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M4i chief slams 'obsolete' ICE 7th edition contract


ONE OF the first Movement for Innovation demonstration projects has ended with clientLondon Underground seeking almost £600,000 in damages and costs from contractor John Mowlem.

The project to strengthen brick jack arches on a section of the Tube between Gloucester Road and High Street Kensington, part of a £17.4M package of work, caused chaos for commuters over the summer (NCE 24 June). LU was forced to withdraw all Circle Line services for eight weeks during the work after a complex emergency timetable collapsed.

The line eventually re-opened a week late but most of the strengthening was left incomplete due to 'logistical problems' (NCE 19 August). Torrential storms and sewer flooding were originally given as the reason for the failure.

But in a draft letter written by LU project manager Peter Madden on 14 September and leaked to NCE this week, it has emerged that LU is blaming Mowlem.

The letter demands that Mowlem pay LU £104,000 in damages for delays to the completion of work, continuing at £2,000 a day, plus £225,720 for disruption during the work. It also calls for a further £246,000 to be paid for costs incurred in repairing damage to LU assets and the inefficient co-ordination of work.

The contract was carried out on an alliancing basis and put forward as a M4i demonstration project by LU. M4i's mission statement is 'to lead radical improvement in construction in value for money, profitability, reliability and respect for people, through demonstration and dissemination of best practice and innovation'.

In a particularly adversarial paragraph of the letter, Madden writes: 'I still await a programme which complies with clause 31 of the contract and shows when the 'strengthening work' will be complete . . . Should I not be in receipt of a compliant programme detailing this by Friday 1 October 1999, I will be obliged to notify LU that you have substantially failed to comply with your contractual obligations.'

Madden confirmed that he had written the letter but said it was 'a draft' which had been discussed with Mowlem but never posted. He said: 'A project wasn't finished but we are establishing negotiations for a settlement and hopefully we can negotiate the second phase of the project with Mowlem.'

He added: 'Alliances do not mean that companies never fall out, and from time to time they do. We will still share this experience - warts and all - with M4i because it is the only way the industry can learn.'

But Mowlem managing director of major projects Steve Smith insisted that there was 'no dispute' and that measures to complete the work were being discussed.

THE GOVERNMENT-BACKED Movement for Innovation this week challenged the Institution of Civil Engineers to come off the fence and abandon its 'obsolete' 7th Edition traditional contract in favour of the more progressive New Engineering Contract.

In a letter to NCE, M4i executive director Ian Huntington says it was not possible for the ICE to 'ride two horses at the same time'. By attempting to do so, he says, it was failing to lead the 'impetus for radical change' within the industry.

'Is it the objective of the ICE to be progressive and set trends for others to follow?' he asks. 'Wouldn't it be a very clear, powerful message of the status of the ICE if it totally withdrew this obsolete contract form?'

The letter follow NCE's story of 23 September and comes four months after M4i board member Dr Bernard Rimmer, Slough Estates general manager, resigned from the ICE, saying it had failed to help the industry respond to the demands of the Egan initiative (NCE 27 May).

Rimmer urged engineers to spend more time and money on Egan-inspired bodies such as M4i and the Design Build Federation, which, he said, were more in tune with modern industry thinking and practice.

Huntington points out that while many clients still use the ICE 5th and 6th contract forms, they do so in 'ignorance of the benefits' that can come to them from more progressive forms. 'In time a large number of these clients (and client advisers) will reform but there will always be some dinosaurs.'

He also disputes comments made by ICE 7th Edition drafting committee chairman David Hodgkinson that the new contract form 'fully supports and promotes the benefits of team working and current (progressive) procurement initiatives'.

He says: 'If one excludes the revisions required to comply with new legislation, there are really only two or three substantive amendments to the 6th Edition which could potentially reduce conflict between the contracted parties. It is extremely naive to state that the form of contract does not influence the resultant level of conflict on a project.'

But ICE chief executive Mike Casebourne rejected Huntington's comments. He said the ICE continued to offer two contracts because there was a demand from the industry for both. 'The NEC is the contract of the future embodying processes which cause the parties to the contract to be decisive and reach agreement quickly in tune with the project programme,' he added.

'The ICE 7th is very familiar to many of our members and their clients who have good co-operative procedures with which to operate the contract.'

Casebourne said that if the ICE 'charged over the horizon with one contract' it would end up leaving 'half the army behind'. Abandoning the contract would not remove the demand and clients and contractors would simply go elsewhere for inferior traditional contracts, he claimed.

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