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Artisanal features: How to manage the risk

Catrin Rees

Bespoke hand-crafted features are often included in luxury developments – but what problems could arise with their installation?

The word ‘artisanal’ is deployed to describe everything nowadays, from expensive single-origin coffee brewed at hipster hangouts to frozen pepperoni pizzas.

However, what problems may arise where an employer procures or requires bespoke artisanal-created features or artwork to be installed as part of a prestigious residential home or luxury hotel, where aesthetic considerations are paramount?

A little forethought and planning in advance of entering into contract with the main contractor can avoid problems at the end of the works.

Who is responsible?

First, be clear who will be responsible for procuring and installing the bespoke items, and understand the effect on the risk and responsibility profile of the project as a result. If proper thought is not given to this at the start of the project, it could cause delays and additional cost just as the project nears practical completion.

It may be advantageous to request that the main contractor take responsibility for these activities, as in most cases the contractor will then take the risk for such procurement.

It is not uncommon for a client perhaps to want to save on the main contractor’s mark-up for overheads, profit and management costs or to work with preferred craftsman to acquire bespoke items or work directly, supplying these items ‘free issue’ to the contractor.

In such a position, the client will need to consider that potential saving against the risk that the delivery of the goods or completion of the specialist works may be late, mismanaged or not co-ordinated against the main programmme. Where that happens and delay to programme ensues, the contractor is most likely to have a claim for an extension of time and possibly loss and expense as a result.

The best way to protect against this risk is to ensure all parties co-operate and co-ordinate the works, reporting to the employer as clearly as possible. Where there is delay due to the late delivery of bespoke furnishing, request that the contractor details to the employer how it will proceed to mitigate delay.

The standard JCT forms, for instance, provide that the contractor take steps to mitigate such delay; this would encompass resequencing of the works to accommodate delays previously occurring or anticipated.

Do your homework

Second, be clear on who is authorised to give instructions to whom. Most commonly the building contract will empower a contract administrator or similar to give instructions on behalf of the employer.

However, confusion, delay and significant additional cost can ensue where other design professionals – such as interior designers – get involved and give instructions to the contractor directly rather than properly routed through the contract administrator.

Third, if procuring goods or services direct, do your homework.

The insolvency of any party involved in the works will have an adverse effect, including to the completion date. Often clients and consultants fail to carry out basic credit checks on the financial stability of specialists they intend to employ direct.

In those circumstances, the employer will be picking up the bill if the specialist goes belly up in the course of the project and any consequent failure to perform results in delay and/or increased costs to the project.

Understand insurance

Finally, once on site, the employer or the contract administrator should check that the contractor is taking adequate measures to store the goods properly. Damage to bespoke furniture can have adverse implications to works, particularly if they have already been fitted.

It is also important to understand the insurance provisions relating to site. Once on site, damage to bespoke items is likely to be covered by the joint names / contractors all risks policy.

The client should, of course, check who is responsible for insuring any goods in transit from manufacturer to site.

Catrin Rees is a senior associate in the construction team at Collyer Bristow

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