CONCODE. Guide to the agreement for the appointment of architects, surveyors and engineers for commissions in the NHS (1995edition) STATUS IN WALES

CONCODE Guide to the agreement for the appointment of architects, surveyors and engineers for commissions in the NHS (1995edition) 1995 STATUS IN WALES ARCHIVED For queries on the status of this document contact info@whe.wales.nhs.uk or telephone 029 2031 5512 Status Note amended March 2013

Guide the Agreement for the appointment of architects, surveyors and engineers for commissions in the National Health Service (1995 Edition) to London: HMSO An Executive Agency of the Department of Health

0 Crown copyright 1995 Application for reproduction should be made to HMSO Copyright Unit First published 1993 Second edition 1995 ISBN 0 11 322198 3 HMSO Standing order service Placing a standing order with HMSO BOOKS enables a customer to receive future titles in this series automatically as published. This saves the time, trouble and expense of placing individual orders and avoids the problem of knowing when to do so. For details please write to HMSO BOOKS (PC 13A/l), Publications Centre, PO Box 276, London SW8 5DT quoting reference 14.02.021. The standing order service also enables customers to receive automatically as published all material of their choice which additionally saves extensive catalogue research. The scope and selectivity of the service has been extended by new techniques, and there are more than 3,500 classifications to choose from. A special leaflet describing the service in detail may be obtained on request.

About this publication This guide is a commentary on the Agreement for the appointment of architects, surveyors and engineers for commissions in the National Health Service. It provides advice to users on how to make the entries required in parts 1 and 6 of the agreement. The procedures to be adopted in the selection and appointment of individual firms of consultants and Department of Health requirements governing fee competition are included in the Guide to procedures for commissioning building and engineering consultants. c. Guide to procedures for commissioning building and engineering consultants; d. Guide to the JCT Agreement for Minor Building works; e. Guide to the agreement for the appointment of project managers for commissions for construction projects in the National Health Service (1995 Edition); f. Guide to contract strategies for construction projects in the NHS; This guide is one of the series of documents that forms New Concode ; the sections that have been issued to date are: a. Policy; b. Contract procedures; g. Guide to the requirements of European Community public procurement directives; h. Guide to the JCT Standard Form of Building Contract 1980 Edition, Local Authorities (as amended).

Contents About this publication 1. The Agreement for appointment of architects, surveyors and engineers for commissions in the National Health Service page 3 1.I Background 1.2 Structure and use of the agreement I. 10 Work stages 1.11 Quality of service 1.12 Roles and responsibilities of the client and consultant 1.16 Reference to the appropriate health department in the event of doubt or dispute 1.I 7 Guidance on selection, tendering and evaluation procedures 2. Completion of scheme particulars (part 1) we 5 General Clauses 1.I-1.3: scope of appointment/scheme Clause 1.4: estimated cost Clause 1.5: target dates Clausel.6: project director Clause 1.7: project manager Clause 1.8: design team Clause 1.9-I.I 1: contract strategy Clause 1.I 2: site inspection staff Clause 1.13: details of documentation Clauses 1.14-1.18: the main contract/method of measurement Clauses 1.I 9-l.20: client s procedures/requirements Clause 1.21: attendance at meetings 3. Conditions of appointment (part 2) we 7 General Clause 2.2: objectives and obligations of the consultant Clause 2.3: attendance at meetings Clause 2.4: additional duties Clause 2.5: information from the consultant Clause 2.7: co-ordination of consultants services Clauses 2.10-2.11: changes Clause 2.12: progression between work stages Clause 2.13: programme Clauses 2.14.-2.18: site inspection Clause 2.19: obligations of the client Clause 2.20: Construction (Design and Management) Regulations 1994 Clause 2.21: information from the client Clause 2.22: provision of site accommodation and facilities Clause 2.23: copyright entitlement Clause 2.24: documentation provided by the client Clause 2.25: client s licence and restrictions Clauses 2.28-2.29 professional indemnity insurance Clauses 2.30-2.31: certification Clause 2.32: assignment by the consultant Clause 2.33: assignment by the client Clauses 2.35-2.42: variation, extension, suspension or termination Clauses 2.43-2.54: settlement of disputes Clauses 2.55 and 2.56: Race Relations Act 1976 Clauses 2.57-2.59: Governing laws 4. Provision for fees and expenses (part 3) page 11 Clause 3.1: cost of the works Clause 3.la: works cost at stage 0 and 1 Clause 3.1 b: fees for stage 2 and 3 duties Clause 3.2: Cost of the works in the event of no tender being accepted Clause 3.3: methods of payment Clause 3.4: payment on a percentage basis Clause 3.5: payment on a lump sum basis Clause 3.7: basis of fee when excess tenders are received Clause 3.8: payment on a time charge basis Clauses 3.1 1-3.13: travelling, subsistence and other expenses Clause 3.14: site inspection staff Clause 3.15: payment for site accommodatron and equipment Clause 3.17: post-contract changes (stage 4 onwards) Clause 3.19: fees for additional duties required by the client Clause 3.20: fees for attendance at meetings required by the project director Clause 3.21 and 3.22: use of computers and/or other special equipment Clauses 3.31-3.33: payment of accounts 5. Specimen certificates (part 4) page 14 6. Definitions (part 5) page 15 7. Memorandum of agreement (part 6) page 16 General Articles 6.1-6.2 Articles 6.3-6.5: lead consultant/contract administrator/ employer s agent Article 6.6: payment for duties Article 6.6A: appointment at work stages 0, I, 7 or 8 Article 6.6B: appointment at work stages 2-6 Article 6.7: time charge rates Article 6.8: travelling, subsistence and other expenses Article 6.9: attendance at meetings required by the client

Article 6.10: site inspection staff Article 6.11: site accommodation and equipment Article 6.12: accounts and interim payments Article 6.13: index for lump sum bids Article 6.14: adjudicator Article 6.15: special conditions Article 6.16: conditions not to apply 8. Schedule l/schedule 2: memorandum of agreement (part 6) page 19 9. Supplementary annexure (volume 2) page 2 I Appendix 1 - Diagram illustrating the progression between work stages when using the agreement page 22 Appendix 2 - Contracts Guidance Sheet 25 - Construction (Design and Management) Regulations page 23 Appendix 3 - Examples of the method used to adjust lump sum fees page 28 Other publications in this series page 30 About NHS Estates page 3 1

1.0 The Agreement for the appointment of architects, surveyors and engineers for commissions in the National Health Service Background 1.1 The Agreement for the appointment of architects, surveyors, and engineers for commissions in the National Health Service (the agreement) was revised by NHS Estates in 1995. The revised agreement was produced following discussions between NHS Estates, The Royal Institute of British Architects (RIBA), the Royal Institution of Chartered Surveyors (RIGS), the Association of Consulting Engineers (ACE) and professional estates interests in the NHS. Structure and use of the agreement 1.2 The agreement incorporates Government and Department of Health policy and is compatible with the Agreement for the appointment of project managers for commissions for construction projects in the NHS (1995 Edition). It is not suitable, without review and modification, for use in connection with commissions for other clients. 1.3 The agreement is also suitable for use in Wales, Scotland and Northern Ireland. 1.4 The agreement provides for the appointment of consultants using traditional and design and build contract strategies. Schedules of duties for involvement in a traditional or design and build contract strategy have been included in schedule 1 of the memorandum of agreement. If any other contract strategy is used, these duties will need to be amended. The duties assume that a lead consultant will be utilised by both strategies for the co-ordination of the design team at the pre-contract work stages with the employer s agent replacing the lead consultant where a design and build contract strategy is being used; in practice the lead consultant and the contract administrator or employer s agent may be the same person/firm. 1.5 The agreement is intended for use in the letting of separate commissions in the NHS for work for which a works consultant, that is an architect, mechanical and electrical engineer, structural engineer, or building or quantity surveyor is engaged to provide professional services by an NHS body. Any reference to the client in the agreement is to be taken to be a reference to the NHS body by which the consultant is engaged to provide professional services. Many of the responsibilities of the client under the agreement or referred to in this guide will be undertaken by the project director nominated for the scheme. 1.6 The agreement is suitable for use with all sizes of schemes, although the Supplementary annexure (volume 2) can be omitted for small, straightforward schemes for which the plan of work adequately describes the service to be performed. 1.7 There will be a supplement to the Construction (Design and Management) Regulations 1994 published in the near future, although the revised agreement includes for the consultants to contribute to the health and safety file and the health and safety plan. 1.8 The Department recommends that works consultants are commissioned in accordance with the revised agreement. 1.9 The agreement is based on the Capital Investment Manual. Work stages 1.10 Whilst the agreement is based upon the Capital Investment Manual (CIM), the work stages included in it are as follows: Stage 0 - * Outline business case Stage 1 - Full business case leading to approval Stage 2 - Design Stage 3 - Tender and contract Stage 4 - Construction and equipment supply Stage 5 - Technical commissioning and handover Stage 6 - Post completion Stage 7 - * Operational commissioning Stage 8 - * Post-project evaluation (* these stages have been added to enable the duties required at all stages of CIM to be included in the agreement) Appendix 1 illustrates the progression between the work stages when using the agreement.

1.0 The Agreement for the appointment of architects, surveyors and engineers for commissions in the National Health Service Quality of service 1.11 It is important for all concerned with a works scheme that consultants submit bids for their commissions which, while remaining competitive, contain adequate emuneration for the provision of a good quality servrce. When briefing and awarding commissions, project directors should therefore take care to ensure, especially when competition is very keen, that due regard is given to the need for the quality of service to be maintained within the accepted fee bid. This should be achieved by careful assessment of the consultant s technical approach and the resources allocated. The evaluation of fee bids should take quality into account (see Guide to procedures for commissioning building and engineering consultants and Better by design ). Any fee bid which does not meet the NHS body s evaluation criteria should not be accepted. Roles and responsibilities of the client and consultant 1.12 The consultant s commission will be with the client NHS body. Ownership of a specific scheme will be delegated to a project director who must be named in volume 1, part 1 of the agreement (clause 1.6). The project director will be nominated to act for the client, will undertake most of the client s responsibilities in respect of the project manager and design team consultants, and will act as the project manager s interface with the client. The project director s responsibilities and actions in relation to the project manager and thereby the consultant are listed in the agreement for the appointment of project managers for construction projects in the NHS (1995 Edition) (see schedule 2 of the memorandum of agreement). 1.14 Each consultant s primary responsibility is to the client. However, the consultant is also required to collaborate with the project manager, lead consultant and other appointed consultants to ensure that the progress of the work is fully co-ordinated at all times, having regard to the services the consultants are required to provide and their separate terms of appointment. The agreement is designed to facilitate the co-ordination of services. 1.15 Any reference to the client in the agreement is to be taken to refer to the NHS body by whom the consultant has been engaged to provide services under the agreement. In most cases, the project director will act for the client. Reference to the appropriate health department in the event of doubt or dispute 1.16 Any doubts concerning interpretation of the provisions contained in the agreement should be referred to NHS Estates in England or the appropriate health department in Wales, Scotland or Northern Ireland who will consult as necessary with the relevant NHS or professional bodies. Guidance on selection, tendering and evaluation procedures 1.17 This is included in Guide to procedures for the commissioning of building and engineering consultants 1.13 The client must provide adequate information about the project, site, programme and budget in the brief and should fully understand and approve each consultant s proposals at various stages of the work as it proceeds.

2.0 Completion of scheme particulars (part 1) General This part of the agreement describes the scheme for which the consultant is to be appointed. The client should complete all of part I. The headings provide a guideline to the information which should be available to the consultant. This is a minimum which should always be provided but which may be expanded to give as much information as possible on the scheme and the client s procedures and requirements to assist the consultant to prepare an offer. Clauses 1.1-1.3: scope of appointment/ scheme As much information as is available about the location, general description and phasing of the scheme should be entered here. Additional briefing material should be provided, if available, to cover the broad intent of the scheme and its basic requirements and objectrves. Clause 1.4: estimated cost State the estimated cost of the works for new construction and for alterations and extensions separately. State also the work stage to which these costs relate, the tender price index level at which these costs were established and the title of this index. Delete the entlre clause if the project director cannot provide these details for appointments at stage 0, 1, 7 or 8. Clause 1.5: target dates Enter into the matrix the relevant CIM work stages together with their programmed start and finish dates. These details are important for the consultant s bid and should be completed as accurately as possible by the project director. Clause 1.6: project director Enter the name and position of the person in the client s organisation who will be the project director. This appointment is important as the person nominated will provide the client interface with the project manager, and project and design teams. Reference to the Agreement for the appointment of project managers for commissions for construction projects in the NHS, schedule 2 of the memorandum of agreement reveals the extent of information to be provided and action to be taken by the project director throughout the duration of the scheme. Because of the diversity of information required, the project director should, if necessary, have access to professional advice and support. Clause 1.7: project manager State the name of the firm or individual for the post of project manager. Where possible, it is anticipated that the project manager will be appointed before design team consultants to provide the project director with assistance in their appointment. Clause 1.8: design team State the client s intentions regarding the composition of the design team, the name of the firm in each discipline, if known, and identify the discipline of the planning supervisor and lead consultant. When using a design and build contract strategy, a design team may be appointed to assist with the preparation of the employer s requirements, evaluation of tenders, monitoring of quality and cost management. Clauses 1.9-1.11: contract strategy State the likely contract strategy. This could be, for example: a lump sum contract based upon a fully detailed desrgn, bills of firm quantities, JCT Standard Form of Building Contract (1980) obtained by competitive tendering; a lump sum contract based upon a performance specification (employer s requirement), JCT Standard Form of Building Contract with Contractor s Design (1981) obtained by competitive tendering. Include the discipline of the contract administrator or employer s agent depending on the contract strategy being used.

2.0 Completion of scheme particulars (part 1) Clause 1.12: site inspection staff State the requirements for site inspection staff spaces provided and indicate whether such staff will be appointed by the client or the consultant. The comments in this guide relating to site inspection are also relevant (see, clauses 2.14-2.18). Clause 1.13: details of documentation State the number of copies of drawings, documents and other information required from the consultant by the client. This will include the number of tender and formal contract documents required at stage 4, the as-built drawings/operation and training manuals required at stage 5, and the post-project evaluation report required at stage 8. The documentation may be provided in electronic format, for example CAD drawings. Clauses 1.14-1.18: the main contract/ method of measurement State the details of the form of main contract together with the method of measurement. The consultant will need to know whether the contract will be firm price or variation of price (VOP) as this will affect the fee assessment. should provide all the other procedural requirements with which the consultant must comply. These may include the NH S body s audit procedures, standing orders, etc. If these procedures are contained in separate documents, they should be referred to in this clause and copies either made available for reference or attached for fee bidding purposes. If the procedures are changed during the period of the commission, the effect of the change should be negotiated with the consultant. Clause 1.21: attendance at meetings Enter the meetings that the client will require the consultant to attend in addition to those required to perform the duties set out in schedule 1 of the memorandum of agreement (see clause 2.3). Provide details of the purpose, location, timing and frequency of the meetings and the professional discipline required to attend, together with any other relevant requirements. If this information is precise, the consultant will be able to make provision in the fee bid for the time and expense involved. Payment option (a) in article 6.9 of the memorandum of agreement can then be selected. If the requirement of any of the additional meetings are not fully known, option (b) of article 6.9 should be selected. Payment will then be made on the basis of an agreed time charge in accordance with clause 3.8 or an agreed lump sum. Clauses 1.19-1.20: client s procedures/ requirements CIM procedures will apply to all schemes, and clause 1.I9 should not therefore be deleted. The project director

3.0 Conditions of appointment (part 2) General This part of the agreement describes the conditions which normally apply to a consultant s appointment. NHS bodies are advised against making changes to these conditions unless they are necessary for the requirements of a particular scheme. If any of the conditions are deleted or added to, details should be provided in articles 6.15 or 6.16 of the memorandum of agreement (see chapter 7 of this volume). Clause 2.2: objectives and obligations of the consultant The consultant s fee bid should cover all costs and expenses in fulfilling the objectives and obligations described in schedule 1 and 2 of the memorandum of agreement. Consultant s should not carry out any duties additional to those stated in the agreement without the formal approval of the client. Clause 2.7: co-ordination of consultants services The lead consultant/employer s agent has the responsibility for co-ordination and integration of the activities of all consultants. Each consultant should clearly understand the duties of the lead consultant/employer s agent and have regard to the services to be supplied by the other consultants and their conditions of appointment, It is one of the strengths of the agreement that the duties, services and conditions of engagement for each consultant are clearly set out for all the other consultants to see. Clauses 2.10 and 2.11: changes The management of change is an important function of the consultant s duties. Clause 2.11 allows the consultant some authority to authorise changes for urgent constructional reasons, The approval of the project director must be obtained as soon as possible. Clause 2.3: attendance at meetings The consultant s fee bid should cover all the costs of attending meetings necessary to perform the duties stated in schedule 1 and 2 of the memorandum of agreement and the Supplementary annexure (volume 2). Additional meetings required by the project director are stated in clause 1.21 of the scheme particulars, Clause 2.4: additional duties Consultants should not carry out duties additional to those stated in the scheme particulars without the formal approval of the project director. Clause 2.5: information from the consultant The consultant is obliged to provide information reasonably required by the lead consultant/employer s agent for the performance of the lead consultant s duties/ employer s agent s duties. Clause 2.12: progression between work stages The project director s written approval is required by the consultant before proceeding to the next work stage described in schedule 1 and 2 of the memorandum of agreement. The work stages refer to CIM stages O-8 inclusive. Clause 2.13: programme The consultant shall submit a programme to the lead consultant/employer s agent in respect of the commission within 14 days of the execution of the agreement. This programme shall be maintained during the existence of the commission. Clauses 2.14-2.18: site inspection These clauses cover the requirements and appointment of site inspection staff either full-time or part-time. Specific requirements regarding site inspection, particularly if this is to be undertaken by the consultant, should be discussed at interview with the consultant. Decisions should be incorporated in briefing to facilitate calculation of the percentage referred to in clause 3.14~. and quoted in

3.0 Conditions of appointment (part 2) article 6.8 of the memorandum of agreement. Clause 2.17 should be particularly noted as in the second sentence it states that site staff shall be under the consultant s direction and control, but the consultant shall not be responsible for any failure on the part of staff employed other than by the consultant. Clause 2.19: obligations of the client It is essential that the NHS body nominates a project director, usually a suitable employee, to represent and have the authority of the client in respect of the scheme. All instructions given by the project director are deemed to be given by the client. All advice given to the project director is deemed to have been given to the client. Schedule 2 of the memorandum of agreement, Agreement for the appointment of project managers for commissions for construction projects in the NHS (1995 Edition) lists the information to be provided by, and action required of, the project director, The list covers a wide range of activities and assumes considerable technical and procedural knowledge and experience. NHS bodies should ensure that adequate support is provided for project directors, so that they can carry out their duties effectively. Clause 2.20: Construction (Design and Management) Regulations 1994 The client is required to appoint a planning supervisor and a principal contractor under the Construction (Design and Management) Regulations. Clause 2.21: information from the client The client should provide adequate information on the project and the budget. A high standard of briefing material is essential. Clause 2.22: provision of site accommodation and facilities The consultant can request in article 6.1 1 of the memorandum of agreement that the client provide site office accommodation and facilities for use by the consultant s site inspection staff. It is therefore important that when consultant s offers are made, both the project director and consultants clearly understand whether offers include or exclude the provision of office accommodation for the consultant s site inspection staff. The client requirements in this respect can be discussed at interview and should be included in the briefing upon which consultant s offers are made. If the client does not want to provide accommodation and facilities, article 6.1 1 of the memorandum of agreement should be deleted. Clauses 2.23: copyright entitlement The copyright of documents remains vested in the consultant unless otherwise agreed. Clause 2.24: documentation by the client provided This allows for the copyright of information provided by the client to remain vested in the client. Clause 2.25: client s licence and restrictions This allows the client to have a licence to use drawings and other documents to facilitate future extension of the works. Apart from this, the copyright in drawings and other documents provided by the consultant remains vested in the consultant unless the client wishes to use them, for which a licence should be obtained. An NHS body should therefore consider, before placing a commission, whether the design and documentation are likely to be needed for use on other projects. Where an NHS body thinks it necessary to safeguard the right to reuse the designs and documentation at a future date, it will need to acquire a licence permitting specific re-use from the consultant, As a licence only permits an NHS body to do whatever is allowed by the licence, it is preferable for the copyright in the designs and documentation to be assigned in full in the commissioning contract and moral rights as set out in part 1 chapter 4 of The Copyright, Designs and Patents Act 1988 waived. Agreement to this effect should, if possible, be negotiated with the consultant. The amount of any financial consideration will depend on the circumstances. The copyright can be assigned and moral rights waived by inserting a special condition to this effect in article 6.15 of the memorandum of agreement. If the matter is dealt with in this way, clauses 2.23 and 2.25 should be deleted and the deletions noted in article 6.16. The following wording is suggested for the special condition: In consideration of the sum of f- (insert the amount of any additional fee), the Consultant hereby acknowledges that copyright and all rights in the nature of copyrights, in the material produced in the performance and during the currency of this Agreement and in all reports submitted 8

3.0 Conditions of appointment (part 2) under the terms of this Agreement, shall upon creation immediately vest in the NHS body. Such material shall not be reproduced, or disseminated for any other purpose, without the written permission of the NHS body in whom the copyright will be vested or of such persons or bodies to whom he has delegated his authority to do so. The Consultant waives any claim to moral rights as set out in Part 1 Chapter IV of the Copyright, Designs and Patents Act 1988. Such a provision secures the eventual further use of the material covered by the copyright in case it is needed by another NHS body (not necessarily the NHS body granting the commission). Clauses 2.28-2.29: professional indemnity insurance The requirements for professional indemnity insurance have been agreed between Government departments. The required level of cover is set out in the certificate shown in part 4 of the agreement. Although NHS bodies are required to ensure that consultants are adequately insured before they are commissioned for work in the NHS, in exceptional crrcumstances it may be that some consultants are unable, in particular cases, to maintain that insurance throughout the period stated in clause 2.28. In such instances, it is recommended that project directors discuss fully the way in which the positions of the NHS body and the consultant can be protected. This may, for example, entail a separate ancillary agreement which meets the circumstances of the particular case and maintains continuity of professional input. NHS bodies should note the advice contained in Guide to procedures for commissioning building and engineering consultants with specific reference to limited liability companies. Clauses 2.30-2.31: certification Consultants will be required to sign those certificates, relevant to their services in relation to the work stages for which they are commissioned and are advised to obtain copies of those certificates signed by the cient. Specimen copies of the certificates, including those which the consultant is required to sign, are set out in part 4 of the agreement for information. Clause 2.32: assignment by the consultant This clause applies to assignment by the consultant and does not apply to transfer by the NHS body. Clause 2.33: assignment by the client This clause applies to assignment by the NHS body; the agreement may therefore be unilaterally transferred by one NHS body to another. The consultant should be advised in writing by the project director if it is proposed to assign the agreement in this way. Clauses 2.35-2.42: variation, extension, suspension or termination Clause 2.35 allows the client to vary or extend in time, the duties by giving reasonable notice to the consultant. Clause 2.36 allows the client to suspend or terminate the duties by giving reasonable notice in writing to the consultant. Clause 2.37 details circumstances which permit the suspension or termination of the performance of the agreed duties by the client. Clause 2.38 deals with the requirements for the resumption of duties following suspension. Clause 2.39 allows the consultant to suspend or terminate the performance of the agreed duties on expiry of reasonable notice given in writing to the client. Clause 2.40 details circumstances which permit the suspension or termination of this agreement by the consultant. Clause 2.41 allows for the termination of the appointment due to the death or incapacity of the consultant. Clause 2.42 applies on termination of the commission. It requires the satisfactory delivery to the project director of all the documents prepared by the consultant. The consultant is entitled to be paid all due fees and expenses on completion of this action.

3.0 Conditions of appointment (part 2) Clauses 2.43-2.54: settlement of disputes These clauses deal with the requirements for the settlement of disputes during the period of the commission by adjudication, thereafter by either agreement or arbitration, unless the requirements of Clause 2.46 have not been complied with, in which case the alternatives of agreement or arbitration apply. When selecting an adjudicator, the person must be completely impartial and therefore have: a. no involvement with the NHS body; b. no involvement with the consultant; c. no involvement with the project. Clauses 2.55 and 2.56: Race Relations Act 1976 Although the agreement is governed by the applicable laws, it is policy that a specific reminder in respect of the Race Relations Act should be included in Government contracts. Clauses 2.57-2.59: governing laws These clauses deal with the laws governing the contract. It will be noted that these refer to the laws of England, Wales, Scotland and Northern Ireland. Whichever of these clauses is not to apply, should be entered at article 6.16 of the memorandum of agreement. 10

4.0 Provision for fees and expenses (part 3) Clause 3.1: cost of the works Fees are payable on a percentage, lump sum or time charge basis. The fee option at each stage is to be at the discretion of the client/project director and stated in article 6.6 of the memorandum of agreement. At stage 2 and at subsequent stages, where a percentage fee is selected, fees will be calculated by applying the quoted percentage for each stage to the works cost calculated in accordance with clause 3.1. Clause 3.la: works cost at stage 0 and 1 There may be doubt as to whether the works cost at CIM stage 0 and 1 used for calculating percentage fees, includes or excludes any allowance for local variations in the cost of the scheme included for budgeting purposes. To avoid future misunderstanding, NHS bodies are advised to clarify in the consultant s briefing whether or not such an allowance will be used in the calculation of fees for this stage. Clause 3.lb: fees for stage 2 and 3 duties There may be agreement among members of the design and project teams, supported by information from relevant tender price indices, that a falling trend in building prices is likely to result in a tender figure that is less than the agreed budget cost. In such circumstances, the project director is advised to seek guidance from the consultant and the design team about the anticipated tender level to ensure that no overpayment of fees in respect of stage 2 and 3 duties occurs. Clause 3.2: cost of the works in the event of no tender being accepted The lower of the alternatives must be selected from costs calculated on the same basis. To compare with tender costs, the updated works cost at stage 1 should take account of local variations in the cost of the scheme, if this has not already been included in the CIM stages 0 and 1 cost referred to in clause 3.1 (a). Clause 3.3: methods of payment Fees may be payable on a percentage, lump sum or time charge basis. Article 6.6 of the memorandum of agreement should be completed to obtain fee bids on the basis desired by the client. Articles 6.6A and 6.6B are alternatives; the option not selected should be deleted. Article 6.6A applies for appointments made at stage 0, 1, 7, or 8. This article only allows for fee bids to be obtained on a time charge or lump sum basis. It is not considered feasible to invite fee bids on the basis of a percentage of the works cost at this stage, when the preferred option may not be established. Article 6.6A also contains provision for a commission at stage 0 or stage 1 to be extended to further stages. Article 6.6B applies for appointments made from stage 2 onwards. Fee bids may be invited on a percentage, lump sum or time charge basis for each or any of the stages for which the appointment is to be made. Decisions about the basis of fee bids will be schemespecific. Percentage and lump sum fee bids should be invited only where it is possible to adequately define with a degree of certainty the scheme briefing and other information upon which consultants fee bids will be made. Clause 3.4: payment on a percentage basis Where fees are payable on a percentage basis, they should be calculated for each work stage by applying the percentage figure stated in article 6.6A or 6.6B (whichever is applicable) to the cost of the works for that stage as defined in clause 3.1 (costs of the works). Clause 3.5: payment on a lump sum basis This clause details the mechanism whereby the lump sum is adjusted by reference to movements in the index identified by the client/project director in article 6.13 of the memorandum of agreement. The lump sum fee is on a fixed price basis for the first 24 months, with adjustment occurring 24 months after the date of the agreement. This first 24 months is a period during which the consultant should be able to accurately forecast and allow in the 11

4.0 Provision for fees and expenses (part 3) lump sum fee brd for cost fluctuatrons, and complies with Government policy in respect of all contracts of less than two years being fixed price. It should be noted that only 90% of the outstanding balance of unpaid fees is adjustable. The 10% nonadjustable element is equivalent to that used in construction contracts subject to formula fluctuatrons Appendix 2 provides an example of the method used to adjust lump sum fees. Clause 3.7: basis of fees when excess tenders are received This clause indicates how fees will be calculated in the event of an excess tender being received. As the consultant s input at this stage may be critical to the achievement of a successful tender, the fees for negotiating and effecting a reduction in the tender shall be adjusted in accordance with the provisions of clause 3.16. Should the consultant be the cause of the excess tender, the cost to the consultant of effecting reductions and negotiating a revised tender shall be deemed to be included in the consultant s fees. Clause 3.8: payment on a time charge basis This clause sets out the conditions applicable to fees payable on a time charge basis. Time charges are calculated on rates for principals, and professional and technical staff. The rates per hour are set out and quoted for in article 6.7 of the memorandum of agreement. The quoted rates apply for a period of 12 months from the date of the agreement and are adjusted annually by reference to the movements in the index identified by the client/project director in article 6.13 of the memorandum of agreement. Clauses 3.11-3.13: travelling, subsistence and other expenses When option (a) of article 6.8 of the memorandum of agreement is selected, those items of travelling, subsistence and other expenses listed in clause 3.11 will be included in the lump sum or percentage fee stated by the consultant. Those items of expenses listed in clause 3.12 will be reimbursed in addition. When option (b) of article 6.8 is selected, or when time based charges apply, travelling, subsistence and other expenses will be reimbursed in accordance with clause 3.13. If the application of clause 3.13 is likely to be extensive, an indication of the relevant NHS staff rates may be included in briefing, as information to the consultant. Clause 3.14: site inspection staff This clause deals with the method of reimbursement to the consultant of fees for site inspection staff. In addition to the cost of employment, an increment is payable to the consultant in accordance with the percentage quoted by the consultant in article 6.10 of the memorandum of agreement. It should be noted in sub-clause (d) that the consultant will also be reimbursed in respect of travelling and subsistence expenses of the site inspection staff for journeys required by the client. These expenses do not include the cost of travelling between the consultant s office and the site. Clause 3.15: payment for site accommodation and equipment If the client does not delete article 6.1 1 in the memorandum of agreement, the client shall provide site office accommodation and facilities specified in article 6.1 1 by the consultant for use by the site inspection staff. It is therefore important that the client decides whether or not to provide site accommodation prior to inviting fee bids. Site accommodation and facilities may include items such as site office accommodation, furniture, telex, facsimile, telephone, secretarial services and equipment for the use of site inspection staff. The facilities may be provided in existing accommodation if it is available. Clause 3.17: post-contract changes (stage 4 onwards) The consultant s input to post-contract changes will be variable and not necessarily related to the value of the variations. Fees should be negotiated for each postcontract variation made by the project director, preferably on a lump sum basis, before the consultant s services are provided. If this is not possible, fees can be paid on a time charge basis under the provisions of clause 3.8. It is only where the works are varied by the project director that additional fees and expenses are payable. Clause 3.19: fees for additional duties required by the client Consultant s fees in respect of the validation of contractor s claims and other similar duties are additional to the fees dealt with in the preceding clauses. Where 12

4.0 Provision for fees and expenses (part 3) such duties are at the specific instruction of the project director and can be reasonably defined, the fees should be agreed on a lump sum basis. Failing that, they may be paid on a time charge basis. Clause 3.20: fees for attendance at meetings required by the project director See guidance notes for clause 1.21. Clauses 3.21 and 3.22: use of computers and/or other special equipment Specific requests by the project director for the use of computers and/or other special equipment will give rise to additional fee charges. It is therefore important that the project director ensures that the consultant is made aware of any such requirements, if known, so that the fee bid may include them. If the project director requests the use of such equipment after the consultant s bid has been received, the additional requirement and fee should be agreed before work commences. Clauses 3.31-3.33: payment of accounts Fee accounts should be submitted to the client at the intervals stated by the client in article 6.12 of the memorandum of agreement. Fee accounts should be accompanied by the necessary documentary evidence particularly in the case of travelling, subsistence, other expenses and time charges. It should be noted that fees due from the client to the consultant should be paid within 30 days of submission of the consultant s account In accordance with Government policy on prompt payment, consultants shall pay all sub-contractors within 30 days of receipt of a fee account from the subcontractor. Although it is contrary to Government financial policy for automatic interest payments on undisputed, unpaid fees to be included in model forms of contract, this does not prevent NHS bodies from including such interest payments in specific cases if they consider it value for money to do so. Value for money would be established by the identification of some cost, quality or other benefit to the NHS body in taking this action. 13

5.0 Specimen certificates (part 4) 5.1 This part of the agreement contains specimens of the employer s agent. Where a certificate contains alternative certificates that are referred to in the agreement and some undertakings or where only a part service is required from are required to be signed by the respective consultants as a particular consultant, appropriate deletions should be indicated. made. 5.2 Those certificates requiring signatures of consultants 5.3 It is important that NHS bodies ensure that all under the agreement must completed and passed to the consultants are adequately insured before they are project director/project manager via the lead consultant/ commissioned for work in the NHS. 14

6.0 Definitions (part 5) 6.1 This part of the agreement contains a list of terms used in the agreement. Each term is defined so as to avoid errors in interpretation of the provisions of the agreement. 15

7.0 Memorandum of agreement (part 6) General This part of the agreement comprises the memorandum of agreement. A section for attestation by the client and consultant is included at the end. Each consultant should be aware of the identity of the other consultants appointed or to be appointed under separate agreements. The requirement for advice on the need for other consultancies, for example landscape, interior design, town planning, etc may be included in other duties in the supplementary annexure (see volume 2), and the responsibility for such services should be identified in the schedule at the beginning of the plan of work If separate commissions are to be let by the client, the terms of engagement will be those of the relevant professional body, suitably amended to take account of Government and Department of Health policy. The duties must be coordinated between all disciplines and all should be made aware of them. Articles 6.1-6.2 The agreement between client and consultant comprises both volumes and all parts of each volume. The supplementary annexure (volume 2) may, however, be excluded for small, simple schemes, in which case the appropriate amendments should be made. Articles 6.3-6.5: lead consultant/ contract administrator/employer s agent The discipline of the lead consultant/contract administrator/employer s agent should be inserted by the client. This information will need to be known by the lead consultant/contract administrator/employer s agent before a fee bid is made, as the lead consultant/contract administrator/employer s agent will need to allow for the additional duties involved in this appointment when calculating the fee. Article 6.6: payment for duties Articles 6.6A and 6.6B are alternatives, one of which should be deleted by the project director. Article 6.6A The use of article 6.6A enables an appointment to be made at stage 0 and stage 1 with no obligation on the client to continue with the scheme beyond that stage. This would apply, for example, if an appraisal study were to confirm that a non-constructional option was the most advantageous strategy and construction work was unnecessary. However, article 6.6A also provides a payment method by which the client can continue the appointment of the same consultant on a competitive bid basis beyond the stage where the work could be defined at the time of the fee bid. Payment for stage 0, 1, 7 or 8 duties in relation to article 6.6A can be on either a time charge or a lump sum basis. Articles 6.6A(s)(i) and 6.6A(a)(ii) are alternatives, and one should be deleted. If no deletion is made, article 6.6A(s)(i) will apply and payment will be made on a time charge basis. A lump sum payment method should only be selected if the work is sufficiently well defined for the consultant to estimate the time and resources required to execute the commission. Payment for stage 2 and subsequent stages is based on completion of the two matrices contained in article 6.6A(h)(i). If an appointment is to be made at stage 1 and a fee bid is required for the later stages, the project director should enter the first matrix at article 6,6A(h)(i). A range of estimated costs and time duration for the scheme is to be estimated in months or years. The consultant will be able to offer a fee bid relating to these estimates. The consultant will then be paid according to the fee bid if the actual cost of the works at stage 2 (as defined in clause 3.1 a) and the time duration from the actual commencement of stage 2 to the estimated date of practical completion falls within the ranges specified by the client. If the actual cost of the works at stage 2 (as defined in clause 3.la) and the time duration from the actual commencement of stage 2 to the estimated date of practical completion falls outside the ranges, then the fees shall be adjusted in accordance with the provisions of clause 3.15. Article 6.6A(b)(iv) requires the client to state whether the fee offered by the project manager is to be on a lump sum or a percentage basis. This is done by deletion of the inappropriate wording. The second matrix (at article 6.6A(h)(v)) allows apportionment of fees into work stages from stage 2 to the stage inserted by the project director in the space provided. The first column should be completed by the project director to list each work stage required. The 16

7.0 Memorandum of agreement (part 6) consultant will state what percentage of the fee relates to each stage by completing the second column. Apportionment of fees into work stages is carried out by applying these percentages to the total fee. The percentages should be realistic and reflect the workload appropriate to each stage. Article 6.6B Article 6.6B enables an appointment to be made from stage 2 onwards. The project director should state the applicable work stages in the first column of the table, together with the basis on which fee bids are to be made in the third column. Fees can be made on a lump sum, percentage or time charge basis. Fee bids should only be invited on a lump sum basis if the work is sufficiently well defined for the consultant to estimate the time and resources required. The consultant WIII complete the second column of the table, stating a fee for each work stage which should realistically reflect the workload of that stage. The adjustment of lump sum fees in relation to the fluctuations in cost is described in clause 3.5 of the agreement. Article 6.7: time charge rates The consultant is required to enter the hourly rate for fees to be paid on a time charge basis for each category of professional and technical staff indicated by the project director. The rates will need to be taken into account in evaluating fee bids. The categories of professional and technical staff are defined in part 5 of the agreement. Where the project director is aware that categories of professional and technical staff, other than those stated, are required, these should be listed in the space provided. These other categories of staff will need to be added to the list in part 5 of the agreement under the heading professional and technical staff grades, and their roles defined. Article 6.8: travelling, subsistence and other expenses Provision is made for these charges to be included in the fees stated in article 6.6A or 6.68, or for them to be charged separately. If one of the alternatives in article 6.8 is not deleted, the agreement states that the article 6.8a will apply, and expenses are deemed to be included in the fees. Article 6.9: attendance at meetings required by the client See guidance notes for clause 1.21 Article 6.10: site inspection staff Where the consultant appoints site inspection staff, the consultant is required to include percentages to cover overheads and other costs additional to their salaries and wages, which are defined in clause 3.14. Percentages bid for these overheads should be taken into account in assessing the overall fee bid. Article 6.11: site accommodation and equipment If the client has not deleted this artrcle, the consultant shall insert the site accommodation and equipment that is required. See guidance notes on clauses 2.22 and 3.15. Article 6.12: accounts and interim payments The project director should state the intervals at which accounts are to be submitted and interim payments made. These may be on a monthly, quarterly or stage payment basis. If no deletion is made, the monthly basis will apply. Article 6.13: index for lump sum bids The project director should identify the index, referred to in clause 3.5 of the agreement, which is to be used to adjust a lump sum fee bid. Information on indices is obtainable from the Employment Gazette which is published monthly by HMSO. This publication includes indices for retail prices and employment from which the most suitable index can be selected for a scheme. It is essential that the project director identifies the index precisely. For example, if the Retail Prices Index is used, reference must be made to the category, for example the general index for retail prices for all items. Article 6.14: adjudicator The project director should insert the name of the individual referred to in clause 2.43 to whom all disputes should be referred during the course of this commission. 17

7.0 Memorandum of agreement (part 6) Article 6.15: special conditions The project director should detail any conditions additional to those contained in parts 2 and 3 of the agreement which are to apply to the appointment. Article 6.16: conditions not to apply The project director should insert the numbers of any clauses in parts 2 and 3 of the agreement which will not apply to the appointment. The appropriate alternative clause 2.57, 2.58 or 2.59 should be inserted. 18

8.0 Schedule l/schedule 2 of memorandum of agreement (part 6) Schedule 1 This schedule describes the duties to be carried out by the various consultants. It is important for each consultant to know the duties required from other consultants. Clause 51: lead consultant This clause sets out the duties of the lead consultant and the communication patterns to be established between the lead consultant and the client, and between the lead consultant and the design team. The management arrangements assume that the client communicates directly with the consultant, who then informs the lead consultant, who in turn instructs the design team consultants. A detailed programme of design team activities showing relevant submissions at the various procedural stages to accord with the target dates is to be prepared by the lead consultant in conjunction with the project manager and other consultants. Clause S2: contract administrator This clause sets out the duties of the contract administrator who is normally required when using a traditional contract strategy. The duties of the contract administrator will normally be carried out by the design team leader, for example the architect on a building contract or an engineer on a contract for mechanical and electrical engineering services. Clause 53: employer s agent This clause sets out the duties of the employer s agent who is normally required when using a design and build contract strategy. The duties of the employer s agent may be carried out by either the project manager or the lead consultant of the design team, initially appointed for the preparation of the employer s requirements and evaluation of tenders, if their commissions include those pre-contract duties such as monitoring compliance with the contract documents. The employer s agent may be supported by a team of consultants whose input will be co-ordinated by the employer s agent. Clause 54: quantity surveyor and services engineer; cost planning, cost management and final account duties This clause sets out the option for the cost planning, cost management and final account duties for the engineering services. These can either be carried out by the quantity surveyor with the assistance of the engineer, or by the engineer within a framework set up by the quantity surveyor. The option selected will affect the duties of the respective consultants and care should be taken to ensure that the duties are compatible with the option selected. The client should delete the clause which is not applicable. Clause 56: responsibility for functions/design of constructional elements The client should complete this table to ensure that responsibility for those services/duties mentioned is clarified. Any additional services/duties not mentioned should be added. Plan of work The plan of work sets out the duties of each consultant and is based on CIM stages with provision for traditional and design and build contract strategies. The table at the beginning of the plan of work illustrates those sections of the plan of work which it is felt are applicable to these strategies where options are provided, and shows the options applicable to each strategy. The duties of consultants are set out side by side so that each consultant is aware of the duties of the other consultants at each stage. The duties reflect the key events of the CIM stages and the duties each consultant is expected to provide, and it is on the basis of these duties that the consultant will base his fee offer. If any changes are made to the plan of work, care should be taken to ensure that any amendment, deletions or additions are compatible with the remainder of the agreement, in particular the supplementary annexure. Generally speaking, it is advisable to omit only complete CIM stages. The duties listed in schedule 1 and the supplementary annexure reflect the sequence of events necessary to progress health building schemes. Some duties are of a continuous nature and extend through subsequent stages. This should be taken into account when fee offers are made and evaluated, particularly if the commission consists of less than all the CIM stages. Schedule 2 The client should delete those items of engineering services and equipment which are not required for the particular commission. Special items which are required should be inserted as extra items. Any items in schedule 2 which are to be designed by others but co-ordinated by 19

8.0 Schedule l/schedule 2: memorandum of agreement (part 6) the services engineer should be clearly prefixed with an X. select the alternative which they require and ensure that there is consistency in the execution of all agreements and contracts for a specific scheme. Attestation There are alternatives provided for execution of the agreement under-hand, or as a deed. NHS bodies should 20

9.0 Supplementary annexure (Volume 2) 9.1 The supplementary annexure (the annexure) expands the duties for each consultant and, when used, forms an integral part of the agreement. It should be used for all except small straightforward projects for which expansion of the duties described in the memorandum of agreement may be unnecessary. 9.2 The annexure cannot stand on its own and must always be read in conjunction with the plan of work. 9.3 The duties listed in the annexure may be adjusted to suit a particular project, but care must be taken to ensure that any such amendments do not conflict with or invalidate those duties contained in the plan of work. The duties contained in the plan of work are considered essential to all projects. Where there is any conflict, the duties described in the annexure override those in the plan of work. 9.4 If the commission consists of less than all the basic CIM stages, those stages not required must be deleted in their entirety. The client should ensure that the stages required correspond with those in the plan of work. Items not required under the basic or other duties should be deleted and any special items added by the client, 9.5 When the annexure is used, all completed sections must be included in each consultant s document in order to facilitate co-ordination of duties and collaboration between consultants at all stages. 9.6 It should be noted that the annexure contains not only the details of the consultant and the scheme on the first page, but also a requirement for the document to be signed by the client and the consultant on the last page. 21

I Select prajea managel I + Appoint project manager us,ng agreement Stage 0 - OutlIne business case Stage 1 -Full busmess case leadmg to approval 1 Instruct project manager to proceed to stage 1 (clause 2.10) b lnstrutilons to resume work received wthm SIX months (clause 2 34)7 WUSI~SS case No < =;I:: R! to resume Yes (clause 2 33a) work received wlthln six months (clause 2.34)? YB. Establish form of aqreement to be used and duties requtred before progressing private finance OptIon Stage 2 - Design to stage a Post-project edm2n Instruct project manager to proceed to subsequent stages 2-8 as required (clause 2.10) Only in exceptlonal circumstances (such as the suspension or term,nat,on of the prolect or the falure to resolve differences or Note disputes by the other means provided) should the project managers appomtment be suspended or terminated once the scheme has progressed beyond stage 1 (clause 2.33a-d) Instructlax to resume work waved wthln six months (clause 2 3417 ~rqect manager performs agreed duties under the prowons 4 of the agreement Yes