In the first of two articles, architect and partner at Hawkins\Brown Nigel Ostime looks at how Pre-Construction Services Agreements (PCSAs) can better engage contractors to tackle issues early on, and offers advice on what to tell clients before they sign one
A Pre-Construction Services Agreement enables the client to employ the main design and build contractor to provide logistics and costing services, before the construction contract itself commences. This enables them to iron out issues prior to work starting on site, and typically, is part of a two-stage tender process – used in the first stage to procure contractor involvement in the design process.
For architects, a PCSA, either for the contractor or prospective contractor, can be a help or a hindrance. It is important to know what to look out for and be able to advise your clients accordingly.
There are many benefits that PCSAs can bring to a project but there are also some pitfalls to look out for.
Benefits
A PCSA brings a range of benefits, contributing to the design process itself and ironing out design issues. It can help inform on buildability, sequencing, phasing and construction risk, the packaging of the works (including the risks of interfaces between packages), and on the selection of the specialist subcontractors delivering them. It can also be used to price work packages or suppliers on an open book basis.
The cost plan, construction programme, and construction method itself can be encompassed in a PCSA, as can preparation of a site layout plan for the construction phase, and subcontractor bid documents. Further matters concerning the build phase that may affect the planning application (including waste disposal, traffic movement, tree preservation orders).
A major benefit for the construction stage is continuity of relationships within the contractor team. In addition, the contractor better understands the project’s ambitions, risks and the design overall. Once specialist trades are involved, a PCSA can result in innovative design development while reducing construction risks.
Potential issues
There are several caveats when advocating that clients engage in a PCSA. Firstly it can just be a period of paid tendering for the contractor, and can cause additional work for the design team that has not been envisaged in the initial fee proposal.
There is potential for duplication of work and out of sequence working, where costing of packages is driving the programme. Production of the Employer’s Requirements (ERs – sometimes termed RIBA Stage 4a), can end up being duplicated. The architect/lead designer should explain this to the client and agree the principle of pricing (and programming) variations. Also, the process does not always achieve cost saving, especially after the cost of the PCSA itself is accounted for.
There can be insufficient time for comprehensive design development, as the contractor needs the information too early in the process. Clear understanding of (fully resourced) programming of workflow is essential so the contractor knows when costing can commence which requires more complete information.
Bringing in design by specialist subcontractors can help, but main contractors often don’t want this as they prefer to defer the tendering process to keep pricing keen. It can be advantageous to bring in sub-contractors outside of the main contractor’s PCSA, but the latter generally don’t desire this.
Effectively the project is priced on RIBA Stage 3 information, so any additional details which affect cost are resisted by the main contractor. This can lead to time being spent arguing over what was costed at Stage 3, and design flexibility is lost.
The tendering schedule is typically based on going out with enhanced Stage 3 information, but contractors want final design and co-ordination complete, to minimise cost changes and risk. Even with an agreement in place, this is hard to manage. Value engineering discussion stalls design development and adds pressure on the team later.
Contractor-guided proposals can drive changes that affect the client’s brief and in turn project compliance, however the PCSA process rarely has sufficient change-control measures to verify what has been agreed. If this is not integrated into the contract documents (or derogated list) the work is lost. Conversely, if this is adopted into the ERs the consequences to client requirements are left for the next stage to reconcile – causing additional work that is not accounted for in the program.
PCSA periods sometimes force changes to the design and specification without the requisite time for reflection and discussion with subcontractors, as it can be a time-limited process linked to funding and cash flow.
The PCSA process is carried out with the design team which includes the services engineers who only develop a performance MEP design. However most services efficiencies and coordination benefits are only realised later when the MEP contractor is appointed, which can undo or alter key decisions made earlier.
Typically the PCSA team from the contractor’s side has dropped away once they are into contract. This leads to a lack of ownership of decisions made from the contractor’s side in the next stage.
In next month’s edition I will explain how to get the best outcome from a PCSA.