The firm had secured its place on the panel in 2006 but dropped off as a number of clauses in EP’s contract demanded it offer an ‘absolute guarantee’ for any work taken on through the framework.
Grimshaw’s commercial director Ewan Jones said giving any performance guarantee falls outside of a firms’ professional indemnity (PI) insurance policy, and would make the practice exclusively liable for any issues, for example project delays or budget over-runs, only excluding negligence.
Jones said: ‘The clauses imposed an unacceptable level of risk to our practice and might have jeopardised our ability to serve all our other clients.’
The AJ understands that at least one other practice on EP’s 18-strong architecture framework panel is yet to sign its contract, and another is looking into the insurance issue.
One source from a firm on the panel said: ‘When we first looked at it, we thought “Christ!”. I suppose EP is trying to get as much out of it as possible.
‘If you don’t like the terms then that’s it, you don’t work on the framework,’ he added.
Richard Long, director of professional services at Lockton International, PI insurance specialists, believes any firm entering into contract that requires a performance guarantee, should tread carefully.
Long said: ‘My advice would be to avoid entering into a performance guarantee. But if a firm does decide to enter that contract then they should keep their eyes open for any liabilities.’
Grimshaw’s Jones said: ‘It’s a risk management thing [for EP], but there really isn’t any point trying to transfer risk onto a practice that they can’t back up with insurance. All that happens is you make the claim and the practice ceases trading.’
An EP spokeswoman said: ‘The consultants were all made aware of the contract. We do have an unlimited liability clause, but the risk is fairly low. Most of the work commissioned by EP is early stage work.’