Keeping tabs on your sub-consultants
The increasing preference of clients to appoint a single consultant, who in turn must sub-contract work outside his discipline to other consultants, produces real difficulties often overlooked in the haste to secure new work.
Under these arrangements clients are, of course, able to agree a single fee arrangement for all consultancy work involved in a project, payable to only one firm. That 'lead' firm must negotiate competitive terms with other consultants, define their briefs, ultimately pay those other consultants, and deal with (and assume the risks for) any claims that arise for additional fees. While clearly convenient for clients, such arrangements can be a nightmare for consultants - whether appointed as 'employers' or merely as 'sub-consultants'.
In one such situation, where an architect was a sub-consultant, the client refused to pay his additional fees which arose from changed instructions. The engineer, which had sub-contracted the architectural services, would not press the matter on behalf of the sub-consultant for fear of threatening its interest in subsequent commissions with the same client. As the architect had no direct appointment with the client, its sole recourse was to sue the engineer - its fellow consultant.
Another case involved an architect sub-contracted by a qs for housing association work. He resigned because the qs introduced procedures and sequences of work that put the architect at risk under the terms of his collateral warranty to the client. Indeed, other professionals in this position - particularly qss - have been adept at setting up home-spun warranties in which they effectively attempt to side-step responsibility for sub-consultant's work.
While there exist various standard forms of collateral warranty that can be given by consultants, these have been drafted in favour of funding institutions, purchasers and tenants. There is not yet a model warranty for sub-consultants' work in favour of the client. However, good news: the riba is reviewing this area as I write.
In the meantime, here is some useful advice if you sub-contract to other consultants:
1) Don't permit sub-consultancy terms that vary from those you agreed with the client. In particular do not allow sub-consultants to reduce their liability, or make fee claims for additional services that you in turn cannot recover.
2) Don't let sub-consultants take instructions from other parties.
3) Ensure adequate pi cover is available from the sub-consultant, and that your own policy covers your extended liabilities.
4) Make it a condition of appointment that the sub-consultant enters into a collateral warranty arrangement with the client.
5) The terms of that warranty should be explicit, and should refer to the sub-agreement between the consultants which should be attached.
If you are a sub-consultant:
1) Ensure that your appointment terms do not impose unsatisfactory arrangements on you about intervals of payment or unreasonable conditions for payment, such as 'pay when paid'. This is very important: non-payment by the client may render your account with the employing consultant void.
2) Make sure your employing consultant instructs variations to the scope of your work in writing, and that appropriate fees are agreed before such work is started.
While they are increasing in popularity, and many of us accept them, these methods of appointment are potentially dangerous - beware!