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28 JAN 2019

THE ESSENTIAL INGREDIENTS FOR A SUCCESSFUL OUTCOME

ACE contracts advisor Rosemary Beales on the need for working within a clear legal framework

Within consultancy and engineering it is often the case that there is no formal agreement, perhaps just an exchange of emails which can ultimately lead to disagreements and disputes to the detriment of all involved. Do you know what you are signing up to when a proposal is accepted by a client? Has any agreement been signed? There may have been negotiations but what terms and conditions cover the delivery of services and are they clearly defined?

These questions are fundamental for those providing consultancy services, regardless of their client. It is for this reason that ACE has, for many years, produced standard forms of agreement to assist members, their clients and others, ensuring there are a suite of documents which cover the requirements, rights and liabilities of the parties who sign up to them in a fair and comprehensive way.

Whatever the value or complexity of the services commissioned and delivered, the business case for clarity on the proper allocation of risk and responsibility is irrefutable and working within a clear legal framework is a part of this.

ACE has consistently promoted the use of standard terms of engagement to assist the delivery of services and has also highlighted the pitfalls inherent in many contractual terms, especially bespoke conditions. Even if the parties believe they understand what they have agreed to, it may well, if tested, differ significantly from what they initially thought. This can prove costly both financially and in terms of the ongoing relationship between consultant and client.

In order for standard terms of engagement to remain relevant to the profession, they need to be kept up to date. This is why in 2017 ACE published a new form of Professional Services Agreement, Sub-Consultancy Agreement and Schedules of Services to ensure that consultancy and engineering professionals have access to terms and conditions suitable for today’s world. Recognising new developments, such as legislation around procurement, advances in technology, and the management of projects, often involving several parties in the process, the documents are written in a clear language and assist everyone in understanding their roles and responsibilities in a project. 

So, what else is new? The Professional Service Agreement:

  • Can be used in all UK jurisdictions, removing the need for separate agreements for Scotland.

  • Can be used whether the client is a contractor delivering design and construct services, or any other organisation which may require design only services.

  • Includes a more balanced apportionment of risk with Consultant’s Obligations, Client’s Obligations and Joint Obligations all clearly listed in sequence rather than “scattered” throughout the Agreement –the objective being to allocate risk to the party best able to manage it.

  • Includes a limitation of liability clause, and the Schedule enables an aggregate limit of liability to be stated. There are clearer provisions for agreeing caps on liability and the parties are encouraged to discuss and agree an appropriate cap, particularly in the context of professional indemnity cover. It is expressly worded to include any liability that may arise under any collateral warranties given to other parties by the consultant, which should be welcomed by insurers.

  • Includes provisions for collaboration and the early warning of events which may impact on the delivery of the services and are included “in the interests of the timely, economic and successful completion of the Project”.

  • Includes provisions to facilitate the use of BIM

  • Includes a standard form of collateral warranty as an option, should this be asked for by the client.

The new Schedules of Services facilitates the use of BIM offering a useful tool to all those who deliver a wide range of engineering and consultancy services. The Schedules better provides for the identification of the services to be delivered, including “additional services” and also “mirror” the sequence of the RIBA Plan of Work, which is seen as beneficial by many users. With core and optional deliverables at the end of each work stage, the Schedules provide welcome clarity and choice to both clients and consultants.

Overall the Professional Services Agreement is designed to be “user friendly” and the Guidance Notes, whilst not a legal interpretation or part of the Agreement, are provided to enable users to gain a broad understanding of its provisions and assist in its completion.

Use of the ACE Professional Services Agreement can provide confidence to both clients and consultants that the terms under which they do business are relevant, insurable, balanced and fair… the essential ingredients for a successful outcome.

Order the new Professional Services Agreement, Sub-Consultancy Agreement and Schedules of Services online now. View all ACE, FIDIC and ICC contracts.

Rosemary Beales

Rosemary Beales

Contracts Advisor

Rosemary is ACE's contract expert and knows agreements inside out.

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