Explainers

BIM Bytes: Who pays the price when BIM fails to deliver?

29 June 2015 | By Assad Maqbool

BIM is a team effort, so when there are failures with a model, it may not be the entire responsibility of one party. Effective planning, communication and problem-solving are to be encouraged but, in the end, it may come down to liability.

A net contribution clause is a contractual provision that provides that a party’s liability for breach of contract or negligence will be limited to an amount that is just and equitable for that party to pay, taking into account its proportion of responsibility for the loss or damage caused.

This may seem perfectly reasonable, but it is a contentious issue because it changes the common law position of joint and several liability.

The principle of joint and several liability is that, if two or more parties contribute to the same loss, the party that has suffered the loss can choose to sue any of them to recover that loss. The party that is sued can then bring proceedings against the other liable parties, if they want a contribution from them.

If those other contributors do not have the means to pay – because of a lack of assets or insolvency – it is the paying rather than the loss-suffering party who bears that risk.

Say, for example, during construction it becomes apparent that the BIM is flawed. A mechanical and engineering (M&E) consultant has created the flawed data but the lead designer negligently failed to notice the problem during a review that was part of its services, so the lead designer is partially responsible.

Joint and several liability means the employer can sue either the M&E consultant or the lead designer and recover 100% of its losses, instead of having to sue both. The paying party then has to sue the other consultant to recover a contribution.

If the appointment included a net contribution clause, the employer could only recover from the M&E consultant the proportion for which the M&E consultant is responsible, and would have to sue the lead designer for the balance. If the lead designer is unable to pay, the risk of non-payment rests with the employer rather than the M&E consultant

The potential impact of a net contribution clause is, therefore, significant and something that employers and beneficiaries of warranties are concerned to ensure are excluded.

I often find it is the consultant’s professional indemnity insurer who, on reviewing proposed appointments, seeks to introduce net contribution clauses. The insurer is essentially seeking to move the general risk of consultant insolvency – and therefore the risk of non-payment – from themselves to employers.

Assad Maqbool is a partner at Trowers & Hamlins specialising in projects and construction

The potential impact of a net contribution clause is, therefore, significant and something that employers and beneficiaries of warranties are concerned to ensure are excluded.– Assad Maqbool, partner, Trowers & Hamlins