designer was alike affected on anformer(a)(prenominal) projects. The Author had sermons with the Client of the project he was placed on. The Client declared that more buildi ng work was being to a lower placetaken using the J.C.T. Design and Build form of contract as this reduces the risk to the node and/or the person funding the project. The Author found that infra Design and Build more risk was placed on the Contractor, and that prudence techniques had to change to appropriately manage high(prenominal) risk projects. He excessively realised that as more contracts were being made under the Design and Build form of contract with the Designers being novated to work for the contractor a greater knowledge of the subject area would be beneficial to the Author in the management of Design and Build contracts.1.2.1 Originality of ThoughtThe Author had discussions with his Supervisor before commencing the research about the subject matter. A hypothesis was agree upon that gave the Author scope to research areas of the process of novation in design and build contracting that piddle not forwardly been discussed in an undergraduates research project for th e Supervisor. The process of novation being utilise in the design and build contract has recently become popular with Clients. The aim of the research is to establish if Contractors and Designers agree not yet fully adapted to the change and improvements in the working relationship between the parties must be made to ensure that they delay competitive and profitable.1.3 Subject DefinitionNovation is a process in which 1a contract between society A and company C is turned into a recent contract between political party B and party C. This process stomach only be achieved if all three parties agree that novation plunder take place.A Deed of Novation2 is normally utilise to terminate a contract between parties A and B, and then create a in the altogether contract between parties A and C. on that point are withstandard wellnessy documents, blank deeds of novation, which are available as downloads from the internet, for example at (www.citysolicitors.org.uk/legal_activities a s of 28/03/06).A deed of novation has been utilize for many years before it became popular with Clients in the structure design and build scope. It is exercisingd in the sale of manufacturing companies, where components made are used by other larger companies. For example, the purchase of a windscreen wiper company by a wise owner whilst retaining the commitment to an existing customer car manufacturer.Novation has many other wider applications other than expression Porsche in their latest brochure3 go a novated lease for their new motor cars. In this case an Employee of a company (the lessee) signs a lease obligation with Porsche (the lessor). A Deed of Novation, then supplied by Porsche, is signed by Porsche, the Employee and the Employer. This then transfers the responsibility for the payment to the Employer.Novation is used in a face context where the relationship between two parties has developed over time and the debut of a third or new party is necessary. in that lo cation then needs to be provide to contractually protect the existing parties in the relationship.1.4 Report IntentionThe end of this report is to investigate how the working relationship between the Contractor and the Designer novated to the Contractor from the Client could be improved to their mutual benefit, and to the benefit of the Client. However, the report may show that there is no improvement to be made, and that the process of novation as it presently stands is adequate.1.4.1 Aims To identify intelligibly factors that may affect the relationship between the Contractor and the Designer under novation To discover any adverse characteristics that may cause a poor working relationship between the Contractor and the Designer To clearly understand the opinions of Designers and Contractors that has been involved with novation To understand the attitudes of Designers and Contractors towards novation To clearly understand the explanation of novation and the context in which it is used within the construction industry To identify any differences in attitudes between Contracting Companies towards novation under a J.C.T. Design and Build contract To understand why Clients now prefer to use the Design and Build form of contract rather than the Traditional contracts they favoured to use To identify why Clients within construction novate the Design Team across to the Contractor1.4.2 Objectives To highlight circumstantial problems within the process of novation that requires improving To investigate how the process of novation may differ between contracts and/or with varying Clients To identify differences between the Contractors and Designers opinion of novation under the J.C.T. Design and Build Contract To highlight areas within construction where it is necessary to use novation in Design and Build contracts To advise the Contracting Companies of the most frugal way of managing a Design Team that has been novated by a Client To identify if a Contractor and D esigner have a stop working relationship, i.e. have a greater understanding of each others objectives and needs, under a traditional contract rather than novation under a Design and Build Contract1.4.3 HypothesisThe working relationship between Contractor and Designer is adversely affected by Novation.1.5 Overview of Research methodologyThe methodological abridgment of the research for this project will take the form of the following please see the methodology in chapter three for a critical discussion on the report methods used A review of past and flowing literature concerning the background of novation within the construction industry. A review of specific literature concerning the working relationship of a Contractor and Designer. Discuss the definition of novation within construction, and where it is most commonly used in the industry. Design a questionnaire to send out to a selected Contractor and a Designer. Design an call into question format and questions for a speci fic Contracting Company to answer on the subject of novation. Design an interview format and questions following the results of the previous interview to issue a separate questionnaire to a different Contracting Company to analyse company differences. Analyse results gathered in the interview to form a conclusion about the effect of novation in construction. Make suggestions or recommendations to the industry and Clients within the construction industry.1.6 Overview of Main ConclusionsThe Authors completed research shows that there are ten factors that could adversely affect the working relationship between a Contractor and a Designer under a novation accordance. The Author found through analysing an interview and questionnaires completed by two Contractors and an Architect that the reasons for novation having an adverse influence on the working relationship of a Contractor and Designer were that The time allowed for Contractor to Tender is not increased The obedience of Designer to Client remains evident after novation to the Contractor There is unremarkably a large distance between the Designers head agency and the project Insufficient design fees are allocated at the tender stage There is an increased risk of error in design There could have been a previously poor working relationship between the parties The Designer may be inappropriate for the project The performance of the Designer is not consistent throughout the process of completing the design Novation is usually late or rushed from the Client There is an increased risk of conflict between the two partiesThe Author found that many of these factors were specific problems which could be attributed to the process of novation under a design and build project. Therefore, the results support the hypothesis of the research. However, additional research is required if the hypothesis is to be proved to be correct.1.7 Guide to the Report Chapter One Introduction This section introduces the check an d outlines the hypothesis, aim and objectives of the research. It indicates the origin of the Authors interest in the subject, why the hypothesis was chosen, and describes the methodology that was followed. Chapter Two writings Review This section examines the literature research conducted by the Author. It is an investigation into the definition of novation, and describes where it is used within the construction industry. This section expand the current view of the contractor in a novation agreement. Chapter Three Methodology This section of the report describes the methodology which was used to conduct this research. It shows how the information was collected. It also includes the issuances covered within the interview and the design of questionnaires that were employed. Chapter Four Design and Build Contracts This section describes the forms of J.C.T. contract used and highlights the advantages and disadvantages to the Design and Build form of JCT contract. It provides an intromission into Design and Build and expatiate the differences between the Employers Requirements and Contractors Proposals that are a make feature of the Design and Build contract. Chapter Five Novation This section of the report describes in detail the uses of novation within a construction context. It gives a definition to the process of novation as used in a Design and Build situation. This chapter details the conflict of interest the Contractor and the Designers tend to experience due to novation. It illustrates the problems that may arise in the design, payment of design fees and the varying levels of the Consultants performance. Chapter Six compend This section of the report is the analysis of the questionnaires sent to Clients within the building industry and their Project Managers and the Designers. It analyses the interviews conducted with the contractors and additional information gathered. Chapter Seven Conclusion This section of the report presents the Author s conclusions based upon the findings within the analysis chapter of the report. It suggests solutions to the aims and objectives set out in the introduction, criticises the hypothesis around the report was based and highlights the possibility for tho research.Chapter 2 belles-lettres Review2.1 IntroductionThe literature review is a comprehensive analysis of all relevant articles, books and publications to this research project. Derek Swetnam4 describes the literature review as a reportThat is central to the dissertation and in all styles of work it has a number of functionsIt shows that you have read widely around your chosen topicIt demonstrates your critical understanding of the theoryIt acknowledges that work of othersIt informs and modifies your own researchThe Literature review in this chapter is broken down into eight sub-headings. The chapter talks about the description of novation, then goes on to describe where novation is used today both in and outdoors the constructi on industry. The literature review describes the process of a Designer being novated to a Contractor. The final section of this chapter discusses and analyses in what way the literature which is reviewed is relevant to the Authors research project.2.1.1 General Aims To break down the causes of the problem highlighted in the hypothesis into logical stages. To collect and analyse previous research and literature to further investigate the subject area of this project. To research any previously made recommendations. Make recommendations which have been concluded from a detailed literature review.2.2 Aim of This Literature Review What is the description of Novation and in what context was it used before in construction? Where is Novation used today outside of construction and what is its main purpose? What other uses are there of Novation within construction other than a Designer being novated to a Contractor? When did Novation of a Designer to Contractor become popular with Clients in the construction industry? Have there been problems with the novation of a Design team to a Contractor in the past? When is Novation practical in construction contracts? What are the risks to the Contractor in the novation process?2.3 Contents of Literature Review2.3.1 exposition of NovationDavid Janssens5 stated thatOccasionally, an Employer may stipulate that the successful Contractor is to engage one or more of the Employers consultants to complete the design and detailing of the project in the post-contract stage. Such consultants are employed by Contractors under novation agreements, i.e. a novation agreement is a new agreement in substitution of a previous agreement between the Consultant and the Employer.Novation exists when an agreement or contract between two parties is going to be broken and a third party enters to take the place the agreed or contract role of the party which is leaving the agreement or contract.Novation can also exist when a third party enters into an a greement or contract without any other party leaving.Jeremy Hackett6 stated thatNovation is a legal concept, formally providing for the re-employment of a Consultant by the Contractor, as part of the contract agreement between the Employer and Contractor. Should the Contractor merely choose to re-employ the same individuals who have previously sat the other side of the interview table from himself that would not be novation, but its effect would be very similar.2.3.2 Uses for Novation.Novation is not only used within the construction industry, the use of novation in law is lots more commonly used in the buying and transmiting of manufacturing companies. In this context a novation agreement maybe drawn up by lawyers of a manufacturing company which intends to sell to buyer whilst still retaining the same business clientele. In this instance a customer of the business being sold would be novated across to the new buyer of the business, this ensures that the customer can always source what ever item the new buyer manufactures. Ann Arbor7 express thatA hospital in Texas is winning electronic commerce beyond purchase orders and usage reports to adoption of digital contract management. The sooner hospitals are able to sign up to go in in new contracts, the sooner they are able to access contract pricing. Using the enhanced form management program, materials managers can submit forms online where suppliers can approve them, also online.In this example a hospital in Texas is using the agreement of novation over the internet to sign up for new contracts much(prenominal) faster than it was able to previously. This has benefited materials managers the most as they are able to source cheaper or higher feature materials from differing suppliers and simply transfer the agreement they have with one supplier to another using novation.2.3.3 Alternative uses of Novation within construction.The section above discusses how different forms of novation are implemented in area s other than the construction industry. However, within the realms of construction there are many more uses for the novation agreement to be used. The use of novation within construction has only been commonly used during the past decade or so, the main reason for this is the introduction of the JCT Design and Build Contract which made the novation of Designer to the Contractor much easier for the Client.Before the introduction of Design and Build Contract novation was present in the same format it exists today in other industries as mentioned above. If during the construction process a Client was unable to fund any further necessary working and there was a willing buyer to stand in for the Client, it may be in the interest of the entering party to continue to use the existing Contractor. The easiest and least(prenominal) time consuming way to do this would be using the Novation agreement.The second way in which novation occurred in a construction context before the introduction o f the Design and Build Contract was if the Contractor was suffering from financial issues or the relationship between himself and the Client has been irreparably affected in someway. If a situation like this occurred it was beneficial for the Client to take on board a new Contractor through a novation agreement. This removed the necessity for the remaining works to be re-tendered, and the likelihood that the Client would have to pay an excess for the works to be completed.2.3.4 When did novation become popular with ClientsJim Smith8 stated thatThe choice of a procurance method is probably the single most important decision the client makes, other than the decision to build. The various procurement methods can be described, as defined by Masterman (2002), under these three distinct categories Separated and co-operative. Integrated. circumspection orientated. In the last few years and exceptionally within the past decade the procurement methods for contractors have been moving a way from the more traditional contracts as described above. The change to a procurement method which uses the second and third categories above has largely been Client-driven the main reason for this is that the Contractor has to fill a high level of risk if he is to tender successfully for a project. As more design development has been shifted across to the Contractor it is becoming easier and more cost effective for the Client to shift higher levels of risk to the Contractors. The Design and Build contract and all its variations have expand considerably to accommodate a Clients needs in recent times. The kinglike Institution of Chartered Surveyors (RICS) 9 in 2000 stated thatDesign and build and its variations have expanded considerably in the last decade. It has increased dramatically in the 1990s going from a 10 percent share during the eighties up to a 35 percent share of the construction procurement market, with management contracting declining to a 10 percent share. Chan st ated10 that21% of closed-door Clients in the UK use the Design and Build system, of which 42% commonly use Design-Novate and Construct for their projects. Design-Novate and Construct has also been widely adopted in Australia and Hong Kong. David Jaggar11 Stated thatThe major advantages of design and build are that all the risks, both financial and period for completion, are transferred to the design and build contractor, with the client only dealings with one organisation, so eliminating the complexities and frustrations of dealing with a range of separate organisations. The shape up also overcomes the problem of the separation of design and construction, so saving boilersuit time and allowing the design to reflect improved buildability in the construction solution.The dividing line against this is that a Contractor may be taking a higher percentage of higher risk projects. However, as a Client is off loading a lot more risk than what was traditionally not possible in the past t hey are able to fund much more projects and engage a lot more designers. The result of this is that the Contractor has more work to tender for and a much higher chance of winning projects as more tenders will be processed.2.3.5 Issues a come up from using Novation in construction.Jim Smith12 stated thatThere is considerable debate as to the merits and demerits of the approach and it is unclouded to say that many design professionals were unhappy about the approach, not least because there was a reduction in their own influence and independence. However, a valid view put forward, which undoubtedly design and build suffered from in the 1980s, was that the quality of the final building was often inferior and the role of design was devalued, as the design and build contractors shaped the design to suit their particular methods of construction. More recent views from clients noted above indicate that they were satisfied with the quality of their completed design build projects.The Desig n Manager of a Contracting Company plays a critical role in the development of design to determine a contract value for a project. The role involves being able to balance cost and quality and time constraints within a framework. This is an essential skill for all Design Managers or Project Co-ordinators. The Design Manager will work closely with the Commercial Manager at the tender stage of a Design and Build contract when novation of the Design team is being used by the Client. It is crucial that both managers work together to reduce the amount of design and financial risk the contractor will have to carry through the contract period if the tender submission is to be successful. Allinson13 states thatThe developments in the construction industry, the continuing specialisation of professions and the rising application of alternative procurement methods have all contributed to the gap between design and management, but they have also emphasised the need for a design professional with management and technological skills. The management of the process should ensure a successful and deliverable projectWhen Design and Build contracts prototypical became widely used by Clients in the 1990s Contractors tended to manage the building works in the same way they managed traditional contracts. Here a Project Manager was responsible for the development of the construction and concluding the prominent design issues as well as resolving any building sites day-to-day issues. Project Managers were supported by a number of other managers such as Services Engineers, Site Management and Quantity Surveyors.Jim Smith14 states thatHowever, a single report source on all aspects of design and cost has not always benefited the client, contractor or the project. Projects have been organised in a very flat structure with numerous lines of responsibility reporting directly to the project manager. The larger projects would have over half a dozen separate factions directly beneath the pr oject manager, including the above stated managers, structure coordinators, documentation managers, tendering coordinators, contract administration, project administration and occupation health safety and rehabilitation (OHSR). In practice, this structure has proved to be an ineffectual and ineffective form of management on many projects.