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Brownfield liability terms deter consultants


TOP ENVIRONMENTAL engineering consultants are refusing to compete for work from two of the UK's largest brownfield clients because of the potentially devastating risk burden.

Clients BG, responsible for property formerly owned by British Gas, and national development agency English Partnerships require consultants to guarantee their work by means of unlimited warranty and unlimited collateral liability.

Effectively, this means consultants are liable not only to the client but also to third parties investing in the site after any contamination has been remediated or geo-engineering carried out.

Dames & Moore international division risk manager Alwyn Callender said: 'British Gas provides terms that most consultants feel are pretty onerous. Environmental consultants can't give guarantees that every inch of a site is contamination free.'

Pressure from cautious investors and insurers, however, means BG normally demands total clean up. On a heavily contaminated site with a complex history this is difficult and hugely expensive to achieve, said Callender.

Should contaminants sub- sequently be found, unlimited warranty and unlimited liability would give owners and occupiers recourse to the consultant. This could be years after work finishes.

The vulnerability of consultants was highlighted earlier this year by English Partnerships' £18.5M courtroom victory against Mott MacDonald (see box).

Mott MacDonald director of environment and water resources Peter Smith warned consultants can be locked into long term liability on low value contracts such as surveys and site investigations.

Risk relative to financial reward made tendering dangerous, he said.

The Association of Consulting Engineers failed to negotiate better terms with BG when consultants first voiced concerns four years ago. ACE is now discussing risk sharing with English Partnerships.

Currently, as the result of the risk consultants are forced to carry, insurers are demanding massive premiums for cover. Current professional indemnity should be used as guidance for liability, said Smith.

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